BIOTIE THERAPIES CORP. STOCK EXCHANGE RELEASE 28.4.2003 at 8.30 am
INTERIM REPORT ON BIOTIE THERAPIES CORP. JANUARY 1 – MARCH 31, 2003
• In January 2003, BioTie sold its process development and manufacturing unit as part of the company’s strategy to focus on drug development. • The operating profit (loss) for the first quarter was EUR –4.3 million (in 2002, EUR –6.0 million pro forma). • The company’s liquid assets amounted to EUR 5.4 million (in 2002, EUR 9.0 million pro forma) at March 31, 2003. • After the reporting period, the company completed the first phase III clinical studies of the nalmefene tablet intended for the treatment of alcoholism. • In April 2003, the National Technology Agency (Tekes) made a conditional grant of additional funding of EUR 5.9 million for the company’s research and development programs. • After the reporting period, the company entered into a licensing agreement on the company’s VAP-1 antibody program worth USD 16.7 million with the Japanese Seikagaku Corporation. The agreement will enter into force when BioTie has completed the new issue currently being prepared and secured funding for its operations until the end of 2004. The agreement grants BioTie a signing fee of USD 2.5 million. • On April 28, 2003, The Board of Directors of BioTie Therapies decided on preparations to arrange a new issue whereby the shareholders of the company would have the pre-emptive subscription right for the new shares. With the new issue the company aims to raise EUR 10-14 million new capital primarily from company’s current shareholders by the end of June 2003.
Drug development projects at the clinical phase
Nalmefene (SOBERAL) for the treatment of alcoholism and alcohol abuse
BioTie Therapies completed the first phase III clinical studies of the nalmefene tablet intended for the treatment of alcoholism. The studies were performed in Finland and the United Kingdom and focused on the safety and efficacy of nalmefene in the treatment of alcoholism and alcohol abuse without supporting psycho-social therapy in patients who considered themselves to be incapable of controlling their drinking.
Both studies were multi-center and placebo-controlled studies. In Finland, 400 patients and in the UK, 150 patients participated in the study. The duration of drug therapy in both studies was 28 weeks. Patients were instructed to take the study drug before drinking alcohol.
In the Finnish study, the number of heavy drinking days decreased almost by half in nalmefene users. In the placebo group, the number of heavy drinking days decreased by about one third and the difference between the nalmefene and placebo groups was statistically significant. In the British study, the number of heavy drinking days was also reduced by half in the nalmefene group, and the difference between the groups was in the same range as in the Finnish study. However, the difference was not statistically significant in the British study, because a higher than expected proportion of patients dropped out from the study. In both studies, the patients receiving nalmefene felt that the treatment was beneficial more often than the patients receiving placebo. No serious adverse effects related to the use of nalmefene were observed during the studies.
The results demonstrate that heavy drinking can be reduced by drug therapy alone. According to its strategy BioTie seeks to out-license the project at its current development phase. The company is seeking a licensing partner, who would further develop nalmefene and bring the drug to the market.
Nalmefene for the treatment of impulse control disorders
The company is developing another nalmefene product for the treatment of impulse control disorders (ICD). Impulse control disorders include, for example, addictive pathological gambling, compulsive shopping, kleptomania and pyromania.
Approximately 200 patients suffering from addictive pathological gambling participate in a multi-center study commenced in the United States. Preliminary results are estimated to be available during the second quarter of 2003.
There is presently no drug therapy approved by pharmaceutical authorities for the treatment of impulse control disorders, and the company’s clinical product development project is the first one for developing a drug for this indication. Investigator-sponsored, small- scale studies have provided evidence that opioid antagonists are effective in the treatment of these disorders. Furthermore, it has been suggested that different dependence disorders result from the same kind of neurobiological mediation and a vicious circle of reward and enforcement as alcoholism.
VAP-1 monoclonal antibody program
HUVAP is a humanized (chimeric) IgG2 antibody. It has been developed in collaboration with Cambridge University, the University of Turku and Boehringer Ingelheim. HUVAP is primarily intended for the treatment of chronic inflammatory diseases such as rheumatoid arthritis.
Clinical studies with HUVAP commenced at the end of September 2002. When the ongoing phase I clinical study in healthy volunteers has been completed, the company will also consider the development options of a humanized (non-chimeric) or a fully human VAP-1 monoclonal antibody.
After the reporting period, on April 15, 2003, BioTie Therapies signed a regional licensing agreement on the company’s VAP-1 antibody program with the Japanese company Seikagaku Corporation.
Research
In glycomics research, the company continued its collaboration with Professor Karlsson’s group at the University of Gothenburg. The agreement significantly enhances the company’s ability to further strengthen its portfolio of patents in glycomics.
