Toronto biotechnology company's revenues increase 22% for fiscal 2009; on track for positive cash flow in fiscal 2010
TORONTO, Dec. 16 /PRNewswire-FirstCall/ - Microbix Biosystems Inc. (MBX:TSX) a biotechnology company focused on virology and biological technologies, today reported financial results for fourth quarter and full-year 2009. For the fiscal year ended September 30, 2009, Microbix reported revenues of $6.08 million, a 22% increase from the same period in 2008. For fourth-quarter 2009, the Company saw revenues increase by 20% to $1.5 million, compared with the year-ago quarter.
Sales increases in Microbix core business of providing biological products to the diagnostic and research industries were primarily due to greater capacity from the company's ISO-certified Watline biologic production facility, which opened in April of 2009, filling higher order volume from existing customers worldwide. Revenues would have been significantly higher if not for the negative impact of the strong Canadian dollar.
"We expect cash flow from our base business to continue to improve as it did in 2009 supporting our new areas of growth which are approaching value milestones," said William J. Gastle, Microbix CEO. "The year 2010 marks the beginning of a significant growth era for our 20-year-old company as we enter global markets with novel products and new partners."
"In 2009 we took bold steps to position our three pipeline products to generate significant revenue in the near future. During the past year, our efforts to launch VIRUSMAX(TM), a proprietary influenza vaccine production enhancement technology, led to a joint venture agreement with the Chinese government for Microbix to jointly build and operate the world's third largest vaccine production facility scheduled for ground breaking in February; KINLYTIC(TM) (urokinase), a thrombolytic agent indicated for the treatment of acute massive pulmonary embolism, has just been approved for sale in Canada and already garnered a guaranteed purchase of 50,000 vials; and SST(TM), (Semen Sexing Technology), a process that will allow livestock producers to pre-select the sex of offspring before conception, is the focus of licensing discussions with several global animal health companies," Gastle added.
In October, the company announced a financing agreement with Hunan Biopharmaceutical Co. Ltd. (a Hunan Province state-owned enterprise) to begin construction on Asia's largest vaccine facility using Microbix VIRUSMAX technology. Microbix will begin earning revenue from management fees by 2012 and expects to realize vaccine sales from this facility for the 2014 flu season. The company will receive fees and future royalties of more than $25 million per year when the plant reaches full capacity and will initially participate with a 50% equity interest. In addition, Microbix and Hunan Biopharmaceutical have signed an initial vaccine supply agreement covering seven years with a value of approximately $500 million (USD.)
Financing for this large project has been delayed in part because of the global capital markets environment since the summer of 2008. Hunan Biopharmaceutical is financing the initial construction beginning in the first quarter of 2010. During Phase 1 of the project, both partners will raise money; however, the increased funding will be non-dilutive for Microbix because the company will raise proceeds through its Barbados subsidiary, established for this purpose.
The facility will be constructed and financed in three stages. Phase 1 will provide 20 million doses by 2014 leading up to Phase 3 capacity in 2017 to produce more than 120 million doses of seasonal influenza vaccine annually, and over 300 million doses of a pandemic influenza vaccine in the event of an outbreak to immunize against a single strain of influenza.
After his recent visit to the Hunan Province, Gastle said: "As Microbix and its partner's senior management begin implementing the startup of the Hunan Microbix Joint Venture, I've seen first-hand that the vaccine project has a high priority in government circles. The enthusiasm is keen in China to move forward at all government levels and we are receiving offers of assistance to advance the ball quickly."
SST, Microbix' semen sexing technology, will enter an animal health market for artificial insemination valued at more than $2.5 billion. SST will enable commercial breeders to pre-determine the sex of livestock allowing producers to maximize productivity and profitability. Even before launch, expected in 2012, Microbix technology has drawn interest from livestock producers and other key stakeholders in the animal health and related markets. In fact, Microbix already has agreements in place with 25% of dairy semen collection centers to adopt its SST technology.
Within three years of launch, Microbix expects its SST technology to generate $140 million annually in revenues for the company and its partners, and as much as $500 million annually once fully deployed into the global market.
Microbix is in discussion with several global partners to license the final phase of SST development. Microbix CEO recently said: "We are very pleased with the response and interest received for participation in sponsoring the final phase of development of the SST technology. The opportunity offers a sponsoring partner high-margin revenues and a new platform to augment its own herd management products."
Protected by recently garnered intellectual property rights and having low development risk with no regulatory barriers to markets globally, Microbix' expects it novel semen sexing technology will become the industry standard for livestock producers in the near future.
Early in November, Microbix announced that KINLYTIC (urokinase for injection) was approved in Canada for marketing and export. Health Canada's issuance of a Drug Identification Number for KINLYTIC gives Microbix the opportunity to market the product in Canada and export the clot-busting therapy to markets worldwide. Later that month, Microbix announced a marketing and supply agreement with Riso Pharma that guarantees purchases of not less than 50,000 KINLYTIC vials over the next three years. Urokinase sales are projected to begin in Canada and other countries in the second half of 2010.
Under the terms of the agreement with Riso, Microbix granted exclusive rights to market KINLYTIC throughout the Middle East. Riso will be responsible for all commercialization activities and purchase inventory for distribution.
