CAMBRIDGE, England, Nov. 28 /PRNewswire-FirstCall/ -- Cambridge Antibody Technology today announces preliminary results for the year ended 30 September 2005 and an update on business since year end.
Highlights - Legal action against Abbott Laboratories in respect of HUMIRA(R) royalties settled on acceptable terms in October 2005 - Royalty agreement secures a significant and growing revenue stream from HUMIRA: - HUMIRA sales of US$959 million for the first nine months of 2005 - Abbott continues development of HUMIRA for a number of additional indications - Three proprietary product candidates, and one product candidate which CAT is developing with Genzyme, in clinical trials: - Positive preliminary results from the Phase I clinical trial of CAT- 354, being developed as a potential treatment for severe asthma - Acquisition of two oncology product candidates from Genencor, CAT-3888 and CAT-8015 - GC-1008 commenced a Phase I clinical trial as a potential treatment for Idiopathic Pulmonary Fibrosis (IPF) - First US operation, CAT Inc, established in Palo Alto, California - Excellent progress in the major Strategic Alliance with AstraZeneca in the field of inflammatory disease, with six Discovery programmes now active - Ten further licensed product candidates in clinical development, funded by CAT’s licensees - Balance sheet remains strong with net cash and liquid resources of 175.6 million pounds as at 30 September 2005
Peter Chambre, Chief Executive Officer, commented: “This has been a year of significant achievement for CAT. Substantial headway has been made with the development of CAT-354 and GC-1008 and our proprietary pipeline has been strengthened further since the year end with the acquisition of two promising oncology candidates from Genencor. Our major Strategic Alliance with AstraZeneca continues to make excellent progress.
Following the settlement of our long running legal action against Abbott, we are now able to plan for the future with a higher degree of certainty than has been the case for the last three years. The royalty stream from HUMIRA and our balance sheet strength provide firm foundations for the future development of CAT.”
Chairman’s Statement
“A number of important achievements have been accomplished during the past year. I am grateful to everyone who has contributed to CAT during the year. I welcome in particular two directors to the Board. Following our Annual General Meeting (AGM) in February, Diane Mellett, General Counsel at CAT, joined the Board of Directors as an Executive Director. Diane joined CAT in October 1997 as Vice President Legal Affairs and Company Secretary. She is an English lawyer and a US attorney admitted to the Illinois Bar, and has previously worked in private practice. In September, we appointed Dr John Brown as a new non-executive director. John has held a number of positions within our sector, most recently as Chief Executive of Acambis plc. John has widespread commercial, financial and scientific experience within the biopharmaceutical industry and is already making a significant contribution to the Board and also the Audit and Remuneration Committees.
I would also like to thank two non-executive directors who will not be seeking re-election at the company’s AGM in February 2006. Professor Sir Aaron Klug has been a director of CAT for over 15 years, and has made a significant and valuable contribution to the company during that time. He has also served as a member of CAT’s Scientific Advisory Board (SAB). His scientific contribution, his commitment and his belief in the company have been instrumental in keeping CAT at the forefront of molecular display and drug discovery. He will continue to be a member of CAT’s SAB and act as a scientific advisor to the company. Professor Uwe Bicker has served two three-year terms on CAT’s Board and has contributed substantially to CAT’s continuing transition.
We are delighted to note that the University of Heidelberg has recently conferred upon him its highest honour, electing him to the honorary position of Senator in recognition of his active work for the benefit of this prestigious university.
I would like to acknowledge the contributions to the business from CAT’s collaborators -- AstraZeneca, Genzyme and Zenyth (formerly Amrad) -- with whom we have formed effective and productive relationships, and also from our licensees. In addition, I would like to thank CAT’s SAB, which continues to play an important role in guiding the scientific direction of our company, and my colleagues on the Board. And last, but by no means least, I would like to thank the staff, whose dedication and commitment to CAT has delivered a year of achievement.”
