SLOUGH, England, Feb. 24 /PRNewswire-FirstCall/ -- Xenova Group plc (Nasdaq: XNVA - News; London Stock Exchange: XEN - News) today announces its results for the year ended 31 December 2002.
Summary
-- Tariquidar (XR9576) commences Phase III clinical trials and granted
Fast Track status by FDA
-- Temporary suspension of new patient enrolment announced
21st February 2003
-- Novel DNA targeting agent XR11576 begins Phase I clinical trials
-- Anti-cocaine addiction vaccine TA-CD starts Phase IIa dose escalation
trial
-- Positive results of Phase I trials for anti-nicotine addiction
vaccine TA-NIC
-- Positive results of Phase IIa physician-initiated trials for anti-HPV
vaccine TA-HPV
-- Successful conclusion of Phase I trial for gene therapy
product DISC-GMCSF
-- Potential $63.0m (43.2m pounds sterling) Development and Licence
Agreement signed with Genentech Inc for Novel Drugs in Immune
Inflammatory Disease
Financial Highlights
-- Fully underwritten Rights Issue raises 9.8m pounds net of expenses
-- Revenues from licensing agreements, strategic partnerships and
manufacturing outsourcing 12.2m pounds (2001: 1.8m pounds)
-- Cash, short term deposits and investments at 31 December 2002
19.2m pounds (2001: 24.0m pounds)
Commenting, David Oxlade, Chief Executive Officer of Xenova Group plc, said: "During 2002, Xenova made solid clinical progress with our portfolio of mid and late stage products, strengthening the pipeline and expanding our corporate partnerships. Although enrolment has been temporarily suspended for tariquidar, the trials continues and both we and our partner QLT Inc. remain confident in the long-term potential of the drug."
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 programmes 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 www.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 commercialisation 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 commercialise 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 commercialisation 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.
Chairman's Statement and Chief Executive's Review
The last financial year was a good year for Xenova. Following the merger with Cantab Pharmaceuticals in 2001, Xenova has continued to focus its resources on the research and development of both small molecule and biologic drug candidates. Xenova currently has a development pipeline of 8 programmes undergoing clinical trials, backed up by an extensive pipeline of research- stage programmes. As a result of this year's operational review, we have applied our 'virtual' development approach, which we have used successfully with our pharmaceutics programmes, to our biologics portfolio. This has allowed us to reduce the level of in-house resources involved in the early development of biologics. Details of the latest stage of development of all our programmes, including information relating to two new programmes, known as HIF-1 alpha and MEN-B, (which entered preclinical research in 2002), can be found in the following section headed Operating Review.
Xenova was amongst the small number of biotechnology companies who were successful in raising funds in the market in 2002, raising 9.8m pounds net through a fully underwritten 8 for 33 Rights Issue. As a result, Xenova had 19.2m pounds ($30.9m) in cash, short-term deposits and investments at the year end. The impact of the December 2002 operational review is expected to produce annual cost savings of approximately 2m pounds. Exceptional reorganisation costs of 3.8m pounds ($6.2m) have been recognised in the current year. This comprises (0.5m pounds ($0.9m) in respect of redundancy and 3.3m pounds ($5.3m) in respect of fixed assed impairments.
Xenova employed approximately 147 people at 31 December 2002 at its facilities in Slough and Cambridge, UK. The company's head office and small molecule discovery and development facilities are based in Slough, while the Cambridge site houses Xenova's biologics capabilities.
Our objectives for the coming year include the further advancement of our clinical programmes and potentially further commercial partnerships for certain products currently in development. We generally seek to finance the development of new drugs up to the completion of Phase II trials, at which point a licensing partner would be sought for further development and marketing of the product. However, in certain instances we may consider licensing a product at an earlier stage, for example, when an attractive commercial arrangement can be negotiated. Within the area of oncology, it is our practice to seek to retain rights to certain significant geographic territories in order to maximise the value to Xenova of each product through further out-licensing at a later stage.
Operating Review
Drug Candidates - 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. There is a substantial market opportunity for a drug that overcomes MDR, since it is estimated that, depending on the type of cancer, between 30% and 80% of solid tumours will develop resistance to anti-cancer drugs.
In August 2001, Xenova signed an exclusive licence 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 it is being used as an adjunctive treatment in combination with first-line chemotherapy for non-small cell lung cancer (NSCLC) patients. The double-blind, randomised, placebo-controlled trials are being carried out on patients with stage IIIb/IV NSCLC at centres located throughout North America and Europe. Tariquidar was granted fast track status by the US Food and Drug Administration (FDA) in October 2002. On successful completion of the Phase III programme, it is anticipated that QLT Inc. 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.
