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ARIUS announces second quarter fiscal 2008 financial results
Date:7/11/2008

TORONTO, July 11 /PRNewswire-FirstCall/ - ARIUS Research Inc., (TSX: ARI), a biotechnology company discovering and developing the next wave of antibody therapeutics, today announced its financial and operational results for the second fiscal quarter of 2008, ended May 31st, 2008.

"Throughout the second quarter, we maintained our focus on moving ARIUS' anti-cancer antibodies towards human clinical trial. Most notably, our lead drug candidates received significant attention from the scientific community this quarter as five abstracts were presented at the AACR Annual Meeting in April, disclosing new findings about our CD44, Trop-2, CD59, and CD9 antibody programs," said Dr. David Young, President and CEO of ARIUS. "Additionally, abstracts on our CD44 program were selected for publication at the ASCO Annual Meeting in May. The inclusion of ARIUS' findings at these important conferences demonstrates the high quality of our research and reinforces the value of our lead drug candidates."

Program Updates:

CD44 Cancer Stem Cell Program

- Presented two CD44-focused posters at AACR the American Association

for Cancer Research (AACR) Annual Meeting held from April 12-16, 2008

in San Diego, California.

- Published two CD44-focused abstracts at the American Association for

Clinical Oncology (ASCO) Annual Meeting held from May 30-June 3, 2008

in Chicago, Illinois.

- Held meeting with FDA to discuss plans for the upcoming IND

submission in the first quarter of 2008.

- ARIUS plans to have clinical trials' materials prepared in the fourth

quarter of 2008 and then a Phase I IND application is expected to be

filed and human clinical trials commenced.

Trop-2 Signal Transduction Program

- Completed two toxicology studies with no dose-limiting toxicity.

- Presented a Trop-2-focused poster at AACR Annual Meeting.

- Engaged ----------------------------------------

Deficit, end of period (38,934,651) (26,819,421) (38,934,651)

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Loss per share - basic and

diluted (0.08) (0.07)

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Weighted average common shares

outstanding 47,062,644 44,750,964

-------------------------------------------------------------------------

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ARIUS RESEARCH INC.

(A DEVELOPMENT STAGE COMPANY)

INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

-----------------------------------------------------------

Six-month Six-month

period ended period ended

May 31, May 31,

2008 2007

$ $

-----------------------------------------------------------

Cash provided by (used in):

Operating activities:

Loss for the period (6,401,018) (5,342,827)

Items not involving cash:

Amortization of:

Facilities and equipment 187,307 166,479

Deferred costs - -

Leasehold inducements (20,743) (20,743)

Loss on disposal of equipment - -

Write-off of leasehold

improvements - -

Write-off of receivable 42,109 -

Leasehold inducement - -

Non-cash stock-based

compensation 866,895 434,620

Accretion of convertible

debentures - -

Loss on extinguishment of

debt - -

Services received for common

shares - -

Write-off of investment - -

Interest expense paid in

common shares - -

Change in non-cash operating

working capital items (674,854) 1,221,090

---------------------------------------------------------

(6,000,304) (3,541,381)

Financing activities:

Issue of shares, warrants and

units, net of issuance costs 305,486 -

Issuance of convertible bridge

loan, net - -

Repayment of convertible bridge

loan, including costs - -

Exercise of compensation

warrants 1,697,446 -

Exercise of stock options 153,917 -

Draw of bank line of credit - -

Repayment of bank line of

credit - -

Bridge loan - -

Repayment of bridge loan - -

Repayment of capital lease

and equipment financing

obligations (12,630) (17,433)

---------------------------------------------------------

2,144,219 (17,433)

Investing activities:

Purchase of short-term

investments (1,299,844) (10,240,605)

Maturity of short-term

investments 8,125,034 17,661,017

Leasehold inducements - -

Long-term investment - -

Acquisition of facilities

and equipment (61,346) (517,554)

Disposal of equipment - -

---------------------------------------------------------

6,763,844 6,902,858

Increase in cash & cash

equivalents 2,907,759 3,344,044

Cash & cash equivalents,

beginning of period 5,635,365 4,077,065

-----------------------------------------------------------

Cash & cash equivalents,

end of period 8,543,124 7,421,109

-----------------------------------------------------------

-----------------------------------------------------------

-------------------------------------------------------------------------

Cumulative

Three-month Three-month since

period ended period ended inception on

May 31, May 31, August 11,

2008 2007 1999

$ $ $

-------------------------------------------------------------------------

Cash provided by (used in):

Operating activities:

Loss for the period (3,816,937) (3,036,132) (38,934,651)

Items not involving cash:

Amortization of:

