Full Press Release Details
Stellar Biotechnologies Reports Third
Quarter 2017 Financial Results
LOS ANGELES, Calif., August 9, 2017 - Stellar Biotechnologies,
Inc. (Nasdaq: SBOT), a leading manufacturer of a key protein utilized in multiple immunotherapy development pipelines, today reported
financial results for the three and nine months ended June 30, 2017 and provided an update on its business.
During the first nine months of the year, the company reported
continuing progress across its initiatives to optimize and expand its manufacturing capacity at its primary production facility
in California. Stellar's current manufacturing systems, which were originally developed to provide clinical-stage quantities
of its KLH carrier molecule, currently support multiple KLH therapies in advanced clinical studies. These studies include Alzheimer's
disease, lupus and metastatic breast cancer.
"We now have multiple customers with Phase 2
clinical studies that are fully enrolled and underway, and we are preparing for the impact that favorable clinical results
could have on the KLH market and our supply capabilities," said Stellar President and CEO Frank Oakes. "We plan
to incrementally increase our production capacity and manufacturing capabilities in line with the needs of our customers and
to maintain our leadership position in the sustainable production of controlled, fully traceable KLH."
Stellar Chief Financial Officer Kathi Niffenegger noted that
research and development activities increased under the company's optimization plan for the three and nine months ended June
30, 2017. "In the third quarter, we continued the trend of prudently managing our working capital. We reduced corporate expenses
and redirected resources to continue the ramp up of our development activities. In addition to the operational benefits of increased
throughput capacity, we believe these optimizations will favorably impact our financial metrics at the higher production volumes
needed for commercial drug launches."
Three months ended June 30, 2017
Total revenues were $0.02 million for the quarter ended June
30, 2017 compared to $0.18 million for same period last year. The change was due to a decrease in product sales volume. While the
company's customer base has not changed significantly, product sales volumes are subject to variability associated with the
rate of development and progression of clinical studies of third-party products that utilize Stellar KLH. For the three months
ended June 30, 2017, product sales consisted of lower volume orders for pre-clinical studies and immune system assays. For the
three months ended June 30, 2016, product sales primarily consisted of higher volume orders for later stage clinical studies. The
rate of progression towards later stage studies is expected to continue to affect the timing and volume of future product sales.
Total expenses decreased by $0.06 million to $1.31 million for
the quarter ended June 30, 2017, compared to $1.37 million for the same period last year.
For the third quarter of fiscal year 2017, Stellar reported
a net loss of $1.22 million, or $0.12 per basic share, compared to a net loss of $1.19 million, or $0.14 per basic share, for the
same period last year.
Nine months ended June 30, 2017
Total revenues were $0.23 million for the nine months ended
June 30, 2017 compared to $1.0 million for the same period last year. The change was primarily due to a decrease in product sales.
While the company's customer base has not changed significantly, product sales volumes are subject to variability associated
with the rate of development and progression of clinical studies of third-party products that utilize Stellar KLH. For the nine
months ended June 30, 2017, product sales consisted of KLH for clinical and pre-clinical studies and immune system assays. For
the nine months ended June 30, 2016, product orders primarily consisted of higher volume orders for later stage clinical studies.
Total revenues were also impacted by a decrease in the number of significant customers who purchased the company's products
and services, with two customers representing 85% of total revenue for the current period compared to five customers representing
91% of total revenue for the same period last year.
Total expenses decreased by $0.51 million to $4.08 million for
the nine months ended June 30, 2017 compared to $4.59 million for the same period last year.
For the first nine months of fiscal year 2017, Stellar reported
a net loss of $3.81 million, or $0.38 per basic share, compared to a net loss of $3.68 million, or $0.44 per basic share, for the
same period last year.
At June 30, 2017, the company had working capital of approximately
$7.69 million. Cash, cash equivalents and short-term investments totaled $7.65 million.
Additional Information
Stellar will file its Form 10-Q for the quarter ended June
30, 2017 with the Securities and Exchange Commission on August 9, 2017. To view the company's filings, visit the website
of the Securities and Exchange Commission at www.sec.gov. To view the company's filings with the Canadian Securities Administrators
(CSA), including the Management Discussion and Analysis and related consolidated financial statements, visit the CSA's SEDAR
website at www.sedar.com.
About Stellar Biotechnologies
Based north of Los Angeles at the Port of Hueneme, Stellar Biotechnologies,
Inc. (Nasdaq: SBOT) is the leader in sustainable manufacture of Keyhole Limpet Hemocyanin (KLH), an important immune-stimulating
protein used in wide-ranging therapeutic and diagnostic markets. KLH is both an active pharmaceutical ingredient (API) in many
new immunotherapies (targeting cancer, immune disorders, Alzheimer's and inflammatory diseases) as well as a finished product for
measuring immune status. Stellar is unique in its proprietary methods, facilities, and KLH technology. The company is committed
to meeting the growing demand for commercial-scale supplies of GMP grade KLH, ensuring environmentally sound KLH production, and
developing KLH-based active immunotherapies. Stellar KLH is a trademark of Stellar Biotechnologies.
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Stellar Forward-Looking Statements
This press release may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Forward-looking statements may be identified by the use of words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend," "may," "will," "would,"
"could," "should," "might," "potential," or "continue" and variations or similar
expressions. Readers should not unduly rely on these forward-looking statements, which are not a guarantee of future performance.