Xenova retains substantially all rights to commercialise tariquidar in Europe and the Rest of the World, and we intend to establish further collaborations in order to maximise the value of this potentially first-in-class drug.
On 21st February 2003, QLT Inc. announced that enrolment of additional patients in the ongoing Phase III studies of tariquidar in non-small cell lung cancer patients was being suspended for approximately three months pending the completion of the planned interim safety and efficacy analysis by an Independent Data and Safety Monitoring Committee (DSMC).
The DSMC recommended to QLT Inc. that accrual to the trials be temporarily halted until all patients currently enrolled have been followed for a minimum of three months and that the patients should continue to be treated and followed according to the protocol. The committee also stated that all data should remain blinded and that the intention of this halt in accrual is to permit, for those patients already entered, acquisition and review of additional data on safety and efficacy. The DSMC concluded that the recommendations above "provided the best opportunity for these trials to remain intact and to serve, in their entirety as pivotal registration trials for regulatory purposes."
The DSMC is an independent panel of experts who are not participating in the studies. The primary responsibility of the DSMC is to oversee the studies and safeguard the interests of current and future participants in these trials. The DSMC has not reviewed any efficacy data for the trials. Accrual in the two Phase III studies had already reached the threshold number of patients required for the three-month interim analysis. The DSMC felt that a review of the patients enrolled to date would be sufficient "to permit an assessment of differences in response rates between the two arms of the trial, and to provide information on short to mid term differences in survival" and to make an initial assessment of therapeutic benefit to potential risk.
The Phase IIb trial underway at MD Anderson in chemo refractory breast cancer is unaffected.
XR11576 (MLN576) -- XR11576, XR5944 and XR11612 are novel DNA targeting agents, whose mode of action includes dual inhibition of topoisomerases I and II. XR11576, XR5944 and XR11612 are the subject of a licence agreement with Millennium Pharmaceuticals Inc, announced in December 2001. XR11576 entered Phase I clinical trials in February 2002. The open label Phase I trial is being carried out at centres in the UK and the Netherlands and comprises multiple ascending oral doses in patients with solid tumours. The other compounds covered by this agreement, XR5944 (MLN944) and XR11612 (MLN612), are currently in preclinical development. Xenova retains responsibility for performing development activities associated with the programme to the end of Phase II clinical trials. Millennium will provide funding for the programme commencing in 2003, up to the agreed level of $20.0m (12.4m pounds). Xenova retains substantially all commercialisation rights for all products arising from the collaboration outside the United States, Canada and Mexico.
DISC-GMCSF -- DISC-GMCSF, an innovative immunotherapeutic vaccine, is designed as a treatment for a broad range of solid tumours. 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 centres 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 localised at the site of injection and had not spread beyond the required therapeutic area, a key objective of the study.
TA-HPV/TA-CIN -- TA-HPV is an immunotherapeutic vaccine, which is being developed to prevent the recurrence of cervical cancer. The product is intended to be used as a therapeutic vaccine alongside standard treatments, such as surgery. The results of two physician-initiated Phase IIa trials, in which TA-HPV was tested in patients with high-grade vulval intra-epithelial neoplasia (VIN 3), have shown the vaccine to be safe and well tolerated, with partial responses being shown in over 40% of cases in these studies.
TA-CIN is a recombinant fusion protein, designed as a treatment for women with cervical dysplasia. Preclinical studies have suggested that use of this product together with TA-HPV results in an immune response that is significantly greater than that observed with either product alone. An open label, physician-sponsored Phase II 'prime-boost' study, targeting the treatment of HPV associated ano-genital neoplasias, began in October 2001. Results of this trial are anticipated during the course of 2003.
Drug Candidates - 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. TA-NIC is intended as an aid to smoking cessation and has been designed to generate anti-nicotine antibodies. 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. It is expected that TA-NIC will enter further Phase I dose escalation trials during the course of 2003.
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. A Phase II 'cocaine administration' study, which has been designed to provide a preliminary assessment of the efficacy of TA-CD, as determined by quantative behavioural and other measurements, is expected to begin during the course of 2003.
DISC-PRO -- A prophylactic vaccine designed to prevent genital and oro-labial herpes, DISC-PRO has completed Phase I trials. These Phase I trials demonstrated that DISC-PRO was well tolerated and immunogenic. We intend to secure a corporate partner ahead of Phase III clinical trials for the further development of this programme.