Facilities and equipment 94,993 85,064 1,466,178

Deferred costs - - 55,055

Leasehold inducements (10,372) (10,371) (76,896)

Loss on disposal of equipment - - 23,532

Write-off of leasehold

improvements - - 86,349

Write-off of receivable 42,109 - 42,109

Leasehold inducement - - 89,148

Non-cash stock-based

compensation 696,818 224,036 2,497,496

Accretion of convertible

debentures - - 429,905

Loss on extinguishment of

debt - - 782,143

Services received for common

shares - - 400,024

Write-off of investment - - 20,000

Interest expense paid in

common shares - - 140,032

Change in non-cash operating

working capital items 109,584 549,700 4,388,693

-----------------------------------------------------------------------

(2,883,805) (2,187,703) (28,590,883)

Financing activities:

Issue of shares, warrants and

units, net of issuance costs 305,486 - 38,587,264

Issuance of convertible bridge

loan, net - - 2,196,619

Repayment of convertible bridge

loan, including costs - - (2,408,886)

Exercise of compensation

warrants - - 1,706,027

Exercise of stock options 118,825 153,917

Draw of bank line of credit - - 655,000

Repayment of bank line of

credit - - (655,000)

Bridge loan - - 300,000

Repayment of bridge loan - - (300,000)

Repayment of capital lease

and equipment financing

obligations (6,370) (5,941) (303,061)

-----------------------------------------------------------------------

417,941 (5,941) 39,931,880

Investing activities:

Purchase of short-term

investments - (2,577,726) (44,450,921)

Maturity of short-term

investments 1,299,844 7,662,879 44,450,921

Leasehold inducements - - 243,780

Long-term investment - - (20,000)

Acquisition of facilities

and equipment (51,129) (295,296) (3,030,639)

Disposal of equipment - - 8,986

-----------------------------------------------------------------------

-----------------------------------------------------------------------

1,248,715 4,789,857 (2,797,873)

Increase in cash & cash

equivalents (1,217,149) 2,596,213 8,543,124

Cash & cash equivalents,

beginning of period 9,760,273 4,824,896 -

-------------------------------------------------------------------------

Cash & cash equivalents,

end of period 8,543,124 7,421,109 8,543,124

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Forward-Looking Statements

Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Forward-looking statements in this release include, but are not limited to, ARIUS successfully advancing its new product programs as well as licensing opportunities. These statements are only predictions and actual events or results may differ materially. Factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements include, but are not limited to: early stage of development; technology and product development; dependence on and management of current and future corporate collaborations; future capital needs; uncertainty of additional funding; no assurance of market acceptance; dependence on proprietary technology and uncertainty of patent protection; intense competition; manufacturing and market uncertainties; and government regulation. These and other factors are described in detail in ARIUS' Annual Report, forthcoming news releases and other filings with Canadian securities regulatory authorities available at http://www.sedar.com. Forward-looking statements are based on our current expectations and ARIUS is not obligated to update such information to reflect later events or developments.

Laureate Pharma Inc. for cGMP manufacturing of humanized

antibody for Phase 1 clinical supply. A cell line producing the

humanized anti-Trop-2 antibody was successfully transferred to

Laureate.

- Preparing for a pre-IND meeting with the FDA.

- ARIUS intends to have clinical trials' materials prepared in the

fourth quarter of 2008 and then a Phase I IND application is expected

to be filed and human clinical trials commenced.

CD59 Complement Inhibitor Program

- Presented a CD59-focused poster at AACR Annual Meeting.

- Generated a cell line producing humanized CD59 antibody that

successfully retained binding characteristics and potent in vivo

activity.

- Preparing to perform preclinical toxicology studies planned for 2008

in preparation for a Pre-IND meeting with the FDA and filing a

Phase I IND application.

CD9 Cancer Stem Cell Program

- Presented a CD9-focused poster at AACR Annual Meeting.

- Presented positive findings demonstrating the ability of the lead

anti-CD9 antibody to kill cancer stem cells in an in vivo model using

cells from human leukemia patients at the American Association of

Cancer Research Special Conference on Cancer Stem Cells in the first

quarter of 2008.

CD63 Antibody Program

- Licensed to Genentech, Inc. in March 2006, the CD63 program continues

to advance in preclinical studies in a variety of cancer indications

as part of a program to move the lead antibody towards the clinic.

Takeda Collaboration

- Discovered and delivered novel antibodies to Takeda. Under the terms

of the research collaboration agreement, ARIUS has successfully met

its obligations to date and has received all scheduled research

payments from Takeda.

Additional Product Updates

- Currently, ARIUS has antibody programs targeting the MCSP antigen and

37LRP, in addition to several other undisclosed programs.

