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SemBioSys announces 2007 third quarter results
Date:11/1/2007

- Canadian Biotechnology Company demonstrates the technical feasibility of

a second high-value biopharmaceutical in safflower -

TSX symbol: SBS

CALGARY, Nov. 1 /PRNewswire-FirstCall/ - SemBioSys Genetics Inc. (TSX:SBS), a biotechnology company developing a portfolio of therapeutic proteins for metabolic and cardiovascular diseases, today announced its 2007 third quarter operational and financial results.

Highlights

- Successfully developed commercially viable levels of both

apolipoprotein AI (Apo AI) Milano variant and, subsequent to the end

of the quarter, native Apo AI accumulation in safflower seed.

- Continued the preclinical work necessary to submit an Investigational

New Drug application (IND) to the United States Food and Drug

Administration (FDA) in early 2008 to initiate a Phase II trial for

safflower-produced insulin.

- Established Botaneco, a separate business unit dedicated to the

commercialization of SemBioSys' oilbody products for the cosmetics,

personal care and prescription topical dermatology markets.

- Commissioned the Company's commercial scale manufacturing operation

for the Botaneco business and subsequent to the end of the quarter

launched Hydresia(TM), Botaneco's first branded line of oilbody-based

ingredients.

- Obtained $2.4 million in non-dilutive development funding from AVAC

Ltd. to develop the Botaneco business, subsequent to quarter end.

- Entered into an agreement to complete a private placement financing

for total gross proceeds of approximately $9,568,000, of which

$6,500,000 was completed on a bought deal basis, subsequent to

quarter end.

- Appointed Mr. Ian S. Brown to the Board of Directors, subsequent to

quarter end. Mr. Brown is an independent businessman with ove(2,659,025) (10,134,732) (9,771,546)

Deficit - Beginning

of period (47,194,268) (33,725,921) (40,740,486) (26,613,400)

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

Deficit - End

of period (50,875,218) (36,384,946) (50,875,218) (36,384,946)

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

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

Loss per share -

basic and diluted (0.17) (0.16) (0.48) (0.59)

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

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

Weighted average

shares outstanding 22,167,171 16,775,190 21,069,493 16,674,148

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

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

SemBioSys Genetics Inc.

Consolidated Statements of Cash Flows

(Unaudited)

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

(expressed in Canadian dollars)

Three month period Nine month period

ended September 30, ended September 30,

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

2007 2006 2007 2006

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

$ $ $ $

Cash provided by

(used in)

Operating activities

Net and comprehensive

loss for the period (3,680,950) (2,659,025) (10,134,732) (9,771,546)

Add items not

affecting cash:

Amortization 328,684 209,978 798,629 610,500

Acquisition of

intellectual property

for warrants - - - 1,516,906

Loss on sale of

property and equipment - - 1,483 16,802

Stock-based

compensation 185,335 189,925 551,039 536,368

Unrealized foreign

exchange loss (gain) (70,220) 6,378 (219,764) (44,452)

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

(3,237,151) (2,252,744) (9,003,345) (7,135,422)

Change in non-cash

working capital and

other balances related

to operations (54,034) (348,804) 741,263 (590,830)

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

Cash used in operating

activities (3,291,185) (2,601,548) (8,262,082) (7,726,252)

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

Financing activities

Issuance of

capital stock - - 15,904,488 -

Share issue costs - - (1,525,478) -

Exercise of stock options 48,250 - 62,750 167,914

Proceeds from

long-term debt - 777,811 - 777,811

Repayment of

long-term debt (171,305) (147,183) (547,117) (437,992)

Repayment of repayable

advances - - (85,640) -

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

Cash provided by

(used in) financing

activities (123,055) 630,628 13,809,003 507,733

Investing activities

Proceeds on sale of

property and equipment - 7,000 6,000 7,000

Acquisition of property

and equipment (2,133,730) (295,940) (4,551,566) (686,902)

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

Cash used in investing

activities (2,133,730) (288,940) (4,545,566) (679,902)

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

Increase (decrease)

in cash and cash

equivalents (5,547,970) (2,259,860) 1,001,355 (7,898,421)

Cash and cash

equivalents

- Beginning

of period 22,877,784 22,874,534 16,328,459 28,513,095

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

Cash and cash

equivalents

- End of period 17,329,814 20,614,674 17,329,814 20,614,674

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

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

Supplemental Information

Cash interest received 166,065 77,421 1,078,458 324,804

Cash interest paid 39,842 37,304 139,048 123,950

Non-cash transactions

Capital items included

in accounts payable 424,956 221,773 424,956 221,773

r

25 years of financial and capital markets experience who presently

sits on the Boards of several public and private companies.

