CeNeS Announces Preliminary Results for the Year- Ended December 31, 2001 (with link)
CAMBRIDGE, U.K., March 27, 2002 (PRIMEZONE) -- CeNeS Pharmaceuticals plc (LSE:CEN - news) today announced its results for the year ended Dec. 31, 2001 and an update on its restructuring plan.
Key events since Jan 2001:
Restructuring:
-- Implementation of restructuring program announced in Oct 2001
-- Focus on lead clinical candidates in pain and pharmaceutical products division
-- Research activities halted. USA site shut down
-- Non-core assets - divestment plan initiated
-- Cash burn significantly reduced
Pharmaceutical Sales Division
-- 2001 was 1st full year of this division - products performing to plan
-- UK hospital sales force recruited and new pain product Xefo launched in Q3 2001
New Business Venture
-- Pain portfolio expanded with commencement of business venture in June 2001 with Elan Corporation plc
-- Under this business venture M6G is to be combined with Elan's Medipad drug delivery technology to develop a treatment for chronic pain
-- Elan business venture extended in Oct 2001 to include M6G post-op pain clinical programs
-- Elan became a CeNeS shareholder and now holds 9.9% of CeNeS shares
Clinical Pipeline
-- M6G global clinical program fully managed via business venture with Elan
-- M6G reports further positive phase II results in post-op pain
-- Following further phase II trials in 2002 M6G is planned to enter phase III trials in post-op pain in 2003
-- Phase 1 study for treatment of chronic pain using M6G underway
-- CNS5161 - Phase II neuropathic pain trial 1st cohort completed - results due Q2
-- CEE 310 - 2nd phase II sleep trial successfully completed - partners being sought
-- CEE 320 - Schizophrenia candidate successfully advanced to pre-clinical stage - partners being sought
Pharmaceutical Services
-- Cognition - management team strengthened and sale expected Q2 2002
-- Channelwork - Wyeth orders $1.2m of ion-channel screening
equipment
-- Drug Delivery - CeNeS commenced divestment of drug delivery technologies
Financial and Corporate
-- Retained loss for 2001 of 64.6 million pounds after goodwill write off of 33.7 million pounds and provision for loss on disposal of discontinued operations of 4.2 million pounds. Retained loss for 2000 was 20.8 million pounds
-- Turnover down to 5.3 million pounds in 2001 from 6.6 million pounds in 2000
-- 5.5 m pounds raised through Elan's 2 subscriptions of CeNeS shares. Elan now holds 9.9% of CeNeS shares in issue.
-- CeNeS assigned its head office lease and sold surplus fixed assets for 0.6 million pounds
-- Cash burn reduced so that on completion of restructuring cash resources are expected to be sufficient until the end of 2003
-- CeNeS is in discussion with the administrator of Bioglan regarding the pain development and drug delivery contracts with Bioglan that can be terminated by CeNeS on Bioglan's entry into administration
-- CeNeS has approached the administrator of Bioglan to agree an orderly disposal of Bioglan's 8.9 million CeNeS shares
Commenting on the results, Alan Goodman Chairman said: ``We are effecting our restructuring plan successfully. We are implementing our strategy to build a specialized pharmaceutical company focused on the development and sale of CNS and pain pharmaceutical products. We are looking forward to building on the expertise we have developed in CNS and pain and expanding our clinical pipeline and product portfolio.''
CeNeS' Strategy
CeNeS has focused its business in the 2nd half of 2001 on its core capabilities in pain and CNS drug development and pharmaceutical product sales and marketing. CeNeS is now well placed to capitalize on its expertise in these fields.
CeNeS' preferred policy has been to maintain an interest in disposed assets in the form of milestones or royalties. As part of the restructuring, CeNeS has stopped research and is concentrating on the development of late stage candidates subject to adequate funding being available. CeNeS has reduced the number of employees from 145 to 50 and the number of sites from which the group operates.
