- Pacgen Reports Fiscal 2008 Financial Results
Pacgen Reports Fiscal 2008 Financial Results
Vancouver, BC, Canada (July 29, 2008) – Pacgen Biopharmaceuticals Corporation (“Pacgen”) (TSX-V: PGA) today reported financial results from its fiscal year ended March 31, 2008. Amounts unless specified otherwise, are expressed in Canadian dollars and in accordance with Canadian Generally Accepted Accounting Principles (Canadian GAAP).
Fiscal 2008 Operating Highlights
On May 7, 2007, Pacgen reported the topline results from the Phase I/II clinical trial of PAC- 113 showing that it is generally safe, well-tolerated, and active in the treatment of oral Candida infection with clinical cure rates comparable to the current standard of care, Nystatin. The Phase I/II clinical trial involved approximately 100 seropositive HIV patients.
On September 24, 2007, Pacgen announced its plan for a Phase IIb dose-ranging clinical trial for an optimized formulation of PAC-113 and released the final results from the Phase I/II clinical trial. The final results of Phase I/II clinical trial showed the per-protocol PAC-113 treated group had a complete clinical cure rate of 44% comparable to the per-protocol Nystatin treated group at 40%; these results were similar to the topline results reported in May 2007. Pacgen also announced that a new patent application containing claims covering the findings of the PAC-113 formulation and dose optimization studies had been filed.
On November 19, 2007, Pacgen initiated a Phase IIb dose-ranging trial for an optimized formulation of PAC-113. This study involving approximately 200 seropositive HIV patients was a randomized, examiner-blinded, parallel design trial comparing three different doses of PAC-113 to Nystatin.
On March 17, 2008, Pacgen announced that it had closed an offering of 4,515,000 units of the company at a price of $0.20 per unit for a gross proceed of $903,000.
On April 15, 2008, Pacgen announced that it had completed recruitment of patients in its Phase IIb dose-ranging trial for PAC-113.
Subsequent to the year ended March 31, 2008, Pacgen released positive topline results from its Phase IIb dose-ranging trial of PAC-113 on June 5, 2008. The results demonstrated that PAC- 113 is effective in the treatment of oral candidiasis and compares favourably to the efficacy demonstrated by Nystatin.
For the year ended March 31, 2008 (“Fiscal 2008”), the Company recorded a net loss of $5,974,712 ($0.19 per common share), compared to a net loss of $4,353,837 ($0.20 per common share) for the year ended March 31, 2007 (“Fiscal 2007”). The increase in net loss in Fiscal 2008, as compared to Fiscal 2007, was largely due to the increase of research and development expenditures associated with PAC-113 clinical development and PAC-G31P manufacturing development.
Research and Development Expenditures
Research and development expenses were $3,480,523 for Fiscal 2008, compared to $1,987,583 for Fiscal 2007. The increase of $1,492,940 was primarily due to the increased contract research cost associated with PAC-113 clinical development and PAC-G31P manufacturing development. Internal overhead for research and development activities were relatively the same in both fiscal years.
PAC-113 development cost increased by $1,009,909 in Fiscal 2008, compared to Fiscal 2007 as the program advanced from a proof of concept Phase I/II stage to a Phase II development stage. The development cost in Fiscal 2008 covered the completion of Phase I/II clinical trial, formulation optimization work, manufacture of Phase IIb drug supply, and the initiation and patient recruitment of Phase IIb clinical trial. The expenditures in Fiscal 2007 covered the clinical site expansion to South Africa and the patient recruitment of Phase I/II trial.
External cost composed of all development costs other than internal overhead, for the Phase I/II trial was approximately $1.6 million. The Phase I/II trial which involved 107 patients was initiated in Fiscal 2006 and completed in Fiscal 2008. As a result, the related cost was spread over a period of three fiscal years ended March 31, 2008. The estimated external cost for the Phase IIb study, which involved 223 patients, is approximately $2.5 million of which $1.9 million was recorded in Fiscal 2008.
Pacgen plans to meet with the FDA late 2008 to discuss its proposed Phase III clinical development plan (the “Post Phase II Meeting”). For the fiscal year ending March 31, 2009 (“Fiscal 2009”), Pacgen expects to incur research and development expenditures primarily associated with the completion of Phase IIb trial and the Post Phase II Meeting.
PAC-G31P research cost increased by $466,371 in Fiscal 2008, compared to Fiscal 2007. The research cost in both fiscal years covered the activities related to pre-clinical studies, mainly through its collaboration with the University of Saskatchewan, and manufacturing development of PACG31P. The Company initiated its manufacturing development and formulation work in February 2007 and successfully reproduced PAC-G31P at Good Laboratory Practices Standards (“GLP”) level in July 2007.