The development of BioHeparin intended for the hemodialysis markets continues in accordance with the research and collaboration agreement with Shimizu Pharmaceuticals. BioHeparin represents a new type of drug molecule with sugar structure that has been produced by using the technology patented by the company in cooperation with the Italian company Inalco SpA.
The screening and preclinical development of new alfa2beta1 integrin inhibitors continued in cooperation with the University of Turku, Åbo Akademi University and the University of Jyväskylä. A patent application for new inhibitors was submitted in the EU during the reporting period. Alfa2beta1 integrin inhibitors provide new methods for preventing thromboses caused by vascular damage as well as preventing cancer metastasis.
Performance
The operating profit (loss) for the reporting period was EUR –4.3 million. The corresponding figure for the previous year was EUR –6.0 million (pro forma). Research and development costs of the period amounted to EUR 3.1 million (in 2002 EUR 4.8 million, pro forma) and thus decreased by 35% from the previous year, as a result of focusing of research and development programs and rationalization of costs.
In accordance with the agreement signed on January 30, 2003, the company sold its process development and production unit businesses to Biovian Oy that is owned by the management and key persons of the company and BioTie. In connection with these arrangements, a total of 14 employees, the current assets of the business, as well as business agreements and obligations were transferred to Biovian Oy as of February 1, 2003. BioTie remained a significant client and shareholder of Biovian Oy.
Financing
BioTie’s equity ratio was –67.4 % as at March 31, 2003 (in 2002 10.3 % pro forma). Cash and cash equivalents totaled EUR 5.4 million as at March 31, 2003 (in 2002 EUR 9.0 million, pro forma), which is sufficient for financing the company’s operations for approximately four months without income obtained from the possible commercialization of products.
Investments and cash flow
The company’s investments during the period amounted to EUR 18 thousand (in 2002 EUR 0.7 million, pro forma). The investments comprised of equipment for research and development operations. Cash flow before financing was EUR -4.3 million (in 2002 EUR –7.0 million, pro forma).
Organization and Personnel
During the reporting period, the Company's personnel was on average 85 (116 in 2002 pro forma) and at the end of the reporting period 68 (112 on 31.12.2002). The number of personnel was reduced by 44 persons during the reporting period as a result of focusing of research and development programs and rationalization of costs.
Events after the reporting period
Funding from the National Technology Agency (Tekes)
After the reporting period, the National Technology Agency (Tekes) granted additional funding EUR 5.9 million for BioTie Therapies' drug development projects. The R&D subsidies and loans with favorable conditions granted in April cover certain drug development costs of the company from October 2002 to mid 2004. The funding granted for the development projects by Tekes varies from one project to another and covers 50-60 per cent of the costs of the projects. The share of capital loan funding of the amount now granted is EUR 4.7 million. The funding granted by Tekes is conditional on BioTie receiving in the new issue to be arranged new capital of approximately EUR 10 million for covering the self-financing share of the drug development projects.
Decision of the Board of Directors to start preparation for a new issue
On April 28, the Board of Directors of the company decided to start preparations to arrange a new issue whereby shareholders of the company would have the pre-emptive subscription right for the new shares. By the new issue, the company aims to raise EUR 10-14 million
all new capital primarily from the company’s current shareholders by the end of June 2003.
The new issue would secure covering the Tekes self-financing share as well as materialization of the VAP-1 licensing agreement with Seikagaku Corporation. An Extraordinary Shareholder’s Meeting is likely to be convened to decide on the new issue during May.
Regional licensing agreement on VAP-1 antibody technology
After the reporting period, BioTie Therapies entered into a licensing agreement on the company’s VAP-1 antibody program with the Japanese company Seikagaku Corporation. According to the terms of the licensing agreement, Seikagaku will have the exclusive right to the VAP-1 monoclonal antibody developed by BioTie Therapies, as well as the right to commercial exploitation of the patents in Japan, Taiwan, Singapore, New Zealand and Australia. The regional licensing agreement covers all indications but is now targeted at the following three indications: rheumatoid arthritis, psoriasis and ulcerative colitis.
The agreement will enter into force when BioTie has completed the new issue currently being prepared and secured funding for its operations until the end of 2004. The company aims at completing the new issue by the end of June 2003.
The value of the licensing agreement totals USD 16.7 million (EUR 15.2 million), comprising of a signing fee of USD 2.5 million, which will be paid once the agreement has entered into force, and USD 14.2 million as milestone payments payable in accordance with the jointly agreed clinical development milestones. Additional milestones will be payable in accordance with mutual agreement, if the number of indications exceeds the abovementioned three. After the launch of the product in Japan, Taiwan, Singapore, New Zealand and Australia, BioTie Therapies will additionally receive significant royalty income during the lifetime of the company’s patents.
