MELBOURN, England, Aug. 28 /PRNewswire-FirstCall/ -- Cambridge Antibody Technology Group plc (Nasdaq: CATG; LSE: CAT) today reports financial results for the nine months ended 30 June 2002 and an update on business for the period since the Interim Report in May 2002.
Business Update
CAT-213, a human anti-eotaxin1 monoclonal antibody, has completed a single dose Phase I/II allergic rhinitis allergen challenge trial. Preliminary results of this trial show a significant positive effect of CAT-213 upon nasal patency, and reductions in tissue eosinophils and mast cells. CAT-213 by nasal aerosol generally produced greater effects than intravenous injection. It is expected that the data will be submitted for presentation at a major allergy congress. These results are consistent with CAT-213 being developed further for the treatment of allergic disorders. Accordingly, the next stage in the development of CAT-213 will be a challenge study in allergic eye disease.
Overall, the timetable for future product license applications of CAT-152 (lerdelimumab) remains on track. Recruitment to the first Phase II/III clinical trial of CAT-152, a human anti-TGF2 monoclonal antibody being developed as treatment to prevent post-operative scarring in patients undergoing surgery for glaucoma (trabeculectomy), continues but has progressed at a slower rate than previously expected which means that completion of enrollment is expected in the first half of 2003. Recruitment to a further Phase II/III trial in Europe and South Africa is expected to start shortly. Discussions with the United States (US) Food & Drug Administration (FDA) regarding US trials for CAT-152 are continuing.
Patient enrollment is continuing in the Phase I/II clinical trial of CAT-192, a human anti-TGF1 monoclonal antibody being developed with Genzyme (Nasdaq: GENZ - News) as a potential treatment for diffuse systemic sclerosis. An IND has been granted for clinical trials in the U.S., and the recruitment of patients has started at several leading scleroderma centres.
In August 2002, Human Genome Sciences, Inc (Nasdaq: HGSI - News) granted Takeda Chemical Industries an option to develop and commercialize the TRAIL Receptor 1 human monoclonal antibody (TRAIL-R1 mAb) in Japan. TRAIL-R1 mAb was developed in a collaboration between CAT and HGSI and is currently being evaluated, by HGSI, as an anti-cancer drug in Phase I clinical trials.
In June 2002, CAT granted Wyeth Research (the pharmaceutical research arm of Wyeth, (NYSE: WYE - News) an exclusive product license to a human monoclonal antibody identified by CAT against a target supplied by Wyeth Research. Under the terms of the agreement, CAT receives a license fee and will potentially receive clinical milestone and royalties associated with product sales.
In August 2002, CAT and Xerion Pharmaceuticals AG announced the expansion of their existing business relationship into a research collaboration for target characterization and drug discovery. CAT and Xerion will explore and evaluate the therapeutic potential of a cell surface protein known to play a role in allergic reactions in man. CAT and Xerion will jointly own the results generated.
Financial Results
CAT made a loss after taxation for the nine months ended 30 June 2002 of 21.5 million pounds sterling (nine months ended 30 June 2001: 8.2 million pounds; year ended 30 September 2001: 11.8 million pounds). This figure is stated after costs of 7.9 million pounds related to the buy out of its future royalty obligations from and offer for Drug Royalty Corporation Inc. of Canada (DRC). Excluding this one-time cost, the loss would have been 13.6 million pounds. Net cash outflow before management of liquid resources and financing for the period was 20.1 million pounds (nine months ended 30 June 2001: 9.6 million pounds; year ended 30 September 2001: 14.3 million pounds). Cash and liquid resources at 30 June 2002 amounted to 137.9 million pounds (30 June 2001: 162.5 million pounds; 30 September 2001: 156.8 million pounds). Turnover in the period was 6.9 million pounds (nine months ended 30 June 2001: 4.3 million pounds; year ended 30 September 2001: 7.1 million pounds). Milestone payments of 1.4 million pounds were received during the nine month period, including a payment in the third quarter from HGSI with the initiation of Phase I clinical trials of TRAIL-R1 mAb.
Turnover of 3.4 million pounds was generated under ongoing collaborations for research and development services. Turnover included 0.7 million pounds (principally license fees) released from deferred income brought forward at 1 October 2001. In addition, 0.6 million pounds of deferred revenue was recognized during the third quarter as a result of CAT opting to buy out its future royalty rights obligations to DRC.
Research and development expenses for the period amounted to 21.0 million pounds (nine months ended 30 June 2001: 15.0 million pounds; year ended 30 September 2001: 21.4 million pounds). This results from increased spending on clinical trials to support the Company's proprietary product development and increasing levels of research and development activity across the Company.
