Probiodrug reports full year 2016 financial results

Probiodrug reports full year 2016 financial results
  
SAPHIR, the Phase 2a study of PQ912 as a novel treatment for Alzheimer's disease fully enrolled
Favourable results of chronic toxicology studies with PQ912 announced
Promising combination data of PQ912 and a pGlu Abeta specific antibody generated
Successful capital raise of EUR 14.9 million with blue chip investors completed
  

HALLE (SAALE), Germany, 30 March 2017 Probiodrug AG (Euronext Amsterdam: PBD), a biopharmaceutical company developing novel therapeutic solutions to treat Alzheimer's disease (AD), today announced its financial results for the twelve-month period ending 31 December 2016 prepared in accordance with German GAAP ("HGB") and, on a voluntary basis, in accordance with IFRS as endorsed by the European Union. The Annual Reports are available on the company website (http://www.probiodrug.de/investors/reports-and-presentations/).
  
KEY HIGHLIGHTS 

• Favourable results of chronic toxicology studies with Glutaminyl Cyclase (QC) inhibitor PQ912 announced
• Encouraging combination data of PQ912 with pGlu-Abeta specific antibody PBD-C06 generated
• Innovative Phase 2 study design of PQ912 in early Alzheimer's disease presented
• SAPHIR Phase 2 study of PQ912 fully enrolled in December 2016
• Promising new findings for Probiodrug's Glutaminyl Cyclase - inhibitor in an inflammation animal model announced
• Abeta aggregate-clearing by PBD-C06 with and without complement mutation in an Alzheimer's mouse model announced
• Key patents on Glutaminyl Cyclase (QC) inhibition, PQ912 and the pGlu-Abeta targeting monoclonal antibody program for the treatment of Alzheimer's disease granted
• Capital raise of EUR 14.9 million executed in October 2016
• Cash and cash equivalents of EUR 21.9 million as of 31 December 2016
• Net loss of EUR 13.9 million compared with EUR 13.5 million in 2015 - in line with company expectations

POST PERIOD HIGHLIGHTS

There were no significant events subsequent to the reporting period.

CONFERENCE CALL
Probiodrug will host a conference call open to the public today, March 30, at 15:00 Central European Summer Time (CEST); the presentation will also be posted to the website. The conference will be held in English. To participate in the conference call, please call one of the following numbers ten minutes prior to commencement:

Please dial one of the following access numbers,
then enter the PIN Code: 17545699#

A Question and Answer session will follow the presentation of results.

Dr Konrad Glund, Chief Executive Officer of Probiodrug comments on the 2016 results: "We look back to a very successful year. Significant progress was made with our lead molecule PQ912 - we could announce favourable long term toxicology data, exciting preclinical data of combining our two target approaches, a QC inhibitor with an anti pGlu-Abeta antibody, and, finally, the full enrolment of the Phase 2 "SAPHIR" study. We trust that the advancement of the program further increases the attractiveness of PQ912 and strengthens the foundation for decisions on further clinical studies.

The recent failures of several late stage clinical studies in AD clearly indicate that more focused and specific approaches targeting selectively the neurotoxic fraction of Abeta are needed. Innovative treatment strategies should address pathological processes such as synaptic failure and impairment of neuronal connectivity underlying clinical symptoms. Here Probiodrug's differentiated approach of targeting specifically toxic pGlu-Abeta via QC inhibition and/or via specific anti-pGlu-Abeta antibodies offers attractive new strategies to tackle AD.

With our capital raise from October 2016 we welcomed a number of new blue-chip investors. The successes of 2016 were only possible with the high support, trust and commitment of all stakeholders and we would like to take the opportunity to say many thanks to all of you."

KEY FIGURES (ACCORDING TO IFRS)

DETAILS OF THE FINANCIAL RESULTS (ACCORDING TO IFRS)

Net loss
The net loss amounts to EUR 13,891k (2015: EUR 13,505k), thereof EUR 13,777k (2015: EUR 13,393k) operating loss and EUR 114k (2015: EUR 112k) financial loss. The majority of the operating loss is determined by the research and development expenses amounting to EUR 10,951k (2015: EUR 10,158k), whereas the general and administrative expenses of EUR 2,909k (2015: EUR 3,279k) represent a minor fraction thereof. All numbers are in line with the projections of Probiodrug.