Paul Nicholson
Product Development Pipeline
CAT is a biopharmaceutical company aiming to bring improvements to seriously ill patients’ lives and in this way create outstanding returns for shareholders. The company seeks to develop high value products in which it has a significant economic interest, both independently and in collaboration with partners, by using its capabilities and technologies in the discovery and development of antibody medicines in selected therapeutic areas. CAT also licenses its technologies to enable others to develop drugs in which CAT has a financial interest.
CAT has recently (post year end) acquired two oncology candidates from Genencor and a development organisation in the US to take these programmes forward. The acquisition of these product candidates accelerates the development of CAT’s proprietary pipeline and signals the intention to focus future proprietary research and development activities in oncology - the area where CAT believes the opportunities are greatest for a company of CAT’s technologies and capabilities.
Proprietary
CAT-354 is a fully human anti-IL13 monoclonal antibody being developed by CAT, initially as a potential treatment for severe asthma. CAT commenced a Phase I clinical trial in the UK in September 2004 to assess safety, tolerability and pharmacokinetics. The trial was a double-blind, placebo-controlled, rising single dose intravenous study in 34 mild asthmatic patients. In June 2005, CAT announced preliminary results which showed that CAT-354 was well tolerated at all doses and no safety concerns were identified; pharmacokinetics met expectations. The trial results will be submitted to an appropriate scientific meeting in due course.
Based on these results, CAT is now planning to start a further clinical trial in the first quarter of 2006. This is being planned as a repeat-dose safety study in patients with mild/moderate asthma. The trial will study safety, tolerability and pharmacokinetics, and is likely to take place in the UK.
Given the size of the market and complexity of the likely development plan for CAT-354, CAT has decided that the programme will benefit from having a partner experienced in developing drugs for major respiratory indications prior to commencing Phase III clinical trials. Accordingly, CAT has started to assess interest in the product candidate from a limited number of potential licensees.
In November 2005, CAT announced the acquisition of CAT-3888 (formerly GCR-3888) and CAT-8015 (formerly GCR-8015) from Genencor, a subsidiary of Danisco, based in Palo Alto, California.
CAT-3888 and CAT-8015 are anti-CD22 immunotoxins. Each comprises a disulphide-linked antibody fragment (dsFv) that targets the CD22 receptor, fused with a specifically engineered toxin molecule (Pseudomonas exotoxin PE38) that minimises non-targeted toxicity, potentially resulting in a highly specific therapeutic molecule. CD22 is a cell-surface receptor expressed in a variety of B-cell malignancies. CAT-3888 and CAT-8015 act by releasing the toxin intracellularly, after the whole immunotoxin has been internalised via the CD22 receptor.
CAT-3888 and CAT-8015 were discovered and initially developed by the US National Cancer Institute (NCI), which is part of the US National Institutes of Health (NIH). Genencor licensed the candidates for haematological malignancies and entered into a co-operative research and development agreement (CRADA) with the NIH, which is now being continued by CAT. Under the original licence agreement with the NIH, CAT has rights to a portfolio of intellectual property associated with the programmes and will pay future royalties to the NIH.
The NCI has demonstrated significant efficacy of CAT-3888 in patients with hairy cell leukaemia (HCL) in a Phase I clinical trial. The trial was carried out in 46 patients and performed at the NCI. The patients suffered from one of three types of CD22 positive B-cell tumours: four patients with non-Hodgkins’ lymphoma (NHL), 11 patients with chronic lymphocytic leukaemia (CLL) and 31 patients with HCL. The results were published in the Journal of Clinical Oncology (Vol. 23 No. 27 September 20, 2005) and included data from 265 cycles of treatment. Results showed that CAT-3888 was active in HCL, with 19 complete remissions (61%) and six partial responses (19%) in 31 patients. Lower, but significant, activity occurred in CLL. The publication concluded that the drug was well tolerated and highly effective in HCL even after one cycle of treatment.
