BIOTIE THERAPIES CORP. STOCK EXCHANGE RELEASE April 25, 2008 at
9.00 a.m.
INTERIM REPORT ON BIOTIE THERAPIES CORP. JANUARY 1 - MARCH 31, 2008
January - March 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 January The Finnish Funding Agency for Technology and Innovation
(Tekes) granted EUR 1.7 million additional debt funding for Biotie's
integrin alpha2beta1 inhibitor program for thrombosis.
- The Annual General Meeting of Biotie was held on March 28, 2008.
- The net loss in January - March stood at EUR 2.0 million (in 2007
EUR 1.1 million). Cash flow from operating activities was EUR -3.3
million (EUR -2.6 million in 2007).
- The company's liquid assets amounted to EUR 24.6 million as at
March 31, 2008 (EUR 29.4 million as at March 31, 2007).
General:
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 is expected to enroll 240 healthy volunteers and to be
completed in 2008 and included in the eventual registration dossier.
VAP-1 antibody program
The first phase I clinical trial with Biotie's fully human VAP-1
monoclonal antibody is ongoing.
This first-in-man study evaluates the safety, tolerability, and
pharmacokinetics of intravenously administered antibody in healthy
volunteers. Results are expected during the second quarter of 2008.
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 1.1-31.3.2008 was EUR 1.3 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 period 1.1-31.3.2007 consisted of periodization of
the signing of the licensing agreement signed with Seikagaku
Corporation in 2003 and periodization of the signing fee of the
licensing agreement in nalmefene project signed with Somaxon
Pharmaceuticals in 2004 and periodization of the option fee of the
option agreement signed with Roche in 2006. The revenue was in total
EUR 0.6 million. No new milestone or signing fees were received
during the period.
Financial results
The net loss for the reporting period was EUR 2.0 million. The
corresponding figure for the previous year was EUR 1.1 million.
Research and development costs for the period amounted to EUR 2.4
million (in 2007 EUR 1.5 million). Patent costs have been booked as
expenses.
Financing
Biotie's equity ratio was -48.8 % on March 31, 2008 (-56.6 % in
2007). Cash and cash equivalents totaled EUR 24.6 million on March
31, 2008 (EUR 29.4 million in 2007). Financial expenses amounted to
EUR 0.7 million (EUR 0.2 million in 2006) mainly due to recognition
of financial assets at fair value.
In January 2008, The Finnish Funding Agency for Technology and
Innovation (Tekes) granted EUR 1.7 million additional funding for
Biotie Therapies' integrin alpha2beta1 inhibitor program for
thrombosis. The R&D funding granted covers drug development costs of
the project from July 2007 to December 2009.
The funding granted is in the form of loan and it covers 50 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 3.4
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. Shareholders' equity and capital loans add up
to EUR 15.2 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 -3.3 million (in 2007 EUR -2.6
million The company's investments during the reporting period
amounted to EUR 17 thousand (EUR 7 thousand in 2007).
Personnel
During the reporting period, the company's personnel was on average
35 (36 in 2007, 41 in 2006) and at the end of the reporting period 35
(36 on March 31, 2007 and 37 on March 31, 2006).
Decisions taken at Biotie's Annual General Meeting
The Annual General Meeting of Biotie Therapies Corp. was held on
March 28, 2008.
The General Meeting of Shareholders adopted the income statement and
balance sheet and the consolidated income statement and balance sheet
for the financial year 1 January, 2007 - 31 December, 2007. The
General Meeting of Shareholders resolved pursuant to the proposal of
the Board of Directors that the loss of the financial year, EUR
1,624,388.72 shall be transferred to the company's equity.
The General Meeting of Shareholders discharged the members of the
Board of Directors and the President and CEO from liability
concerning the financial year from 1 January - 31 December 2007.
The Board of Directors and Auditors
The number of the members of the Board of Directors was resolved to
be five. Juha Jouhki, Pauli Marttila, Riku Rautsola and Piet Serrure
were re-elected as the members of the Board of Directors and Mr.
Krish Krishnan was appointed as a new Board member.
