Xenova Group plc First Quarter Results 2003
Thursday May 8, 2:00 am ET
SLOUGH, England, May 8 /PRNewswire-FirstCall/ -- Xenova Group plc (Nasdaq: XNVA - News; London Stock Exchange: XEN - News) today announced its results for the quarter ended 31 March 2003.
Year to Date Highlights
* TA-CD: patient dosing begins in Phase IIa cocaine administration trial
* TA-CIN/TA-HPV: clear clinical responses in a "prime-boost" Phase IIa
clinical trial targeting HPV associated AGIN
* Tariquidar (XR9576): temporary suspension of new patient enrolment to
Phase III clinical trials
* Vaccines of addiction (TA-NIC & TA-CD): buyout of residual interests
from ImmuLogic
* Revenue recognized in quarter of 2.1m pounds ($3.3m) (2002: 2.8m pounds
($4.4m))
* Cash, short term deposits and investments 12.9m pounds ($20.4m) at
31 March 2003 (2002: 17.1m pounds ($27.0m))
Commenting, Chief Executive Officer, David Oxlade said: "We await with interest the outcome of the DSMC's interim safety and efficacy analysis of our lead product, tariquidar. In the meantime, the first quarter has seen good progress throughout the rest of our broad pipeline which now has one Phase III, two Phase II and four Phase I drug candidates in clinical development, supported by a further eight programs at various stages of research."
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 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 and biopharmaceutical 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 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.
Quarterly Review - Product Pipeline Update
Cancer - Tariquidar Multi-drug resistance (MDR) program
Tariquidar entered two pivotal Phase III clinical trials in June 2002. In each trial it is being used as an adjunctive treatment in combination with first-line chemotherapy for non-small cell lung cancer (NSCLC) patients. The temporary suspension of new recruitment to these trials announced on 21 February 2003 was made at the request of the Data Safety Monitoring Committee (DSMC) pending the completion of the planned interim safety and efficacy analysis. The DSMC recommended that further recruitment of new patients to the trials be halted until all patients currently enrolled had been followed for a minimum of three months. Importantly, the DSMC confirmed that there were no new toxicities seen related to tariquidar and the toxicities that have been observed are the same as those frequently seen with the same cytotoxic drugs when used without tariquidar. The DSMC stated that the patients already enrolled in the trials (circa 300) should continue to be treated and followed according to the protocol. The DSMC also recommended that the data from these two pivotal Phase III studies remain blinded to Xenova and QLT so that the data remains eligible for submission to the regulatory authorities in due course.
During the intervening period, the DSMC will assess the level of clinical benefit seen in the current patient pool and compare it against the increased level of toxicities already noted. The DSMC is expected to report its findings by mid-year, with recommendations as to how the trials should proceed. Xenova will publish these recommendations immediately after they become available. A Phase IIb trial in chemo-refractory breast cancer underway at MD Anderson, Texas, is continuing and was not affected by the DSMC recommendations.
Tariquidar was granted fast track status by the US Food and Drug Administration (FDA) in October 2002. 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. Xenova retains substantially all rights to commercialize tariquidar in Europe and the Rest of the World, and we intend to establish further collaborations in order to maximize the value of this potentially first-in-class drug.
Cancer - Therapeutic Vaccines
Xenova is making significant progress in its development of therapeutic vaccines for cancer. On 14 April 2003, the Company announced the results of an open label, physician-sponsored Phase II 'prime-boost' study, targeting the treatment of human papillomavirus (HPV) associated ano-genital intraepithelial neoplasia (AGIN) using a combination of Xenova's TA-CIN and TA-HPV candidate therapeutic vaccines.
TA-HPV is an immunotherapeutic vaccine which is being developed for use alongside surgery in the treatment of cervical cancer and for the treatment of high-grade AGIN. TA-CIN is a recombinant fusion protein, designed as a treatment for women with cervical dysplasia. Pre-clinical studies, conducted by Xenova in conjunction with scientists at Leiden University Medical Centre, The Netherlands, demonstrated that use of TA-CIN together with TA-HPV resulted in an immune response that was significantly greater than that observed with either product alone.
The Phase II 'prime-boost' study began in October 2001, and was carried out on 29 patients at three centers in the UK. The results of this study indicated that a prime boost strategy, using a combination of Xenova's TA-CIN and TA-HPV candidate therapeutic vaccines, was both safe and well tolerated and demonstrated clear clinical responses, even in women with long-standing disease. Of the 26 patients meeting the entry requirements of the study, 15 (58%) showed evidence of symptomatic improvement, one (4%) had a complete response (confirmed by histological examination and viral clearance) and in addition, five (19%) showed a partial response (defined as a lesion area reduction of 50% or greater), for an overall response rate in this study of 23%. Five patients (19%) were HPV16 negative at the end of the study. Assessment of clinical and immunological responses is ongoing and additional follow-up visits are planned to see whether patients with a partial response go on to complete response. The responses seen during the initial stages of the immunization regimen were particularly encouraging, and indicated that further development is warranted.
