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SemBioSys announces 2007 financial and operational results

- Canadian Biotechnology Company advances pharmaceutical programs while

executing on non-pharmaceutical opportunities -

TSX symbol: SBS

CALGARY, March 17 /PRNewswire-FirstCall/ - SemBioSys Genetics Inc. (TSX:SBS), a biotechnology company developing a portfolio of therapeutic proteins for metabolic and cardiovascular diseases, today announced its operational and financial results for the twelve-month period ended December 31, 2007.

"We made progress on multiple product candidates during 2007 that was essential to setting the stage for significant value creating milestones in 2008. We believe that each of our candidates individually represent an exciting and material opportunity to the growth of our company. The basis for this growth is the flexibility of our proprietary oilbody-oleosin technology which allows us to target multiple markets that require high volume, cost-effective pharmaceutical and non-pharmaceutical products," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "Establishing Botaneco as a separate operating company with genuine value creating potential and achieving commercially viable levels of Apo AI accumulation were some of the key highlights of the year for us. Additionally, we have made significant progress on the insulin program including the necessary preclinical work to submit an IND in order to begin the Phase I/II clinical trial in the second half of 2008. While we have adjusted the expected start date of the insulin clinical trial, we believe the insulin program represents just one of the important upcoming milestones for SemBioSys in 2008. We also expect in vivo functional and efficacy results from Apo AI(Milano), which has the potential to attract partnership opportunities as well as further growth and business development opportunities from Botaneco. Our recent achievements have also begun to attract interest from new potential partners that believe the capab,560

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Loss before the undernoted (16,376,952) (14,559,302)

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Interest income 893,142 857,595

Interest expense (195,753) (182,440)

Loss on sale of property and equipment (1,483) (16,802)

Write down of property and equipment - (161,732)

Foreign exchange gain (loss) 262,369 (64,405)

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958,275 432,216

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Net loss and comprehensive loss for the year (15,418,677) (14,127,086)

Deficit - Beginning of year (40,740,486) (26,613,400)

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Deficit - End of year (56,159,163) (40,740,486)

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Loss per share - basic and diluted (0.71) (0.85)

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Weighted average shares outstanding 21,823,242 16,699,653

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SemBioSys Genetics Inc.

Consolidated Statements of Cash Flows

For the years ended December 31,


(expressed in Canadian dollars)

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

2007 2006

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

$ $

Cash provided by (used in)

Operating activities

Net and comprehensive loss for the period (15,418,677) (14,127,086)

Add items not affecting cash:

Amortization 1,390,065 832,845

Acquisition of intellectual

property for warrants - 1,516,906

Write down of property and equipment - 161,732

Loss on sale of property and equipment 1,483 16,802

Stock-based compensation 723,558 713,902

Unrealized foreign exchange (gain) loss (220,554) 41,900

Non-cash interest expense 4,994 -

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(13,519,131) (10,842,999)

Change in non-cash working capital and

other balances related to operations 578,174 (251,140)

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(12,940,957) (11,094,139)

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Financing activities

Issuance of capital stock 24,331,688 -

Share issue costs (2,256,728) (20,284)

Issuance of warrants 1,140,800 -

Warrant issue costs (106,826) -

Exercise of stock options 81,242 167,914

Proceeds from long-term debt 250,000 777,811

Repayment of long-term debt (704,990) (612,938)

Repayment of repayable advances (85,640) -

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22,649,546 312,503

Investing activities

Proceeds on sale of property and equipment 6,000 7,000

Acquisition of property and equipment (5,599,035) (1,410,000)

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(5,593,035) (1,403,000)

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Increase (decrease) in

cash and cash equivalents 4,115,554 (12,184,636)

Cash and cash equivalents - Beginning of year 16,328,459 28,513,095

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Cash and cash equivalents - End of year 20,444,013 16,328,459

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Supplemental Information

Cash interest received 1,367,372 444,063

Cash interest paid 175,343 167,026

Non-cash transactions

Capital items included in accounts payable 276,373 362,608

Share issue costs included in accounts payable 57,884 -

Proceeds from issuance of common

shares included in accounts receivable - 4,186

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ilities of our technology could address production and manufacturing challenges in their market."

Operational Highlights

Pharmaceutical Products

- Successfully developed commercially viable levels of both

apolipoprotein AI (Apo AI) and apolipoprotein AI Milano

(Apo AI(Milano)) in safflower seed.

- Demonstrated the functional equivalence of the Company's proprietary

safflower-produced insulin to U.S. pharma grade human insulin in

animal models.

