Hemosol (NASDAQ:HMSL)
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Hemosol Corp. Announces Third Quarter 2004 Financial Results
TORONTO, Nov. 1 /PRNewswire-FirstCall/ -- Hemosol Corp. (NASDAQ:HMSLNASDAQ:
TSX:NASDAQ:HML) today announced financial results and reviewed operational
highlights for the third quarter and nine-months ended September 30, 2004. The
quarterly and year-to-date financial results of Hemosol Corp. are compared to
those of its predecessor, Hemosol Inc., subsequently renamed LPBP Inc. after
the completion of a Plan of Arrangement involving Hemosol Inc., its
shareholders and MDS Inc. All amounts are expressed in Canadian currency unless
otherwise stated.
During the third quarter of 2004 Hemosol Corp. had a net loss of $3.6 million,
or ($0.06) per share, compared to a net loss of $4.0 million, or ($0.09) per
share, in the same period of 2003. The net loss for the nine months ended
September 30, 2004 was $5.7 million ($0.10 per share) versus $24.0 million
($0.52 per share) in the prior year. The decreased net loss for the three month
period ended September 30, 2004 resulted from the recording of the future tax
liability as a result of the Plan of Arrangement which was offset by non-cash
stock based compensation expenses of $1.4 million. The decreased net loss for
the nine months ended September 30, 2004, resulted primarily from cost savings
measures implemented in 2003 and the recording of the future tax liability of
$3.0 million which was offset by non-cash stock-based compensation expenses of
$2.5 million.
"During the third quarter we continued to make progress in implementing the
Cascade technology at our Meadowpine facility," said Lee Hartwell, President
and Chief Executive Officer of Hemosol. "We expect to be in a position to
manufacture and sell clinical material by the end of 2005. In the meantime we
have finalized a contract manufacturing agreement with Organon Canada, which
will allow us to begin generating revenue earlier in 2005."
Organon Canada is the pharmaceutical division of Akzo Nobel. The agreement,
signed in early September, represents another major step in the Company's
strategy to leverage its Meadowpine facility and bio-manufacturing expertise to
produce high value biopharmaceutical products and more specifically validate
the Company's experience and capability in the area of biologics manufacturing.
As a result of this agreement, the Company has acquired a vial filling line to
produce "Hepalean(R)" products for Organon. This vial filing line will also
support the clinical stage of the Company's previously announced strategic
alliance with ProMetic and the American Red Cross. Revenue from the Organon
agreement is expected to contribute to reducing the Company's burn rate
beginning in 2005.
Hemosol has entered into definitive license and strategic alliance agreements
with ProMetic Life Sciences Inc. ("ProMetic"), for the separation of valuable
therapeutic proteins from human plasma. Hemosol is currently integrating the
novel Cascade technology, developed by Prometic and the American Red Cross into
its state-of-the-art Meadowpine facility and intends, upon completion, to sell
the resulting products to customers, including the American Red Cross.
The American Red Cross has committed in principle to supply plasma to Hemosol
and subsequently purchase therapeutic products isolated using the Cascade
technology. Under the license Hemosol will have the right to the Cascade
technology to manufacture therapeutic products from plasma on an exclusive
basis in North America. The Company is currently negotiating a supply and
purchase agreement with the American Red Cross. As a result of the strategic
alliance agreement, ProMetic and Hemosol have also agreed to work together to
generate revenues in the short term through technology transfer support and the
supply of clinical trial material to other forthcoming licensees of ProMetic
outside of North America.
HEMOLINK Update
Hemosol is nearing the completion of a series of non-clinical studies on
HEMOLINK(TM) (hemoglobin raffimer). Based on the strength of these studies the
next step will be to request a meeting with the U.S. Food & Drug Administration
to define the future clinical path for HEMOLINK.
In addition to the ongoing analysis of data related to HEMOLINK, the Company
continues to pursue a number of strategic opportunities with respect to the
advancement of its pipeline of oxygen therapeutics and drug delivery and cell
therapy programs as well as other opportunities related to the utilization of
Meadowpine.
