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EANS-News: AGENNIX AG
Agennix AG Reports Financial Results For Third Quarter
and First Nine Months of 2010 - Company Also Provides Update on Clinical
Development Progress and Changes
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Heidelberg (euro adhoc) - Planegg/Munich (Germany), Princeton, NJ and Houston, TX, November 18, 2010 - Agennix AG (Frankfurt Stock Exchange: AGX) today announced financial results for the third quarter and first nine months ended September 30, 2010.
Agennix AG was formed by the business combination of Agennix Incorporated and GPC Biotech AG, which became effective on November 5, 2009, and in which GPC Biotech AG was identified as the acquirer for accounting purposes. Accordingly, the comparative historical financial information of Agennix AG is that of GPC Biotech AG for the respective comparative periods.
First nine months of 2010 compared to first nine months of 2009 The Company recognized revenue of EUR 0.2 million for the nine months ended September 30, 2010 compared to EUR 0.3 million for the same period in 2009. Revenue for the nine months ended September 30, 2010, was attributable to an out-license agreement for certain intellectual property of the Company from a discontinued discovery program. Revenue for the nine months ended September 30, 2009, was attributable to the services agreement with Agennix Incorporated prior to the effectiveness of the business combination.
Research and development (R&D) expenses for the nine months ended September 30, 2010, increased to EUR 19.9 million compared to EUR 3.9 million for the same period in 2009. The increase in R&D expenses is primarily due to the increased clinical trial costs related to the Company´s Phase 3 trials with talactoferrin in non-small cell lung cancer as a result of the inclusion of Agennix Incorporated´s operations for the first nine months of 2010, and a credit to compensation cost of EUR (1.5) million recognized for the first nine months of 2009 as a result of the forfeiture of convertible bonds and stock options, which did not occur in 2010.
Despite the inclusion of Agennix Incorporated´s operations for the nine months ended September 30, 2010, administrative expenses decreased to EUR 6.4 million compared to EUR 8.0 million for the same period in 2009. Included in administrative expenses for the nine months ended September 30, 2009, were approximately EUR 3.3 million in one-time merger-related costs (banking fees, legal services, audit and other related services) and a credit to compensation cost of EUR (1.7) million as a result of the forfeiture of convertible bonds and stock options. There were no such one-time charges in the nine months ended September 30, 2010.
Net loss before tax for the nine months ended September 30, 2010, increased to EUR (26.3) million compared to EUR (10.6) million for the same period in 2009. Income tax benefit for the nine months ended September 30, 2010 amounted to EUR 6.9 million (EUR 0 for the same period in 2009) and related to the net operating losses incurred by the Company´s subsidiary, Agennix Incorporated, during the period. Net loss for the nine months ended September 30, 2010, increased to EUR (19.4) million compared to EUR (10.6) million for the same period in 2009. Basic and diluted loss per share was EUR (0.97) for the nine months ended September 30, 2010, compared to EUR (1.44) for the same period in 2009. The per share amount for 2009 has been retrospectively adjusted to reflect the effect of the 5 to 1 merger exchange ratio related to the merger of GPC Biotech AG into Agennix AG.
Comparison to previous year: third quarter 2010 compared to third quarter 2009 Revenues for the three months ended September 30, 2010, were EUR 0.2 million compared to EUR 0.2 million for the same period in 2009. R&D expenses increased for the third quarter of 2010 to EUR 8.3 million compared to EUR 1.3 million for the same period in 2009. Administrative expenses for the third quarter of 2010 increased to EUR 2.0 million compared to EUR 1.6 million for the same quarter in 2009. Net loss for the third quarter of 2010 was EUR (11.2) million compared to EUR (2.1) million for the third quarter of 2009. Basic and diluted loss per share was EUR (0.54) and EUR (0.29) for the third quarter of 2010 and 2009, respectively. The per share amount for 2009 has been retrospectively adjusted to reflect the effect of the 5 to 1 merger exchange ratio related to the merger of GPC Biotech AG into Agennix AG.
Quarter over quarter results: third quarter 2010 compared to second quarter 2010 Revenues for the third quarter of 2010 were EUR 0.2 million compared to EUR 0 for the previous quarter. R&D expenses increased to EUR 8.3 million for the third quarter of 2010 compared to EUR 6.6 million in the second quarter of 2010. Administrative expenses for the third quarter of 2010 decreased to EUR 2.0 million compared to EUR 2.3 million for the previous quarter. The Company´s net loss was EUR (11.2) million in the third quarter of 2010, compared to a net loss of EUR (3.9) million for the previous quarter. During the first six months of 2010 the Euro weakened against the U.S. dollar. As a result, the Company recognized approximately EUR 4.0 million in net foreign exchange gains as other income (EUR 2.9 million in the second quarter and EUR 1.1 million in the first quarter of 2010). During the three months ended September 30, 2010, the Euro rebounded significantly against the U.S. dollar, almost entirely erasing the unrealized gains from the first two quarters of 2010. As a result, the Company recognized approximately EUR 4.0 million in net foreign exchange losses in the third quarter of 2010. This resulted in a swing in Other income/Other expense of approximately EUR 8.0 million for the three months ended September 30, 2010. Basic and diluted loss per share was EUR (0.54) for the third quarter of 2010 compared to a loss per share of EUR (0.19) for the previous quarter.
