07/29/2010 08:37:45 PM EDT -- Filing Services Canada

Biowest Reports Fiscal 2010 Financial Results

Vancouver, British Columbia CANADA, July 29, 2010 /FSC/ - BioWest Therapeutics Inc.  (BWE - TSX), ("BioWest" or the "Company"), announced today the financial results for its fiscal year and fourth quarter ended April 30, 2010 ("Fiscal 2010") and provided a corporate update.

Non-dilutive Financing Transaction: On March 19, 2010, MIGENIX Inc. ("MIGENIX") completed a corporate reorganization, pursuant to which it received gross cash proceeds of $4,000,000 (the "Reorganization"). Pursuant to the Reorganization, MIGENIX caused substantially all of its assets and liabilities, including the $4,000,000 proceeds, to be transferred to BioWest. After completion of the Reorganization, among other things: (i) the security holders of MIGENIX owned 100% of the outstanding securities of BioWest; and (ii) BioWest had substantially all of the same assets, liabilities, directors, management and consultants as MIGENIX previously had and pursued the business and operations previously carried on by MIGENIX. As part of the Reorganization, BioWest's common shares were listed on the Toronto Stock Exchange effective March 24, 2010 under the stock symbol "BWE".

Omiganan 1% gel (OmigardTM; topical cationic peptide; prevention of catheter-related infections): The Company continues to investigate a range of opportunities for the OmigardTM program. In May 2010, the Company retained two multinational, full service contract research organizations with experience in clinical trial design, statistics and regulatory affairs, and with experience working with infectious diseases, to review the clinical data from the completed phase III trials and assist the Company evaluate the optimal path forward for commercializing OmigardTM. BioWest anticipates concluding its assessment in or about October 2010.  In the event that a clear commercialization path cannot be implemented, the OmigardTM program may be abandoned.

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 Company continues to pursue strategic options for advancing the development of MX-2401 with a focus on licensing MX-2401 to a third party. Guidance as to the possibility of finding a development partner to advance this program to clinical trials cannot be provided at this time. If the Company is unable to identify a suitable partner for MX-2401, the program may be terminated.

Other Product Candidates: The global development and commercialization rights for omiganan for use in dermatological diseases are licensed to Cutanea Life Sciences Inc. ("Cutanea"). Cutanea is currently seeking to complete a financing that will enable it to advance omiganan into Phase III development for the treatment of rosacea. SB-9000, which is being developed for the treatment of hepatitis B virus infections, is licensed on an exclusive, world-wide basis to Spring Bank Pharmaceuticals Inc. ("Spring Bank"). Spring Bank plans to advance SB-9000 into clinical testing in the third quarter of calendar 2010.

In addition to pursuing the development of its current product candidates, BioWest is reviewing other strategic options available to the Company. As part of this evaluation, management is exploring the in-licensing of new pharmaceutical and other life science product opportunities by identifying, through business development activities, additional assets that may be brought into the Company and that are appropriately risk managed.  The focus will be to identify opportunities that are lower risk (compared to pre-clinical research projects) and that may be more easily understood and evaluated. In the event that the Company's evaluation of the current pharmaceutical portfolio results in the abandonment of the portfolio or BioWest is unsuccessful in its on-going business development initiatives, the Company will explore such other business opportunities and strategies that may be available to the Company.

Financial Results

All figures are in Canadian dollars, unless otherwise noted.

The Company's audited consolidated financial statements have been presented under the Continuity of Interest Basis of accounting and reflect the consolidated financial position, statement of loss, comprehensive loss and deficit and cash flows as if BioWest and MIGENIX had always been the combined entity.

For the year ended April 30, 2010, the Company reported a loss of $2.7 million or $(0.19) per share (basic and fully diluted) compared to a loss of $0.6 million or $(0.06) per share (basic and fully diluted) in the prior year ended April 30, 2009 ("Fiscal 2009"). The $2.1 million increase in the Fiscal 2010 loss compared to the Fiscal 2009 loss consists principally of an approximate $4.2 million decrease in operating expenses and an approximate $1.7 million decrease in accretion expense for the convertible royalty participation units which are more than offset by an approximate $7.8 million decrease in the gain (loss) on adjustment and repurchase of the convertible royalty participation units.

Operating expenses for Fiscal 2010 were approximately $2.6 million (Fiscal 2009: $6.8 million). The approximate $4.2 million decrease in Fiscal 2010 operating expenses compared to Fiscal 2009 consists principally of a $2.3 million decrease in research and development expenses and a $1.8 million decrease in general and corporate expenses. The decrease in research and development expenses to $1.0 million for Fiscal 2010 compared to $3.3 million for Fiscal 2009 is principally due to halting drug development programs and related personnel reductions pending an assessment of the viability of BioWest's product candidates and its business development initiatives to obtain collaborations to fund the future development and commercialization of its product candidates.

General and corporate expenses for Fiscal 2010 were approximately $1.2 million compared to $3.0 million for Fiscal 2009. The decrease in general and corporate expenses for Fiscal 2010 compared to Fiscal 2009 is principally due to: reduced personnel costs; reduced legal costs; reduced rent expense, including closing of the San Diego office during Fiscal 2009; and reduction in external investor relations services. The lower Fiscal 2010 personnel costs compared to Fiscal 2009 include reductions in personnel, elimination of cash compensation for directors and other cost reduction initiatives.  

Accretion expense related to the convertible royalty participation units for Fiscal 2010 was less than $0.1 million compared to $1.8 million in Fiscal 2009. The approximate $1.7 million decrease in Fiscal 2010 accretion expense compared to Fiscal 2009 is principally due to the adjustment of the carrying amount of the debt component of the convertible royalty participation units in late Fiscal 2009 resulting from the Company's lower estimate of the probable royalties payable to the unit holders over the royalty payment term (estimate was reduced from the maximum royalties payable of approximately $29.5 million to approximately $7.3 million).