In accordance with the terms of the licensing agreement, Seikagaku Corporation will have a licensing option on BioTie Therapies’ small- molecule VAP-1 SSAO enzyme inhibitor. The licensing option covers the same indications and territory as the present agreement.
The company aims at signing a global licensing agreement on the VAP-1 technology intended for the treatment of inflammatory diseases during 2004 so that the agreement would cover the geographical areas outside the regional agreement signed in April 2004.
Outlook for the year 2003
In the short term, the company aims at commercializing the most advanced drug development projects, concentrating its resources to the
most promising research and drug development projects, focusing its organization and reducing cost structure. To improve its financial position, the company aims at completing a new issue by the end of June 2003. The purpose of these actions is to reduce the company’s financial risk and to create the foundations for positive development for the company’s share.
In order to conserve cash and as further development of the nalmefene project intended for the treatment of dependence disorders will be the responsibility of the possible licensing partner, the company will adapt its cost structure and operations during the second quarter of 2003.
The company’s glycomics projects are still at a very early phase, at the discovery research or preclinical phase. The company aims at reducing the risks of product development projects based on glycomics technology by research and collaboration agreements or by implementing other arrangements in 2003.
The preliminary results of phase II clinical studies of the nalmefene product being developed for the treatment of impulse control disorders will be available during the second quarter of 2003. The decision to proceed to phase II clinical studies with vapaliximab (HUVAP) will be made during the second half of 2003, after phase I studies have been completed. The company will also consider developing a humanized (non- chimeric) or a fully human VAP-1 monoclonal antibody.
The company’s goal is to commercialize the nalmefene project at the present development stage of the project during the years 2003-2004. The company is looking for a licensing partner for the research project to take responsibility for further development of the nalmefene product and launching the candidate drug to the pharmaceutical markets.
PRO FORMA ACCOUNTING PRINCIPLES
The merger of "Old" BioTie Therapies Corp., Contral Pharma Ltd (present BioTie Therapies) and its subsidiary Carbion Inc was implemented on October 31, 2002. The Interim Report for the period 1.1.-31.3.2002 does not cover the operations of the merged companies.
The company has prepared the pro forma income statement, balance sheet and cash flow for the period 1.1.-31.3.2002 with the intention of illustrating the financial effects of the merger and the results and the financial position of the combined company assuming that the merger was completed on January 1, 2001. This information is presented only to illustrate the effects of the merger and it cannot, as such, be regarded as reflecting the results of the combined company or its financial position in the future.
The companies’ income statements are directly consolidated into the pro forma income statement and eliminations are made using the pooling of interest method.
The pro forma balance sheet is prepared by directly consolidating the companies’ balance sheets, eliminations are made using the pooling of interest method. The companies’ assets and liabilities are valued at their book values. The shareholders’ equity items reflect the situation after the merger. The share capital consists of Contral Pharma’s share capital and of the nominal value of the new shares issued to BioTie’s shareholders as merger consideration. Carbion is consolidated using the purchase method. Contral Clinics’ (merged to Contral Pharma 2001) restricted equity at the time of merger and the retained earnings are separately consolidated to the pro forma balance sheet.
FINANCIAL STATEMENT Pro forma 1.1.- 1.1.- 1.1.- 1.1.- EUR 1,000 31.03.2003 31.03.2002 31.03.2002 31.12.2002 3 months 3 months 3 months 12 months
Revenue 0 79 22 153
Cost of sales 0 0 0 0
Gross profit 0 79 22 153
Research and -3,096 -4,775 -1,920 -21,541 Development expenses Sales and marketing 0 -42 -42 -178 expenses General and -1,111 -1,081 -209 -3,197 administrative expenses Goodwill depreciation -111 0 0 -189 Other operating income 60 114 0 824 Other operating 0 -278 0 -2,128 expenses Operating profit (loss) -4,258 -5,983 -2,149 -26,256