CAT-3888 is currently in a Phase II clinical trial for the treatment of HCL in 25 patients. The trial started in October 2003. There are also two ongoing Phase I clinical trials. In February 2004, a trial commenced in paediatric refractory CD22-positive leukaemias and lymphomas in up to 54 patients. In September 2005, a Phase I study in 20 patients with CLL and NHL commenced. All the clinical trials are in patients who are resistant/refractory to conventional treatment and all are being run at the NCI. CAT will support the NCI’s ongoing development of CAT-3888 in all these indications. Data are expected to be available from all three trials by the end of 2006.
CAT-8015 is an optimised version of CAT-3888 with increased affinity for CD22, and is currently in pre-clinical development as a potential treatment for B-cell malignancies including NHL and CLL.
CAT intends to file an Investigational New Drug application (IND) for CAT-8015 in various CD22 positive B-cell malignancies, including NHL and CLL, following a period of manufacturing development that is expected to be complete by the end of 2006.
Trabio(R) (lerdelimumab) is a fully human anti-TGF Beta(2) monoclonal antibody developed by CAT as a potential treatment for improving the outcome of glaucoma surgery. Trabio failed to demonstrate efficacy in two Phase III clinical trials (in November 2004 and March 2005). CAT has now terminated all further development of Trabio, subject only to continuing with its minimum obligations in completing an ongoing US clinical trial.
Collaborative
a) Genzyme - TGF Beta
GC-1008 is a pan-specific fully human anti-TGF Beta monoclonal antibody being developed by CAT and Genzyme. In October 2005, a Phase I clinical trial of GC-1008 in idiopathic pulmonary fibrosis (IPF) commenced. The objectives of the trial are to evaluate the safety, tolerability and pharmacokinetics of single intravenous infusions of GC-1008 in patients with IPF. The trial, which is an open-label, single dose, dose-escalating study will be in 25 patients in five centres in the US. Preliminary results are expected to be available in 2007.
Subject to ongoing discussions with the US Food and Drug Administration (FDA), the companies are planning to file an IND for a Phase I clinical trial in oncology early in 2006.
b) Amrad - GM-CSF
CAT and Amrad have selected a lead antibody, CAM-3001. Preliminary safety studies are ongoing and scale-up of production prior to pre-clinical development is underway.
c) AstraZeneca - Respiratory and Inflammation
Since November 2004, excellent progress has been made. CAT and AstraZeneca are working on six Discovery projects: one pre-existing CAT Discovery programme adopted into the Alliance and five new programmes, all of which had progressed to lead isolation stage on schedule by June 2005. Selection of the next targets for Alliance Discovery projects is already underway and during the next year, the companies intend to commence a further five programmes.
Licensed
a) Product licensees
HUMIRA(R) (adalimumab) is a fully human anti-TEN alpha monoclonal antibody, isolated and optimised by CAT in collaboration with Abbott and now approved for marketing as a treatment for rheumatoid arthritis (RA) in 57 countries.
In August 2005, Abbott announced that it had received approval from the European Commission to market HUMIRA as a treatment for psoriatic arthritis and early RA in Europe. In October 2005, Abbott announced that the FDA had approved HUMIRA as a first-line treatment of recent onset moderate to severe RA and for reducing the signs and symptoms of active arthritis in patients with psoriatic arthritis.
Also in October 2005, Abbott announced that it had simultaneously submitted a supplemental Biologics License Application (sBLA) with the US FDA and a Type II Variation to the European Medicines Agency (EMEA) seeking approval to market HUMIRA as a treatment for ankylosing spondylitis, an inflammatory disease of the spine and spinal joints.
Abbott continues to develop HUMIRA as a potential treatment for a number of additional indications and has stated that it expects to file applications for RA in Japan and, possibly, for Juvenile RA in 2005.
Phase III clinical trials in chronic plaque psoriasis commenced at the end of 2004 and Abbott has stated that it expects to submit a regulatory application for this indication in 2006 or early 2007.
