BIOTIE THERAPIES CORP. STOCK EXCHANGE RELEASE October 24, 2008 at
8.45 a.m.
INTERIM REPORT ON BIOTIE THERAPIES CORP. JANUARY 1 - SEPTEMBER 30,
2008
January - September 2008 in brief
- In January Lundbeck acquired the United Kingdom and Ireland rights
for nalmefene from Britannia Pharmaceuticals (now part of STADA
Group, headquartered in Germany). Following the new agreement
Lundbeck has worldwide rights for nalmefene, excluding North America,
Mexico, Turkey, and South-Korea.
- In June Biotie announced top-line data from the first-in-man
clinical study with its fully human VAP-1 monoclonal antibody. The
data from the study support proceeding to clinical studies with
repeated doses of the antibody.
- Top-line data have become available of the clinical trial with
nalmefene evaluating potential cardiac effects measured using an
electrocardiogram in 240 healthy volunteer subjects. The data from
the study indicate that use of nalmefene does not increase the risk
of adverse cardiac effects and that current regulatory requirements
for such studies are met.
- The net loss in January - September stood at EUR 3.8 million (net
income in 2007 EUR 0.6 million). Cash flow in January - September
from operating activities was EUR -7.9 million (EUR -4.1 million in
2007).
- Revenue for January - September stood at EUR 4.0 million (EUR 6.7
million in 2007) and earnings per share was EUR -0.04 (EUR 0.01 in
2007).
- The company's liquid assets amounted to EUR 21.0 million as at
September 30, 2008 (EUR 29.3 million as at September 30, 2007).
- After the reporting period Biotie announced today in a separate
stock exchange release that it has entered into an agreement with
elbion NV and elbion GmbH to acquire a pharmaceutical discovery and
development company elbion GmbH. The acquisition will be executed as
an exchange of shares transaction whereby Biotie will issue
46,802,967 new shares as a consideration for the total share capital
of elbion GmbH. As a result of the transaction, elbion GmbH will
become a fully owned subsidiary of Biotie. In connection with the
acquisition, certain shareholders of elbion NV have committed to
invest additional capital in aggregate 3.3 million euro into Biotie
by subscribing up to 7,305,733 new shares in Biotie. The transaction
is still subject to the approval by Biotie's and elbion NV's general
meetings and to obtaining certain regulatory approvals. The Board of
Directors of Biotie has today called an extraordinary general meeting
to resolve on the transaction and related matters for 14 November,
2008. Biotie shareholders representing some 49% of the total number
of outstanding Biotie shares have committed to vote in favour of the
contemplated transaction.
Q3/2008 in brief:
- Top-line data have become available of the clinical trial with
nalmefene evaluating potential cardiac effects measured using an
electrocardiogram in 240 healthy volunteer subjects. The data from
the study indicate that use of nalmefene does not increase the risk
of adverse cardiac effects and that current regulatory requirements
for such studies are met
- The net loss in July - September stood at EUR 0.5 million (net loss
in 2007 EUR 0.9 million). Cash flow in July - September from
operating activities was EUR -2.1 million (EUR -1.1 million in 2007).
- Revenue for July - September stood at EUR 0.8 million (EUR 1.5
million in 2007) and earnings per share was EUR -0.01 (EUR -0.01 in
2007).
General:
After the reporting period Biotie announced today in a separate stock
exchange release that it has entered into an agreement with elbion NV
and elbion GmbH on the acquisition of pharmaceutical discovery and
development company elbion GmbH, by means of an exchange of shares of
all of the issued and outstanding shares of elbion GmbH by elbion NV
against in the aggregate 46,802,967 new shares in Biotie. In
connection with the acquisition, certain shareholders of elbion NV
have committed to invest additional capital in the aggregate 3.3
million euro into Biotie against Biotie issuing 7,305,733 new shares.
The transaction is still subject to the approval by Biotie's and
elbion NV's general meetings and to obtaining certain regulatory
approvals. The Board of Directors of Biotie have today called an
extraordinary general meeting to resolve on the transaction and
related matters, such as on complementing the Board of Directors by
three additional members and authorizing the Board to put in place an
incentive program, for 14 November, 2008. More information on elbion
GmbH and of the transaction may be found from the separate stock
exchange release of 24 October 2008.
