NeuroSearch announces the company's annual Report 2011 (Neurosearch) - Feb 28, 2012 - Together with Huntexil, seridopidine & ordopidine constitute a range of patent families which are important to NeuroSearch; Seridopidine has been evaluated in P1 clinical studies with satisfactory results; Ordopidine has finalised the active part of a P1b study & data are currently being analysed; In order to focus on the development of Huntexil, NeuroSearch has decided not to initiate P2 studies for seridopidine and ordopidine at this time
Product update • Parkinson's Disease • Schizophrenia
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In 2011, the NeuroSearch Group (NEUR) posted an operating loss from continuing activities of DKK 383 million (2010: DKK 168 million), which is in line with the company's expectations of an operating loss in the region of DKK 370 million. This includes DKK 170 million as one-off costs without a cash flow effect regarding an impairment write-down of intangible assets and a provision for changed milestone payments to the sellers of Carlsson Research and additional DKK 99 million representing impairment charges on property and other assets with no cash flow effect.
Additionally, the company incurred losses from discontinued operations amounting to DKK 329 million (2010: DKK 160 million) related to a provision for loss-making collaborations, including the contracts with Lilly and Janssen, impairment write-downs of property, plant and equipment and intangible assets, salaries to redundant employees during the notice period and related infrastructure.
The consolidated loss in 2011 for the group after tax and financial income was DKK 678 million (2010: DKK 259 million).
The company’s capital resources consisting of cash and securities totalled DKK 221 million (2010: DKK 481 million) at 31 December 2011.
Future expected payments from Janssen related to staff working under the agreement with this partner amount to DKK 38 million, and an additional payment from the sale of Sophion Bioscience in the form of release of an escrow of DKK 9 million is expected at year end 2012.
NeuroSearch is working on securing financing required to conduct the Prime-HD study and the associated supportive studies in the Huntexil® development programme. The Prime-HD study will not be initiated before financing is secured to finalise the study. NeuroSearch continues to seek a partner to market Huntexil® outside Europe and in parallel NeuroSearch is exploring potential financing through a capital increase. So far, no decision on preferred route of financing has been taken.
Please see the enclosed Annual Report 2011 for NeuroSearch for a full description of the financial year 2011.
Events during 2011 to date:
Organisation
On 27 September 2011, NeuroSearch announced a comprehensive restructuring, which – when fully implemented in 2013 – will result in an organisation of approximately 35 employees. The aim of the restructuring is to focus the company's financial and managerial resources on the phase III development and subsequent marketing of Huntexil®.
Huntexil®
During Q2 2011, NeuroSearch received feedback from the End of Phase II meeting with FDA and held a scientific advice meeting with EMA regarding the clinical development programme for Huntexil®. Both the FDA and EMA requested additional phase III data to support the previously observed effect on the TMS and to substantiate the clinical relevance of this finding. The FDA further requested evidence of a statistically significant effect on an endpoint which supports clinical relevance and the FDA also recommended investigating doses of Huntexil® higher than those used in MermaiHD and HART.
After discussions with leading experts in the field, NeuroSearch has designed the continued development programme for Huntexil®, including the phase III Prime-HD study. This study is planned to enrol approximately 630 patients with Huntington's disease who will be dosed with 45 mg or 67.5 mg Huntexil® or placebo, all twice daily. The primary study endpoint will be the TMS. To further demonstrate the clinical relevance of Huntexil®, the patients overall function will be measured using the Clinical Global Impression (CGI) scale.
The Multiple Ascending Dose (MAD) study, which is aimed at evaluating the safety, tolerability and pharmacokinetics of multiple ascending doses of Huntexil® in healthy volunteers, was initiated at the end of September. The study has concluded its active phase and the maximum tolerated dose in healthy volunteers has been identified. The twice daily doses of 45 mg and 67.5 mg Huntexil® which are planned for the Prime-HD study appear to be safe and well tolerated and will thus remain as planned. The data management and analysis of data from the MAD study is still on-going and final results are expected to be ready in Q2 2012.
