• Technology transfer under the terms of the alliance with Roche triggered in January 2009 a success fee of EUR 5 million to BioInvent and ThromboGenics.
• The first Phase l study with TB-403, for treatment of cancer, was completed in June 2008 and showed that TB-403 was safe and well tolerated. The study was conducted in healthy volunteers.
• The follow-up study, the second Phase I trial with TB-403, is a multi-dose study in patients with advanced cancer, and was started in June 2008.
• First approval has been granted to start clinical Phase II studies with product candidate TB-402 for the prevention of thrombosis. The planned study is a multicenter study in six countries, primarily in Central Europe, in patients who have undergone knee replacement surgery.
• All subjects in the Phase I programme with product candidate BI-204 for treatment of atherosclerosis have been enrolled and monitoring is completed. The project is developed in collaboration with Genentech.
• Product candidate BI-505, for treatment of cancer, has been granted orphan drug designation in Europe for the indication multiple myeloma. Equivalent status was previously granted in the US.
• In 2008 BioInvent entered into agreements with Bayer HealthCare and with a Japanese pharmaceutical company for research and development of antibody-based drugs.
• Net revenues for January - December 2008: SEK 252.1 million (143.4).
• Current investments together with cash and bank as of 31 December 2008: SEK 212.5 million (216.9).
• Cash flow from current operations and investment activities for January - December 2008: SEK -4.4 million (8.7).
• Profit after tax for January - December 2008 amounted to SEK 16.2 million (-16.1) and the profit after tax per share was SEK 0.29 (-0.31).
BioInvent is a research-based pharmaceutical company that focuses on developing antibody drugs. The Company is currently running innovative drug projects mainly within the areas of thrombosis, cancer and atherosclerosis.
Comments by the CEO
The year 2008 was successful for the company and our projects, both commercially and in terms of research. Of course the agreement with Roche, for the further development of TB-403 in cancer, accounts for the single largest breakthrough during the past year. The agreement ensured that the project received the expertise and resources necessary to take this very promising concept all the way to market. At the same time, the collaboration provided the company with a financial contribution that is of significance in the situation we are currently experiencing in the financial markets. It is also very satisfying to report that we already have received the first success-based milestone payment within the collaboration through the technology transfer to Roche. In addition, the Phase Ib program with seriously ill cancer patients is progressing according to plan and we expect that with time Roche will expand the clinical program with studies for a number of cancer indications.
In the Phase I study with BI-204 for the treatment of atherosclerosis, all individuals have now been included and monitoring is completed. In collaboration with Genentech we are now preparing for the next clinical development step, with a decision to start Phase II expected in the first half of 2009.
We have decided to conduct the first clinical trials with BI-505 in the United States. In preparation for this new and exciting step, we met with the US Food and Drug Administration (FDA) in early February to facilitate the approval procedure. Based on the feedback we received, we expect to be able to start the clinical program at the turn of the half-year 2009. We also recently received orphan drug designation for the indication multiple myeloma from the European Agency for the Evaluation of Medicinal Products (EMEA) – a classification that we already obtained from the FDA for the American market.
We expect to start the Phase ll studies with TB-402, for the prevention of thrombosis, in the near future. A long-acting coagulation inhibitor with favorable safety profile that is administered once in conjunction with the surgical procedure is expected to have good commercial prospects compared with the existing treatment, which requires daily dosage for several weeks with extensive patient monitoring. The Phase ll program is yet another important step to move the company forward in the the value chain.
Financial performance in 2008 was also strong, with a profit of SEK 16 million. For the second consecutive year, we balanced our own cost and investment undertakings with revenues from large collaborative projects. Although we do not expect to achieve sustainable profitability until one of our product candidates is launched on the market, the agreements - and the revenues from these agreements - demonstrate the value generation in the projects.
Development projects
BioInvent is currently running four projects in the development phase. In the development phase the safety profile of the product candidate is tested in animal models, before testing safety and efficacy in clinical trials.
Thrombosis (TB-402)
TB-402 is a human antibody binding to Factor VIII. The antibody has shown a beneficial partial inhibition of Factor VIII, even when applied in excess dosage. This reduces the risk of undesirable bleedings. The objective is to initially develop a drug that prevents Deep Vein Thrombosis (DVT) following orthopaedic surgery. DVT is caused when a blood clot forms in a deep vein, most commonly in the deep veins of the lower leg. DVT is a major public health issue and it is estimated that in the US alone, more than 350,000 individuals are affected by DVT or pulmonary embolism (PE) each year. It is estimated that by 2015, 1.4 million patients will undergo knee replacement and 600,000 patients will undergo hip replacement in the U.S. if current trends persist. Patients undergoing hip replacement or knee surgery are particularly at risk of developing DVT and all patients are therefore treated with anticoagulants prophylactically in order to reduce the risks of blood clots. The project is carried out within the alliance with ThromboGenics.
