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SemBioSys announces third quarter 2009 financial and operational results
Date:11/13/2009

CALGARY, Nov. 13 /PRNewswire-FirstCall/ - SemBioSys Genetics Inc. (TSX:SBS), specializing in the manufacture of high-value proteins and oils in plant seeds, today announced its third quarter 2009 financial and operational results.

"We entered into an agreement with Cathedral Energy Services Income Trust, subsequent to the end of the quarter, which will provide us with gross proceeds of approximately $3.3 million in new non-dilutive capital. This capital infusion will extend the development runway for our Apo AI(Milano) and Biosimilar Insulin programs," said James Szarko, President and Chief Executive Officer of SemBioSys. "During the quarter we also announced key agreements with INDEAR and between Botaneco and Advitech. Our partnership with INDEAR for the commercialization and supply of safflower-made chymosin further validates our platform technology as a versatile, scalable, and cost-effective protein production system. Botaneco's pending merger with Advitech provides it with additional funding and strengthens its product portfolio while still securing a portion of the upside potential from the Botaneco opportunity for SemBioSys. The agreements with INDEAR and Botaneco/Advitech demonstrate our ability to accelerate the commercialization and capture future revenue streams from our non-pharmaceutical programs through strategic partnerships and corporate transactions."

    Highlights

    Corporate
    -  Botaneco entered into an agreement with Advitech Inc., whereby
       Advitech will acquire all of the issued and outstanding shares of
       Botaneco Specialty Ingredients Inc. (Botaneco). SemBioSys will hold
       an initial 9.48 percent shareholding in Advitech, in return for the
       19.35 percent share of Botaneco it held prior to the agreement. A
       subsequent $2.5 million financing for the combined entity is also
       anticipated to close in the fourth quarter.
    -  SemBioSys entered into an exclusive commercial license agreement with
       Instituto de Agrobiotecnologia Rosario S.A. (INDEAR) whereby, in
       exchange for an undisclosed upfront technology access fee, INDEAR was
       granted an exclusive royalty-bearing license to SemBioSys' technology
       to extract chymosin from modified safflower seeds and sell the protein
       for use in the manufacture of cheese in Argentina. Under the terms of
       the agreement, SemBioSys granted INDEAR a time-limited right of first
       refusal to expand the territory beyond Argentina.
    -  Reduced the Company's burn rate, net of recoveries, to a level of
       approximately $500,000 per month while still ensuring the appropriate
       maintenance and development capabilities for its core programs.

    Apo AI(Milano)
    -  Completed a pre-IND (Investigational New Drug) meeting during which
       the U.S. Food and Drug Administration (FDA) confirmed the development
       plan presented by SemBioSys to file an IND application and addressed
       the proposed design of clinical trials for Apo AI(Milano).
    -  Harvested more than 10 tonnes of safflower in Chile and initiated
       bench to pilot scale manufacturing scale-up.
    -  Harvested a second 10 tonnes of safflower in the U.S. providing the
       Company a surplus of Apo AI(Milano) safflower seed for the current
       scale-up process, subsequent to the end of the quarter.
    -  Received additional interest from potential partners and continue to
       advance partnering discussions.

    Insulin Program
    -  Continued the development and analysis of next generation seed lines
       designed to meet targeted economics, simplify the manufacturing
       process and ensure the commercial viability of plant-produced insulin
       program.
    -  Received further partnership interest as a result of the completion
       of the first clinical trial earlier in the year.

    Outlook

    The Company anticipates a number of milestone events in the coming months
     including:
    -  Closing of a plan of arrangement with Cathedral Energy Services
       Income Trust and Cathedral Energy Services Ltd, providing gross
       proceeds of approximately $3.3 million in new non-dilutive capital to
       SemBioSys.
    -  Scale-up of pilot plant operations for the extraction and purification
       of Apo AI(Milano) in gram quantities.
    -  Achievement of commercial economic targets for next generation insulin
       seed lines.