In October 2005, Abbott announced new data in Crohn’s disease from a Phase III extension study. It showed that of the 55 patients who initially achieved remission in the Phase III study who were maintained on HUMIRA, approximately three quarters were still in remission at one year. Of those not initially in remission, 43% who stayed on HUMIRA therapy had achieved remission by one year. Abbott has stated that it intends to file a BLA for Crohn’s disease in 2006.
Abbott reported worldwide sales of HUMIRA of US$852 million in 2004 and sales of US$959 million for the first nine months of 2005. Abbott has forecast revenues from HUMIRA of more than US$1.3 billion in 2005.
ABT-874 is a fully human anti-IL12 monoclonal antibody, isolated and optimised by CAT in collaboration with Abbott, and licensed to Abbott. Abbott is developing ABT-874 as a potential treatment for Crohn’s disease, psoriasis and multiple sclerosis. A Phase II clinical trial continues in multiple sclerosis.
LymphoStat-B(TM) is a fully human anti-BLyS monoclonal antibody, licensed by CAT to Human Genome Sciences, Inc (HGSI). HGSI is developing LymphoStat-B(TM) as a potential treatment for systemic lupus erythematosus (SLE) for which HGSI has a Fast Track designation from the US FDA, and RA. In July 2005, HGSI announced that GlaxoSmithKline (GSK) had exercised its option to develop and commercialise LymphoStat-B jointly with HGSI.
In April 2005, HGSI announced positive Phase II results of LymphoStat-B in a 283-patient trial in RA and, in November 2005, the results were presented at the 69th Annual Meeting of the American College of Rheumatology/Association of Rheumatology Health Professionals (ACR/ARHP) in San Diego. The results show that LymphoStat-B met the primary efficacy and safety endpoints, and demonstrate that it is safe and well tolerated, biologically active and reduces RA activity at a level of statistical significance.
In October 2005, HGSI announced the results of a Phase II trial of LymphoStat-B in 449 patients with SLE: LymphoStat-B was shown to be safe and well-tolerated and, although the drug did not meet the overall primary efficacy endpoints, showed signs of statistically significant clinical effect in seropositive patients representing 75% of patient population in the study. Based on the results, HGSI stated that it now has a path forward to Phase III for LymphoStat-B in SLE and planning is underway.
HGS-ETR1 (mapatumumab) is a fully human anti-TRAIL Receptor-1 monoclonal antibody licensed by CAT to HGSI. HGSI is developing HGS-ETR1 as a potential treatment for multiple cancer indications. In August 2005, HGSI announced that GSK had exercised its option to develop and commercialise HGS-ETR1 jointly with HGSI.
Three Phase II clinical trials of HGS-ETR1 have been initiated: in non-Hodgkins’ lymphoma (NHL), non-small cell lung cancer (NSCLC) and colorectal cancer.
In June 2005, HGSI announced interim results from an ongoing Phase II trial of HGSI-ETR1 in patients with advanced NHL, which demonstrated that it is well tolerated and shows signs of clinical activity. Partial responses were observed in some patients. HGSI expects that full data from the study will be presented in December 2005 at the 47th Annual Meeting of the American Society of Hematology.
In July 2005, HGSI announced that the results of a Phase II clinical trial of HGS-ETR1 demonstrated that HGS-ETR1 was well tolerated and could be administered safely and repetitively in patients with advanced NSCLC. Stable disease was observed a number of patients and the results support continued evaluation of HGS-ETR1 in NSCLC patients in combination with chemotherapeutic agents.
In November 2005, at the European Cancer Conference (ECCO 13) in Paris, HGSI announced results of a Phase II clinical trial of HGS-ETR1 in patients with advanced colorectal cancer. In the open-label study in 38 patients conducted in Germany, HGS-ETR1 was found to be well-tolerated and could be administered safely and repetitively to patients with advanced colorectal cancer. The results support the continued evaluation of HGS-ETR1 in combination with chemotherapy for the treatment of colorectal cancer.
