Hemosol Announces Fourth Quarter and Full Year 2003 Financial
Results TORONTO, March 11 /PRNewswire-FirstCall/ -- Hemosol Inc.
today announced financial results and a review of operational
highlights for the fourth quarter and year ended December 31, 2003.
Unless otherwise stated, all dollar amounts presented herein are in
Canadian dollars. The Company's net loss decreased slightly to
$10.9 million, or ($0.22) per share, for the quarter ended December
31, 2003 from $11.4 million or ($0.25) per share for the quarter
ended December 31, 2002. The loss in the quarter included a
write-down of certain assets, including property, plant and
equipment, inventory and patents and trademarks, of $6.5 million.
Net losses for the year were $34.9 million ($0.75 per share) versus
$54.8 million ($1.23 per share) in the prior year. Total operating
expenses for the quarter ended December 31, 2003 (excluding the
previously mentioned asset write downs of $6.5 million) decreased
by 63% to $3.9 million from $10.5million for the quarter ended
December 31, 2002, bringing operating expenses for the year ended
December 31, 2003 to $25.6 million versus $47.4 million in the
prior year. The lowering of operating expenses resulted from cost
savings plans implemented in both June 2002 and April 2003 which
have reduced the Company's average monthly burn to approximately
$1.2 million. "The Company has commenced a number of strategic
initiatives designed to allow Hemosol to realize value from its
existing asset base and move the Company forward," said Lee
Hartwell, Chief Executive Officer of Hemosol. "Leveraging the
technological strength of our manufacturing team coupled with our
state-of-the-art Meadowpine facility, we were able to forge the
principal terms of a strategic alliance for the production of
therapeutic blood products that will provide significant
opportunities over the mid-term. Combined with the agreement with
MDS allowing us to recognize value from accumulated tax losses and
other tax assets, the Company will be well positioned to pursue a
three-pronged value creation strategy, which includes advancing
development of products across our pipeline, including HEMOLINK(TM)
(hemoglobin raffimer), pursuing bio-manufacturing opportunities,
and capitalizing on our alliance with ProMetic Life Sciences Inc.
("ProMetic") and the American National Red Cross ("ARC"). In
December, Hemosol forged the principal terms of a strategic
alliance with ProMetic and its strategic co-development partner,
the ARC, to in-license their novel plasma separation technology.
The Cascade purification process permits the recovery of valuable
proteins from human plasma. The annual market for proteins that can
be isolated using the Cascade technology is estimated to be worth
in excess of US $5 billion and continues to grow. Under the terms
of the exclusive North American agreement, the Cascade technology
will be utilized at Hemosol's state-of-the-art Meadowpine
manufacturing facility. The ARC and Hemosol will enter into a
separate agreement for the supply of plasma and the purchase of the
therapeutic products isolated using the Cascade technology. The
organizations are working toward concluding the definitive
agreement and are proceeding with the technology transfer. Hemosol
is also actively pursuing opportunities to generate revenue by
providing bio-manufacturing services to other bio-pharmaceutical
companies. The Company believes there is considerable demand for
facilities and expertise in engineering and quality
assurance/control in this sector. Improving Financial Strength On
November 28th, Hemosol completed the sale of 7,841,800 special
warrants at a price of $0.75 per special warrant for gross proceeds
of $5,881,350. Each special warrant consisted of one commonshare
and one-half of one warrant. Each whole warrant entitles the holder
to purchase one common share for $0.90 at any time within 36 months
of the closing of the transaction. Hemosol initially received
$5,400,000 on closing of the transaction, and subsequently received
$481,350, which had been held in escrow pending shareholder
approval, which was granted on January 22nd, 2004. Subsequent to
the year-end, Hemosol announced that it had entered into an
agreement with MDS Inc. (TSX: MDS, NYSE: MDZ) regarding a proposed
transaction that will allow Hemosol's business to effectively
exchange a significant portion of the existing and unutilized
income tax losses and other tax assets for a $16 million dollar
cash infusion. The transaction will be effected under a statutory
Plan of Arrangement and is subject to certain approvals, including
that of shareholders and warrantholders of Hemosol, who will vote
at a special meeting of the Company to be held on April 20, 2004.