Financials

SemBioSys has historically operated in two reportable segments: (i) Biopharmaceuticals and Bioproducts focused on the Company's lead pharmaceutical candidates, recombinant human insulin and Apo AI(Milano) and (ii) Specialty Ingredients. Effective July 29, 2009, SemBioSys divested of the majority of its interest in Botaneco, and, therefore, no longer has control nor significant influence over these entities. As a result, the Specialty Ingredients segment is no longer being consolidated, but instead is being accounted for on a cost basis effective July 29, 2009 and its operating results are included in discontinued operations.

Net loss/income for the three-month period ended September 30, 2009 compared to the same period last year:

    -  $2,472,008 or $0.07 per share from continuing operations compared to
       $4,860,627 or $0.19 per share;
    -  $2,544,986 or $0.07 per share in net income from discontinued
       operations compared to $883,739 or $0.03 per share in net loss from
       discontinued operations; and
    -  $72,978 or $0.002 per share in total net income compared to $5,744,366
       or $0.22 per share in total net loss.

Net loss for the nine-month period ended September 30, 2009 compared to the same period last year:

    -  $7,545,095 or $0.24 per share from continuing operations compared to
       $14,340,189 or $0.55 per share;
    -  $96,492 or $0.003 per share in net loss from discontinued operations
       compared to $2,836,088 or $0.11 per share; and
    -  $7,641,587 or $0.24 per share in total net loss compared to
       $17,176,277 or $0.66 per share.

Revenue for the three-month period ended September 30, 2009 compared to the same period last year:

    -  $24,540 in revenue from continuing operations compared to $nil;
    -  $41,670 in revenue from discontinued operations compared to $228,201;
       and
    -  $66,210 in total revenue compared to $228,201.

Revenue for the nine-month period ended September 30, 2009 compared to the same period last year:

    -  $1,476,234 in revenue from continuing operations compared to $50,110;
    -  $378,970 in revenue from discontinued operations compared to $450,325;
       and
    -  $1,855,204 in total revenue compared to $500,435.

The increase in the nine-month period for continuing operations is due mainly to the recognition of licensing option fees in the first quarter of 2009 from an option agreement entered into with MannKind Corporation in the fourth quarter of 2008 and licensing fees recognized in the second quarter of 2009 related to the Company's GLA program.

    Expenditures (net of cost recoveries in each case) for the three-month
period ended September 30, 2009 compared to the same period last year:
    -  $2,461,085 in expenditures from continuing operations compared to
       $4,847,213;
    -  $376,645 in expenditures from discontinued operations compared to
       $955,122; and
    -  $2,837,730 in total expenses net of cost recoveries compared to
       $5,802,335.

Expenditures (net of cost recoveries in each case) for the nine-month period ended September 30, 2009 compared to the same period last year:

    -  $8,955,871 in expenditures from continuing operations compared to
       $14,510,694;
    -  $2,774,345 in expenditures from discontinued operations compared to
       $3,091,510; and
    -  $11,730,216 in total expenses compared to $17,602,204.

The overall decrease in expenditures is primarily due to the cost reductions implemented in the fourth quarter of 2008 and the third quarter of 2009, in addition to decreased preclinical costs as the majority of the preclinical work for the insulin clinical trial was completed in 2008. The reduction in cost recoveries for the nine-month period ended September 30, 2009 as compared to the corresponding prior year period resulted from the achievement of all outstanding milestones related to our agreement with AVAC Ltd. for the insulin program in 2008.

As of September 30, 2009 the Company had cash and cash equivalents from continuing operations of $1,737,150 and a net positive working capital balance of $1,069,357, compared to $1,926,966 ($3,819,796 including cash related to discontinued operations), and $646,156 ($3,730,413 including working capital from discontinued operations), respectively at December 31, 2008. Total long-term debt was $1,382,987 at September 30, 2009 compared to $752,644 ($5,127,829 including long-term debt from discontinued operations) at December 31, 2008.

