Jul. 10, 2009 (Filing Services Canada) -- Migenix Inc. (MGI - TSX, MGIFF - OTCBB), (the "Company" or "MIGENIX") reports financial results for the three months and year ended April 30, 2009 and provides a corporate update:
* In March 2009 we raised gross proceeds of approximately $2.3 million by way of a rights offering financing. Under the rights offering, we issued approximately 47 million units priced at $0.05 per unit, with each unit consisting of one common share and a warrant to purchase one common share at $0.10 per common share at any time over the 12 month period following issuance of such warrants.
* We continued to streamline operations while preserving the integrity of the core assets. These restructuring efforts have resulted in funds on hand at April 30, 2009 that are expected to provide for operations into approximately the first quarter of calendar 2010.
* Omiganan 1% gel (OmigardTM; topical cationic peptide; prevention of catheter-related infections): In May 2009 Cadence Pharmaceuticals, Inc., discontinued the OmigardTM license agreement. We are currently interacting with our advisors and a regulatory agency regarding potential approval strategies for OmigardTM.
* Omiganan (CLS001; topical cationic peptide; treatment of dermatological diseases): Cutanea Life Sciences, our development and commercialization partner for CLS001, continues to seek a co-development partner to advance omiganan into Phase III clinical development for the treatment of rosacea.
* MX-2401 (IV lipopeptide; treatment of gram-positive bacterial infections): MX-2401, an injectable lipopeptide antibiotic, is targeted for the treatment of serious gram positive bacterial infections, including highly publicized treatment resistant hospital bacteria such as MRSA. The focus of our activities in this program is on strategic options for advancing the development of MX-2401. The Company plans to present further results of our research on MX-2401 at the 49th Annual Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) meeting being held September 12-15, 2009 in San Francisco, CA.
* Celgosivir (MX-3253; oral alpha-glucosidase I inhibitor; treatment of chronic hepatitis C virus infections): In April 2009 the Company received notice from United Therapeutics to discontinue the celgosivir option agreement. We are currently seeking strategic options for the celgosivir program.
* We currently have five employees and are utilizing the services of several consultants including former employees to carry out our objectives. These objectives include: (i) investigating opportunities for the OmigardTM program; (ii) obtaining additional funds through licensing and non-dilutive financing arrangements; and (iii) continuing to reduce expenses. As part of our efforts to manage costs, the Company has invoked the notice provisions in its employment agreements with the Company's Chief Financial Officer and the Vice President, Business Development, and the employment of these senior executives will end on or before November 30, 2009 unless otherwise agreed by the parties.
FINANCIAL RESULTS
For the three months ended April 30, 2009 ("Q4/09"), MIGENIX recorded income of $6.7 million (Q4/08: loss of $3.2 million) or $0.05 (Q4/08: loss of $0.04) per common share and for the year ended April 30, 2009 ("Fiscal 2009"), the loss is $0.6 million (Fiscal 2008: $12.8 million) or $0.01 (Fiscal 2008: $0.14) per common share. The $12.2 million difference between the Fiscal 2009 loss and the Fiscal 2008 loss consists principally of: a $7.8 million gain on adjustment of the convertible royalty participation units; a $3.1 million decrease in research and development costs; a $0.6 million decrease in general and corporate costs; and a $0.8 million decrease in the write-down of intangible assets.
During Q4/09 the Company had approximately $0.1 million in revenues (Q4/08: $nil) and Fiscal 2009 revenues were approximately $0.2 million (Fiscal 2008: nominal i.e. <$0.1 million). The Q4/09 and Fiscal 2009 revenues were from work performed by MIGENIX personnel pursuant to: (1) the option agreement with United Therapeutics; and (2) a service agreement with Cadence Pharmaceuticals. We do not anticipate further revenues from either of these agreements as both agreements have been discontinued.
Expenses in Q4/09 and Fiscal 2009 have decreased significantly compared to prior periods due to the Company's initiatives to reduce expenses including personnel reductions and focusing on the out-licensing of the Company's unpartnered programs with minimal research and development activities being conducted that are not funded by partners.
Research and development expenses decreased approximately $3.1 million in Fiscal 2009 compared to Fiscal 2008 principally due to the completion of clinical trials in the celgosivir program, reduced personnel, less research activity and lower patent expenses.
General and corporate expenses decreased approximately $0.6 million in Fiscal 2009 compared to Fiscal 2008. This decrease is principally due to: reduced rent expense including closing of the San Diego office; reduced use of contract personnel for internal control work and accounting; reduction in external investor relations services; and reduced personnel costs; offset partially by higher legal costs primarily related to the requisition of a shareholder meeting in 2008.
The Company reviews the carrying value of its intangible assets on a quarterly basis. Pursuant to the Q4/09 quarterly review of the carrying values of the Company's intangible assets, the Company determined that a write-down of approximately $0.1 million was appropriate in respect of one of the Company's technology licenses. The write-down of intangible assets in Fiscal 2009 was approximately $0.1 million (Fiscal 2008: $0.9 million) - the Fiscal 2008 write-downs were principally in respect of technologies acquired as part of our MitoKor merger in August 2004.
Interest income was approximately $0.1 million for Fiscal 2009 (Fiscal 2008: $0.4 million). The decrease in interest income is due to lower cash balances available for investing and lower interest rates obtained on our investments.
The $2.9 million initial carrying value (net of deferred transaction costs) of the debt component of the convertible royalty participation units was being accreted to the maximum royalties payable of approximately $29.5 million (would be reduced for actual royalties paid, any units converted into common shares and should the Company's estimate of the probable royalties payable decline below $29.5 million). The OmigardTM results on March 12, 2009 and the resulting uncertainty for the OmigardTM program led the Company to reduce its estimate of the probable royalties payable to the unit holders over the royalty payment term to approximately $7.3 million.
