Isotechnika Inc. Announces Highlights And Financial Results For Third Quarter Of 2006
EDMONTON, Nov. 14 /PRNewswire-FirstCall/ - Isotechnika Inc. announced today its results for the third quarter ended September 30, 2006.
Operational and Scientific Update --------------------------------- - The Company announced final safety and efficacy data subsequent to 60 weeks of continuous treatment with ISA247 on October 4, 2006. Patients completing the 24 week Phase III (SPIRIT) psoriasis trial were given the opportunity to continue ISA247 therapy at a 0.3 mg/kg twice daily oral dose for an additional 36 weeks. The goal of the extension trial was to gather long term safety data while demonstrating continued therapeutic benefit. Over the course of the 24-week Phase III trial, patients exhibited a 60% mean improvement in Psoriasis Area and Severity Index (PASI) scores from pre-treatment levels. After an additional 36 weeks of treatment, continued therapeutic benefit was observed as PASI scores remained at 54% below pre-treatment levels. This beneficial effect was still observed twelve weeks after discontinuing ISA247 treatment; mean PASI scores remained at 35% below pre-treatment scores. Subsequent to 60 weeks of continuous treatment, there were no clinically significant changes in kidney function, cholesterol, triglycerides, new onset diabetes, infectious complications, or other laboratory parameters. This supports the long term safety of ISA247. - In October, 2006, the Company announced that it had received approval from both the German and Canadian Regulatory agencies to conduct a pivotal Phase III clinical trial for the treatment of moderate to severe psoriasis. This 24 week trial will be performed at thirty-six centers in Germany, Poland and Canada involving a total of 500 subjects with moderate to severe psoriasis. It will be conducted as a randomized, double-blind, placebo and cyclosporin controlled study with 300 subjects receiving ISA247 (0.4 mg/kg twice daily), 100 subjects receiving cyclosporine (1.5 mg/kg twice daily), and 100 subjects receiving placebo. In an effort to maximize the benefit to those enrolled in the study who may receive placebo for the first 12 week period they will be administered ISA247 at a dose of 0.4 mg/kg twice daily commencing the 13th week of the study. All doses of drug will be administered as soft gelatine capsules administered orally. Successful completion of the trial will be determined by superiority in the proportion of subjects achieving a score of "clear" or "almost clear" in the Static Physician's Global Assessment (SPGA) score at 12 weeks of ISA247 compared to placebo. Secondary endpoints of the trial include non-inferiority of ISA247 compared to cyclosporin in the proportion of subjects achieving a score of "clear" or "almost clear" in the Static Physician's Global Assessment (SPGA) score at 12 weeks, a 75% reduction in the Psoriasis Area and Severity Index (PASI) score at 12 weeks of ISA247 compared to placebo and maintenance of stable kidney function. - Isotechnika was issued European Patent # EP0991660 for its lead immunosuppressive drug, ISA247. The patent entitled "DEUTERATED AND UNDEUTERATED CYCLOSPORINE ANALOGS AND THEIR USE AS IMMUNOMODULATING AGENTS" is the ninth patent to be issued internationally in this patent family. Patents relating to these claims have issued in the following countries; Australia (# 750245, issued July 11, 2002 and # 774744 issued October 21, 2004), Canada (# 2,298,572 issued April 9, 2002 and # 2,372,639 issued November 1, 2005); New Zealand (# 502362 issued September 6, 2001), South Korea (# 585348, issued June 1, 2006) and the United States (# 6,605,593 issued August 12, 2003 and # 6,613,739 issued September 2, 2003). - The Company reported results of its Phase I TAFA93 human clinical trials. TAFA93, a pro-drug of rapamycin, is a novel small molecule mTOR inhibitor, which is a class of drugs currently used in the prevention of organ rejection in transplantation. No serious adverse events were noted in either of the Phase I trials. The successful completion of the Phase I trials fulfills one of our commitments to Atrium Medical Corporation ("Atrium") and allows Atrium to continue moving forward with their drug eluting stent technology program. - The Board of Directors has formed a special committee to evaluate a range of strategic and financial alternatives for the Company. GMP Securities L.P. and Lazard have been retained as financial advisors to assist the Company and the special committee. Financial results -----------------
At September 30, 2006, cash, cash equivalents and short-term investments totalled $33.0 million, compared to $39.0 million at June 30, 2006, and $52.8 million at December 31, 2005. The Company used $6.0 million of cash, cash equivalents and short-term investments in the third quarter of 2006 primarily for operating activities.
