Vancouver, Canada - Forbes Medi-Tech Inc. (TSX:FMI; NASDAQ:FMTI) reports its financial results for the three months ended March 31, 2007. Comparative period for these statements is the three months ended March 31, 2006. All amounts are in Canadian Dollars unless otherwise noted.
First Quarter 2007 Highlights
. Reported total revenue from continuing operations of $2.1 million for the quarter ended March 31, 2007 compared with $1 million for same period last year, an increase of 122% . Reported net loss from continuing operations of $0.06 per share for the quarter ended March 31, 2007 compared with a net loss per share from continuing operations of $0.10 for same period last year . Announced product launches for a range of dairy products through Modelo Continente and Jeronimo Martins of Portugal . Announced revenue guidance of CDN$7.5 to $8 million for fiscal 2007 excluding interest income
"Our revenue is up, there are more customer product launches on the way and our re-focused pharmaceutical development program with reduced expenditures has formed a strong foundation with the FM-TP series of compounds," says Charles Butt, President and CEO of Forbes Medi-Tech Inc. "To further enhance our portfolio of products, we are pursuing other technologies and compounds through potential strategic partnership and M&A activities."
Sales of Forbes cholesterol-lowering ingredient, Reducol(tm), and other cholesterol-lowering ingredients and value added products have grown over 100%. Product launches in the first quarter featuring Reducol(tm) included a range of dairy products through Modelo Continente and Jeronimo Martins of Portugal.
The Company maintains its revenue guidance for 2007 of $7.5 to $8 million. The anticipated revenue is primarily based on contracted and forecasted amounts for Reducol(tm) and other sterol products for sale into the functional food and dietary supplement markets, and on forecasted amounts for value added products for sale into the functional food markets. Realization of the anticipated revenue is dependent upon these contracted and forecasted sales being achieved.
The Company will review its revenue guidance throughout the year as product launches and discussions with companies regarding possible new contracts continue.
Forbes' re-focused pharmaceutical development program is concentrating on the FM-TP Series of Compounds being designed to target specific aspects of Metabolic Syndrome and various Inflammatory Lung Diseases.
The Company continues to seek out-licensing opportunities for FM-VP4 (the Company's novel cholesterol absorption inhibitor.) to take advantage of the compound's clinically significant results, safety profile, dose response and market opportunity. R&D expenses related to
FM-VP4 have been cut with Forbes focusing on exciting new development opportunities. To build the Company's development pipeline, Forbes will continue to seek other compounds and technology through potential strategic partnership and M&A activities.
The Company reported a net loss from continuing operations of $2.3 million for the quarter ended March 31, 2007 compared to a loss from continuing operations of $3.6 million for the same period last year. As Forbes continues to conduct further research and development of the FM-TP Series of Compounds, and to continue to invest in the expansion of additional products across Europe, the Company expects to continue to report future operating losses from continuing operations.
Revenues - for the quarter ended March 31, 2007 were $2.1 million compared with $1.0 million for the quarter ended March 31, 2006, an increase of 110%. This increase was due to increases in both sales of Reducol(tm) by Forbes and sales by Forbes-Fayrefield of finished products, such as margarine spread, spoonable yogurt, and yogurt drinks.
Cost of sales - for the quarter ended March 31, 2007, totaled $1,601 thousand on phytosterol revenues of $1,907 thousand, or 84% of phytosterol revenues, versus $649 thousand on phytosterol revenues of
$755 thousand for the three months ended March 31, 2006, or 86% of phytosterol revenues. Fluctuations in Cost of Sales as a percentage of revenue are attributable to the mix of product sold in a period, varying contractual sales terms, lower margins realized on the sales of finished goods sold through Forbes-Fayrefield and inventory valuation adjustments.