Biotie is a drug development company focusing on dependence
disorders, inflammatory diseases and thrombosis.
Drug development projects:
Nalmefene program
In January, Lundbeck acquired the United Kingdom and Ireland rights
for nalmefene from Britannia Pharmaceuticals (now part of STADA
Group, headquartered in Germany). Following the new agreement
Lundbeck has worldwide rights for nalmefene, excluding North America,
Mexico, Turkey, and South-Korea.
Biotie-Lundbeck license agreement terms were amended due to Lundbeck
acquiring the United Kingdom and Ireland rights. Under the terms of
the amended agreement, Biotie is now eligible for up to EUR 82
million in upfront and milestone payments (previously up to EUR 80
million) plus royalty on sales. Of the EUR 82 million, Biotie has
already received an execution fee of EUR 12 million from Lundbeck.
To maximise nalmefene's potential in the treatment of alcoholism
Biotie and Lundbeck have jointly decided to seek marketing
authorisation simultaneously in all 27 EU member states via the
centralized procedure. To this end, Lundbeck plans to further
strengthen the existing nalmefene registration dossier in its
alcoholism indication with additional phase III clinical studies
before submitting the marketing authorisation application. The
studies are expected to start in 2008. Biotie will participate in
financing some of the clinical development costs.
Subsequent to the Biotie clinical program for nalmefene in alcoholism
having been completed, there is currently a regulatory requirement
for an electrocardiogram (ECG) study. In October 2007 Biotie started
a clinical trial with nalmefene evaluating the potential cardiac
effects on healthy volunteers measured using an electrocardiogram.
The study enrolled 240 healthy volunteers and topline data became
available in September 2008. The data from the study indicate that
use of nalmefene does not increase the risk of adverse cardiac
effects and that current regulatory requirements for such studies are
met. The data will be included in the eventual registration dossier.
VAP-1 antibody program
Top-line data from the first-in-man study with Biotie's fully human
VAP-1 monoclonal antibody BTT-1023 were reported in June 2008. The
study was conducted in a clinical pharmacology unit in the United
Kingdom and investigated the safety, tolerability and pharmacokinetic
characteristics of single intravenous doses of BTT-1023 in healthy
volunteer subjects.
A total of 35 subjects, of whom 29 received BTT-1023, were enrolled
into the placebo-controlled study. BTT-1023 was generally well
tolerated and no serious adverse events were reported in the study.
The data from the study support proceeding to clinical studies with
repeated doses of the antibody. These studies are expected to be
carried out in rheumatoid arthritis and psoriasis patients and will
aim to establish appropriate dosing regimens for subsequent
therapeutic studies and provide initial information on the
therapeutic potential of BTT-1023. The studies are expected to start
in the end of 2008.
The Finnish Funding Agency for Technology and Innovation (Tekes) has
granted EUR 0.6 million additional funding for the VAP-1 antibody
program. The R&D funding granted covers costs of a planned clinical
PET-imaging study project from August 2008 to December 2009. The
funding granted is in the form of a loan and covers 70 per cent of
the costs of the study. The loan will be paid to Biotie against
reported realised costs. In order to receive the full amount of
granted financing, Biotie must show a total expenditure of EUR 0.8
million in the project.
In November 2006, Biotie and Roche signed an option agreement for
Biotie's fully human antibody program targeting Vascular Adhesion
Protein-1 (VAP-1) in inflammatory diseases.
Under the terms of the agreement, Roche has paid an option initiation
fee of EUR 5 million, which grants Roche an exclusive option right to
an exclusive, worldwide license agreement for Biotie's fully human
antibody targeting VAP-1, excluding Japan, Taiwan, Singapore, New
Zealand, and Australia. The initial option right will end upon
completion of Phase I. Roche may extend the option right to later
development points by paying additional fees. Biotie will retain all
rights to the program until a license is granted to Roche.