Details of the transaction will be included in the information
circular to be mailed to the Hemosol Inc. securityholders in
connection with the special meeting. "The completion of these
initiatives to re-capitalize the Company, will significantly
strengthen our balance sheet and facilitate the execution of our
strategy in the year ahead," said Lee Hartwell. More Financial
Results The Company incurred interest expense of $221,000 for the
quarter ended December 31, 2003 versus interest income of $156,000
for the quarter ended December 31, 2002. Interest expense for the
year ended December 31, 2003 was $535,000 versus interest income of
$842,000 in the prior year. The increase in interest expense was
due to the Company drawing down its $20 million credit facility as
well as lower balances in cash and cash-equivalents. Amortization
of deferred charges increased to $1.3 million for the quarter ended
December 31, 2003 from $0.8 million for the quarter ended December
31, 2002. Amortization of deferred charges for the year ended
December 31, 2003 were $5.0 million versus $1.6 million in the
prior year. The increase in amortization relates to charges
associated with the $20 million credit facility. In the fourth
quarter the Company realized $1.1 million of miscellaneous income
related to the sale of certain equipment at its old manufacturing
facility. Miscellaneous income for the full year ended December 31,
2003 totalled $2.9 million which included $1.8 million of net
proceeds from an insurance policy received in the third quarter.
The Company incurred a total of $0.03 million in capital
expenditures during the quarter ended December 31, 2003, bringing
capital expenditures for the year ended December 31, 2003 to $1.9
million versus $30.4 million in the prior year. Of this $0.2
million related to production equipment, information technology and
various lab equipment expenditures and $1.7 million relating to the
new facility. During the year, the company wrote-off costs of $4.7
million for impaired equipment related to the near term commercial
production of HEMOLINK(TM). This brings total capital assets net of
depreciation to $83.9 million at December 31, 2003, of which $81.7
million relates to the new facility. Annual and Special Meeting
Hemosol will hold its Annual and Special Meeting of Shareholders at
the TSX Broadcast Centre, Gallery Room, 130 King Street West,
Toronto, Ontario, beginning at 10:00 am (EST) on April 20th, 2004.
If you are unable to attend the Meeting, a live audio version will
be available on the Internet. To access the live webcast please
visit http://www.hemosol.com/ or
http://www.financialdisclosure.ca/. The broadcast will be archived
for up to twelve months. To listen to the presentation you will
need a standard web browser equipped with Windows media player.
Financial Statements to Follow: CONSOLIDATED BALANCE SHEETS As at
December 31 2003 2002 $ (000's) $
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ASSETS CURRENT Cash and cash equivalents 8,125 17,579 Cash held in
escrow 448 5,000 Amounts receivable and prepaids 735 1,077
Inventory 1,274 2,877
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TOTAL CURRENT ASSETS 10,582 26,533
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Property, plant and equipment, net 83,881 88,907 Patents and
trademarks, net 1,368 2,176 License Technology 2,520 - Deferred
charges, net 2,026 6,696
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TOTAL OTHER ASSETS 89,795 97,779
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100,377 124,312
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LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT Accounts payable and
accrued liabilities 3,394 15,249 Short term debt 20,000 -
Debentures payable - 5,000
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TOTAL CURRENT LIABILITIES 23,394 20,249
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SHAREHOLDERS' EQUITY Common Shares 305,983 303,463 Non-employee
warrants and options 15,642 10,300 Contributed surplus 8,535 8,535
Deficit (253,177) (218,235)
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TOTAL SHAREHOLDERS' EQUITY 76,983 104,063
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100,377 124,312
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CONSOLIDATED STATEMENT OF LOSS AND DEFICIT THREE MONTH TWELVE MONTH
PERIOD ENDED PERIOD ENDED ---------------------
--------------------- December December December December 31, 31,
31, 31, 2003 2002 2003 2002 $ $ $ $
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EXPENSES Research and development Scientific and process 2,597
2,600 10,773 15,271 Regulatory and clinical 353 4,618 5,817 17,173
Administration 1,416 1,312 6,586 6,115 Marketing and business
development 213 1,051 1,760 6,018 Support services 235 873 1,297