CeNeS' strategy is designed to capitalize on the synergy between the marketing and clinical experiences gained in our chosen areas. CeNeS is now positioned so that on completion of the restructuring it expects to have sufficient existing cash resources and future cash generation from its recurring pharmaceutical product revenue stream to be self-funding into 2003.
Chairman's Statement
The year has been a difficult one for CeNeS and a major restructuring was announced in Oct. 2001 to secure the future of the company. The restructuring has progressed well and management has implemented a simplified strategy.
The company received a frustrated bid approach from Bioglan Pharma early in 2001 that diverted management time and reduced the ability of the company to secure appropriate funding from external sources. Funding opportunities were further reduced by the downturn in the global economy that accelerated in the 2nd half of 2001 and the shortfall in funding was exacerbated by delays in revenue generation from the company's drug delivery and research divisions.
Unfortunately, the restructuring has resulted in job losses at the group's 3 main operating sites in Cambridge (England), Irvine (Scotland) and Boston (USA). I wish all of our former employee's success in their future careers and thank them for their hard work at CeNeS.
The restructuring resulted in a number of changes to the Board. Dan Roach (CEO) and Martyn Collett (Commercial Director) stepped down as directors in October and I would like to thank them for their significant contributions to the development of CeNeS. I would also like to thank the 4 non-executive directors who stepped down in October namely, David Needham, Mike Redmond, Harry Wilcox and Paul O'Brien.
Neil Clark, our Finance director was appointed COO. John Buckle joined the Board as Pharmaceutical Operations Director and Tim Wright, from Elan Pharmaceuticals European operation, was appointed as non-Executive Director.
The Board and management have faced up to the key issues for the company and acted decisively to move the company forward.
The outlook for the restructured CeNeS business is positive and on completion of the restructuring, the core operations are expected to be self-financing into 2003. The Board are now looking forward to building up the pharmaceutical products and clinical development portfolios in line with our increased focus on pain control and CNS diseases and disorders. The Board will deliver value to shareholders by maximizing its pain and CNS expertise. This is expected to be led by the further progress in the development of M6G - CeNeS' leading candidate for the treatment of pain and, subject to funding, the development of CNS5161 for the treatment of neuropathic pain.
Chief Operating Officer's Review
Strategy
CeNeS remains focused on becoming a key UK player in the field of pain and CNS pharmaceuticals. The company has acted to reduce its commitment to non-core activities and is now looking to build its pharma product and clinical assets focused on its existing expertise in the areas of pain control and disorders of the CNS. The Board is committed to maintaining a clear business focus.
Sales and Marketing of CNS Pharmaceuticals
CeNeS' strategy is to build the regulatory, sales, marketing and distribution infrastructure that will support the launch of CeNeS' own development candidates in the future.
CeNeS launched its pharmaceutical business in late 2000 with the acquisition of 3 GlaxoWellcome products: Diconal, Cyclimorph and Valoid. Diconal and Cyclimorph are strong analgesics used in the management of moderate to severe pain either by the oral route (Diconal) or the i.v. route (Cyclimorph). Cyclimorph contains morphine whereas Diconal contains the analgesic dipipanone. In both cases, the analgesic is combined with cyclizine; a proven agent to counter the nausea and vomiting commonly associated with opioid analgesics. Valoid contains cyclizine as the sole active ingredient and is used to counter nausea and vomiting. These products have performed in line with expectations in 2001 and we expect further growth in 2002 based on an increased marketing effort. In Sept. 2001 CeNeS launched Xefo, a novel product for the treatment of post-op pain, which had been in-licensed from Nycomed in Jan. 2001.
Sept. 2001 also saw the establishment of CeNeS hospital sales force. Therefore, within 12 months of the acquisition of the GlaxoWellcome products, CeNeS has successfully completed its aim of forming a small, focused pharma products sales and marketing division. Now that CeNeS has established a critical mass in this area, the plan is to acquire new products in the chosen areas of expertise to achieve maximum benefit from the infrastructure.
Divesting of Non-Core Assets
During the restructuring we have cut back on certain of our non-core activities and focused on our pharma products and pain control clinical programs. As part of this process we are undertaking a systematic exercise to complete commercial arrangements to realize value for non-core assets.
