I received Xillix's 2nd quarter report today, and things look like they are well on track......
Xillix Technologies Corp.
SECOND QUARTER 1998 - REPORT
Letter to Shareholders
The second quarter for 1998 has demonstrated that Xillixr is on track and continues to
achieve its corporate objectives. We have seen Xillix LIFE-Lung Fluorescence
Endoscopy SystemTM (Xillix LIFE-Lung) sales progress throughout the quarter. The key
market for our premier product, Xillix LIFE-Lung, continues to be the leading medical
centers in the U.S. and Europe. Olympus has been successful in continuing to place Xillix
systems into strategic institutions in these geographic locations. Highlights for the second
quarter ended June 30, 1998 include:
Increase in product revenue
1998 second quarter product revenues increased to $1,082,658 compared to
1997's second quarter results of $213,333. The loss per share for the second
quarter improved to $0.02 from $0.06 for the same period last year. For the six
month period the loss per share is $0.07 compared to $0.08 for the same six
month period last year. At June 30, 1998 the Company had working capital of
$8.3M.
Xillix, Miravant Alliance
In the second quarter Xillix announced an exclusive agreement with Miravant
Medical Technologies of Santa Barbara, California. The two companies will
co-develop devices for the treatment of cancer, using Xillix's LIFE technology and
Miravant's PhotoPoint drug for photodynamic therapy. In exchange Xillix received
a $7.2 million equity investment, of which $4.3M was provided in cash and the
remaining $2.9M was in the form of Miravant shares, and future drug royalty
payments. Both companies will share the research and development costs
associated with the co-developed products. The first application to be
co-developed will integrate the Xillix LIFE-Lung system, for the detection and
localization of lung cancer, with Miravant's PhotoPoint drug, which uses principles
of photodynamic therapy for various cancer treatments. PhotoPoint is currently in
development for the treatment of lung cancer.
Sale of Oncometrics
In May, the Company announced its intention to sell its final one-third interest in
Oncometrics Imaging corp. to AccuMed International. This transaction was
completed in June and enables Xillix to focus on its core technology of
fluorescence imaging.
Second Generation Device for Lung Cancer Detection
In May, Xillix delivered the second generation prototype system for the early
detection and localization of lung cancer to key clinical test sites. This resulted in a
milestone payment from Olympus Optical Co. Ltd. of Tokyo of $1M in the second
quarter. The Company expects to gain clinical and technical experience from the
medical sites that will be using the devices on a test basis over the next several
months. The information gained will be used in the final design of the second
generation Xillix LIFE-Lung system.
Xillix LIFE-GI System Focus Group Meets
In May, Xillix met with some of the world's leading physicians specializing in the
gastrointestinal tract, which includes the esophagus, stomach and colon, at the
annual Digestive Disease Week conference in New Orleans. This focus group
meeting kicked off the clinical testing of the Xillix LIFE-GI Fluorescence
Endoscopy SystemTM (Xillix LIFE-GI) in Canada, Japan and Europe. At the focus
group meeting, physicians shared their early results using the Xillix LIFE-GI system
and finalized the protocol. The focus group is made up of leaders in the field who
were selected by Olympus and Xillix.
Publication of Xillix LIFE-Lung Fluorescence Endoscopy System articles
In late May at the 21st Bronchogenic Society of Japan, in Hiroshima, Japan, six
abstracts were presented to the conference based on experiences with the Xillix
LIFE-Lung technology. Several of the abstracts identified the ability to locate early
lesions and precancerous lesions easily with the Xillix LIFE-Lung technology.
Translated copies are available by contacting Xillix's Investor Relations
department.
Gibbons Appointed Xillix Chair
In June, the Board of Directors elected Mr. Richard P. Gibbons to the position of
Chairman. Mr. Gibbons, a lawyer and businessman, is replacing Mr. Winslow W.
Bennett, who resigned as Chairman, after having held that position for the past
seven years. Mr. Bennett will continue as a director of Xillix. Mr. Gibbons is one of
the original investors in Xillix and has been on the board for the past seven years.
He is a director of several other corporations and has served on many community
and non-profit boards.
Research Update: Xillix LIFE-GI System
Clinical testing of the Xillix LIFE-GI system is ongoing at clinical test centers
located at leading medical centers around the world. The initial feedback we have
received from the physicians has been encouraging. The early results of this testing
period are expected to be submitted to the Company late in the third quarter.
The second quarter has been very positive for your Company. Our success in gaining a
new alliance with Miravant; our progress in Xillix LIFE-Lung sales and our developments
in designing new products to fill our product pipeline have strengthened your Company.
The business fundamentals at Xillix remain healthy and positive.
Thank you for your support and confidence in Xillix.
Pierre Leduc
President and Chief Executive Officer
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