"We continue to demonstrate momentum across both our pharmaceutical and non-pharmaceutical pipeline products, highlighted by our two successful announcements on the commercial levels of native Apo AI and Apo AIMilano accumulation in safflower. Additionally, we continue to work on the preclinical development of safflower-produced insulin in preparation for our IND submission and our planned Phase II trial which we expect to initiate in 2008," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "We have now clearly established the technical viability of our oilbody-oleosin technology to produce commercial biopharmaceuticals that target large markets in diabetes and cardiovascular disease management. On the non-pharmaceutical side, we have commissioned the commercial manufacturing for our oilbody product and expect to generate modest revenue in the fourth quarter of 2007."

Financials

Please note that prior to the third quarter of 2007, SemBioSys operated under one segment. During the 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 cosmetics, personal care, prescription topical/dermatology, and food products through the Botaneco business unit.

Total revenue for the three-month and nine-month periods ended September 30, 2007 were $38,629 and $1,045,467 respectively, compared with $123,039 and $390,570 for the corresponding periods in 2006. The difference in revenue relates primarily to the recognition of an upfront license fee payment received from Martek in the first quarter of 2007 as well as contract research revenue recognized in the first half of 2007 and three-month and nine-month periods ended September 30, 2006.

Total expenditures for the three-month and nine-month periods ended September 30, 2007 were $4,022,642 and $12,017,416 respectively, compared with $2,949,791 and $10,706,226 for the corresponding periods last year.

Research and development expenses for the three-month and nine-month periods ended September 30, 2007 were $1,892,224 and $5,560,941 respectively, compared with $1,360,045 and $3,843,207 for the corresponding periods last year. The difference is primarily from increased personnel and outsourcing related to preclinical costs and the related support costs in all areas of research and development with an expanded focus on insulin and Apo AI. As SemBioSys prepares to enter clinical trials, all lab related activities continue to substantially increase resulting in a higher overall cost. The Company has also expanded the plant growth team and infrastructure both indoors and in the field as its programs further progress.

General and administrative expenses for the three-month and nine-month periods ended September 30, 2007 were $1,041,949 and $3,152,426 respectively, compared with $903,753 and $2,695,669 for the corresponding periods last year. The difference is mainly due to newly added staff to support expanded operations and increased investor relations activities as the Company broadens its exposure to U.S. and European markets.

Intellectual property costs for the three-month and nine-month periods ended September 30, 2007 were $237,430 and $1,073,093 respectively, compared with $217,269 and $2,561,564 for the corresponding periods last year. This difference in the nine-month period 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 three-month and nine-month periods ended September 30, 2007 were $396,481 and $1,115,033 respectively, compared with $134,182 and $586,279 for the corresponding periods last year. The difference is primarily related to the commercialization activities of Botaneco.

Net loss for the three-month period ended September 30, 2007 was $3,680,950 or ($0.17) per share, compared to a net loss of $2,659,025 or ($0.16) per share for the same period last year. Net loss for the nine-month period ended September 30, 2007 was $10,134,732 or ($0.48) per share compared with $9,771,546 or ($0.59) for the same nine-month period last year.

As at September 30, 2007 the Company had cash and cash equivalents totaling $17,329,814 compared to $22,877,784 at June 30, 2007.

Subsequent to the end of the quarter the Company entered into an agreement to issue 2,500,000 units of the Company at a price of $2.60 per unit, on a bought deal private placement basis to a syndicate of underwriters. The Company also granted the underwriters an over-allotment option to purchase up to an additional 1,180,000 units on the same terms as the initial amount which, if exercised in full, would raise the total gross proceeds to the Company to $9,658,000. The offering is expected to close on or about November 14, 2007 and is subject to the receipt of all necessary regulatory and stock exchange approvals, as well as completion of standard documentation and other customary terms and conditions. Each unit will consist of one common share of the Company and one-half of one common share purchase warrant.

