Clavis Pharma ASA. Interim Financial Report Second Quarter and First Half Year 2009

Transcription

1 Clavis Pharma ASA Interim Financial Report Second Quarter and First Half Year 2009 During the second quarter Clavis Pharma announced the successful completion of a Phase II study of its lead development candidate, elacytarabine, in late-stage acute myeloid leukaemia (AML). The study showed that compared to historical data for similar patients, elacytarabine may increase survival threefold, increase remission rates and reduce shortterm mortality. Following these positive clinical results, the Company conducted a new equity financing, raising NOK million (gross) in a private placement and a subsequent offering. Proceeds of the offering will be used to fund the further development of the company s pipeline of novel anticancer drug candidates. The fundraising was announced in June and completed successfully in two stages in July and August. First and Second Quarter: Highlights The Company announced in June the successful completion of a Phase II study of it s lead development candidate, elacytarabine (CP-4055), demonstrating that elacytarabine may increase survival threefold in patients with late-stage acute myeloid leukaemia (AML). Elacytarabine also demonstrated improved remission rates and reduced short-term mortality compared to a detailed historical outcome analysis of similar AML patients. Based on these encouraging results, the Company is in preparation for an elacytarabine registration study in late-stage AML. Encouraging data from the Phase I study of elacytarabine in combination with idarubicin in AML patients was presented at the American Association of Cancer Research (AACR) 100th Annual Meeting in April in Denver, USA. Following the positive results, the Company is currently initiating a Phase II study in patients with AML who have failed their 1 st course of treatment. In May, the Company announced pre-clinical data that differentiate CP-4200 from current standard therapy. CP-4200, Clavis Pharma's fourth drug candidate, represents a new family of Lipid Vector Technology (LVT) drugs called epigenetic modulators, which are expected to constitute an important drug class of future cancer therapy. The Company s R&D programs are progressing well, resulting in R&D and other operating expenses of NOK 38.7 million for the first six months of The Company had cash and cash equivalents of NOK 44.1 million as of 30 June 2009, prior to the fundraising completed in July and August. Clavis Pharma ASA Interim Financial Report 2009 Page 1 of 14

2 Events after 30 June The Company announced in June a private placement and a subsequent offering that was completed successfully in July and August respectively. These share offerings raised NOK million in gross proceeds. The offerings were substantially oversubscribed and were supported by existing shareholders, as well as new institutional investors. In July, the United States Food and Drug Administration (FDA) approved the Investigational New Drug application (IND) for Intravenous CP-4126, thereby giving clearance to enrol patients in the clinical Phase II programme in newly diagnosed (1 st line) pancreatic cancer in the USA. The programme was initiated in Europe in April. The objective is to compare the safety and efficacy of Intravenous CP-4126 to gemcitabine, with primary focus on patients with deficient levels of a certain nucleoside transporter (hent1) responsible for the active transport of gemcitabine into cancer cells. Clavis Pharma ASA Interim Financial Report 2009 Page 2 of 14