Janne Rajalahti, Authorized Public Accountant, and
PricewaterhouseCoopers Oy, Authorized Public Accountants, were
elected as auditors of Biotie Therapies Corp.
At the organization meeting of the new Board of Directors, which
convened immediately after the Annual General Meeting, Juha Jouhki
was elected as the Chairman of the Board of Directors and Pauli
Marttila as the deputy chairman.
Authorisation of the Board of Directors to resolve on a share issue
and granting of option and other specific rights entitling to the
shares
The Annual General Meeting authorized the Board of Directors to
resolve on one or more share issues, which contains the right to
issue new shares or dispose of the shares in the possession of the
company and to issue options or other specific rights to the shares
pursuant to chapter 10 of the Finnish Companies Act. The
authorisation consists of up to 18,000,000 shares in the aggregate. A
maximum of 819,000 own shares in the possession of the company may be
conveyed.
The authorisation does not exclude the Board of Directors' right to
decide on a directed share issue. The authorisation is used for
possible material arrangements from the company's point of view, such
as financing or implementing business arrangements or investments or
for other such purposes determined by the Board in which case a
weighty financial reason for issuing shares, options or other
specific rights and possibly directing a share issue would exist.
However, the authorisation could not be used to create new
share-based incentive schemes. The authorisation shall be effective
until 30 June 2009.
The Board of Directors was authorised to decide on all other terms
and conditions of the issuance of shares, options and other specific
share entitlements as referred to in chapter 10, section 1 of the
Finnish Companies Act, including the payment period, determination
grounds for the subscription price and subscription price or
allocation of shares, stock options or specific rights free of charge
or that the subscription price may be paid besides in cash also by
other assets either partially or entirely.
Issuance of new stock options
The Annual General Meeting decided to issue up to 3,000,000 stock
options in the aggregate which would entitle to subscribe for up to
3,000,000 new shares in the company.
The stock options shall be given free of charge to the company's key
personnel and Biotie Therapies International Oy, which is the
company's wholly owned subsidiary. The Board of Directors will send a
written notification of the issuance of the stock options to those
being entitled to the stock options. The stock options will be
delivered to the recipient when the recipient has accepted the Board
of Directors' offer.
1,000,000 of the stock options shall be marked with the symbol 2008A,
1,000,000 with the symbol 2008B and 1,000,000 with the symbol 2008C.
Each stock option entitles to subscribe for one (1) new share in the
company.
The subscription period for the shares:
1 January 2009 to 31 December 2013 for the 2008A stock option
1 January 2010 to 31 December 2013 for the 2008B stock option
1 January 2011 to 31 December 2013 for the 2008C stock option
The subscription price of a share is the volume-weighted average
trading price of the company's share on the Helsinki Stock Exchange
during the period between 1 March 2008 and 30 March 2008 with an
increase as follows:
- increase of 10% for A stock option
- increase of 20% for B stock option and
- increase of 30% for C stock option.
The subscription price of the shares determined this way is based on
the market price of the company's share while at the same time
setting an incentive for the key personnel in order to add ownership
value.
The shares shall be paid to the bank account announced by the company
upon subscription. The subscription price of the shares shall be
entered into the invested non-restricted equity fund.
The company has a weighty financial reason for the issuance of stock
options because the stock options are intended to form a part of the
company's incentive and commitment program for the company's key
personnel.
More detailed terms of the issuance of the stock options are
presented in the proposal of the Board of Directors which has been
published as stock exchange release on 29 February 2008.
The ten biggest shareholders of Biotie on March 31, 2008
Number of
shares %
Pequot group: 21,869,624 24.45
- Pequot Healthcare Fund, L.P.
(7,765,345)
- Pequot Healthcare Offshore Fund, Inc.
(5,937,983)
- Premium Series PCC Limited (998 490)
- Pequot Diversified Master Fund Ltd.
(1,201,800)
- Pequot Healthcare Institutional Fund, L.P
(1 521 406)
- Pequot Healthcare Emerging Markets Fund, Ltd.
