Neurosearch A/S to Axe Workforce by 82.5 Pct. in Next 2 Years
Today, NeuroSearch provides an update on the development programme for Huntexil® in the treatment of motor symptoms in Huntington's disease and outlines the company's design of a confirmatory Phase III efficacy study designated Prime-HD. In addition, the company announces a comprehensive restructuring and controlled discontinuation of its other activities in order to optimise financial and management resources to complete the development of Huntexil®.
-- The Huntexil® development programme will include the Prime-HD study, planned to enrol 630 patients and to test 45 mg and 67.5 mg Huntexil® both twice daily. The primary endpoint of the efficacy study will be the Total Motor Score (TMS) and includes additional endpoints measuring overall patient improvement. Dosing of the first patient is expected in the first half of 2012 provided that the company has secured funding for completion of the development programme
-- Over the course of the next two years, a planned restructuring and controlled discontinuation of the company's other activities is expected to reduce the organisation to about 35 employees. This is expected to reduce fixed and employee-related costs from about DKK 200 million per year to about DKK 50 million per year
-- The financial guidance and reporting will, going forward, distinguish between loss from continuing operations, being primarily Huntexil® related activities, and loss from discontinuing activities
-- The company adjusts its financial guidance from an operating loss (EBIT) of DKK 300 million to an operating loss on continuing operations of DKK 370 million in 2011, of which DKK 130 million are primarily Huntexil®-related costs, and the remaining DKK 240 million are one-off restructuring costs with no cash effect. In addition, the company expects a loss on discontinuing activities of approximately DKK 345 million in 2011, with a cash effect of approximately DKK 140 million in 2011 and additional DKK 70 million in 2012
-- The value of cash and cash equivalents and securities is expected to be approximately DKK 230 million at the end of 2011
The principal objective is to take Huntexil® through the Prime-HD study which is to confirm the significant efficacy on the TMS that was demonstrated in the MermaiHD and HART studies. Concurrently with the study, NeuroSearch will prepare for product registration and marketing of Huntexil®. In the longer term, Huntexil® could form the basis of the establishment of commercial partnerships in selected markets and inlicensing of other CNS specialty pharmaceutical products.
Patrik Dahlen, CEO of NeuroSearch, commented on the announcement: “We are committed to complete the development of Huntexil® and market the product in the best possible way. In the long run, our vision is to create a specialty pharmaceutical company building on the platform that Huntexil® will give us. Unfortunately, this means that we will have to part with many competent employees who are working on other projects. We much regret this development, but it is necessary in order to realise the full potential of Huntexil®.”
Telephone conference
NeuroSearch will host a telephone conference today at 11.00 am CET (10 am UK time, 05 am EST). CEO Patrik Dahlen, EVP & CFO René Schneider and EVP & CDO Karin Garre will participate in the conference, which will be conducted in English and with access via the following telephone numbers: UK and international +44 207 509 5139, US +1 718 354 1226 and Denmark +45 3271 4767.
The conference call can also be accessed via the company's website www.neurosearch.com. The corresponding presentation will be available at the company's website at the time of the teleconference and a playback of the call will also be available from the website as soon as possible after the call.
Financial guidance for 2011 and outlook for 2012 The company's financial guidance is based on the assumptions that the company will secure funding for the completion of the entire development programme, that the first patient in Prime-HD is dosed in the first half of 2012 and that no partnership agreement is reached with respect to Huntexil®.
The financial guidance and reporting will, going forward, distinguish between loss from continuing operations, being primarily activities related to Huntexil®, and loss from discontinuing activities.
The company adjusts its financial guidance from an operating loss (EBIT) of DKK 300 million to an operating loss on continuing operations of DKK 370 million in 2011, of which DKK 130 million primarily are costs related to Huntexil®, and the remaining DKK 240 million are one-off restructuring costs with no cash effect. The one-off restructuring costs primarily relates to impairment of goodwill, intangible assets and property, plant and equipment.
In addition, the company expects a loss on discontinuing activities of approximately DKK 345 million in 2011, with a cash effect of approximately DKK 140 million in 2011 and additional DKK 70 million in 2012. Discontinuing activities include costs and provisions for loss-making collaboration agreements, salaries for employees under notice, lease obligations and other items.