As at December 31, 2009, the Company further reduced its estimate of the probable royalties payable to the unit holders over the royalty payment term to approximately $5.6 million. As a result, the Company adjusted the carrying amount of the debt component of the convertible royalty participation units at December 31, 2009 to approximately $0.15 million from $0.25 million and resulted in a gain of approximately $0.1 million for Fiscal 2010. In addition, on December 31, 2009 the Company repurchased 100% of the outstanding convertible royalty participation units and recorded a loss on settlement of the units of approximately $0.2 million. The combined loss for these two items in Fiscal 2010 of less than $0.1 million compares to the gain of $7.9 million recorded in Fiscal 2009 when the Company adjusted the carrying amount of the debt component of the convertible royalty participation units.

For the three-month period ended April 30, 2010 ("Q4 FY10") the Company reported a loss of $0.6 million, or $(0.05) per share (basic and fully diluted) compared to income of $6.7 million or $0.58 per share (basic and fully diluted) for the fourth quarter a year ago ("Q4 FY09"). The increase in loss for Q4 FY10 as compared to the income in Q4 FY09 is primarily attributable to an approximate $7.9 million decrease in the gain (loss) on adjustment and repurchase of the convertible royalty participation units which was partially offset by a $0.4 million reduction in operating expenses and $0.3 million reduction in accretion expense related to the convertible royalty participation units.  

As at April 30, 2010, the Company had cash and short-term investments of $4.0 million and a working capital surplus of $3.3 million. These balances represent an increase of $1.9 million and $1.8 million, respectively, compared to the balances as at April 30, 2009.

BioWest's complete financial statements for the year ended April 30, 2010 and the related Management's Discussion & Analysis of Financial Condition and Results of Operations are available at the Company's website, www.biowestinc.com, or at www.sedar.com under the Company's profile.

About BioWest

BioWest is committed to advancing therapy, improving health, and enriching life by developing and commercializing drugs for the treatment of unmet medical needs for various diseases. The Company's programs include drug candidates for: the prevention of catheter related infections, for the treatment of hospital-acquired infections, the treatment of dermatological diseases, and the treatment of hepatitis B infections. BioWest is headquartered in Vancouver, British Columbia, Canada. For more information about BioWest, please visit the Company's website at www.biowestinc.com.

Caution concerning forward-looking statements:

This news release contains forward-looking information or statements within the meaning of applicable securities laws. Information or statements, other than information or statements of historical fact, are forward-looking information or statements and include, without limitation, statements regarding the Company's strategy, future operations, timing and completion of clinical trials, prospects, plans and objectives of management. The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information or statements, which include underlying assumptions, although not all forward-looking information or statements contain these identifying words. By their nature, forward-looking information or statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other matters contemplated by the forward-looking information or statements will not occur.

Although BioWest's management believes that the expectations represented by such forward-looking information or statements are reasonable, there is significant risk that the forward-looking information or statements may not be achieved, and the underlying assumptions thereto will not prove to be accurate. Forward-looking information or statements in this news release include, but are not limited to, information or statements concerning the Company's expectations for: investigating a range of opportunities for the OmigardTM program; Cutanea Life Sciences' seeking financing to advance omiganan into Phase III clinical development for the treatment of rosacea; exploring out-licensing options for developing MX-2401; Spring Bank Pharmaceuticals advancing SB-9000 into clinical development; the Company's estimate of no milestone payments pursuant to its preferred shares in the next 12 months; working within an annual burn rate of approximately $1.2 million; and the Company's current financial resources being sufficient, excluding any further material investment by the Company in its product candidates, to fund operations into at least the second quarter of calendar 2012.

With respect to the forward-looking information or statements contained in this news release, the Company has made numerous assumptions regarding, among other things, BioWest's ability to assess and advance opportunities in the OmigardTM program; Cutanea's ability to fund, manage and advance omiganan for dermatological applications into Phase III; the Company's ability to generate and manage licensing and other strategic opportunities in the MX-2401 program; BioWest's ability to retain or engage the personnel required to advance the Company's objectives; Spring Bank's ability to fund, manage and advance SB-9000 into clinical development; the Company's ability to obtain additional funds through licensing; and future expense levels being within its current expectations.

Actual results or events could differ materially from the plans, intentions and expectations expressed or implied in any forward-looking information or statements, including the underlying assumptions thereto, as a result of numerous risks, uncertainties and other factors including:  the possibility that opportunities will arise that require more cash than the Company has or can reasonably obtain; dependence on key personnel; dependence on corporate collaborations; potential delays; uncertainties related to early stage of technology and product development; uncertainties as to the requirement that a drug be found to be safe and effective after extensive clinical trials and the possibility that the results of such trials, if completed, will not establish the safety or efficacy of the Company's products; uncertainties as to future expense levels and the possibility of unanticipated costs or expenses or cost overruns; and other risks and uncertainties which may not be described herein. Certain of these factors and other factors are described in detail in the Company's Annual Information Form and other filings with the Canadian securities regulatory authorities which are available on SEDAR at www.sedar.com.

Forward-looking information or statements are based on the Company's current expectations and the Company assumes no obligations to update such information to reflect later events or developments, except as required by applicable law.

For further information, contact either: Paul Brennan, Chief Executive Officer, Tel.: (604) 790-4671 Jeff Charpentier, Chief Financial Officer, Tel.: (604) 221-9666

Source: BioWest Therapeutics Inc. (TSX - BWE) http://www.migenix.com Maximum News Dissemination by Filing Services Canada Inc. * www.usetdas.com

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