AGI Therapeutics, plc announces Financial results for the twelve months ended 31 December 2007


Dublin, Ireland--(Marketwire - April 3, 2008) -

 

                         AGI Therapeutics, plc

  Financial results for the twelve months ended 31 December 2007
 

Dublin, Ireland, 3rd April 2007 - AGI Therapeutics plc ("AGI" or
the "Company"), a speciality pharmaceutical company focused on 
gastrointestinal drug products, today reports audited financial 
results for the twelve months ended 31 December 2007.

Financial highlights

- Revenue of EUR392,000 (2006: EUR196,000)

- Cash and short term deposits at 31 December 2007 of EUR30.9 million,
  (2006: EUR40.0 million)

- R & D spend of EUR13.2 million (2006: EUR3.5 million)

- Net loss of EUR14.1 million (2006: EUR4.3 million)

- Loss per ordinary share of 20.9 cent (2006: 6.9 cent)

Operational highlights

- Positive meeting with the US Food and Drug Administration (FDA) in
  relation to Rezular(TM) (arverapamil, AGI-003) resulting in guidance 
  on the investigational new drug application (IND) requirements for 
  further clinical and pre-clinical development, Phase III study design 
  and NDA 505b2 submission requirements

-  IND filed and ARDIS programme initiated for Rezular(TM) in the
   treatment of diarrhoea-predominant irritable bowel syndrome (IBS-D)

- Characterised mechanism of action of Rezular(TM), a triple action
  intestinal modulator, which the Company believes to be a first-
  in-class compound offering a safe and effective treatment for 
  IBS-D patients

- Identified target indications and developed Phase II programmes for
  arbaclofen (AGI-006), 4-ASA (AGI-022) and mecamylamine CR (AGI-004) 
  in gastroparesis, ulcerative colitis and chemotherapy-induced 
  diarrhoea, respectively

- Further strengthened the management team with the addition of two
  experienced senior executives to the US group:

  - Sian Bigora, Pharm D. - Vice President, Clinical Research & 
    Regulatory Affairs

  - Amir Shojaei, Pharm D., Ph.D. - Vice President, Pharmaceutical
    Development.

- Exclusive option agreement signed with US-based Williamsburg Holdings;
  an important first step in expanding AGI's early-stage development 
  pipeline

Post year-end highlights:

-  First patient dosed in a Phase II study of AGI-004 in the 
   treatment of chemotherapy-induced diarrhoea (CID)

-  Completed optimisation phase of development of AGI-010, a 
   modified release formulation of the proton pump inhibitor drug 
   ("PPI") omeprazole which utilizes AGI's CHRONAB technology and 
   which is being co-developed with Axcan Pharma Inc. ("Axcan") 
   for the treatment of night-time acid breakthrough, (NAB),
   in gastro esophegeal reflux disease (GERD)

-  Positive pharmacokinetic data on Rezular(TM) which support its 
   safety profile and development strategy for Rezular(TM) in the 
   treatment of IBS-D

-  Characterised the pharmacokinetic profile of arbaclofen 
   (AGI-006) in healthy volunteers

Commenting on the results, Dr. John Devane, CEO of AGI, said:

"The successful filing of an IND application and the commencement of 
the ARDIS clinical programmme for RezularTM was our most significant 
achievement this year and we believe the continued development of 
this exciting IBS-D product will benefit patients in the future in 
this underserved marketplace. In addition, we substantially increased 
our investment in R&D in 2007 and have achieved strong progress across 
our development pipeline. We were particularly pleased to report
the start of a new Phase II clinical study for mecamylamine 
(AGI-004), for the treatment of CID, in February 2008.

Overall, 2007 was a busy year for AGI and we look forward to 
continued progress in 2008. Our focus this year will be to 
further advance our clinical programmes which will allow us 
achieve our commercial goals."