- ARIUS now has 26 issued or allowed patents covering its antibody

programs and discovery platform and over 273 patents pending

worldwide.

Corporate Updates

- Dr. Young was awarded "Most Innovative" award by the Association of

Chinese Canadian Entrepreneurs for demonstration of exceptional

innovation in his field and contribution to the marketplace.

- Secured a sponsored research agreement with the University of Toronto

Health Network and cancer stem cell pioneer, Dr. John E. Dick. In

collaboration with Dr. Dick, ARIUS is assessing the impact of certain

antibodies on cancer stem cells.

- Continued to evaluate its strategic options with global

pharmaceutical and biotechnology companies.

Financial Results:

All amounts are in Canadian dollars unless otherwise indicated.

For the six-month period ended May 31, 2008, the Company recorded a net loss of $6,401,018 ($0.14 per share) compared to a net loss of $5,342,827 ($0.12 per share) for the six-month period ended May 31, 2007. For the three-month period ended May 31, 2008, the Company recorded a net loss of $3,816,937 ($0.08 per share) compared to a net loss of $3,036,132 ($0.07 per share) for the three-month period ended May 31, 2007. This increase in net loss for both periods is primarily the result of higher research and development, and general administrative expenses, partially offset by higher revenues and foreign exchange gains.

For the six-month period ended May 31, 2008, the Company's revenue increased to $1,471,447 compared to $129,846 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's revenue increased to $424,153 compared to $21,392 for the same period in fiscal 2007. The increase for both periods was primarily the result of the recognition of product and research contract revenue from the Takeda collaboration and the recognition of licensing fee revenue for an extension fee payment under the agreement with PDL Biopharma Inc.

For the six-month period ended May 31, 2008, the Company's interest income decreased to $176,512 compared to $381,407 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's interest income decreased to $69,720 compared to $181,484 for the same period in fiscal 2007. The decrease for both periods was primarily the result of lower average cash and investment balances.

For the six-month period ended May 31, 2008, the Company's research and development costs increased to $5,933,367 compared to $4,059,931 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's research and development costs increased to $3,337,461 compared to $2,102,603 for the same period in fiscal 2007. The increases were primarily the result of an increase in staffing levels related to an overall increase in activity as the Company is preparing three products for the clinic, accompanied by increased patent and licensing activity and an increase in stock option remuneration expense.

For the six-month period ended May 31, 2008, the Company's general and administrative expenses increased to $2,170,683 compared to $1,437,009 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's general and administrative expenses increased to $1,149,402 compared to $762,673 for the same period in fiscal 2007. The increases were primarily the result of an increase in staffing levels, consulting fees, legal expenses and stock option remuneration expense.

As at May 31, 2008, ARIUS' cash and cash equivalents, and net working capital position were $8,543,124 and $5,807,638, respectively, compared with November 30, 2007 cash and cash equivalents, short-term investments and net working capital of $5,635,365, $6,825,190 and $9,088,712, respectively. The Company currently believes that it has adequate financial resources to continue into the fourth quarter of fiscal 2008 based on planned research and development expenditures and operating costs.

About ARIUS

ARIUS is a biotechnology company discovering and developing the next wave of antibody therapeutics. Established in 1999, ARIUS has built a proprietary technology platform, FunctionFIRST(TM), that rapidly identifies and selects antibodies based on their functional ability to affect disease. This antibody generation engine has enabled ARIUS to assemble a portfolio of more than 500 antibody candidates. In addition to the antibodies it is developing in-house, ARIUS has ongoing partnerships with key biotechnology and drug development companies. ARIUS is listed on the TSX under the symbol "ARI". For further information, visit http://www.ariusmabs.com

Financial Information to Follow:

ARIUS RESEARCH INC.

(A DEVELOPMENT STAGE COMPANY)

INTERIM BALANCE SHEETS

(Unaudited)

-------------------------------------------------------------------------

May 31, November 30,

2008 2007

$ $

-------------------------------------------------------------------------

Assets

Current assets:

Cash and cash equivalents 8,543,124 5,635,365

Short-term investments - 6,825,190

Receivables 185,672 230,126

Refundable tax credits 600,000 400,000

Prepaid expenses 473,080 387,674

-----------------------------------------------------------------------

9,801,876 13,478,355

Facilities and equipment, net 1,763,960 1,889,921

-------------------------------------------------------------------------

11,565,836 15,368,276

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable and accrued liabilities 2,060,753 2,034,972

Accrued loss on embedded foreign exchange

derivative 129,930 296,064

Current portion of leasehold inducements 41,484 41,484

Current portion of capital lease obligation 15,304 25,710

Current portion of deferred revenue 1,746,767 1,991,413

-----------------------------------------------------------------------

3,994,238 4,389,643

Leasehold inducements 214,548 235,291

Capital lease obligation - 2,224

Deferred revenue 1,752,104 1,758,898

Shareholders' equity:

Share capital:

Common shares 31,084,346 28,644,454

Warrants 10,325,740 9,603,644

Compensation warrants - 912,377

Contributed surplus 3,129,511 2,355,378

Deficit (38,934,651) (32,533,633)

-----------------------------------------------------------------------

5,604,946 8,982,220

Nature of operations and going concern

uncertainty

Commitments

Subsequent events

-------------------------------------------------------------------------

11,565,836 15,368,276

-------------------------------------------------------------------------

-------------------------------------------------------------------------

ARIUS RESEARCH INC.

