3rd Apr 2008 07:00
AGI Therapeutics plc03 April 2008 AGI Therapeutics, plc Financial results for the twelve months ended 31 December 2007 Dublin, Ireland, 3rd April 2007 - AGI Therapeutics plc ("AGI" or the "Company"),a speciality pharmaceutical company focused on gastrointestinal drug products,today reports audited financial results for the twelve months ended 31 December2007. Financial highlights • Revenue of €392,000 (2006: €196,000) • Cash and short term deposits at 31 December 2007 of €30.9 million, (2006: €40.0 million)• R & D spend of €13.2 million (2006: €3.5 million)• Net loss of €14.1 million (2006: €4.3 million)• Loss per ordinary share of 20.9 cent (2006: 6.9 cent) Operational highlights • Positive meeting with the US Food and Drug Administration (FDA) in relation to Rezular(TM) (arverapamil, AGI-003) resulting in guidance on the investigational new drug application (IND) requirements for further clinical and pre-clinical development, Phase III study design and NDA 505b2 submission requirements • IND filed and ARDIS programme initiated for Rezular(TM) in the treatment of diarrhoea-predominant irritable bowel syndrome (IBS-D) • Characterised mechanism of action of RezularTM, a triple action intestinal modulator, which the Company believes to be a first-in-class compound offering a safe and effective treatment for IBS-D patients • Identified target indications and developed Phase II programmes for arbaclofen (AGI-006), 4-ASA (AGI-022) and mecamylamine CR (AGI-004) in gastroparesis, ulcerative colitis and chemotherapy-induced diarrhoea, respectively • Further strengthened the management team with the addition of two experienced senior executives to the US group: • Sian Bigora, Pharm D. - Vice President, Clinical Research & Regulatory Affairs • Amir Shojaei, Pharm D., Ph.D. - Vice President, Pharmaceutical Development. • Exclusive option agreement signed with US-based Williamsburg Holdings; an important first step in expanding AGI's early-stage development pipeline Post year-end highlights: • First patient dosed in a Phase II study of AGI-004 in the treatment of chemotherapy-induced diarrhoea (CID) • Completed optimisation phase of development of AGI-010, a modified release formulation of the proton pump inhibitor drug ("PPI") omeprazole which utilizes AGI's CHRONAB technology and which is being co-developed with Axcan Pharma Inc. ("Axcan") for the treatment of night-time acid breakthrough, (NAB), in gastro esophegeal reflux disease (GERD) • Positive pharmacokinetic data on Rezular(TM) which support its safety profile and development strategy for Rezular(TM) in the treatment of IBS-D • Characterised the pharmacokinetic profile of arbaclofen (AGI-006) in healthy volunteers Commenting on the results, Dr. John Devane, CEO of AGI, said: "The successful filing of an IND application and the commencement of the ARDISclinical programmme for Rezular(TM) was our most significant achievement thisyear and we believe the continued development of this exciting IBS-D productwill benefit patients in the future in this underserved marketplace. Inaddition, we substantially increased our investment in R&D in 2007 and haveachieved strong progress across our development pipeline. We were particularlypleased to report the start of a new Phase II clinical study for mecamylamine(AGI-004), for the treatment of CID, in February 2008. Overall, 2007 was a busy year for AGI and we look forward to continued progressin 2008. Our focus this year will be to further advance our clinical programmeswhich will allow us achieve our commercial goals." Contact Information: AGI Therapeutics plc. Tel: +353 1 449 3254David Kelly, Chief Financial Officer Financial Dynamics - UK Tel: +44 (0) 20 7269 7182Deborah Scott/Lara Mott Financial Dynamics - Ireland Tel: +353 1 663 3607Aisling Garvey Piper Jaffray Limited Tel: +44 (0) 20 3142 8700Neil MackisonWill CarnwathDavy Tel: +353 (1) 614 8761John Frain For further information: www.agitherapeutics.com About AGI Therapeutics plc AGI is a speciality pharmaceutical company which is focused on the developmentand commercialisation of differentiated drug products for gastro-intestinal (GI)diseases and disorders. AGI's common shares are listed on the AlternativeInvestment Market of the London Stock Exchange (AIM) and on the Irish EnterpriseExchange of the Irish Stock Market (IEX) as AGI. The Company has a portfolio of product candidates derived from its KnownMolecular Entity (KME) approach to drug re-profiling and development. TheCompany's lead product candidate, RezularTM, is an orally administeredtriple-action intestinal regulator, a first-in-class mechanism for the treatmentof diarrhoea predominant Irritable Bowel Syndrome (IBS-D). KME is a re-profiling methodology used by the Company to identify existingtherapeutic drugs which typically have been marketed for a number of years, haveestablished safety profiles and can be developed for new clinical indications orwith improved profiles in their existing clinical indications. In this way, theCompany seeks to reduce the risk, time and cost of new product development ascompared to the development