Inhibiting VAP-1 reduces inflammation by regulating the migration of
leukocytes, or white blood cells, to inflamed tissues. Pathological
accumulation of white blood cells in tissue is a common feature in
many autoimmune diseases, such as rheumatoid arthritis, ulcerative
colitis, and psoriasis.
Co-operation with Seikagaku Corporation proceeded as planned.
Pre-clinical programs
Pre-clinical programs (VAP-1 SSAO small molecule inhibitor program
and alfa2beta1 integrin inhibitor program) progressed as planned. In
the bioheparin program the company continued to look for a partner to
finance the future development of the program. To date, partnering
efforts have not been successful.
Revenues
Revenue for the reporting period 1.1.-30.9.2008 was EUR 4.0 million.
Revenue consisted of periodization of the signing fees of the
licensing agreements signed with Seikagaku Corporation in 2003 and
with Somaxon Pharmaceuticals in 2004, periodization of the option fee
of the option agreement signed with Roche in 2006 as well as
periodization of the execution fee of the licensing agreement signed
with Lundbeck that entered into force in May 2007. No new milestones
or signing fees were received during the reporting period.
Revenue for the reporting period January - September 2007 consists of
periodization of the signing fee of the licensing agreement signed
with Seikagaku Corporation in 2003, periodization of the signing fee
of the licensing agreement signed with Somaxon Pharmaceuticals in
2004, periodization of the option fee of the option agreement signed
with Roche in 2006 as well as periodization of the execution fee of
the licensing agreement signed with Lundbeck that entered into force
in May 2007. The revenue for the reporting period January -
September, 2007 was in total EUR 6.7 million. Payment of EUR 2,0
million was received from Lundbeck during the period.
Revenue for July - September 2008 amounted to EUR 0.8 million (EUR
1.5 million in 2007) consisting of periodizations described above.
Financial results
The net loss for the reporting period was EUR 3.8 million (net income
in 2007 EUR 0.6 million). Research and development costs for the
period amounted to EUR 6.3 million. The corresponding figure for the
previous year was EUR 5.8 million.
The net loss in July - September was EUR 0.5 million (net loss in
July - September 2007 EUR 0.9 million). Research and development
costs in the third quarter amounted to EUR 1.1 million (EUR 2.3
million in 2007)
Patent costs have been booked as expenses.
Financing
Biotie's equity ratio was -64.0 % on September 30, 2008 (-29.5 % in
2007). Cash and cash equivalents totaled EUR 21.0 million on
September 30, 2008 (EUR 29.3 million in 2007).
The company has invested its liquid assets into bank deposits during
the second quarter 2008. Funds are reported in "investments held to
maturity". Deposits with maturity less than 3 months are reported in
the "cash and cash equivalents". Previously the funds were invested
in money market funds.
In September 2008, The Finnish Funding Agency for Technology and
Innovation (Tekes) granted EUR 0.6 million additional funding for
Biotie Therapies' VAP-1 antibody program. The R&D funding granted
covers drug development costs of the project from August 2008 to
December 2009.
The funding granted is in the form of loan and it covers 70 per cent
of the costs of the project. The loan will be paid to Biotie against
reported realised costs. In order to receive the full amount of
granted financing, Biotie must show a total expenditure of EUR 0.8
million in the project.
Shareholder's equity
The shareholders' equity (FAS) of the company is less than half of
the company's share capital when capital loans are not included in
shareholders' equity. Company's share capital is EUR 19.9 million.
Shareholders' equity and capital loans add up to EUR 12.8 million.
Annual General Meeting was held on March 28, 2008 and considered
measures relating to the level of shareholder's equity. It was
resolved that no special measures are necessary at this point in
time.
Investments and cash flow
The cash flow from operations was EUR -7.9 million (in 2007 EUR -4.1
million). The company's investments during the reporting period
amounted to EUR 110 thousand (EUR 15 thousand in 2007).
The cash flow from operating activities in July - September was EUR
-2.1 million (EUR -1.1 million in 2007). Investments during the third
quarter amounted to EUR 1 thousand (EUR 5 thousand in 2007).
Personnel
During the reporting period, the company's personnel was on average
35 (35 in 2007, 38 in 2006) and at the end of the reporting period 34
(36 on September 30, 2007 and 36 on September 30, 2006).