As at November 12, 2009 the Company had 40,653,592 common shares outstanding, 12,655,341 warrants, 3,054,578 options, 711,920 broker warrants and 385,717 Deferred Stock Units.

About SemBioSys

Calgary, Alberta-based SemBioSys is focused on leveraging its unique proprietary platform to manufacture high-value proteins and oils. SemBioSys' seed-based protein production system can provide for its partners product enablement, exceptionally low cost and unprecedented scalability. SemBioSys is applying the platform with high selectivity to products with tremendous clinical promise and value potential. The Company's current pharmaceutical development programs include insulin (SBS-1000, regulated as a biosimilar in Europe) and Apo AI(Milano), a next-generation cardiovascular therapy. SemBioSys' proprietary safflower-derived Apo AI(Milano) is a des-1,2- variant of Apo AI(Milano) as previously described in the literature. SemBioSys is listed on the Toronto Stock Exchange under the ticker SBS. More information is available at www.sembiosys.com.

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 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, the submission of a CTA to the appropriate European authorities, the successful initiation and timely and successful completion of clinical studies, the fact that Apo AI(Milano) 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 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.

    SemBioSys Genetics Inc.
    CONSOLIDATED BALANCE SHEETS

    (Unaudited)
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                   September 30, December 31,
                                                           2009         2008
                                                              $            $
                                                    ------------ ------------

    ASSETS

    Current assets
    Cash and cash equivalents                         1,737,150    1,926,966
    Accounts receivable                                 286,504      723,259
    GST receivable                                       34,808      213,981
    Prepaid expenses, deposits and other                319,715      406,054
    Current assets related to
     discontinued operations                                  -    3,849,220
                                                    ------------ ------------
                                                      2,378,177    7,119,480

    Property and equipment                            4,049,991    5,154,044

    Long-term assets related to
     discontinued operations                                  -    2,855,580
                                                    ------------ ------------

                                                      6,428,168   15,129,104
                                                    ------------ ------------
                                                    ------------ ------------

    LIABILITIES

    Current liabilities
    Accounts payable and accrued liabilities          1,053,109    1,489,757
    Deferred revenue                                          -      612,295
    Short-term portion of long-term debt                255,711      522,052
    Current liabilities related to
     discontinued operations                                  -      764,963
                                                    ------------ ------------
                                                      1,308,820    3,389,067

    Deferred cost recoveries                                702       23,371
    Long-term debt                                    1,127,276      230,592
    Long-term liabilities related to
     discontinued operations                                  -    4,373,876
                                                    ------------ ------------
                                                      2,436,798    8,016,906
                                                    ------------ ------------
                                                    ------------ ------------

    SHAREHOLDERS' EQUITY

    Capital stock                                    73,726,414   70,428,431
    Warrants                                          4,561,399    2,550,880
    Contributed surplus                              12,441,448   11,802,064
    Equity component of convertible debenture,
     discontinued operations                                  -    1,427,127
    Deficit                                         (86,737,891) (79,096,304)
                                                    ------------ ------------
                                                      3,991,370    7,112,198
                                                    ------------ ------------

                                                      6,428,168   15,129,104
                                                    ------------ ------------
                                                    ------------ ------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF INCOME (LOSS), COMPREHENSIVE INCOME (LOSS)
     AND DEFICIT

    (Unaudited)
    (expressed in Canadian dollars, except shares)
    -------------------------------------------------------------------------
                          Three month period ended   Nine month period ended
                                    September 30,             September 30,
                                 2009         2008         2009         2008
                                    $            $            $            $
                          ------------ ------------ ------------ ------------

    REVENUE

    Licensing option fees           -            -    1,161,495       50,110
    Licensing fees                  -            -      252,048            -
    Contract research          24,540            -       62,691            -
                          ------------ ------------ ------------ ------------
                               24,540            -    1,476,234       50,110

