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 third quarter and
nine months ended May 31, 2014, and provided operational highlights.
Third Quarter and Nine Months ended May 31, 2014 Results
Cash Position: Cash and cash equivalents as of May 31, 2014 were $14.8 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 nine months ended
May 31, 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 May 31, 2014, Stellar had shareholders equity of $11.1 million and
approximately 78 million shares outstanding.
Revenues: Revenues were $102,581 in the third quarter and $252,848 for the nine
months ended May 31, 2014 compared to $73,214 and $250,422 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 and third quarter.
R&D Expenses: Research and development expenses were $462,129 in the third
quarter of 2014 and $1.37 million in the nine months ended May 31, 2014,
compared to $178,202 and $684,662 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 $864,485 in the third
quarter of 2014 and $2.98 million in the nine months ended May 31, 2014,
compared to $582,152 and $1.74 million 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 Income (Loss): Net income was $1.81 million for the third quarter of 2014
and a net loss of $3.8 million for the nine months ended May 31, 2014, compared
to net loss of $1.17 million and $5.58 million for the comparable periods in
2013. The decrease of $2.98 million in net loss for the third quarter of 2014,
and cumulative decrease of $1.78 million net loss for the nine months ended May
31, 2014 were substantially affected by fluctuations in noncash change in fair
value of warrant liability. During the three months ended May 31, 2014, there
was a gain on fair value of warrant liability of $3.02 million (2013 - loss of
$353,119) for a net fluctuation of $3.38 million additional gain than the prior
period. The 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.
Operational Updates:
Collaborations and KLH Supply Agreements: Stellar KLH(TM) is currently used by
the Company's biopharma partners as the carrier molecule in certain new
immunotherapies in clinical development for cancer, autoimmune disease and
inflammatory disease. Those programs continued to progress in 2014 and Stellar
met all contract requirements related to supply and/or development of KLH
protein for those product candidates. In addition, Stellar continues to
strengthen its collaboration expansion with biopharma companies as their
immunotherapy programs advance in the clinic to later stages of development and
potential regulatory submissions. These strategic collaborations represent
multiple commercial pathways for Stellar including future growth of core
business sales and close involvement in the development of new KLH-based
immunotherapies.
C. diff Active Immunotherapy Program:: During the first half of 2014, Stellar
successfully advanced its C. diff active immunotherapy program in key
preclinical areas including early process development and the scale-up and
transfer of essential manufacturing methods to a contract manufacturing
organization (CMO). The goal of this stage of product development is to
establish scalable processes necessary to support GMP production of a PS-KLH
conjugate vaccine candidate. In the second half of 2014, the Company will focus
on completing certain IND-enabling milestones such as identification of
appropriate PS-KLH formulation, demonstration of dose ranging and safety,
intermediary scale-up and manufacturing of test material in preparation for
clinical production.
"This has been an important strategic year for Stellar and we are pleased to
report positive momentum in key facets of our KLH business," said Frank Oakes,
President and CEO of Stellar Biotechnologies. "Our corporate collaborations,
where Stellar KLH is used as the critical carrier molecule in new therapeutic
vaccines, are strong and poised for clinical advancement. And we are on track in
the preclinical development of our own C. diff immunotherapy program. We are
confident that these initiatives will enhance valuation for our shareholders as
well as expand Stellar's long-term commercial potential."
To receive timely up dates of Stellar Biotechnologies news and events please
register for our email alert, by signing up at:
http://ir.stellarbiotechnologies.com/email-alerts
About Stellar Biotechnologies, Inc.
Stellar Biotechnologies, Inc. (OTCQB: SBOTF) (TSX VENTURE: KLH) is the 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.
Visit www.stellarbiotech.com and the KLH knowledge base www.klhsite.org.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements may be
identified by the use of words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend," "may," "will," "would," "could," "should,"
"might," "potential," or "continue" and variations or similar expressions.
