HXBM Helix Biomedix Inc (PK)

Helix BioMedix, Inc. (OTCQB: HXBM), a developer of bioactive peptides, today announced financial results for the year ended December 31, 2011.

2011 Financial and Business Highlights

• Revenue for 2011 increased 122% to a record $1.9 million, compared to $852,000 for 2010.
• The year-over-year increase in revenue reflected a 52% increase in licensing revenue and a 120% increase in peptide and consumer product sales to non-affiliates. In addition, consumer product sales to NuGlow Cosmaceuticals, LLC, an affiliated direct-response company, increased to $481,000 in 2011.
• Net loss for 2011 decreased to $2.5 million compared to $7.7 million for 2010. Net loss for 2010 included $4.7 million in interest and other non-cash expenses for the company’s then outstanding convertible debt.

Full Year 2011 Results

Total revenue was a record $1.9 million for 2011 compared to $852,000 for 2010. The 122% annual increase reflected significant growth in license revenue and product sales. License revenue in 2011 increased by 52% year-over-year to $731,000 as licensees continued to increase utilization of Helix BioMedix peptide technologies. Peptide and consumer product sales increased by 120% to $680,000 due to increased sales to existing customers and the expanded revenue base for consumer products sold under Helix BioMedix proprietary brands. In addition, sales to NuGlow Cosmaceuticals, LLC, an affiliated company, grew to $481,000 in 2011, reflecting the first full year of revenue from NuGlow, compared to $63,000 for three months in 2010, as NuGlow’s products gained increasing acceptance among target consumers.

Commenting on the results, R. Stephen Beatty, President and Chief Executive Officer of Helix BioMedix, stated, “Helix BioMedix achieved another year of record revenue in 2011, driven by strong momentum in all of our business lines. Peptide utilization by our license partners continued to expand, while our ongoing focus on consumer products contributed strongly to our growth during the year. Additionally, the increase in NuGlow product sales and the introduction of our Apothederm™ skin care line in early 2011 both helped strengthen sales of our branded and private label products.”

Gross margin for 2011 was 61%, compared to 69% for 2010. The decrease in gross margin reflected the larger revenue contribution from peptide and consumer product sales in 2011, which grew faster than the higher margin license fees.

Total operating expenses were $3.6 million for 2011, compared to $3.5 million for 2010. Marketing and business development expenses increased during 2011 due to expanded advertising and marketing programs established to promote brand awareness and generate consumer product sales. Research and development as well as general and administrative expenses decreased during 2011 compared to the previous year due primarily to reduced consulting fees, compensation and general corporate expenses.

Net loss for 2011 was $2.5 million, or $(0.05) per share, compared to a net loss of $7.7 million, or $(0.28) per share, for 2010. The decrease in net loss for 2011 compared to the prior year reflected higher revenue combined with a reduction of $4.7 million in interest and other expenses related to the company’s convertible debt that was converted or repaid in the fourth quarter of 2010. Additionally, the company’s 2011 net loss per share was based on 49.7 million weighted-average shares outstanding whereas the 2010 net loss per share was based on 27.1 million weighted-average shares outstanding in 2010. The increase in weighted average shares outstanding in 2011 resulted from the conversion of debt into common stock and additional issuance of equity in the fourth quarter of 2010.

As of December 31, 2011, cash and cash equivalents were $1.7 million, compared to $4.0 million at December 31, 2010, due primarily to cash used in operations during the year. In March 2012, a $2.0 million letter of credit with JP Morgan Chase Bank, N.A. was established on the company’s behalf by its largest stockholder, which bears interest at a rate of 0.75% per annum and has a maturity date of July 1, 2013. JP Morgan Chase Bank has the option to extend the letter of credit without amendment until July 1, 2014.

Beatty concluded, “I am pleased with our results for 2011 in light of the uncertain economic conditions we faced. The momentum generated in 2010 enabled us to achieve a stronger market position in 2011 and our disciplined financial and operational management served us well. Looking to 2012, we will strive to further leverage our market opportunities by broadening our distribution channels and customer base as well as continuing expansion of our leading edge intellectual property portfolio.”

About Helix BioMedix, Inc.

