Microbix Reports Strong First Half Sales Growth – Progress in Virology, with Kinlytic® and with Lumisort™
TORONTO, May 15, 2017 – Microbix Biosystems Inc. (TSX: MBX) (“Microbix” or the “Company”), an innovator of biological products and technologies, today reported financial results for its fiscal second quarter and six months ended March 31, 2017 (“Q2” and “H1”).
Second Quarter Financial Results
Total Q2 revenue was $2,646,649, down 3% compared to a record quarter in the prior year (2016 – $2,729,779). Included was Virology product revenue of $2,580,005, down 4% compared to the same quarter in 2016, due to some expected Q2 sales instead occurring in the first quarter. The balance of revenue was from royalties totaling $66,644 (2016 – $47,787).
Gross margin increased by $81,819 or 6%, primarily due to an improvement in the product mix.
Operating expenses increased by $136,149 compared to the second quarter last year. This was primarily due to ongoing costs related to the new bioreactor manufacturing process.
In total, the Company experienced a net profit for the period of $257,649 (2016 – $175,944.
Cash generated from operations in Q2 was $143,721 compared to cash used of $6,816 in the second quarter of 2016.
Six-Month Financial Results
Total H1 revenue was $4,599,151, or a 21% increase over the same period last year (2016 – $3,793,184). Included was Virology product revenue of $4,466,829 – an increase of 21% versus the same period last year due to increased sales in Asian markets and to our key customers. Revenue from royalties was $132,322 (2016 – $101,876).
Gross margin increased by $538,894 or 32% in H1 compared to 2016, due to increased revenues as outlined above and a positive change in the product mix.
H1 Operating expenses increased by $3,531,276 compared to last year, with 80% of that increase due to one-time costs related to (1) a non-cash adjustment of $2,582,526 related to a restructuring of existing debt that was necessary to implement an enhanced revolving credit facility, and (2) the settlement of a 2012 trade dispute in the amount of $258,540.
As a result, the Company experienced a net loss for the period of $2,958,823 (2016 – $162,476 net loss). Adjusting for one-time costs, the net operating loss before debt restructuring and WFI settlement expenses was $417,757 for H1 compared to a net loss of $266,441 in the same period last year.
Cash generated from operations in H1 was $453,263 compared to cash used of $24,882 in the first half of 2016.
Vaughn Embro-Pantalony, President and CEO of Microbix remarked, “I am very pleased with our operating results through the first half of fiscal 2017. We continue to experience strong top-line growth in Virology products, which has contributed to a significant improvement in cash from operations. Based on current projections, we expect to see continued growth in the second half of the fiscal year and for Microbix to potentially achieve record revenues in fiscal 2017.”
|3 Months Ended March 31||6 Months Ended March 31|
|Operating Income (Loss) before Debt Restructuring & Settlement Expense||$||107,649||161,979||(417,757)||(266,441)|
|Debt Restructuring & Settlement Expense||–||–||2,841,066||–|
|Net income (Loss)||$||257,649||175,944||(2,958,823)||(162,476)|
|Net income (Loss) per share||$||0.003||0.002||(0.035)||(0.002)|
The Company continues to upgrade its manufacturing and quality processes to support the launch of its new line of molecular control products. The Company is also investing to build inventory to support the expansion of sales in the Asia Pacific market under its recently announced partnership with Meridian Life Sciences. The Meridian agreement allows Microbix to utilize its production capacity to support growing demand in those markets.
Mr. Embro-Pantalony commented, “These initiatives are very important growth drivers for our Virology products business that will continue to strengthen our position within the global diagnostics industry.”
Microbix recently reported that it has consulted with the U.S. Food and Drug Administration (the “FDA”) regarding its plans to return the thrombolytic biologic drug, Kinlytic®, to the U.S. market. The Company believes the results of its consultation will accelerate its work to obtain financing, complete its re-launch program and then submit an application to FDA for re-approval in the U.S. market. The Company has already received expressions of interest to license or acquire Kinlytic and to provide full funding for its re-launch program. Following its consultation with FDA, the Company now intends to accelerate its work to conclude such an agreement.
The global use of thrombolytic drugs has been increasing every year. In the United States alone, thrombolytic sales now exceed US$1 billion per year. Urokinase was previously used in major worldwide health care markets, but there is now a monopoly. Currently only one thrombolytic drug (tissue plasminogen activator or “tPA”) is available for dissolving blood clots in hospitals and clinics. Microbix believes that there is significant need for another therapeutic option, both to provide an alternative choice for care providers and patients and to mitigate the risk of supply disruptions.
Mr. Embro-Pantalony reinforced the relevance of the FDA consultation to the Company, “Interested investors were awaiting the outcome of our consultation with the FDA. We believe the outcome of this consultation supports the planned path to approval of our lead indication is worthwhile; important information that will help us conclude a development agreement to enable the re-launch of Kinlytic.”
The Company reported that recent developments in the legal environment within the animal genetics industry have created an opportunity to revisit potential partnership proposals to complete the development and commercialization of its LumiSort technology.
Mr. Embro-Pantalony added, “We are very interested in resuming discussions to partner LumiSort, our game-changing technology that can help the livestock industry achieve superior yields and throughput of viable sexed semen. We believe we can offer efficiency improvements and cost savings to the industry, while unlocking significant value for Microbix shareholders”.
About Microbix Biosystems
Microbix Biosystems Inc. specializes in the development of proprietary biological and technology solutions for human health and wellbeing in the global therapeutic, vaccine and diagnostic markets. The Company manufactures a wide range of highly purified infectious microorganism antigens for the global diagnostics industry, with such sales now exceeding $10 million per year. The Company also applies its biological expertise and technology platforms to create other innovative products and technologies. Currently it is commercializing two such proprietary products, (1) Kinlytic® Urokinase, a biologic thrombolytic drug used to treat blood clots, and (2) Lumisort™, a technology platform for ultra-rapid and efficient sorting of somatic cells that can be used to enrich cell populations of interest, such as in sexing semen. Established in 1988, Microbix is a publicly traded company, listed on the Toronto Stock Exchange and headquartered in Mississauga, Ontario, Canada.
This news release includes “forward-looking information,” as such term is defined in applicable securities laws. Forward-looking information includes, without limitation, the risks associated with its revenue business, development projects such as those referenced herein, operations in foreign jurisdictions, engineering and construction generally, production (including control over
costs, quality, quantity and timeliness of delivery of products), foreign currency and exchange rates, maintaining adequate working capital and raising further capital on acceptable terms or at all, and other similar statements concerning anticipated future events, conditions or results that are not historical facts. These statements reflect management’s current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. The Company cautions that all forward looking information is inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond the Company’s control. Accordingly, actual future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. All statements are made as of the date of this news release and represent the Company’s judgement as of the date of this new release, and the Company is under no obligation to update or alter any forward-looking information.
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For further information, please visit www.microbix.com or contact:
Vaughn C. Embro-Pantalony, CEO
(905) 361-8910 x 350 email@example.com
Jim Currie, CFO
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Stephen Kilmer, Investor Relations
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