Contact Information:
 
AGI Therapeutics plc.                       Tel: +353 1 449 3254
David Kelly, Chief Financial                                    
Officer                                                         
                                                                
Financial Dynamics - UK                Tel: +44 (0) 20 7269 7182
Deborah Scott/Lara Mott                                         
                                                                
Financial Dynamics - Ireland                Tel: +353 1 663 3607
Aisling Garvey                                                  
Piper Jaffray Limited                  Tel: +44 (0) 20 3142 8700
Neil Mackison                                                   
Will Carnwath                                                   

Davy                                      Tel: +353 (1) 614 8761
John Frain                                                      

For further information: www.agitherapeutics.com

About AGI Therapeutics plc

AGI is a speciality pharmaceutical company which is focused on the development and commercialisation of differentiated drug products for gastro-intestinal (GI) diseases and disorders. AGI's common shares are listed on the Alternative Investment Market of the London Stock Exchange (AIM) and on the Irish Enterprise Exchange of the Irish Stock Market (IEX) as AGI.

The Company has a portfolio of product candidates derived from its Known Molecular Entity (KME) approach to drug re-profiling and development. The Company's lead product candidate, Rezular™, is an orally administered triple-action intestinal regulator, a first-in-class mechanism for the treatment of diarrhoea predominant Irritable Bowel Syndrome (IBS-D).

KME is a re-profiling methodology used by the Company to identify existing therapeutic drugs which typically have been marketed for a number of years, have established safety profiles and can be developed for new clinical indications or with improved profiles in their existing clinical indications. In this way, the Company seeks to reduce the risk, time and cost of new product development as compared to the development of new chemical entities.

AGI is developing a range of product candidates to treat a variety of prevalent GI diseases and disorders, including irritable bowel syndrome (IBS), dyspeptic symptoms, gastroparesis, ulcerative colitis, gastro-esophageal reflux disease (GERD) and diarrhoea-related conditions such as chemotherapy-induced diarrhoea (CID). The Company is targeting areas of the GI therapeutic drug products market for its product candidates where there are currently unmet medical needs or where the effectiveness of existing drug therapies can be further improved.

The Company has five active clinical stage product candidates which are either isomers or new drug delivery formulations of existing approved drugs and which have established safety and tolerability profiles in their currently approved clinical indications.

For further information please see www.agitherapeutics.com

Statements contained within this press release may contain forward-looking comments which involve risks and uncertainties that may cause actual results to vary from those contained in the forward-looking statements. In some cases, you can identify such forward-looking statements by terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or 'continue'. Predictions and forward-looking references in this press release are subject to the satisfactory progress of research which is, by nature, unpredictable. Forward projections reflect management's best estimates based on information available at the time of issue.

Chairman's and Chief Executive's review:

Overview

2007 was an important year of progress for AGI. Following a successful IPO in 2006, and the subsequent reporting of clinical data across the development pipeline, 2007 was the year in which the Company refined the scope and direction of future clinical development of its products. The year was dominated by the progress of Rezular™, a product designed to treat the multiple symptoms of IBS-D, a debilitating disease believed to affect between 10% and 20% of the population in developed markets.

The Company also defined the clinical development programmes for its other pipeline products. The clinical results generated from the proof-of-concept studies in 2006 and early 2007 provided sufficient data to chart the best route for further development. In 2007, AGI identified gastroparesis, ulcerative colitis and chemotherapy-induced diarrhoea as the most promising clinical indications for which to further develop its arbaclofen, 4-ASA and mecamylamine products, respectively.

In anticipation of the steps required to move Rezular™ into Phase III studies, the Company has expanded its US operations and raised its profile amongst the international scientific, medical and investment communities in 2007. AGI attended Digestive Disease Week (DDW) in May and presented the Phase II Rezular™ study results at the 2007 Scientific Meeting of the American College of Gastroenterology in October. The Company also attended and presented at a number of the major pharmaceutical investor conferences.

Strategy

AGI remains dedicated to its founding strategy, focusing on the development of new products for GI diseases which are based on Known Molecular Entities (KMEs). KME is a re-profiling methodology used by the Company to identify existing therapeutic drugs which typically have been marketed for a number of years, have established safety profiles and can be developed for new clinical indications or with improved profiles in their existing clinical indications.