3 First and Second Quarter: Operational Review Elacytarabine Background Elacytarabine is a novel cancer drug candidate under development for the treatment of blood related cancers and certain solid tumours. Elacytarabine is an analogue of cytarabine, the gold standard drug for the treatment of acute myeloid leukaemia (AML) and certain other blood cancers (haematological malignancies). Unfortunately a substantial portion of AML patients have a deficient uptake of cytarabine in their leukaemic cells due to deficient expression of a necessary transport protein, hent1 (human equilibrative nucleoside transporter 1) on the cell membrane. Cellular uptake of elacytarabine in contrast to cytarabine is independent of hent1, which offers a potential clinical advantage to elacytarabine in the treatment of AML. In haematology, a Clinical Phase II study with the aim to evaluate the efficacy and safety of elacytarabine in patients with late stage acute myeloid leukaemia (AML) that have failed two prior rounds of treatment (2 nd salvage) has been completed. The results of the study showed improvements in survival data and response rates compared to historical data. Following these positive results, a Phase II/III registration trial of elacytarabine in late stage AML patients is being planned. The US Food & Drug Administration and the European Commission have granted an Orphan Drug Designation to elacytarabine for the treatment of AML. This designation entitles Clavis Pharma to exclusive marketing rights for seven and ten years in the US and the EU respectively, from the date of the marketing approval. The Company also has an ongoing elacytarabine clinical Phase II study in ovarian cancer. The study is designed to show activity of elacytarabine in women who have relapsed after prior chemotherapy regimens. Elacytarabine clinical development in haematology The Company announced in June positive results from a Phase II trial of elacytarabine (CP-4055) in patients with late-stage acute myeloid leukaemia (AML). In the trial, elacytarabine showed statistically significant superior efficacy compared to published clinical data for late-stage AML. There is currently no standard therapy available for these patients and life expectancy is very short. The key results were: Median survival three times longer (5.5 months vs. 1.5 months) Remission rate significantly increased (15% vs 2.5%, p<0.0001) Well tolerated - short-term mortality substantially lower (13% vs. 25%) In the Phase II study, 61 patients with late stage AML who failed to respond or relapsed after two separate rounds of treatments received third-line therapy (also called second salvage) with intravenous elacytarabine. The response to treatment was compared with a detailed historical outcome analysis of 594 similar 2 nd salvage AML patients, who were treated at the MD Anderson Cancer Center (Houston, TX, USA) (published by Giles et al, Cancer 2005;104:547-54). Median overall survival in the elacytarabine study was three times that of the historical control patients (5.5 months vs. 1.5 months). Further follow up on survival is ongoing. In addition, nine patients responded to elacytarabine with a complete remission or complete remission without full recovery of platelet counts as assessed by the investigator (of which seven have been confirmed by an independent review of bone marrow histology), representing an overall remission rate of 15 per cent. By contrast, the expected remission rate for similar group of patients, matched for prognostic factors as described by Giles et al. was only 2.5 per cent. Using a predefined statistical analysis method, the improvement in outcome was statistically highly significant Clavis Pharma ASA Interim Financial Report 2009 Page 3 of 14

4 (corresponding to p<0.0001). If only patients whose complete remission has been confirmed by histology are included in the analysis, the improvement in remission rate is still statistically highly significant (corresponding to p<0.001). Elacytarabine was relatively well tolerated and 30 day all cause mortality following treatment was substantially lower than published data for existing therapies (13 per cent vs. 25 per cent). Out of the 61 patients treated with elacytarabine, ten were referred for stem cell transplantation following treatment, including some patients in complete remission and others with a more modest level of clinical benefit. Stem cell transplantation represents a potential cure for these patients. Based on these encouraging results a Phase II/III registration study of elacytarabine in late stage AML is being planned. A Phase I study of elacytarabine in combination with idarubicin in refractory / relapsed AML patients has been completed. Data from the study was presented in April at the American Association of Cancer Research (AACR) 100th Annual Meeting 2009 in Denver, CO, USA. The Company is currently initiating a Phase II study in patients who have failed their 1 st course of treatment. The objective is to study response rates and the relationship to the patient s nucleoside transporter (hent1) status. The goal is to demonstrate that the efficacy of elacytarabine is independent of the patient s hent1 status. About AML Acute myeloid leukaemia (AML) is characterised by uncontrolled growth of immature bone marrow cells resulting in deficient production of mature red and white blood cells and platelets. The aim of the treatment is to induce a so called complete remission (CR), i.e. a state where there are no signs of leukaemia. A large portion of patients will not attain CR even after two treatments, or relapse. The prognosis for these 2 nd salvage patients is poor and there is no standard treatment available. Such patients are included in the elacytarabine clinical programme in 2 nd salvage treatment of AML. Patients who fail to attain CR after the first course of treatment will be included in the upcoming Phase II study in combination with idarubicin planned by the Company. Elacytarabine clinical development in solid tumours An ongoing clinical Phase II study in ovarian cancer is designed to show activity of elacytarabine when given in a new and prolonged schedule compared to previous solid tumour studies. The study has reached the Maximum Tolerated Dose (MTD) and the Recommended Dose (RD) for further treatment has been established. Currently, a limited number of patients have been enrolled to measure efficacy at the RD. Intravenous (I.V.) CP-4126 Background Intravenous CP-4126 is a novel anticancer agent designed to circumvent important drug resistance mechanisms. A clinical Phase I study has been completed and based on the encouraging safety and the pharmacokinetic data obtained, a Phase II study in first line pancreatic cancer patients was initiated during the second quarter of CP-4126 is an improved derivative of gemcitabine (Gemzar, Eli Lilly) and this study will compare the safety and efficacy of Intravenous CP-4126 and gemcitabine. The cancer drug Gemzar is the best selling anti-metabolite in the world with sales of more than USD 1.7 billion in Clavis Pharma ASA Interim Financial Report 2009 Page 4 of 14

