TORONTO, Aug. 12 /PRNewswire-FirstCall/ -- Hemosol Corp.
(NASDAQ:HMSLNASDAQ: TSX:NASDAQ:HML) today announced financial
results and reviewed operations for the second quarter ended June
30, 2005. Unless otherwise stated, all dollar amounts presented
herein are in Canadian dollars. Highlights of the quarter included:
- The kick-off of the Company's strategy to capitalize on the
opportunity represented by the therapeutic plasma proteins market,
through the choice of Immune Globulin Intravenous 10% (IGIV) as the
first product that the Company will advance through clinical
development and the regulatory process; and - Shipment of
Hepalean(R) products under Hemosol's contract with Organon Canada
began. The initial order was fulfilled after Hemosol received a
license from Health Canada following the regulatory agency's recent
successful inspection of the Company's Meadowpine facility.
Subsequent to the end of the quarter the Company completed initial
discussions with the US Food and Drug Administration (FDA) with
respect to the clinical development of IGIV. During these
discussions the FDA agreed with the Company's basic proposed
clinical development plans and offered valuable guidance. If
clinical development of the Company's IGIV product is completed
successfully in line with these discussions, the clinical data
would support the approval of a Biological License Application for
the treatment of patients with Primary Immune Deficiency. "The
second quarter marked the initiation of two important components of
our growth strategy," said Lee Hartwell, President and CEO of
Hemosol. "In addition to choosing IGIV as our first entry into the
multi-billion dollar therapeutic plasma protein market, we began
shipments of Hepalean products to Organon Canada under our first
contract manufacturing relationship." Financial Results The
Company's net loss during the second quarter was $6.9 million or
($0.39) per share compared to net income of $2.9 million or $0.21
per share for the quarter ended June 30, 2004. The results for the
quarter ended June 30, 2004 contained a one-time gain of $6.8
million related to the Company's Plan of Arrangement. For the first
six months of 2005, Hemosol's net loss was $12.8 million or ($0.79)
per share compared to a loss of $2.1 million or ($0.15) per share
in the first half of 2004. Total operating expenses for the quarter
ended June 30, 2005 increased to $6.6 million from $4.5 million for
the quarter ended June 30, 2004. Scientific and process costs
comprised the biggest portion of the increased expense, rising to
$4.9 million in the second quarter of 2005 compared to $2.7 million
in the second quarter of 2004. As of June 30, 2005 the Company had
$3.8 million of cash and cash- equivalents and working capital of
$4.6 million. During the quarter Hemosol closed financings
generating gross proceeds of approximately $13.4 million.
Subsequent to quarter-end, the Company received just over $1
million which was released from an escrow account established as
part of the Plan of Arrangement completed on April 30, 2004. The
Company's monthly cash used in operating activities is
approximately $1.5 million and the Company is implementing cash
conservation measures in an effort to reduce cash utilization. The
Company also continues to undertake a number of initiatives with
respect to generating the necessary capital required to execute its
therapeutic protein strategy. These activities include advanced
discussions with strategic and financial partners in addition to
initiatives to raise the requisite funds by way of the capital
markets. Hemosol will require additional capital early in the
fourth quarter in order to continue as a going concern. Plasma
Protein Market Opportunity The market opportunity for the Company's
plasma protein products is substantial. In 2004 the North American
market for all therapeutic plasma proteins was approximately US$2.4
billion. The Company initially intends to seek regulatory approval
to manufacture and market three therapeutic proteins isolated using
its technology: - Immune Globulins Intravenous (IGIV); - Alpha1
Proteinase Inhibitor (A1PI); and - von Willebrand Factor/Factor
VIII (vWF/VIII) Sales of IGIV in the US in 2004 were estimated to
be U.S. $1.2 billion, a rise of 10% over the prior year and growth
of 7-10% per year is expected to continue. The market for A1PI was
approximately $175 million. The demand for these therapeutic
proteins is expected to increase (i) as new indications for these
products are discovered and approved, and (ii) as the number of
patients requiring therapy under the existing indications increase
Hemosol continues to work closely with it's partner, ProMetic Life
Sciences in the implementation of the Cascade technology which can
also extract proteins such as fibrinogen, plasmin, and albumin.