2,602 Write-off of property, plant and equipment 4,654 - 4,654 -
Write-off of patents & trademarks 846 - 846 - Foreign currency
translation loss (gain) 97 63 380 246
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Loss from operations before the following 10,411 10,517 32,113
47,425 Amortization of deferred charges 1,262 836 5,009 1,587
Write-off of deferred charges - - - 6,453 Interest income (19)
(156) (153) (842) Interest expense 240 - 688 - Miscellaneous Income
(1,103) - (2,871) -
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Loss before income taxes 10,791 11,197 34,786 54,623 Provision for
income taxes 156 211 156 211
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NET LOSS FOR THE PERIOD 10,947 11,408 34,942 54,834 Deficit,
beginning of period 242,230 206,827 218,235 163,401
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DEFICIT, END OF PERIOD 253,177 218,235 253,177 218,235
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BASIC AND DILUTED LOSS PER SHARE 0.22 0.25 0.75 1.23
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES outstanding (000's) 49,012
46,066 46,837 44,514
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CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTH TWELVE MONTH
PERIOD ENDED PERIOD ENDED ---------------------
--------------------- December December December December 31, 31,
31, 31, 2003 2002 2003 2002 (000's) (000's)
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Net loss for the period (10,947) (11,408) (34,942) (54,834)
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Cash used in operating activities (2,646) (8,030) (26,655) (40,359)
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Cash provided by (used in) investing activities 1,086 (5,320)
(7,433) 35,026
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Cash providedby financing activities 8,555 (434) 24,555 20,179
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Effect ofexchange rates on cash and cash equivalents 56 131 79 (52)
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Net increase (decrease) in cash and cash equivalents during the
period 7,051 (13,653) (9,454) 14,794 Cash and cash equivalents,
beginning of period 1,074 31,232 17,579 2,785
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Cash and cash equivalents, end of period 8,125 17,579 8,125 17,579
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About HemosolInc. Hemosol is a biopharmaceutical company focused on
the development and manufacturing of biologics, particularly
blood-related proteins. The Company has a broad range of novel
therapeutic products in development, including HEMOLINK(TM)
(hemoglobinraffimer), an oxygen therapeutic designed to rapidly and
safely improve oxygen delivery via the circulatory system. Hemosol
also is developing additional oxygen therapeutics, a
hemoglobin-based drug delivery platform to treat diseases such as
hepatitisC and cancers of the liver, and a cell therapy program
initially directed to the treatment of cancer. Hemosol intends to
leverage its expertise in manufacturing blood proteins and its
state-of-the-art Meadowpine manufacturing facility to seek
additional strategic growth opportunities. For more information
visit Hemosol's website at http://www.hemosol.com/. Hemosol Inc.'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". HEMOLINK is a registered trademark of Hemosol
Inc. Certain statements concerning Hemosol's future prospects are
"forward-looking statements" under the United States Private
Securities Litigation Reform Act of 1995. There can be noassurances
that future results will be achieved, and actual results could
differ materially from forecasts and estimates. Important factors
that could cause Hemosol's actual results to differ materially from
forecasts and estimates include, but are notlimited to: the
successful and timely completion of the preclinical and clinical
development of its products; Hemosol's ability to obtain regulatory
approvals for its products; Hemosol's ability to manufacture or
have manufactured its product in commercial quantities and at
competitive costs; the competitive environment for therapeutic and
non-therapeutic protein products derived from human blood; the
ability to obtain adequate funding under acceptable terms to
complete its development programs; 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 Canadiansecurities 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. DATASOURCE: Hemosol Inc. CONTACT:
Jason Hogan, Investor Relations, (416) 361-1331, 800-789-3419,
(416) 815-0080 fax, , http://www.hemosol.com/; To request a free
copy of this organization's annual report, please go to
http://www.newswire.ca/ and click on reports@cnw.
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