The consolidated loss for the third quarter of 2006 was $7.0 million, or $0.08 per common share, compared to a loss of $8.2 million, or $0.10 per common share, in the third quarter of 2005. For the nine months ended September 30, 2006, the consolidated loss was $19.0 million or $0.23 per common share compared to $24.6 million or $0.31 per common share for the comparable period in 2005. The consolidated loss has decreased primarily as a result of licence fee revenue earned in the period, reduced research and development expenses and reduced corporate, administration and marketing expenses.
Revenue increased to $580,000 for the third quarter ended September 30, 2006, compared to $305,000 for the third quarter ended September 30, 2006. Revenue in the third quarter of 2006 was comprised of $269,000 for licensing fees and $311,000 for diagnostic product sales, as compared to $nil for licensing fees and $305,000 for diagnostic product sales for the third quarter of 2005. On a year-to-date basis, revenue for the nine months ended September 30, 2006, was $3.2 million compared to $939,000 for the same period in fiscal 2005. Licensing fees represent the amortization of deferred revenue related to upfront payments the Company has received from its out-licensing agreement with Atrium Medical Corporation.
Research and development expenditures were $5.6 million in the third quarter of 2006, compared to $6.0 million in the third quarter of 2005, a decrease of $400,000. The Company incurred total research and development expenditures of $16.0 million for the nine months ended September 30, 2006, as compared to $17.9 million for the same period in 2005.
Research and development expenditures for the third quarter of 2006 consisted primarily of clinical trial costs for the ISA247 Phase IIb kidney transplant trial, additional start up and implementation costs related to the Phase III ISA247 European psoriasis trial, the ongoing quarterly non-clinical study costs to conduct the mouse and rat carcinogenicity studies and drug manufacturing costs related to producing three stability batches of ISA247 for clinical trial and regulatory requirements.
Corporate, administration and marketing costs totalled $1.6 million for the third quarter of 2006, compared to $1.9 million for the third quarter of 2005. Isotechnika incurred a total corporate, administration and marketing expenditure of $5.2 million for the nine months ended September 30, 2006, as compared with $6.5 million for the same period in fiscal 2005. The decrease for the nine month period ended September 30, 2006, was primarily due to reduced salary costs resulting from a reduction in personnel in this area and decreased stock-based compensation expense.
For further discussion of the Company's financial results for the three and nine months ended September 30, 2006, the unaudited interim consolidated financial statements and the Management's Discussion and Analysis for the third quarter ended September 30, 2006, are accessible on Isotechnika's Web site at www.isotechnika.com or on SEDAR at www.sedar.com.
About Isotechnika
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Isotechnika Inc. is an international biopharmaceutical company headquartered in Edmonton, Alberta, Canada. Drawing upon its expertise in medicinal chemistry and immunology, the Company is focused on the discovery and development of novel immunosuppressive therapeutics that are safer than currently available treatments. Its entrepreneurial management and world-class team of scientists are building a pipeline of immunosuppressive drug candidates for treatment of autoimmune diseases and for use in the prevention of organ rejection in transplantation. Isotechnika looks to become the leader in development of immunosuppressant therapies.
Isotechnika's lead compound, ISA247 has successfully completed a Canadian Phase III human clinical trial for the treatment of moderate to severe psoriasis. ISA247 is currently being investigated in a North American Phase IIb human clinical trial for the prevention of organ rejection following kidney transplantation. The Company also has an additional immunosuppressive compound in its drug pipeline, TAFA93 which successfully completed Phase I clinical trials.
Isotechnika Inc. is a publicly traded company on the Toronto Stock Exchange under the symbol ISA. More information on Isotechnika can be found at www.isotechnika.com.
Partnerships ------------
Isotechnika Inc. signed a collaboration agreement with Hoffman La Roche on April 9, 2002, which licensed the worldwide rights to develop and commercialize ISA247 for all transplant indications.