Further Financial Results
Total operating expenses for the quarter ended September 30, 2004 increased by
30% to $5.6 million from $4.3 million for the quarter ended September 30, 2003
bringing operating expenses for the nine months ended September 30, 2004 to
$13.6 million compared with $21.6 million for the same period in the prior
year. The decrease in operating expenses, partially offset by non-cash stock
based compensation expenses of $2.5 million, resulted primarily from a cost
savings plan implemented in April 2003, which reduced the average monthly cash
used in operating expenses by approximately $2.0 million to the current average
monthly cash used in operating expenses of approximately $1.2 million. The
increase in operating expenses in the quarter resulted from non-cash stock
based compensation expenses of $1.4 million.
The cash used in operating activities for the three-month period ended
September 30, 2004 increased 31% to $3.4 million from $2.6 million for the
quarter ended September 30, 2003. In spite of this quarterly increase, the cash
used in operating activities for the nine months ended September 30, 2004 was
$11.6 million compared to $23.7 million for the same period in the prior year.
The significant decrease was a result of restructuring measures implemented in
April 2003, specifically, a reduction in cost expenditures associated with
HEMOLINK activity.
As of September 30, 2004 the Company had $8.2 million of cash and cash-
equivalents and a further $1 million held in escrow related to the Plan of
Arrangement. The Company expects that its average cash used in operating
expenses for the fourth quarter of 2004 will be approximately $1.3 million per
month. The Company expects that its cash resources will be sufficient to fund
anticipated operating and capital expenditures into the second quarter of 2005,
exclusive of milestone payments due under the ProMetic license agreement.
About Hemosol
Hemosol is a biopharmaceutical company focused on the development and
manufacturing of biologics, particularly blood-related proteins. Hemosol is
leveraging its expertise in manufacturing blood proteins and its
state-of-the-art Meadowpine manufacturing facility to seek additional strategic
growth opportunities. Hemosol has a broad range of novel therapeutic products
in development, including HEMOLINK(TM) (hemoglobin raffimer), an oxygen
therapeutic designed to rapidly and safely improve oxygen delivery via the
circulatory system. Hemosol is also developing next generation oxygen
therapeutics, a hemoglobin-based drug delivery platform to treat diseases such
as hepatitis C and liver cancers, and a cell therapy program initially directed
to the treatment of cancer.
For more information visit Hemosol's website at http://www.hemosol.com/.
Hemosol's common shares are listed on the NASDAQ Stock Market under the trading
symbol "HMSL" and on the Toronto Stock Exchange 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 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; Hemosol's ability to obtain sufficient financing to complete clinical
development of its products; 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.
Financial Statements to follow.
HEMOSOL CORP (A DEVELOPMENT STAGE COMPANY)
- INCORPORATED UNDER THE LAW OF ONTARIO
CONSOLIDATED BALANCE SHEETS
(unaudited)
September, 30 December, 31
(THOUSANDS OF CANADIAN DOLLARS) 2004 2003
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ASSETS
Current
Cash and cash equivalents 8,154 8,125
Cash held in escrow 1,000 448
Prepaids and other assets 822 735
Inventory 1,232 1,274
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Total current assets 11,208 10,582
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Property, plant and equipment, net 82,659 83,881
Patents and trademarks, net 1,274 1,368
License technology, net 5,095 2,520
Deferred charges, net 285 2,026
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Total other assets 89,313 89,795
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100,521 100,377
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities 1,830 3,394
Short-term debt 20,000 20,000
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Long term loan payable
Total current liabilities 21,830 23,394
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Long term liabilities
Minority interest 5,557 -
Future tax liability 748 -
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Total long term liabilities 6,305 -
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28,135 23,394
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Shareholders' equity
Common shares 311,668 305,983
Warrants and options 13,332 15,642
Contributed surplus 9,125 8,535
Deficit (261,739) (253,177)
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Total shareholders' equity 72,386 76,983
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100,521 100,377
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HEMOSOL CORP (A DEVELOPMENT STAGE COMPANY)
- INCORPORATED UNDER THE LAW OF ONTARIO
CONSOLIDATED STATEMENTS OF LOSS
(unaudited)