Outlook

The Company has completed a number of the major scientific milestones necessary to proceed into human clinical trials of safflower-produced insulin in the first half of 2008. Additional upcoming insulin milestone events include:

- Complete the preclinical testing of safflower-produced insulin

- Complete the technology transfer and scale-up of insulin processing

and formulation to the Company's contract manufacturer for Phase II

clinical material and production of clinical grade material for early

stage human trials

- Submit an IND to the FDA and prepare for Phase II clinical trial

- Continue business development activities toward an insulin

partnership

With the Company's recent achievement of successfully developing commercial levels of Apo AI, the upcoming Apo AI milestone events include:

- Functional equivalence of Arabidopsis-produced Apo AI and serum-

derived Apo AI in animal trials

- Functional equivalence of safflower-produced Apo AI and serum-derived

Apo AI in animal trials

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:

- Establish commercial distribution channels for its personal care

topical oilbody products through the Botaneco business unit

- Establish Botaneco as a separate legal entity

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

ImmunoSphere(TM)

About SemBioSys Genetics Inc. (http://www.sembiosys.com)

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 animal health 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 and market size, the acceptance of an IND by the FDA in respect of clinical studies and the successful and timely completion of clinical studies, the fact that Apo AI is currently a development stage drug, 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 http://www.sedar.com. 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.

Financials results included below:

SemBioSys Genetics Inc.

Consolidated Balance Sheets

(Unaudited)

As at September 30, 2007 and December 31, 2006

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

(expressed in Canadian dollars)

September 30, December 31,

2007 2006

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

$ $

Assets

Current assets

Cash and cash equivalents 17,329,814 16,328,459

Accounts receivable 407,139 526,002

Interest receivable 117,378 504,551

Prepaid expenses and deposits 345,811 392,094

Inventory 63,239 13,365

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

18,263,381 17,764,471

Property and equipment 8,964,965 5,157,163

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

27,228,346 22,921,634

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

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

Liabilities

Current liabilities

Accounts payable and accrued liabilities 1,476,720 1,356,018

Repayable advances - 85,640

Short-term portion of long-term debt 626,984 746,658

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

2,103,704 2,188,316

Deferred cost recoveries 285,408 84,203

Long-term debt 673,683 1,337,445

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

3,062,795 3,609,964

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

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

Shareholders' Equity

Capital stock 62,739,610 48,302,036

Warrants 6,274,716 6,274,716

Contributed surplus 6,026,443 5,475,404

Deficit (50,875,218) (40,740,486)

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

24,165,551 19,311,670

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

27,228,346 22,921,634

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

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

SemBioSys Genetics Inc.

Consolidated Statements of Loss, Comprehensive Loss and Deficit

(Unaudited)

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

(expressed in Canadian dollars)

Three month period Nine month period

ended September 30, ended September 30,

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

2007 2006 2007 2006

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

$ $ $ $

Revenue

Licensing fees - - 874,024 -

Contract research - 123,039 122,304 390,570

Product sales 38,629 - 49,139 -

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

38,629 123,039 1,045,467 390,570

Expenses

Research and

development 1,892,224 1,360,045 5,560,941 3,843,207

General and

administration 1,041,949 903,753 3,152,426 2,695,669

Intellectual

property costs 237,430 217,269 1,073,093 2,561,564

Business development 396,481 134,182 1,115,033 586,279

Stock-based

compensation 185,335 189,925 551,039 536,368

Amortization 328,684 209,978 798,629 610,500

Cost recoveries (59,461) (65,361) (233,745) (127,361)

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

4,022,642 2,949,791 12,017,416 10,706,226

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

Loss before the

undernoted (3,984,013) (2,826,752) (10,971,949) (10,315,656)

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

Interest income 216,090 217,495 691,285 668,100

Interest expense (43,406) (41,158) (153,949) (135,511)

Loss on sale of

property and equipment - - (1,483) (16,802)

Foreign exchange

gain (loss) 130,379 (8,610) 301,364 28,323

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

303,063 167,727 837,217 544,110

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

Net loss and

comprehensive loss

for the period (3,680,950)
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SOURCE SemBioSys Genetics Inc.
Copyright©2007 PR Newswire.
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