Clinical Development in CNS and Pain
Under the restructuring plan, CeNeS has cut back on its clinical development programs and is concentrating its efforts in the medium term on its leading pain candidate M6G for severe pain (fully partnered with Elan) and CNS 5161 for the treatment of neuropathic pain. In Oct. 2001, CeNeS suspended the phase II clinical trial investigating the use of sipatrigine in the treatment of stroke. After discussion with our partner GlaxoSmithKline (``GSK''), it has been agreed that we hand back all our rights to sipatrigine to GSK. CeNeS' other clinical projects have been placed on hold and we are talking to prospective and existing collaborators with regard to the future development of these candidates. CeNeS' strategy with these non-core projects is to seek milestone and royalty-based deals that involve no funding requirement from CeNeS.
Research in CNS and Pain
Under the restructuring plan we have cut back our internal and external funding of research. Our research facilities in Boston, USA has been shut down. We have disposed of our ion-channel focused chemical library to Scion Pharmaceuticals Inc. for $300,000 in cash at completion together with further stage payments totaling $500,000 and up to $2 million in the form of milestone dependent payments.
CeNeS has reduced its research capability in Cambridge, England to focus solely on our world leading ion-channel high throughput screening technology and associated research projects. Our Parkinson's disease research program has been assigned to our partner Shire Pharmaceuticals plc and we again retain an interest in the form of milestones and royalties in this program should it proceed to clinical development.
In the medium term, CeNeS is reviewing its strategy regarding its expertise in ion-channel research and associated platform technologies and is talking to interested parties with this in mind. As part of CeNeS' strategy, the company plans to remove its commitment to research funding and focus its efforts solely on clinical development projects.
Clinical Development - Pain Portfolio
CeNeS is focusing its clinical development efforts on its pain portfolio. CeNeS is actively looking to out-license its other clinical candidates and is also looking to in-license appropriate clinical candidates in its chosen areas of expertise.
M6G (morphine-6-glucuronide)- For the Treatment of Post-op Pain
In Jan. 2001 we announced successful results from clinical trials in over 140 post-op pain patients which showed that CeNeS' lead drug candidate M6G, metabolite of morphine, has an advantage over morphine by reducing by more than 50% the incidence of nausea and vomiting.
In Oct. 2001 CeNeS announced further positive phase II results for our lead candidate M6G in post-op pain. These results showed that M6G had again shown positive results in a Phase II clinical trial comparing M6G with morphine in the relief of post-op pain. A total of 18 patients undergoing hip-replacement surgery were studied and M6G doses were escalated in 3 steps, each of which was compared with a standard dose of morphine. Drugs were administered as i.v. bolus injections followed by use of a Patient Controlled Analgesia (PCA) device for 24 hours post-operatively. The data showed that all doses provided effective analgesia during the 24-hour post-op period and that all doses were well tolerated. A reduction in pain scores over 24 hours was seen in all groups. After 24 hours there did not appear to be any difference between pain relief provided by any of the M6G dose groups and the standard dose of morphine.
CeNeS is currently carrying out a phase II study of M6G to investigate the effect of timing of administration of M6G in order to optimize pain control during the immediate post-op period. The extended Elan/CeNeS business venture has taken responsibility for this program worldwide. In the extended development program, CeNeS will carry out a further dose escalation study in 2002, which will enable a well-designed phase III worldwide program to commence in Europe during 2003. This will be a major milestone in the history of the company. Current sales of morphine in post-op pain are estimated to be 350m pounds in USA and Europe.
In June 2001, we entered into a collaboration with Elan Corporation plc to develop M6G with their unique Medipad subcutaneous drug delivery device for the treatment of chronic pain. Preliminary subcutaneous bioavailability studies have commenced in volunteers to enable Phase I clinical trials with M6G/Medipad to be carried out later in 2002.