of new chemical entities. AGI is developing a range of product candidates to treat a variety of prevalentGI diseases and disorders, including irritable bowel syndrome (IBS), dyspepticsymptoms, gastroparesis, ulcerative colitis, gastro-esophageal reflux disease(GERD) and diarrhoea-related conditions such as chemotherapy-induced diarrhoea(CID). The Company is targeting areas of the GI therapeutic drug products marketfor its product candidates where there are currently unmet medical needs orwhere the effectiveness of existing drug therapies can be further improved. The Company has five active clinical stage product candidates which are eitherisomers or new drug delivery formulations of existing approved drugs and whichhave established safety and tolerability profiles in their currently approvedclinical indications. For further information please see www.agitherapeutics.com Statements contained within this press release may contain forward-lookingcomments which involve risks and uncertainties that may cause actual results tovary from those contained in the forward-looking statements. In some cases, youcan identify such forward-looking statements by terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or 'continue'. Predictions andforward-looking references in this press release are subject to the satisfactoryprogress of research which is, by nature, unpredictable. Forward projectionsreflect management's best estimates based on information available at the timeof issue. Chairman's and Chief Executive's review: Overview 2007 was an important year of progress for AGI. Following a successful IPO in2006, and the subsequent reporting of clinical data across the developmentpipeline, 2007 was the year in which the Company refined the scope and directionof future clinical development of its products. The year was dominated by theprogress of Rezular(TM), a product designed to treat the multiple symptoms ofIBS-D, a debilitating disease believed to affect between 10% and 20% of thepopulation in developed markets. The Company also defined the clinical development programmes for its otherpipeline products. The clinical results generated from the proof-of-conceptstudies in 2006 and early 2007 provided sufficient data to chart the best routefor further development. In 2007, AGI identified gastroparesis, ulcerativecolitis and chemotherapy-induced diarrhoea as the most promising clinicalindications for which to further develop its arbaclofen, 4-ASA and mecamylamineproducts, respectively. In anticipation of the steps required to move Rezular(TM) into Phase III studies,the Company has expanded its US operations and raised its profile amongst theinternational scientific, medical and investment communities in 2007. AGIattended Digestive Disease Week (DDW) in May and presented the Phase II Rezular(TM) study results at the 2007 Scientific Meeting of the American College ofGastroenterology in October. The Company also attended and presented at a numberof the major pharmaceutical investor conferences. Strategy AGI remains dedicated to its founding strategy, focusing on the development ofnew products for GI diseases which are based on Known Molecular Entities (KMEs).KME is a re-profiling methodology used by the Company to identify existingtherapeutic drugs which typically have been marketed for a number of years, haveestablished safety profiles and can be developed for new clinical indications orwith improved profiles in their existing clinical indications. In addition to the Company's continued focus on the pharmaceutical and clinicaldevelopment of its product portfolio, AGI maintains its aim to develop into afully integrated specialty pharmaceutical business with the ability to overseethe sales, marketing and distribution of its own products in the market bytargeting medical specialists within its therapeutic areas of expertise. Inorder to maximise the commercial success of the Company's products, AGI aims toout-license or partner those products that would benefit from being marketed orco-promoted by larger companies, whilst retaining co-ownership rights to AGI'sproducts where possible. Operations: Rezular(TM) (arverapamil, AGI-003) in IBS-D IBS is a functional disorder that comprises a cluster of gastrointestinalsymptoms which are likely to be life long and which affect between 10% and 20%of the population in developed markets. Rezular(TM) is being developed in an oraldosage form for the treatment of IBS-D in both men and women. The IBS-D segmentof the IBS market is estimated to account for at least one-third of all IBSpatients and there is currently an estimated 6 million diagnosed IBS-D patientswho could benefit from safe and effective drug therapy. Rezular(TM) is an orally administered triple-action intestinal regulator, afirst-in-class mechanism for the treatment of IBS-D. It contains arverapamil, asingle enantiomer moiety of the racemic drug verapamil. Unlike the currentlyavailable commercial forms of racemic verapamil (a mixture of two enantiomers),Rezular(TM) shows a dominant activity in treating the symptoms of IBS-D withoutthe traditional cardiovascular actions