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Lorus Therapeutics Reports First Quarter Results for Fiscal 2012
TORONTO, ONTARIO--(Nov. 11, 2011) - Lorus Therapeutics Inc. (TSX:LOR) ("Lorus" or the "Corporation"), a biopharmaceutical company specializing in the discovery, research and development of pharmaceutical products and technologies for the management of cancer, today reported financial results for the three months ended August 31, 2011.
Q1 2012 HIGHLIGHTS
Our net loss for the three months ended August 31, 2011 was $1.1 million ($0.06 per share) compared with $1.2 million ($0.12 per share) during the same period in fiscal 2011. Increased research and development expenditures of $75 thousand due to increased spending on our LOR-253 Phase I clinical development program as well as increased stock based compensation of $10 thousand offset by lower general administrative expenses of $85 thousand primarily due to $95 thousand in financing fees related to a proposed financing terminated during the quarter ended August 31, 2010 resulted in the overall decrease in net loss during the quarter.
We utilized cash of $1.1 million in our operating activities in the three months ended August 31, 2011 compared with $661 thousand in the same period in the prior year. The increase is primarily a result of delayed payment of accounts payable and accrued liabilities balances in the three months ended August 31, 2010 which reduced cash outflows in the quarter.
At August 31, 2011, we had cash and cash equivalents and short-term investments of $1.7 million compared to $911 thousand at May 31, 2011.
Research and development expenses totaled $589 thousand in the three months ended August 31, 2011 compared to $514 thousand during the same period in the prior year. Research and development costs consist of the following:
The increase in research and development costs during the three months ended August 31, 2011 is due to increased stock based compensation of $10 thousand resulting from larger than usual stock option grants in fiscal 2011 as well as increased program spending of $66 thousand.
We are not continuing to develop our RNA-targeted therapies from our own resources and are currently seeking partnership to further advance these technologies. As such there were no expenditures related to this program during the quarter. The research and development expenditures related to our small molecule program increased in comparison with the same quarter last year due to the ongoing Phase I clinical trial of LOR-253 initiated in January 2011.
General and administrative expenses totaled $533 thousand for the three months ended August 31, 2011 compared to $618 thousand in the same period in the prior year.
General and administrative costs have decreased in the three months ended August 31, 2011 compared with the prior year primarily due to $95 thousand in financing fees related to a proposed financing terminated during the quarter ended August 31, 2010 offset by higher accounting costs associated with the transition to IFRS. Salary costs are lower in the current quarter due to a reduction in headcount. Stock based compensation expense is higher for the three months ended August 31, 2011 resulting from larger than usual stock option grants in fiscal 2011.
Annual and Special Meeting
Lorus will hold the Annual and Special Meeting of its Shareholders (the "Meeting") at the Hyatt Regency, 370 King Street West, Toronto, Ontario on Tuesday, November 29, 2011 at 10:00 a.m. (Toronto time).
The Corporation would like to amend the exercise price of the November 2010 Warrants from the $1.33 current exercise price to an exercise price equal to the 5-day volume weighted average trading price of the common shares of the Corporation on the Toronto Stock Exchange (the "TSX") on the date of the approval of the shareholders to such amendment at the Meeting, plus a 10% premium (to be rounded up). While the exact price of the warrants will be determined on November 29, 2011 if the warrants were repriced as at November 9, 2011 the five day VWAP would be $0.25, resulting in a revised warrant exercise price of $0.28. The TSX has conditionally approved such amendment.
The current exercise price of the November 2010 Warrants is $1.33 which is significantly above the current trading price of the Corporation's common shares. It is the Corporation's view that the likelihood that any of the November 2010 Warrants being exercised is unlikely at the current exercise price. Therefore, Lorus believes amending the exercise price of the November 2010 Warrants would likely provide the Corporation with a further means of raising additional capital through the potential exercise of the November 2010 Warrants and thus saving the cost of doing an additional financing.
The November 2010 Warrants are governed by a warrant indenture entered into between Lorus and Computershare Trust Company of Canada ("Computershare") dated October 4, 2010, as supplemented by a first supplemental indenture dated October 18, 2010 (collectively, the "Warrant Indenture") available on SEDAR at www.sedar.com. Lorus will enter into a second supplemental indenture with Computershare to provide for the reduction of the exercise price, a copy of which will be filed on SEDAR. All other material terms of the Warrant Indenture will remain unchanged.
Non-registered holders of the November 2010 Warrants, whose warrants are registered in the name of a brokerage firm, bank or trust company or other intermediary through which they purchased the November 2010 Warrants should contact their intermediary holding those November 2010 Warrants for instructions on how to exercise their warrants in accordance with the procedure set forth in the Warrant Indenture.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of Canadian and U.S. securities laws. Such statements include, but are not limited to, statements relating to: our ability to continue as a going concern, the ability to find future financing, our plans to obtain partners to assist in the further development of our product candidates, the establishment of corporate alliances, our research program plans, our plans to conduct clinical trials, the successful and timely completion of clinical studies and the regulatory approval process, our ability to fund future research, our plans, objectives, expectations and intentions and other statements including words such as "continue", "believe", "plan", "expect", "intend", "will", "should", "may", and other similar expressions. Such statements reflect our current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others: our ability to continue to operate as a going concern; our ability to obtain the substantial capital required to fund research and operations; our lack of product revenues and history of operating losses; our early stage of development, particularly the inherent risks and uncertainties associated with (i) developing new drug candidates generally, (ii) demonstrating the safety and efficacy of these drug candidates in clinical studies in humans, and (iii) obtaining regulatory approval to commercialize these drug candidates; our ability to recruit patients for clinical trials; the progress of our clinical trials; our liability associated with the indemnification of Old Lorus and its directors, officers and employees in respect of the arrangement; our ability to find and enter into agreements with potential partners; our drug candidates require time-consuming and costly preclinical and clinical testing and regulatory approvals before commercialization; clinical studies and regulatory approvals of our drug candidates are subject to delays, and may not be completed or granted on expected timetables, if at all, and such delays may increase our costs and could delay our ability to generate revenue; the regulatory approval process; our ability to attract and retain key personnel;
Should one or more of these risks or uncertainties materialize, or should the assumptions set out in the section entitled "Risk Factors" in our Annual Information Form dated August 26, 2011 for the fiscal year ended May 31, 2011 underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this press release and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. We cannot assure you that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.