In addition to the Company's continued focus on the pharmaceutical and clinical development of its product portfolio, AGI maintains its aim to develop into a fully integrated specialty pharmaceutical business with the ability to oversee the sales, marketing and distribution of its own products in the market by targeting medical specialists within its therapeutic areas of expertise. In order to maximise the commercial success of the Company's products, AGI aims to out-license or partner those products that would benefit from being marketed or co-promoted by larger companies, whilst retaining co-ownership rights to AGI's products where possible.

Operations:

Rezular™ (arverapamil, AGI-003) in IBS-D

IBS is a functional disorder that comprises a cluster of gastrointestinal symptoms which are likely to be life long and which affect between 10% and 20% of the population in developed markets. Rezular™ is being developed in an oral dosage form for the treatment of IBS-D in both men and women. The IBS-D segment of the IBS market is estimated to account for at least one-third of all IBS patients and there is currently an estimated 6 million diagnosed IBS-D patients who could benefit from safe and effective drug therapy.

Rezular™ is an orally administered triple-action intestinal regulator, a first-in-class mechanism for the treatment of IBS-D. It contains arverapamil, a single enantiomer moiety of the racemic drug verapamil. Unlike the currently available commercial forms of racemic verapamil (a mixture of two enantiomers), Rezular™ shows a dominant activity in treating the symptoms of IBS-D without the traditional cardiovascular actions of the racemic drug.

Rezular™ activities dominated 2007. In March, the FDA determined that the existing pre-clinical and clinical data would support submission of an IND application and a Phase III programme for Rezular™. The design and scope of the Phase III protocol was also agreed upon in the IND submission. In addition, the FDA and AGI agreed on the overall manufacturing, pre-clinical, and clinical development plans to support the submission of the New Drug Application (NDA) in IBS-D under FDA's 505(b)(2) NDA regulations. The FDA concurred that the remaining pre-clinical and supporting clinical studies required for the NDA could be performed in parallel with the Phase III programme.

At the time of writing, the first ARDIS studies are underway with over 75 sites currently randomising patients in the US, Europe and Latin America. Site initiation and recruitment during Q4 was slower than expected and the Company expects to be able to provide a more complete status update mid-2008. AGI is pleased to note that greater than 80% of patients completing ARDIS I have elected to roll over into the 12-month safety extension, ARDIS 3.

CHRONAB omeprazole (AGI-010) for NAB in GERD

As previously reported, AGI is developing a modified release formulation of the proton pump inhibitor drug (PPI) omeprazole based on its CHRONAB technology which the Company believes will be effective in treating NAB, a prevalent aspect of current PPI therapy of GERD. GERD is the most prevalent of the major gastrointestinal disorders and is most commonly treated with PPI drugs, which achieve global annual sales in excess of US$20 billion. NAB is estimated to occur in at least 50 per cent of GERD patients on PPI therapy.

AGI entered into a co-development and license agreement with Axcan in September 2006 to jointly develop for North American markets a modified release omeprazole product based on AGI's CHRONAB formulation approach. AGI worked closely with Axcan throughout 2007 to progress omeprazole through Phase II product optimisation.

Following extensive work during 2007 to optimise its earlier prototype formulations, AGI announced in March 2008 that it has identified a unique formulation of omeprazole for once daily administration which, the Company believes, could specifically address nocturnal acid breakthrough (NAB), a real unmet medical need for GERD patients. With its partner Axcan, AGI will now focus on defining the appropriate development approach for the remainder of the AGI-010 program.

Arbaclofen (AGI-006) in gastroparesis

The results of a 64 patient exploratory Phase II trial of arbaclofen in functional dyspepsia in early 2007 demonstrated statistically significant improvements across a range of endpoints, including patient global severity, bloating, nausea, condition specific Quality-of-Life (QOL) and rescue antacids. AGI determined that the profile of activity of arbaclofen matches well with the desired profile of a therapy for the dyspeptic symptoms of gastroparesis. Diabetic gastroparesis is the most common manifestation of the dyspeptic symptoms of gastroparesis, however effective and well-tolerated therapy options are extremely limited for these patients.