Equity
The equity amounts to EUR 16,376k (2015: EUR 16,133k), resulting in an equity ratio of 73.2%.

Cash
Cash and cash equivalents were EUR 21,897k (2015: EUR 21,361k). Net cash proceeds of EUR 13,915k were realised in the course of the capital increase in October 2016.

Noncurrent/ current liabilities
The noncurrent liabilities with EUR 850k (2015: EUR 822k) represent the net commitment (defined benefit liability) of the pension commitments (defined benefit obligations) of EUR 1,644k (2015: EUR 1,522k). The current liabilities are nearly constant with EUR 5,140k versus EUR 4,911k at the end of 2015 and consist primarily of tax liabilities and trade payables. The tax liability of EUR 2,739k results from payment obligations as a result of the tax audit for the period 2002 through 2005 including interest for late payment. The trade payables amount to EUR 1,893k (2015: EUR 1,629k) resulting from of the ordinary course of business. They have a remaining term of up to one year.
  
OPERATIONAL REVIEW

Pipeline update
Probiodrug`s therapeutic approach targets pyroglutamate-Abeta (pGlu-Abeta, also called N3pG Abeta) as a therapeutic strategy to fight Alzheimer's disease. This modified Abeta is considered to be linked with disease initiation and progression by seeding the formation of soluble neurotoxic amyloid oligomers. Probiodrug is developing proprietary product candidates to target toxic pGlu-Abeta via two modes of action: by (i) inhibiting the production of pGlu-Abeta; and (ii) clearing existing pGlu-Abeta from the brain.

Probiodrug's innovative approach is based on the development of specific inhibitors for the enzyme Glutaminyl Cyclase (QC), which is instrumental in the creation of pGlu-Abeta. In addition, the company is developing a monoclonal antibody targeting pGlu-Abeta to enhance its clearance.

To date, Probiodrug's pipeline consists of two small molecule inhibitors of the QC-enzyme, PQ912 and PQ1565, and a monoclonal antibody, PBD-C06, targeting pGlu-Abeta.

PQ912
Probiodrug is running a Phase 2a trial, the "SAPHIR" study, of its lead product candidate PQ912. In a preceding Phase 1 study with healthy young and elderly volunteers, PQ912 was shown to be safe and well tolerated and revealed high QC-inhibition.

PQ912 is the first QC-inhibitor being tested in patients. The Phase 2a study is a randomized, double-blind multi-center study which plans to enrol a total of 110 patients with early stage Alzheimer's disease. The study is led by internationally renowned experts in AD in seven European countries at 21 sites, with the Alzheimer Center, VU Medical Center (VUmc), Amsterdam being the lead center. The primary endpoint of the trial is the safety and tolerability of PQ912 compared with placebo over a three-month treatment period. Additionally, a set of exploratory read-outs comprising cognitive tests, functional assessments by EEG and functional MRI and new molecular biomarkers in CSF will be used to evaluate the compound's effect on the pathology of the disease.

In this study Mini-Mental State Examination (MMSE) and the Cogstate neuro-psychological tests are monitored blindly every 30 patients to ensure consistency and reliability of ratings. First blinded results at baseline show that the mean MMSE scores from the 120 randomised patients is 25.3, the mean age is 73 years and gender distribution is 64 female and 56 male. Current results indicate a low variability and therefore the high quality of the assessments being used.

Recruitment has been completed in mid-December 2016. A total of 120 patients have been randomised, surpassing the 110 patients planned in the study protocol. Full unblinded results of the SAPHIR study are expected in the second quarter of 2017.