Cash position and net cash burn As of September 30, 2010, cash, cash equivalents and restricted cash totaled EUR 11.1 million (December 31, 2009: EUR 11.5 million). Net cash burn for the nine months ended September 30, 2010, was EUR 25.3 million (September 30, 2009: EUR 15.5 million), with net cash burn of EUR 7.6 million in the first quarter, EUR 9.9 million in the second quarter and EUR 7.8 million in the third quarter of 2010. The increase in net cash burn compared to the 2009 period is primarily due to the inclusion of Agennix Incorporated´s operations for the first nine months of 2010 and increased clinical trials costs due to the progression of the Company´s two ongoing Phase 3 trials with talactoferrin. Net cash burn is derived by adding net cash used in operating activities and purchases of property, equipment and intangible assets. The figures used to calculate net cash burn are contained in the Company´s interim consolidated cash flow statement for the respective periods.
On October 1, 2010, the Company announced that it had raised approximately EUR 76 million in net proceeds in a capital increase via participation from both new and existing shareholders. The execution of the capital increase was based on the resolution passed at the Company´s annual general meeting on May 25, 2010, to issue 20,588,705 new shares. Subscription rights were granted to the shareholders at a subscription price of EUR 3.81 per share. The proceeds from the offering, net of the underwriting commission, were received on October 5, 2010.
Clinical development update The Company provided an update on the following clinical development programs: oral talactoferrin in non-small cell lung cancer (NSCLC), oral talactoferrin in severe sepsis and RGB-286638, the Company´s multi-targeted kinase inhibitor.
Oral talactoferrin in NSCLC: The Company reported that, as of November 16, 2010, 542 patients (75% of the total planned 720 patients) had been enrolled in the Phase 3 FORTIS-M trial in NSCLC patients whose disease has progressed following two or more prior treatment regimens. The FORTIS-M trial remains on track to complete enrollment in the first half of 2011, with top-line data expected before the end of 2011.
Oral talactoferrin in severe sepsis: The Company has decided to initiate a Phase 2/3 trial with talactoferrin in severe sepsis, which is a change from previously disclosed plans for this indication. This trial will have two distinct components: a randomized, double-blind, placebo-controlled Phase 2 portion in approximately 350 adult patients with severe sepsis will be conducted prior to initiating the Phase 3 portion. The Phase 2 component is expected to be initiated in March/April 2011. The purpose of this Phase 2 component, which builds on the promising results seen in the first Phase 2 trial conducted by the Company, is to generate additional meaningful clinical data with talactoferrin in severe sepsis using the Company´s existing financial resources.
The Phase 2/3 trial involves one protocol, which is expected to enable the Phase 3 component to quickly be initiated after completion of the Phase 2 portion, assuming results from the Phase 2 are positive and consistent with the earlier Phase 2 study. Important findings from the Phase 2 portion can also be incorporated into the Phase 3 portion of the protocol as appropriate to maximize the potential for success in Phase 3. As previously announced, the FDA has strongly recommended that Agennix conduct two adequate and well-controlled Phase 3 studies to support a potential Biologic License Application (BLA) submission, and the planned Phase 2/3 trial incorporates the initial Phase 3 trial the Company plans to conduct.
RGB-286638 multi-targeted kinase inhibitor: Preliminary data from the ongoing Phase 1 trial in solid tumors are being presented today at the EORTC-NCI-AACR conference in Berlin, Germany. This is the first-in-human study with this compound. RGB-286638 is being administered once a day intravenously on days 1-5 of a 28 day schedule. The trial objectives are to determine the maximum tolerated dose and dose limiting toxicities and to evaluate the pharmacokinetic and pharmacodynamic profile of RGB-286638. Today´s presentation reports that 25 patients have been enrolled to date at dose levels between 10-160 mg/day. RGB-286638 was well tolerated at doses up to 80 mg; the maximum tolerated dose was exceeded at a dose level of 160 mg and the 120 mg dose level is currently enrolling patients. Prolonged disease stabilization was seen across dose levels.
As part of its plan to focus existing financial resources on generating important data with talactoferrin in both NSCLC and severe sepsis, Agennix has made the decision to defer the initiation of the planned Phase 1 trial in hematological tumors with RGB-286638. The Company plans to complete the ongoing Phase 1 trial in solid tumors and hopes to be able to conduct further testing when more financial resources are available to allocate to this program.
