Xenova Group plc Third Quarter Results Announcement
Thursday November 7, 2:00 am ET
SLOUGH, England, Nov. 7 /PRNewswire-FirstCall/ --
Year to Date Highlights:
* Tariquidar enters Phase III trials
* Tariquidar granted FDA 'fast track' status
* Successful results of Phase IIa trial for therapeutic vaccine
TA-HPV
* Patient dosing begins in Phase IIa study for anti-cocaine addiction
vaccine TA-CD
* $63m (43.2m pounds) development and license agreement with
Genentech Inc for novel drugs in immune inflammatory disease
* Fully underwritten rights issue raising approximately
9.9m pounds ($15.6m) net of expenses
* Cash and liquid resources as at 30 September #10m ($15.7m),
excluding rights issue proceeds
Commenting, Chief Executive Officer, David Oxlade said:
"Xenova continues to make encouraging progress, both in terms of advancing its clinical and pre-clinical pipelines and in expanding its revenue-generating collaborations.
"We are delighted that tariquidar has been granted fast track status by the FDA so soon after its entry to Phase III clinical trials in both North America and Europe."
Notes to Editors
Xenova Group plc's product pipeline focuses principally on the therapeutic areas of cancer and immune system disorders. Xenova has a broad pipeline of eight programs in clinical development. The Group has a well-established track record in the identification, development and partnering of innovative products and technologies and has partnerships with significant pharmaceutical companies including Lilly, Pfizer, Celltech, Genentech, QLT and Millennium Pharmaceuticals.
For further information about Xenova and its products please visit the Xenova website at xenova.co.uk .
For Xenova: Disclaimer to take advantage of the "Safe Harbor" provisions of the US Private Securities Litigation Reform Act of 1995. This press release contains "forward-looking statements," including statements about the discovery, development and commercialization of products. Various risks may cause Xenova's actual results to differ materially from those expressed or implied by the forward looking statements, including: adverse results in our drug discovery and clinical development programs; failure to obtain patent protection for our discoveries; commercial limitations imposed by patents owned or controlled by third parties; our dependence upon strategic alliance partners to develop and commercialize products and services; difficulties or delays in obtaining regulatory approvals to market products and services resulting from our development efforts; the requirement for substantial funding to conduct research and development and to expand commercialization activities; and product initiatives by competitors. For a further list and description of the risks and uncertainties we face, see the reports we have filed with the Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Product Pipeline Year to Date Update - Clinical Trials
Cancer:
Tariquidar (XR9576) -- Discovered by Xenova, tariquidar, a potent small-molecule inhibitor of the P-glycoprotein pump, is being developed for the treatment of multidrug resistance (MDR) in cancer. In August 2001, Xenova signed an exclusive license agreement with QLT Inc for the development and marketing in the United States, Canada and Mexico of tariquidar for the treatment of MDR in cancer. In June 2002, tariquidar entered two pivotal Phase III clinical trials, in which tariquidar is being used as an adjunctive treatment in combination with first-line chemotherapy for non-small cell lung cancer (NSCLC) patients. The double-blind, randomized, placebo-controlled trials are being carried out in patients with stage IIIb/IV NSCLC at approximately 100 centers located throughout North America and Europe. Tariquidar was granted fast track status by the US Food and Drug Administration (FDA) in October 2002. Recruitment is currently progressing in line with expectations. An interim safety analysis is planned for mid- 2003 and, on successful completion of the Phase III program, it is anticipated that QLT will file for approval of tariquidar in North America for use in combination with first-line chemotherapy in advanced NSCLC by the end of 2005 and Xenova will file for marketing approval in Europe.
DISC-GMCSF -- DISC-GMCSF, an innovative immunotherapeutic vaccine, is designed as a treatment for a broad range of solid tumors. In preclinical studies DISC-GMCSF was shown to be effective in models of breast and colorectal cancer. As announced in June 2002, DISC-GMCSF successfully completed a Phase I dose-escalating safety study at three centers in the UK, in patients with metastatic melanoma. DISC-GMCSF was found to be well tolerated, with no serious adverse events reported. The DISC vector was shown to be localized at the site of injection and had not spread beyond the required therapeutic area, a key objective of the study.
XR11576 (MLN576) -- XR11576, XR5944 and XR11612 are novel DNA targeting agents, whose method of action includes dual inhibition of topoisomerases I and II. XR11576 is the subject of a license agreement with Millennium Pharmaceuticals Inc, announced in December 2001. The other compounds covered by this agreement, XR5944 (MLN944) and XR11612 (MLN612), are currently in preclinical development. XR11576 entered Phase I clinical trials in February 2002. The open label Phase I trial is being carried out at centers in the UK and the Netherlands and comprises multiple ascending oral doses in patients with solid tumors. Xenova retains responsibility for performing development activities associated with the program to the end of Phase II clinical trials. Millennium will provide funding for the program commencing in 2003, up to the agreed level of $20m.