PBD-C06
PBD-C06 is a monoclonal antibody, currently in preclinical stage. PBD-C06 targets pGlu-Abeta, aiming to selectively clear the brain of pGlu-Abeta while leaving non-toxic forms of Abeta untouched. PBD-C06 has been successfully humanized and also de-immunized to avoid detection by the patient's endogenous immune system. For the first time for an anti-pGlu-Abeta approach PBD-C06 has not only shown the ability to reduce Abeta/plaques but also to significantly improve cognitive deficits in aged Alzheimer's mice. Moreover, no evidence was found of increased microhemorrhages after treatment with PBD-C06.

The development of the manufacturing process of this molecule is running.

PQ1565
PQ1565 is a QC-inhibitor, currently in preclinical stage. The product candidate has shown attractive drug-like properties in preclinical studies. The GMP process for this molecule is being implemented.

The next development steps are in preparation and respective decisions would be made in connection with the readout of the SAPHIR trial.

Publications/ Presentations
In March 2016 Probiodrug presented at the 14^th AAT Symposium on Advances in Alzheimer Therapy in Athens Greece two oral presentations entitled "The pyroglutamate modification of toxic A-beta resulted in new therapeutic approaches: Inhibitors of glutaminyl cyclase and highly specific antibodies - A status report" and "Phagocytic characterization and therapeutic efficacy of an Anti-PyroGlutamate-3 A-beta IgG2a antibody in aged APP/PS1dE9 mice". The data resulted from a collaboration between Probiodrug and a research team led by Professor Hans-Ulrich Demuth from the Department of Drug Design and Target Validation at the Fraunhofer Institute for Cell Therapy and Immunology IZI, Halle (Saale), Germany and the research team led by Professor Cynthia Lemere from the Center for Neurologic Diseases at the Brigham and Women's Hospital and Harvard Medical School, Boston, MA, USA.

In April 2016 Probiodrug announced that it has concluded the assessment of its chronic toxicology studies with its lead candidate PQ912, currently under development for AD in a clinical Phase 2 study (SAPHIR). The results showed that the toxicology profile of PQ912 in the 6-month rat and 9-month dog studies was absolutely comparable to the results of the previously available 3-month toxicology studies conducted in the same species. No new findings were observed and the minimal to slight non-adverse or questionable changes seen in both the 1-month - and the 3 month-studies were not aggravated after prolonged treatment, thus providing an excellent basis for a sound preclinical safety assessment. In conclusion, the comfortable safety margin is retained.

In May 2016 Probiodrug presented two poster at the 1^st Meeting of the newly founded Society for CSF Analysis and Clinical Neurochemistry in Gothenburg, Sweden entitled "Quantitative Analysis of truncated Abeta peptide substrates of glutaminyl cyclase in human CSF samples using LC-MS/MS," and "Determination of Abeta Oligomers using a Flow Cytometry-Förster Resonance Energy Transfer (FRET) method,". Probiodrug is evaluating and establishing new concept-related molecular biomarkers to be used in their ongoing Phase 2a study (SAPHIR). The emphasis is regarded as an important and key cornerstone in the read out hierarchy in clinical studies.

In June 2016 Probiodrug announced an agreement with the Dutch biotech company Crossbeta Biosciences B.V. in order to utilize Crossbeta's proprietary technology in support of Probiodrug's biomarker development activities. The potential of Crossbeta's unique technology has significant impact to overcome the challenge of establishing and validating sensitive and specific assays for Abeta- and pGlu-Abeta-oligomers to be used in the clinical studies of Probiodrug's lead candidate, Glutaminyl Cyclase (QC) inhibitor PQ912.

In September 2016 new findings for Probiodrug's Glutaminyl Cyclase - inhibitor in an inflammation animal model were presented at the Summer Frontiers Symposium 2016 'Systems Biology of Innate Immunity', Nijmegen, The Netherlands and the 6^th European Workshop on Lipid Mediators, Frankfurt/M, Germany. The data resulted from a collaboration between Probiodrug and Ambiotis. The effect of the QC inhibitor PQ912 was investigated in a mouse model of inflammation (thioglycollate induced peritonitis) with special focus on its effect on cell infiltration and release of pro-resolving lipid mediators. The effects seen with PQ912 on recruitment of macrophages and eosinophils, and levels of chemokines and lipid mediators, makes QC inhibition attractive for further evaluation as potential anti-inflammatory drug and/or resolution promoting agent.