During 2007, AGI carried out further work, including a study (reported in a separate press release this week) on the pharmacokinetic exposure profile of arbaclofen in healthy human subjects, under both fasted and fed conditions. In addition, this study compared the fasted exposure of AGI-006 in terms of both R- and S-isomers of baclofen with the fasted exposure following a single 10mg dose of Lioresal® (a marketed form of racemic baclofen). The results of this work support the Company's belief that the development of AGI-006 can follow a similar clinical/ regulatory pathway to Rezular™.

4-ASA (AGI-022) in ulcerative colitis

AGI is developing a modified release oral formulation of 4-aminosalicylate sodium (4-ASA) for the induction and maintenance of remission of mild to moderate ulcerative colitis (UC). UC is a chronic, recurrent, relapsing and remitting inflammatory disease of the colon and/or rectum. AGI believes that its 4-ASA product may offer certain advantages compared with current 5-ASA based therapies which are commonly used to treat UC, including a superior tolerability profile, and a more reliable delivery to the target sites of action in UC leading to a higher efficiency of therapy with potential dosing advantages.

In March 2006, AGI reported on the outcome of a human pharmacokinetics trial in 16 human subjects designed to characterise the in vivo drug release profile and pharmacokinetics of three delayed release/controlled release formulations compared with a reference solution of 4-ASA. The study demonstrated delayed and controlled in vivo release profiles consistent with targeted colonic delivery.

During 2007, having selected a lead formulation, AGI developed a high unit-dose, once-daily, modified release tablet of this product and has designed a Phase II clinical study to further investigate the efficacy of this product in UC patients. AGI hopes to initiate this study later in 2008.

Mecamylamine (AGI-004) in CID

Based on preliminary proof-of-concept clinical work carried out in patients suffering from functional diarrhoea, AGI believes that controlled release mecamylamine has the potential to be an effective agent in diarrhoeal states characterised by a high frequency of watery stools. Given the mechanism of action of mecamylamine on the nicotinic acetylcholine receptors (nAChR) and the pathophysiology of certain diarrhoeal states that are not satisfied by current therapy, AGI identified chemotherapy-induced diarrhoea (CID) as an area of unmet clinical need where controlled release mecamylamine may have therapeutic benefit.

During 2007, AGI consulted with medical experts and designed a clinical protocol to study mecamylamine in patients with CID. In February 2008, AGI announced that the first patient has been dosed in this Phase II study.

The current standard of care for CID patients usually involves multiple oral daily doses of an opioid agent such as loperamide. However, many patients who receive loperamide continue to experience significant and debilitating diarrhoea which may require reduction, delay or even withdrawal of chemotherapy. AGI's mecamylamine product is a controlled release transdermal patch which AGI believes offers a significant advantage to current CID therapy, including its convenient, once-daily transdermal form.

New Products

In August 2007, AGI signed an exclusive option agreement to license certain intellectual property and know-how surrounding a novel prodrug platform for the prokinetic/antiemetic agent, levosulpiride, from Williamsburg Holdings, a US private drug development company.

While this particular technology is still undergoing technical feasibility assessment, AGI believes this demonstrates its continued commitment to broaden the Company's early stage portfolio.

Outlook

The 2007 results announced today demonstrate the progress AGI is making in moving forward its pipeline of exciting compounds in underserved markets. In 2008, a key objective will be to deliver further clinical data which will allow the Company to bring industry partners on board to see the products through to eventual market launch. In these difficult equity markets, AGI remains firmly focused on ensuring that both its existing financial resources and management effort is concentrated on maximising the value of the Company's existing pipeline and optimising the route to regulatory submission and approval.