These additional proteins could represent additional near-term
development opportunities. More Financial Results Scientific and
process development expenses increased to $5.0 million for the
quarter ended June 30, 2005 from $2.7 million for the quarter ended
June 30, 2004. This increase was mainly due to increased activity
related to bio-manufacturing as the Company prepared its vial
filling facility for the ultimately successful Health Canada
licensing inspection. The facility was subsequently put into use to
fulfil the Organon Canada initial order. Regulatory and clinical
expenses of $0.3 million for the quarter ended June 30, 2005 were
modestly lower than $0.4 million of such costs in the same period
in fiscal 2004. Administrative expenses decreased to $1.0 million
from $1.3 million primarily due to lower estimates for capital
taxes, reduction in salaries and lower insurance costs. Marketing
and business development expenses increased to $0.3 million in the
second quarter from $0.04 million for the same period in 2004
primarily related to increased activity for business development
costs associated with bio-manufacturing and pipeline partnering
activities. Amortization of deferred charges for the quarter ended
June 30, 2005, were $0.2 million, representing the charge related
to the maintenance of the guarantee of the Company's $20.0 million
credit facility as well as charges related to the convertible note
issued April 8, 2005. Financial Statements to Follow: The following
statements should be read in conjunction with the applicable notes,
which can be found on the Company's website at
http://www.hemosol.com/. Hemosol Corp. (A development stage
company)(Incorporated under the laws of Ontario) CONSOLIDATED
BALANCE SHEETS (unaudited) June 30 December 31 2005 2004 (in
thousands of dollars) $ $
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ASSETS Current Cash and cash equivalents 3,812 4,230 Cash held in
escrow 1,000 1,000 Prepaids and other assets 623 366 Inventory
1,571 1,329
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Total current assets 7,006 6,925
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Property, plant and equipment, net 80,435 83,104 Patents and
trademarks, net 1,108 1,164 License technology, net 8,772 5,022
Deferred charges, net 1,378 177
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Total other assets 91,693 89,467
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98,699 96,392
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LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and
accrued liabilities 2,380 2,538 Short-term portion of convertible
note 350 - Short-term debt - 20,000
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Total current liabilities 2,730 22,538
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Long-term debt 20,000 - Convertible note 3,650 - Minority interest
4,195 5,163
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Total long term liabilities 27,845 5,163
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Total liabilities 30,575 27,701
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Shareholders' equity Common shares 320,294 311,711 Equity portion
related to convertible note 1,453 - Warrants and options 16,250
14,080 Contributed surplus 9,125 9,125 Deficit (278,998) (266,225)
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Total shareholders' equity 68,124 68,691
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98,699 96,392
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Hemosol Corp. (A development stage company)(Incorporated under the
laws of Ontario) CONSOLIDATED STATEMENTS OF LOSS (unaudited) Three
months ended Six months ended June 30 June 30 (in thousands of
dollars 2005 2004 2005 2004 except per share data) $ $ $ $
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EXPENSES Research and development Scientific and process 4,937
2,676 9,569 4,731 Regulatory and clinical 296 364 575 663
Administration 1,035 1,340 1,457 2,169 Marketing and business
development 260 43 450 150 Support services 142 77 325 261 Foreign
currency translation gain (61) 18 (62) 9
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Loss from operations 6,609 4,518 12,314 7,983 Amortization of
deferred charges 246 434 593 1,687 Interest income (42) (51) (60)
(87) Interest expense 431 243 690 506 Net gain on Arrangement -
(6,838) - (6,838) Accretion in carrying value of convertible note
174 - 174 -
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Loss (income) before minority interest and income taxes 7,418
(1,694) 13,711 3,251 Minority interest (520) (256) (968) (256)
Provision for (recovery of) income taxes Current 20 50 30 100
Future - (1,029) - (1,029)
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Net loss (income) for the period 6,918 (2,929) 12,773 2,066
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Basic and diluted loss (income) per share 0.39 (0.21) 0.80 0.15
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Weighted average number of common shares outstanding (000's) 17,590
14,113 15,945 14,041
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CONSOLIDATED STATEMENTS OF DEFICIT (unaudited) Three months ended
Six months ended June 30 June 30 2005 2004 2005 2004 (in thousands
of dollars) $ $ $ $
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Deficit, beginning of period 272,080 258,172 266,225 253,177 Net
loss (income) for the period 6,918 (2,929) 12,773 2,066
Distribution - 2,900 - 2,900
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Deficit, end of period 278,998 258,143 278,998 258,143
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Hemosol Corp. (A development stage company)(Incorporated under the
