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4SC AG. (3/25/15). "Press Release: 4SC Publishes Results for Financial Year 2014". Planegg-Martinsried.
|Organisation 2||Yakult Honsha Co., Ltd.|
|Group||Yakult Honsha (Group)|
|Product 2||4SC-202 (4SC AG)|
|Person||Spillner, Enno (Evotec 201607– CFO before 4SC CEO + CFO before BioM Venture Capital GmbH)|
4SC AG (Frankfurt, Prime Standard: VSC), a discovery and development company of targeted small molecule drugs for cancer and autoimmune diseases, today published the financial results of the 4SC Group for the financial year ended 31 December 2014.
Key figures for the 2014 financial year:
- Revenue up 44% and consolidated operating result up 11%.
- Earnings per share improve by 10% to EUR -0.19.
- Cash reach extends to beyond the first quarter of 2016.
Key operating events during the 2014 financial year:
- Resminostat: 4SC's licensing partner Yakult Honsha successfully completes a clinical Phase I trial in Japanese patients with solid tumours and makes a milestone payment to 4SC (May 2014). Yakult also successfully completes two further clinical Phase I study parts in liver cancer (HCC) and non-small-cell lung cancer (NSCLC), and starts the Phase II study parts of the Phase I/II trials in both indications (Sep./Oct. 2014).
- Resminostat: 4SC, in-house, is far advanced in the preparation of a planned Phase II liver cancer trial in Western patient populations and has also evaluated further development options for resminostat in additional indications.
- 4SC-202: Positive Phase I data with promising indications of anti-tumour activity in patients with advanced haematological tumours presented at the ASCO Annual Meeting in Chicago (June 2014). Overall, 83% of patients benefited from the treatment. One patient, who exhibited a complete remission of the tumour lesions upon treatment with 4SC-202, was treated in the study for a period of 28 months. 4SC has started negotiations for the further clinical development (Phase II) with potential partners and investors.
- 4SC-205: Positive results reported from Phase I AEGIS study (Dec. 2014).
- Strengthening of short- and medium-term financing: Convertible note agreement of up to EUR 15 million signed with US Investor Yorkville (Feb. 2014) plus conclusion of loan agreement of up to EUR 10 million with main shareholder Santo Holding (June 2014).
Key operating events after the reporting date:
- To increase the flexibility of future funding options, the Extraordinary General Meeting on 11 March 2015 adopted - with a majority vote of over 99% - a motion for a 1-for-5 reverse stock split and a corresponding decrease in share capital to EUR 10,169,841.00. Completion of the transaction is expected for mid-May 2015.
Enno Spillner, CEO of 4SC AG, commented:
"In 2014, we experienced another eventful year at 4SC. We improved both revenue and earnings considerably and strengthened our short- and mid-term financing base. We have actively pursued our research and development programmes while creating additional development options for the future. Good progress with resminostat has been achieved above all in our work with partner Yakult Honsha in Japan. We also made further preparations for a planned Phase II trial in the indication of liver cancer and evaluated a number of potential further developments in other indications. Our oncology compounds 4SC-202 and 4SC-205 have also returned some highly promising Phase I results and we are currently evaluating their further clinical development."
"Our primary goal for 2015 is to safeguard the further clinical development of our value drivers and the long-term financing of our Company, which should also reinforce the prospects of our enterprise value on the capital markets", Spillner continues. "To this end, we are negotiating with investors and potential partners for resminostat, but we also believe 4SC-205 and our second epigenetic compound 4SC-202 in particular have enormous future potential. In our work, we take comfort from the almost unanimous backing of our shareholders for the capital reduction and reverse stock split at our Extraordinary General Meeting held 11 March 2015, and the associated improvements to our future financing options on the capital market."
