Pharmexa A/S Annual Report 2002


HORSHOLM, Denmark, March 5, 2003 (PRIMEZONE) -- The Board of Directors of Pharmexa A/S (Other OTC:PMXAY) has approved the audited financial statements for the financial year 2002.

The Pharmexa Group reported a loss for the financial year 2002 of kDKK 137,870 which was as expected. Research and development costs for the Group were kDKK 158,469. Net revenue was kDKK 30,061.

For 2003, Pharmexa A/S expects decreasing research costs relative to 2002, while development costs are expected to increase as a result of the company's two breast cancer products entering phase I/II and phase II clinical trials, respectively. Overall, Pharmexa A/S' research and development costs are therefore expected to increase to approximately DKK 143 million, up from DKK 137 million in 2002. Research and development costs may vary, depending on the outcome of the company's ongoing outlicensing activities, as the license partner will often take over some or all of the costs associated with a development project.

Pharmexa A/S' administrative expenses are expected to be in line with 2002. Net revenues are expected to be at least in line with 2002 but may turn out to be higher, depending on the outcome of the company's ongoing outlicensing activities.

Against this background, Pharmexa A/S expects a loss before net financials of approximately DKK 110 million. However, this result depends on the company's financial position and on the success of the ongoing outlicensing activities.

At year-end 2002 the Pharmexa Group had marketable securities, cash and cash equivalents of kDKK 174,824. Assuming no further cash contributions, the company expects the present capital resources to be sufficient to cover operations into Q2, 2004.

Position at the balance sheet date, summary:

- Pharmexa's patented AutoVac(TM) technology is now "fully developed", and the company's strategic focus has shifted from research to development of new drugs

- Concurrently with these activities, Pharmexa has developed a professional and efficient organisation, which is capable of applying optimum productivity and quality in bringing new potential products forward to show the desired effect in man and thereafter to transfer the products to partners, in order to obtain final approval within 8-11 years, matching the top targets in the industry

- Pharmexa's in-house development efforts focus on products within its core areas: Cancer and chronic inflammatory diseases

- Promising results from phase I/II trials with the HER-2DNA AutoVac(TM) product against breast cancer were achieved in 2002. The product is well tolerated. It is able to induce a so-called killer cell attack against cancer cells, and there are several indications that it can reduce the extent of tumor growth even in advanced-stage patients. A more extensive phase II trial will be initiated in 2003, and is expected completed in 2005

- The agreement with H. Lundbeck, covering the developmentof a new groundbreaking drug against Alzheimer's disease, made important progress during the year

After the end of the financial year

- Pharmexa has adjusted its organisation to the financial realities prevailing in today's capital markets. This adjustment will reduce the headcount by 30%, and focus is now on the three products that have reached the most advanced development stage and are expected to first generate substantial income

- Pharmexa has agreed with Dansk Erhvervsinvestering and LD Pensions to close down the activities of Pharmexa's 83.33% owned subsidiary Inoxell. A solvent winding up is expected

The printed Annual Report is expected available on the company's homepage from mid March.

Annual General Assembly

Pharmexa A/S will hold its annual general meeting on April 7, 2003, 15.30 at the Company's domicile on Kogle Alle 6, DK-2970 Horsholm. At the AGM, the Board of Directors expects to propose a new warrant programme to the company's employees, board members and management.

Horsholm, March 5, 2003

Soren Mouritsen, Chief Executive Officer

Additional information: Soren Mouritsen, chief executive officer, telephone +45 4516 2525; or Jakob Schmidt, chief financial officer, telephone +45 4516 2525

Summary financial figures for the Group

                    2002        2001        2000        1999        1998
                    kDKK        kDKK        kDKK        kDKK        kDKK
Net revenues      30,061      19,913      13,101       1,576       2,240
Research costs    91,706      76,419      50,546      37,362      28,624
costs             66,763      26,169       9,611           0           0
expenses          20,434      19,193       7,335       3,283       3,242
profit/(loss)   -148,842    -101,868     -54,391     -39,069     -30,061
before net
financials      -148,899    -102,045     -55,099     -39,069     -30,061
on net
income             7,909      14,890      14,429        -672       1,992
income/(loss)   -137,870     -86,192     -40,670     -39,741     -28,069