5 The Company announced in July that it had received clearance by the United States Food and Drug Administration (FDA) to include patients in the USA in its Phase II clinical programme for Intravenous CP Intravenous CP-4126 is in development as a new, 1 st line treatment for pancreatic cancer and the phase II programme was initiated in Europe in April. Clavis Pharma has now begun preparations at selected clinical sites for an expansion of the Phase II programme into the USA. The study will be in newly diagnosed (1 st line) pancreatic cancer patients and the objective is to compare the safety and efficacy to gemcitabine and the relationships to the patient s nucleoside transporter (hent1) status. In the Phase II study, newly diagnosed untreated patients will be randomized to be given Intravenous CP-4126 or gemcitabine. The study will investigate treatment response and overall survival. Cancer tissue (biopsies) from each patient will be collected and analyzed with regard to levels of hent1. The relation between efficacy and hent1 levels will be studied and the primary endpoint is treatment response in hent1 deficient patients. Oral CP-4126 Background Oral CP-4126 is a formulation that can be given by mouth as tablets or capsules. This novel anticancer agent has been designed as an efficient pro-drug, which releases its active metabolite, gemcitabine, once taken up from the gut. Preclinical studies have demonstrated that the active metabolite is quickly and almost completely absorbed into the blood stream. The dose escalating part of a clinical Phase I study is ongoing. If successful, Oral CP-4126 may significantly expand the market for this class of anti-cancer agents. The clinical Phase I study on Oral CP-4126 was initiated in October 2008 and has progressed according to plan. As the active metabolite is a known anticancer agent, proof of concept may for Oral CP-4126 be obtained already in this Phase I study. Preclinical studies have demonstrated that the active metabolite is quickly and almost completely absorbed into the blood stream after administration of Oral CP The preclinical data also indicate a promising safety profile. The clinical Phase I study evaluates the safety of Oral CP-4126 and measures the extent of uptake of the active metabolite, gemcitabine, in the body. The dose administered is increased step-wise until the maximum tolerated dose (MTD) is reached and the dose limiting toxicity (DLT) is established. Concentrations of the active metabolite are measured in the bloodstream of the patients. As soon as the MTD is reached, the plan is to continue the study as a controlled study comparing Oral CP-4126 to gemcitabine. CP-4200 Background The Company s fourth product, CP-4200, represents a new family of LVT drugs for the treatment of cancer and haematological malignancies. CP-4200 is a LVT derivative of azacytidine, which predominantly does not act as a traditional cytotoxic drug, but rather a drug that modifies gene expression. CP-4200 is currently in preclinical research phase. CP-4200 is a novel LVT derivative of azacitidine, which is approved for the treatment of myelodysplastic syndrome (MDS), a disease that sometimes develops to acute myeloid leukemia (AML). CP-4200 has in preclinical models demonstrated important advantages over azacitidine, including increased re-constitution of normal cell function, less dependency of multidrug resistance, improved cellular uptake and more rapid onset of activity. These improved properties may result in expanded clinical applicability and improved efficacy. Clavis Pharma ASA Interim Financial Report 2009 Page 5 of 14