(THOUSANDS OF
CANADIAN DOLLARS 3 MONTHS PERIOD ENDED 9 MONTHS PERIOD ENDED
EXCEPT FOR September 30 September 30 September 30 September 30
SHARE DATA) 2004 2003 2004 2003
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EXPENSES
Research
and development
Scientific
and process 3,298 1,847 7,905 7,560
Regulatory
and clinical 354 704 1,007 5,464
Administration 1,446 1,349 3,614 5,036
Marketing and
business development 284 125 597 1,547
Support services 224 251 485 1,678
Foreign currency
translation loss (gain) (3) (2) 6 283
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Loss from operations
before the following 5,603 4,274 13,614 21,568
Amortization of
deferred charges 115 1,252 1,823 3,747
Interest income (44) - (128) -
Interest expense 242 226 746 448
Stock option expense - - -
Deferred taxes - - - -
Net gain on Arrangement - - (6,838) -
Miscellaneous income - (1,768) (50) (1,768)
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Loss before
income taxes and
minority interest 5,916 3,984 9,167 23,995
Minority interest (424) - (680) -
Provision for (recovery)
of income taxes -
Current 50 - 150 -
Future (1,946) - (2,975) -
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Net loss for
the period 3,596 3,984 5,662 23,995
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Basic and diluted
loss per share 0.06 0.09 0.10 0.52
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Weighted average number
of common shares
outstanding (000's) 57,146 46,103 56,493 46,103
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HEMOSOL CORP (A DEVELOPMENT STAGE COMPANY)
- INCORPORATED UNDER THE LAW OF ONTARIO
CONSOLIDATED STATEMENTS OF DEFICIT
(unaudited)
(THOUSANDS OF
CANADIAN DOLLARS 3 MONTHS PERIOD ENDED 9 MONTHS PERIOD ENDED
EXCEPT FOR September 30 September 30 September 30 September 30
SHARE DATA) 2004 2003 2004 2003
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Deficit, beginning
of period 258,143 260,772 253,177 240,761
Net loss for
the period 3,596 3,984 5,662 23,995
Distribution - - 2,900 -
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Deficit, end
of period 261,739 264,756 261,739 264,756
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HEMOSOL CORP (A DEVELOPMENT STAGE COMPANY)
- INCORPORATED UNDER THE LAW OF ONTARIO
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
3 MONTHS PERIOD ENDED 9 MONTHS PERIOD ENDED
(THOUSANDS OF September 30 September 30 September 30 September 30
CANADIAN DOLLARS) 2004 2003 2004 2003
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OPERATING
ACTIVITIES
Net loss for
the period (3,596) (3,984) (5,662) (23,995)
Add (deduct) items
not involving cash
Amortization of
property plant
and equipment 536 604 1,646 1,800
Amortization of
license
technology 100 - 187 -
Amortization of
patents and
trademarks 28 21 98 81
Amortization of
deferred charges 115 1,252 1,823 3,747
Stock based
compensation 1,411 - 2,464 -
Future tax
liability (1,946) - (2,975) -
Minority interest (424) - (680) -
Net gain
on Arrangement - - (6,838) -
Foreign currency
translation
(gain) loss 3 (2) (6) 283
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(3,773) (2,109) (9,943) (18,084)
Net changes in
non-cash working
capital balances
related to operations 369 (464) (1,630) (5,590)
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Cash used in
operating activities (3,404) (2,573) (11,573) (23,674)
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INVESTING ACTIVITIES
Patent and
trademark costs - (92) (4) (187)
Purchase of property,
plant and equipment (169) (172) (424) (8,332)
Purchase of
license technology - - (1,502) -
Proceeds from
Arrangement, net of
transaction costs - - 12,898 -
Proceeds from short
term investments 6,965 - - -
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Cash provided by
(used in) investing
activities 6,796 (264) 10,968 (8,519)
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FINANCING ACTIVITIES
Proceeds on issuance
of common shares - - 180 -
Proceeds from loan - 3,000 - 16,000
Cash released
from escrow - - 448 -
Deferred charges - - - (29)
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Cash provided by
financing activities - 3,000 628 15,971
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Effect of exchange
rates on cash (3) 2 6 (283)
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Net increase (decrease)
in cash and cash
equivalents during
the period 3,389 165 29 (16,505)
Cash and
cash equivalents,
beginning of period 4,765 909 8,125 17,579
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Cash and
cash equivalents,
end of period 8,154 1,074 8,154 1,074
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DATASOURCE: Hemosol Corp.
CONTACT: Jason Hogan, Investor & Media Relations, (416) 361-1331,
(800) 789-3419, (416) 815-0080 fax, , http://www.hemosol.com/;
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http://www.newswire.ca/. Images are free to members of The Canadian Press.
To request a free copy of this organization's annual report, please go to
http://www.newswire.ca/ and click on reports@cnw.