of the racemic drug. Rezular(TM) activities dominated 2007. In March, the FDA determined that theexisting pre-clinical and clinical data would support submission of an INDapplication and a Phase III programme for Rezular(TM) The design and scope ofthe Phase III protocol was also agreed upon in the IND submission. In addition,the FDA and AGI agreed on the overall manufacturing, pre-clinical, and clinicaldevelopment plans to support the submission of the New Drug Application (NDA) inIBS-D under FDA's 505(b)(2) NDA regulations. The FDA concurred that theremaining pre-clinical and supporting clinical studies required for the NDAcould be performed in parallel with the Phase III programme. At the time of writing, the first ARDIS studies are underway with over 75 sitescurrently randomising patients in the US, Europe and Latin America. Siteinitiation and recruitment during Q4 was slower than expected and the Companyexpects to be able to provide a more complete status update mid-2008. AGI ispleased to note that greater than 80% of patients completing ARDIS I haveelected to roll over into the 12-month safety extension, ARDIS 3. CHRONAB omeprazole (AGI-010) for NAB in GERD As previously reported, AGI is developing a modified release formulation of theproton pump inhibitor drug (PPI) omeprazole based on its CHRONAB technologywhich the Company believes will be effective in treating NAB, a prevalent aspectof current PPI therapy of GERD. GERD is the most prevalent of the majorgastrointestinal disorders and is most commonly treated with PPI drugs, whichachieve global annual sales in excess of US$20 billion. NAB is estimated tooccur in at least 50 per cent of GERD patients on PPI therapy. AGI entered into a co-development and license agreement with Axcan in September2006 to jointly develop for North American markets a modified release omeprazoleproduct based on AGI's CHRONAB formulation approach. AGI worked closely withAxcan throughout 2007 to progress omeprazole through Phase II productoptimisation. Following extensive work during 2007 to optimise its earlier prototypeformulations, AGI announced in March 2008 that it has identified a uniqueformulation of omeprazole for once daily administration which, the Companybelieves, could specifically address nocturnal acid breakthrough (NAB), a realunmet medical need for GERD patients. With its partner Axcan, AGI will now focuson defining the appropriate development approach for the remainder of theAGI-010 program. Arbaclofen (AGI-006) in gastroparesis The results of a 64 patient exploratory Phase II trial of arbaclofen infunctional dyspepsia in early 2007 demonstrated statistically significantimprovements across a range of endpoints, including patient global severity,bloating, nausea, condition specific Quality-of-Life (QOL) and rescue antacids.AGI determined that the profile of activity of arbaclofen matches well with thedesired profile of a therapy for the dyspeptic symptoms of gastroparesis.Diabetic gastroparesis is the most common manifestation of the dyspepticsymptoms of gastroparesis, however effective and well-tolerated therapy optionsare extremely limited for these patients. During 2007, AGI carried out further work, including a study (reported in aseparate press release this week) on the pharmacokinetic exposure profile ofarbaclofen in healthy human subjects, under both fasted and fed conditions. Inaddition, this study compared the fasted exposure of AGI-006 in terms of both R-and S-isomers of baclofen with the fasted exposure following a single 10mg doseof Lioresal(R) (a marketed form of racemic baclofen). The results of this worksupport the Company's belief that the development of AGI-006 can follow asimilar clinical/ regulatory pathway to Rezular(TM) 4-ASA (AGI-022) in ulcerative colitis AGI is developing a modified release oral formulation of 4-aminosalicylatesodium (4-ASA) for the induction and maintenance of remission of mild tomoderate ulcerative colitis (UC). UC is a chronic, recurrent, relapsing andremitting inflammatory disease of the colon and/or rectum. AGI believes thatits 4-ASA product may offer certain advantages compared with current 5-ASA basedtherapies which are commonly used to treat UC, including a superior tolerabilityprofile, and a more reliable delivery to the target sites of action in UCleading to a higher efficiency of therapy with potential dosing advantages. In March 2006, AGI reported on the outcome of a human pharmacokinetics trial in16 human subjects designed to characterise the in vivo drug release profile andpharmacokinetics of three delayed release/controlled release formulationscompared with a reference solution of 4-ASA. The study demonstrated delayed andcontrolled in vivo release profiles consistent with targeted colonic delivery. During 2007, having selected a lead formulation, AGI developed a high unit-dose,once-daily, modified release tablet of this product and has designed a Phase IIclinical study to further investigate the efficacy of this product in UCpatients. AGI hopes to initiate this study later in 2008. Mecamylamine (AGI-004) in CID Based on preliminary