    EXPENSES

    Research and
     development            1,012,262    2,547,676    3,995,994    8,329,137
    General and
     administration           638,071    1,110,216    2,258,801    3,386,379
    Intellectual property
     costs                    216,359      373,130      763,097    1,180,434
    Business development       95,516      175,945      374,708      491,097
    Stock-based compensation  147,045      289,919      503,744      625,947
    Amortization              364,332      375,327    1,104,832    1,093,864
    Cost recoveries           (12,500)     (25,000)     (45,305)    (596,164)
                          ------------ ------------ ------------ ------------
                            2,461,085    4,847,213    8,955,871   14,510,694
                          ------------ ------------ ------------ ------------

    Loss before the
     undernoted            (2,436,545)  (4,847,213)  (7,479,637) (14,460,584)
                          ------------ ------------ ------------ ------------

    Interest income               131       57,468        7,629      323,252
    Interest expense          (69,481)     (26,276)    (117,792)     (94,284)
    Foreign exchange
     gain (loss)               33,887      (44,606)      44,705     (108,573)
                          ------------ ------------ ------------ ------------

                              (35,463)     (13,414)     (65,458)     120,395
                          ------------ ------------ ------------ ------------

    Net loss from
     continuing
     operations            (2,472,008)  (4,860,627)  (7,545,095) (14,340,189)

    Discontinued
     operations             2,544,986     (883,739)     (96,492)  (2,836,088)
                          ------------ ------------ ------------ ------------

    Net income (loss)
     and comprehensive
     income (loss) for
     the period                72,978   (5,744,366)  (7,641,587) (17,176,277)

    Deficit - Beginning
     of period            (86,810,869) (67,591,074) (79,096,304) (56,159,163)
                          ------------ ------------ ------------ ------------

    Deficit - End of
     period               (86,737,891) (73,335,440) (86,737,891) (73,335,440)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Earnings (loss)
     per share
    Basic and diluted
     from continuing
     operations                 (0.07)       (0.19)       (0.24)       (0.55)
    Basic and diluted
     from discontinued
     operations                  0.07        (0.03)       (0.00)       (0.11)
    Basic and diluted            0.00        (0.22)       (0.24)       (0.66)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Weighted average
     shares outstanding    37,558,286   25,938,205   31,582,743   25,937,162
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------



    ACCUMULATED OTHER COMPREHENSIVE LOSS

    (Unaudited)
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                           Nine month period
                                                                       ended
                                                                September 30,
                                                                        2009
                                                                           $
                                                                -------------
    Accumulated other comprehensive income -
     beginning of period                                                   -

    Change in accounting policy - foreign currency
     translation adjustment                                           26,534
    Foreign currency translation adjustment                          (32,365)
    Foreign currency translation adjustments
     transferred to net income from discontinued
     operations during the year                                        5,831

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

    Accumulated other comprehensive income - end of period                 -
                                                                -------------
                                                                -------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (Unaudited)
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------
                          Three month period ended   Nine month period ended
                                    September 30,             September 30,
                                 2009         2008         2009         2008
                                    $            $            $            $
                          ------------ ------------ ------------ ------------

    Cash provided by
     (used in)

