Below please find the first part of the H1 2012 report for NeuroSearch A/S. The full text is available in the enclosed PDF document.
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Announcement
30.08.2012
Today, the Board of Directors of NeuroSearch A/S (NEUR) considered and adopted the company's interim report for the period 1 January to 30 June 2012.
The operating result of continuing operations was a loss of DKK 430 million (a loss of DKK 63 million in the same period 2011). The result of continuing operations after tax was a loss of DKK 466 million (a loss of DKK 68 million in the same period 2011). The operating result is affected by a one-off cost without cash effect of DKK 386 million relating to impairment of intangible assets. The operating loss was DKK 44 million with adjustment for the impairment.
In announcement no. 09-12 of 10 April 2012, NeuroSearch informed the market of the need for a prompt clarification regarding the financing of the continued development of Huntexil® and company's operations. NeuroSearch also informed the market that NeuroSearch would offer the global rights for Huntexil® and investigate the possibility for a capital increase.
As NeuroSearch so far has neither found a partner nor a buyer for Huntexil® nor obtained sufficient prior interest with investors to complete a capital increase, the Board of Directors cannot guarantee financing of the continued development of Huntexil® leading to realisation of the value related to the project. The carrying amount has therefore been impaired. As a consequence of the impairment of Huntexil®, the contingent payments to the sellers of Carlsson Research have also been written off. NeuroSearch is still working intensively on having the project taken further and is in dialogue with a selected number of companies.
Financial items amounted to a net cost of DKK 31 million (a net cost of 5 million in the same period 2011).
Discontinued operations
The result of the period relating to discontinued operations was an income of DKK 52 million (a loss of DKK 80 million in the same period 2012). In connection with the 2011 Annual Report, a provision was made for loss-making contracts, including Lilly and Janssen, write-off of tangible and intangible assets, salaries for employees under notice during the notice period and related infrastructure. In connection with the wind down of the discontinued operations, it has been possible to close down the related infrastructure more promptly than expected and the loss-making contracts have materialised more positively than according to budget.
Liquidity and capital resources
The company's cash and cash equivalents including securities amounted to DKK 88 million as of 30 June 2012. The securities mainly consist of highly liquid short term bonds. In addition, a payment of DKK 10 million remains from the collaboration partner Janssen, which was received in July 2012, and contingent proceeds from the sale of Sophion Bioscience A/S of DKK 9 million which fall due in December 2012.
Loss of capital
As of 30 June 2012, NeuroSearch has lost more than half of the share capital and consequently the Board of Directors are obliged to convene a general meeting within six months. In this connection, the Board must clarify the company's financial situation and, if required, make proposals for relevant actions. The Board is awaiting the result of the financing efforts relating to Huntexil® as described below but follows the situation closely and will take the necessary steps in the given situation.
CEO René Schneider comments as follows in connection with the release of the interim report for H1 2012:
"When we changed our strategy in the spring from offering the ex-European rights for Huntexil® to offering the global rights for Huntexil®, we saw an enhanced interest for the project, but we are still in a difficult situation as our discussions with potential partners have still not led to an agreement. On that basis, we now impair the carrying amount of Huntexil® even though we intensively continue our efforts to secure the further development of the
project."
Financial expectations for 2012
For the full year 2012, NeuroSearch lowers the company's expectations to an operating loss of approx. DKK 465 million from the previously announced expected loss of approx. DKK 75 million. The readjustment is exclusively related to the impairment of Huntexil® and has no cash effect.
René Schneider
CEO
Contact person
René Schneider, CEO, telephone: +45 4460 8700 or +45 2911 2097
Teleconference
NeuroSearch will host a teleconference today at 9.30 am during which CEO René Schneider will present the H1 2012 report in English. The teleconference can be accessed via the following numbers:
Denmark: +45 3271 4767
UK: +44 207 509 5139
US: +1 718 354 1226
Listening to the teleconference is also possible via the company’s website along with the accompanying presentation. After the teleconference, the presentation will be available at the company's website.
About NeuroSearch
NeuroSearch is a European-based biopharmaceutical company specialising in CNS diseases. The company is listed on NASDAQ OMX Copenhagen A/S. The company’s product pipeline comprises Huntexil® for the treatment of motor symptoms in patients with Huntington's disease and ordopidine and seridopidine, which have both completed phase I studies. Huntexil® is currently in Phase III development. NeuroSearch is seeking a global partner for the final development and marketing of Huntexil®, which is currently in phase III development. The company also has a portfolio of assets for outlicensing or divestment.
