Stellar Biotechnologies, Inc. ("Stellar" or "the Company") (OTCQB: SBOTF) (TSX
VENTURE: KLH), a leader in sustainable manufacture of Keyhole Limpet Hemocyanin
(KLH), an important immune-stimulating protein used in wide-ranging therapeutic
and diagnostic markets, has reported financial results for the second quarter
and six months ended February 28, 2014, and provided operational highlights.
"We continue to make progress with our core KLH manufacturing and strengthen our
relationships with key stakeholders and commercial partners," said Frank Oakes,
president and chief executive officer of Stellar Biotechnologies. "On the new
development front, we expect completion of the secondary preclinical study in
our Active Immunotherapy program for Clostridium difficile ("C. diff") in 2014
and to publish results as soon as possible. Our financial position remains
strong with approximately $15.8 million cash and equivalents which will support
the enhancement of Stellar's immunotherapy program, KLH product research,
aquaculture and KLH production expansion."
Second Quarter and Recent Business Highlights:
Collaborations and Supply Agreements: Stellar continues to gain high level
strategic and collaborative interest from biopharma and research partners as
those clinical programs advance to later stages of development. Stellar KLH
technology serves as a platform for partnerships with long-term revenue,
strategic, and clinical potential for the Company. In December 2013, Stellar
executed a collaboration agreement with Amaran Biotechnology, Inc., to develop
and evaluate methods for the manufacture of OBI-822 active immunotherapy using
Stellar's GMP grade Keyhole Limpet Hemocyanin ("KLH"). The collaboration
involves an important, multinational clinical project with long-term product
development and commercial potential.
C. diff Active Immunotherapy Program Preclinical Study Update: In December 2013,
Stellar began method development for manufacturing C. difficile bacteria
fermentation and cell wall polysaccharide (PS) extraction with outside contract
manufacturers. Upcoming milestones in this program, expected to implement
throughout 2014, include engineering runs of the Stellar C. diff PS-KLH
conjugate vaccine, validation of engineering prototypes in the preclinical C.
diff model, and prototype scale-up.
Strong Financial Position: As of February 28, 2014 Company's current cash
position is US$15.8 million. The strong financial position will continue to
support the enhancement of Stellar's immunotherapy program, KLH product
research, aquaculture operations, and KLH production expansion.
Key Financials:
Second Quarter and First Six Months 2014 Results
Cash Position: Cash and cash equivalents as of February 28, 2014 were $15.8
million, compared to $ 7.9 million at year-end August 31, 2013. The Company
believes current cash will be sufficient to meet estimated working capital
requirements and fund planned program development through 2015. During the six
months ended February 28, 2014, the Company received $7 million gross proceeds
under private placements (with $5 million of the September 2013 private
placement subscribed and received prior to August 31, 2013) and $4.2 million
gross proceeds from the exercise of warrants and options.
As of February 28, 2014, Stellar had shareholders equity of $9.1 million and
approximately 78 million shares outstanding.
Revenues: Revenues were $91,103 in the second quarter and $150,267 for the six
months ended February 28, 2014 compared to $61,481 and $177,208 in the
comparable periods in 2013. Stellar completed the NSF Phase IIB grant during the
first quarter of 2014 and generated additional contract and commercial sales
revenue during the second quarter.
R&D Expenses: Research and development expenses were $536,621 in the second
quarter of 2014 and $908,452 in the six months ended February 28, 2014, compared
to $236,832 and $506,460 in the comparable periods in 2013. The increase in
R&D expense was largely due to an increase in method development activities
for vaccine manufacturing during the period related to the C. diff active
immunotherapy research program.
Other Operating Expenses: Other operating expenses totaled $901,455 in the
second quarter of 2014 and $2,118,044 in the six months ended February 28, 2014,
compared to $572,303 and $1,159,365 in the comparable periods in 2013. The
increase was primarily attributable to a higher level of activity, addition of
key personnel, vesting and timing of stock options, and discontinuation of the
temporary voluntary salary reduction that were initiated in the prior comparison
period.