- Demonstrated with in vitro and in vivo assay studies that the

Company's safflower-produced insulin is chemically, structurally and

physiologically indistinguishable from U.S. pharma grade human


- Confirmed the Company is eligible to pursue a Section 505(b)(2)

regulatory path for safflower-produced insulin after meeting with the

U.S. Food and Drug Administration (FDA).

- Continued the necessary preclinical work, including preparations for

an animal toxicology study, to submit an Investigational New Drug

application (IND) to the FDA in order to initiate a Phase I/II trial

for safflower-produced insulin in the second half of 2008.

Non-pharmaceutical Products

- Established Botaneco, a subsidiary dedicated to the commercialization

of SemBioSys' non-transgenic oilbody products for the cosmetics,

personal care and prescription topical dermatology markets.

- Commissioned Botaneco's 10,000 square foot, state-of-the-art,

commercial scale manufacturing facility located in Calgary.

- Launched Hydresia(TM), Botaneco's first branded line of natural

oilbody-based ingredients, and subsequently signed the Company's first

national brand customer, Burt's Bees, the largest natural personal

care company in North America. Subsequent to the end of the year,

Burt's Bees launched three products in the U.S. market containing

Hydresia(TM), two body washes and a hand soap.

- Produced sufficient safflower-produced ImmunoSphere(TM) Feed Additive

in Chile and the United States to enable the next stage of the

Company's development and commercialization plans.


Please note that prior to the third quarter of 2007, SemBioSys operated under one segment. During the third quarter, Botaneco completed the construction of its manufacturing facility and SemBioSys began operating in two reportable segments: (i) the Biopharmaceutical, Animal Health, and Nutritional Oils segment focused on the Company's lead pharmaceutical candidates, recombinant human insulin and Apo AI, in addition to its animal health product, ImmunoSphere(TM) and nutritional oils, DHA and GLA and (ii) the Specialty Ingredients segment which will manufacture and market branded lines of naturally derived base emulsions and delivery systems used in the development of cosmetic, personal care and prescription topical/dermatology products through the Botaneco subsidiaries.

Total revenue for the twelve-month period ended December 31, 2007 was $1,222,823 compared with $523,258 for the corresponding period in 2006. The difference is due mainly to a license fee payment earned from our collaboration agreement with Martek BioSciences Corporation in the first half of 2007, and from product sales from Hydresia(TM).

Total expenditures for the year ended December 31, 2007 were $17,599,775 compared with $15,082,560 for the year ended December 31, 2006.

Research and development expenses for the twelve-month period ended December 31, 2007 were $8,044,121, compared with $5,480,972 for the same period last year. The increase in research and development costs is primarily from increased laboratory supplies, personnel and outsourcing costs related to preclinical activity and the related support costs in all areas of research and development with an expanded focus on insulin and Apo AI, as well as increased field planting costs for ImmunoSphere(TM).

General and administrative expenses for the twelve-month period ended December 31, 2007 were $4,528,184 compared with $4,013,653 for the corresponding period last year. The difference is due mainly to the increased general and administration support required for the overall increased company activity including newly added staff and the additional related support costs as well as increased recruiting activities for senior management in Botaneco.

Intellectual property costs for the twelve-month period ended December 31, 2007 were $1,569,095 compared with $3,467,045 for the twelve-month period ended December 31, 2006. This difference is primarily attributable to a $1,516,906 non-cash license fee incurred in the second quarter of 2006 for the acquisition of technology from Syngenta Crop Protection AG in exchange for warrants.

Business development costs for the twelve-month period ended December 31, 2007 were $1,213,634, compared with $745,964 for the corresponding period last year. The difference is primarily related to the commercialization activities of Botaneco including increased staffing levels and increased contractor and consulting time.

Net loss for the twelve-month period ended December 31, 2007 was $15,418,677 or $0.71 per share, compared to a net loss of $14,127,086 or $0.85 per share for the twelve-month period ended December 31, 2006.

As at December 31, 2007 the Company had cash and cash equivalents totaling $20,444,013 and a net positive working capital balance of $19,518,408 compared to $16,328,459 and $15,576,155, respectively, at December 31, 2006. Total long-term debt at December 31, 2007 was $1,389,047 compared with $2,084,103 at December 31, 2006.

The increase in cash and working capital resulted primarily from the completion of a $14,379,010 (net of issue costs) public offering in the first quarter of 2007 and an $8,672,040 (net of issue costs) private placement completed in November of 2007.

As at December 31, 2007 the Company had 25,886,676 common shares outstanding, 4,322,000 warrants, and 1,335,224 options.