The ten biggest shareholders of Biotie on September 30, 2008 Number of
shares %
Finnish Innovation Fund (Sitra) 14,585,350 16.30
Finnish Industry Investment Ltd 6,778,592 7.58
Juha Jouhki and his controlled companies 6,537,672 7.31
- Dreadnought Finance Oy (2,098,416)
- Jouhki Juha (1,501,356)
- Thominvest Oy (2,937,900)
Funds administered by BioFund Management Oy: 2,485,715 2.78
- BioFund Ventures III Ky (2,485,715)
Harri Markkula and his controlled company: 1,330,500 1.49
- Tilator Oy (369,700)
- Markkula Harri (960,800)
Oy H. Kuningas & Co AB 1,058,371 1.18
Oksanen Markku 690,000 0.77
Alfred Berg Small Cap Finland Fund 670,000 0.75
Funds administered by Aboa Venture Management Oy 344,618 0.39
- Aboa Venture Ky II (336,747)
- Karhu Pääomarahasto Ky (7,871)
Nacawi Ab 313,067 0.35
34,793,885 38.89
Nominee registered shares total 27,100,465 30.29
Other shareholders 27,568,510 30.82
Outstanding shares 89,462,860 100.00
The number of the company's own shares held by
Biotie Therapies 749,000*)
Total 90,211,860
*) The company has in its possession 819.000 of its own shares.
Relating to the company's option programs, the company has signed a
stock lending agreement with EVLI Bank in January, 2007. Pursuant to
this program, the number of the company's own shares in its
possession may be temporarily less than 819,000.
Short-term risks and uncertainties
Biotie's strategic risks are related to the technical success of the
drug development programs, regulatory issues, the strategic decisions
of its commercial partners, ability to obtain and maintain
intellectual property rights for its products, validity of its
patents, launch of competitive products and the development of the
sales of its products and availability of capital. For example, even
though the commercialisation and collaboration agreements on the
company's product development projects have been concluded, there can
be no assurance that the contracting partner will act in accordance
with the agreement, the authorities will approve the product under
development or the approved product will be commercialised. The
development and success of the company's products depends on third
parties.
The operational risks include dependency of key personnel, assets and
dependency on partners' decisions.
Future outlook
- Lundbeck is expected to start additional phase III studies with
nalmefene in its alcohol indication in 2008.
- Operating costs in 2008 have previously been estimated to be
somewhat higher than in 2007. As some clinical study costs have moved
forward the 2008 operating costs are expected to be approximately at
the same level as in 2007.
- Revenue in 2008 is estimated to be approximately EUR 5 to 6 million
and consists of periodization of already received payments based on
established revenue recognition principles. The company is not
expecting new milestone payments based on existing agreements in
2008.
IFRS and Accounting principles
The interim report does not comply with all requirements of IAS 34,
Interim Financial Reporting. Biotie has applied the same accounting
principles as in the closing of year 2007 except for the effect of
changes required by interpretations and amendments entered in force
in 2008. Interpretation (IFRIC 11, 'IFRS 2 Group and treasury share
transactions') and amendments (IAS 39 and IFRS 7 'Reclassification of
financial assets') have no material impact on the group's interim
financial statements.
In addition to new standards and interpretations presented in the
annual financial statements for 2007 the group will adopt in 2009 the
amended standard 'IAS 39 (amendment) Financial instruments:
Recognition and measurement - Eligible Hedged Items' as well as
interpretations IFRIC 15 'Agreements for the Construction of Real
Estate' and IFRIC 16 'Hedges of a Net Investment in a Foreign
Operation'. These amendments and interpretations are not expected to
have material impact on the group's financial statements.
This interim report is unaudited.
In Turku, October 24, 2008
Biotie Therapies Corp.