 
Dr Ronan Lambe       Dr John Devane                                
Chairman             Chief Executive Officer                       
Dublin, 3 April, 2008

Financial review

The financial information for the year ended 31 December 2007 presented below has been prepared according to IFRS, as adopted by the European Union.

Operating performance

Revenue

AGI received an initial milestone payment of $1.5 million from Axcan Pharma Inc. in 2006 related to a co-development agreement for Chronab omeprazole. This upfront fee is being recognised on a straight line basis over three years, an estimate of the likely term of the underlying development programme. For the year to December 31, 2007 a total of EUR0.4 million was recognised as revenue (2006: EUR0.2 million).

Research and Development expenses

Total Research and Development Expenses for the year to December 31, 2007 was EUR13.2 million (2006: EUR3.5 million). The significant increase in R&D costs reflects the increased number of clinical programmes associated with the Company's products in development, particularly the initiation of the ARDIS Phase III programme for Rezular™. Also included in this cost category is a write down of approximately EUR0.7 million associated with intellectual property relating to a discontinued development programme.

General and Administrative expenses

General and Administrative expenses in 2007 were EUR2.6 million (2006: EUR1.9 million). This increase is attributable to increased costs associated with the expansion of the Company's office in the US and the fact that AGI incurred the first full year of costs associated with being a public company.

Interest Income

The Company earned interest on its cash balances, primarily the proceeds of the IPO during 2006. This amounted to EUR1.5 million in 2007 (2006: EUR1.0 million).

Taxation

While the Company has had a loss to date, not all of this is available for offset against the interest income referred to above. Therefore AGI incurred a tax charge of EUR0.2 million for the year (2006:EUR0.1 million).

Share based compensation expense

During 2006 and 2007, the Company issued share options to certain employees. While the options were issued at a strike price equal to the market price of the Company's shares on the date of grant, a calculation is required of the potential expense to the company of issuing those options which is determined using the Black-Scholes option-pricing formula. A total amount of EUR1.0 million was expensed during 2007 (2006: EUR0.8 million) for these share based compensation charges, divided between Research and Development and General and Administration expenses.

Operating cash flow

Net cash outflow from operating activities in the period was EUR8.9 million (2006:EUR2.0 million). At 31 December 2007, AGI had cash and short-term deposits of EUR30.9 million, (2006 EUR40.0 million).

AGI Therapeutics, plc

Consolidated Income Statement
for the year ended 31 December 2007

 
                                                2007          2006  
                                             EUR'000       EUR'000
                                                                   
Revenue                                          392           196  
                                              ______        ______
Operating expenses                                                 
                                                                   
Research and development expenses 
(share based payment charge of 
EUR489,000 (2006: EUR287,000))               (13,159)       (3,519)
General and administrative expenses                                
(share based payment charge of 
EUR516,000 (2006: EUR484,000))                (2,640)       (1,893)
Other operating income                             -            65  
                                              ______        ______
                                                                   
Operating loss                               (15,407)       (5,151) 
                                              ______        ______
                                                                   
Interest income                                1,518         1,064  
Interest expense                                   -           (98) 
                                              ______        ______
                                                                   
Net finance income                             1,518           966  
                                              ______        ______
                                                                   
Loss before income tax                       (13,889)       (4,185) 
Income tax expense                              (179)         (137) 
                                               ______        ______
                                                                   
Loss for the year                            (14,068)       (4,322) 
                                                                   
                                                                   
Attributable to equity holders               (14,068)       (4,322) 
                                                                   
                                                                   
Basic loss per ordinary share                                      
Basic loss per share (in cent)                  20.9           6.9  
Diluted loss per share (in cent)                20.9           6.9  
                                                                   

 

Consolidated Balance Sheet
at 31 December 2007

 
                                               2007          2006  
                                            EUR'000       EUR'000
Non-current assets                                                 
Property, plant and equipment                    48            39  
Intangible assets                             1,165         1,810  
                                             ______        ______
                                                                   