NeuroSearch is providing a research grant to The University of Lyon to conduct the Global Huntington Disease Burden Study in Europe, Australia and the USA and some results have been received already. In France, the direct treatment costs (hospital visits, nursing home, etc.) excluding productivity losses associated with Huntington’s disease amount to approximately EUR 24,000 per patient per year.
The compassionate use program that followed MermaiHD now enrols 130 patients, which is 43% of the 305 eligible patients who completed the MermaiHD study. The Open-HART study was initiated in March 2011 and concluded enrolment in December 2011 with 118 patients, which is more than 55% of the eligible 213 patients from the HART study. Both the compassionate study and the Open-HART study contribute to the long term safety database of 45 mg Huntexil® twice daily, and to date this dose has been very well tolerated.
In Q4 2011, the MermaiHD study was published in The Lancet Neurology.
Ordopidine and Seridopidine
Together with Huntexil®, seridopidine and ordopidine constitute a range of patent families which are important to NeuroSearch. Seridopidine has been evaluated in phase I clinical studies with satisfactory results. Ordopidine has finalised the active part of a phase Ib study and the data are currently being analysed.
In order to focus on the development of Huntexil®, NeuroSearch has decided not to initiate phase II studies with any of these projects at this time.
Alliances and NsDiscovery
The alliances with Eli Lilly and Janssen have continued as planned. In accordance with its terms, the Lilly agreement expired on 17 February 2012. During Q2 2011, the Janssen agreement was extended until August 2013 with no change in the total payments to NeuroSearch.
In Q4 2011, leading employees from NsDiscovery founded the company Aniona ApS with the aim of establishing the basis for a continuation of research and development activities from NsDiscovery within a new company and with new investors. NeuroSearch endorses this initiative and participates with a non-binding agreement which allows the sale of selected intellectual rights to Aniona provided that Aniona establishes the necessary external financing. This agreement denotes that NeuroSearch obtains ownership in Aniona as well as certain royalty payments depending on the transferred rights. NeuroSearch shareholders will thus have the possibility of a future flow of earnings relating to the transferred rights, but the company will not invest further in NsDiscovery activities.
Group
During Q3 2011, NeuroSearch and all other shareholders sold Sophion Bioscience A/S to Biolin Scientific AB. The company's proceeds from the sale amounted to DKK 41 million of which DKK 32 million were received in September 2011, and the remaining DKK 9 million in the form of release of an escrow are expected to be received before the end of 2012.
During Q4 2011, NeuroSearch and the sellers of Carlsson Research renegotiated and agreed on an amendment to the share purchase agreement that was entered into in connection with the acquisition of Carlsson Research in 2006. As a consequence, the following milestones are now outstanding:
First registration application for Huntexil® (SEK 100 million)
First marketing approval in EU/EFTA of Huntexil® (SEK 75 million)
First marketing approval outside EU/EFTA of Huntexil® (SEK 75 million)
This amendment gives NeuroSearch full freedom to deal with seridopidine and ordopidine in the best possible way without obligation to the sellers of Carlsson Research.
On 20 February 2012, NeuroSearch conducted an extraordinary general meeting and was granted the permission to reduce the share capital to DKK 24,553,947 in shares of DKK 0.05. The reduction of the share capital neither dilutes any existing shareholding nor has any impact on the number of shares owned by each shareholder. Notice has been given to the company's creditors, requesting them to file their claims against NeuroSearch within four weeks. Implementation of the reduction of the share capital will not take place until after expiry of this four week time limit, which will expire on 19 March 2012.
Financial expectations for 2012
NeuroSearch expects an operating loss on continuing operations of approximately DKK 75 million excluding any possible costs related to the phase III programme on Huntexil®. Costs mainly relate to the continuing organisation, fixed costs and continuation of the Open-HART study and the compassionate use programme. NeuroSearch is working on securing the financing required to conduct the Prime-HD study and the associated supportive studies in the Huntexil® development programme. The Prime-HD study will not be initiated before financing is secured to finalise the study. So far, no decision on preferred route of financing has been taken.
No further costs related to the discontinued operations are expected in 2012. The cash flow effect in 2012 is expected to be in the region of DKK 70 million.
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