Torsten Hombeck, Ph.D., Chief Financial Officer, said: "Our top development priorities continue to be the advancement of oral talactoferrin for the treatment of non-small cell lung cancer and severe sepsis, two areas of major unmet medical need. We have carefully reviewed all of our programs and plans for the year ahead and have made important decisions and changes to ensure that we can achieve meaningful results from these two programs using our existing financial resources. With the recent successful completion of our financing that netted proceeds of approximately EUR 76 million, we believe we now have sufficient resources to get to top-line data in our FORTIS-M trial with talactoferrin in non-small cell lung cancer and to conduct the Phase 2 portion of our planned Phase 2/3 trial with talactoferrin in severe sepsis."
Supervisory Board resignation Agennix was informed on November 3, 2010 that Robert van Leen, Ph.D. has resigned from the Supervisory Board. The Company will provide an update in the near future regarding a replacement for Dr. van Leen.
Financial guidance The Company updated its financial guidance as follows:
Management believes that, including the approximately EUR 76 million in net proceeds received from the recent capital increase, the Company will have sufficient cash to fund its operations through the second quarter of 2012, assuming the EUR 15 million loan made to the Company in the third quarter of 2010 by dievini Hopp BioTech holding GmbH & Co. KG is terminated and re-paid before that time.
Management expects no substantial cash generating revenues for the remainder of 2010 or for 2011. This guidance does not consider cash revenue from potential partnering of the Company´s product candidates due to the uncertainty of the timing of such events.
For the remainder of 2010 and for 2011, the Company expects R&D expenses to significantly increase compared to 2009 due to an expected steady increase in clinical trial-related costs as the Company´s Phase 3 trials in non-small cell lung cancer with talactoferrin progress. In addition, the Company plans to initiate the Phase 2 portion of a Phase 2/3 trial with talactoferrin in severe sepsis in March/April 2011.
Administrative expenses will be lower in 2010 compared to 2009 as the one-time costs associated with the merger that were incurred in 2009 will not occur in the following years. Administrative expenses in 2011 are expected to increase compared to 2010 as the Company plans to initiate certain critical pre-commercialization efforts.
Conference call scheduled The Company has scheduled a conference call to which participants may listen via live webcast, accessible through the Agennix Web site at www.agennix.com or via telephone. A replay will be available on the Web site following the live event. The call, which will be conducted in English, will be held on November 18, 2010 at 15:00 CET/9:00 AM ET. The dial-in numbers for the call are as follows:
Participants in Europe: 0049 (0)69 71044 5598
0044 (0)20 3003 2666
Participants in the U.S.: 1-212-999-6659
Please dial in 10 minutes before the beginning of the call.
About Agennix Agennix AG is a publicly listed biopharmaceutical company that is focused on the development of novel therapies that have the potential to substantially improve the length and quality of life of critically ill patients in areas of major unmet medical need. The Company´s most advanced program is talactoferrin, an oral therapy that has demonstrated activity in randomized, double-blind, placebo-controlled Phase 2 studies in non-small cell lung cancer, as well as in severe sepsis. Talactoferrin is currently in Phase 3 clinical trials in non-small cell lung cancer, and Agennix plans to develop this program further for the treatment of severe sepsis. Other clinical development programs include RGB-286638, a multi-targeted kinase inhibitor in Phase I testing, and a topical gel form of talactoferrin for diabetic foot ulcers. Agennix´s registered seat is in Heidelberg, Germany. The Company has three sites of operation: Planegg/Munich, Germany; Princeton, New Jersey and Houston, Texas. For additional information, please visit the Agennix Web site at www.agennix.com.
This press release contains forward-looking statements, which express the current beliefs and expectations of the management of Agennix AG, including statements about the Company´s future cash position and the status of its clinical development programs for talactoferrin. Such statements are based on current expectations and are subject to risks and uncertainties, many of which are beyond the control of the Company, that could cause future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. There can be no guarantee that the Company will move talactoferrin forward in development for severe sepsis in a timely manner, if at all, or that talactoferrin will ultimately be approved for sale in any country. Additionally, there can be no guarantee that the Company will have sufficient cash to fund its operations through the second quarter of 2012. Actual results could differ materially depending on a number of factors, and management cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date on which they are made and Agennix undertakes no obligation to update these forward-looking statements, even if new information becomes available in the future.
Agennix is a trademark of the Agennix group.
For the full interim management report and interim condensed consolidated financial statements and accompanying notes for the third quarter and first nine months of 2010, please visit the Investor Relations section of the Agennix website at http://www.agennix.com/index.php option=com_content&view=article&id=122&Itemid=77&lang=en.
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