Results from the Phase l trial show that TB-402 is both safe and well-tolerated. No serious adverse events related to TB-402 were reported. The pharmacokinetic analysis undertaken as part of the Phase I trial confirm a prolonged half-life of approximately three weeks, which will allow for single dose treatment in orthopaedic surgery patients and/or a once-a-month administration for long-term stroke prevention in atrial fibrillation (AF), as opposed to daily treatment with current anticoagulants. The pharmacodynamic analysis confirms that TB-402 achieves only partial inhibition of Factor VIII activity without the undesired effect of total Factor VIII inactivation. A stable long-acting anticoagulant effect based on partial Factor VIII inhibition could also be shown.
Additional studies have shown that the effect of TB-402 can be reversed by giving the target protein (Factor VIII) that blocks TB-402 and also that TB-402 is safe and well tolerated in patients that are given standard treatment (enoxaparin and warfarin) for deep vein thrombosis. The results show that TB-402 has prospects to be able to be developed into a safe and well-controlled treatment for several medical conditions in which thrombosis prevention is of great importance. A Phase II study is being prepared for patients who have undergone knee replacement surgery, to further evaluate the safety of the medication and its ability to prevent deep vein thrombosis. Preparations are underway in several European countries, primarily in Central Europe, and the first authorisation to start the study has been received.
Atherosclerosis (BI-204)
The product candidate BI-204 targets oxidized forms of the LDL cholesterol (oxLDL). Links have been shown between oxidized forms of certain lipoproteins and the inflammatory processes that lead to plaque formation in the vessel walls. BI-204 has in preclinical studies reduced inflammatory processes and reduced plaque formation significantly. The results also show a considerable reduction in the size of existing plaques in animals treated with BI-204. Results supports that the mechanism behind BI-204 is a modulation of the inflammatory process resulting in a reduction of pro-inflammatory cells in treated plaques, which in turn leads to a reduction in new plaque formation and the regression of existing plaques. It is being developed as a drug for the secondary prevention of cardiac events, such as heart attack or stroke, in high-risk patients. BI-204 is developed in collaboration with Genentech, Inc.
All subjects in the Phase I programme have been enrolled and the monitoring is completed. The study is expected to be reported during the first half of 2009. The Phase I study was a double-blind, within-group randomised dose-escalation trial testing both single and multiple doses of BI-204 administered either intravenously or subcutaneously. In total, 80 healthy male or female subjects with elevated levels of LDL cholesterol were included in the trial. In addition to monitoring the tolerability and safety of BI-204, the study evaluated pharmacokinetic and pharmacodynamic parameters in order to help set the dosage of BI-204 administered to patients in future Phase II trials.
Cancer (TB-403)
The product candidate TB-403, is a monoclonal antibody directed against placental growth factor, PlGF. TB-403 binds PlGF with high affinity and specificity and has been shown to inhibit tumour growth in animal models. TB-403 blocks tumour angiogenesis, the development of new blood vessels, which is required for tumour nutrient and oxygen supply supporting tumour growth. Angiogenesis is also required for disease progression and metastasis, the dissemination of the tumour to distal sites of the body.
The PlGF growth factor is secreted by tumours and is specifically over expressed in cancer and chronic inflammatory conditions. It affects the formation of new vessels in tissue that is under stress. PlGF is not required for survival of normal resting vasculature and blocking PlGF is expected to be relatively safe, because mice lacking PlGF are healthy and reproduce normally. Preclinical research has also shown that inhibition of PlGF does not induce resistance mechanisms because it does not induce “angiogenic rescue” mechanisms, whereby tumour expression of proangiogenic growth factors is upregulated that may enable escape from therapy. This angiogenic rescue phenomenon has been demonstrated with some angiogenesis inhibitors.
The first Phase l study in 16 healthy male subjects was successfully completed in June 2008 and showed that TB-403 is safe and well tolerated, with pharmacokinetic properties enabling it to be developed as a novel anti-cancer agent. The follow-up study, a second Phase I trial, is a study of tolerability, pharmacokinetics and pharmacodynamics in patients with advanced cancer, and was started in June 2008. Up to 30 patients will be enrolled in this multi-dose study.