On September 30, 2005, Isotechnika Inc. entered into an exclusive worldwide licensing agreement with Atrium Medical Corporation for the use of ISA247 and TAFA93 specifically with drug eluting devices for the non-systemic treatment of vascular, cardiovascular, target vessel and tissue disorders.
Isotechnika Inc. and Cellgate Inc. signed an option agreement on April 25, 2006, granting Isotechnika the option to obtain an exclusive license to develop and commercialize conjugates consisting of Cellgate's patented transporter technology for the topical delivery of ISA247 in patients suffering from mild to moderate psoriasis.
On May 25, 2006, Isotechnika Inc. signed an agreement with Lux Biosciences, Inc. of Jersey City, New Jersey granting Lux Biosciences worldwide rights to develop and commercialize Isotechnika's lead drug, ISA247 for the treatment and prophylaxis of all ophthalmic diseases.
Forward-Looking Statements
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This press release may contain forward-looking statements. Forward looking statements, including the Company's belief as to the potential of its products, the Company's expectations regarding the issuance of additional patents and the Company's ability to protect its intellectual property, involve known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from those in the forward looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue research and development projects, the ability to economically manufacture its products, the potential of its products, the success and timely completion of clinical studies and trials, the Company's ability to successfully commercialize its products, the ability of the Company to defend its patents from infringement by third parties, and the risk that the Company's patents may be subsequently shown to be invalid or infringe the patents of others. Investors should consult the Company's quarterly and annual filings with the Canadian commissions for additional information on risks and uncertainties relating to the forward- looking statements. Investors are cautioned against placing undue reliance on forward-looking statements.
Isotechnika Inc. Consolidated Balance Sheets ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) September 30 December 31 2006 2005 (Unaudited) $ $ Assets Current assets Cash and cash equivalents 17,500 19,402 Short-term investments 15,518 33,425 Accounts receivable 370 447 Inventories 364 312 Prepaid expenses and other deposits 1,533 830 -------------------------- 35,285 54,416 Property and equipment 5,685 6,506 Patents 2,494 2,200 -------------------------- 43,464 63,122 -------------------------- -------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 4,656 5,649 Deferred revenue 1,291 3,489 Current portion of long-term debt 1,915 1,887 Current portion of deferred lease inducements 16 61 -------------------------- 7,878 11,086 Long-term debt 1,171 2,717 Deferred lease inducements 94 125 Deferred revenue 3,287 - -------------------------- 12,430 13,928 -------------------------- Shareholders' Equity Share capital Common stock Authorized Unlimited number of common shares without par value Issued and outstanding 84,308,492 (December 31, 2005: 84,108,492) 158,254 157,812 Warrants - 1,094 Contributed surplus 4,355 2,843 Deficit (131,575) (112,555) -------------------------- 31,034 49,194 -------------------------- 43,464 63,122 -------------------------- -------------------------- Isotechnika Inc. Consolidated Statement of Changes in Shareholders' Equity (Unaudited) ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars, except numbers of shares and warrants) Common stock Warrants ------------------------- -------------------------- Number Amount Number Amount # $ # $ Balance - December 31, 2005 84,108,492 157,812 1,293,147 1,094 Exercise of stock options 200,000 442 - - Issue of stock options - - - - Expiry of warrants (1,293,147) (1,094) Net loss for the period - - - - ------------------------------------------------------ Balance - September 30, 2006 84,308,492 158,254 - - ------------------------------------------------------ ------------------------------------------------------ Share- Contributed holders' surplus Deficit equity ---------------------------------------- $ $ $ Balance - December 31, 2005 2,843 (112,555) 49,194 Exercise of stock options (108) - 334 Issue of stock options 526 - 526 Expiry of warrants 1,094 - Net loss for the period - (19,020) (19,020) ---------------------------------------- Balance - September 30, 2006 4,355 (131,575) 31,034 ---------------------------------------- ---------------------------------------- Isotechnika Inc. Consolidated Statements of Operations (Unaudited) ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars, except per share amounts) Three