Today, on 25 March 2015 at 4:00 pm CET (11:00 am EDT), 4SC will host a telephone conference in English, in which the Management Board of 4SC AG will report on the principal developments in the 2014 financial year and beyond. To participate in the telephone conference, please use the following data:
+49-89-2030-31218 (other countries)
Conference ID: 1721570
After the conference call, an audio recording will be available at www.4sc.com under Investors / Events & Presentations / Conference Calls & Webcasts.
Financial summary 2014:
The 4SC Group, which comprises 4SC AG and its wholly-owned subsidiary 4SC Discovery GmbH, reports consolidated figures for the Group in accordance with International Financial Reporting Standards (IFRSs) and financial figures for the two operating segments Development (resminostat, 4SC-202 and 4SC-205) and Discovery & Collaborative Business (drug discovery and early-stage research activities as well as their commercialisation through the service business and research collaborations). The figures for the 4SC Group are reported below; for more information on segment reporting, see the full annual report at (http://www.4sc.de/investors/financial-reports).
In the 2014 financial year, revenue increased by 44% year on year to EUR 7.06 million (2013: EUR 4.90 million). This positive revenue performance was driven by stable business with research collaborations at Group subsidiary 4SC Discovery GmbH and the delivery of the resminostat compound to our partner Yakult Honsha for clinical trials in Japan. Operating expenses amounted to EUR 16.55 million, up 7% from the previous year (EUR 15.53 million). While costs for research and development fell, a rise was seen particularly in the cost of sales passed on to Yakult in relation to the contract manufacturing of the resminostat compound on behalf of Yakult Honsha. As a result of the above, earnings before interest (EBIT) improved by 11% in 2014 to EUR -9.44 million (2013: EUR -10.59 million). The loss for the period decreased by 8% to EUR 9.70 million (2013: EUR 10.53 million). Earnings per share improved by 10% to EUR -0.19 (2013: EUR -0.21) because in addition to the improved consolidated net loss there was also a higher average number of shares in financial year 2014 due to the conversion of convertible notes issued in March and September.
This results in an average monthly outflow of cash from operations amounting to EUR 0.71 million in the reporting period (2013: EUR 0.60 million per month). As at 31 December 2014, the Company had cash and cash equivalents totalling EUR 3.20 million, compared with EUR 4.90 million as at 31 December 2013. As at the reporting date, funds available to 4SC included the shareholder loan of up to EUR 4 million and convertible notes issued to Yorkville of up to EUR 14 million.
Detailed review of operations (2014) and outlook (2015):
Development segment (clinical development activities of 4SC AG)
In May 2014, 4SC's Japanese development partner Yakult Honsha successfully completed a clinical Phase I trial with resminostat - an epigenetic drug candidate from the class of HDAC inhibitors - in Japanese patients with solid tumours. This study was able to demonstrate that resminostat is safe and well-tolerated in Asian cancer patients at all doses tested. The completion of this study was associated with a contractually agreed milestone payment to 4SC from Yakult Honsha. In September and October 2014, Yakult Honsha started the Phase II parts of two clinical Phase I/II trials in Asia, which investigate the safety and efficacy of resminostat in the indications of advanced liver cancer (HCC) and non-small-cell lung cancer (NSCLC). The combination therapies of resminostat with sorafenib (HCC) and docetaxel (NSCLC) tested in the two studies' Phase I parts previously proved to be safe and well-tolerated.
In October 2014, the US Patent Office granted 4SC the patent for resminostat's manufacturing method. After securing the composition-of-matter patent for its lead compound in all of the world's key pharmaceutical markets by 2013, 4SC has since protected the manufacturing method in almost all of the key markets - including the USA, Europe, Japan, China, Russia, Hong Kong, Singapore and Australia.
In preparation for a planned Phase II trial, which is intended to test resminostat in combination with sorafenib as a first-line therapy in significant patient populations with advanced liver cancer (HCC) and to compare this therapy with the current standard treatment - monotherapy with sorafenib - 4SC drafted a study protocol and then discussed and optimised it by consulting with external experts.
