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4SC publishes results for the first half of 2008
During the second quarter of 2008, net sales totalled 1.34 million Euros, which represents virtually four times the figure for the same period last year in the amount of 348,000 Euros. The operating result of - 2.39 million Euros represents an 13.6% increase compared to the 2.10 million Euros loss in the second quarter of 2007. The period result came to - 2.24 million Euros (second quarter 2007: - 2.09 million Euros) or - 0.12 Euro per share (second quarter 2007: - 0.17 Euros per share). As of 30 June 2008, funds totalled 13.56 million Euros.
Highlights in the second quarter of 2008:
- Announcement of the acquisition of the oncology projects of Nycomed for 14 million Euros in cash
- Cooperation with Erlangen-based ViroLogik GmbH on the compound SC68896(now: 4SC-206) in the indication of viral infections
- Nearly four per cent participation in the Bonn-based biotech company Nexigen GmbH with the exclusive option to take over the company entirely within a period of 15 months
- Appointment of Dr. Thomas Strüngmann and Helmut Jeggle from principal shareholder Santo Holding as from 5 June 2008 to the supervisory board of 4SC AG
Acquisitions and clinical progress
The most important accomplishment during the past quarter was the announcement of the acquisition of the eight oncology projects of the pharmaceuticals company Nycomed. One of the compounds is in clinical phase I, seven further drug candidates are in preclinical stages. The successful conclusion of the 14 million Euros transaction was announced on 31 July 2008. All Nycomed projects, as well as 4SC AG's own drug candidates, are currently being prioritised in order to determine on which of the projects to focus available scientific resources in future.
'In any case, we intend to stick to our stated corporate strategy of accompanying our most promising projects up to the clinical proof of concept in order to subsequently enter into appropriate licensing deals with the biopharmaceutical industry for further development and marketing purposes,' commented Dr Ulrich Dauer, CEO of 4SC AG.
As already described in detail in the press release of 31 July 2008, 4SC AG has renamed all development substances within the framework of integration of the new projects, in a move designed to further enhance the transparency of the research pipeline. In the case of 4SC-101 for the treatment of rheumatoid arthritis, preparations are underway for an advanced phase II study. The aim here is to enhance the efficacy profile in combination with already established therapies even more clearly.
The preclinical compound 4SC-206 developed by 4SC AG as a cancer therapy is to be developed further as a treatment for viral diseases in collaboration with ViroLogik GmbH. The development costs incurred in the course of the joint research activities are to be split. Moreover, new preclinical data during the reporting period have proven that the new forms of direct administration into the head could enable the substance to be effective for example in the treatment of brain tumours.
During the reporting period, a contract research institution was chosen to conduct the clinical phase I study on the compound 4SC-203 tested in the treatment of acute myeloid leukaemia (AML). Provided that the current analysis of the safety data furnishes appropriate results, this could lay the foundations for filing for a clinical test.
The results for the first six months of 2008 (IFRS)
The revenues of 1.98 million Euros (first six months of 2007: 635,000 Euros) trebled year-on-year. Of this amount, 1.23 million Euros were generated by the business segment 'Collaborative Business'. The 750,000 Euros generated in the 'Drug Discovery and Development' segment originated entirely from the licensing and cooperation agreement with ViroLogik GmbH.
Operating expenses totalled 6.83 million Euros (first six months of 2007:
4.96 million Euros), which represents an increase of 37.7% year-on-year. Of this amount, 4.67 million Euros represent research and development costs, which correnspond to an increase of nearly 45% compared to the first six months of 2007. The increase in administrative costs from 1.35 million Euros to 1.52 million Euros is primarily attributable to rising personnel costs.
During the first half of 2008, 4SC AG posted an operating loss of 4.71 million Euros (first six months of 2007: - 4.26 million Euros). Taking the financial results into consideration, this results in a net loss for the first six months of the year of 4.46 million Euros (first six months of 2007: - 4.24 million Euros) or - 0.23 Euro per share (first six months of 2007: - 0.36 Euro per share).
4SC AG's equity stood at 15.31 million Euros on 30 June 2008 compared to 19.62 million Euros on 31 December 2007. This results in an equity ratio of 79.9%, which represents a drop compared to the equity ratio of 88.9% at the end of 2007. This ratio is set to increase significantly during the second half of 2008 as a consequence of the capital increase conducted on 14 July 2008 after the end of the reporting period which brought in gross proceeds of 29.45 million Euros.
In terms of its research activities, 4SC AG intends to adhere to its targets defined for 2008. In the area of 'Drug Discovery & Development', this involves a two-track strategy for the lead compound 4SC-101. On the one hand, the management intends to press ahead with the advanced negotiation with the biopharmaceutical industry with a view to achieving a licensing agreement on attractive terms. However, in order to further enhance product value, preparations are underway for a clinical phase II study in the area of rheumatoid arthritis as well as a phase IIa study for chronic inflammatory bowel diseases (e.g. Morbus Crohn, Colitis Ulcerosa).
Following the successful completion of the capital increase in July, the subscribed capital of 4SC AG increased to some 28.5 million Euros. Parts of the gross proceeds of around 29.45 million Euros were used to finance the acquisition of the oncology projects of Nycomed in the amount of 14 million Euros. In order to ensure the prompt and high-quality development of all pipeline projects, 4SC AG intends to strategically enlarge its workforce.
In connection with the successful expansion of the Research and Development pipeline, 4SC AG anticipates a moderate rise in development costs compared to the original budget. It is expected that further projects will reach the clinical development stage by the end of the year. Furthermore, 4SC AG expects firstresults of the clinical phase I study for the anti-cancer agent 4SC-201 from the Nycomed pipeline to be available by the end of the year.
'During the quarter under review we were once again able to prove that even in a difficult capital market environment, 4SC AG is still capable of maintaining its strategic capacity to act,' commented Dr Ulrich Dauer, CEO of 4SC AG. 'With the new funds and the expanded project pipeline we now consider ourselves to be excellently prepared for the second half of 2008.
Thus, for example, we are confident that in the months to come, we will be able to convince our shareholders with interesting news on our projects,' added Dauer.
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