(4,444,600)
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: 2,519,775 2.82
- BioFund Ventures III Ky (2,485,715)
- BioFund Ventures I Ky (34,060)
Harri Markkula and his controlled company: 1,301,545 1.45
- Tilator Oy (654,000)
- Markkula Harri (647,545)
Oy H. Kuningas & Co AB 1,058,371 1,18
Oksanen Markku 575,000 0.64
Siven Pertti 350,000 0.39
Funds administered by Aboa Venture Management Oy: 344,618 0.39
- Aboa Venture Ky II (336,747)
- Karhu Pääomarahasto Ky (7,871)
55,920,547 62.51
Nominee registered shares total 7,648,967 8.55
Other shareholders 25,893,346 28.94
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.
On 24 January, 2008 Biotie gained knowledge of the following change
in holdings under Chapter 2, Section 9 of the Finnish Securities
Market Act:
Pequot Healthcare Emerging Markets Master Fund has decreased its
holding from 5,01 % to 4,99 % of the voting rights and share capital
in the Company, calculated on the basis of the number of shares
registered in the Finnish Trade Register on 30 April 2007.
Risks and Risk Management
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. 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
- Results from the first phase I clinical trial with Biotie's VAP-1
fully human monoclonal antibody are expected during the second
quarter of 2008.
- Lundbeck is expected to start additional phase III studies with
nalmefene in its alcohol indication in 2008.
- Due to Biotie having two programs in the clinical development phase
the operating costs are expected to increase to a somewhat higher
level for 2008 than 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.
This interim report is unaudited.
In Turku, April 25, 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:
OMX Nordic Exchange Helsinki
Main Media
APPENDICES TO THE FINANCIAL STATEMENTS
Income statement
Balance sheet
Statement of changes in shareholders' equity
Cash flow statement
Key figures
FINANCIAL STATEMENT
1.1.- 1.1.- 1.1.-
31.3.2008 31.3.2007 31.12.2007
EUR 1,000 3 months 3 months 12 months
Revenue 1,321 605 7,895
Research and -2,403 -1,475 -9,053
development expenses
General and -475 -597 -1,655
administrative
Expenses
Other operating income 59 258 1,044
Operating profit/loss -1,498 -1,209 -1,769
Financial income 214 302 860
Financial expenses -736 -211 -817
Profit/loss before taxes -2,020 -1,119 -1,726
Taxes 0 0 0
Net income/loss -2,020 -1,119 -1,726
Distribution
To parent company -2,020 -1,119 -1,726
Shareholders
Earnings per share (EPS) basic & -0.02 -0.01 -0.02
diluted, EUR
BALANCE SHEET
EUR 1,000 31.3.2008 31.3.2007 31.12.2007
Assets
Non-current assets
Intangible assets 733 787 747
Property, plant and equipment 313 96 332
Financial assets at fair value through 11,240 20,000 14,938
profit or loss
12,286 20,883 16,017
Current assets
Accounts receivables and other 1,128 713 753
receivables
Financial assets at fair value through 13,000 9,168 13,000
profit or loss
Cash and cash equivalents 377 274 305
14,505 10,155 14,058
Total 26,791 31,038 30,075
Equity and liabilities
Shareholders' equity
Share capital 19,850 19,850 19,850
Reserve for invested unrestricted 980 980
equity
Retained earnings -31,884 -30,638 -30,220
Net income/loss -2,020 -1,119 -1,726
Shareholders' equity total -13,075 -11,907 -11,117
Long-term liabilities
Provisions 8 23 14
Non-current financial liabilities 23,614 23,508 23,603
Other non-current liabilities 9,796 6,310 10,098
33,418 29,840 33,715
Current liabilities
Provisions 20 16 20
Current financial liabilities 124 18 104
Accounts payable and other current 6,304 13,071 7,353
debts
6,448 13,105 7,477
Liabilities total 39,866 42,945 41,192
Total 26,791 31,038 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 -1,119 -1,119
for the period