6 Epigenetic modulators are intended to restore normal function of genes that control how cells develop and grow in the human body at doses with low cytotoxic activity. Vidaza TM (azacitidine) is currently approved for myelodysplastic syndrome and certain forms of Acute Myeloid Leukemia (AML) and Chronic myelomonocytic leukaemia (CMML). Sales of Vidaza are growing rapidly and in 2008 US sales totalled more than USD 200 million. The use of epigenetic modulators is expected to expand into many cancer types in the future and thus represents a huge market potential. CP-4200 is licensed from The Mount Sinai Medical Center and its renowned Mount Sinai School of Medicine (MSSM) in New York, NY. Researchers at MSSM's oncology division who have contributed to the development of several groundbreaking cancer drugs over the last decades collaborated with Clavis on some of the preclinical studies of CP hent1 biomarker diagnostic method development The Company is developing a novel biomarker (hent1, human equilibrative nucleoside transporter 1) diagnostic method to enable the pre-selection of patients that would benefit from treatment with elacytarabine and CP The development is progressing as planned. Annual General Meeting The Annual General Meeting of Clavis Pharma ASA was held on 14 May The Annual General Meeting elected Keith McCullagh as the new Chairman of the Board of Directors, and Gert Caspritz was elected as new director. Kaci Kullmann Five, Karol Sikora, Hilde Hermansen Steineger were re-elected as directors. The Board of Directors of Clavis Pharma ASA now consists of the following members: Keith McCullagh (chairman) Geir Stormorken (deputy chairman) Gert Caspritz Kaci Kullmann Five Stina Margretha Gestrelius Carl Christian Gilhuus-Moe Karol Sikora Hilde Hermansen Steineger Events after 30 June 2009 Private placement formally approved by EGM on 15 July and subsequent offering closed by the Board of Directors on 18 August. IND for CP-4126 approved by FDA on 3 July. Major risk factors Major risk factors applicable to Clavis Pharma are described in the Annual Report for 2008, and there were no material changes to these risk factors during the first six months of The Company has from late June to mid August completed a private placement and a subsequent offering raising NOK million in gross proceeds, which has significantly strengthened the financial position of the Company. Thus the liquidity risk described in the Annual Report 2009 has been reduced. No other material changes to the risk factors are expected in the last six months of Clavis Pharma ASA Interim Financial Report 2009 Page 6 of 14

7 First and Second Quarter Financial Review Income Statement Revenues Clavis Pharma recorded total operating income of NOK 0.6 million in the second quarter 2009, which was marginally lower than in the same period last year. The operating income for the first six months of 2009 was NOK 1.3 million, compared to 2.0 million in the same period last year. The company s operating income is primarily made up of government grants. Operating costs Total operating costs were NOK 17.8 million in the second quarter, compared to NOK 18.9 million in the same quarter last year. The total operating costs for the first six months of 2009 were NOK 38.7 million, compared to NOK 40.2 million in the same period last year. In general, R&D costs will vary from quarter to quarter depending on the timing of project start-ups and when patients enter clinical programs. Net financials Net financial income was NOK 0.4 million in the second quarter, compared to NOK 2.1 million in the same quarter last year. The net financial income for the first six months of 2009 was NOK 1.5 million, compared to 3.8 million in the same period last year. The positive net financial income mainly represents interest earned on money market funds. Profit and loss Clavis Pharma incurred a net loss of NOK 16.7 million for the second quarter 2009, compared to NOK 15.7 million in the second quarter The net loss for the first six months of 2009 was NOK 35.9 million, compared to 34.4 million in the same period last year. Balance Sheet Clavis Pharma had a total balance of NOK 50.1 million as at 30 June 2009, compared to a total balance of NOK million as at 30 June Cash and cash equivalents amounted to NOK 44.1 million as at 30 June 2008, and the company had no interest bearing debt. A private placement and subsequent repair offering after June 2009 raised NOK in total gross proceeds. On 26 June the Company announced the successful completion of a private placement that raised NOK 129 million in gross proceeds. The private placement was well oversubscribed and was supported by existing shareholders, as well as new institutional investors. The issue of new shares was approved by the shareholders in an Extraordinary General Meeting on 15 July. 10,750,000 new shares were issued, each with a par value of 1.00, at a price of NOK per share. In mid August the Company completed a subsequent offering of 650,000 shares, each with a par value of 1.00, at a price of NOK per share, which raised NOK 7.8 million in gross proceeds. The offering was directed at those shareholders that were not allocated shares in the private placement. These share issues combined raised NOK million in gross proceeds, which has significantly strengthened the balance sheet of the Company and the net proceeds from the transactions will provide financial resources to achieve clinical data on the Company s products in development, and optimise its commercial strategy. Clavis Pharma ASA Interim Financial Report 2009 Page 7 of 14

8 Responsibility Statement We confirm that, to the best of our knowledge, the condensed set of financial statements for the first half year of 2009, which has been prepared in accordance with IAS 34 Interim Financial Statement, gives a true and fair view of the Company s assets, liabilities, financial position and results of operations, and that the interim management report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph. Oslo, Keith McCullagh Geir Stormorken Gert Caspritz Chairman of the Board Deputy Chairman Board member Kaci Kullmann Five Stina Gestrelius Carl Christian Gilhuus-Moe Board member Board member Board member Karol Sikora Hilde H. Steineger Geir Christian Melen Board member Board member CEO Head Office Parkveien 53B, NO-0256 Oslo, Norway Tel: Fax: mail@clavispharma.com Clavis Pharma ASA Interim Financial Report 2009 Page 8 of 14