The Company's $2.5 million acquisition in 2008 of all Urokinase assets from ImaRx Therapeutics, Inc. of Tucson, Arizona, (Nasdaq: IMRX) resulted in a major transformation for Microbix. With this acquisition, Microbix will become a fully integrated biopharmaceutical company with an established revenue base. Discussions are under way with several potential partners, all in the hospital-based injection market, to help Urokinase reach its full commercial potential.
All partnership agreements will include an up-front payment for marketing and/or development rights plus ongoing milestone and royalty payments.
Urokinase, which Microbix has re-branded as KINLYTIC, has been administered to over four million patients and generated peak annual worldwide sales of more than $300 million, prior to Abbott Laboratories discontinuing sales in 1999 due to manufacturing issues. In 2008, Microbix completed the acquisition of all urokinase assets from ImaRx Therapeutics, Inc., making Microbix the only worldwide source of low-molecular-weight urokinase.
According to IMS data, the total Canadian clot-busting market exceeds $26 million for the last twelve months and has grown 20% on a year-over-year basis. Significant underserved markets also exist for urokinase in a large number of countries and Microbix expects to rapidly submit regulatory filings for approval in those countries.
Microbix has submitted an application to Health Canada for approval of its acquired urokinase inventory and targets its release for mid-year 2010. The inventory will supply market needs for nearly three years and generate revenue of about $30 million. Microbix plans to use this revenue to scale up KINLYTIC manufacturing at its Skyway production facility in time to re-supply its inventory with capacity to produce $70 million worth of product annually.
Mark A. Cochran, Microbix Chief Business Officer said, "Microbix is pleased to bring back to the medical community an effective and safe therapy with life-saving benefits. We now have the potential to expand the drug's indications into larger markets such as catheter clearance, oncology and ophthalmology and to use the existing product sales to accelerate urokinase production at our facility in Toronto."
Approval in Canada also allows the company to provide KINLYTIC for use in clinical trials in Canada and other countries. To this end, Microbix has been in discussions with several companies to license its product for studies in new indications such as urology, oncology and ophthalmology. In earlier studies, the therapy has shown promise for treating colon, prostate and other solid tumors. The company sees significant licensing and revenue opportunities ahead for KINLYTIC for these new indications.
For the year ended September 30, 2009, the Company recorded a net loss of $2,484,536, down 32%, or 5 cents a share compared to a loss of $3,667,909 or 8 cents a share in fiscal 2008.
The fourth quarter loss was $715,667, up 62%, or 1 cent a share compared with a loss of $440,113 or 1 cent a share in 2008. Cash flow was negative for both the quarter and full year compared to slightly positive in 2008.
In September, Microbix raised $750,000 in equity through a brokered private placement financing with significant high net-worth investor participation. The funds are being used for working capital.
The development of the Hunan Joint Venture and extensive business development activities associated with concluding agreements for the Urokinase acquisition increased the loss this year. Microbix has undergone a corporate restructuring to conserve resources and lower its cash burn rate in order to ensure its pipeline products reach their full potential. Microbix is expected to turn cash flow positive in 2010.
Microbix specializes in the development of biological technologies and commercializing them through global partners. The Company has intellectual property in large market biotherapeutic drugs, vaccine technologies and animal reproduction technologies. Established in 1988, Microbix is headquartered in Toronto.
This press release contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements including the risks associated with failure to get regulatory approval, and release, of KINLYTIC(TM) for distribution in Canada and other regions of the world; inability to close financing for the Microbix-Hunan project; risks inherent in moving onto new markets or developing and launching new products or engaging new partners; risks associated with commercializing the technologies including sales may not reach sales targets or be made at all, there is no guarantee that the Company will complete development of any technology and if it does that it will perform to commercially exploitable levels, other technologies may emerge before any technology developed by the Company enters the market, royalty rates may not be achievable, markets may not sustain demand for any product should world economies shift significantly, market utilization rates may not be reached, market value of products may vary, product launch dates and market utilization timetables may not be met; risks associated with the ability to license VIRUSMAX to industry; risks associated with failure to develop and commercialize SST; non-adoption of SST; competition in Microbix' core business; general economic conditions; risks affecting timely and cost effective construction and operation of the Microbix-Hunan facility; intellectual property risks including challenges to protecting the Company's intellectual property rights, patents may not provide adequate protection of the Company's intellectual property, may not be successfully prosecuted and may be subject to challenge and risks of infringement of third party rights; risks of operating in foreign jurisdictions, including operating in China with its evolving legal and economic infrastructure and the involvement of the Chinese government departments at national, state and local levels in business and economic matters; creating risks associated with various levels of political and economic conditions and other risks including but not limited to, currency exchange rates and restrictions on foreign exchange; high rates of inflation; renegotiation or nullification of existing licenses, permits and contracts; changes in taxation policies; risks associated with repatriation of profits and changing political conditions and governmental regulations; development of competing technologies in all of its business lines, and Microbix' ability to attract and retain qualified employees and management. These forward-looking statements represent the Company's judgment as of the date of this press release. The Company disclaims any intent or obligation to update these forward-looking statements.
Microbix 2009 achievements: VIRUSMAX --------
SOURCE Microbix Biosystems Inc.