proof-of-concept clinical work carried out in patientssuffering from functional diarrhoea, AGI believes that controlled releasemecamylamine has the potential to be an effective agent in diarrhoeal statescharacterised by a high frequency of watery stools. Given the mechanism ofaction of mecamylamine on the nicotinic acetylcholine receptors (nAChR) and thepathophysiology of certain diarrhoeal states that are not satisfied by currenttherapy, AGI identified chemotherapy-induced diarrhoea (CID) as an area of unmetclinical need where controlled release mecamylamine may have therapeuticbenefit. During 2007, AGI consulted with medical experts and designed a clinical protocolto study mecamylamine in patients with CID. In February 2008, AGI announced thatthe first patient has been dosed in this Phase II study. The current standard of care for CID patients usually involves multiple oraldaily doses of an opioid agent such as loperamide. However, many patients whoreceive loperamide continue to experience significant and debilitating diarrhoeawhich may require reduction, delay or even withdrawal of chemotherapy. AGI'smecamylamine product is a controlled release transdermal patch which AGIbelieves offers a significant advantage to current CID therapy, including itsconvenient, once-daily transdermal form. New Products In August 2007, AGI signed an exclusive option agreement to license certainintellectual property and know-how surrounding a novel prodrug platform for theprokinetic/antiemetic agent, levosulpiride, from Williamsburg Holdings, a USprivate drug development company. While this particular technology is still undergoing technical feasibilityassessment, AGI believes this demonstrates its continued commitment to broadenthe Company's early stage portfolio. Outlook The 2007 results announced today demonstrate the progress AGI is making inmoving forward its pipeline of exciting compounds in underserved markets. In2008, a key objective will be to deliver further clinical data which will allowthe Company to bring industry partners on board to see the products through toeventual market launch. In these difficult equity markets, AGI remains firmlyfocused on ensuring that both its existing financial resources and managementeffort is concentrated on maximising the value of the Company's existingpipeline and optimising the route to regulatory submission and approval. Dr Ronan Lambe Dr John DevaneChairman Chief Executive OfficerDublin, 3 April, 2008 Financial review The financial information for the year ended 31 December 2007 presented belowhas been prepared according to IFRS, as adopted by the European Union. Operating performance Revenue AGI received an initial milestone payment of $1.5 million from Axcan Pharma Inc.in 2006 related to a co-development agreement for Chronab omeprazole. Thisupfront fee is being recognised on a straight line basis over three years, anestimate of the likely term of the underlying development programme. For theyear to December 31, 2007 a total of €0.4 million was recognised as revenue(2006: €0.2 million). Research and Development expenses Total Research and Development Expenses for the year to December 31, 2007 was€13.2 million (2006: €3.5 million). The significant increase in R&D costsreflects the increased number of clinical programmes associated with theCompany's products in development, particularly the initiation of the ARDISPhase III programme for Rezular(TM) Also included in this cost category is awrite down of approximately €0.7 million associated with intellectual propertyrelating to a discontinued development programme. General and Administrative expenses General and Administrative expenses in 2007 were €2.6 million (2006: €1.9million). This increase is attributable to increased costs associated with theexpansion of the Company's office in the US and the fact that AGI incurred thefirst full year of costs associated with being a public company. Interest Income The Company earned interest on its cash balances, primarily the proceeds of theIPO during 2006. This amounted to €1.5 million in 2007 (2006: €1.0 million). Taxation While the Company has had a loss to date, not all of this is available foroffset against the interest income referred to above. Therefore AGI incurred atax charge of €0.2 million for the year (2006:€0.1 million). Share based compensation expense During 2006 and 2007, the Company issued share options to certain employees.While the options were issued at a strike price equal to the market price of theCompany's shares on the date of grant, a calculation is required of thepotential expense to the company of issuing those options which is determinedusing the Black-Scholes option-pricing formula. A total amount of €1.0 millionwas expensed during 2007 (2006: €0.8 million) for these share based compensationcharges, divided between Research and Development and General and Administrationexpenses. Operating cash flow Net cash outflow from operating activities in the period was €8.9 million (2006:€2.0 million). At 31 December 2007, AGI had cash and short-term deposits of€30.9 million, (2006 €40.0 million). AGI Therapeutics, plc