PARIS, March 6 /PRNewswire-FirstCall/ -- ExonHit Therapeutics S.A., a French drug and diagnostic discovery company, today announces its consolidated financial results for the year ending December 31, 2006.
2006 Key Events - Founding milestone reached in the collaboration with bioMerieux in the blood diagnostic of cancers; - Early renewal and amendment of the strategic therapeutic collaboration with Allergan Sales LLC; - Development of a map opening to new deciphering of the human genome and launch of an e-portal giving the ability for clients to design their own biochips according to the ExonHit Therapeutics patented design; - Filing of 58 new patents; - Increase of financial resources, substantial improvement of stock liquidity and higher free float. Other 2006 important events - Key financial figures
- Research and development revenues increased by 26% to EUR 5.6 million (EUR 4.5 million in 2005);
- Operating loss at EUR 5.0 million in 2006(EUR 4.8 million in 2005); - Net loss of EUR 4.5 million, against EUR 4.2 million in 2005; - Cash burn from operations remained limited at EUR 3.9 million;
- Consolidated cash and cash equivalents position increased to EUR 24.0 million at December 31, 2006 following the issuance of convertible bonds for EUR 13.5 million, and the exercise of warrants and stock options for over EUR 1.5 million.
- Strategic progress in therapeutics
- Development of a diagnostic to follow the efficacy of the EHT0202 compound and the pursuit of clinical trials for this compound with the objective to initiate Phase II at the end of 2007;
- Validation of the second pre-clinical program with Allergan. - Strengthened position in diagnostics - Patents filed for the detection of Alzheimer’s disease in blood;
- Initiation of a diagnostic program with our own resources for the blood detection of atherosclerosis;
- Development of the SpliceArray(TM) business
- Signature of the first research license on the ExonHit Therapeutics IP in this field with Merck & Co.
- Strengthened patent portfolio
- 58 new patents were filed in 2006, bringing the total of active patents filed since the Company’s creation in 1997 to 167. 26 patents have been granted to ExonHit Therapeutics since its inception.
Bruno Tocque, President of the Management Board of ExonHit, commented: “It is a great satisfaction to present our 2006 results. With revenues increased by near 25% and a strong increase in our financial resources, 2006 has been a solid year for ExonHit. We have reached our financial objectives with a stabilization of our operating loss while significantly developing ExonHit Therapeutics assets. We have recorded important progress in each activity and we have an enviable cash and cash equivalent position of EUR 24.0 million for a net cash burn from our operations lower than EUR 4 million. Since 2006 closing, we have further increased our financial resources by EUR 8 million. In 2007, we will continue to request excellence from our collaborators and we will witness success both in our diagnostic and therapeutic projects financed with our own resources in the Alzheimer’s disease field and in our strategic collaborations with Allergan and bioMerieux. This optimism is based on 9 years of intensive research to develop our clinical projects, with the only aim the research of genuine therapeutic and diagnostic innovation for the benefit of patients, and of course of our shareholders.”
Overview of ExonHit’s business activities
ExonHit intends to capitalize on the results of its marketing efforts and on the clinical trials conducted in 2006. In 2007, ExonHit will be present in its three fields of expertise -- therapeutics, diagnostics and genome analyzing tools -- and will continue its investments and balance projects financed on our internal resources and that of its partners. Each of these areas of discipline has its own risk and return on investment profile.
- Development of new therapeutics
ExonHit is planning to develop its therapeutic pipeline by using its R&D engine based on the analysis of alternative splicing events and their role in the onset of diseases. The company is planning to enter into both R&D and license agreements, to advance the clinical development of its proprietary drug candidates as well as leverage on its strategic alliance with Allergan.
- In the EHT 202 project, ExonHit Therapeutics has demonstrated that the administration of the EHT0202 compound in animals leads to an increase of a blood marker, the properties of which are directly linked to the effect of the compound on the symptoms and evolution of Alzheimer’s disease. This discovery has led to the filing of new patents, and will give us the ability to recruit,
in clinical trials, patients with Alzheimer’s that are likely to respond to this treatment. The pharmaceutical formulation of this compound, orally available, has been reviewed and new clinical trials have been initiated in order to further assess the safety, before measuring the compound efficacy.
