Intellect Neurosciences, Inc. Issues Letter to Shareholders
NEW YORK, Feb. 2, 2012 /PRNewswire/ -- Intellect Neurosciences, Inc. (OTCBB:ILNS), a biopharmaceutical company engaged in the discovery and development of disease-modifying therapeutic agents for the treatment of Alzheimer's and other neurological diseases today issued the following Letter to Shareholders from Dr. Daniel Chain, Chairman and CEO.
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2011 was an exceptionally fruitful year for Intellect Neurosciences. We introduced two new innovative platform technologies, which will set the stage for the future direction of the company and offer significant potential to create value for the Company and our shareholders. We also ended the year with an improved balance sheet. As we enter 2012, we are excited by the prospect that our pioneering Alzheimer's disease immunotherapy ANTISENILIN® technology may be validated in the Phase 3 trials for Bapineuzumab, which are nearing completion. In addition, we expect to demonstrate proof-of-concept in our early stage programs: IN-N01-OX2, a compound of CONJUMAB-A, our antibody drug conjugate platform; and RV03, a compound of RECALL-VAX, and the first dual-acting Alzheimer's disease vaccine targeting both beta amyloid and tau proteins.
Of particular significance and importance to Intellect Neurosciences in 2011, we completed a transaction with ViroPharma for our OX1 program. ViroPharma is one of the leading biotechnology companies, and they have done a stellar job of capturing the majority of market share in an orphan indication. Commensurate with the transaction, we received an upfront payment of $6.5 million, and we have the potential to receive up to $120 million in regulatory milestone payments, in addition to a two-tiered royalty reaching double digits from future potential drug sales. ViroPharma will bear all of the costs of continued development and commercialization. Mr. Vincent Milano, ViroPharma's CEO, spoke enthusiastically about his company's plans to develop OX1 for Friedreich's Ataxia during his presentation at the JP Morgan Healthcare Conference in January 2012, indicating OX1 likely would enter Phase 2 clinical trials early in 2013. Mr. Milano expressed hope that OX1 would be at least as successful as ViroPharma's best-selling orphan drug, CINRYZE®, which reportedly generated more than $300 million in sales revenue last year. We could not be more pleased that ViroPharma chose Intellect Neurosciences' product for its next development program.
To ensure an ongoing pipeline of product candidates that have the potential to build shareholder value, we focused on developing other assets in our pipeline and further enriching our patent estate. We filed patent applications at the United States Patent and Trademark Office (USPTO) based on two new discoveries, which we believe will result in important next generation biologics for the treatment of Alzheimer's and other neurodegenerative diseases. Already we have received positive feedback from major pharmaceutical companies interested in specific drug products of these platform technologies. Discussions are commencing with potential partners, even at this early stage.
We introducedRV03during 2011, a first-in-class Alzheimer's vaccine candidate, which targets the two proteins that are the hallmark features of the disease: beta amyloid, which accumulates in the brains of Alzheimer's patients and deposits as plaques on the surface of nerve cells, and abnormal tau proteins, which comprise intracellular neurofibrillary tangles. Although both beta amyloid and tau have been studied extensively on an individual basis with regard to their separate modes of toxicity, new light has been shed recently on their possible interactions and synergistic effects in Alzheimer's disease. Independent published studies have shifted our understanding of the role of tau in the pathogenesis of Alzheimer's disease towards being a crucial partner of beta amyloid. Of particular interest is the cleavage of tau protein by "executioner" caspases, which leads to a truncated form of the protein that is more toxic than the intact protein and can precede tangle formation.
It occurred to us that we could use our RECALL-VAX platform to generate an immune response specifically targeting this more toxic form of tau, known as delta tau. Moreover, since RECALL-VAX technology lends itself particularly well to a combined vaccine, we are using it to target both beta amyloid and delta tau, in each case taking advantage of the unique molecular signatures ("neoepitopes") formed by the cleavage of the precursor proteins. We are in the process of embarking on proof-of-concept studies for RV03 in a transgenic mouse model of Alzheimer's disease, which expresses both human beta amyloid and delta tau. We expect initial data by the end of 2012.
CONJUMAB-Ais our novel proprietary antibody-empowering platform technology that we believe has the potential to yield a new class of improved therapeutics and diagnostics for treatment of Alzheimer's disease and other proteinopathies. The technology is based on antibody-drug conjugates (ADCs) that specifically target amyloid and amyloid-associated proteins, as well as associated toxicity, such as oxidative stress and inflammation leading to tissue damage. CONJUMAB-A is the first application of ADCs to treatment of neurodegenerative diseases and aims to capitalize on the significant advances made with ADCs in the field of oncology. CONJUMAB-A has the potential to improve on current methods of passive immunotherapy by increasing clearance of amyloid or amyloid-associated proteins while delivering potent cytoprotective molecules to sites of amyloidosis, and thus, reduce inflammation and oxidative stress.
CONJUMAB-A has potential application for treatment of several serious diseases, such as Alzheimer's, Parkinson's, Huntington's, Cerebral Amyloid Angiopathy, Frontotemporal Dementia, Progressive Supranuclear Palsy, Pick's disease, Creutzfeldt-Jakob disease and Cortical Basal Degeneration. It also may be effective in non-CNS indications, such as Age-Related Macular Degeneration, Glaucoma, and Peripheral Amyloidosis.