Consolidated Income Statementfor the year ended 31 December 2007 2007 2006 •'000 •'000 Revenue 392 196 ______ ______Operating expenses Research and development expenses (share basedpayment charge of €489,000 (2006: €287,000)) (13,159) (3,519)General and administrative expenses (share basedpayment charge of €516,000 (2006: €484,000)) (2,640) (1,893)Other operating income - 65 ______ ______ Operating loss (15,407) (5,151) ______ ______ Interest income 1,518 1,064Interest expense - (98) ______ ______ Net finance income 1,518 966 ______ ______ Loss before income tax (13,889) (4,185)Income tax expense (179) (137) ______ ______ Loss for the year (14,068) (4,322) Attributable to equity holders (14,068) (4,322) Basic loss per ordinary shareBasic loss per share (in cent) 20.9 6.9Diluted loss per share (in cent) 20.9 6.9 Consolidated Balance Sheetat 31 December 2007 2007 2006 •'000 •'000Non-current assetsProperty, plant and equipment 48 39Intangible assets 1,165 1,810 ______ ______ Total non-current assets 1,213 1,849 ______ ______Current assetsOther current assets 426 223Cash and cash equivalents 30,911 40,007 ______ ______Total current assets 31,337 40,230 ______ ______Total assets 32,550 42,079 Shareholder equityShare capital 674 674Share premium 51,079 51,079Other reserve 1,800 795Retained deficit (26,712) (12,644) ______ ______Total shareholders' equity 26,841 39,904 ______ ______Current liabilitiesTrade and other payables 5,709 2,175 ______ ______Total current liabilities 5,709 2,175 ______ ______Total liabilities 5,709 2,175 ______ ______ Total equity and liabilities 32,550 42,079 Consolidated Statement of Cash Flowsfor the year ended 31 December 2007 2007 2006 •'000 •'000(Loss) for the year (14,068) (4,322)Adjustments to reconcile loss to net cash used inoperating activities:Depreciation of property, plant & equipment 19 10Amortisation of intangible assets 61 41Interest income (1,518) (1,064)Interest expense - 98Impairment of intangible assets 738 -Corporation tax 179 137Share based payment 1,005 771 ______ ______Operating cash outflow before changesin working capital (13,584) (4,329)(Increase)/decrease in other current assets (95) (48)Increase in trade and other payables 3,433 1,303 ______ ______Cash absorbed by operations (10,246) (3,074)Interest received 1,410 1,005Tax paid (78) - ______ ______Net cash outflow fromoperating activities (8,914) (2,069) ______ ______Cash flows from investing activitiesAcquisition of intangible assets (154) (330)Purchases of property, plant and equipment (28) (47) ______ ______Net cash used in investing activities (182) (377) ______ ______Cash flows from financing activitiesProceeds from issue of share capital - 42,517Expenses in respect of the issue of share capital - (2,979) ______ ______Net cash from financing activities - 39,538 ______ ______Net (decrease)/increase in cash andcash equivalents (9,096) 37,092Cash and cash equivalents at the beginningof the year 40,007 2,915 ______ ______Cash and cash equivalents at theend of the year 30,911 40,007 Notes to the consolidated preliminary financial information 1 Basis of preparation This consolidated preliminary financial information is presented in euro roundedto the nearest thousand, being the functional currency of the company and itssubsidiaries. It has been prepared on the historical cost basis of accounting,except for share based payments and financial instruments, which are stated atfair value. The accounting policies have been applied consistently by all group companies. This preliminary consolidated financial information does not constitute fullstatutory financial statements of the Group within the meaning of Regulation 40of the European Communities (Companies: Group Accounts) Regulations, 1992, butis derived from those Financial Statements. Statutory Financial Statements forthe year ended 31 December 2006 have been filed with Companies House. Theauditor's report on those financial statements was unqualified. The StatutoryFinancial Statements for the year ended 31 December 2007 will be delivered tothe Companies House following the Company's annual general meeting. Going concern The Company's main activity is research and development which to date has beenfunded through equity offerings. The Company is loss-making and will continue tobe so into the future as it continues to invest in the clinical development ofits products which will be managed and scheduled in line with available funds,and possible future funding from out-licensing and/or further equity funding. On this basis the Directors have a reasonable expectation that AGI will continuein operational existence for the foreseeable future and have adopted the goingconcern basis in preparing these financial statements. 2 Statement of compliance This preliminary consolidated financial information has been prepared inaccordance with the International Financial Reporting Standards (IFRSs) asissued by the International Accounting Standards Board (IASB) as adopted by theEuropean Union (herein 'EU IFRS'). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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