DISC-VET -- DISC-VET is a programme to develop Xenova's DISC technology for the treatment of multiple diseases in animals. A product candidate, DISC-BHV, for the treatment of bovine herpes virus induced respiratory disease in cattle, is in the equivalent of Phase I clinical development in partnership with Pfizer. Xenova's DISC vaccine technology is applicable to multiple disease targets including diseases which affect other animal species.
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 licence agreement worth up to $63.0m (43.2m pounds) was entered into in April 2002 with Genentech for 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 programmes. Under this agreement, Xenova retains all rights to the up-regulation of the immune system using the OX40:OX40L interaction, including use in oncology and infectious disease therapy.
PAI-Cancer -- In collaboration with the Institute for Cancer Research, Xenova has been developing an active novel inhibitor of a protein released by platelets and the cells lining the blood vessels known as PAI-1. PAI is an unfavourable prognostic indicator in many human cancers and is strongly implicated in the metastatic process. Lilly has an option to acquire exclusive rights to develop and commercialise PAI-1 inhibitors in the cancer field, which, if exercised, would realise upfront and milestone payments of up to $16.5m (10.0m pounds), with additional royalties payable on commercialised products.
MRP -- Multi-Drug Resistance Protein (MRP) acts as a pump which, like the P-glycoprotein pump, expels small molecules out of cells and thus can help protect tumour cells from certain chemotherapeutic agents. We are currently carrying out a lead optimisation programme for a compound for the inhibition of MRP to further strengthen our position in the field of multi-drug resistance.
Other
OX40 -- A partnership has been established with Celltech Group plc to develop an antibody-based product against OX40 for the treatment of autoimmune disease. Along with OX40L, OX40 is also the subject of a development and licence agreement with Genentech (see above).
PAI-CV -- In conjunction with our partner Lilly, we have been carrying out a research and development programme for the development of a new class of oral anti-thrombotic drugs suitable for chronic use. Research is focused on the development of small molecule inhibitors of PAI-1 that are designed to enhance the break-up of blood clots without the side-effects of bleeding associated with other marketed anti-thrombotic drugs. Xenova and Lilly entered into this collaboration in 1998.
MEN-B -- Xenova is currently developing a vaccine for the prevention of meningitis caused by meningococcal group B infections. The aim is to construct a live attenuated vaccine, which should give good protection against all group B strains, and which can be developed as a paediatric vaccine for universal vaccination. We envisage a secondary market for adolescent vaccination, and estimate the US and European markets for both paediatric and adolescents to be valued at about $1b. The programme entered preclinical development in late 2002.
HIF-1 Alpha -- Hypoxia inducible factor (HIF) 1 alpha is a complex molecular structure which plays a role in gene expression, promoting cell survival. Xenova is developing small molecule inhibitors of HIF-1 alpha, which may have anti-cancer and anti-angiogenic activity.
Phogen:
A joint venture between Xenova and Marie Curie Cancer Care, Phogen Limited is developing a novel technology, known as VP22, for the enhanced delivery of gene-based therapeutics. Phogen entered into a licensing agreement with Genencor International Inc, worth up to 15.0m pounds ($21.0m), for the utilisation of Phogen's VP22 technology in the area of therapeutic vaccines for certain infectious viral diseases, in August 2001. A further research collaboration was announced with Cell Genesys in October 2001 and a collaboration with PowderJect Pharmaceuticals plc was announced in January 2003. Phogen intends to seek additional partnering opportunities for its novel technologies.
Financial Summary
Operating Performance
In the year to 31 December 2002, the Group's revenues from licensing agreements, strategic partnerships and manufacturing outsourcing were 12.2m pounds ($19.7m) (2001: 1.8m pounds ($2.9m)).
In accordance with the Group's revenue recognition policy, of the 6.9m pounds ($11.1m) received from QLT Inc. in 2001 as part of the tariquidar licensing agreement, 2.5m pounds ($4.0m) was recognised in the year, with a further 3.9m pounds ($6.2m) being deferred to future periods. All of the 7.9m pounds ($12.7m) received from Millennium in 2001 has been recognised by the Group in the year to 31 December 2002, matching the commitments under this agreement. Following the successful completion of a further licensing deal in the year in respect of the OX40 programme with Genentech, 0.9m pounds ($1.5m) of the upfront licence fee of 2.7m pounds ($4.4m) has been recognised this year. Other revenue included 0.9m pounds ($1.5m) in respect of ongoing contract vaccine manufacturing.