General and administration expenses for the period were 13.2 million pounds (nine months ended 30 June 2001: 4.4 million pounds; year ended 30 September 2001: 6.4 million pounds). These include 7.9 million pounds of costs relating to DRC (comparative periods -- none), comprising professional fees of 1.8 million pounds in connection with CAT's offer for DRC and 6.1 million pounds (settled through the issue of CAT ordinary shares) for the buy-back of CAT's royalty obligation. During the period the cost of patent litigation, including patent oppositions, was 0.8 million pounds (nine months ended 30 June 2001: 1.7 million pounds; year ended 30 September 2001: 2.0 million pounds).
The Group accrued interest receivable on its cash deposits of 5.0 million pounds (nine months ended 30 June 2001: 7.1 million pounds; year ended 30 September 2001: 9.3 million pounds), reflecting the reduced level of cash and liquid resources held in interest bearing securities and the lower interest rates available over the period.
Additions to tangible fixed assets for the period were 4.7 million pounds (nine months ended 30 June 2001: 2.8 million pounds; year ended 30 September 2001: 3.8 million pounds), with the purchase of a significant amount of laboratory equipment and costs associated with the construction of CAT's new premises at Granta Park. The addition to intangible fixed assets represents the Incyte LifeSeq license that was capitalized as an intangible asset in the first quarter and for which the first of two payments has been made.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited)
Proforma
nine months Nine months Nine Months Year
ended ended ended ended
30 June 2002 30 June 2002 30 June 2001 30 September 2001
US$'000 Pds.'000 Pds.'000 Pds.'000
Turnover 10,478 6,873 4,294 7,121
Direct costs (98) (64) (254) (351)
Gross profit 10,380 6,809 4,040 6,770
Research and
development
expenses (31,966) (20,968) (14,963) (21,393)
Drug Royalty
Corporation
transaction
costs (12,063) (7,913) -- --
Other general
and administration
expenses (8,062) (5,288) (4,395) (6,443)
General and
administration
expenses (20,125) (13,201) (4,395) (6,443)
Operating loss (41,711) (27,360) (15,318) (21,066)
Interest
receivable (net) 7,562 4,960 7,077 9,295
Loss on ordinary
activities before
taxation (34,149) (22,400) (8,241) (11,771)
Taxation on loss
on ordinary
activities 1,403 920 -- --
Loss for the
financial
period (32,746) (21,480) (8,241) (11,771)
Loss per share -
basic and diluted (pence) 60.2p 23.4p 33.3p
CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
(Unaudited)
Proforma
nine months Nine months Nine months Year
ended ended ended ended
30 June 2002 30 June 2002 30 June 2001 30 September 2001
US$'000 Pds.'000 Pds.'000 Pds.'000
Loss for
the financial
period (32,746) (21,480) (8,241) (11,771)
Gain on foreign
exchange
translation 99 65 -- 1
Total recognized
loss (32,647) (21,415) (8,241) (11,770)
Prior year
adjustment (6,594)
Total recognized
losses since last
Annual Report and
financial statements (18,364)
This financial information has been prepared in accordance with UK GAAP. The dollar translations are solely for the convenience of the reader.
CONSOLIDATED BALANCE SHEET
(Unaudited)
Proforma
as at As at As at As at
30 June 2002 30 June 2002 30 June 2001 30 September 2001
US$'000 Pds.'000 Pds.'000 Pds.'000
Fixed Assets
Intangible assets 12,580 8,252 4,168 4,075
Tangible fixed
assets 13,923 9,133 6,127 6,642
Investments 328 215 -- --
26,831 17,600 10,295 10,717
Current Assets
Debtors 7,270 4,769 4,345 4,940
Investment in
liquid resources 206,675 135,569 161,776 156,228
Cash at bank
and in hand 3,560 2,335 710 585
217,505 142,673 166,831 161,753
Creditors
Amounts falling
due within
one year (14,499) (9,511) (10,027) (8,335)
Net current
assets 203,006 133,162 156,804 153,418
Total assets less
current
liabilities 229,837 150,762 167,099 164,135
Creditors
Amounts falling
due after more
than one year (12,699) (8,330) (7,804) (8,085)
Net Assets 217,138 142,432 159,295 156,050
Capital and Reserves
Called-up share
capital 5,520 3,621 3,540 3,546
Share premium
account 308,719 202,505 194,739 195,017
Other reserve 20,514 13,456 13,451 13,451
Profit and
loss account (117,615) (77,150) (52,435) (55,964)
Shareholders'
funds - all
equity 217,138 142,432 159,295 156,050
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
CONSOLIDATED CASH FLOW STATEMENT
(Unaudited)
Proforma
nine months Nine months Nine months Year
ended ended ended ended
30 June 2002 30 June 2002 30 June 2001 30 September 2001
US$'000 Pds.'000 Pds.'000 Pds.'000
Net cash outflow
from operations (30,737) (20,162) (13,257) (19,150)
Returns on investments and servicing of finance
Interest received 9,658 6,335 6,357 8,322
Taxation -- -- -- --
Capital expenditure and financial investment
Purchase of
fixed assets (9,629) (6,316) (2,695) (3,485)
Sale of fixed assets -- -- -- 4
(9,629) (6,316) (2,695) (3,481)
Net cash outflow
before management
of liquid resources
and financing (30,708) (20,143) (9,595) (14,309)
Management of
liquid
resources 31,495 20,659 (5,274) 274
Financing
Issue of
ordinary shares 2,163 1,419 15,096 15,380
Increase in cash 2,950 1,935 227 1,345
This financial information has been prepared in accordance with UK GAAP. The dollar translations are solely for the convenience of the reader.