(A DEVELOPMENT STAGE COMPANY)

INTERIM STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT

(Unaudited)

-----------------------------------------------------------

Six-month Six-month

period ended period ended

May 31, May 31,

2008 2007

$ $

-----------------------------------------------------------

Revenue:

Research contract 1,249,340 -

Product 121,107 56,486

Licensing fees 101,000 -

Research grant payments - 73,360

---------------------------------------------------------

1,471,447 129,846

Expenses:

Research and development,

net of tax credits 5,933,367 4,059,931

General and administrative 2,170,683 1,437,009

Foreign exchange loss (gain) (202,635) 235,234

Interest expense 2,371 1,646

---------------------------------------------------------

7,903,786 5,733,820

---------------------------------------------------------

Loss before the undernoted (6,432,339) (5,603,974)

Interest income 176,512 381,407

Loss on extinguishment of debt - -

-----------------------------------------------------------

Loss before income taxes (6,255,827) (5,222,567)

Income taxes:

Current (145,191) (120,260)

-----------------------------------------------------------

Loss and comprehensive loss

for the period (6,401,018) (5,342,827)

Deficit, beginning of period (32,533,633) (21,476,594)

-----------------------------------------------------------

Deficit, end of period (38,934,651) (26,819,421)

-----------------------------------------------------------

-----------------------------------------------------------

Loss per share - basic and

diluted (0.14) (0.12)

-----------------------------------------------------------

-----------------------------------------------------------

Weighted average common shares

outstanding 46,239,912 44,750,964

-----------------------------------------------------------

-----------------------------------------------------------

-------------------------------------------------------------------------

Cumulative

Three-month Three-month since

period ended period ended inception on

May 31, May 31, August 11,

2008 2007 1999

$ $ $

-------------------------------------------------------------------------

Revenue:

Research contract 262,478 - 1,996,120

Product 60,675 21,392 280,049

Licensing fees 101,000 - 3,385,703

Research grant payments - - 273,663

-----------------------------------------------------------------------

424,153 21,392 5,935,535

Expenses:

Research and development,

net of tax credits 3,337,461 2,102,603 31,331,946

General and administrative 1,149,402 762,673 13,168,494

Foreign exchange loss (gain) (236,020) 319,481 508,201

Interest expense 551 771 906,768

-----------------------------------------------------------------------

4,251,394 3,185,528 45,915,409

-----------------------------------------------------------------------

Loss before the undernoted (3,827,241) (3,164,136) (39,979,874)

Interest income 69,720 181,484 2,221,804

Loss on extinguishment of debt - - (782,143)

-------------------------------------------------------------------------

Loss before income taxes (3,757,521) (2,982,652) (38,540,213)

Income taxes:

Current (59,416) (53,480) (394,438)

-------------------------------------------------------------------------

Loss and comprehensive loss

for the period (3,816,937) (3,036,132) (38,934,651)

Deficit, beginning of period (35,117,714) (23,783,289) -

---------------------------------
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SOURCE ARIUS Research Inc.
Copyright©2008 PR Newswire.
All rights reserved

Related biology technology :

1. ARIUS presents new findings for anti-cancer antibody programs at AACR
2. ARIUS announces first quarter fiscal 2008 financial results
3. ARIUS 2008 Annual and Special Meeting of Shareholders
4. ARIUS recognized for entrepreneurial excellence
5. ARIUS announces five abstracts selected for presentation at 2008 AACR Annual Meeting
6. ARIUS presents new findings showing therapeutic antibody inhibits human leukemic cancer stem cells
7. Laureate Announces Manufacturing Agreement with ARIUS for Trop-2 Targeting Antibody
8. ARIUS announces manufacturing Agreement with Laureate Pharma For Trop-2 targeting antibody
9. ARIUS announces fourth quarter and year-end fiscal 2007 financial results
10. Arius completes Pre-IND Meeting with FDA for Lead CD44 Cancer Stem Cell Program
11. ARIUS to Hold Fourth Quarter and Year End 2007 Conference Call
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