DGAP-News: Press Release: 4SC reports second quarter 2013 financial results
(firmenpresse) - DGAP-News: 4SC AG / Key word(s): Half Year Results/Miscellaneous
Press Release: 4SC reports second quarter 2013 financial results
08.08.2013 / 07:30
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Press Release
4SC reports second quarter 2013 financial results
- Consolidated revenue up 167% in the first half-year
- Consolidated loss reduced further due to higher revenue and lower costs
- Successfully implemented strategy to focus on key development assets
Planegg-Martinsried, Germany, 8 August 2013 - 4SC AG (Frankfurt, Prime
Standard: VSC), a discovery and development company of targeted small
molecule drugs for cancer and autoimmune diseases, today announced the
financial results of the Group managed by 4SC AG (4SC) in accordance with
International Financial Reporting Standards (IFRS) for the first six months
of 2013 and the second quarter of 2013, which ended 30 June 2013.
In the first half of 2013, 4SC more than doubled its revenue compared to
the same period last year and made significant reductions to its operating
expenses adjusted for one-off extraordinary effects. Thus 4SC markedly
improved its earnings situation while at the same time recording a positive
development of its cash flow from operations compared to H1 2012.
Consolidated revenue was EUR 1.17 million in the second quarter (Q2 2012:
EUR 0.37 million). This means that the Company posted its highest quarterly
revenue in five years - excluding the fourth quarter of 2012, in which high
licensing income was directly recognised as revenue. In the first six
months of the year, consolidated revenue increased by 167% to EUR 1.96
million compared to the same time period last year (H1 2012: EUR 0.73
million). This positive development was mainly attributable to the research
partnerships aimed at compound discovery and optimisation which were
launched in the first half-year by the Group subsidiary 4SC Discovery GmbH
with Leo Pharma A/S and BioNTech AG.
Due to the growth in revenue, the reduction in R&D costs as a result of
clinical studies coming to an end as well as continued cost saving
measures, the result from operating activities improved significantly. The
loss from operating activities fell by 14% to EUR 3.43 million in the
second quarter of 2013 compared to the same quarter last year (Q2 2012: EUR
-4.00 million) and by 21% to EUR 6.17 million in the first six months of
2013 (H1 2012: EUR -7.83 million). After adjusting for the one-off expenses
of EUR 1.20 million incurred in the second quarter of 2013 in connection
with the focusing of the Company's development strategy by streamlining its
product pipeline and making personnel adjustments, the operating loss in
the first half of the year was EUR 4.96 million, down by as much as 37%
compared with the prior-year figure.
The net loss for the period improved by 15% to EUR 3.40 million in the
second quarter of 2013 compared to the same quarter last year (Q2 2012: EUR
-3.98 million) and by 21% to EUR 6.08 million in the first six months of
2013 (H1 2012: EUR -7.68 million). The decrease in the net loss for the
period along with a simultaneous increase in the underlying average number
of shares (resulting from the capital increase completed in the third
quarter of 2012) reduced the loss per share to EUR 0.07 in the second
quarter of 2013 (Q2 2012: EUR -0.09) and to EUR 0.12 in the first half of
2013 (H1 2012: EUR -0.18).
As at 30June 2013, 4SC had funds totalling EUR 9.21 million, compared with
EUR 12.06 million as at 31 December 2012. This resulted in an average
monthly outflow of cash from operations amounting to EUR 0.48 million in
the first half of 2013. The company forecasts these funds, in connection
with the current further expense and revenue planning, will ensure the
Company's financing into the third quarter of 2014.
Key events in the second quarter of 2013 and after the reporting period
- May 2013: Announcement of advances in the clinical development of
resminostat - 4SC's lead anti-cancer compound
The Phase I results from the SHORE study in advanced colorectal cancer
(CRC) were announced at the ASCO Conference in Chicago and showed that
resminostat in combination with FOLFIRI chemotherapy was safe and
well-tolerated at all dosage levels administered. In addition, treatment
with resminostat - already in the Phase I part of the study - showed
promising signs of clinical activity.
Furthermore, 4SC identified a potential new predictive biomarker (ZFP64),
whose expression in Phase II trials in liver cancer (HCC) and Hodgkin's
lymphoma (HL) correlates with the expected survival of patients receiving
treatment with resminostat. Patients with overexpression of the biomarker
ZFP64 at the beginning of treatment experienced a considerably longer
survival than patients with low levels of ZFP64 expression.
- May/June 2013: Focusing of the development strategy and adjustment of
the corporate structure
Corporate and personnel structures are being adjusted in line with the
development strategy focused on key products. The planned clinical
development of the anti-cancer compound resminostat towards market approval
as first-line therapy of liver cancer remains the main focus of the
Company's operational development activities. Conversely, other development
programmes have been cut back or halted. The Group subsidiary 4SC Discovery
will continue pursuing its successful course of growth in marketing
early-stage research.