Basis of preparation
These interim financial statements have been prepared in accordance with the policies set out in the statutory financial statements for the year ended 30 September 2001 with the exception that the Company has adopted FRS19 "Deferred Tax" in order to comply with the latest UK accounting standards. This has no effect on either the current period or prior periods. The Group did not make any announcement of results for the nine months ended 30 June 2001 during the prior financial year and therefore the comparative figures for that period in these statements are being presented for the first time.
These interim financial statements do not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985. Results for the nine-month periods ended 30 June 2001 and 30 June 2002 have not been audited. The results for the year ended 30 September 2001 have been extracted from the statutory financial statements, which have been filed with the Registrar of Companies and upon which the auditors reported without qualification and did not contain statements under s237(2) or (3) Companies Act 1985.
Convenience translation
The consolidated financial statements are presented in pounds sterling. The consolidated financial statements as of and for the period ended 30 June 2002 are also presented in United States Dollars as proforma financial information. The Dollar amounts are presented solely for the convenience of the reader and have been calculated using an exchange rate of 1 pound: US$1.5245, the noon buying rate as of 28 June 2002. No representation is made that the amounts could have been or could be converted into United States Dollars at this or any other rate.
Drug Royalty Corporation transaction costs
General and administration costs expenses include 7.9 million pounds of costs incurred in the nine months ended 30 June 2002 relating to the two transactions entered into with Drug Royalty Corporation Inc. of Canada (DRC) during the period (comparative periods: none). In January 2002, CAT announced a recommended offer for the whole of DRC. A competing offer was made by Inwest Investments Ltd of Canada, which was accepted in April. The professional fees incurred in CAT's bid were 1.8 million pounds. Under an agreement with DRC, the Group received a payment of 1.5 million pounds in 1994 in return for rights to a percentage of revenues (and certain other payments) received by the Group over a period terminating in 2009. The 1.5 million pounds was deferred and recognized over the period for which the rights were purchased. On 2 May 2002, CAT bought out this royalty obligation to DRC for 6.1 million pounds (C$14 million) with the issue of 463,818 CAT shares to DRC. The remaining balance of 0.6 million pounds of deferred income has all been released in the period.
Prior year adjustment
The Group policy for recognizing turnover was changed during the year ended 30 September 2001 in accordance with emerging best practice in the UK. Under the revised policy, where contractual performance is incomplete despite the Group having received non-refundable payments, revenue is only recognized to the extent that the Group has performed its obligations and such performance has resulted in benefits accruing to the customer.
Loss per share
The loss per ordinary share and fully diluted loss per share are equal because share options are only included in the calculation of diluted earnings per share if their issue would decrease the net profit per share or increase the net loss per share. The calculation is based on the following: for the nine months ended 30 June 2002, the nine months ended 30 June 2001 and the year ended 30 September 2001 respectively. Losses of 21,480,000 pounds, 8,241,000 pounds, and 11,771,000 pounds. Weighted average number of shares in issue of 35,699,076, 35,143,318 and 35,313,260. The Company has 36,206,224 ordinary shares in issue and a total of 1,531,787 ordinary shares under option as of 30 June 2002.