Also in September 2016 Probiodrug announced first results of a preclinical combination trial targeting pGlu-Abeta. An additive effect on lowering pGlu-Abeta (pyroglutamate-Abeta) as well as total Abeta was observed with a double-pronged approach of targeting toxic pGlu-Abeta by combining the Glutaminyl Cyclase-inhibitor PQ912 to block pGlu-Abeta formation and the mouse version of the pGlu-Abeta specific antibody, PBD-C06, to increase its clearance in an AD animal model

In November 2016 first results of a preclinical study in an AD mouse model with the pyroglutamate-3 Abeta (pGlu3-Abeta)-specific antibody mPBD-C06, comparing versions with and without a mutation eliminating complement activation were presented as a poster at the Society for Neuroscience (SfN) meeting in San Diego, CA, USA. The data were generated in collaboration with Cynthia Lemere of Brigham and Women's Hospital, Harvard Medical School, and QPS, Graz, Austria. It was demonstrated for the first time, that microglial activation, analyzed by TSPO microPET, can be reduced by CDC inactivation without impairing the potency of the antibody to clear amyloid deposits.

In December 2016 the Innovative Phase 2 study design of the SAPHIR study was presented at 9^th Clinical Trials on Alzheimer's disease (CTAD), San Diego, CA, USA. Based on an exploratory analysis of 86 randomised patients, a low standard deviation for the Neuro-psychological test battery and functional EEG at baseline has been observed. The SAPHIR study has been designed and is conducted in collaboration with Philip Scheltens, M.D., Ph.D., the VUmc Amsterdam (NL) and the CRO Julius Clinical (NL).

Patents
In 2016, Probiodrug's IP position was further strengthened by important patent applications being granted. These include:

• Patents US 9,156,907 and JP 5,828,762 covering antibody program targeting pyroglutamate Abeta (pGlu-Abeta, also N3pG Abeta)   in the US and in Japan, method as well as composition of matter claims.
• Patent JP 5,934,645 covers PQ912 and surrounding chemical space; this patent has been granted already in the USA, the EU as well as in other important markets. With a patent life expiring in 2030, plus the usual extension for pharmaceuticals, the patent provides a solid protection for PQ912 in Japan and other key markets.
• Patent JP 5,930,573 covers the general use of QC inhibitors for the treatment of Mild Cognitive Impairment (MCI), granted previously for the treatment of AD and British/Danish dementia in the USA, EU and Japan, thereby broadly protecting the general use of QC inhibition. Importantly, the granted claims of JP 5,930,573, already issued in the US, complement and extend the use of QC inhibitors for MCI.

CORPORATE REVIEW

Execution of a capital increase via accelerated bookbuild
On October 6, 2016 Probiodrug announced an increase in its share capital from EUR 7,442,487 to EUR 8,186,735, by issuing 744,248 new shares generating gross proceeds of EUR 14.9 million. The order book was well covered based on strong demand from European and US investors. The new shares were placed with selected qualified institutional investors at a price of EUR 20 per share. The issued shares represented approximately 10% of the Company's issued share capital at the time of the placing.

Executive Management
Mark Booth, who was appointed as Chief Business Officer in March 2016, left the company for personal reasons in August 2016 and his responsibilities have been taken over by Dr Konrad Glund, CEO.

Supervisory Board
The general shareholder meeting on May 19, 2016, re-elected Dr Erich Platzer, Dr Dinnies von der Osten, Dr Jörg Neermann and Dr Olivier Litzka as Supervisory Board Members. The Supervisory Board then re-elected Dr Erich Platzer as chairman and Dr Dinnies von der Osten as vice chairman.

Dr Olivier Litzka, partner at Edmond de Rothschild Investment Partners (EdRIP) and member of the Supervisory Board since October 2009, stepped down in September 2016 as part of a natural transition.