The modified development strategy necessitated adjustments to the staffing
structure, especially in preclinical and clinical development operations,
but also in administration. These changes will reduce the number of
employees by about 15% during the second half of 2013, and theÜberlingen-Bonndorf office will be closed at the end of 2013.
- May and July 2013: 4SC's partner Yakult Honsha starts clinical Phase
I/II trials in Japan with the anti-cancer compound resminostat and
established cancer therapies in liver cancer (HCC) (May) and
non-small-cell lung cancer (NSCLC) (July).
The liver cancer study will investigate the safety and efficacy of
resminostat in combination with sorafenib versus the current standard of
care, sorafenib alone, as a novel first-line treatment of advanced liver
cancer (HCC). The lung cancer study will investigate the safety and
efficacy of resminostat in combination with the cancer drug docetaxel
versus docetaxel monotherapy in patients with advanced, metastatic or
recurrent NSCLC.
- June 2013: UCB begins collaboration with 4SC Discovery and CRELUX to
research and develop new therapies for neurological diseases.
Based on the joint idea-to-candidate (i2c) research platform, 4SC Discovery
and CRELUX will identify and optimise small molecule compounds for treating
central nervous system diseases on behalf of UCB. UCB intends to bring
these compounds to further stages in preclinical and clinical development.
- July 2013: 4SC expands its patent protection for 4SC-202, the Company's
second epigenetic anti-cancer compound in clinical development, in
China, Hong Kong and the USA.
Enno Spillner, CEO of 4SC AG, commented:
'We achieved further operational strides and took important strategic
decisions in the first half of the year. After focusing our development
strategy on our main products - above all our epigenetic cancer compound
resminostat - we implemented important strategic measures aimed at further
improving our cost structures. In addition, our subsidiary 4SC Discovery
GmbH started several important partnerships which contributed to our
significantly improved consolidated revenue in the second quarter.
Preparing and launching a clinical registration programme with our main
product resminostat as a novel therapy option for advanced liver cancer
remains our main strategic objective and we believe the identification of
ZFP64, a potentially predictive biomarker, could help us advance
resminostat as a personalised cancer therapy. Overall, 4SC is entering the
second half of the year with a clear strategic focus and a streamlined
organisation, on the back of successful operations.'
Further finance information
Segment reporting
The 4SC Group, comprising 4SC AG and its wholly-owned subsidiary 4SC
Discovery GmbH, reports consolidated figures from two operating segments.
At the end of the second quarter of 2013, the Development segment comprised
the development programmes for resminostat, 4SC-202, 4SC-205 and
vidofludimus. The Discovery&Collaborative Business segment comprised the
activities involved in drug discovery and early-stage research plus
subsequent commercialisation, in particular through service business and
research collaborations.
Revenue in the Development segment remained constant both in the quarter
under review and in the first half of the year (Q2 2013: EUR 0.22 million
after Q2 2012: EUR 0.23 million; H1 2013 and H1 2012: EUR 0.45 million in
each case). Revenue in the Discovery&Collaborative Business segment was
given a substantial boost. It amounted to EUR 0.94 million in the second
quarter (Q2 2012: EUR 0.14 million) and showed a more than fivefold
increase in the first six months to EUR 1.51 million (H1 2012: EUR 0.28
million).
Operating expenses
Operating expenses, comprising the cost of sales, distribution costs,
research and development costs and administration costs, stood at EUR 4.59
million in the second quarter of 2013, an increase of 5% on the prior-year
figure (Q2 2012: EUR 4.39 million). At EUR 8.12 million, the figure for the
first six months was down 5% year-on-year (H1 2012: EUR 8.57 million). The
Development segment accounted for EUR 6.57 million (H1 2012: EUR 7.41
million) of operating expenses, while the Discovery&Collaborative
Business segment incurred EUR 2.29 million (H1 2012: EUR 2.50 million) and
the consolidation accounted for EUR -0.73 million (H1 2012: EUR -1.34
million).
Extraordinary expenses in the course of strategic adjustments
Two one-off extraordinary factors drove up expenses by EUR 1.20 million in
the second quarter of 2013. A non-recurring, non-cash expense of EUR 0.72
million was reported under research and development costs which resulted
from the decision to focus the development strategy and were due to the
associated impairment losses as a consequence of the streamlining of the
product pipeline. Operating expenses in the reporting period also include
an amount of EUR 0.48 million comprising accrued liabilities in connection
with the adjustment of personnel structures related to the focused
development strategy. About half of these expenses are made up by prepaid
staff costs which are expected to be reversed during the second half of
2013. One-time extraordinary factors of just under EUR 1 million arising
from the impairment losses and the adjustment of personnel structures can
therefore be anticipated for 2013 as a whole. The Company expects
considerable, high six-figure savings in its annual staff costs during
2014.