The restructuring is expected to reduce the company's fixed and employee-related costs from about DKK 200 million per year to about DKK 50 million per year.
The value of cash and cash equivalents including securities is expected to be approximately DKK 230 million at the end of 2011.
For 2012, the company provides an outlook on operating loss from continuing operations in the range of DKK 150 to DKK 175 million. The costs relate primarily to the Phase III programme for Huntexil®, provided it progresses according to plan, but also include costs for continuing the Open HART study, the compassionate use programme, development of a tablet formulation for commercial use, preparation of product registration and marketing, further development of seridopidine and ordopidine and costs of a significantly smaller organisation. No additional costs on discontinuing activities are expected in 2012.
As a consequence of the restructuring, NeuroSearch will gain significant financial flexibility, which will imply that the company will be a going concern until the beginning of 2013 should the Prime-HD study not be initiated.
Total external costs for completion of the Huntexil® development programme, consisting of Prime-HD and four additional studies, are estimated to be about DKK 200 million of which the majority relates to Prime-HD. Most of the external costs are expected to be incurred in 2012 and 2013 provided that the study is initiated in the first half of 2012.
NeuroSearch is actively assessing different funding options, including a partnership agreement for Huntexil® and a rights issue.
NeuroSearch designs a Phase III development programme for Huntexil® As a candidate for the treatment of Huntington's disease, Huntexil® has been granted Orphan Drug status in Europe and the United States, and the purpose of the programme is to develop the first drug for the treatment of the overall impaired motor symptoms associated with Huntington's disease.
As previously announced, NeuroSearch discussed the future development programme for Huntexil® in Huntington's disease with the regulatory authorities in the United States (FDA) and Europe (EMA) in 2011. An End of Phase II meeting was held with the FDA and scientific advice was obtained in a meeting with the EMA. Both authorities required additional Phase III data to confirm the previously observed effect on TMS and to further support the clinical relevance of this finding. The FDA also recommended an investigation of higher doses of Huntexil®.
NeuroSearch has now designed the development programme for Huntexil® based on the recommendations from both the FDA and the EMA, the results of the HART and MermaiHD studies, and on discussions with leading experts in the field. The Phase III study protocol will be submitted for informal protocol review to the FDA during Q4 2011 and the feedback will determine the final details of the Prime-HD study.
The results of the development programme will form the basis for the application for marketing authorisation with the regulatory authorities in regions such as the United States and Europe.
Highlights of the confirmatory Prime-HD Phase III efficacy study The planned efficacy study is a randomised, double-blind and placebo-controlled three-arm Phase III clinical study.
The primary objective of Prime-HD is to confirm the effectiveness of Huntexil® measured according to the TMS. The TMS is the motor domain from the Unified Huntington's Disease Rating Scale (UHDRS), on which a significant effect of Huntexil® (45 mg twice daily) was seen both in the HART and MermaiHD studies. In both studies the TMS was included as secondary and tertiary endpoint, respectively.
To further evaluate the clinical relevance of the effect, an assessment will be made of the patients overall function. This function is measured using the Clinical Global Impression (CGI) scale, for which a trend towards effect of Huntexil® (45 mg twice daily) was seen in HART. The CGI score will be based on interviews performed by the doctor based on a defined semi-structured interview, the so-called Clinician's Interview-Based Impression of Change (CIBIC).
Two Huntexil® doses will be investigated: 45 mg and 67.5 mg, both twice daily. The efficacy of the two doses measured according to the TMS and CGI will be tested within a closed testing procedure to ensure an overall significance level of 5%.
The study is designed to confirm the efficacy on TMS of Huntexil® administered as a 45 mg twice-daily dose, with a power of 90%.
Study design:
-- Primary endpoint: Total Motor Score, TMS
-- Other endpoints in order of priority:
-- General clinical improvement measured by the CGI using CIBIC as the preceding interview
-- Activities of everyday life using the Alzheimer's Disease Cooperative Study- Activities of Daily Living (ADCS-ADL) scale
-- Other non-motor scales from UHDRS (e.g. cognitive skills and function)
-- Prime-HD is planned to enrol 630 patients in three equal-sized treatment arms (placebo, 45 mg or 67.5 mg Huntexil®, both twice daily)
-- Patients will be recruited in Europe and the United States and possibly also in South America and Australia
-- Treatment duration will be 26 weeks
-- Patient eligibility criteria will be similar to those in the HART and MermaiHD studies
-- The six-months randomised phase will be followed by a 4 weeks' wash out period and then followed by a 6-months' open-label extension, in order to collect long-term (12 months) safety data
NeuroSearch expects to initiate patient dosing in Prime-HD in the first half of 2012 provided that the company has secured funding for completion of the entire development programme.