Intellect Neuroscience's lead CONJUMAB-A candidate is IN-N01-OX2, a non-activating, stabilized IgG4 humanized monoclonal antibody specific for beta amyloid protein conjugated to OX2, a small molecule with potent neuroprotective properties due to its dual activities as an anti-oxidant and protein aggregation inhibitor. We are developing IN-N01-OX2 as first-in-class treatment for retinal degeneration, notably age-related macular degeneration and glaucoma. The drug candidate also has potential applications for Alzheimer's disease and traumatic brain injury.
CONJUMAB-A offers us multiple opportunities for commercialization: For example, we may partner products developed internally by Intellect (e.g. IN-N01-OX2). Alternatively, we can license use of the technology to other companies that have different antibodies that would be suitable for development as new antibody drug conjugates in combination with OX2 or other small molecule. We may also partner with companies that have other neuroprotective small molecules for use in an antibody drug conjugate.
Continuing with our operational goals to maintain a streamlined, effective team to manage our international virtual R&D activities, we have made two recent additions: Dr. Vadim Fedulov, Ph.D., an expert in transgenic mouse models of neurodegeneration, based in Copenhagen, Denmark, serves as Project Manager and Dr. Dan Shochat, Ph.D., based in San Francisco, serves as Consulting Vice President Non-Clinical Development.
Dr. Shochat is a pioneer in the antibody development field with more than 20 years of experience in the biotechnology industry. He has been instrumental in the invention and development of the approved in vivo tumor-imaging reagent CEA-Scan and led the team that obtained the first approved antibody-drug conjugate, Mylotarg. He was pivotal to the development of Bexxar, a radioiodinated antibody for the treatment of Non-Hodgkin's Lymphoma that was approved by the FDA in June 2003. In 2001 he joined Deltagen as Vice President of Pharmaceutical Development and in 2003 co-founded Celscia Therapeutics Inc., a therapeutic antibodies development company, which merged with KaloBios Therapeutics in January 2004 where he has held the position of Executive Vice President, Development.
We continue to devote considerable resources to our patent estate, including ongoing patent prosecution, defending existing patents and adding new patent applications to revitalize our patent portfolio. Of particular significance, we obtained a new patent in both the United States and Japan for our RECALL-VAX technology platform in 2011. In Europe, we filed an appeal in response to an opposition filed against us by Wyeth and Élan Pharmaceuticals with respect to our ANTISENILIN® patent estate. We remain confident of our ability to prevail in this process. In addition, we have additional divisional applications pending to further protect us. We obtained strong support for our patent prosecution in Europe and the U.S. from world-renown independent experts who provided written declarations explaining errors in the office actions against us. This support gives us good reason to believe we ultimately will be granted the patents we are seeking.
Current Period Financial Summary:
As of December 31, 2011, we had cash and cash equivalents of $1,053,880. Proceeds from the ViroPharma transaction were used to pay expenses related to the transaction, including payment of $1.3 million in licensing fees to our university research partners; $826,000 to consultants who helped secure the agreement; legal fees incurred in connection with executing the transaction; and payment of significant overdue accounts payable owed to contract research organizations, independent auditors, former independent directors and other vendors. The balance has been set aside for working capital.
Operating expenses for the three months ended December 31, 2011, increased by $3,173,825, to $3,924,828 from $751,003 for the comparable period last year. The increase in operating expenses was caused by an increase in both General and Administrative expenses primarily related to the ViroPharma transaction and an increase in Research and Development fees.
Other income (expenses) for the three months ended December 31, 2011, changed by $19,324,458, to income of $17,933,750 from a loss of $1,390,708 for the comparable period last year. The change primarily was due to a non-cash gain on the change in the value of derivative instruments and preferred stock liability and a reduction in interest expense.
Increased public awareness:
We have continued our efforts to increase public and investor awareness of Intellect Neurosciences through media outreach and other activities, including speaking at several international industry and investor conferences. Our activities and developments are frequently reported in the media, including several articles that have appeared in BioCentury, a professional online magazine that is read widely in the industry. These activities have contributed to the increased attention we have received from potential strategic partners. We will continue these activities in 2012.
2011 was a year of remarkable achievements for a company with the small size and limited resources of Intellect. These achievements have yielded our current licenses and rich pipeline that generates continued interest from major biotechnology and pharmaceutical companies.
Thank you for your continued support of Intellect Neurosciences and our important mission to create a world without Alzheimer's disease and other horrifying neurodegenerative diseases.
Daniel G. Chain, PhD
Chairman & CEO
Safe Harbor Statement Regarding Forward-Looking Statements:
The statements in this release and oral statements made by representatives of Intellect relating to matters that are not historical facts (including, without limitation, those regarding future performance or financial results, the timing or potential outcomes of research collaborations or clinical trials, any market that might develop for any of Intellect's product candidates and the sufficiency of Intellect's cash and other capital resources) are forward-looking statements that involve risks and uncertainties, including, but not limited to, the likelihood that actual performance or results could materially differ, that future research will prove successful, the likelihood that any product in the research pipeline will receive regulatory approval in the United States or abroad, or Intellect's ability to fund such efforts with or without partners. Intellect undertakes no obligation to update any of these statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. Accordingly, any forward-looking statements should be read in conjunction with the additional risks and uncertainties detailed in Intellect's filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in Intellect's Annual Report on Form 10-K (file no. 333-128226), filed on October 13, 2011, and in our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2011, filed on February 2, 2012.
JQA Partners, LLC
SOURCE Intellect Neurosciences, Inc.