Research and development costs
Research and development costs incurred in connection with ongoing clinical
studies and the preparation of planned clinical studies continued to make
up the majority of expenses. R&D costs were down slightly by 1% over the
prior-year quarter to EUR 3.13 million (Q2 2012: EUR 3.15 million) and by
15% over the first six months to EUR 5.15 million (H1 2012: EUR 6.07
million) on account of the reduced operating activities in connection with
clinical studies and the implementation of targeted cost-cutting measures.
After adjusting for the extraordinary factors, research and development
costs amounted to EUR 2.14 million in the second quarter and to EUR 4.16
million in the first half-year.
Development of operating cash flow
Cash flows from operating activities in the first half of 2013 were
influenced predominantly by the Group's income from the licence agreement
concluded with BioNTech AG in December 2012 and from the licence agreement
entered into with LEO Pharma A/S, Denmark, in February 2013. Added to this
are non-cash items from the statement of comprehensive income totalling EUR
1.24 million (including from the amortisation of intangible assets and
depreciation of property plant and equipment and the one-off impairment
losses incurred in connection with the streamlining of the product
pipeline), which means that in spite of a pre-tax loss of EUR 6.08 million,
the Company recorded cash outflows from operating activities of just EUR
2.82 million. In the comparative 2012 period, a pre-tax loss of EUR 7.67
million resulted in cash outflows in the amount of EUR 6.90 million.
4SC Group outlook: Further operating and strategic development
Resminostat: Preparation of registration trial in HCC
Subject to approval from the regulatory agencies, 4SC is pursuing an
adaptive study design for the planned registration trial with as a
first-line treatment of advanced liver cancer (HCC). This programme will
consist of a preliminary Phase IIb stage, followed by a larger Phase III
stage. Following a positive interim evaluation during the Phase IIb stage,
an adaptive modification can then be made for the Phase III stage. As plans
currently stand, 4SC assumes that around 650 patients will be needed for
the trial. In addition, 4SC also intends to integrate the analysis of ZFP64
as a potentially predictive biomarker such that it forms an integral part
of the study. If successful, this is intended to enable 4SC to advance
resminostat as a personalised cancer therapy towards market approval. 4SC
is now taking steps to ensure the financing and successful initiation of
the study. Including the registration phase, 4SC expects the overall study
to last approximately five years. Assuming the Phase IIb stage of the study
commences in the first six months of 2014, market approval could therefore
be granted in 2019.
Further plans for resminostat in the current financial year include the
publication of a more detailed data analysis from the Phase II SHELTER
study in liver cancer (HCC) as well as the publication of detailed results
from the biomarker analysis in the HCC and Hodgkin's lymphoma (HL)
indications. The results will be presented at two scientific conferences:
ILCA (12-15 Sept. 2013, Washington, D.C./USA) and ECCO (27 Sept.-1 Oct.
2013, Amsterdam/The Netherlands).
After the successful completion of the Phase-I part of the SHORE study in
the treatment of colorectal cancer (CRC), 4SC decided to discontinue the
development of resminostat in this indication for the time being. In
accordance with its focused development strategy, the Company wants to
concentrate fully on the further development of resminostat in the
indication of liver cancer (HCC). Yet 4SC may return to building on these
results at any time in the future - both in colorectal cancer and other
cancer indications - not least because the results once again confirm
resminostat's positive safety profile, clinical activity and its broad
applicability in combination with established cancer therapies.
Further product pipeline: Study data with cancer compounds 4SC-202 and
4SC-205
4SC is currently testing two other promising cancer compounds, 4SC-202 and
4SC-205, in Phase I clinical trials. The Company currently assumes that it
will be in a position to publish the results of the Phase I TOPAS dose
escalation study with 4SC-202, its second epigenetic compound after
resminostat, in patients with advanced haematological tumours in the second
half of 2013. Data from the Phase I AEGIS trial with the oral cell division
inhibitor 4SC-205 in patients with solid masses - a trial that was extended
in December 2012 to include the testing of an innovative dosage scheme
following positive study results - are scheduled to be published in the
second half of 2013. This is due to the positive tolerability shown to date
in the new dosage scheme.
For vidofludimus, the Company's lead compound for autoimmune diseases,
activities are focusing on the search for suitable partners or investors to
work with 4SC to conduct a Phase IIb trial in Crohn's disease. In
accordance with its focused development strategy, 4SC will not take any
further steps to develop vidofludimus without receiving additional
financing from external sources.