- The EHT 206 project has continued and a new chemistry has been initiated by our chemists in order to design molecules that specifically interact with a variant of the rac gene and that is present in the brain of Alzheimer’s disease patients. This original chemistry will also open new development horizons for ExonHit in other therapeutic domains such as cancer or asthma.
- The research efforts in collaboration with Allergan have continued with an exceptional productivity and have led to the selection of new molecules for pre-clinical development. Two new chemical series optimized in 2006 should lead to two new additional pharmaceutical programs in 2007. Regulatory pre-clinical studies have been pursued by Allergan in view of the first administration to human of the first compound resulting from the collaboration. This compound presents an appropriate profile for the treatment of neuropathic pain, a multi-billion dollar market. The scope of this strategic collaboration has been broadened to all neuro-degenerative diseases, including among others, Alzheimer’s disease (but excluding current ExonHit programs) and Parkinson’s disease. Pain, Ophtalmology and ALS (Amyotrophic Lateral Sclerosis) remain in the scope as well.
- Development of new diagnostics
Clinical trials have been conducted for ExonHit to collect blood samples of patients with Alzheimer’s disease. The research to identify new specific blood markers is complete and the results are currently being analyzed.
A new project funded by ExonHit Therapeutics has been initiated in collaboration with researchers from College de France in order to develop a blood diagnostic to detect atherosclerosis.
The primary objective in this domain is to continue the research in collaboration with bioMerieux to develop new blood-based diagnostics for cancers, while developing our own projects in order to capitalize on our know- how in this field.
The first results of the blood-based diagnostic for breast cancer were presented in April 2006 at the AACR by bioMerieux. Meanwhile, two new research projects have been initiated within the collaboration: one for the development of a blood-based diagnostic for colon cancer, and more recently another for the development of a blood-based diagnostic for prostate cancer.
- Genomic analytical tools (SpliceArrays)
ExonHit researchers produced a new high resolution map for human gene expression as well as supporting tools for its study of 22,000 genes which express over 200,000 messenger RNAs, all detected for the first time with ExonHit’s self-funded research activities.
With this new map, the company has significantly increased the number of new SpliceArray(TM) commercially available and manufactured by Agilent Technologies, Inc. and Affymetrix, Inc.
ExonHit Therapeutics Inc, the US subsidiary, has also continued its service activity enabling industrial laboratories and academic bodies to measure gene and variant expression on these biochips in biological samples they send to our laboratory, with an expanded client list.
2006 Consolidated financials results - Profit and loss account
Consolidated R&D revenues were EUR 5.6 million in 2006, up 26% compared to EUR 4.5 million in 2005. Total revenues amount to EUR 5.6 million, an increase of 24% compared to the EUR 4.5 million achieved in 2005. 76% of ExonHit’s 2006 revenues come from the Allergan collaboration; this compares with 88% in 2005. R&D revenues from grants decrease from EUR 0.07 million in 2005 to EUR 9 thousand in 2006, due to the fact that certain research projects benefiting from French and European supports came to an end.
R&D expenses have increased by 3% to EUR 6.8 million in 2006 when compared to EUR 6.6 million in 2005. In 2006 R&D revenues covered 83% of the company’s R&D expenses, as opposed to only 68% in 2005.
Marketing and selling expenses have increased by 48% to EUR 0.8 million in 2006, compared to EUR 0.5 million in 2005. This increase mainly comes from the recruitment of new employees in this department and the increase in the selling and marketing effort for SpliceArrays(TM).
General and administrative costs increased by 33% to EUR 3.0 million in 2006, compared to EUR 2.3 million in 2005. This increase mainly comes from the substantial increase of study and consultancy fees between the two years as a result of the financial operations finalized by the company in 2006.
Operating expenses have been increased by 13% to EUR 10.6 million in 2006 compared to EUR 9.4 million in 2005. Consequently, the company’s operating loss is quite stable with EUR 5.0 million in 2006, compared to EUR 4.8 million in 2005.