4SC remains committed to the goal of pushing ahead with the resminostat cancer compound, for example in the liver cancer indication, and to secure its funding. 4SC is also reviewing additional future development options for resminostat in other indications on a regular basis. One particularly attractive option is offered by haematological niche indications. Since efficacy for these indications has already been shown successfully by the class of HDAC inhibitor compounds, the positive clinical safety and efficacy profile demonstrated by resminostat to date appears to offer an accelerated route to market approval with a comparably moderate level of capital outlay.
4SC also expects its Japanese development partner Yakult Honsha Co to maintain its high level of commitment in proceeding with the two ongoing Asian Phase II trials investigating resminostat in the indications of advanced liver cancer and non-small-cell lung cancer.
In early June 2014, 4SC published positive top-line results from a clinical Phase I trial (TOPAS study) with the drug candidate 4SC-202 in patients with advanced haematological tumours at the ASCO Annual Meeting. 4SC-202 - a selective epigenetic compound that is also targeting cancer stem cells via modulation of the Hedgehog and WNT signalling pathways - was safe and well-tolerated in this trial. In addition, it showed promising indications of anti-tumour efficacy, both in terms of long-term stabilisation of the disease and in terms of shrinking the tumours. Overall, 83% of patients benefited from the treatment, with 75% of them also receiving treatment after the primary six-week treatment period. It proved possible to stabilise the disease for a period of over 100 days for half of the study participants, with 13% achieving stabilisation for a period of over a year. Treatment for a period of more than two years proved possible for two of these patients, with one patient achieving long-term stabilisation of the disease and the other patient experiencing complete remission of the tumour lesions. This patient was treated successfully with 4SC-202 for 28 months.
The data is currently being processed for the final study report, which is expected to be published in mid-2015. 4SC used these positive study results as the basis for initiating discussions with potential partners, in order to push ahead with the clinical development of the compound.
In early December 2014, positive top-line results were reported from the Phase I trial (AEGIS study) with the oral Eg5 inhibitor 4SC-205 in patients with advanced solid tumours. The compound showed promising indications of efficacy and good tolerability alongside a very positive linear pharmacokinetic profile in this trial, which was the first of its kind to test the continuous dosing scheme in this class of compounds. Currently one patient whose previously strongly pronounced and highly aggressive cancer has been stabilised for about eight months now after taking 4SC-205 is still continuing study treatment. After completing the study report, the Company expects to present the final study data at a scientific conference in the current financial year. 4SC will discuss the results with external clinical key opinion leaders and potential partners to assess the best possible development options for 4SC-205.
4SC optimised the chemistry of vidofludimus, its clinical compound in the field of autoimmune diseases, in the reporting year. This work secured pharmacological advantages over the compound's previous formulation while greatly strengthening the patent situation. Based on its modified patent and development strategy, 4SC is continuing the search for external investors and industry partners capable of handling the further development of vidofludimus.
Discovery & Collaborative Business segment (research at 4SC Discovery):
Group subsidiary 4SC Discovery GmbH continued along its successful trajectory of pursuing the collaboration and service business in pharmaceutical early-stage research in 2014. The existing partnerships, including those with Mainz-based BioNTech AG and Danish pharmaceutical company LEO Pharma S/A, continued to develop encouragingly. The strategic technology and sales partnership with CRELUX GmbH was expanded and new collaboration projects were launched.
In March 2014, the subsidiary announced the receipt of a grant of EUR 1.3 million to fund a collaboration with Heidelberg University Hospital focusing on the research and preclinical development of a new compound to counteract resistant strains of malaria. In April 2014, the 4SC Discovery GmbH received confirmation of a EUR 0.45 million grant from the EU to start research, for the first time, into new epigenetic compounds targeting cardiovascular diseases in cooperation with the Medical Clinic of the University of Munich. In July 2014, 4SC Discovery GmbH and its collaboration partner CRELUX received a grant associated with the Munich m4 biotech cluster programme for a project researching new epigenetic bromodomain inhibitors for use in oncology.