9 Interim Condensed Financial Statements 2009 (unaudited) Second Quarter and First Half Year 2009 Statement of Comprehensive Income Note (NOK 1000) Q2 Q Year Government grants Other revenue Total operating income Payroll and payroll related cost Depreciation 5 Other operating costs Operating profit/loss Financial income Financial expenses Loss before tax Income tax expense Profit/(Loss) for the period Total comprehensive income for the period Earnings per share (NOK): Basic Diluted Clavis Pharma ASA Interim Financial Report 2009 Page 9 of 14

10 Interim Condensed Financial Statements 2009 (unaudited) Second Quarter and First Half Year 2009 Statement of Financial Position (NOK 1000) Note ASSETS Non-current assets Computer and office equipment 34 Total non-current assets 34 Current assets Trade accounts receivable Other receivables Cash & cash equivalents Total current assets Total Assets EQUITY AND LIABILITIES Equity Share capital Share premium reserve Other paid in capital Loss for the period Total equity Current liabilities Trade accounts payable Other current liabilities Total current liabilites Total liabilities Total Equity and Liabilities Clavis Pharma ASA Interim Financial Report 2009 Page 10 of 14

11 Interim Condensed Financial Statements 2009 (unaudited) Second Quarter and First Half Year 2009 Cash Flow Statement (NOK 1000) Q2 Q Year Cash flow from operating activities Loss before tax Employee share option program Depreciation 5 Changes in trade receivables and trade creditors Changes in other accrued entries Net cash flow from operating activities Net cash flow from investing activities Purchase of tangible non-current assets Net cash flow from investing activities Cash flow from financing activities Net cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalents beginning period Cash and cash equivalents end period Clavis Pharma ASA Interim Financial Report 2009 Page 11 of 14

12 Interim Condensed Financial Statements 2009 (unaudited) Second Quarter and First Half Year 2009 Statement of Changes in Equity (NOK 1 000) Attributable to equity holders Note Share capital Share premium reserve Other paid in capital Retained earnings Total equity Equity as at Total comprehensive income Share-based payment 4(b) Equity as at Equity as at Total comprehensive income Share-based payment 4(b) Equity as at Clavis Pharma ASA Interim Financial Report 2009 Page 12 of 14

13 Notes to the Interim Condensed Financial Statements Note 1: Basis of presentation The financial information is prepared in accordance with International Accounting Standard 34 Interim Financial Reporting ( IAS 34 ). This financial information should be read together with the financial statements for the year ended 31 December 2008 prepared in accordance with International Financial Reporting Standards ( IFRS ). The accounting policies used are consistent with those used in the Annual Financial Statements. The presentation of the Interim Financial Statements is consistent with the Annual Financial Statements. Where necessary, the comparatives have been reclassified or extended to take into account any presentational changes made in these Interim Financial Statements. The preparation of the Interim Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities at the date of the Interim Financial Statements. If in the future such estimates and assumptions, which are based on management s best judgement at the date of the Interim Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. Note 2: Other operating costs (NOK 1000) Q2 Q Year R&D costs External services General & admin. expenses Other expenses Other operating costs Note 3: Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents are comprised of the following: (NOK 1000) Cash at bank and on hand Money market funds Other deposits Total Note 4: Employee benefits a) Pension obligations The Company has a defined contribution plan. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Clavis Pharma ASA Interim Financial Report 2009 Page 13 of 14

14 For defined contribution plans, the Company pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available. b) Share-based compensation The Company operates an equity-settled, share-based compensation plan. The Company measures the cost of share based compensation by reference to the fair value of the option at the date at which they are granted and the cost is recognised as an expense in the income statement. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Note 5: Related party transactions There are no material related party transactions other than those described in the Annual Report for 2008 for Clavis Pharma. For further descriptions of related party transactions please refer to Note 15 of the Financial Statements for Clavis Pharma is a registered trademark of Clavis Pharma ASA. Head Office Parkveien 53B, NO-0256 Oslo, Norway Tel: Fax: mail@clavispharma.com Clavis Pharma ASA Interim Financial Report 2009 Page 14 of 14