Additionally, two Phase Ib open-label, dose escalation clinical studies are currently underway to evaluate the safety and tolerability of HGS-ETR1 in combination with chemotherapeutic agents in the treatment of patients with advanced solid malignancies. The first is being conducted in the US and the second in The Netherlands. Interim results of both studies were presented in November 2005 at the AACR-NCI-EORTC International Conference on Molecular Therapeutics in Philadelphia. The results to date demonstrate that HGS-ETR1 in combination with chemotherapy was well tolerated and could be administered safely and repetitively at the doses and schedules evaluated. Partial response was observed in a number of patients in each of the studies. These results support further evaluation of HGS-ETR1 in combination with chemotherapy Phase II trials.
HGS-ETR2 is a fully human anti-TRAIL Receptor-2 monoclonal antibody licensed by CAT to HSGI and being developed by HGSI as a potential treatment for cancer.
In January 2005, HGSI reported plans to initiate Phase II clinical trials of HGS-ETR2. At the AACR-NCI-EORTC conference in Philadelphia, HGSI presented results from two Phase I clinical trials that demonstrate that HGS-ETR2 is well tolerated and can be administered safely and repetitively in patients with advanced solid tumours. Stable disease was observed in a number of patients in each of the studies. These data support further evaluation of HGS-ETR2 in Phase II trials.
MYO-029 is a fully human monoclonal antibody that neutralises the effects of GDF-8 (a protein which is associated with reduced skeletal muscle mass). The antibody was discovered by CAT in collaboration with Wyeth and is licensed to Wyeth, which is studying it as a potential therapy for muscle-wasting diseases such as muscular dystrophy. In February 2005, Wyeth announced a Phase I/II clinical trial in adult patients with muscular dystrophy (MD). The trial, which will take place in 12 clinical sites, is a prospective, randomised, placebo-controlled study in 108 patients, including equal numbers of patients with facioscapulohumeral MD (FSHD), Becker MD (BMD) and limb-girdle MD (LGMD). Results of the study are expected to be available in late 2006.
ABthrax(TM) is a fully human monoclonal antibody licensed by CAT to HGSI. ABthrax(TM) was isolated and developed by HGSI from antibody libraries licensed from CAT and HGSI is developing it as a potential treatment for anthrax disease. In October 2005, HGSI announced that it had been awarded a two-phase contract to supply ABthrax, a human monoclonal antibody developed for use in the treatment of anthrax disease, to the US Government. Under the first phase of the contract, HGSI will supply ten grams ABthrax to the US Department of Health and Human Services (HHS) for comparative in vitro and in vivo testing. Under the second phase of the contract, under the Project BioShield Act of 2004, the US Government has the option to place an order within one year for up to 100,000 doses of ABthrax for the Strategic National Stockpile, for use in the treatment of anthrax disease. The HHS comparative testing results, along with HGSI’s own pre-clinical and clinical study results, will form the basis of the US Government’s decision process for exercising its option for additional product for the Strategic National Stockpile.
b) Patent licensees
CAT and Dyax have cross-licensing agreements. In January 2005, Dyax announced that two fully human monoclonal antibodies from Dyax’s proprietary phage display libraries, IMC-11F8 and IMC-1121B, entered Phase I clinical development at ImClone Systems.
In June 2005, CAT and BioInvent entered into a licence agreement under which CAT granted BioInvent and its partners the rights to use its Phage Display technology patents to enable BioInvent to develop antibody products from its n-CoDeR antibody libraries. As part of the agreement, BioInvent withdrew its opposition to CAT’s patents filed at the European Patent Office in Munich. CAT has received an initial licence fee from BioInvent and will receive milestone payments and royalties on any successful antibody therapeutics that BioInvent and its partners develop using CAT’s Phage Display technology. One product candidate, BI-201, a human antibody that binds the TAT toxoid protein, is in Phase I/IIa clinical testing as a potential treatment for HIV infection. BioInvent expects to begin Phase II clinical trials in 2006.