Reconciliation of operating loss to operating cash outflow
Proforma
nine months Nine months Nine months Year
ended ended ended ended
30 June 2002 30 June 2002 30 June 2001 30 September 2001
US$'000 Pds.'000 Pds.'000 Pds'000
Operating loss (41,711) (27,360) (15,318) (21,066)
Depreciation in
the period 3,761 2,467 1,576 2,146
Amortization of
intangible assets 428 281 280 373
Loss on disposal
of fixed assets -- -- -- 1
Shares issued to
buy out DRC
royalty agreement 9,374 6,149
Increase in debtors (439) (288) (173) (515)
(Decrease) / increase
in creditors (2,150) (1,411) 378 (89)
Net cash outflow
from operations (30,737) (20,162) (13,257) (19,150)
Quarterly financial information
Three months Three months Three months
ended ended ended
30 June 2002 31 March 2002 31 December 2001
Pds.'000 Pds.'000 Pds.'000
Consolidated profit and loss account
(unaudited):
Turnover 2,021 2,974 1,878
Direct costs -- 20 (84)
Gross profit 2,021 2,994 1,794
Research and
development expenses (7,206) (7,652) (6,110)
Drug Royalty Corporation
transaction costs (6,678) (1,235) --
Other general and
administration
expenses (2,005) (1,726) (1,557)
General and
administration
expenses (8,683) (2,961) (1,557)
Operating loss (13,868) (7,619) (5,873)
Interest
receivable (net) 1,536 1,564 1,860
Loss on ordinary
activities
before taxation (12,332) (6,055) (4,013)
Taxation on loss
on ordinary
activities -- 920 --
Loss for the
financial period (12,332) (5,135) (4,013)
Consolidated cash flow statement
(unaudited):
Net cash outflow
from operations (9,296) (6,569) (4,297)
Returns on investments and servicing of finance
Interest received 2,254 1,688 2,393
Taxation -- -- --
Capital expenditure and financial investment
Purchase of fixed
assets (2,384) (3,021) (911)
Net cash outflow
before management
of liquid resources
and financing (9,426) (7,902) (2,815)
Management of
liquid resources 8,653 6,551 5,455
Financing
Issue of ordinary
shares 51 583 785
(Decrease) / increase
in cash (722) (768) 3,425
Notes to Editors:
Cambridge Antibody Technology (CAT)
* CAT is a leader in the discovery and development of human
therapeutic antibodies and has an advanced proprietary platform
technology for rapidly isolating human monoclonal antibodies using
phage display systems. CAT has extensive phage antibody libraries,
currently incorporating more than 100 billion distinct antibodies.
These libraries form the basis for the Company's strategy to develop a
portfolio of antibody-based drugs.
* CAT is a UK biotechnology company based near Cambridge, England. CAT
currently employs around 280 people.
* Six CAT-derived human therapeutic antibodies are at various stages of
clinical trials, with a seventh CAT-derived antibody, D2E7, having
been submitted for regulatory review by Abbott (responsible for
development and marketing) following the completion of Phase III
trials.
* CAT has alliances with a large number of pharmaceutical and
biotechnology companies to discover, develop and commercialize human
monoclonal antibody-based products. CAT has also licensed its
proprietary human phage antibody libraries to several companies for
target validation and drug discovery. CAT's collaborators include:
Abbott, Amrad, Elan, Genzyme, Human Genome Sciences, Immunex,
Merck & Co, Pharmacia and Wyeth Research.
* CAT is listed on the London Stock Exchange and on NASDAQ since June
2001. CAT raised #41m in its IPO in March 1997 and 93m pounds in a
secondary offering in March 2000.
Glossary
* Negative regulator: Controls by inhibiting normal biological function
* Superfamily of proteins: A large group of proteins with similar
structure and function derived from a common evolutionary ancestor.
* Nasal patency: The openness, or lack of blockages, in the airways of
the nose.
* Potent: The measure of the effectiveness of a drug related to its
concentration.
* Eosinophil: A type of white blood cell particularly involved in
allergic disorders.
* Mast cells: Granular cells found in connective tissue. They release
substances such as histamine and heparin in response to allergic or
immune reactions.
* IND (Investigational New Drug): License granted by the US Food and
Drug Administration (FDA) to allow testing of a new drug in humans.
Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995: This press release contains statements about CAT that are forward-looking statements. All statements other than statements of historical facts included in this press release may be forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934.
These forward-looking statements are based on numerous assumptions regarding CAT's present and future business strategies and the environment in which CAT will operate in the future. Certain factors that could cause CAT's actual results, performance or achievements to differ materially from those in the forward looking statements include: market conditions, CAT's ability to enter into and maintain collaborative arrangements, success of product candidates in clinical trials, regulatory developments and competition.
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