Total research and development (R&D) expenditure of 17.7m pounds ($28.4m) (2001: 15.4m pounds, $24.7m) includes substantial preclinical and clinical development of the programme of novel DNA targeting agents, one of which (XR11576) entered Phase I clinical trials in February 2002. This programme was licensed to Millennium Pharmaceuticals Inc in December 2001 and cost reimbursement under this agreement commences in 2003. Additionally, Phase I clinical development of the anti-nicotine vaccine, TA-NIC, was completed during 2002 as was initial Phase II clinical development of the P-gp inhibitor, tariquidar. Tariquidar, which is the subject of a North American licensing agreement with QLT Inc. also entered Phase III clinical development during the course of 2002.
Total administrative expenses of 9.3m pounds ($15.0m) (2001: 4.9m pounds ($7.8m)) have increased by 4.4m pounds ($7.2m) from the prior year primarily due to the exceptional reorganisation costs of 3.8m pounds ($6.2m). Amortisation costs of 1.2m pounds ($1.9m) (2001: 0.9m pounds ($1.5m)) relate to the amortisation of goodwill arising on the acquisition of the Cantab business in 2001 of 11.7m pounds ($18.8m). The goodwill is being amortised over the 10 year estimated useful life of the business.
Total net operating expenses for the second half of the year increased to 15.5m pounds ($25.0m) from 11.0m pounds ($17.7m) in the first half of the year principally as a result of the increased research and development activity totalling 0.8m pounds ($1.3m) and the additional exceptional reorganisation costs of 3.8m pounds ($6.2m).
The reduced net interest income reflects the lower average cash and liquid resources balance held throughout the year. Following the fall, since 31 December 2001, in the listed market price of the 88,668 Cubist Pharmaceuticals Inc shares held by the Group, 1.7m pounds ($2.8m) has been written off to the profit and loss account.
Exceptional charge -- Reorganisation
On 11 December 2002, the Group announced the completion of an operational review. Following this review, approximately 40 staff have been made redundant resulting in an exceptional reorganisation charge of 0.5m pounds ($0.9m).
Additionally, excess property at the Cambridge facility is expected to be sublet during the course of 2003. An impairment charge of 3.3m pounds ($5.3m) has been provided against leasehold improvements, plant and equipment at the Cambridge facility for those assets no longer expected to be used in the business.
Rights issue
On 11 September 2002, the Group announced a fully underwritten 8 for 33 rights issue to raise 9.8m pounds ($15.8m) 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 in issue following the rights issue was approximately 172.8 million.
Cash, short-term deposits and investments
Cash, short-term deposits and investments at 31 December 2002 total 19.2m pounds ($30.9m) (2001: 24.0m pounds ($38.6m)). The Group had cash of 2.6m pounds ($4.2m) and liquid resources of 16.6m pounds ($26.7m) at 31 December 2002 (2001: cash 9.0m pounds ($14.5m), liquid resources 15.0m pounds ($24.1m)).
Included in liquid resources is an investment in Cubist Pharmaceuticals Inc., which subsequent to the year end fell in value such that at 17 January 2003 the share price was $6.70 valuing the investment held at 0.4m pounds ($0.6m), representing a decline from the valuation at 31 December 2002 of 0.1m pounds ($0.1m).
Share capital
The number of shares in issue rose to 172.8 million as at 31 December 2002 from 139.0 million at 31 December 2001, due principally to the rights issue of 33.7 million shares.
The Directors do not propose a dividend for 2002 (2001: nil).
Subsequent Events
On 15 January 2003, the Group announced that it had reached agreement with ImmuLogic Pharmaceutical Corporation Liquidating Trust ("ImmuLogic") under which Xenova has bought out the remaining ImmuLogic rights to future milestone and royalty payments relating to two of Xenova's development stage vaccine programmes, TA-CD and TA-NIC, for 0.6m pounds ($1.0m).
In order to fund the buyout of ImmuLogic's interests, Xenova has raised 0.7m pounds ($1.1m), before expenses, through the placing for cash of 1,766,235 new ordinary shares of 10 pence each. The new shares, which represent approximately 1.02 per cent of the Company's issued share capital prior to the placing, were placed by Nomura International plc at a price of 38.5 pence per share. Following this transaction, the total number of shares in issue was 174.5 million. |