Helix BioMedix, Inc. is a biopharmaceutical company with an extensive library of structurally diverse bioactive peptides and patents covering hundreds of thousands of peptide sequences. Core competencies include peptide design, synthesis and characterization together with assay development, screening, tissue culture and microbiology, leveraged through relationships with contract research organizations and peptide manufacturers. The company takes product development programs from theoretical concept to a qualified skin care active ingredient fully validated as to efficacy and safety. Applications for Helix BioMedix peptides include anti-aging cosmeceutical skin care and acne treatment as well as other topical anti-infective pharmaceuticals and wound healing applications. Striking®, Cerakine™, Apothederm™ and SmartPeptide™ are trademarks of Helix BioMedix, Inc. More information about the company and its proprietary peptides may be found on the company’s website at www.helixbiomedix.com.

Forward-Looking Statements

This press release contains forward-looking statements (statements which are not historical facts) within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding activities, events or developments that the company expects, believes or anticipates may occur in the future, including statements related to its potential growth, product development and commercialization and revenue. A number of factors could cause actual results to differ from those indicated in the forward-looking statements, including the company's ability to successfully raise additional capital, enter into revenue generating license agreements, continue its research and development efforts, including pre-clinical and clinical studies, and continue developing marketable peptide-based products, and general economic conditions. Additional assumptions, risks and uncertainties are described in detail in the company’s reports and other filings with the Securities and Exchange Commission. Such filings are available on the company’s website or at www.sec.gov. Readers are cautioned that such forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those set forth in the forward-looking statements. The company undertakes no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances.

HELIX BIOMEDIX, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

    December 31, 2011   2010 ASSETS Current assets: Cash and cash equivalents $ 1,688,945 $ 4,044,309 Accounts receivable, net 239,773 235,149 Accounts receivable, affiliated company, net 200,935 52,795 Inventory 363,869 278,392 Prepaid expenses and other current assets   64,583     63,471   Total current assets 2,558,105 4,674,116 Property and equipment, net 26,098 44,178 Intangible assets, net 146,297 214,068 Other long term assets 20,884 29,179 Investment in affiliated company   223,255     266,941   Total assets $ 2,974,639   $ 5,228,482     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 125,324 $ 130,489 Accrued compensation and benefits 87,859 30,285 Accrued expenses 55,463 102,123 Deferred gross profit, related party 134,842 50,479 Deferred rent, current   7,155     4,847   Total current liabilities   410,643     318,223   Deferred rent, non-current   28,660     35,815   Total liabilities   439,303     354,038     Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value, 25,000,000 shares authorized; no shares issued or outstanding — — Common stock, $0.001 par value, 100,000,000 shares authorized; 49,720,255 shares issued and outstanding at December 31, 2011 and 2010 49,721 49,721 Additional paid-in capital 48,542,453 48,392,985 Accumulated deficit  

(46,056,838

)

 

(43,568,262

)

Total stockholders’ equity   2,535,336     4,874,444   Total liabilities and stockholders’ equity $ 2,974,639   $ 5,228,482    

HELIX BIOMEDIX, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

    Year ended December 31, 2011   2010 Revenue: Licensing fees $ 730,635 $ 479,317 Peptide and consumer product sales 679,907 309,379 Consumer product sales to affiliated company   480,796     62,987   Total revenue   1,891,338     851,683   Cost of revenue: Cost of peptide and consumer product sales 482,033 219,504 Cost of consumer product sales to affiliated company   251,274     40,990   Total cost of revenue   733,307     260,494   Gross profit   1,158,031     591,189     Operating expenses: Research and development 501,044 748,663 Marketing and business development 937,508 622,846 General and administrative 1,417,467 1,530,333 Accounting, legal and professional fees 597,160 531,726 Depreciation and amortization   109,175     113,777   Total operating expenses   3,562,354     3,547,345   Loss from operations   (2,404,323 )   (2,956,156 )  

Other income (expense):

Interest income 3,728 3,074 Interest expense on convertible notes payable — (138,979 ) Interest expense on convertible note payable, related party — (534,465 ) Accretion of discount on convertible notes payable — (73,468 ) Accretion of discount on convertible notes payable, related party — (141,440 ) Debt conversion inducement expense — (3,806,966 ) Gain from sale of asset 6,000 — Equity in loss of affiliated company (85,686 ) (65,601 ) Change in value of option to purchase interest in affiliated company   (8,295 )   3,199   Other income (expense), net   (84,253 )   (4,754,646 ) Net loss and comprehensive loss $ (2,488,576 ) $ (7,710,802 ) Basic and diluted net loss per share $ (0.05 ) $ (0.28 ) Weighted average shares outstanding   49,720,255     27,124,159