Agreement with Roche
In June 2008 BioInvent and partner ThromboGenics entered into a strategic license agreement with Roche for development and commercialisation of TB-403. Roche paid BioInvent and ThromboGenics an upfront payment of EUR 50 million in July 2008. In total, BioInvent and ThromboGenics could potentially receive up to EUR 450 million over the term of the collaboration based on the successful completion of a series of development and commercial milestones, as well as double digit royalties on potential product sales, including any backup antibodies based on inhibition of PlGF. ThromboGenics, which discovered TB-403, will receive 60% and BioInvent 40% of the revenue from the deal.
In January 2009 transfer and implementation of technology and process development to Roche in relation to the ongoing clinical development of TB-403 was successfully finalized. This triggered a success fee of EUR 5 million to BioInvent and ThromboGenics.
Roche has a worldwide, exclusive license to develop and commercialise TB-403. BioInvent and ThromboGenics will retain co-promotion rights for the product in the Nordic, Baltic and Benelux regions. Roche will assume responsibility for all future development costs.
Cancer (BI-505)
The drug candidate BI-505 is a human antibody that targets the adhesion protein ICAM-1 (also called CD54). In tumour cells the expression of ICAM-1 is elevated and it is therefore a candidate for being a suitable target protein for a therapeutic antibody. In addition to inducing apoptosis the antibody also provides important immuno-effector functions that help to kill tumour cells. BI-505 has in different animal models proved to be very effective at killing tumours and more effective than existing drugs.
BioInvent’s intention is, in an initial stage, to treat patients with multiple myeloma. Other forms of hematologic cancer may also become relevant as indications. The possibility of treating ICAM-1 expressing solid tumours will also be examined further in additional preclinical trials. The number of newly diagnosed patients with multiple myeloma is more than 40,000 per year and the number of newly diagnosed patients with blood cancer is more than 200,000 per year.
BI-505 has been granted orphan drug designation in the United States and Europe for the indication of multiple myeloma. This status gives BI-505 possibility for market exclusivity for treatment of multiple myeloma with an antibody against ICAM-1 in these markets for 10 years after marketing approval is obtained.
Bioinvent intends to initiate clinical development of BI-505 in the United States. As part of preparations to submit an application to start clinical trials in the United States, in early February 2009 the company met with the US Food and Drug Administration. Based on received feedback, we expect to be able to start the clinical program at the turn of the half-year 2009.
Research projects
BioInvent is running a number of projects in the research phase i.e. the stage prior to selection of a Candidate Drug. The company’s research portfolio currently includes projects mainly within the areas of cancer and inflammation. The research in the cancer field is aimed at additional product candidates that will impede undesirable vessel growth and thus the blood supply to tumours, as well as at apoptotic antibodies that kill tumour cells. BI-505 is one result of the apoptosis programme.
To strengthen the company's research activities in angiogenesis, BioInvent has in April 2008 acquired intellectual property from the research company AngioGenetics AB, located at Karolinska Institutet (KI). In connection with the takeover BioInvent set up a branch at KI to strengthen and expand collaboration with research groups at KI.
A deal with Bayer HealthCare was signed in March 2008 related to the discovery and development of antibody products. The agreement allows for up to 14 antibody products to be developed. As well as undisclosed license fees and research funding, BioInvent will receive milestone payments and royalties on sales of any products commercialized.
In December 2008 an agreement was reached with a Japanese pharmaceutical group for the development of an antibody-based drug from the n-CoDeR antibody library. Bioinvent will receive research funding as well as milestone payments and royalties on sales if development and commercialization are successful.
Revenues and result
Net revenues for the January – December period amounted to SEK 252.1 million (143.4). BioInvent's share of the initial installment from Roche for TB-403, SEK 187.6 million (40% of SEK 469 million) is included in its entirety in reported net revenues. The first installment from Genentech of SEK 105.5 million for BI-204 is included in its entirety in net revenues for 2007. Net revenues for the October – December period amounted to SEK 23.1 million (3.4).
The Company’s total costs for the January – December period amounted to SEK 246.3 million (169.6). Operating costs are divided between external costs of SEK 155.6 million (83.1), personnel costs of SEK 79.2 million (74.2) and depreciation of SEK 11.5 million (12.3). External costs relate mainly to toxicology studies, clinical studies, commissioned research and milestone payments. During the fourth quarter of 2008 external costs rose by SEK 25 million compared with the corresponding quarter in 2007, with foreign currency effects accounting for about one quarter of the increase. The increase of external costs during 2008 is also attributable to milestone payments in the projects, acquisition of intangible rights and to increased development costs as projects advances in the value chain.