Patient enrolment is expected to take about 12 months. The study design is outlined below (please see the enclosed PDF file).
Additional Huntexil® clinical studies
The scheduled development programme includes four complementary studies, of which the first was recently initiated, to support the registration applications. The studies can be completed independently of the Prime-HD study and comprise:
-- Multiple Ascending Dose (MAD) study.
This study, in which the first subject was recently dosed, aims to assess the safety and tolerability of Huntexil® at increasing doses and to, for example, provide the basis for the selection of the supra-therapeutical dose in a TQT heart study. Enrolling up to 36 healthy volunteers, the MAD study is expected to be completed by Q1 2012. Interim analyses of the data will be prepared before each dose escalation and for the use in the other studies, including the Prime-HD study
-- TQT heart study.
Mandatory study to assess the effect of Huntexil® on the heart's conductive properties (electrocardiogram). The study will be conducted in healthy volunteers
-- Abuse potential study.
As Huntexil® is a compound acting on the cental nervous system, it will be evaluated for abuse potential. A clinical abuse potential study will be conducted in subjects classified as recreational drug abusers -- Bioequivalence study.
A study to evaluate the bio-equivalence between Huntexil® in capsules, used for testing in clinical development and a tablet formulation, to be developed and used at launch
Restructuring and discontinuation of research and development activities Simultaneously with the initiation of the pivotal development programme for Huntexil®, NeuroSearch is planning to carry out a comprehensive restructuring and controlled discontinuation of the company's other activities in order to optimise financial and management resources primarily for the development of Huntexil®.
The restructuring of NeuroSearch will have the following implications:
-- The employee headcount will be reduced to a size necessary to primarily continue the development of Huntexil®. The headcount at NeuroSearch is expected to be reduced from the current number of just under 200 to about 100 employees during the second quarter of 2012, to about 50 employees at the end of the third quarter of 2012 and to about 35 employees when the restructuring is fully and finally implemented in mid-2013
-- NeuroSearch will seek buyers for all drug candidates with the exception of Huntexil®, ordopidine and seridopidine
-- In the months ahead, NeuroSearch will explore the possibilities for the company's research activities to continue under new ownership
The employees affected are expected to be given notice at the end of October 2011 with notices of termination that will allow the company to continue to meet its obligations towards Lilly and Janssen.
NeuroSearch will initiate negotiations with the employee representatives in accordance with applicable rules and legislation and will ensure that all involved employees are given the best possible support.
Thomas Hofman-Bang
Patrik Dahlen
Chairman of the Board CEO
Contact persons
Patrik Dahlen, CEO, telephone: +45 4460 8214 or +45 2629 7296
René Schneider, EVP & CFO, telephone: +45 4460 8700 or +45 2911 2097
About NeuroSearch
NeuroSearch A/S is a European-based biopharmaceutical company listed on NASDAQ OMX Copenhagen A/S (NEUR) and specialising in central nervous system (CNS) disorders. The vision is to develop NeuroSearch into a profitable specialty pharmaceutical company. The strategy is primarily to complete the development and subsequently to market Huntexil®, a unique drug in Phase III for the treatment of the motor symptoms of Huntington's disease.
This announcement has been prepared in Danish and English. In case of inconsistencies between the two versions, the Danish text shall prevail.
Forward-looking statements This announcement includes forward-looking statements and opinions, including statements on future results and cash resources, and other forecasts about the company's expectations. Forward-looking statements involve risk, uncertainties and other factors, many of which are beyond the company's control. This could cause actual results and other factors to differ, even materially, from the results and factors discussed in the forward-looking statements. Forward-looking statements include statements concerning our plans, objectives, goals, future events, performance and/or other information that is not a statement of historical fact. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances, except as required by law or similar binding rules.