Options granted 19 19
0 0 0 0 -1,100 -1,100
BALANCE AT 89,531 19,850 0 -15 -31,741 -11,907
31.3.2007
Net income/loss -607 -607
for the period
Options granted 418 418
Share subscription 450 841 841
with
Convertible
capital loans
Share subscription 231 139 139
with
option rights
681 0 980 0 -189 791
BALANCE AT 90,212 19,850 980 -15 -31,930 -11,117
31.12.2007
Net income/loss -2,020 -2,020
for the period
Options granted 62 62
0 0 0 0 -1,958 -1,958
BALANCE AT 90,212 19,850 980 -15 -33,888 -13,075
31.3.2008
CASH FLOW STATEMENT
1.1.- 1.1.- 1.1.-
31.3.2008 31.3.2007 31.12.2007
EUR 1,000 3 months 3 months 12 months
Cash flow from operating
Activities
Net income/loss -2,020 -1,119 -1,726
Adjustments:
Non-cash transactions 145 52 443
Addition/disposal due to 497 -257 -644
revaluation
of financial assets at fair
value through profit or loss
Interest expenses and other 238 211 817
financial expenses
Interest income -214 -302 -216
Taxes 0 0 0
Change in working capital:
Change in accounts receivables and -370 -153 -190
other receivables
Change in accounts payable and -1,574 -1,072 -3,799
other liabilities
Change in mandatory provisions -5 4 10
Interests paid -2 -5 -40
Interests received 16 45 57
Taxes paid 0 0 0
Net cash from operating activities -3,288 -2,595 -5,288
Cash flow from investing
activities
Change in financial assets at
fair value through profit or loss
Additions 0 -2,000 -4,500
Disposals 3,401 1,000 5,280
Investments to tangible assets -17 -7 -23
Net cash used in investing 3,384 -1,007 757
activities
Cash flow from financing
activities
Payments from share issue 0 0 139
Proceeds from borrowings 0 0 874
Repayment of loans 0 -40
Repayment of lease -24 -10 -23
commitments
Net cash from financing -24 -10 950
activities
Net increase (+) or decrease (-) 72 -3,611 -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 377 274 305
end of the period
KEY FIGURES
1.1.- 1.1.- 1.1.-
31.3.2008 31.3.2007 31.12.2007
EUR 1,000 3 months 3 months 12 months
Business
development
Revenues 1,321 605 7,895
Personnel on average 35 36 36
Personnel at the end of period 35 36 37
Research and development costs 2,403 1,475 9,053
Capital expenditure 17 7 287
Profitability
Operating profit/loss -1,498 -1,209 -1,769
as percentage of revenues, % -113.4 -198.9 -22.4
Profit/loss before taxes -2,020 -1,119 -1,726
as percentage of revenues, % -152.9 -185.0 -21.9
Balance sheet
Cash and cash equivalents 24,617 29,442 28,243
Shareholders equity -13,075 -11,907 -11,117
Balance sheet total 26,791 31,038 30,075
Financial ratios
Return on equity, % - - -
Return on capital employed, % -44.2 -29.8 -7.2
Equity ratio, % -48.8 -56.6 -37.0
Gearing, % 6.7 49.7 40.8
Per share data
Earnings per share (EPS) basic & -0.02 -0.01 -0.02
diluted, EUR
Shareholders'equity per share, EUR -0.15 -0.13 -0.12
Dividend per share, EUR
Pay-out ratio, %
Effective dividend yield, %
P/E-ratio
Share price
Lowest share price, EUR 0.74 0.85 0.75
Highest share price, EUR 0.94 1.18 1.22
Average share price, EUR 0.81 1.01 0.98
End of period share price, EUR 0.82 0.89 0.76
Market capitalization 74.0 79.7 68.6
at the end of period MEUR
Trading of shares
Number of shares traded 1,939,651 14,390,615 35,093,743
As percentage of all 2.2 16.1 38.9
Adjusted weighted average 90,211,860 89,530,660 90,003,192
number of shares during the period
Adjusted number of shares 90,211,860 89,530,660 90,211,860
at the end of the period
Contingent liabilities
EUR 1,000 31.3.2008 31.3.2007 31.12.2007
Lease commitments 142 104 159
Formulas for the Calculation of the Financial Ratios
Return on equity, %
Profit (loss) before extraordinary items - taxes
--------------------------------------------------------------- x 100
Shareholders' equity
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