Other:
TA-NIC -- Designed as a treatment for nicotine addiction, TA-NIC is a nicotine conjugate vaccine which is administered through a course of intramuscular injections. The successful results of a Phase I trial for TA-NIC, reported in June 2002, showed the vaccine to be safe and well tolerated both systemically and locally in the 60 smokers and non-smokers who took part in the trial, and that the vaccine generated a specific anti-nicotine response. This is the first time such a vaccine has been tested in man.
TA-CD -- TA-CD is a therapeutic vaccine which is under development for the treatment of cocaine addiction. Its mechanism of action is similar to that of TA-NIC. A Phase IIa dose escalation trial, supported by the US National Institute on Drug Abuse (NIDA), began in April 2002.
Product Pipeline Year to Date Update - Preclinical
Cancer:
OX40/OX40L -- OX40 is a platform technology which is capable of producing multiple drug candidates primarily targeting cancer and autoimmune disease. OX40 and OX40L (OX40 Ligand) are a pair of interacting cell-surface proteins. A development and license agreement worth up to $63m (43.2m pounds) was signed in April 2002 with Genentech for the worldwide rights to develop and market products, primarily targeting disorders of the immune system, based on Xenova's OX40 receptor protein and anti-OX40 Ligand antibody programs. Under this agreement, Xenova retains all rights to the up-regulation of the immune system using the OX40:OX40L interaction, including for use in oncology and infectious disease therapy.
Financial Summary
Operating Performance
In the 3 months to 30 September 2002, the Group's revenue from licensing deals, strategic partnerships and manufacturing outsourcing was 3.9m pounds ($6.1m) (2001: 0.7m pounds ($1.1m)).
In accordance with the Group's revenue recognition policy, of the 6.9m pounds ($10.9m) received from QLT as part of the tariquidar licensing agreement, 1.0m pounds ($1.6m) was included in the quarter to 30 September 2002. Of the 7.9m pounds ($12.4m) received from Millennium, 2.2m pounds ($3.5m) was recognized by the Group in the 3 months to 30 September 2002. In respect of the OX40 licensing deal with Genentech, 0.3m pounds ($0.5m) of the upfront license fee of 2.7m pounds ($4.3m) received in 2002 was recognized in the 3 months to 30 September 2002. Included within the balance sheet at 30 September 2002 was 7.1m pounds ($11.1m) of deferred revenue in respect of the QLT, Millennium and Genentech licensing deals. Other revenue in the quarter included 0.3m pounds ($0.5m) primarily in respect of ongoing vaccine manufacture.
Total net operating expenses were 6.2m pounds ($9.7m) in the 3 months to 30 September 2002. Of this, research and development costs of 4.9m pounds ($7.7m) (2001: 4.4m pounds ($7.0m)) primarily reflects the ongoing clinical work on the tariquidar, topoisomerase and TA-NIC programs.
Of the total administrative expenses for the 9 months to 30 September 2002 of 4.2m pounds ($6.7m), 0.9m pounds ($1.4m) relates to the amortisation over a 10-year period of the goodwill in respect of the acquisition of Cantab.
Net interest income of 0.5m pounds ($0.7m) has been earned on the cash balance held throughout the nine months to 30 September 2002. Following a revaluation to the listed market price of the 88,668 Cubist Pharmaceuticals Inc shares held by the Group, 0.3m pounds ($0.4m) has been written off in the quarter to mark the shares to their market price, increasing the unrealized loss in the 9 months to 30 September 2002 to 1.9m pounds ($3.0m).
The net loss per share this quarter was 1.4p (2001: 3.2p).
Rights issue
On 11 September 2002, the Group announced a fully underwritten 8 for 33 rights issue to raise 9.9m pounds ($15.6m) net of expenses. The rights issue of approximately 33.7 million New Ordinary Shares was made at a price of 32.5 pence per New Ordinary Share. The total number of shares outstanding following the rights issue is approximately 172.8 million.
Cash and liquid investments
Cash and liquid resources at 30 September 2002 total 10.0m pounds ($15.7m) (30 September 2001: 17.5m pounds ($27.5m)).
Cash of 9.7m pounds ($15.3m) and liquid resources of 0.3m pounds ($0.4m) at 30 September 2002 (2001: cash of 15.5m pounds ($24.4m), liquid resources of 2.0m pounds ($3.1m)), excludes the receipt of 2.3m pounds ($3.6m) in respect of the 2001 R&D tax credit recovered in October this year and the net proceeds from the rights issue received in Q4 2002 of 9.9m pounds ($15.6m).
