Protox Therapeutics Inc. (TSX: PRX), a leader in the development of receptor targeted fusion proteins, today released third quarter 2008 financial results for the three months ended September 30, 2008 ("2008 Q3").

"The third quarter marked significant advances for Protox, most prominently the early completion of patient enrolment in our Phase 2a study of PRX302 for the treatment of BPH," said Dr. Fahar Merchant, President and CEO of Protox. "We are very pleased with the 12 month data that we recently announced from our Phase 1 BPH study and look forward to releasing top line results from our Phase 2a BPH study before the end of the year."

 

2008 Q3 Highlights

 

    <<

       Completed enrolment of patients for Phase 2a study of PRX302 as a

        treatment for benign prostatic hyperplasia (BPH) one quarter ahead of

        schedule.

       Presented a poster entitled "Convection enhanced delivery (CED) of

        IL-4 pseudomonas exotoxin (PRX321): Increased distribution and MR

        monitoring" by Company collaborator Dr. Yael Mardor at the 8th

        Congress of the European Association of Neuro-oncology and received

        the EANO 2008 Poster Award.

       A PRX321 study conducted by Company collaborator Dr. Raj Puri and

        colleagues entitled "Potent in vitro and in vivo antitumor activity

        of interleukin-4-conjugated Pseudomonas exotoxin against human

        biliary tract carcinoma" was published in the International Journal

        of Cancer, Volume 123(12), p. 2915.

       Announced appointment of Dr. Jack Geltosky to the Board of Directors.

 

Subsequent Highlights

 

       Announced positive 12 month follow-up data from Phase 1 study of

        PRX302 in patients with BPH.

       Data from the PRX302 Phase 1 prostate cancer study was presented at

        the 15th Annual Scientific Retreat of the Prostate Cancer Foundation

        in Lake Tahoe, Nevada in October 2008. The poster presentation was

        entitled &q
uot;A Phase 1 Trial of PSA-Activated Pore-Forming Protoxin

        (PRX302) as Therapy for Locally Recurrent Prostate Cancer".

       Announced the expiry date for up to 9,948,507 share purchase warrants

        has been extended from November 29, 2008 to December 22, 2008.

    >>

 

FINANCIAL RESULTS

 

Protox has not earned any revenue in any of its previous fiscal years, other than income from interest earned on the Company's cash balances. During 2008 Q3 and the nine months ended September 30, 2008 ("2008 YTD") the Company earned interest income of $0.09 million and $0.23 million, respectively, compared to $0.06 million and $0.25 million for the corresponding 2007 comparative periods. The variance in interest income is a result of the investment products, interest rate and/or average cash balanced invested. Interest income is anticipated to continue to vary given the current and expected near term market environment.

 

The Company reported a net loss for 2008 Q3 of $2.5 million or $0.03 per share compared to $1.7 million or $0.03 per share for the three months ended September 30, 2007 comparative period ("2007 Q3"). The net loss for 2008 YTD totaled $6.4 million or $0.09 per share compared to $5.1 million or $0.09 per share for the nine months ended September 30, 2007 ("2007 YTD").

 

Research and development ("R&D") costs of nearly $2.0 million were incurred during 2008 Q3, as compared to $1.0 million incurred for the 2007 Q3 comparative period. For the 2008 YTD period, R&D costs totaled $4.6 million representing a $1.4 million (45%) increase from $3.2 million incurred during the 2007 YTD comparative period. The increase for both the 2008 Q3 and 2008

YTD periods reflects the continuing effect of the expanded scope and advancement of Protox's drug development and clinical trial activities.

 

Since the beginning of the year, incremental costs have been incurred for clinical and regulatory preparation activities. During the first three quarters of 2007, the scope and related cost of PRX321 CMC/drug supply manufacturing activities were significantly less while GBM Phase 2b clinical trial planning activities were nominal on a comparative basis. In addition, the early 2008 initiation of the PRX302 Phase 2a BPH study and enrolment completion during 2008 Q3 resulted in higher costs compared to 2007 YTD during which the predecessor Phase 1 study was initiated in mid 2007 Q2 and only partially enrolled by the end of 2007 Q3. A milestone payment relating to the PRX302 prostate cancer program also contributed to increased R&D costs earlier in 2008. Discovery research costs for 2008 Q3 were $0.2 million compared to $0.1 million for 2007 Q3, and increased roughly 50% from $0.4 million for 2007 YTD to $0.6 million for the 2008 YTD period. The increases in Discovery research costs reflect incremental spending associated with expanded CRADA and collaborative research activities for the Company's technology platforms.