laws of Ontario) CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three months ended Six months ended June 30 June 30 2005 2004 2005
2004 (in thousands of dollars) $ $ $ $
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OPERATING ACTIVITIES Net (loss) income for the period (6,918) 2,929
(12,773) (2,066) Add (deduct) items not involving cash Amortization
of property, plant and equipment 1,560 567 3,124 1,110 Amortization
of license technology 162 42 250 84 Amortization of patents and
trademarks 29 41 56 70 Amortization of deferred charges 246 434 593
1,687 Stock-based compensation 120 1,053 184 1,053 Accretion in
carrying value of convertible note 174 - 174 - Future tax liability
- (1,029) - (1,029) Minority interest (520) (256) (968) (256) Net
gain on arrangement - (6,838) - (6,838) Foreign currency
translation (gain) loss - (8) - -
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(5,147) (3,065) (9,360) (6,185) Net change in non-cash working
capital balances related to operations (1,868) (282) (659) (1,975)
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Cash used in operating activities (7,015) (3,347) (10,019) (8,160)
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INVESTING ACTIVITIES Patents and trademark costs - (4) - (6)
Purchase of property, plant and equipment (45) (125) (455) (255)
Purchase of license technology (1,070) (1,500) (1,070) (1,500)
Proceeds from arrangement, net of transaction cost - 12,898 -
12,898 Purchase of short term investments - (6,965) - (6,965)
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Cash provided by (used in) investing activities (1,115) 4,304
(1,525) 4,172
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FINANCING ACTIVITIES Proceeds on issuance of common shares,
warrants and options 6,118 - 6,118 180 Issuance of convertible
debentures 5,633 - 5,633 - Increase in deferred charges (116) -
(625) - Proceeds from bulge facility 500 - 500 - Payment of bulge
facility (500) - (500) - Cash released from escrow - - - 448
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Cash provided by financing activities 11,635 - 11,126 628
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Effect of exchange rates on cash and cash equivalents - 8 - -
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Net increase (decrease) in cash and cash equivalents during the
period 3,505 965 (418) (3,360) Cash and cash equivalents, beginning
of period 307 3,800 4,230 8,125
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Cash and cash equivalents, end of period 3,812 4,765 3,812 4,765
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About Hemosol
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Hemosol is an integrated biopharmaceutical developer and
manufacturer of biologics, particularly blood-related protein based
therapeutics. The Company is deploying a novel technology, Plasma
Protein Chromatography (PPC), which has the potential to change the
business dynamics of the therapeutic plasma proteins sector.
Hemosol also continues to develop its rich and diverse therapeutic
pipeline that includes three technology platforms - Oxygen
Therapeutics for the treatment of high volume blood loss; Drug
Delivery for the treatment of Hepatitis C and liver cancer; and
Cell Therapeutics for the treatment of chronic myelogenous leukemia
and chemotherapy-induced anemia. For more information visit
Hemosol's website at http://www.hemosol.com/. The Common Shares are
listed on the NASDAQ Stock Market under the trading symbol "HMSL"
and on the TSX under the trading symbol "HML". Certain statements
concerning Hemosol's future prospects are "forward- looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and other applicable
securities legislation. There can be no assurances that future
results will be achieved, and actual results could differ
materially from forecasts and estimates. Important factors that
could cause actual results to differ materially from forecasts and
estimates include, but are not limited to: Hemosol's ability to
successfully implement the Cascade technology and commercialize
products derived from that technology; Hemosol's ability to obtain
additional financing which is critical to the implementation of the
Cascade technology and to Hemosol's continued viability as a going
concern; Hemosol's ability to obtain regulatory approvals for its
products; Hemosol's ability to successfully complete clinical
trials for its products; Hemosol's ability to enter into
satisfactory arrangements for the supply of materials used in its
manufacturing operations and the sale of resulting products to
customers; technical, manufacturing or distribution issues; the
competitive environment for Hemosol's products and services; the
degree of market penetration of Hemosol's products; Hemosol's
ability to attract and retain clients for its bio-manufacturing
services; the risk that Hemosol may not become profitable; and
other factors set forth in filings with Canadian securities
regulatory authorities and the U.S. Securities and Exchange
Commission. These risks and uncertainties, as well as others, are
discussed in greater detail in the filings of Hemosol with Canadian
securities regulatory authorities and the U.S. Securities and
Exchange Commission. Hemosol makes no commitment to revise or
update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.
DATASOURCE: Hemosol Corp. CONTACT: Jason Hogan, Investor &
Media Relations, (416) 361-1331, 800-789-3419, fax: (416) 815-0080,
, http://www.hemosol.com/; Archived images on this organization are
searchable through CNW Photo Archive website at
http://photos.newswire.ca/. Images are free to accredited members
of the media. To request a free copy of this organization's annual
report, please go to http://www.newswire.ca/ and click on
reports@cnw.
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