Net Loss: Net loss was $237,953 for the second quarter of 2014 and $5.6 million
for the six months ended February 28, 2014, compared to net loss of $3.6 million
and $4.4 million for the comparable periods in 2013. The decrease of $3.4 net
loss for the second quarter of 2014, and cumulative increase of $1.2 million net
loss for the six months ended February 28, 2014 were substantially affected by
fluctuations in noncash change in fair value of warrant liability. As a result
of having exercise prices denominated in Canadian dollars which is not the
Company's functional currency of US dollars, some of the Company's warrants meet
the definition of derivatives and are therefore classified as derivative
liabilities. The noncash fair value gains and losses in these periods are a
reflection of the Company's share price fluctuations with increases in share
prices causing greater warrant liability and a loss on fair value of warrant
liability, while decreases in share prices cause a gain on fair value of warrant
liability. Changes in fair value of warrant liability have no impact on cash
flow. If the warrants are exercised, the warrant liability is reclassified to
share capital. If the warrants expire, the decrease in warrant liability offsets
the changes in fair value.
To view the Company's second quarter and six months 2014 consolidated financial
statements, related notes and Management Discussion & Analysis as well as
all of Stellar Biotechnologies' past reports and filings please visit the
Canadian Securities Administrators' website (www.sedar.com). To view the
Company's filings under Form 20-F, please visit the U.S. SEC website
(www.sec.gov/edgar).
Conference Call and Webcast Details:
Date: Thursday, April 10, 2014
Time: 1:30 p.m. Eastern Time / 10:30 a.m. Pacific Time
Conference Line (U.S.): 1-480-629-9712
International Dial-In: +1 480-629-9712
Conference ID: 4678236
Webcast: http://public.viavid.com/index.php?id=108588
Q&A submission: Questions for management may be submitted via the chat
feature of the live online webcast.
Please log in at least 10 minutes before the start time to ensure timely
participation and appropriate web interface platform.
A playback of the call will be available from 7:00 p.m. ET on April 10, 2014 to
7:00 p.m. ET on April 24, 2014. To listen, call 1-877-870-5176 within the United
States or 1-858-384-5517 when calling internationally. Please use the replay pin
number 4678236. For additional information please visit the investor section at
www.stellarbiotech.com.
About Stellar Biotechnologies, Inc.
Stellar Biotechnologies, Inc. (OTCQB: SBOTF) (TSX VENTURE: KLH) is the world
leader in sustainable manufacture of Keyhole Limpet Hemocyanin (KLH), an
important immune-stimulating protein used in wide-ranging therapeutic and
diagnostic markets. KLH is both an active pharmaceutical ingredient (API) in
many new immunotherapies (targeting cancer, infectious diseases, and immune
disorders) as well as a finished product for measuring immune status. Stellar
Biotechnologies is unique in its proprietary methods, facilities, and KLH
technology. We are committed to meeting the growing demand for commercial-scale
supplies of GMP grade KLH, ensuring environmentally sound KLH production, and
developing KLH-based active immunotherapies.
To learn more visit www.StellarBiotech.com and the KLH knowledge base
www.KLHSite.org.