Research and development costs for January – December amounted to SEK 215.4 million (140.9). Depreciation according to plan reduced the operating result for the period by SEK 11.5 million (12.3), of which depreciation of intangible fixed assets amounts to SEK 6.1 million (6.3).
The profit after tax for January – December amounted to SEK 16.2 million (-16.1). The loss after tax for October - December amounted to SEK -45.4 million (-38.0). The net financial items, January – December, amounted to SEK 9.7 million (7.4). Earnings per share after tax, January – December, amounted to SEK 0.29 (-0.31).
Financial position and cash flow
As of 31 December 2008, the Group’s current investments together with cash and bank amounted to SEK 212.5 million (216.9). The cash flow from current operations and investment activities for January – December amounted to SEK -4.4 million (8.7). Capital tied up in short-term receivables (mainly accounts receivable) doubled as of the balance sheet date compared with the previous year, which had a negative impact on cash flow. These accounts receivable were settled in January 2009. The cash flow for October - December amounted to SEK -40.3 million (-13.4).
The shareholders’ equity amounted to SEK 231.3 million (214.1) at the end of the period. The Company’s share capital was SEK 27.8 million. The equity/assets ratio at the end of the period was 78.3 (79.0) per cent. Shareholders’ equity per share amounted to SEK 4.15 SEK (3.85). The Group had no interest-bearing liabilities.
Investments
Investments in tangible fixed assets amounted to SEK 7.6 million (3.9). Investments in intangible fixed assets amounted to SEK 6.0 million (-).
Organisation
As of 31 December 2008, BioInvent had 103 (94) employees. 89 (79) of these work in research and development.
Employee incentive program
The annual general meeting on 14 April 2008 resolved to adopt an incentive program comprising a maximum of 1,450,000 employee options (Sw. personaloptioner) and to issue 1,920,090 warrants for the subsidiary BioInvent Finans AB, free of charge, to secure the company's commitment under the incentive program and to cover the company's associated social security contributions. BioInvent Finans AB has subscribed all the warrants. Each employee option entitles the holder to subscribe to a new share at a subscription price of SEK 26.84. A basic allocation of 498,750 employee options took place during 2008. Extra allotment of 69,750 employee options took place during February 2009.
Risk factors
The Company’s operations are associated with risks related to factors such as drug development, competition, collaboration with partners, technology development, patents, capital requirements, currency and interest rates. The aforementioned risks summarize the factors of significance for BioInvent and thus an investment in the BioInvent share.
Accounting principles
For the group's part this interim report is prepared according to IAS 34, Interim Financial Reporting, and the Annual Accounts Act and for the parent company's part according to the Annual Accounts Act. The accounting principles applied are consistent with those used when preparing the most recent Annual Report. The cost of the employee options was calculated in accordance with IFRS 2.
Annual General Meeting, dividend proposal and upcoming financial reports
The Annual General Meeting will be held on Tuesday 21 April 2009 at 4 p.m., at Ideon, Lund. Notice to attend will be announced in the Swedish press in Post- och Inrikes Tidningar, Sydsvenska Dagbladet and Dagens Industri, and will be posted on the Company’s website. Annual reports will be sent to shareholders upon request, with distribution expected to begin on 6 April 2009.
Shareholders wishing to attend the AGM must be registered in the shareholders’ register kept by the Swedish Securities Register Centre (VPC AB) no later than Wednesday 15 April 2009 and must inform BioInvent of their intention to attend no later than 4 p.m. on 15 April 2009 by sending a letter to: Sölvegatan 41, SE-223 70 Lund, attn: Marie Serwe, or by fax to +46 (0)46 211 08 06, or by phone +46 (0)46 286 85 50, or by e-mail to marie.serwe@bioinvent.com. Shareholders must include their name, personal/company registration number, shareholding, telephone number and the name of any assistants that will be attending.
In order to participate in the AGM, shareholders with nominee-registered shares must request that their shares be temporarily owner-registered in the VPC AB shareholders’ register. Such registration must be completed no later than 15 April 2009 and the nominee must be informed of this well in advance of this date.
The Board of Directors and the CEO do not propose the payment of any dividend for the 2008 business year.