Financial income and 108 52 16 340 expenses
Profit (loss) before -4,149 -5,931 -2,134 -25,916 extraordinary items
Extraordinary items +/- 0 0 0 -321
Profit (loss) before -4,149 -5.931 -2,134 -26,236 appropriations and taxes
Minority interest 0 103 103 103 Taxes 0 0 0 0
Net income (loss) -4,149 -5,828 -2,031 -26,133
BALANCE SHEET
pro forma EUR 1,000 31.03.2003 31.03.2002 31.03.2002 31.12.2002
Assets
Fixed assets and other long term investments Intangible assets 1,918 2,772 617 2,053 Consolidation goodwill 992 243 243 1,103 Tangible assets 339 526 300 386 Investments 10 0 0 0 3,259 3,541 1,160 3,542
Current assets Advanced payments 0 4 4 0 Current receivables 1,424 1,466 514 1,287 Securities 4,654 6,737 1,980 6,343 Cash in hand at banks 718 2,346 2,097 2,347 6,796 10,553 4,595 9,978
Total 10,055 14,094 5,754 13,520
EUR 1,000 Equity and liabilities
Shareholders equity
Share capital 349 267 135 349 Share premium fund 23,661 36,978 12,234 23,661 Retained earnigs -26,593 -29,959 -10,624 -460 Net income for the -4,149 -5,828 -2,031 -26,133 period Capital loans 8,288 8,238 5,206 8,288 1,556 9,696 4,920 5,706
Mandatory provisions 27 99 0 27
Liabilities Long term debt 6,248 2,209 546 5,251 Current liabilities 2,224 2,090 288 2,536 8,472 4,299 834 7,787
Total 10,055 14,094 5,754 13,520
CASH FLOW pro forma 1.1.- 1.1.- 1.1.- 1.1.- 31.03.2003 31.03.2002 31.03.2002 31.12.2002 EUR 1,000 3 months 3 months 3 months 12 months
Cash flow from operating activities
Operating profit -4,258 -5,983 -2,149 -26,256 Depreciation 300 246 135 1,645 Extraordinary items +/- 0 0 0 -321 Change in mandatory 0 -40 0 -111 provisions Change in working -449 -549 -460 80 capital Financial income and 108 52 16 340 expenses Net cash from operating -4,298 -6,273 -2,458 -24,622 activities
Cash flow from investing activities Investments -18 -704 -43 -1,090 Net cash used in -18 -704 -43 -1,090 investing activities
Cash flow before -4,316 -6,977 -2,501 -25,712 financial activities
Cash flow from financing activities Change in long term debt 997 303 302 3,219 Share issue 0 0 0 15,426 Net cash from financing 997 303 302 18,645 activities
Net increase (+) or -3,319 -6,674 -2,199 -7,067 decrease (-) in cash and cash equivalents Cash and cash 8,691 15,757 6,275 6,276 equivalents in the beginning of the period Impact of changes in 0 0 0 9,482 group structure Cash and cash 5,372 9,083 4,076 8,691 equivalents in the end of the period
KEY FIGURES pro forma 1.1.- 1.1.- 1.1.- 1.1.- 31.03.2003 31.03.2002 31.03.2002 31.12.2002 EUR 1,000 3 months 3 months 3 months 12 months Business development
Personnel on average 85 116 45 115 Personnel at the end of 68 116 45 112 period Research and development 3,096 4,775 1,920 21,541 costs
Capital expenditure 18 704 43 1,090
Profitability
Revenues 0 79 22 153 Operating profit (loss) -4,258 -5,983 -2,149 -26,256 as percentage of n.a -7,573.4 n.a -17,177.5 revenues, % Profit (loss) before -4,149 -5,931 -2,134 -25,916 extraordinary items as percentage of n.a -7,507.6 n.a -16,954.8 revenues, % profit (loss) before -4,149 -5,931 -2,134 -26,236 taxes as percentage of n.a -7,507.6 n.a -17,164.7 revenues, %
Balance sheet
Cash and cash 5,372 9,083 4,076 8,691 equivalents Shareholders equity 1,556 9,696 4,920 5,706 Balance sheet total 10,055 14,094 5,754 13,520
Financial rations
Return on equity, % - - Return on capital -179,7 -288.5 employed, % Equity ratio, % -67.4 10,3 -5,0 -19.1 Gearing, % -133.5 88,8 -524,6 -181.0
Per share data
Earnings per share -0.24 -2.76 (EPS), EUR Shareholders´equity per -0.39 -0.15
share, EUR Divided per share, EUR - - - Pay-out ratio, % - - - Effective dividend -- - yield, % P/E-ratio - - - Share price Lowest share price, 0,66 - 0.67 EUR Highest share price, 1,51 - 2.66 EUR Average share price, 0,95 - 1,13 EUR 31.3/30.12. share 0,68 - 0,67 price, EUR
Market capitalization, 11.8 - - 11.7 MEUR Trading of shares Number of shares traded 484,780 - - 446,478 As percentage of all 2.8 - - 2.6 Adjusted weighted 17,459,559 9.338.897 average number of shares during the period, Adjusted number of 17,459,559 17,459,559 shares at the end of the period
contingent liabilities 1000 EUR 31.03.2003 31.03.2002 31.12.2002
Lease commitments 585 765 667 Accrued interest of capital 1,545 602 1,262 loans
BioTie Therapies Corp.
Board of Directors
Further information:
Jari Saarinen, President and CEO, BioTie Therapies Corp. tel. +358 2 274 8954, e-mail: [email protected] http://www.biotie.com
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