Safe Harbor Statement
There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such statements. Readers should not place undue reliance on such
statements. Except in accordance with applicable securities laws, the Company
expressly disclaims any obligation to update any forward-looking statements or
forward-looking statements that are incorporated by reference herein. This news
release does not constitute an offer to sell, or a solicitation of an offer to
buy any of the Company's securities set out herein in the United States, or to,
or for the benefit or account of, a U.S. Person or person in the United States.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of these releases.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited - Prepared by Management)
(Expressed in US Dollars )
---------------- ----------------
February 28, August 31,
2014 2013
---------------- ----------------
Assets:
Cash and cash equivalents $ 15,840,974 $ 7,859,889
Other current assets 149,479 274,633
Noncurrent assets 544,466 378,836
---------------- ----------------
Total Assets $ 16,534,919 $ 8,513,358
================ ================
Liabilities and Shareholders' Equity
(Deficiency):
Accounts payable and accrued
liabilities $ 520,140 $ 454,063
Warrant liability, including current
portion 6,884,098 11,200,807
Shareholders' equity (deficiency) 9,130,681 (3,141,512)
---------------- ----------------
Total Liabilities and Shareholders'
Equity (Deficiency) $ 16,534,919 $ 8,513,358
================ ================
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Unaudited - Prepared by Management)
(Expressed in US Dollars )
------------- ------------- ------------- -------------
Three Months Ended Six Months Ended
February 28, February 28, February 28, February 28,
2014 2013 2014 2013
------------- ------------- ------------- -------------
Revenues:
Contract and
collaboration
income $ 72,000 $ 15,000 $ 87,000 $ 30,000
Commercial
sales 19,103 9,375 26,688 39,225
Grant revenue - 37,106 36,579 107,983
------------- ------------- ------------- -------------
Total Revenues 91,103 61,481 150,267 177,208
Costs of
Production,
Aquaculture and
Grants 96,868 100,949 218,568 264,423
------------- ------------- ------------- -------------
Gross Margin
(Loss) (5,765) (39,468) (68,301) (87,215)
------------- ------------- ------------- -------------
Operating
Expenses:
Research and
development 536,621 236,832 908,452 506,460
Other operating
expenses 901,455 572,303 2,118,044 1,159,365
------------- ------------- ------------- -------------
Total
Operating
Expenses 1,438,076 809,135 3,026,496 1,665,825
Other Income
(Loss):
Foreign
exchange loss (266,941) (29,003) (337,010) (29,954)
Change in fair
value of
warrant
liability 1,469,086 (2,767,283) (2,200,472) (2,628,621)
Interest income 15,943 1,762 26,640 2,633
Income tax
expense 12,200 800 12,200 800
------------- ------------- ------------- -------------
Loss and
Comprehensive
Loss for the
Period $ (237,953) $ (3,643,927) $ (5,617,839) $ (4,409,782)
============= ============= ============= =============
Loss per common
share - basic
and diluted $ (0.00) $ (0.07) $ (0.08) $ (0.09)
Weighted average
number of
common shares
outstanding 75,036,352 50,679,214 73,491,305 48,827,422
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
(Expressed in US Dollars )
---------------- ----------------
Six Months Ended
February 28, February 28,
2014 2013
---------------- ----------------
Cash Flows Used In Operating Activities:
Loss for the period $ (5,617,839) $ (4,409,782)
Items not affecting cash:
Amortization and depreciation 79,057 61,902
Share-based payments 706,423 320,689
Foreign exchange (gain) loss 24,989 29,102
Change in fair value of warrant
liability 2,200,472 2,628,621
Changes in non-cash working capital
items 191,231 (141,392)
---------------- ----------------
Net cash used in operating activities (2,415,667) (1,510,860)
Net cash provided by financing
activities 10,666,428 1,435,181
Net cash used in investing activities (244,687) (2,411)
Effect of exchange rate changes on cash
and cash equivalents (24,989) 852
---------------- ----------------
Net change in cash and cash equivalents 7,981,085 (77,238)
Cash and cash equivalents - beginning of
period 7,859,889 998,998
---------------- ----------------
Cash and cash equivalents - end of
period $ 15,840,974 $ 921,760
================ ================
FOR FURTHER INFORMATION PLEASE CONTACT:
Frank Oakes
President and CEO
Phone +1 (805) 488-2800
IR@stellarbiotech.com
Mark McPartland
Vice President of Corporate Development and Communications
Phone: +1 (805) 488-2800
markmcp@stellarbiotech.com
www.stellarbiotech.com
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