Vancouver, Canada - Forbes Medi-Tech Inc. (TSE:FMI; NASDAQ:FMTI) today announced its financial results for the three and nine-month periods ended September 30, 2003. Comparative periods for these statements are the three months and nine months ended September 30, 2002 respectively.
All amounts are in Canadian Dollars unless otherwise noted.
Third Quarter 2003 Highlights
- Increased revenues by 161% to $3.4 million for the three months ended September 30, 2003 compared to $1.3 million for the three months ended September 30, 2002
- Increased revenues by 62% to $10.3 million for the nine months ended September 30, 2003 compared to $6.4 million for the nine months ended September 30, 2002
- Reported net loss of $0.06 per share for the three months ended September 30, 2003 compared to a $0.09 per share loss for the same period last year
- Reported net income of $0.04 per share for the nine months ended September 30, 2003 compared to a $0.05 per share loss for the same period last year
- Increased cash balance to $9.7 million compared to $0.4 million at December 31, 2002
- Completed US$4.8 equity financing with BioAsia acting as lead investor
- Regained Nasdaq listing compliance and subsequently moved up to the Nasdaq National Market
- Received US$3.0 million partial loan repayment from Phyto-Source LP, the Company's manufacturing joint venture operation in Pasadena, Texas, from proceeds of bank financing obtained by Phyto-Source
- Signed contract for future Reducol(tm) sales with Iljin Pharmaceuticals
"Forbes has continued to meet its goals and objectives", said Charles Butt, President and CEO of Forbes Medi-Tech Inc. "The capital from our financial initiatives has increased our resources to grow our nutraceutical business and expand the pharmaceutical development pipeline including the FM-VPx Library of Compounds", said Butt.
Demand for the Company's products, Reducol(tm) and Phyto-S Sterols (non-branded sterols), has continued to provide a significant revenue base for Forbes. The Company continues to seek additional sales contracts and partnership initiatives to further the growth of its nutraceutical business.
For the three months ended September 30, 2003, revenues totaled $3.4 million, compared with $1.3 million for the quarter ended September 30, 2002. For the nine months ended September 30, 2003, total revenues were $10.3 million compared with $6.4 million for the nine months ended September 30, 2002.
Phytosterol revenues, including direct sales of phytosterol products and the amortization of license fees, made up the majority of the Company's revenue.
For the three months ended September 30, 2003, the Company reported a net loss of $1.4 million ($0.06 per share) compared with a loss of $1.9 million ($0.09 per share) for the quarter ended September 30, 2002. The improvement in financial results for the third quarter is representative of the Company's efforts to maintain sales initiatives and cost containment measures.
For the nine months ended September 30, 2003, the Company reported a net profit of $0.9 million ($0.04 per share) compared with a net loss of $1.0 million ($0.05 per share) for the nine months ended September 30, 2002. Included in net income for the nine months ended September 30, 2003 is a gain on the divestiture of the AD/ADD technology in the amount of $2.2 million. Included in net income for the three months ended September 30, 2002, is a one-time gain of $6.1 million on settlement of licensing arrangements. The increase in net income for the nine months ended September 30, 2003 is due to the Company's share of sales by the Phyto-Source joint venture, cost containment measures in the areas of administrative and non-core R&D expenditures, and the receipt of Quebec provincial investment tax credits in the first quarter in the amount of $0.6 million.
Liquidity & Capital Resources
As at September 30, 2003, the Company's net cash and cash equivalents were $9.7 million compared with $0.4 million as at December 31, 2002.
The Company's working capital at September 30, 2003 improved to $8.4 million from a working capital deficit of $3.5 million at December 31, 2002. Forbes' working capital position has improved mainly due to increased revenues, the partial loan repayment from Phyto-Source, its manufacturing joint venture from proceeds of a US$3 million term loan obtained by the joint venture (See Company's news release dated July 2 & August 13, 2003), completion of a US$4.8 million equity financing primarily with institutional investors, reduction in accounts payable and an increase in short-term receivables under contractual commitments.
During the three months ended September 30, 2003, the Company used $0.9 million of cash in operations compared with $1.8 million in the quarter ended September 30, 2002. Investing activities used $0.1 million of cash compared with $1.7 million of cash being generated in the third quarter ended September 30, 2002. Financing activities in the quarter ended September 2003 generated $9.6 million of cash compared with $1.1 million in the third quarter ended September 30, 2002. This improvement is primarily due to the completion of a US$4.8 equity financing in September 2003 with BioAsia acting as the lead investor (see Company's news release dated September 5, 2003) and stock option exercises that provided approximately $0.4 million of cash.
During the nine months ended September 30, 2003, $1.3 million of cash was used in operating activities compared with $6.0 million used in the nine months ended September 30, 2002. This improvement is primarily a result of the increase in phytosterol sales during the period, receipt of deferred revenues under the Pharmavite agreement, reduction of inventories, reduction of royalties payable and increase in accounts receivable. Investing activities provided $1.3 million of net cash primarily from the gain on the divestiture of the AD/ADD technology compared with $2.1 million during the nine months ended September 30,
2002 which resulted largely from proceeds received from the disposal of the pilot plant. Net cash provided by financing activities during the nine months ended September 30, 2003 was $9.3 million compared with $0.6 million cash used during the same period in 2002 due primarily to completion of the private placement led by BioAsia.