Financial forecast
The 4SC Group had funds of EUR 9.21 million at the end of the second
quarter of 2013. These existing funds are expected to secure Company
financing into the third quarter of 2014. This forecast is based on the
assumption that the average monthly operating cash burn rate in 2013 will
be approximately EUR 0.6 million and that the Company's research and
development programmes will continue to run according to plan. These
assumptions do not reflect the execution of the pivotal study programme in
the indication of liver cancer, which is currently in preparation.
4SC expects its loss situation to continue into the short to medium term,
although research and development costs in 2013 are currently expected to
be lower than in 2012. Accordingly, the Group's operating loss - before
adjustment for non-recurring effects in the form of restructuring costs and
impairment losses due to streamlining its pipeline - should continue to
decline year-on-year, thanks to falling costs and the expected rise in
earnings as contributed by the activities of 4SC Discovery GmbH.
The decision to focus research and development activities, combined with
adjustments to the corporate structure and a downsizing of the workforce by
around 15% by the end of 2013 compared to the headcount at the end of May
2013, will enable 4SC to further improve its cost structures. In
conjunction with restructuring, moderate one-time extraordinary expenses of
an estimated EUR 0.25 million will be recognised in the 2013 consolidated
financial statements. From the 2014 financial year onwards, 4SC expects
these adjustments to result in a significant, high six-figure reduction in
staff costs per year.
Based on the strong performance of 4SC Discovery GmbH to date during the
current financial year, the Management Board of 4SC AG currently expects
this subsidiary to be able to achieve a balanced cash flow from operating
activities in 2013.
On the whole, 4SC believes that it is positioned well for 2013 and beyond,
given the promising clinical development programmes and the flow of
clinical news that is expected to continue in the short and medium term as
well as with the strengths in the area of early-stage research consolidated
in 4SC Discovery GmbH, plus the Company's decision at the beginning of May
2013 to focus on value drivers and optimising its cost structure.
The complete consolidated financial report for the first six months of 2013
will be available for download at http://4sc.de/investors/financial-reports
today from 7:30 am CEDT.
Ends
Telephone conference
4SC will host a telephone conference in English today, 8 August 2013, at
3:00 pm CEDT (9:00 am EDT), in which the Management Board of 4SC AG will
report on the principal developments in the first half of 2013 and beyond.
To participate in the telephone conference, please use the following
dial-in data:
+49-6958-999-0808 (Germany)
+44-207-153-2027 (UK)
+1-480-629-9870 (USA)
+49-6958-999-0808 (other countries)
Conference ID: 4632901
After the conference call, an audio replay will be available at www.4sc.com
under Investors / Events&Presentations / Conference Calls&Webcasts.
About 4SC
The Group managed by 4SC AG (ISIN DE0005753818) discovers and develops
targeted, small-molecule drugs for treating diseases with high unmet
medical needs in various autoimmune and cancer indications. These drugs are
intended to provide innovative treatment options that are more tolerable
and efficacious than existing therapies, and provide a better quality of
life. The Company's pipeline comprises promising products that are in
various stages of clinical development. 4SC's aim is to generate future
growth and enhance its enterprise value by entering into partnerships with
pharmaceutical and biotech companies. Founded in 1997, 4SC had 83 employees
at 30 June 2013. 4SC AG has been listed on the Prime Standard of the
Frankfurt Stock Exchange since December 2005.
Legal Note
his document may contain projections or estimates relating to plans and
objectives relating to our future operations, products, or services; future
financial results; or assumptions underlying or relating to any such
statements; each of which constitutes a forward-looking statement subject
to risks and uncertainties, many of which are beyond our control. Actual
results could differ materially, depending on a number of factors.
For more information please visit www.4sc.com or contact:
4SC
Jochen Orlowski, Investor Relations&Public Relations
jochen.orlowski(at)4sc.com, Tel.: +49-89-7007-6366
MC Services
Raimund Gabriel, Michelle Kremer
raimund.gabriel(at)mc-services.eu, Tel.: +49-89-2102-2830
The Trout Group
Chad Rubin
Crubin(at)troutgroup.com, Tel.: +1-646-378-2947
End of Corporate News
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Language: English
Company: 4SC AG
Am Klopferspitz 19a
82152 Martinsried
Germany
Phone: +49 (0)89 7007 63-0
Fax: +49 (0)89 7007 63-29
E-mail: public(at)4sc.com
Internet: www.4sc.de
ISIN: DE0005753818
WKN: 575381
Listed: Regulierter Markt in Frankfurt (Prime Standard);
Freiverkehr in Berlin, Düsseldorf, München, Stuttgart
End of News DGAP News-Service
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