 

General and administrative ("G&A") costs for 2008 Q3 declined 13% to $0.48 million from $0.55 million last quarter, however, increased 12% from $0.43 million incurred during the 2007 Q3 comparative period. YTD G&A costs have also increased at a similar rate to $1.57 million from $1.38 million for the 2007 YTD comparative period, although half of the increase is attributable to a one-time listing fee of $0.1 million incurred during 2008 Q1 when the Company graduated from the TSX Venture Exchange to the Toronto Stock Exchange. G&A costs will generally vary from period to period depending on the specific business development, market research and shareholder relations initiatives undertaken and related travel required at such time to support the Company's corporate objectives. The 2008 Q3 and 2008 YTD G&A costs increase is commensurate with the growth of the Company and its operations and also reflects an increase in business development personnel and activities.

 

During 2008 Q3 and 2008 YTD, the Company recorded nominal foreign exchange losses as the relative value of the U.S. and Canadian dollar changed marginally. However, during the 2007 Q3 and 2007 YTD comparative periods, $0.13 and $0.32 million of losses were recorded respectively with the majority representing unrealized losses on the Company's then more significant U.S. dollar reserves due to an approximate 15% relative decline in the value of the U.S. dollar during the first three quarters of 2007. The foreign exchange loss or gain recorded for a particular period and difference between comparative periods is a function of prevailing foreign exchange rates in effect at such time compared to the comparative period(s) as well as the amount of net financial assets or liabilities held or transacted during the subject periods.

 

At September 30, 2008, the Company had cash and cash equivalents of $9.8 million, a net decrease of $1.7 million from December 31, 2007. The Company had working capital of $8.5 million at September 30, 2008, a decrease of $1.2 million from the December 31, 2007.

 

As at November 11, 2008, the Company has 75,894,044 common shares issued and outstanding. In addition, the Company has 5,032,500 options outstanding to purchase common shares of the Company. Of the options currently outstanding, approximately 3.2 million are exercisable into an equivalent number of common shares of the Company at exercise prices ranging from $0.50 to $1.00 and with an average exercise price of $0.81. The Company also has warrants outstanding entitling warrant holders to purchase common shares as follows: i) 10,938,882 warrants
with an exercise price of $0.65 per common share and an expiry date of December 22, 2008 and ii) 584,413 warrants with an exercise price of $0.71 and expiry date of May 23, 2010.

 

For complete financial results, please see our filings at www.sedar.com.

 

About Protox

 

Protox Therapeutics is a leader in advancing novel, receptor targeted fusion proteins. Two novel drug candidates derived from the company's INxin(TM) and PORxin(TM) platforms are being developed in three clinical programs. A Phase 2a clinical trial evaluating PRX321 (INxin) for the treatment of primary brain cancer has been completed and the drug has received Fast Track Designation and Orphan Drug Status from the US FDA. Phase 2a clinical trials evaluating PRX302 (PORxin) for the treatment of localized prostate cancer and benign prostatic hyperplasia (enlarged prostate) are ongoing. Protox is also collaborating with the US National Institutes of

Health (NIH) on a research program focused on the discovery of next generation fully human targeted therapeutics.

 

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Protox' current beliefs as well as assumptions made by and information currently available to Protox and relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Protox in its public securities filings; actual events may differ materially from current expectations. Protox disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

For further information: James Beesley, Director, Investor Relations, Protox Therapeutics, (604) 484-0975, jbeesley@protoxtherapeutics.com; Michael Moore, Investor Relations, Equicom Group, (416) 815-0700 x 241, mmoore@equicomgroup.com