4SC Announces Financial Results for the First Quarter of 2012
News Oct 22, 2012
4SC AG has announced the consolidated financial results of the 4SC Group (4SC) in accordance with International Financial Reporting Standards (IFRS) for the quarter ended 31 March 2012.
Both Group segments achieved important milestones in the first months of the year.
The Development segment, which comprises the development of clinical drug programmes as conducted by the Group's parent company 4SC AG, achieved decisive progress for its lead products, the cancer drug resminostat and vidofludimus, the compound to treat autoimmune diseases.
The Drug Discovery & Collaborative Business segment comprising early-stage pharmaceutical research and its commercialization by 4SC Discovery GmbH - which launched operations at the beginning of the year - also achieved impressive initial results.
Financial results and financial situation in the first quarter 2012
Consolidated revenue in the first three months of 2012 increased to EUR0.365 million (Q1 2011: EUR0).
The increase is due mainly to the deferred income in the first quarter from the licensing partnership for resminostat with the Japanese pharmaceutical company Yakult Honsha, into which 4SC entered in 2011, and to revenue generated under research collaboration projects.
Operating expenses stood at EUR4.19 million in the first quarter of 2012, down 13% on the prior-year figure of EUR4.79 million. This reduction was mainly triggered by the decline in research and development costs, which fell by 21% to EUR2.92 million (Q1 2011: EUR3.68 million) because four of the originally eight concurrent clinical studies were brought to a successful completion in the meantime.
Administrative costs rose by 6% to EUR1.03 million year on year (Q1 2011: EUR0.97 million), principally as a result of higher legal and consulting costs and an increase in costs incurred for investor relations activities. 4SC was able to reduce its net loss by 21%, from EUR4.70 million in the prior-year quarter to EUR3.70 million in the first quarter of 2012, mainly on the back of lower operating expenses.
At 31 March 2012, 4SC had funds of EUR11.97 million (31.12.2011: EUR15.82 million). This represents an average monthly operational cash burn of EUR1.28 million in Q1 2012.
4SC Group operational highlights in the first quarter of 2012
In clinical and preclinical drug development:
• Publication of excellent clinical data from the Phase II SHELTER study with the anti-cancer drug resminostat in advanced liver cancer (hepatocellular carcinoma, HCC) - the primary endpoint was reached ahead of time (Jan. 2012).
• Publication of preclinical data for vidofludimus, the compound for treating autoimmune diseases, which demonstrate the substance's unique anti-inflammatory mechanism of action (Feb. 2012).
In positioning the drug programmes in the competitive environment:
• Granting of the composition-of-matter patent for resminostat in Taiwan. The patent authorities in three other Asian growth markets (South Korea, India, and the Philippines) have indicated that the granting of patent protection is imminent in the respective countries. Due to the high occurrence of liver cancer in the region, Asia-Pacific is of strategic importance (March 2012).
In early-stage research and research collaboration projects:
• Realization of a milestone payment under a completed research collaboration project with the Japanese pharmaceutical company Sanwa Kagaku Kenkyusho Co., Ltd. (SKK) following SKK's achievement of an agreed milestone for a drug candidate originally identified with the help of 4SC. The milestone payment goes to 4SC Discovery (March 2012).
• After the reporting period: 4SC Discovery launches its first compound screening research collaboration with Henkel KGaA, just three months after commencing operations. Furthermore, 4SC Discovery agrees a strategic marketing cooperation in the field of drug discovery with CRELUX GmbH, a leading provider of services related to protein structure biology (April 2012).
Dr Ulrich Dauer, CEO of 4SC AG, commented: 'We are full of confidence following the successful start to the 2012 financial year both in our clinical compound programmes and our early-stage research. One highlight in clinical development was the publication of the Phase II trial data for our anti-cancer drug resminostat in advanced liver cancer (HCC) in January. These data indicate that resminostat can offer a survival benefit for HCC patients who no longer respond to sorafenib, the only approved cancer therapy available to them today. We are confident that we will be able to confirm these promising data over the course of the year when we present the final results from this study. We are doing everything in our power to ensure that we can launch a registration trial in this indication together with a partner.'
Dr Dauer continued: 'We are particularly pleased that our young subsidiary 4SC Discovery GmbH has entered into its first research collaboration with Henkel and announced a strategic collaboration with CRELUX just three months after commencing operations. Just like the received milestone payment from SKK, these successes validate our business model and our strategic goal to generate additional revenue from our early-stage research work to further strengthen our business. The upcoming operational and clinical milestones for 2012 will be key for the successful future development of our company. We look forward to this with optimism.'
4SC Group outlook
4SC confirms the guidance it published in its consolidated financial statements for 2011 on 29 March 2012:
• 4SC is preparing a Phase IIb trial with vidofludimus in inflammatory bowel disease (IBD). It is intended to launch the trial in late 2012/early 2013, ideally in collaboration with a pharmaceutical partner.
• In the indication of advanced liver cancer (HCC), 4SC is focusing efforts on securing a pivotal study together with a pharmaceutical partner. If the outcome of the talks with the authorities and potential partners is successful, this study could be initiated in the first half of 2013.
• In 2012, 4SC is expecting final data from the Phase II SHELTER study with resminostat in liver cancer and initial interim results from the Phase I/II SHORE study with resminostat in colorectal cancer. In addition, the ongoing Phase I studies with the anti-cancer compounds 4SC-202 and 4SC-205 are also expected to be concluded.
• 4SC Discovery GmbH: It is intended to generate additional revenue in the cooperation and services business with pharmaceutical companies and through the marketing of the Group's own drug programmes in early research phases.
• 4SC is looking to enter into further licensing partnerships with pharmaceutical and biotechnology companies. Under the umbrella of such partnerships, the company wants to develop its lead compounds, vidofludimus and resminostat, into marketable products and generate cash inflows to finance 4SC's operating business.
• Based on 4SC's expense and revenue planning for 2012, the existing funds will ensure the Company's financing beyond the first quarter of 2013. According to this planning, the average monthly operating cash burn rate in 2012 will be around 10% higher than in 2011 (EUR1.07 million). Research and development costs are expected to remain slightly below the 2011 level.