Ondine Biopharma Announces Second Quarter 2009 Financial Results
posted on Aug 13, 2009 08:59AM
Edit this title from the Fast Facts Section
Ondine Biopharma Announces Second Quarter 2009 Financial Results
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 13, 2009) - Ondine Biopharma Corporation (the "Company" or "Ondine" (TSX:OBP - News; AIM:OBP) a medical device company developing photodisinfection based products, today announced its financial results for the second quarter ended June 30, 2009.
"The second quarter of 2009 was marked by two key transactions for Ondine," stated Carolyn Cross, Ondine's Chairman & CEO. "The first transaction was the closing of the sale of the Company's dental healthcare business to Periowave Dental Technologies, Inc., and the second consisted of $2.7 million in private placement financing. Together these transactions have improved the Company's financial position allowing us to focus on the development of new products that leverage Ondine's versatile photodisinfection platform. These new products are aimed at large medical markets that present lucrative opportunities for the use of photodynamic therapy."
For the three months ended June 30, 2009 (the "Second Quarter 2009") the Company recorded a loss of $0.34 million, or $0.00 per common share, compared with a loss of $2.43 million, or $0.04 per common share, for the three months ended June 30, 2008 (the "Second Quarter 2008"). Product sales revenue for Periowave(TM) laser base stations and treatment kits for the Second Quarter 2009 was $0.32 million generating a gross margin of $0.21 million (67%) compared to product sales of $0.26 million and gross margin of $0.18 million (69.8%) for the Second Quarter 2008.
For the six months ended June 30, 2009 (the "First Six Months of 2009"), the Company recorded a loss of $1.79 million or $0.03 per common share compared with a loss of $4.89 million or $0.08 per common share during the six months ended June 30, 2008 (the "First Six Months of 2008"). Product sales of our laser base stations and treatment kits during the First Six Months of 2009 amounted to $0.51 million with a gross margin of $0.33 million (65.4%) compared to product sales of $0.46 million and a gross margin of $0.32 million (69.6%) during the First Six Months of 2008.
The results for the three months and six months ended June 30, 2009 include a gain of $683,000 on the sale of the Company's dental health care business as further described herein.
On May 21, 2009 the Company announced the appointment of Ms. Margaret Shaw as a director of the Company. Ms. Shaw has over 30 years of experience in the capital markets, principally with AGF Fund Inc., one of the largest independent mutual funds in Canada. Ms. Shaw has a Chartered Financial Analyst designation and a Bachelor of Mathematics degree from the University of Waterloo.
On June 2, 2009, the Company closed a non-brokered private placement by issuing 14,851,250 common shares at $0.12 per share, representing a value of $1,782,150 (US$1.5 million), in exchange for 39,042 ordinary shares of Grafton Resource Investments Ltd. ("Grafton", a closed-end mutual fund) at US$38.42 per fund share. In connection with the placement, 250,000 share purchase warrants, each warrant exercisable into one common share of Ondine at $0.12 until June 2, 2011, were issued as part of a finder's fee.
On June 26, 2009, the Company closed a non-brokered private placement by issuing 8,395,275 units at $0.11 per unit (a "Unit") for aggregate gross proceeds of $923,480. Each Unit consists of one common share of the Company and one share purchase warrant (a "$0.15 Warrant") entitling the holder to acquire one common share of the Company at an exercise price of $0.15 until June 26, 2011. Carolyn Cross, Chairman and CEO, purchased 1,959,091 Units, 23.3% of the total units issued in the placement, which was the maximum allowed under the rules of the Toronto Stock Exchange without shareholder approval. In April 2009, the Company received an interest free loan of $0.40 million from Carolyn Cross that was repaid in June 2009.
Sale of Dental Healthcare Business
On June 5, 2009, the Company completed the sale of its dental healthcare business to Periowave Dental Technologies Inc ("PDT", formerly JS Dental Technologies Inc.), a Toronto-based privately held firm. The shareholders approved the sale at the annual general and special meeting held on May 19, 2009 and the definitive agreement was signed on June 5, 2009. The transaction has allowed Ondine to further reduce its ongoing operating expenses and is expected to provide continued economic benefits and cash flows to be used in part for the development of expanded applications of the Company's photodisinfection (PDD) platform.