Total non-current assets                      1,213         1,849  
                                             ______        ______
Current assets                                                     
Other current assets                            426           223  
Cash and cash equivalents                    30,911        40,007  
                                             ______        ______
Total current assets                         31,337        40,230  
                                             ______        ______
Total assets                                 32,550        42,079  
                                                                   
                                                                   
Shareholder equity                                                 
Share capital                                   674           674  
Share premium                                51,079        51,079  
Other reserve                                 1,800           795  
Retained deficit                            (26,712)      (12,644) 
                                             ______        ______
Total shareholders' equity                   26,841        39,904  
                                             ______        ______
Current liabilities                                                
Trade and other payables                      5,709         2,175  
                                             ______        ______
Total current liabilities                     5,709         2,175  
                                             ______        ______
Total liabilities                             5,709         2,175  
                                             ______        ______
                                                                   
Total equity and liabilities                 32,550        42,079  
                                                                   

 

Consolidated Statement of Cash Flows
for the year ended 31 December 2007

 
                                               2007          2006  
                                            EUR'000       EUR'000
(Loss) for the year                         (14,068)       (4,322) 
Adjustments to reconcile loss to net                               
cash used in operating activities:                               
Depreciation of property, plant &                
equipment                                        19            10
Amortisation of intangible assets                61            41  
Interest income                              (1,518)       (1,064) 
Interest expense                                  -            98  
Impairment of intangible assets                 738             -  
Corporation tax                                 179           137  
Share based payment                           1,005           771  
                                             ______        ______
Operating cash outflow before changes                              
in working capital                          (13,584)       (4,329) 
(Increase)/decrease in other current            
assets                                          (95)          (48)
Increase in trade and other payables          3,433         1,303  
                                             ______        ______
Cash absorbed by operations                 (10,246)       (3,074) 
Interest received                             1,410         1,005  
Tax paid                                        (78)            -  
                                             ______        ______
Net cash outflow from                                              
operating activities                         (8,914)       (2,069) 
                                             ______        ______
Cash flows from investing activities                               
Acquisition of intangible assets               (154)         (330) 
Purchases of property, plant and                
equipment                                       (28)          (47)
                                             ______        ______
Net cash used in investing activities          (182)         (377) 
                                             ______        ______
Cash flows from financing activities                               
Proceeds from issue of share capital              -        42,517  
Expenses in respect of the issue of               
share capital                                     -        (2,979)
                                             ______        ______
Net cash from financing activities                -        39,538  
                                             ______        ______
Net (decrease)/increase in cash and                                
cash equivalents                             (9,096)       37,092  
Cash and cash equivalents at the
beginning of the year                        40,007         2,915  
                                             ______        ______
Cash and cash equivalents at the                                   
end of the year                              30,911        40,007  
                                                                   

Notes to the consolidated preliminary financial information

1 Basis of preparation

This consolidated preliminary financial information is presented in euro rounded to the nearest thousand, being the functional currency of the company and its subsidiaries. It has been prepared on the historical cost basis of accounting, except for share based payments and financial instruments, which are stated at fair value.

The accounting policies have been applied consistently by all group companies.

This preliminary consolidated financial information does not constitute full statutory financial statements of the Group within the meaning of Regulation 40 of the European Communities (Companies: Group Accounts) Regulations, 1992, but is derived from those Financial Statements. Statutory Financial Statements for the year ended 31 December 2006 have been filed with Companies House. The auditor's report on those financial statements was unqualified. The Statutory Financial Statements for the year ended 31 December 2007 will be delivered to the Companies House following the Company's annual general meeting.

Going concern

The Company's main activity is research and development which to date has been funded through equity offerings. The Company is loss-making and will continue to be so into the future as it continues to invest in the clinical development of its products which will be managed and scheduled in line with available funds, and possible future funding from out-licensing and/or further equity funding.

On this basis the Directors have a reasonable expectation that AGI will continue in operational existence for the foreseeable future and have adopted the going concern basis in preparing these financial statements.

2 Statement of compliance

This preliminary consolidated financial information has been prepared in accordance with the International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) as adopted by the European Union (herein 'EU IFRS').

 
 
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