LORUS
THERAPEUTICS REPORTS
SECOND
QUARTER RESULTS FOR FISCAL YEAR 2009
TORONTO, CANADA - January 14,
2009 - Lorus Therapeutics Inc. (Lorus), a biopharmaceutical company
specializing in the research and development of pharmaceutical products and
technologies for the management of cancer, today reported financial results for
the three and six months ended November 30, 2008. Unless specified
otherwise, all amounts are in Canadian dollars.
FINANCIAL
RESULTS
Our
loss from operations for the three months ended November 30, 2008 decreased
24.9% to $2.3 million ($0.01 per share) compared to $3.0 million ($0.01 per
share) for the three months ended November 30, 2007. Our loss from
operations for the six months ended November 30, 2008 decreased to $4.9 million
($0.02 per share), compared to $5.1 million ($0.02 per share) for the six months
ended November 30, 2007. During the six months ended November 30,
2008 the Company recorded a gain on sale of shares related to the Arrangement of
$450 thousand which resulted in a net loss and other comprehensive loss of $4.5
million ($0.02 per share). During the six month period ended November
30, 2007, the Company realized a gain on the sale of the shares related to the
Arrangement in the amount of $6.3 million resulting in net earnings and other
comprehensive income for the period of $1.2 million ($0.01 earnings per
share).
The
decrease in loss from operations for the three months ended November 30, 2008
compared with the same period last year is due primarily to reduced research and
development spending of $553 thousand, resulting from the completion of toxicity
studies ongoing in Q2 2007 and reduced general and administrative expenditures
of $183 thousand due to lower legal and annual general meeting
costs.
The
decrease in net loss from operations for the six months ended November 30, 2008
compared with the same period last year is due primarily to lower research and
development costs resulting from less spending on the small molecule program due
to timing of activities.
Research
and development expenses totaled $694 thousand in the three-month period ended
November 30, 2008 compared to $1.2 million during the same period last year and
decreased to $1.9 million from $2.0 million in the six month period ended
November 30, 2008 as compared to the same period in fiscal 2008.
The
decrease during the three months ended November 30, 2008 compared with the prior
year is due primarily to GLP-toxicity studies for our small molecule program
that were initiated in the second quarter of fiscal 2008 and are now completed
as well as a reduced headcount.
Research
and development costs for the six-month period ending November 30, 2008
decreased due to reduced spending on the small molecule program as we prepare to
move it into the clinic as well as reduced headcount.
General
and administrative expenses totaled $920 thousand in the three-month period
ended November 30, 2008 compared to $1.1 million in same period last
year. For the six month period ended November 30, 2008, general and
administrative expense was $1.8 million compared with $1.8 million in the same
period last year.
The
decrease in general and administrative costs for the three month period ended
November 30, 2008 is the result of reduced legal costs, annual report
publication and annual meeting costs in comparison with the prior
year. For the six-month period ended November 30, 2008 general and
administrative costs remained consistent with the prior year as cost savings
were offset by foreign exchange losses.
Interest
income totaled $71 thousand in the three-month period ended November 30, 2008
compared to $175 thousand in the same period last year. For the
six-month period ended November 30, 2008 interest income totaled $153 thousand
compared with $315 thousand in the same period last year. The
decrease in interest income during both the three and six month periods ended
November 30, 2008 is due to a lower average cash and marketable securities
balance and significantly lower interest rates available on investments in
comparison with the same period in the prior year.
The
Company utilized cash of $2.1 million in our operating activities in three-month
period ended November 30, 2008 compared with $2.5 million during the same period
in fiscal 2008 representing a reduction of 18%. The decrease is
primarily a result of a reduced net loss. We utilized cash of $3.9
million for the six months ended November 30, 2008 compared with $4.9 million in
the same period last year a decrease of 20.7%. The reduced cash use
is the result of a lower net loss as well as a reduction in accounts payable and
increase in prepaid and other assets in 2007. At November 30, 2008,
we had cash and cash equivalents and short-term investments of $9.2 million
compared to $9.4 million at May 31, 2008.
Management
believes that Lorus’ current level of cash and cash equivalents and short-term
investments, will be sufficient to execute Lorus’ current planned expenditures
for at least the next twelve months; however, the debt obligation is due in
October 2009 and the Company currently does not have the cash and cash
equivalents and short term investments to satisfy this obligation. Given the current market
capitalization of the Company it is unlikely that the Company will be able to
raise additional funds to repay this liability and as a result there is
significant doubt as to whether the Company will be able to continue as a going
concern and realize its assets and pay its liabilities as they fall
due. The Company is pursuing strategies to address this obligation,
however if the Company cannot repay or refinance the debentures at or prior to
maturity, the lender may, at its discretion, take any action permitted by law to
realize on its security.
Lorus
Therapeutics Inc.
Interim
Consolidated Statements of Loss and Deficit (unaudited)
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Three
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Three
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Six
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Six
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(amounts
in 000's except for per common share data)
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months
ended
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months
ended
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months
ended
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months
ended
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(Canadian
dollars)
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Nov.
30, 2008
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Nov.
30, 2007
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Nov.
30, 2008
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Nov.