SemBioSys is currently conducting all the necessary preclinical work for safflower-produced insulin to enable it to file an IND application with the FDA to proceed into human clinical trials in the second half of 2008. The upcoming insulin milestone events include:
- Completion of the toxicology studies of safflower-produced insulin

- Completion of the production of clinical grade insulin supply for use

in Phase I/II human clinical trials

- Submission of an IND to the FDA in the second half of 2008

- Initiation of a 30 patient Phase I/II clinical trial of safflower-

produced insulin in the second half of 2008

- Continuation of business development activities toward an insulin


During 2007, SemBioSys successfully achieved commercial levels of both Apo AI and Apo AI(Milano) accumulation in safflower. The Company is currently conducting laboratory testing in an animal model to establish equivalent functionality in animals of safflower-produced Apo AI(Milano) to the Apo AI(Milano) that has already been successfully used in human clinical trials. The upcoming milestone events include:
- Completion of in vivo efficacy studies of cholesterol mobilization

with safflower-produced Apo AI and Apo AI(Milano)

- Completion of in vivo efficacy studies of plaque regression with

safflower-produced Apo AI(Milano)

- Initiation of formal partnering process for Apo AI and Apo AI(Milano)

upon receiving the initial in vivo efficacy results

- Initiation of the preparatory work in order to submit an IND to the

FDA for a Phase I clinical trial of Apo AI or Apo AI(Milano) in the

first half of 2009

In addition to its pharmaceutical milestones, the Company is also advancing the development of its non-pharmaceutical products. The upcoming milestone events expected from these programs include:
- Expansion of the commercial distribution of the Company's personal

care topical oilbody products, specifically Hydresia(TM), through


- Pursuit of commercial opportunities for Hydresia(TM) in Europe

- Collection of two milestone payments from Arcadia Biosciences, Inc.,

upon their successful commercial scale-up of GLA-rich safflower oil

- Initiation of pond trials for the Company's shrimp feed additive,


About SemBioSys Genetics Inc. (

Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company developing protein-based pharmaceuticals for metabolic and cardiovascular diseases. The Company's lead pharmaceutical candidates, produced in the plant host safflower, are recombinant human insulin to serve the rapidly expanding global diabetes market and Apo AI, a next generation cardiovascular drug. In addition to its pharmaceutical products, SemBioSys is developing a series of non-pharmaceutical products addressing human topical, nutritional oils and agricultural biotechnology markets.

This press release contains certain forward-looking statements, including, without limitation, statements containing the words "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect" and other similar expressions which constitute "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time-to-time in the Company's ongoing filings with the Canadian securities regulatory authorities which filings can be found at Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws.

Financial results included below:

SemBioSys Genetics Inc.

Consolidated Balance Sheets

As at December 31,


(expressed in Canadian dollars)

2007 2006

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

$ $


Current assets

Cash and cash equivalents 20,444,013 16,328,459

Accounts receivable 583,591 526,002

Interest receivable 30,321 504,551

Prepaid expenses and deposits 538,718 392,094

Inventory 426,641 13,365

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22,023,284 17,764,471

Property and equipment 9,272,415 5,157,163

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31,295,699 22,921,634

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Current liabilities

Accounts payable and accrued liabilities 1,875,397 1,356,018

Repayable advances - 85,640

Current portion of long-term debt 629,479 746,658

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

2,504,876 2,188,316

Deferred cost recoveries 286,596 84,203

Long-term debt 759,568 1,337,445

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3,551,040 3,609,964

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Shareholders' Equity

Capital stock 70,396,170 48,302,036

Warrants 6,180,690 6,274,716

Contributed surplus 7,326,962 5,475,404

Deficit (56,159,163) (40,740,486)

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27,744,659 19,311,670

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31,295,699 22,921,634

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SemBioSys Genetics Inc.

Consolidated Statements of Loss, Comprehensive Loss and Deficit

For the years ended December 31,


(expressed in Canadian dollars)

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

2007 2006

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

$ $


Licensing fees 874,024 -

Contract research 122,304 523,258

Product sales 226,495 -

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

1,222,823 523,258


Research and development 8,044,121 5,480,972

General and administration 4,528,184 4,013,653

Intellectual property 1,569,095 3,467,045

Business development 1,213,634 745,964

Sales and marketing 201,094 -

Cost of products sold 198,019 -

Stock-based compensation 723,558 713,902

Amortization 1,390,065 832,845

Cost recoveries (267,995) (171,821)

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17,599,775 15,082

SOURCE SemBioSys Genetics Inc.
Copyright©2008 PR Newswire.
All rights reserved

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