In order to determine the optimal first clinical indication for PAC-G31P, Pacgen plans to complete a number of pre-clinical studies, as well as continues its manufacturing development and formulation work at Good Manufacturing Practice Standards (“GMP”) level, over the next year. The results of these studies in conjunction with a successful IND application filing will directly support its outlicensing initiatives. For Fiscal 2009, Pacgen expects to incur research and development expenditures primarily associated with the additional pre-clinical studies and formulation work.
General and Administration Expenditures
General and administration expenses for Fiscal 2008 were $1,901,567 compared to $1,790,765 for Fiscal 2007. The increase of $110,802 was primarily attributable to the increase of $96,075 in salaries and wages and $115,813 in market research. These increases were offset by a decrease of $176, $41,199 and $59,711 in consulting and professional fees, travel and accommodation, and other general overhead, respectively.
The increase in salaries and benefits was primarily incurred in the first half of Fiscal 2008. As a precautionary step to reduce its cash burn, the Company initiated a cost management program in the second half of Fiscal 2008. The cost control program involved elimination of two junior administrative positions and 30% reduction in management salaries starting November 2007. A further 20% reduction in management salaries was implemented in February 2008. The increase in market research expenditure was primarily related to product market studies to support our out licensing activities for PAC-113. The decreases in other general administrative expenditures were also primarily due to the cost control program initiated in November 2007.
Liquidity and Outstanding Share Capital
At March 31, 2008, Pacgen had working capital of $535,149, compared to $5,220,456 at March 31, 2007. Pacgen had available cash reserves comprised of cash and cash equivalents of $1,438,691 at March 31, 2008, compared to $5,387,366 at March 31, 2007. The Company estimates that its working capital at March 31, 2008 is adequate to fund the Company’s research and development programs, capital needs and operations into the second quarter of Fiscal 2009. Pacgen is currently
seeking additional capital to finance its operation. Management is considering all financing alternatives, including equity financing, corporate collaboration and licensing arrangement, and has initiated preliminary discussions on some of these alternatives.
As of June 30, 2008, there were 35,144,693 common shares issued and outstanding, 9,233,141 common share purchase warrants outstanding at a weighted average price of $0.72 per share, 500,000 share purchase option outstanding at an exercise price of $2.25 per share, and 2,634,000 incentive stock options outstanding at a weighted average exercise price of $0.99.
Pacgen is a life sciences company focused on the development of therapeutics for the treatment of infectious and inflammatory diseases. Pacgen’s current development efforts are focused on PAC-113, an anti-fungal for the treatment of oral candidiasis and PAC-G31P, a novel peptide therapeutic designed to treat inflammatory diseases characterized by non-beneficial neutrophil.
PAC-113 is a 12 amino-acid antimicrobial peptide derived from a naturally occurring histatin protein found in saliva. This peptide alters the permeability of fungal cell membranes causing cell death. In June 2008, Pacgen announced positive results from its Phase IIb clinical trial demonstrating that PAC-113 is effective in the treatment of oral candidiasis and compares favourably to the efficacy demonstrated by Nystatin, a current standard of care.
PAC-G31P is a small recombinant protein that is a synthetic analogue of the human cytokine called Interleukin-8 which is the key chemokine involved in neutrophil recruitment. PAC-G31P is currently being investigated in preclinical studies for its potential to treat inflammatory diseases characterized by non-beneficial neutrophil.
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Forward looking Statements
Certain statements included in this press release may be considered forward-looking. Statements relating to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments constitute forward-looking statements. All forward-looking statements are based on Pacgen’s current beliefs and expectations as well as assumptions relating to the successful and timely completion of its ongoing Phase II clinical trial and pre-clinical studies, the time and process required to obtain regulatory approval for commercialization of its product, the ability of Pacgen to raise additional capital in future on favourable terms, the impact of competitive products and pricing in the market, new product development, and the successful and timely completion of corporate collaborations or licensing arrangements for its research programs. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. Such factors include, among others, our stage of development, lack of product revenues, additional capital requirements, risk associated with completion of clinical trials and obtaining regulatory approval, dependence on collaborate partners, and our ability to protect our intellectual property. Wherever possible, words such as “anticipate”, “believe”, “expect”, “may”, “could”, “will”, “potential”, “intend”, “estimate”, “should”, “plan”, “predict”, “project” or the negative or other variations of such expressions reflect Pacgen’s current beliefs and assumptions and are based on the information currently available to Pacgen. Certain risks and uncertainties, including those risk factors identified by Pacgen in its annual information form dated August 1, 2007, may cause our actual results, level of activity, performance or achievements to differ materially from those implied by forward looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made only as of the date of this press release. Pacgen disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For all forward-looking statements, Pacgen claims the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.
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