Opioids are the mainstay of the treatment for chronic cancer pain and it is estimated that there are over 13 million cancer patients in the US and Europe requiring increasing doses of opioids as their disease progresses. If the clinical development of M6G in the Medipad device is successful, it will provide a portable treatment option for these patients.
CNS 5161 - For the Treatment of Neuropathic Pain
Our candidate for the treatment of neuropathic pain (CNS 5161) commenced a phase II single center study in early 2001. CNS5161 is a blocker of the NMDA ion channel. Earlier studies showed that CNS5161 was well tolerated by healthy volunteers and that it caused a statistically significant reduction in pain as compared to either morphine or placebo. The current study was placed on hold under the restructuring but results of the trial to date will be analyzed when available and if appropriate, it is then planned to restart this study as a Phase II multi-center study.
The market for the treatment of neuropathic pain is large and few drugs are currently licensed for treatment of this chronic and debilitating condition. For example, up to 35% of the over 13 million diagnosed diabetics in the USA and Europe are thought to suffer from neuropathic pain. In addition, neuropathic pain is experienced by patients with shingles (post-herpetic neuralgia), phantom limb pain and following trauma.
CEE 03 310 - For the Treatment of Sleep Disorders
CEE 03-310 is a dopamine D1 receptor antagonist and CeNeS has been developing the drug candidate for sleep disorders and substance abuse. In the sleep disorders field CeNeS reported data previously describing the significant effect of CEE 03-310 on sleep patterns in young healthy volunteers. In Oct. 2001, CeNeS announced the results of a 2nd volunteer study completed in 24 male subjects. CEE 03-310 again showed a significant alteration in sleep architecture, specifically changes in some non-REM stages of light and slow-wave sleep. These effects on sleep patterns, however, did not translate into effects on subjective ratings of sleep quality in the healthy volunteers.
To progress CEE 03-310, the next step in the clinical development program should be in patients with sleep disorders to explore the effects of this drug in subjects with already dislocated sleep patterns such as patients experiencing sleep disorders following cardiac surgery. With these results and the increased package of clinical data CeNeS is actively seeking partners for the further development of this potential drug.
Pharmaceutical Services
As part of the restructuring plan CeNeS is in the process of reducing its commitment to the 3 revenue generating businesses that formed this division, namely Cambridge Cognition, CeNeS Drug Delivery and Channelwork. All 3 businesses have continued to develop in 2001 but the combined requirement for further capital funding and the increased complexity they add to CeNeS' organization means they have become non-core assets.
CeNeS Cognition, the neuropsychological testing business continued to grow its revenues and extend its product range during 2001. In July 2001 CeNeS merged the business of Management Dynamics with its own cognition division and established Cambridge Cognition as a subsidiary with a separate management team. CeNeS is currently talking to interested parties regarding the sale of the cognition business.
CeNeS Drug Delivery had a difficult 2001. The UK sales for Moraxen since its launch in late 2000 were disappointing and the new UK and European partner, Bioglan Pharma, entered administration. The contract drug delivery business also experienced slower growth than forecast despite making progress on several of its commercial contracts. Under the restructuring plan, CeNeS is exiting drug delivery and is in the process of divesting its drug delivery assets.
CeNeS Channelwork, the contract electrophysiology and ion-channel high throughput screening technology business has been re-organized and the team continues to make progress in developing the next generation of the technology. CeNeS is seeking partners to continue the development and commercialization of the technology. In 2001 this division made significant progress in its development of an automated method of patch clamping based on its proprietary Interface Patch-Clamp(TM) methodology. In 2001, 5 systems were installed at GSK's research laboratories, 3 in the UK and 2 in the USA. In Nov. 2001 CeNeS announced the 2nd sale of $1.2m of AutoPatch systems to Wyeth Aerst.
In contrast to conventional patch-clamp technology, AutoPatch does not require the use of a microscope or three-dimensional micro-manipulation. In addition, because it is fully automated and mechanically robust the technology has the potential for further miniaturization and parallelization to a high-throughput device capable of around 1000x the screening rate of conventional electrophysiology.
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