30, 2007
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REVENUE
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$ |
39 |
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$ |
1 |
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$ |
42 |
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$ |
27 |
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EXPENSES
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Cost
of sales
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- |
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- |
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- |
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1 |
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Research
and development
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694 |
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1,247 |
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1,872 |
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2,029 |
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General
and administrative
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920 |
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1,103 |
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1,761 |
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1,839 |
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Stock-based
compensation
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145 |
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209 |
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236 |
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312 |
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Depreciation
and amortization of fixed assets
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43 |
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80 |
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86 |
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159 |
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Operating
expenses
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1,802 |
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2,639 |
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3,955 |
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4,340 |
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Interest
expense on convertible debentures
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201 |
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271 |
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418 |
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541 |
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Accretion
in carrying value of convertible debentures
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391 |
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307 |
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768 |
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605 |
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Interest
income
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(71 |
) |
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(175 |
) |
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(153 |
) |
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(315 |
) |
Loss
from operation for the period
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2,284 |
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3,041 |
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4,946 |
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5,144 |
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Gain
on sale of shares
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- |
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(216 |
) |
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(450 |
) |
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(6,310 |
) |
Net
loss (earnings) and other comprehensive loss (income) for the
period
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2,284 |
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2,825 |
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4,496 |
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(1,166 |
) |
Basic
and diluted loss (earnings) per common share
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$ |
0.01 |
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$ |
0.01 |
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$ |
0.02 |
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$ |
(0.01 |
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Weighted
average number of common shares outstanding used in the calculation
of
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Basic
loss (earnings) per share
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250,173 |
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213,057 |
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239,290 |
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213,057 |
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Diluted
loss (earnings) per share
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250,173 |
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227,266 |
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239,290 |
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227,266 |
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Note re the financial statement
information above:
On
July 10, 2007 (the “Arrangement Date”), the Company completed a plan of
arrangement and corporate reorganization with 4325231 Canada Inc., formerly
Lorus Therapeutics Inc., (“Old Lorus”), 6707157 Canada Inc. and Pinnacle
International Lands Inc. that resulted in net proceeds of $6.9 million (the
“Arrangement”). As a result of the plan of arrangement
and reorganization, among other things, each common share of Old Lorus was
exchanged for one common share of the Company and the assets (excluding certain
future tax assets and related valuation allowance) and liabilities of Old Lorus
were transferred to the Company and/or its subsidiaries. The Company
continued the business of Old Lorus after the Arrangement Date with the same
officers and employees and continued to be governed by the same Board of
Directors as Old Lorus prior to the Arrangement Date. Therefore, the Company’s
operations have been accounted for on a continuity of interest basis and
accordingly, the consolidated financial statement information above reflects
that of the Company as if it had always carried on the business formerly carried
on by Old Lorus.
About Lorus
Lorus
is a biopharmaceutical company focused on the research and development of novel
therapeutics in cancer. Lorus’ goal is to capitalize on its research,
preclinical, clinical and regulatory expertise by developing new drug candidates
that can be used, either alone, or in combination with other drugs, to
successfully manage cancer. Through its own discovery efforts and an
acquisition and in-licensing program, Lorus is building a portfolio of promising
anticancer drugs. Lorus Therapeutics Inc. is listed on the Toronto
Stock Exchange under the symbol LOR.
Forward
Looking Statements
This
press release contains forward-looking statements within the meaning of Canadian
and U.S. securities laws. Such statements include, but are not limited to,
statements relating to: financings and corporate reorganizations, the
establishment of corporate alliances, the Company’s plans, objectives,
expectations and intentions and other statements including words such as
“continue”, “expect”, “intend”, “will”, “should”, “would”, “may”, and other
similar expressions. Such statements reflect our current views with
respect to future events and are subject to risks and uncertainties and are
necessarily based upon a number of estimates and assumptions that, while
considered reasonable by us are inherently subject to significant business,
economic, competitive, political and social uncertainties and
contingencies. Many factors could cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements described in this press release. Such
expressed or implied forward looking statements could include, among
others: our ability to continue as a going concern, our ability to
repay or refinance our outstanding convertible debentures by October 2009, our
ability to obtain the capital required for research and operations; the inherent
risks in early stage drug development including demonstrating efficacy;
development time/cost and the regulatory approval process; the progress of our
clinical trials; our ability to find and enter into agreements with potential
partners; our ability to attract and retain key personnel; changing market
conditions; and other risks detailed from time-to-time in our ongoing filings
with Canadian securities regulators and the United States Securities and
Exchange Commission.
Should
one or more of these risks or uncertainties materialize, or should the
assumptions set out in the section entitled “Risk Factors” in our filings with
Canadian securities regulators and the United States Securities and Exchange
Commission underlying those forward-looking statements prove incorrect, actual
results may vary materially from those described herein. These
forward-looking statements are made as of the date of this press release and we
do not intend, and do not assume any obligation, to update these forward-looking
statements, except as required by law. We cannot assure you that such
statements will prove to be accurate as actual results and future events could
differ materially from those anticipated in such
statements. Investors are cautioned that forward-looking statements
are not guarantees of future performance and accordingly investors are cautioned
not to put undue reliance on forward-looking statements due to the inherent
uncertainty therein.
Lorus
Therapeutics Inc.’s recent press releases are available through its website at
www.lorusthera.com. For
Lorus' regulatory filings on SEDAR, please go to www.Sedar.com. For
SEDAR filings prior to July 10, 2007 you will find these under the company
profile for Global Summit Real Estate Inc. (Old Lorus).
For further
information, please contact:
Lorus
Therapeutics Inc.
Elizabeth
Williams, 1-416-798-1200 ext. 372
ir@lorusthera.com