The plan is to further expand existing partnerships in the future and undertake new research collaborations with companies in the pharma and biotech sectors or higher education partners. Furthermore, in-house research programmes are to be advanced, for instance by entering into licensing deals, to create value for 4SC in the long term as well through performance-based milestone payments and royalties.
Developments at Group level
An adjustment to strengthen senior management was made at Group level. Dr Bernd Hentsch left 4SC effective 31 March 2014 upon expiration of his contract as Chief Development Officer, and Chief Scientific Officer Dr Daniel Vitt took over responsibility also for development activities. Dr Erich Enghofer joined 4SC as new Executive Vice President Oncology and Haematology in June 2014, to advance the strategic marketing of the oncology projects and expand the partner network. Following the departure of Dr Thomas Werner and Klaus Kühn, 4SC's Supervisory Board was further strengthened and completed: Biotech and pharma research manager Professor Helga Rübsamen-Schaeff and auditor and tax adviser Joerg von Petrikowsky were both appointed to the Supervisory Board (in January 2015 and October 2014, respectively).
The 4SC Group had funds of EUR 3.20 million at the end of 2014. In view of short- and medium-term revenue and expense planning and utilisation of the existing convertible note agreement with Yorkville as well as the further opportunity to draw down tranches from the loan agreement with Santo Holding (Deutschland) GmbH, 4SC believes that these funds are sufficient to finance the Company's operations probably beyond the first quarter of 2016, not including the start of new clinical trials. This forecast is based on the assumption that the average monthly operating cash burn rate in 2015 will be reduced to approximately EUR 0.2 million given corresponding revenue.
For 2015, the Management Board anticipates a further decrease in research and development costs and a further reduction in the consolidated net loss from operations as a result of a renewed drop in operating expenses and a rise in the contributions made by 4SC Discovery GmbH's activities to earnings at the same time. This is, however, contingent on the Company's research and development programmes and partnerships continuing to exist and running according to plan. In the event of funding being secured and the start of further clinical trials - for instance with resminostat in the liver cancer indication - the Company's cost structure will change markedly, with significant rises in both development expenses and the cash burn rate. 4SC expects to post annual net losses in the short to medium term. For 2015, the Management Board expects 4SC Discovery GmbH to generate a positive cash flow from operations.
End of press release
The Group managed by 4SC AG (ISIN DE0005753818) discovers and develops targeted, small-molecule drugs for treating diseases with high unmet medical needs in various cancer and autoimmune indications. These drugs are intended to provide innovative treatment options that are more tolerable and efficacious than existing therapies, and provide a better quality of life. The Company's pipeline comprises promising products that are in various stages of clinical development. 4SC's aim is to generate future growth and enhance its enterprise value by entering into partnerships with pharmaceutical and biotech companies. Founded in 1997, 4SC had a headcount of 66 employees (57 FTEs) at 31 December 2014. 4SC AG has been listed on the Prime Standard of the Frankfurt Stock Exchange since December 2005.
Cautionary statement regarding forward-looking statements
This press release contains certain forward-looking statements. Any forward-looking statement applies only on the date of this press release. By their nature, forward-looking statements are subject to a number of known and unknown risks and uncertainties that may or may not occur in the future and as a result of which the actual results and performance may differ substantially from the expected future results or performance expressed or implied in the forward looking statements. No warranties or representations are made as to the accuracy, achievement or reasonableness of such statements, estimates or projections, and 4SC AG has no obligation to update any such information or to correct any inaccuracies herein or omission herefrom which may become apparent.
For more information please visit www.4sc.com or contact:
Jochen Orlowski, Corporate Communications & Investor Relations
jochen.orlowski(at)4sc.com, Tel.: +49-89-7007-6366
Katja Arnold, Michelle Kremer
katja.arnold(at)mc-services.eu, Tel.: +49-89-2102-2840
The Trout Group
crubin(at)troutgroup.com, Tel.: +1-646-378-2947
Record changed: 2016-06-07
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