HXBM Helix Biomedix Inc (PK)

Helix BioMedix, Inc. (OTCQB: HXBM), a developer of bioactive peptides, today announced financial results for the second quarter ended June 30, 2012.

Second Quarter 2012 Financial and Business Highlights

• Revenue decreased 32% to $471,000 for the second quarter of 2012, compared to $693,000 for the second quarter of 2011.
• The decrease in revenue reflected declines in peptide and consumer product sales, primarily due to order and manufacturing timing, partially offset by increased license fees.
• Net loss was $668,000 for the second quarter of 2012, compared to $625,000 for the same period in 2011.
• Revenue for the first half of 2012 increased 10% to $1,151,000 compared to $1,051,000 for the first half of 2011. The company anticipates continued growth in the second half of the year.
• In July, the company launched Apothederm™ Acne Clarifying Treatment, a new category to the line that complements the brand’s anti-aging and skin brightening products.

Second Quarter 2012 Results

Total revenue for the second quarter of 2012 was $471,000, compared to $693,000 for the second quarter of 2011. Revenue in the second quarter reflected declines in peptide and consumer product sales and sales to NuGlow Cosmaceuticals, LLC (NuGlow), an affiliated company, due to the timing of manufacturing and delivery, partially offset by growth in license fees. For the first six months of 2012, revenue increased 10% to $1,151,000 compared to $1,051,000 in the first half of 2011. License fees in the first half of 2012 increased 45%, peptide and consumer product sales decreased 10% and sales to NuGlow declined 2%.

Gross profit for the second quarter of 2012 was $306,000, compared to $340,000 for the second quarter of 2011. Gross margin improved to 65% compared to 49% in the second quarter of 2011, driven by a larger revenue contribution from license fees and better cost of revenue management. For the first six months of 2012, gross profit increased 35% to $777,000, compared to $577,000 in 2011.

Commenting on the results, R. Stephen Beatty, President and Chief Executive Officer of Helix BioMedix, stated, “License fees in the second quarter continued to grow while peptide and consumer product related sales were impacted by the timing of customer orders and manufacturing cycles. Revenue growth for the first six months is up 10% over last year and we anticipate continued growth for the remainder of the year due to our ongoing business development programs and increasing peptide utilization by our customers and partners. We also continued to closely manage product and operating costs, while investing in our marketing and patent efforts to secure future growth opportunities.”

Total operating expenses were up less than 1% to $890,000 for the second quarter of 2012, compared to $882,000 in the prior year period.

Net loss for the second quarter of 2012 was $668,000, or $(0.01) per share, compared to a net loss of $625,000, or $(0.01) per share, for the second quarter of 2011. For the first half of 2012, net loss was $1,250,000, or ($0.03) per share, compared to $1,335,000, or ($0.03) per share for the first six months of 2011. The decrease in net loss for the first half of 2012 compared to the same period in the prior year was primarily attributable to growth in license utilization and improved gross profit.

As of June 30, 2012, cash and cash equivalents were $739,000, compared to $1,689,000 at December 31, 2011. The decrease in cash was due primarily to cash used in operations. As previously announced, the company has entered into a $2.0 million line of credit agreement with JP Morgan Chase Bank. The line is currently untapped and available to the company.

Beatty concluded, “Helix BioMedix has successfully improved market penetration with our key customers over the past several years, resulting in strong product and license fee growth. We continue to work aggressively with our customers and partners to maximize utilization of our products, while simultaneously addressing patent and intellectual property matters necessary to protect our key assets. We remain well positioned to grow for the remainder of 2012 and look forward to continued improvement as we work to increase utilization of our peptide products with our customers and consumers.”

The company is also announcing the launch of its Apothederm™ Acne Clarifying Treatment. The new product is positioned as a four-in-one treatment that helps to reduce the appearance of blemishes and help prevent future breakouts while helping clean-up sebum and minimize pore size. The clinically tested formulation uses the company’s patented SmartPeptide™ oligopeptide-10, based on the skin’s natural defense system, in combination with salicylic acid to provide gentle, yet effective action. The product is being promoted to physicians, medical spas and select specialty retailers.

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 and SmartPeptides are registered trademarks and 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)

      June 30,2012 December 31,2011 ASSETS Current assets: Cash and cash equivalents $ 739,108 $ 1,688,945 Accounts receivable, net 219,141 239,773 Accounts receivable, affiliated company, net 117,599 200,935 Inventory 295,584 363,869 Deferred debt issuance costs, current 201,040 — Prepaid expenses and other assets   119,265     64,583     Total current assets 1,691,737 2,558,105 Property and equipment, net 14,825 26,098 Intangible assets, net 112,412 146,297 Deferred debt issuance costs, non-current 201,590 — Other long term assets 9,667 20,884 Investment in affiliated company   202,665     223,255     Total assets $ 2,232,896   $ 2,974,639     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 110,957 $ 125,324 Accrued compensation and benefits 56,445 87,859 Accrued expenses 47,831 55,463 Deferred revenue 13,602 — Deferred gross profit, affiliated company 69,718 134,842 Deferred rent, current   8,341     7,155     Total current liabilities 306,894 410,643 Deferred rent, non-current   23,995     28,660     Total liabilities 330,889 439,303 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 outstanding at June 30, 2012 and December 31, 2011 49,721 49,721 Additional paid-in capital 49,159,261 48,542,453 Accumulated deficit   (47,306,975 )   (46,056,838 )   Total stockholders’ equity   1,902,007     2,535,336     Total liabilities and stockholders’ equity $ 2,232,896   $ 2,974,639  

HELIX BIOMEDIX, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

        Three Months Ended June 30, Six Months Ended June 30, 2012 2011 2012 2011 Revenue: Licensing fees $ 173,453 $ 164,975 $ 488,545 $ 336,400 Peptide and consumer product sales 175,794 340,349 428,521 475,281 Consumer product sales to affiliated company   121,275     187,779     233,878     239,050     Total revenue   470,522     693,103     1,150,944     1,050,731     Cost of revenue: Cost of peptide and consumer product sales 109,363 247,698 267,136 338,995 Cost of consumer product sales to affiliated company   55,094     104,995     106,852     134,525     Total cost of revenue   164,457     352,693     373,988     473,520     Gross profit 306,065 340,410 776,956 577,211 Operating expenses: Research and development 87,942 90,747 175,027 315,910 Marketing and business development 269,645 244,018 572,751 448,455 General and administrative 329,235 374,889 713,811 716,681 Accounting, legal and professional fees 181,201 144,196 400,423 309,633 Depreciation and amortization   22,063     28,147     45,158     54,764     Total operating expenses   890,086     881,997     1,907,170     1,845,443     Loss from operations   (584,021 )   (541,587 )   (1,130,214 )   (1,268,232 )   Other income (expense): Interest income 384 928 1,124 2,132 Amortization of debt issuance costs (50,123 ) — (62,240 ) — Equity in earnings (loss) of affiliated company (29,942 ) (59,065 ) (47,590 ) (51,073 ) Change in fair value of option to purchase interest in affiliated company   (4,597 )   (25,151 )   (11,217 )   (17,436 )   Total other income (expense), net   (84,278 )   (83,288 )   (119,923 )   (66,377 )   Net loss and comprehensive loss $ (668,299 ) $ (624,875 ) $ (1,250,137 ) $ (1,334,609 )   Basic and diluted net loss per share $ (0.01 ) $ (0.01 ) $ (0.03 ) $ (0.03 )   Weighted average shares outstanding   49,720,255     49,720,255     49,720,255     49,720,255