In August 2005, CAT granted Symphogen a patent licence to use CAT’s Phage Display technology for research purposes and to develop and commercialise a number of therapeutic and diagnostic human monoclonal antibody products. Symphogen made an upfront payment for the licence and exercised its first product option to develop and commercialise its lead product Sym001. Symphogen paid a product licence fee and will make future milestone and royalty payments to CAT upon the successful development of Sym001.
In September 2003, CAT granted Micromet a patent licence for the development and commercialisation of Micromet’s human therapeutic antibody candidate MT201 (adecatumumab), specific for the epithelial tumour target Ep-CAM. In December 2004, Micromet and Serono signed an exclusive collaboration and licence agreement for the development and commercialisation of MT201, which is currently being tested in two multi-centre Phase II clinical trials. CAT receives milestone and royalty payments on human antibody-based products developed against the Ep-CAM target by Micromet and its partners. The first milestone payment would be due on filing for product approval.
CAT believes that approximately 25 discovery and pre-clinical programmes are underway at licensees with fully human antibodies derived from CAT’s technologies.
Financial Review
The following review is based on the Group’s consolidated financial statements which are prepared under UK Generally Accepted Accounting Principles (GAAP).
Results of operations: Years ended 30 September 2005 and 2004
Turnover, consisting of royalties, licence fees, milestone payments, contract research fees and other, increased from 15.9 million pounds in the 2004 financial year (2004) to 194.0 million pounds in the 2005 financial year (2005).
In November 2003, CAT announced that it had commenced legal proceedings against Abbott in the High Court in London regarding the royalty rate payable on sales of HUMIRA under a licence agreement between the parties. In October 2005, CAT announced it had reached an agreement with Abbott regarding royalties payable to CAT under this licence agreement.
- Abbott will pay CAT royalties at 2.688% on sales of HUMIRA from 1 January 2005. CAT will retain all of these royalties. - CAT will retain all royalties received from Abbott in respect of sales of HUMIRA up to 31 December 2004, net of approximately 7.6 million pounds which will be paid to its licensors, Medical Research Council, Scripps Institute and Stratagene. - Abbott paid CAT the sum of US$255 million, which CAT paid to its licensors in lieu of their entitlement to royalties arising on sales of HUMIRA from 1 January 2005 onwards. This was both received from Abbott and paid to CAT’s licensors in October 2005. - CAT refunded to Abbott approximately 9.2 million pounds for royalties paid in respect of sales of HUMIRA from 1 January 2005 through to 30 June 2005. - Abbott will pay CAT five annual payments of US$9.375 million commencing - January 2006, contingent on the continued sale of HUMIRA. From each of these payments, CAT will pay US$2 million to its licensors.
The settlement was an extension of the litigation and has therefore been accounted for as an adjusting post balance sheet event, that is, as though it had occurred as at 30 September 2005. The settlement accounts for the significant increase in revenue, namely royalties, in 2005 as compared with 2004.
Prior to settlement being reached, the royalty arrears received from Abbott in January 2005, pursuant to the High Court Judgement, and the royalties received in March 2005 in excess of two per cent argued by Abbott, were not recognised as revenue. These receipts were held in other creditors on the balance sheet pending resolution of the appeal. These amounts have been released to revenue in CAT’s results for the full year as a result of the settlement. Of the royalty payment received from Abbott in September 2005 (in respect of sales of HUMIRA for the six months to 30 June 2005), the 9.2 pounds million due back to Abbott has been recognised in other creditors. The remainder, equating to 2.688% of sales, has been recognised as revenue.