Board of Directors
For further information, please contact:
Timo Veromaa, President and CEO, Biotie Therapies Corp.
tel. +358 2 274 8901, e-mail: timo.veromaa@biotie.com
www.biotie.com
Distribution:
NASDAQ OMX Helsinki Ltd
Main Media
APPENDICES TO THE FINANCIAL STATEMENTS
Income statement
Balance sheet
Statement of changes in shareholders' equity
Cash flow statement
Key figures
FINANCIAL
STATEMENT
1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9.2008 30.9.2007 30.9.2008 30.9.2007 31.12.2007
EUR 1,000 3 months 3 months 9 months 9 months 12 months
Revenue 791 1,520 3,950 6,730 7,895
Research and -1,076 -2,263 -6,276 -5,812 -9,053
development
expenses
General and -302 -313 -1,201 -1,276 -1,655
administrative
expenses
Other operating 59 186 179 870 1,044
income
Operating -528 -871 -3,348 512 -1,769
profit/loss
Financial income 273 127 508 728 860
Financial expenses -245 -196 -962 -597 -817
Profit/loss before -500 -940 -3,802 643 -1,726
taxes
Taxes 0 0 0 0 0
Net income/loss -500 -940 -3,802 643 -1,726
Distribution
To parent -500 -940 -3,802 643 -1,726
company
Shareholders
Earnings per share -0.01 -0.01 -0.04 0.01 -0.02
(EPS)
basic &
diluted, EURBALANCE SHEET
EUR 1,000 30.9.2008 30.9.2007 31.12.2007
Assets
Non-current assets
Intangible assets 707 760 747
Property, plant and equipment 350 78 332
Financial assets at fair value 0 16,621 14,938
through
profit or loss
1,057 17,459 16,017
Current assets
Accounts receivables and other 1,181 840 753
receivables
Investments held to maturity 18,300 0
Financial assets at fair value through 0 12,000 13,000
profit or loss
Cash and cash equivalents 2,667 642 305
22,148 13,482 14,058
Total 23,205 30,941 30,075
Equity and liabilities
Shareholders' equity
Share capital 19,779 19,850 19,850
Reserve for invested unrestricted 980 980 980
equity
Retained earnings -31,808 -30,589 -30,220
Net income/loss -3,802 643 -1,726
Shareholders' equity total -14,852 -9,117 -11,117
Non-current liabilities
Provisions 0 15 14
Non-current financial liabilities 24,472 23,493 23,603
Other non-current liabilities 8,637 9,836 10,098
33,109 33,344 33,715
Current liabilities
Provisions 18 16 20
Current financial liabilities 143 11 104
Accounts payable and other current 4,787 6,687 7,353
debts
4,948 6,714 7,477
Liabilities total 38,057 40,058 41,192
Total 23,205 30,941 30,075
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Attributable to equity holders of the parent company
EUR 1,000 Shares Share Reserve Own Retained Share-
(1000 Capital For Shares Earnings holders'
pcs) invested equity
Un- total
restricted
equity
Balance at 89,531 19,850 0 -15 -30,641 -10,807
1.1.2007
Net income/loss 643 643
for the period
Options granted 68 68
Share subscription 450 841 841
with
Convertible
capital loans
Share subscription 231 139 139
with
Option rights
681 0 980 0 711 1,690
BALANCE AT 90,212 19,850 980 -15 -29,930 -9,117
30.9.2007
Net income/loss -2,369 -2,369
for the period
Options granted 369 369
0 0 0 0 -2,000 -2,000
BALANCE AT 90,212 19,850 980 -15 -31,930 -11,117
31.12.2007
Net income/loss -3,802 -3,802
for the period
Options granted 138 138
Expenses related -71 -71
to share issue
0 -71 0 0 -3,664 -3,735
BALANCE AT 90,212 19,779 980 -15 -35,594 -14,852
30.9.2008
CASH FLOW STATEMENT
1.1.- 1.1.- 1.1.-
30.9.2008 30.9.2007 31.12.2007
EUR 1,000 9 months 9 months 12 months
Cash flow from operating
Activities
Net income/loss -3,802 643 -1,726
Adjustments:
Non-cash transactions 238 140 443
Addition/disposal due to 0 -606 -644
revaluation
of financial assets at fair
value through profit or loss
Interest expenses and other 962 598 817
financial expenses
Interest income -508 -728 -216
Taxes 0 0 0
Change in working capital:
Change in accounts receivables and -44 -254 -190
other receivables
Change in accounts payable and -4,732 -3,951 -3,799