Based upon the expected monthly cash burn rate, this balance is sufficient to fund current operations for in excess of 12 months.
Share capital
The number of shares in issue and to be issued stood at 139.1 million as at 30 September 2002.
The Directors do not currently propose a dividend for 2002 (2001: nil).
Consolidated Profit and Loss Account (unaudited)
Three months ended
30 Sept 30 Sept 30 Sept
2002 2002 2001
$000 000 pounds 000 pounds
Turnover (including share of
joint venture) 6,329 4,025 774
Less: share of joint
venture revenue (193) (123) (47)
Turnover 6,136 3,902 727
Operating expenses
Research and development costs (7,709) (4,902) (4,421)
Administrative expenses (1,723) (1,096) (773)
Administrative expenses:
exceptional reorganization costs -- -- --
Administrative expenses:
amortization of goodwill (461) (293) (293)
Total administrative expenses (2,184) (1,389) (1,066)
Other operating income 168 107 --
Total net operating expenses (9,725) (6,184) (5,487)
Group Operating loss (3,589) (2,282) (4,760)
Share of operating profit
of joint venture 44 28 33
Total operating loss: Group
and share of joint venture (3,545) (2,254) (4,727)
Interest (net) 208 132 186
Amounts written (off)/back
on investments (403) (256) (423)
Loss on ordinary activities
before taxation (3,740) (2,378) (4,964)
Tax on loss on ordinary activities 661 420 512
Loss on ordinary activities
after taxation attributable to
members of Xenova Group plc (3,079) (1,958) (4,452)
Loss per share (basic and
diluted) (2.2c) (1.4p) (3.2p)
Shares used in computing net
loss per share (thousands) 139,057 139,057 139,044
Nine Months Ended
30 Sept 30 Sept 30 Sept
2002 2002 2001
$000 000 pounds 000 pounds
Turnover (including share of
joint venture) 17,203 10,939 1,278
Less: share of joint
venture revenue (431) (274) (50)
Turnover 16,772 10,665 1,228
Operating expenses
Research and development
costs (20,956) (13,326) (11,064)
Administrative expenses (5,270) (3,351) (2,180)
Administrative expenses:
exceptional reorganization costs -- -- (596)
Administrative expenses:
amortization of goodwill (1,382) (879) (586)
Total administrative expenses (6,652) (4,230) (3,362)
Other operating income 597 380 --
Total net operating expenses 27,011 (17,176) (14,426)
Group Operating loss (10,239) (6,511) (13,198)
Share of operating profit
of joint venture 99 63 4
Total operating loss: Group
and share of joint venture (10,140) (6,448) (13,194)
Interest (net) 738 469 586
Amounts written (off)/
back on investments (2,977) (1,893) 252
Loss on ordinary activities
before taxation (12,379) (7,872) (12,356)
Tax on loss on
ordinary activities 2,030 1,291 1,419
Loss on ordinary activities
after taxation attributable
to members of Xenova
Group plc (10,349) (6,581) (10,937)
Loss per share
(basic and diluted) (7.4c) (4.7p) (9.4p)
Shares used in computing
net loss per share
(thousands) 139,057
139,057 115,780
US Dollar amounts have been translated at the closing rate on 30 September 2002 (1.00 pound: $1.5726) solely for information.
Condensed Consolidated Balance Sheet (unaudited)
Unaudited Unaudited Unaudited
As at As at As at
30 Sept 30 Sept 30 Sept
2002 2002 2001
$000 000 pounds 000 pounds
Cash and investments 15,723 9,998 24,000
Other current assets 7,979 5,074 4,135
Fixed assets
(including Goodwill) 29,730 18,905 20,384
Total assets 53,432 33,977 48,519
Current liabilities (including
provisions & deferred income) 16,762 10,659 18,683
Shareholders' equity 36,670 23,318 29,836
Total liabilities and
shareholders' equity 53,432 33,977 48,519
US Dollar amounts have been translated at the closing rate on 30 September 2002 (1.00 pound: $1.5726) solely for information.
Notes to the Statement
Basis of preparation
These unaudited statements, which do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985, have been prepared using the accounting policies set out in the Group's 2001 Annual Report and Accounts. The 2001 Annual Report and Accounts received an unqualified auditor's report and have been delivered to the Registrar of Companies.
Going concern
The Group is an emerging pharmaceutical business and as such expects to absorb cash until products are commercialized. The Directors have a reasonable expectation that the Group has, or can reasonably expect to obtain, adequate cash resources to enable it to continue in operational existence for the foreseeable future, and have therefore prepared the financial statements on the going concern basis... |