Vaccines of addiction
On 15 January 2003, Xenova announced that it had reached an agreement with ImmuLogic Pharmaceutical Corporation Liquidating Trust ("ImmuLogic") to buy out all remaining ImmuLogic rights to future milestone and royalty payments relating to two of Xenova's development stage vaccine programs, TA-CD and TA-NIC. Under the terms of the agreement, ImmuLogic waived the rights to all future payments from Xenova relating to the two vaccine programs in return for a payment of US$1m. In order to fund the buyout of ImmuLogic's interests, Xenova raised 680,000 pounds (before expenses) through the placing for cash of 1,766,235 new ordinary shares of 10 pence each.
TA-CD represents a completely new approach to the treatment of cocaine addiction by way of immune intervention and it is intended for use alongside a behavioral therapy program in patients who are trying actively to overcome their cocaine addiction.
The objective of vaccination with TA-CD is to reduce the euphoria obtained by the individual, thus diminishing the reinforcing effects of cocaine and increasing the likelihood of a successful attempt to quit. Currently, there is no effective pharmacotherapy available for the approximately 900,000 individuals in the USA each year who seek medical help with respect to their cocaine addiction.
The start of a Phase IIa cocaine administration trial was announced on 14 April 2003. The ten-patient open label trial is being conducted in the United States and is designed to evaluate the effect of TA-CD on behavioral changes associated with cocaine administration. Cocaine-dependent volunteers, specifically selected from those not seeking to quit, undergo psychological and physiological assessments whilst cocaine is administered under laboratory conditions. The effect of TA-CD is determined by comparing findings from before and after a four-dose immunization course.
This study is also being funded, in part, by the National Institute on Drug Abuse (NIDA), which recognizes cocaine abuse to be a major problem in the U.S. NIDA has also supported earlier clinical work as part of this program.
Other Programs
Research and development continued throughout the first quarter for the Group's other programs, and includes a Phase I trial in melanoma for the vaccine DISC-GMCSF and a Phase I trial for the anti-nicotine vaccine, TA-NIC. Xenova's research pipeline includes programs such as those for PAI-1 inhibition in the treatment of cancer and cardiovascular disease, and multi-drug resistance protein (MRP) inhibition in the treatment of cancer.
Quarterly Review - Publications Update
9th Annual Meeting of the Society on Nicotine and Tobacco, 19-22 February,
New Orleans, USA
In February, Xenova presented the results of the first clinical study of TA-NIC, the Company's novel vaccine designed for the treatment of nicotine addiction. The results (originally 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.
94th Annual Meeting of the American Association of Cancer Research (AACR)
5-9th April, Toronto, Canada
Following the cancellation of the AACR, as a result of safety concerns over the Severe Acute Respiratory Syndrome (SARS) outbreak, Xenova has announced details of the eight poster presentations it had had accepted for presentation at the meeting. Three of these related to Xenova's research into Multi-drug Resistance (MDR) with two posters to be presented on tariquidar (XR9576) and one on XR12890, which is a novel potent modulator of multi-drug resistance protein (MRP1).
The remaining five posters related to continuing research in Xenova's program focusing on the action of novel DNA targeting agents XR5944 and XR11576, both of which are the subject of a North American licensing agreement with Millennium Pharmaceuticals Inc. Three of the posters related to the research into the mechanism of action of XR5944, and one on the role of topoisomerase I and II in the mechanism of action of XR11576. The final poster related to the cellular characterization and differentiation of XR5944 and XR11576. The abstracts of all eight posters are now available from the "Proceedings of the 94th AACR: Vol 44, 2003".
Financial Summary
Operating Performance
In the three months to 31 March 2003, the Group's revenues recognized from licensing agreements, strategic partnerships and manufacturing outsourcing were 2.1m pounds ($3.3m) (2002: 2.8m pounds ($4.4m)).
In accordance with the Group's revenue recognition policy, of the 6.9m pounds ($10.9m) received from QLT in 2001 as part of the tariquidar licensing agreement, 0.8m pounds ($1.3m) was included in the quarter to 31 March 2003, with a further 3.1m pounds ($4.8m) being deferred to future periods. Contract development revenue of 0.9m pounds ($1.4m) was recognized in Q1 2003 in respect of the ongoing Millennium collaboration on the novel DNA targeting agents. Other revenue included 0.4m pounds ($0.6m) in respect of ongoing contract vaccine manufacturing.
Total net operating expenses have reduced from 5.6m pounds ($8.8m) in the first quarter of 2002 to 4.8m pounds ($7.5m) in the first quarter of 2003.