The presence of convertible bonds with attached warrants (“OCABSA”) throughout fiscal year 2005, whereas the new convertible bonds were issued only early November 2006, explains the decrease in interest expenses between 2005 and 2006, all the more since the level of bank debt has also decreased between 2005 and 2006. At the same time, the financial gains have been stable at EUR 0.3 million and the unfavorable evolution of the euro/dollars exchange rate between the two year years has led to a currency rate gain of EUR 0.2 million during 2005, and a loss of EUR 0.3 million in 2006. As a consequence, the financial result amounts to a loss of EUR 0.04 million in 2006 as compared to a gain of EUR 0.4 million in 2005.
A change in the calculation of the Research Tax Credit took place on January 1st, 2006, and led to an increase of the income tax benefit from EUR 0.2 million in 2005 to EUR 0.5 million in 2006. On December 31, 2006, the company had a Research Tax Credit receivable of EUR 3.2 million.
As a consequence, ExonHit recorded a consolidated net loss of EUR 4.5 million in 2006 compared to EUR 4.2 million in 2005.
- Balance sheet
On December 31, 2006, the cash position of the company amounted to EUR 24.0 million, against EUR 13.6 million at the end of 2005. As a result of a number of share capital increases following exercise of warrants and stock-options and the issuance of convertible bonds, the Company’s financial resources have significantly improved.
In addition, in October 2006, the Company has put in place an equity line (PACEO) that will give it the ability to strengthen its shareholders’ equity by the issuance of up to 3,000,000 new shares over 24 months.
- Cash flow statements
In 2006, ExonHit’s net use of cash due to operating activities was EUR 3.9 million as compared to EUR 2.2 million for 2005. This difference is mainly due to timing of payments received from Allergan and the increase of differed revenues. This is partially balanced by an increase in other short term liabilities between December 31, 2005 and 2006.
The capital expenditure to strengthen the SpliceArray(TM) business mainly explains the expense of EUR 0.2 million in 2006, compared to EUR 0.3 million in 2005. Meanwhile, the sale of un-used or duplicate pieces of equipment generated EUR 0.4 million in cash in 2006.
The financial operations generated EUR 14.7 million in 2006, this compares with a use of EUR 0.5 million in 2005.
About ExonHit Therapeutics
ExonHit Therapeutics is the world’s leader in the analysis of alternative RNA splicing, a process which when deregulated plays a key role in the onset of various diseases.
ExonHit has a multi-component commercial strategy to capture the maximum value from its leadership in alternative splicing. The Company is already generating revenues from a new generation of microarrays, SpliceArray(TM) family of products, that enable life science researchers to detect crucial disease-associated information. These products are marketed worldwide in conjunction with Agilent and Affymetrix. In the field of diagnostics, ExonHit has a major collaboration with bioMerieux to develop completely novel predictive blood-based cancer diagnostics, which could play a key role in improving the treatment of breast cancer and other major cancers and develops its own projects for the detection of other chronic diseases such as Alzheimer’s disease or atherosclerosis.
In parallel, ExonHit is developing its own therapeutic pipeline in the field of neurodegenerative diseases and cancer. The Company has advanced drug candidates into clinical trials and is evaluating several promising pre-clinical compounds. ExonHit also has a strategic partnership with Allergan, to discover and develop new therapeutics in the areas of pain, neurological diseases and ophthalmology. This collaboration provides on-going research funding to ExonHit.
Founded in 1997, ExonHit is headquartered in Paris, France and has a U.S. facility in Gaithersburg, Maryland. The Company is listed on Alternext of Euronext Paris since November 17, 2005.
This press release includes only summary information and does not purport to be comprehensive. The projections, forecast and estimates of ExonHit Therapeutics which may be contained herein are for illustrative purposes only and are based on management’s current views and assumptions. Such projections, forecast and estimates involve known and unknown risks and uncertainties, as described at Section 4.2 “Facteurs de risque” (Risk Factors) of the Document de Base available on ExonHit Therapeutics’ website (www.exonhit.com), that may cause actual results, performance or events to differ materially from those anticipated in the summary information.
In addition, ExonHit Therapeutics, its shareholders, and its affiliates, directors, officers, advisors and employees have not verified the accuracy of, and make no representations or warranties in relation to, statistical data or predictions contained in this press release that were taken or derived from third party sources or industry publications, and such statistical data and predictions are used in this press release for information purposes only.