OUTLOOK

The mid-term focus of Probiodrug's business activities can be summarised as follows:

• Continuing the clinical development of PQ912, in particular generate initial patient study data in 2017 and start long-term treatment,
• Continuing the development of PBD-C06,
• Continuing the development of PQ 1565,
• Further scientific analysis of potential second indications for the use of QC inhibitors,
• Further increasing visibility and acceptance as an important prerequisite for obtaining additional capital as well as for an industrial transaction,
• Further strengthening Probiodrug's financial resources.

As a result of the continuing costs being incurred for development activities, the Company projects a net loss for the financial year 2017 which may be lower than that incurred in 2016.

ANNUAL FINANCIAL REPORT 2016

Probiodrug has finalized its financial statements for the year ended 31 December 2016 according to German GAAP ("HGB") and IFRS. The auditor KPMG has issued an unqualified auditors report for both statements. The reports are available on the company website (http://www.probiodrug.de/investors/reports-and-presentations/).

FINANCIAL CALENDAR

###

For more information, please contact:

Probiodrug
Dr Konrad Glund, CEO
Email: contact@probiodrug.de

Hume Brophy
Conor Griffin, Alexia Faure, Alexander Protsenko
Tel: +44 (0) 20 7862 6381
Email: probiodrug@humebrophy.com

The Trout Group
Tricia Truehart
Tel: +1 (646) 378-2953
Email: ttruehart@troutgroup.com

MC Services AG
Anne Hennecke, Caroline Bergmann
Tel: +49 (0) 211 529 252 20
Email: probiodrug@mc-services.eu

Notes to Editors:
About Probiodrug AG
Headquartered in Halle (Saale), Germany, Probiodrug AG (Euronext Amsterdam: PBD) is a biopharmaceutical company focused on the development of new therapeutic products for the treatment of Alzheimer's disease.

Founded in 1997, the company successfully developed a novel therapeutic concept for diabetes - the DP4 inhibitors - which provided the basis for a novel class of antidiabetics - the gliptins. Its core capabilities are based on its long-standing expertise in the elucidation of the structure and function of enzymes involved in the modification of proteins and peptides, which play a central role in pathological conditions.

Today Probiodrug's aim is to become a leading company in the development of Alzheimer's disease treatments and to thereby provide a better life for Alzheimer's disease patients. It has identified a new therapeutic concept linked to disease initiation and progression. The development approaches are targeting pyroglutamate-Abeta (pGlu-Abeta) as a therapeutic strategy to fight Alzheimer's disease. The Company has medical use and composition of matter patents related to the inhibition of Glutaminyl Cyclase (QC) and anti-pGlu-Abeta- specific monoclonal antibodies, providing it, in the Company's view, with a leading position in this field of research.

Probiodrug's lead product candidate, PQ912, is a highly specific and potent inhibitor of Glutaminyl Cyclase (QC), which has shown therapeutic effects in Alzheimer's animal models. PQ912 is currently in a Phase 2a study, the SAPHIR trial. In a preceding Phase 1 study with healthy young and elderly volunteers, PQ912 has shown to be safe and well tolerated and also revealed high QC-inhibition.

www.probiodrug.de

About Alzheimer's disease
Alzheimer's disease is a neurological disorder, which is the most common form of dementia, and ultimately leads to death. Because Alzheimer's disease cannot be cured and is degenerative, the affected patients must increasingly rely on others for assistance. Today, 47 million people live with dementia worldwide, and this number is projected to treble to more than 131 million by 2050, as populations age. Dementia also has a huge economic impact. Alzheimer's has an estimated, global societal cost of US$ 818 billion, and it will become a trillion dollar disease by 2018. (World Alzheimer Report 2016).

Forward Looking Statements
Information set forth in this press release contains forward-looking statements, which involve a number of risks and uncertainties. The forward-looking statements contained herein represent the judgment of Probiodrug AG as of the date of this press release. Such forward-looking statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.