Forbes' pharmaceutical research program is targeting a $21 billion dollar market opportunity. In pursuing this market, Forbes is dedicated to the development of its novel therapeutic and cholesterol absorption inhibitor, FM-VP4. The safety and efficacy of this cholesterol absorption inhibitor is currently being tested in Phase II human clinical trials at the Academic Medical Center in Amsterdam.
Forbes has completed enrollment in the one hundred-patient randomized, placebo-controlled Phase II trials and anticipates the results from the Phase II clinical trials in early 2004.
"In addition to enrollment completion, the safety review of all treated patients to date has not raised any concerns or issues that may preclude the study from finishing," said Butt.
In addition to FM-VP4, Forbes has begun to explore indications from the FM-VPx Library of Compounds including: cholesterol and triglyceride-lowering, HDL (good cholesterol) increasing, anti-obesity, anti-diabetic, and anti-inflammatory.
Cost of sales, marketing and development - For the three months ended September 30, 2003, cost of sales, marketing & product development costs ("Cost of Sales") totaled $2.0 million vs. $1.2 million for the quarter ended September 30, 2002. For the nine months ended September 30, 2003, Cost of Sales were $5.6 million compared with $5.7 million for the nine months ended September 30, 2002. Costs have increased for the quarter ended September 30, 2003 over 2002 in line with increased sales.
Research and development; General and administrative - For the three months ended September 30, 2003, net research and development ("R&D") expenses totaled $0.8 million compared with $0.7 million for the quarter ended September 30, 2002. The Company continues to focus its core research and development on cardiovascular and, specifically, cholesterol-lowering compounds such as FM-VP4. The Company anticipates these expenditures to increase as it further develops its FM-VPx Library of Compounds.
For the nine months ended September 30, 2003, R&D expenses were $1.0 million compared to $2.7 million for the nine months ended September 30, 2002. Included in the nine months ended September 30, 2003 is an amount of $0.6 million of Quebec investment tax credits received in the first quarter of 2003 in respect of prior years' research activities conducted in that Province. As the Company no longer has manufacturing facilities or offices in Quebec, further investment tax credits from that Province, if any, are expected to be minimal.
For the three months ended September 30, 2003, general and administrative ("G&A") expenditures totaled $1.5 million compared to $0.8 million for the third quarter 2002. For the nine months ended September 30, 2003, G&A totaled $3.6 million compared with $3.5 million for the nine months ended September 30, 2002. G&A expenditures for the nine months ended September 30, 2002 and up to June 30, 2003 reflected cost containment as the Company sought further funding, which was obtained in the third quarter 2003. As a result, G&A expenditures can be expected to increase to levels more appropriate for a growing biopharmaceutical development company.
Based on the recent funding through the partial loan re-payment from Phyto-Source, supply forecasts provided by customers pursuant to current supply agreements, the US$4.8 million private placement, other receivables, and projected expenditure levels, Forbes believes it will have sufficient capital to operate through the end of 2005. The Company is also continuing to look at various financing opportunities to further develop its pipeline of products and to provide alternate sources of funding in the event that expenditures or receivables are not realized as planned.
Third Quarter 2003 Report
This news release includes by reference the Company's unaudited financial statements for the third quarter ended September 30, 2003, including the full 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 biopharmaceutical company dedicated to the research, development and commercialization of innovative prescription pharmaceutical and nutraceutical products for the prevention and treatment of cardiovascular and related diseases. Forbes' scientific platform is based on core sterol technology. By extracting plant sterols from by-products of the forestry industry and other natural sources, Forbes has developed cholesterol-lowering agents for use in pharmaceutical compounds, functional foods and dietary supplements.
NASDAQ and the Toronto Stock Exchange have not reviewed and do not accept responsibility for the adequacy or accuracy of the content of this News Release. This News Release contains forward-looking statements concerning anticipated developments in the Company's business, including statements regarding additional sales contracts and partnership initiatives, the timing of the Phase II clinical trial results, levels of future expenditures, projected revenues, sufficiency of capital through 2005, and other information in future periods.
Forward-looking statements are frequently, but not always, identified by words such as "continues", "to seek", "anticipates", "expected", "believes", "look at", "projected", "planned", "targeting", "pursuing", "future", "outlook", and similar expressions or variations thereon, or by statements that events, conditions or results "will," or "may" occur or be achieved. Forward-looking statements are statements about the future and are inherently uncertain and the Company's actual results could differ materially from those anticipated in those forward-looking statements as a result of numerous factors, including without limitation, uncertainty that the Company will be able to procure additional sales contracts or partnership initiatives; uncertainty that the Company will be able to further the growth of its nutraceutical business; clinical trial risks, including uncertainty as to timing of the Phase II trial report; the risk that buyers will not order their forecasted amounts of the Company's products; uncertainty as to the Company's ability to fulfill product orders; manufacturing risks; the need for performance of contractual obligations by third parties; partnership/strategic alliance risks; the need for regulatory approvals which may be withdrawn, or may not be obtained in a timely manner, or at all; the need to control costs and the possibility of unanticipated expenses; the risk of technical obsolescence of the Company's products; intellectual property risks; insurance risks; the effect of competition; uncertainty of the size and existence of a market opportunity for the Company's and its customers' products; the Company's need for additional future capital, which may not be available in a timely manner or at all; foreign exchange risk; product liability risks; as well as a description of other risks and uncertainties affecting the Company and its business, as contained in news releases and filings with the United States Securities and Exchange Commission and Canadian 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 are based on the beliefs, opinions 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 statement if those beliefs, opinions or expectations, or other circumstances should change.