Under the terms of the transaction, Ondine and PDT will collaborate on the continued commercialization of the Periowave(TM) photodisinfection technology. As part of the purchase price Ondine received $725,000 from PDT and is entitled to receive, among other things, royalties and a potential stream of milestone payments on the successful attainment by PDT of cumulative revenue targets. In the event of a subsequent sale to a third party, Ondine will be entitled to receive, in lieu of further royalties and milestone payments, a percentage of all proceeds of such sale (net of transaction costs and amounts previously received as part of the purchase price), up to a maximum of 40 percent in the first year and declining on a yearly basis to 5 percent in the sixth year and 2.5 percent thereafter. In addition, the Company is entitled to manufacturing margins for exclusively supplying PDT with Periowave(TM) product until at least June 5, 2011 pursuant to a manufacturing, sustaining and servicing agreement; and, subject to certain conditions, Ondine will receive management consulting fees of US $50,000 per month up to June 5, 2011 pursuant to a management services agreement. The Company plans to enter into further oral healthcare product development agreements with PDT.
Although the Company reduced its sales and marketing costs significantly during the Second Quarter 2009, when compared to the Second Quarter 2008, both its product sales revenue and gross margin for Second Quarter 2009 exceed the comparable amounts for Second Quarter 2008. During the Second Quarter 2009 the Company sold its products in Canada primarily to three dental distributors while during the Second Quarter 2008 the Company sold its products in Canada primarily to one dental distributor. During both periods the Company also sold its products to its distributor in the United Kingdom. Subsequent to the sale of the Company's dental healthcare business on June 5, 2009 as described above, all of the Company's sales were to the purchaser, PDT.
The $2.09 million decrease in loss for the Second Quarter 2009, when compared to the Second Quarter 2008, was primarily due to expense reductions in research and development (49%), general and administration (54%), and marketing and sales expenses (48%), and the $0.68 million gain on the sale of the Company dental healthcare business. The expense reductions mainly reflect the Company's restructuring and cost cutting measures. The Company intends to focus resources on new product development of a selective number of applications of our platform PDD technology, including our MRSAid(TM) product for decolonization of MRSA in the anterior nares.
During the Second Quarter 2009, the Company continued to invest in research and development including, among other things, the tasks required to enable the Company to file a premarket approval ("PMA") submission with the United States Food and Drug Administration ("FDA") to market Periowave (TM) in the United States, which is expected to be filed in the third quarter of 2009, and the development of our MRSAid(TM) product. The Company believes that it is nearing completion of the FDA submission. The experience gained in the preparatory work required for the PMA submission, including the quality management system and the clinical trial work done to date, is expected to be of benefit in obtaining regulatory approval for our new PDD products currently under development. Research and development expenses for the Second Quarter 2009 were $0.59 million, a decrease of $0.57 million when compared to $1.16 million incurred during the Second Quarter 2008. The bulk of the reduction of R&D expenses related to activities no longer required in the Second Quarter 2009.
General and administration expenses for the Second Quarter 2009 were $0.39 million, a decrease of $0.47 million when compared to $0.86 million incurred during the Second Quarter 2008. Marketing and sales expenses for the Second Quarter 2009 were $0.29 million, a decrease of $0.27 million when compared to $0.56 million incurred during the Second Quarter 2008. The reductions in expenditures were primarily due to decreases in personnel, consulting, and support activities resulting from our restructuring efforts.
As at June 30, 2009 the Company had cash and cash equivalents totaling $1.08 million compared with $1.03 million as at December 31, 2008. During the First Six Months of 2009 the Company used approximately $1.86 million of cash for its operating activities, received an interest free loan of $0.4 million from Carolyn Cross that was repaid during the period and received cash proceeds of $1.29 million, net of issue costs, and an investment in the Grafton fund of $1.78 million from the issuance of an aggregate 31,866,693 common shares in three non-brokered private placements. Carolyn Cross participated in each of the cash private placements completed during the First Six Months of 2009 to the maximum allowed under the rules of the Toronto Stock Exchange without shareholder approval. The Company intends to liquidate its investment in the Grafton fund in stages over a period of months commencing in the fall of 2009 to raise funds to finance its operations. The Grafton fund is listed on the Irish Stock Exchange (ISE) and may be listed in the future on one or more additional exchanges. Although the units have been listed on the ISE, they have not traded and financial liquidity can not be assured.
Based on the Company's current level of activities and its future plans, the Company may need to raise additional capital in the near term to continue with its planned operating activities if it is not able to liquidate its investment in the Grafton fund in the manner described above. Although there has been an improvement in market conditions in the capital marketplace, the Company continues to believe that future market conditions may make it more difficult and time consuming than normal for companies at its stage of development to secure additional funding. No assurances can be given that additional funding will be available on terms that are acceptable to the Company. In the interim, the Company will continue to reduce its expenses and to defer capital outlays in order to extend the period it can operate utilizing its existing cash balances.
As at June 30, 2009 the Company had 93,225,869 common shares outstanding.