    Operating activities
    Net loss for the period
     from continuing
     operations            (2,472,008)  (4,860,627)  (7,545,095) (14,340,189)
    Add items not
     affecting cash:
      Amortization            364,332      375,327    1,104,832    1,093,864
      Stock-based
       compensation           147,045      289,919      503,744      625,947
      Stock-based payments          -            -      152,985            -
      Unrealized foreign
       exchange (gain) loss   (21,123)      50,316      (35,801)     128,886
      Non-cash interest
       expense                 56,720                    72,193            -
                          ------------ ------------ ------------ ------------
                           (1,925,034)  (4,145,065)  (5,747,142) (12,491,492)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Change in non-cash
     working capital and
     other balances
     related to operations   (347,544)    (538,992)    (385,059)     (35,595)
                          ------------ ------------ ------------ ------------
    Cash used in operating
     activities            (2,272,578)  (4,684,057)  (6,132,201) (12,527,087)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Financing activities
    Issuance of capital
     stock                  1,779,801            -    3,531,801            -
    Share issue costs        (237,427)           -     (298,854)     (57,884)
    Issuance of warrants    2,373,068            -    2,454,668            -
    Warrant issue costs      (316,570)           -     (326,883)           -
    Exercise of stock
     options                        -          511            -       32,261
    Proceeds from
     long-term debt            81,118       24,340    1,031,118      159,240
    Repayment of
     long-term debt          (162,501)    (172,092)    (432,154)    (482,676)
                          ------------ ------------ ------------ ------------

    Cash provided by
     (used in) financing
     activities             3,517,489     (147,241)   5,959,696     (349,059)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Investing activities
    Advances to subsidiary          -            -            -   (1,307,000)
    Repayments from
     subsidiary                     -            -            -      500,000
    Acquisition of property
     and equipment                  -      (63,627)     (17,311)    (912,838)
                          ------------ ------------ ------------ ------------

    Cash used in investing
     activities                     -      (63,627)     (17,311)  (1,719,838)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Net change in cash
     from continuing
     operations             1,244,911   (4,894,925)    (189,816) (14,595,984)
    Cash flow from
     discontinued
     operations
    Operating activities     (217,383)    (304,733)  (2,081,450)  (2,078,325)
    Financing activities      506,232       39,741      951,576    4,539,741
    Investing activities     (647,390)     (95,289)    (762,956)     537,272
                          ------------ ------------ ------------ ------------

    Net change in cash
     from discontinued
     operations              (358,541)    (360,281)  (1,892,830)   2,998,688
                          ------------ ------------ ------------ ------------

    Increase (decrease)
     in cash and cash
     equivalents              886,370   (5,255,206)  (2,082,646) (11,597,296)

    Cash and cash
     equivalents -
     Beginning of period      850,780   14,101,923    3,819,796   20,444,013
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------
    Cash and cash
     equivalents - End
     of period              1,737,150    8,846,717    1,737,150    8,846,717
                          ------------ ------------ ------------ ------------
      Cash and cash
       equivalents -
       discontinued
       operations                   -    3,072,071            -    3,072,071

    Cash and cash
     equivalents - from
     continuing
     operations             1,737,150    5,774,646    1,737,150    5,774,646
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Supplemental Information
    Cash interest received         48       66,546       11,854      255,815
    Cash interest paid         12,661       26,234       45,003       79,926
    Non-cash transactions
      Share issue costs
       included in
       accounts payable        18,370            -       18,370            -
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

SOURCE SemBioSys Genetics Inc.


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SOURCE SemBioSys Genetics Inc.
Copyright©2009 PR Newswire.
All rights reserved


Related biology technology :

1. SemBioSys provides an update on Botaneco
2. Data for SemBioSys insulin to be presented at the American Diabetes Associations 69th Scientific Sessions
3. SemBioSys plant-derived Apo AI(Milano) demonstrates encouraging biologic activity in seven preclinical models
4. SemBioSys Genetics Inc. obtains up to $1.5 million in funding from AVAC
5. SemBioSys provides update on insulin program
6. SemBioSys Genetics Inc. Announces Clinical Results with Plant-Produced Insulin
7. SemBioSys announces senior management changes
8. SemBioSys receives US$2.5 million from option agreement with MannKind for plant-produced insulin
9. SemBioSys begins phase I/II trial of insulin produced in plant seeds
10. SemBioSys eligible to proceed with Phase I/II plant-produced insulin trial after submission of IND
11. SemBioSys announces second quarter 2008 financial and operational results
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