Bioniche burn rate rises on animal health spend

Efforts by Bioniche Life Sciences (ASX:BNC) to improve its bottom line by emphasising its animal health business are paying off in improved sales, but are also increasing costs.

In a letter to shareholders detailing the company's third quarter performance, Bioniche CEO Graeme McRae said the company had grown year-to-date sales from its animal health products by 10% year-on-year.

But corporate cash burn rate increased to $1.4 million per month for the quarter, from an average of $1.1 million per month during the first two quarters, as a result of investments in growing the animal health business.

McRae said the company is implementing efforts to reduce its burn rate, including strengthening animal health sales, deferring certain R&D projects and clamping down on administrative expenses.

When Bioniche posted its second quarter results in February, the report warned that the company may have inadequate cash reserves to continue operating for the next 12 months. But a month later, the company signed a US$20 million ($19.9 million) financing facility with US-based Capital Royalty.

McRae acknowledged that the facility “was not inexpensive, in terms of the associated interest rate and royalty payment,” but added that the financing “was completed without any dilution to existing shareholders.”

Canadian-headquartered Bioniche has both animal health and human health divisions, with its Australian operations focused on animal health.

On the human health side, the company is in phase III trials for Urocidin, a treatment for non-muscle-invasive bladder cancer, via its partnership with Endo Pharmaceuticals.

But the company has been concentrating on animal health as it seeks to improve its financial position, and raise funds for Urocidin commercialisation efforts.

In March, the company secured an Australian distribution deal for four animal health products from US-based Modern Veterinary Therapeutics.

And earlier this month, the company revealed it was commercialising two products designed to treat cancer in dogs.

For the third quarter, the Bioniche group reported a net loss of C$5.8 million ($5.8 billion), up from C$5.2 million a quarter earlier. Year to date losses spiked 30% to C$14.4 million, but revenue grew 8% to C$8.7 million.

Bioniche (ASX:BNC) shares fell 5.88% in Monday's trading to $0.400.