Balance sheet
assets             3,438       3,623           0           0           0
Tangible fixed
assets            36,328      26,052      19,762      17,827      17,283
securities       136,183           0           0      11,697      30,659
Cash and cash
equivalents       38,641     309,313     390,036      24,775       5,357
Total assets     220,455     350,393     413,385      56,383      56,151

Equity           144,694     282,264     368,442      32,641      40,736
interest          10,900      14,020           0           0           0
liabilities       35,545      25,964      24,152      18,291      11,799
liabilities       29,316      28,145      20,791       5,451       3,616

Depreciations     10,304       7,315       4,083       3,152       1,978

Cash flows
activities      -125,989     -78,316     -20,644     -33,627     -24,940
activities1     -156,286     -17,403       5,143      16,033      18,686
invested in
tangible fixed
assets and
assets           -20,223     -17,403      -6,726      -3,694     -12,331
activities        11,603      14,996     380,762      37,012      11,288
Change for the
year in cash
and cash
equivalents1    -270,672     -80,723     365,261      19,418       5,034

Average number
of employees         143         120          65          49          39

Earnings per
share of nom.
per share)         -33,7       -21,0       -11,9       -16,6       -12,4
Equity ratio         66%         81%         89%         58%         73%
Average number
of shares      4.098.644   4,095,813   3,428,213   2,398,380   2,263,840

1) The increase herein is caused by investment in marketable securities in connection with a change in the company's portfolio management approach at year-end 2002 of kDKK 136,036.

The ratios have been prepared in accordance with the recommendations and guidelines issued by Danish Society of Financial Analysts (Den Danske Finansanalytikerforening).

Summary comments on the financial statements

Net revenue in the Pharmexa Group amounted to kDKK 30,061 in 2002 compared with kDKK 19,913 in 2001, equivalent to a 51% increase. Revenue consisted primarily of research funding provided under the collaborative agreements with AstraZeneca, H. Lundbeck and Lexigen/Merck KGaA.

Research costs increased by 20% to kDKK 91,706 in 2002 from kDKK 76,419 in 2001. This amount included research costs of kDKK 21,304 in Inoxell. Development costs increased 155% to kDKK 66,763 from kDKK 26,169 in 2001. Inoxell incurred no development costs. Administrative expenses increased by 6% to kDKK 20,434 in 2002 from kDKK 19,193 in 2001. This amount includes administrative expenses of kDKK 3,236 in Inoxell.

The Pharmexa Group has increasing research and development costs. Development costs in Pharmexa A/S have witnessed a particular increase caused by the company's HER-2 DNA, HER-2 Protein and TNF-alpha programmes, which have progressed into the clinical or preclinical phase.

Net financial items declined to kDKK 7,909 in 2002 from kDKK 14,890 in 2001. Financial expenses consisted primarily of interest on a loan granted by the Business Development Finance (VaekstFonden), whereas the Pharmexa Group realised interest income of kDKK 10,773 primarily on the cash position.

The Group reported a net loss of kDKK 137,870 in 2002 compared with a net loss of kDKK 86,192 in 2001, equivalent to a 60% increase. The minority share of Inoxell amounts to kDKK 3,120. The result was in line with expectations.

As at December 31, 2002, total assets of the Pharmexa Group amounted to kDKK 220,455 with marketable securities and cash and cash equivalents of kDKK 174,824.

In 2002, the Pharmexa Group employed on average 143 persons compared with 120 in 2001. About 85% of these employees are engaged in research and development. As a result of Pharmexa's organisational adjustment after the balance sheet date, the company has laid off 30 employees, and together with a number of other HR measures, this adjustment represents a staff reduction of approximately 30%. Following this adjustment, Pharmexa expects to employ approximately 87 people.

Follow-up on previous guidance

For the 2002 financial year, Pharmexa expected research and development costs of approximately DKK 130 million in Pharmexa A/S, i.e. the parent company exclusive of Inoxell. The company realised R&D costs of approximately DKK 137 million - a deviation of just below 6%.

The Expectation to the net result in Pharmexa A/S, exclusive of an anticipated loss in the subsidiary Inoxell, was a net loss of about DKK 115 million. The company realised a net loss of DKK 122 million - a deviation of 6%.

Moreover, Pharmexa had projected negative results in its subsidiary Inoxell. In line with forecasts, the loss for the 2002 financial year amounted to DKK 15.6 million.

In 2002, Pharmexa A/S generated net revenues of approximately DKK 25 million, which was also in line with the company's expectations.

The full version of this release, including financial tables, can be found at the following link: