The full version of the Annual Report 2012 for NeuroSearch is available in the enclosed PDF file.

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Announcement
08.02.2013


In 2012, the NeuroSearch Group (NEUR) realised an operating loss on continued operations of DKK 290 million (2011: DKK 383 million) which is in line with the company's previously announced guidance of a loss in the range of DKK 290 million. Of this DKK 386 million was a one-off cost without cash effect regarding the impairment of intangible assets and contingent payments to the sellers of Carlsson Research, DKK 121 million was revenue relating to the sale of the Huntexil^® project to Teva Pharmaceutical Industries Ltd. (Teva) and DKK 59 million was an income relating to a reversal of a write-down on land and building originally made in 2011 in connection with the sale of the company's land and building, which was announced on 4 February 2013.

The result of the discontinued operations was a profit of DKK 57 million (2011: a loss of DKK 329 million). In connection with the release of Annual Report 2011, provisions were made for loss-making contracts, including Lilly and Janssen, write-downs of property, plant and equipment and intangible assets, salaries to redundant employees during the notice period as well as expenses to the relating infrastructure. In connection with the wind-down of the discontinued operations, it has been possible to close down the related infrastructure more promptly than anticipated and the loss-making contracts have materialised more positively than originally expected.

The result for the year of continuing operations after tax was a loss of DKK 333 million (2011: DKK 349 million).

The group's result for the year was a loss of DKK 276 million (2011: DKK 678 million).

At the end of 2012, the capital resources consisting of cash and cash equivalents, including securities, was DKK 81 million (2011: DKK 221 million). In Q4 2012, an interest rate swap and the total debt related to financial leases were redeemed before time and an extraordinary repayment on the company's mortgage debts was made, amounting to DKK 49 million in total.

Future expected payments from Teva in connection with the sale of the Huntexil^® project amount to DKK 28.7 million which will be released upon satisfactory project transfer, however, not earlier than six months from 25 October 2012.

For a complete description of the financial year 2012, please see NeuroSearch Annual Report 2012, which is attached to this announcement and which will also be available at the company's website as of today.


Events in 2012 and until today: 

Huntexil^®

• On 27 September 2012, NeuroSearch signed a conditional asset transfer agreement with Teva regarding a transfer of the entire Huntexil^® project against a cash payment of DKK 149 million as well as the possibility for up to DKK 55.1 million in success based milestone payments. Please see announcement no. 21-12 for details.
• On 23 October 2012, the Teva agreement was unanimously adopted by the company's shareholders.
• In connection with the closing of the agreement, NeuroSearch received DKK 120.7 million in cash and at the same time Teva paid DKK 28.7 million into escrow, which will be released upon satisfactory transfer of the Huntexil^® project, however, not earlier than six months from 25 October 2012.
   

Changes in management

• On 1 July 2012, René Schneider was appointed to the position of CEO whilst retaining his responsibilities as CFO. Please see announcement no. 17-12 for details.
• At the Extraordinary General Meeting held on 4 January 2013, the company's Board of Directors was changed with the resignation of the then chairman Thomas Hofman-Bang as well as Ian Talmage and Anders Ullman. Attorney-at-law Christian Lundgren was elected to the Board and Allan Andersen was subsequently appointed as chairman of the Board. The Board of Directors now consists of three shareholder elected and two employee elected members.

Other events

• The last employees who had been given notice in connection with the restructuring that was announced in the autumn of 2011 resigned by the end of the autumn 2012. On 31 December 2012, the organisation included 26 employees.
• On 1 September 2012, the research agreement between Janssen Pharmaceutica NV and NeuroSearch was transferred to Aniona ApS. Concurrently, the clinical projects NSD-788 and NSD-721 as well as a number of preclinical projects were conditionally transferred to Aniona. Aniona is to pay royalties to NeuroSearch of future revenues from NSD-788/NSD-721, which will be stepped down over a number of years, as well as a modest one-off payment at the initiation of clinical trials with any of the other projects. Please see announcement no. 20-12 for details.
• On 4 February 2013, NeuroSearch released information regarding the sale of the company's land and building which will be handed over on 1 June 2013. The purchase price is DKK 112.5 million from which costs relating to the sales are to be deducted. NeuroSearch will pay off the remaining mortgage debts with revenues from the sale and hereafter the net proceeds will be approx. DKK 8 million.
   

Outlook for 2013

In 2013, NeuroSearch expects an operating loss of approximately DKK 15 million on the assumption of release of the escrow amount of DKK 28.7 million by Teva upon satisfactory transfer of the Huntexil^® project and an unchanged size of the organisation throughout 2013. The expectations do not take into account any loss or profit arising out of a potential sale of the remaining NeuroSearch assets.

In parallel with the transfer of Huntexil^® to Teva, the Board of Directors and the Executive Management are evaluating the possibilities to maximise the value of the remaining assets which consist of several clinical projects, investments in associates, laboratory and office equipment and a tax asset. A solvent liquidation of the company is also being evaluated.

NeuroSearch will provide an update no later than 20 March 2013 when the Annual General Meeting is being conducted.

CEO of NeuroSearch René Schneider comments as follows in connection with the company's annual report:
"Again in 2012, NeuroSearch has had a year with big changes. We had hoped to be able continue the development of Huntexil^® in-house, but as this was unfortunately not possible we appreciate having sold the project to Teva. NeuroSearch is committed to transferring the project in the most diligent way and is in parallel evaluating the possibilities to maximise the value of the remaining assets."

René Schneider
CEO


Contact person
René Schneider, CEO, telephone: +45 4460 8700 or +45 2911 2097


Telephone conference
NeuroSearch will host a telephone conference today at 9.30 am Copenhagen time (8.30 am London time, 3.30 am New York time) during which CEO René Schneider will present the Annual Report 2012.

The telephone conference will be conducted in English and the dial-in numbers are:

UK:                +44 (0) 844 571 8957
US:                +1 866 682 8490
Denmark:      +45 32 72 80 18

Listening to the telephone conference is also possible via the company's website, www.neurosearch.com, where also the corresponding presentation will be available at the time of the telephone conference.


About NeuroSearch
NeuroSearch A/S (NEUR) is listed on NASDAQ OMX Copenhagen A/S. The company’s product pipeline comprises ordopidine and seridopidine, which have both completed phase I studies, as well as tesofensine, which has completed phase II, and NS2359 which has completed phase I. All drug candidates exert their effect in the central nervous system.

APPENDIX

Financial highlights for the NeuroSearch Group*
 

*     Only the comparative figures for 2010 and 2011 have been restated to reflect the continuing operation. It has not been possible to make the same split between continuing and discontinued operations for years prior to 2010 as the company has only had more than one organisational segment since 2011.

**    In connection with the agreement with Teva, DKK 28.7 million were placed in escrow which will be released no earlier than six months from 25 October 2012. The escrow is not included in cash and cash equivalents and securities.

***  The ratios are stated in accordance with the guidelines in “Recommendations and Ratios” issued by the Danish Society of Financial Analysts.