Months Ended Nine Months Ended September 30 September 30 September 30 September 30 2006 2005 2006 2005 $ $ $ $ (as restated) (as restated) Revenue Licensing revenue 269 - 2,233 - Product sales and contract analysis 311 305 988 939 ------------------------------------------------------ 580 305 3,221 939 ------------------------------------------------------ Expenses Research and development 5,599 5,963 15,956 17,890 Corporate, administration and marketing 1,627 1,900 5,231 6,509 Amortization of property and equipment 517 448 1,359 1,357 Product sales and contract analysis 177 205 482 636 Interest on long-term debt 73 106 250 346 Amortization and write-down of patent costs 13 351 29 377 Loss (gain) on disposal of equipment 26 (333) 55 (326) ------------------------------------------------------ 8,032 8,640 23,362 26,789 ------------------------------------------------------ Loss before the undernoted (7,452) (8,335) (20,141) (25,850) ------------------------------------------------------ Other income (expense) Investment income 439 443 1,276 1,209 Foreign exchange translation gain (loss) 21 (294) (155) 39 ------------------------------------------------------ 460 149 1,121 1,248 ------------------------------------------------------ Net loss for the period (6,992) (8,186) (19,020) (24,602) ------------------------------------------------------ ------------------------------------------------------ Basic and diluted loss per share (0.08) (0.10) (0.23) (0.31) ------------------------------------------------------ ------------------------------------------------------ Weighted average number of common shares outstanding (in thousands) 84,296 82,747 84,270 79,063 ------------------------------------------------------ ------------------------------------------------------ Isotechnika Inc. Consolidated Statements of Cash Flows (Unaudited) ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Three Months Ended Nine Months Ended September 30 September 30 September 30 September 30 2006 2005 2006 2005 $ $ $ $ Cash provided by (used in) (as restated) (as restated) Operating activities Net loss for the period (6,992) (8,186) (19,020) (24,602) Items not affecting cash Amortization of deferred revenue (269) - (2,233) - Amortization of property and equipment 517 448 1,359 1,357 Amortization and write down of patent costs 13 351 29 377 Loss (gain) on disposal of property and equipment 26 (333) 55 (326) Amortization of deferred lease inducements (45) (23) (76) (68) Stock-based compensation 67 67 527 1,330 Unrealized foreign exchange translation loss related to non-operating activities (8) 347 171 236 ------------------------------------------------------ (6,691) (7,329) (19,188) (21,696) Licensing fee proceeds received - 3,489 3,322 3,489 Net change in other operating assets and liabilities 1,527 617 (1,671) (476) ------------------------------------------------------ (5,164) (3,223) (17,537) (18,683) ------------------------------------------------------ Investing activities Decrease (increase) in short-term investments 6,675 (4,130) 17,619 4,916 Purchase of property and equipment (337) (9) (659) (136) Proceeds on sale of property and equipment 28 663 66 1,149 Patent costs (38) (106) (323) (205) ------------------------------------------------------ 6,328 (3,582) 16,703 5,724 ------------------------------------------------------ Financing activities Repayment of long-term debt (461) (425) (1,381) (1,279) Issuance of share capital - 18,431 334 18,844 ------------------------------------------------------ (461) 18,006 (1,047) 17,565 ------------------------------------------------------ Effect of foreign exchange rate fluctuations on cash and cash equivalents 2 (31) (21) (19) ------------------------------------------------------ Increase (decrease) in cash and cash equivalents 705 11,170 (1,902) 4,587 Cash and cash equivalents - Beginning of period 16,795 11,306 19,402 17,889 ------------------------------------------------------ Cash and cash equivalents - End of period 17,500 22,476 17,500 22,476 ------------------------------------------------------ ------------------------------------------------------ Cash and cash equivalents are comprised of: Cash on deposit 6,306 5,717 6,306 5,717 Money market securities and investment deposits 11,194 16,759 11,194 16,759 ------------------------------------------------------ 17,500 22,476 17,500 22,476 ------------------------------------------------------ ------------------------------------------------------
Isotechnika Inc.CONTACT: Dr. Randall Yatscoff, President & CEO, Isotechnika Inc., (780)487-1600 (246), (780) 484-4105 (fax), ryatscoff@isotechnika.com; DennisBourgeault, Chief Financial Officer, Isotechnika Inc., (780) 487-1600(226), (780) 484-4105 (fax), dbourgeault@isotechnika.com