There can be no assurance that forward-looking statements will prove to be accurate, as all such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause actual results or future events to differ materially from
the forward-looking statements. Such risks include, but may not be limited to: general economic and business conditions; technology
changes; competition; changes in strategy or development plans; availability of funds and resources; anticipated requirements for
operating capital; governmental regulations and the ability or failure to comply with governmental regulations; changes in trade
policy and international law; the timing of Stellar's or its partners' anticipated results, including in connection with
clinical trials; the ability to meet the goals of Stellar's joint ventures and strategic partnerships; and other factors
referenced in Stellar's filings with securities regulators. For a discussion of further risks and uncertainties related to
the Stellar's business, please refer to Stellar's public company reports filed with the U.S. Securities and Exchange
Commission and the British Columbia Securities Commission. All forward-looking statements are made as of the date hereof and are
subject to change. Except as required by law, Stellar assumes no obligation to update such statements. This press release does
not constitute an offer or solicitation of an offer for sale of any securities in any jurisdiction, including the United States.
Stellar Biotechnologies
Condensed Interim Consolidated Statements
(Unaudited - Prepared by Management)
(Expressed in US Dollars)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product sales | $ | 20,532 | $ | 181,092 | $ | 175,407 | $ | 963,587 | ||||||||
| Contract services revenue | - | - | 50,000 | 32,000 | ||||||||||||
| Total Revenues | 20,532 | 181,092 | 225,407 | 995,587 | ||||||||||||
| Expenses: | ||||||||||||||||
| Costs of sales and contract services | 77,555 | 119,989 | 227,563 | 700,953 | ||||||||||||
| Costs of aquaculture | 64,708 | 59,063 | 212,945 | 223,225 | ||||||||||||
| Research and development | 536,169 | 470,097 | 1,326,405 | 1,068,008 | ||||||||||||
| General and administrative | 635,716 | 720,421 | 2,314,143 | 2,595,176 | ||||||||||||
| Total Expenses | 1,314,148 | 1,369,570 | 4,081,056 | 4,587,362 | ||||||||||||
| Loss from Operations | (1,293,616 | ) | (1,188,478 | ) | (3,855,649 | ) | (3,591,775 | ) | ||||||||
| Other Income (Loss): | ||||||||||||||||
| Foreign exchange gain (loss) | 64,135 | (8,188 | ) | 21,972 | 109,448 | |||||||||||
| Loss in fair value of warrant liability | - | - | - | (211,956 | ) | |||||||||||
| Other income | 9,120 | 2,589 | 24,767 | 16,593 | ||||||||||||
| Income tax expense | - | - | 800 | 7,200 | ||||||||||||
| Net Loss | $ | (1,220,361 | ) | $ | (1,194,077 | ) | $ | (3,809,710 | ) | $ | (3,684,890 | ) | ||||
| Loss per common share: | ||||||||||||||||
| Basic and diluted | $ | (0.12 | ) | $ | (0.14 | ) | $ | (0.38 | ) | $ | (0.44 | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic and diluted | 10,153,130 | 8,448,758 | 10,141,882 | 8,423,429 |
Condensed Interim Consolidated Balance
(Unaudited - Prepared by Management)
(Expressed in US Dollars)
| June 30, | September 30, | |||||||
| 2017 | 2016 | |||||||
| Assets: | ||||||||
| Cash, cash equivalents and short-term investments | $ | 7,645,010 | $ | 11,405,698 | ||||
| Other current assets | 474,339 | 693,957 | ||||||
| Noncurrent assets | 902,923 | 838,149 | ||||||
| Total Assets | $ | 9,022,272 | $ | 12,937,804 | ||||
| Liabilities and Shareholders' Equity: | ||||||||
| Accounts payable and accrued liabilities | $ | 425,342 | $ | 623,644 | ||||
| Shareholders' equity | 8,596,930 | 12,314,160 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 9,022,272 | $ | 12,937,804 |
Condensed Interim Consolidated Statements
(Unaudited - Prepared by Management)
(Expressed in US Dollars)
| Nine Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2017 | 2016 | |||||||
| Cash Flows Used In Operating Activities: | ||||||||
| Net loss | $ | (3,809,710 | ) | $ | (3,684,890 | ) | ||
| Items not affecting cash: | ||||||||
| Depreciation and amortization | 135,515 | 106,712 | ||||||
| Share-based compensation | 92,480 | 209,781 | ||||||
| Foreign exchange loss | (21,972 | ) | (109,448 | ) | ||||
| Loss in fair value of warrant liability | - | 211,956 | ||||||
| Changes in working capital items | 21,153 | (48,073 | ) | |||||
| Net cash used in operating activities | (3,582,534 | ) | (3,313,962 | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Acquisition of property, plant and equipment | (200,365 | ) | (294,858 | ) | ||||
| Purchase of short-term investments | (3,008,853 | ) | (6,005,737 | ) | ||||
| Proceeds on sales and maturities of short-term investments | 3,000,000 | 9,021,827 | ||||||
| Contribution to joint venture | - | (66,695 | ) | |||||
| Net cash provided by (used in) investing activities | (209,218 | ) | 2,654,537 | |||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from exercise of warrants and options | - | 1,368,260 | ||||||
| Net cash provided by financing activities | - | 1,368,260 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 22,211 | 122,865 | ||||||
| Net change in cash and cash equivalents | (3,769,541 | ) | 831,700 | |||||
| Cash and cash equivalents - beginning of period | 7,416,904 | 3,955,503 | ||||||
| Cash and cash equivalents - end of period | $ | 3,647,363 | $ | 4,787,203 |