Finally, this press release may be drafted in the French and English languages. In an event of differences between the texts, the French language version shall prevail.
EXONHIT THERAPEUTICS S.A. CONSOLIDATED BALANCE SHEET (in thousands of euros) ASSETS December 31, December 31, 2005 2006 Intangible assets, net 33 577 Property and equipment, net 2,393 1,677 Other long term assets 3,040 1,387 Total long term assets 5,466 3,641 Accounts and grants receivable 602 1,879 Other short term assets 2,602 3,092 Cash and cash equivalents 13,601 23,972 Total short-term assets 16,805 28,944 TOTAL ASSETS 22,271 32,584 LIABILITIES AND SHAREHOLDERS’ EQUITY Share capital 369 382 Additional paid-in capital 56,431 58,003 Accumulated deficit (41,551) (46,086) Other 1,078 899 Shareholders’ equity 16,327 13,198 Convertible bonds - 13,522 Provisions for risks 288 169 LT portion of capital lease 0 0 obligations LT debt less current portion 81 0 LT portion of deferred income 538 732 Total long-term liabilities 619 732 Current portion of LT debt 972 951 Current portion of capital lease 242 0 obligations Accounts payable 732 650 Accrued liabilities 1,596 1,596 Deferred income ST 1,766 1,766 Total short-term liabilities 5,308 4,964 TOTAL LIABILITIES AND SHAREHOLDERS’ 22,542 32,584 EQUITY EXONHIT THERAPEUTICS S.A. CONSOLIDATED INCOME STATEMENT (in thousands of euros) Fiscal Year 2005 Fiscal Year 2006 (in thousands of euros, except per share data) Research and development revenues 4,474 5,630 Research and development grants 74 9 Total revenues 4,548 5,639 Research and Development expenses (6,571) (6,784) Marketing and Selling expenses (539) (800) General and Administrative (2,279) (3,035) expenses Total operating expenses (9,389) (10,619) Loss from operations (4,841) (4,979) Interest expense (166) (87) Interest income 325 329 Exchange gain (loss) 206 (280) Loss before tax (4,476) (5,018) Tax benefit 234 486 Net income (loss) (4,242) (4,532) Weighted average number of shares 19,572,468 23,378,105 outstanding Net loss per share (0.22) (0.19) EXONHIT THERAPEUTICS S.A. CONSOLIDATED CASH FLOW STATEMENT (in thousands of euros) December December 31, 31, 2005 2006 OPERATING ACTIVITIES Net loss (4,242) (4,532) Depreciation and amortization of property 782 382 and equipment Depreciation of intangible assets 22 28 Retirement liability provision and 8 (119) other Capitalized interests on convertible 129 71 bonds Increase (decrease) in cash from: Inventory (42) Accounts receivable (464) (1,392) Grants receivable 80 112 Research tax credit 351 1,603 receivable Accounts payable and accrued (958) (98) expenses Accrued compensation 176 235 Other current liabilities - - Prepaid expenses and other assets 450 (403) Deferred income ST & LT 1,499 215 Net cash used in operating (2,167) (3,940) activities INVESTING ACTIVITIES Net cash used in investing (334) (340) activities FINANCING ACTIVITIES Proceeds from loans 13,522 Repayment of loans and capital lease (7,378) (414) Issuance of shares (net of fees) 6,847 1,585 Net cash provided by (used in) financing (531) 14,693 activities Net increase (decrease) in cash and cash (3,032) 10,413 equivalents Effects of exchange rate on cash 58 (41) Cash and cash equivalents, beginning 16,575 13,601 of period Cash and cash equivalents, end of 13,601 23,972 period
ExonHit Therapeutics: Bruno Tocque, Chairman of the Management Board, Tel: +33-1-58-05-47-00, Philippe Rousseau, Chief Financial Officer, philippe.rousseau@exonhit.com
ExonHit Therapeutics S.A.
CONTACT: Bruno Tocque, Chairman of the Management Board,+33-1-58-05-47-00, or Philippe Rousseau, Chief Financial Officer,philippe.rousseau@exonhit.com, both of ExonHit Therapeutics SA
Web site: http://www.exonhit.com/