Research and development expenses (R&D) - for the quarter ended March 31, 2007 totaled $1.2 million compared with $2.1 million for the same period in 2006. R&D expenditures in the first quarter of 2007 were primarily spent on the FM-TP series of compounds, and the finalization of work on the FM-VP4 clinical trial. Patent application, filing and defence costs are expensed as incurred and included in R&D costs. R&D expenses are expected to increase as work progresses on the FM-TP Series of Compounds.
Liquidity & Capital Resources
Cash, cash equivalents and working capital - for the quarter ended March 31, 2007, net cash and cash equivalents were $10.9 million compared with $15.3 million as at December 31, 2006. The Company's working capital at March 31, 2007 was $17.2 million compared with $19.4 million at December 31, 2006. The decrease in cash and working capital in the quarter was mainly attributable to funding the loss from continuing operations.
Operations - for the quarter ended March 31, 2007, the Company used
$4.3 million of cash for continuing operations compared with $5.4 million of cash used in the quarter ended March 31, 2006. Net changes in non-cash operating items used cash of $2.1 million in the quarter ended March 31, 2007 compared with a $2.3 million change in non-cash operating items in the quarter ended March 31, 2006.
Investing activities - for the quarter ended March 31, 2007, were insignificant. Investing activities in the quarter ended March 31, 2006 realized $28.9 million, relating to the proceeds on disposal of Forbes'
interest in Phyto-Source.
First Quarter Ended March 31, 2007 Report This news release includes by reference the Company's unaudited financial statements for the first quarter ended March 31, 2007 and the Management Discussion & Analysis (MD&A). The MD&A and financial statements are being filed with applicable Canadian and U.S. regulatory authorities.
About Forbes Medi-Tech Inc.
Forbes Medi-Tech Inc. is a life sciences company dedicated to the research, development and commercialization of innovative products for the prevention and treatment of life-threatening disease. Our strategy and vision is to develop and market a portfolio of products for the benefit of all consumers, from the healthy person desiring consumer lifestyle products that can help reduce the risk of future disease, to medical patients needing therapeutic prescription products for the treatment of an established ailment.
This News Release contains forward-looking statements and forward-looking information concerning anticipated developments in the Company's business including projected sales and revenues, planned research and development, anticipated new products, future licensing out of FM-VP4, the potential acquisition of other technologies and compounds, and other information in future periods. Forward-looking statements and information can be identified by forward-looking words such as "on the way", "pursuing", "revenue guidance", "forecasted", "potential", "anticipated", "possible", "continues to seek", "new", "opportunities", "expects", "continue", "strategy", "vision", "will", and similar expressions or variations thereon. Forward-looking statements and information are about the future and are inherently uncertain, and actual results may differ materially from those reflected in the forward-looking statements and information due to a variety of risks, uncertainties and other factors, including, without limitation, the Company's need for additional customers and the Company's reliance on its existing customers, including Fayrefield Foods, for performance; uncertainty whether the Company will realize the sales volumes, prices and revenues currently contracted and forecasted; the effect of competition; uncertainty as to whether FM-VP4 will be licensed out; the early stage of development of the FM-TP Series of Compounds and risks inherent in research and development; uncertainty whether the Company will be able to acquire other technologies or compounds, whether through strategic alliance, M&A transactions or otherwise; the need for future regulatory approvals and clinical trials, the occurrence and success of which are not assured; product liability, intellectual property and insurance risks; manufacturing risks and the Company's dependency on Phyto-Source LP, its manufacturer of Reducol(tm); the Company's need for additional future capital, which may not be available in a timely manner or at all; exchange rate fluctuations; uncertainty whether the Company's shares will remain listed on NASDAQ; and other risks and uncertainties affecting the Company and its business, as contained in its latest Annual Information Form / Form 20-F, and other documents filed with Canadian and U.S. securities regulatory authorities, any of which could cause actual results to vary materially from current results or the Company's anticipated future results. Forward-looking statements and information are based on the beliefs, assumptions, and expectations of the Company's management at the time they are made, and the Company does not assume any obligation to update its forward-looking statements or information if those beliefs, assumptions, or expectations or other circumstances should change.