other liabilities
Change in mandatory provisions -15 12 10
Interests paid -5 -15 -40
Interests received 39 108 57
Taxes paid 0 0 0
Net cash from operating activities -7,867 -4,053 -5,288
Cash flow from investing
activities
Change in financial assets at
fair value through profit or loss
Additions 0 -3,000 -4,500
Disposals 27,685 2,952 5,280
Change in investments held to maturity
Additions -21,800 0 0
Disposals 3,598 0 0
Investments to tangible assets -28 -15 -23
Net cash used in investing 9,456 -63 757
activities
Cash flow from financing
activities
Payments from share issue 0 139 139
Expenses related to share issue -71 0 0
Proceeds from borrowings 888 786 874
Repayment of loans -40 -40 -40
Repayment of lease -4 -14 -23commitments
Net cash from financing 774 872 950
activities
Net increase (+) or decrease (-) 2,362 -3,244 -3,581
in cash and cash equivalents
Cash and cash equivalents in the 305 3,886 3,886
beginning of the period
Cash and cash equivalents in the 2,667 642 305
end of the period
KEY FIGURES
1.1.- 1.1.- 1.1.-
30.9.2008 30.9.2007 31.12.2007
EUR 1,000 9 months 9 months 12 months
Business
development
Revenues 3,950 6,730 7,895
Personnel on average 35 35 36
Personnel at the end of period 34 36 37
Research and development costs 6,276 5,812 9,053
Capital expenditure 110 15 287
Profitability
Operating profit/loss -3,348 512 -1,769
as percentage of revenues, % -84.8 7.6 -22.4
Profit/loss before taxes -3,802 643 -1,726
as percentage of revenues, % -96.3 9.5 -21.9
Balance sheet
Cash and cash equivalents 20,967 29,263 28,243
Shareholders equity -14,852 -9,117 -11,117
Balance sheet total 23,205 30,941 30,075
Financial ratios
Return on equity, % - - -
Return on capital employed, % -33.9 12.2 -7.2
Equity ratio, % -64.0 -29.5 -37.0
Gearing, % -24.6 63.2 40.8
Per share data
Earnings per share (EPS) basic & -0.04 0.01 -0.02
diluted, EUR
Shareholders'equity per share, EUR -0.17 -0.10 -0.12
Dividend per share, EUR
Pay-out ratio, %
Effective dividend yield, %
P/E-ratio
Share price
Lowest share price, EUR 0.47 0.83 0.75
Highest share price, EUR 0.94 1.22 1.22
Average share price, EUR 0.67 0.99 0.98
End of period share price, EUR 0.48 1.04 0.76
Market capitalization 43.3 93.8 68.6
at the end of period MEUR
Trading of shares
Number of shares traded 8,542,915 31,727,304 35,093,743
As percentage of all 9.5 35.2 38.9
Adjusted weighted average 90,211,860 89,831,492 90,003,192
Number of shares during the period
Adjusted number of shares 90,211,860 90,211,860 90,211,860
at the end of the period
Related party transactions
There have not been material changes within the related party
transactions in 2008.
Contingent liabilities
EUR 1,000 30.9.2008 30.9.2007 31.12.2007
Lease commitments 146 120 159
Rental commitments 570 689 651
Total 716 809 810
Formulas for the Calculation of the Financial Ratios
Return on capital employed, %
Profit (loss) before taxes + interest expenses and other financial
expenses
--------------------------------------------------------------- x 100
Balance sheet total - non-interest bearing liabilities
Equity ratio, %
Shareholders' equity
--------------------------------------------------------------- x 100
Balance sheet total - advanced received
Gearing, %
Interest bearing liabilities - cash and cash equivalents
-------------------------------------------------------------- x 100
Shareholders' equity
Earnings per share (EPS)
Profit before extraordinary items, appropriations and taxes -
minority interest - taxes
------------------------------------------------------------------
Adjusted average number of outstanding shares during the period
Shareholders' equity per share
Shareholders' equity
------------------------------------------------------------------
Adjusted average number of outstanding shares at the end of the
period
