Stellar
Biotechnologies, a leader in sustainable manufacture of Keyhole Limpet
Hemocyanin (KLH), today reported its financial results for the third quarter
and nine months ended May 31, 2014. It also provided a few operational
highlights from that time frame as well.
Financial 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.
• Shareholder Statistics: 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 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.”
For more information
about Stellar Biotechnologies, please visit: www.stellarbiotech.com
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