Research and development expenditure of 4.5m pounds ($7.1m) is some 0.2m pounds ($0.3m) higher than the first quarter of 2002 (4.3m pounds ($6.8m)). Under the terms of the licensing agreement with Millennium Pharmaceuticals Inc, contract development costs of 0.9m pounds ($1.4m) have been recovered in the first quarter. The administrative expenses (excluding the amortization of goodwill) declined to 1.0m pounds ($1.6m) (2002: 1.2m pounds ($1.8m)). The subletting of excess facilities reduced net operating expenses by 0.1m pounds ($0.2m) in the first quarter (2002: 0.2m pounds ($0.3m)).
Of the total administrative expenses for the three months to 31 March 2003 of 1.3m pounds ($2.1m), 0.3m pounds ($0.5m) relates to the amortization, over a 10-year period, of the goodwill in respect of the acquisition of Cantab in 2001.
The lower net interest income reflects the reduced cash and short-term deposits balance held throughout the three months to 31 March 2003.
The net loss per share in Q1 was 1.9p (2002: 2.3p).
Cash, short-term deposits and investments
Cash, short-term deposits and investments at 31 March 2003 totaled 12.9m pounds ($20.4m) (2002: 17.1m pounds ($27.0m)). The Group held cash of 1.0m pounds ($1.6m) and short-term deposits and investments of 11.9m pounds ($18.8m) at 31 March 2003 (2002: cash 3.3m pounds ($5.2m), short-term deposits and investments 13.8m pounds ($21.8)).
Included in short-term deposits and investments is an investment in Cubist Pharmaceuticals Inc. As at 31 March 2003 the share price was $8.01 valuing the investment held at 0.5m pounds ($0.8m). This is in line with the valuation at 31 December 2002.
Share capital
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 programs, TA-CD and TA-NIC, for 621,000 pounds (US$1.0m).
In order to fund the buyout of ImmuLogic's interests, Xenova raised 680,000 pounds, 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.
The number of shares in issue stood at 174.5 million as at 31 March 2003.
The Directors do not currently propose a dividend for 2003 (2002: nil).
Consolidated Profit and Loss Account (unaudited)
Three months ended
Unaudited Unaudited Unaudited
31 March 31 March 31 March
2003 2003 2002
$000 pounds 000 pounds 000
Turnover (including share of
joint venture) 3,348 2,118 2,789
Less: share of joint venture
revenue (5) (3) (26)
Turnover 3,343 2,115 2,763
Operating expenses
Research and development costs (7,089) (4,485) (4,290)
Administrative expenses (1,598) (1,011) (1,168)
Administrative expenses:
amortization of goodwill (461) (292) (293)
Total administrative expenses (2,059) (1,303) (1,461)
Other operating income 169 107 184
Total net operating expenses (8,979) (5,681) (5,567)
Group operating loss (5,636) (3,566) (2,804)
Share of operating loss of
joint venture (51) (32) (32)
Total operating loss: Group and
share of joint venture (5,687) (3,598) (2,836)
Interest (net) 251 159 173
Amounts written off investments (6) (4) (1,033)
Loss on ordinary activities
before taxation (5,442) (3,443) (3,696)
Tax on loss on ordinary
activities 237 150 451
Loss on ordinary activities
after taxation (5,205) (3,293) (3,245)
Loss per share (basic and
diluted) (3.0c) (1.9p) (2.3p)
Shares used in computing
net loss per share
(thousands) 174,534 174,534 139,057
US Dollar amounts have been translated at the closing rate on
31 March 2003 (1.00 pounds: $1.5805) solely for information.
Condensed Consolidated Balance Sheet (unaudited)
Unaudited Unaudited Unaudited
As at As at As at
31 March 31 March 31 March
2003 2003 2002
$000 pounds 000 pounds 000
Cash, short-term deposits
and investments 20,426 12,924 17,082
Other current assets 6,564 4,153 4,457
Fixed assets (including
goodwill) 23,109 14,621 19,789
Total assets 50,099 31,698 41,328
Current liabilities
(including provisions &
deferred income) (12,309) (7,788) (14,713)
Shareholders' equity (37,790) (23,910) (26,615)
Total liabilities and
shareholders' equity (50,099) (31,698) (41,328)
US Dollar amounts have been translated at the closing rate on
31 March 2003 (1.00 pounds: $1.5805) 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 2002 Annual Report and Accounts. The 2002 Annual Report and Accounts received an unqualified auditor's report and will be delivered to the Registrar of Companies.
Going concern
Xenova is an emerging pharmaceutical company and expects to have an ongoing funding requirement until products are commercialized. A substantial part of the Group's cash requirements are of an investment nature and have a large discretionary element. The Directors have a reasonable degree of confidence that the Group can secure funding to enable it to continue in operational existence for the foreseeable future and have therefore prepared the financial statements on the going concern basis. Should the sources of funding not be available, the Directors will take action to curtail discretionary expenditure to conserve cash resources.
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Source: Xenova Group plc |