Royalty income for 2005 comprises the following, all in respect of HUMIRA: 2005 2005 2005 Excluding Settlement Total Settlement with Abbott with Abbott pounds ‘000 pounds ‘000 pounds ‘000 Sales: 6 months to 31 Dec 04 - at 2%, adjusted to 5-6% 5,167 8,114 13,281 Sales: 6 months to 30 Jun 05 - at 2%, adjusted to 2.688% 6,529 2,346 8,875 Accrued royalty on sales 3 months to 30 Sep 05 - at 2%, adjusted to 2.688% 4,041 1,390 5,431 Release of back dated royalties for sales to 30 Jun 2004 - excess of 5-6% over 2% - 12,934 12,934 Royalty buy out (due to CAT’s licensors) - 144,722 144,722 Total 15,737 169,506 185,243
As reflected above, royalties due on sales of HUMIRA have been accounted for on an accruals basis for the first time, resulting in an accrual of income for the final quarter of the 2005 financial year. This means that the results of 2005 reflect five quarters of royalty income.
Royalties recognised during the 2004 financial year relate to HUMIRA. Abbott announced that it had received US FDA approval to market HUMIRA in the US in December 2002 and, that it had received approval to market HUMIRA in the EU during September 2003. Sales of HUMIRA commenced in January 2003. The three royalty payments received during the 2004 financial year, and recognised as revenue, represent Abbott’s calculation of the 2% royalties due on HUMIRA sales in the period from January 2003 to 30 June 2004.
Licence fees increased from 4.6 million pounds to 5.2 million pounds in 2005. A full year’s revenue was recognised under the Genzyme library licence for the first time during 2005 which, with the new licence granted to NovImmune, accounts for the majority of the increase between 2005 and 2004.
Clinical milestone payments were 1.1 million pounds in 2005 (2004: 1.1 million pounds). In 2004, a milestone payment was received from Wyeth with the initiation of a Phase I clinical trial for MYO-029. Fifty percent of the value of this royalty payment is creditable against any future royalties payable by Wyeth and therefore only half the value was recognised as revenue in the year. A clinical milestone payment was received from Abbott during the 2003 financial year following US FDA approval of HUMIRA. The milestone was not recognised as revenue during the 2003 financial year as it was creditable against royalties receivable from Abbott. Three fifths of this milestone were released as revenue during the 2004 financial year, the remainder was released as revenue in 2005. In addition, in 2005 two clinical milestones were received from Dyax. Technical milestone payments decreased from 1.6 million pounds in 2004 to 1.1 million pounds in 2005. Technical milestone payments were received from Amgen in both financial years. Unless otherwise stated, the above milestone receipts have been recognised in full as revenue under the Group’s accounting policy.
CAT receives a percentage of certain revenues generated by MorphoSys under the terms of the Agreement signed in December 2002 and a percentage of certain revenues generated by Dyax under the terms of a licensing agreement. The majority of the increase in Other Revenues between 2004 and 2005, arose as a result of an increase in such revenues received from MorphoSys and Dyax.
CAT’s direct costs are typically payments made to third parties as a proportion of certain CAT revenues. The majority of direct costs for the 2005 and 2004 financial years comprised royalties payable to the Medical Research Council (MRC) and other licensors, primarily arising from the payments received from Abbott regarding sales of HUMIRA. The amounts due to CAT’s licensors on royalties received from Abbott regarding sales of HUMIRA, were dependent on the outcome of the legal proceedings between CAT and Abbott. Prior to the resolution of the litigation proceedings with Abbott, royalties due to CAT’s licensors were provided for at the mid-point of the expected possible outcomes. Subsequent to the Settlement Agreement reached with Abbott, final amounts due to CAT’s licensors have been agreed between the parties and provided for in CAT’s full year results for 2005, resulting in the adjustments shown below. As part of the settlement agreement reached with Abbott, Abbott paid CAT US$255 million, which CAT paid to its licensors in lieu of their entitlement to royalties arising on sales of HUMIRA from 1 January 2005 onwards. This one off payment due to CAT’s licensors has been recorded in direct costs in 2005 and accounts for the significant increase in direct costs between 2004 and 2005.