Readers should not unduly rely on these forward-looking statements, which are
not a guarantee of future performance. There can be no assurance that
forward-looking statements will prove to be accurate, as all such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause actual results or future events to differ
materially from the forward-looking statements. Such risks include, but may not
be limited to: general economic and business conditions; technology changes;
competition; changes in strategy or development plans; governmental regulations
and the ability or failure to comply with governmental regulations; the timing
of anticipated results; and other factors referenced in the Company's filings
with securities regulators. For a discussion of further risks and uncertainties
related to the Company's business, please refer to the Company's public company
reports filed with the TSX Venture Exchange and the U.S. Securities and Exchange
Commission. All forward-looking statements are made as of the date hereof and
are subject to change. Except as required by law, the Company assumes no
obligation to update such statements. This press release does not constitute an
offer or solicitation of an offer for sale of any securities in any
jurisdiction, including the United States. Neither the 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 the
information contained in this press release.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited - Prepared by Management)
(Expressed in US Dollars )
------------- -------------
May 31, August 31,
2014 2013
------------- -------------
Assets:
Cash and cash equivalents $ 14,785,468 $ 7,859,889
Other current assets 182,039 274,633
Noncurrent assets 538,258 378,836
------------- -------------
Total Assets $ 15,505,765 $ 8,513,358
============= =============
Liabilities and Shareholders' Equity
(Deficiency):
Accounts payable and accrued liabilities $ 492,970 $ 454,063
Warrant liability, including current portion 3,859,412 11,200,807
Shareholders' equity (deficiency) 11,153,383 (3,141,512)
------------- -------------
Total Liabilities and Shareholders' Equity
(Deficiency) $ 15,505,765 $ 8,513,358
============= =============
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Unaudited - Prepared by Management)
(Expressed in US Dollars )
--------------------------------------------------
Three Months Ended Nine Months Ended
May 31, May 31, May 31, May 31,
2014 2013 2014 2013
----------- ----------- ----------- -----------
Revenues:
Contract income $ 60,000 $ 15,000 $ 147,000 $ 45,000
Commercial sales 42,581 12,050 69,269 51,275
Grant revenue - 46,164 36,579 154,147
----------- ----------- ----------- -----------
Total Revenues 102,581 73,214 252,848 250,422
Costs of Production,
Aquaculture and Grants 135,351 101,964 353,919 366,387
----------- ----------- ----------- -----------
Gross Margin (Loss) (32,770) (28,750) (101,071) (115,965)
----------- ----------- ----------- -----------
Operating Expenses:
Research and
development 462,129 178,202 1,370,581 684,662
Other operating
expenses 864,485 582,152 2,982,529 1,741,517
----------- ----------- ----------- -----------
Total Operating
Expenses 1,326,614 760,354 4,353,110 2,426,179
Other Income (Loss):
Foreign exchange gain
(loss) 141,700 (30,389) (195,310) (60,343)
Change in fair value
of warrant liability 3,023,391 (353,119) 822,919 (2,981,740)
Interest income 16,583 1,075 43,223 3,708
Income tax expense 9,000 - 21,200 800
----------- ----------- ----------- -----------
Net Income (Loss) and
Comprehensive Income
(Loss) for the Period $ 1,813,290 $(1,171,537) $(3,804,549) $(5,581,319)
=========== =========== =========== ===========
Income (loss) per common
share - basic and
diluted $ 0.02 $ (0.02) $ (0.05) $ (0.11)
Weighted average number
of common shares
outstanding 78,115,549 53,489,763 75,049,659 50,409,302
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
(Expressed in US Dollars )
----------------------------
Nine Months Ended
May 31, May 31,
2014 2013
------------- -------------
Cash Flows Used In Operating Activities:
Loss for the period $ (3,804,549) $ (5,581,319)
Items not affecting cash:
Amortization and depreciation 119,633 92,853
Share-based payments 899,461 521,987
Foreign exchange (gain) loss 26,778 23,597
Change in fair value of warrant liability (822,919) 2,981,740
Changes in non-cash working capital items 131,501 (275,920)
------------- -------------
Net cash used in operating activities (3,450,095) (2,237,062)
Net cash provided by financing activities 10,681,507 2,992,413
Net cash used in investing activities (279,055) (2,411)
Effect of exchange rate changes on cash and
cash equivalents (26,778) 36,746
------------- -------------
Net change in cash and cash equivalents 6,925,579 789,686
Cash and cash equivalents - beginning of
period 7,859,889 998,998
------------- -------------
Cash and cash equivalents - end of period $ 14,785,468 $ 1,788,684
============= =============
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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