ExonHit Therapeutics (Alternext: ALEHT) today announced its consolidated financial results for the year ending December 31, 2008.
“2008 was a year of transformation for ExonHit: a new organization was put in place and a thorough business review was conducted. We want to stay active in both Therapeutics and Diagnostics and increase our collaborations,” said Dr. Loic Maurel, President of the Management Board of ExonHit Therapeutics. “In Therapeutics, our strategy is to out-license our products or programs to maximize returns on investment. In Diagnostics, we plan to take products to the market and are currently evaluating opportunities to strengthen our overall portfolio and capabilities.”
In July 2008, a new Management Board was elected following the departure of Bruno Tocque, Fabien Schweighoffer and Laurent Bracco, ExonHit’s co-founders. All three retain a consultancy role in the collaboration with Allergan. Loic Maurel was named President of the Management Board, Matt Pando, Head of the Therapeutics Division and John Jaskowiak, Head of the Molecular Diagnostic & Genomic Services Division. Philippe Rousseau remains on the Management Board as Chief Financial Officer.
Overview of ExonHit’s business activities
In order to transform into an emerging healthcare player, ExonHit Therapeutics underwent significant changes in 2008. For the first time, the Company simultaneously invested in clinical testing in both diagnostics and therapeutics. In addition, further investment was made to prepare its internal service laboratories to be compliant with Good Laboratory Practices (GLP).
ExonHit Therapeutics will keep its diversified business model and remain active in both therapeutics and diagnostics. These two fields have distinct risks and returns on investment, and provide opportunities for synergistic value creation. ExonHit will pursue its balanced investment strategy, with internal development programs and an increased number of strategic collaborations. Genomic Services activities are now dedicated to generating new collaborations for both the Diagnostics and Therapeutics divisions.
2009 will be a pivotal year for ExonHit Therapeutics. Assuming successful clinical validation of EHT Dx21, its blood diagnostic test for Alzheimer’s disease, the Company will put its first product on the market. Furthermore, assuming successful completion of the EHT 0202 Phase lla study, the Company will engage in out-licensing activities to support further development of this product in Alzheimer’s disease.
2008 Consolidated financial results
Philippe Rousseau, Chief Financial Officer of ExonHit Therapeutics, said: “Our investment efforts in the clinical development of our lead compounds in both Diagnostics and Therapeutics will continue in the first half of 2009 whereas in the second part of the year, we are committed to invest in marketing to prepare for EHT Dx21’s launch.” He added: “Our financial situation remains healthy with more than 24 months of cash at the end of 2008 and a tool to strengthen our shareholder’s equity, the warrant exercise period running until the end of June.”
- Income Statement
Total revenues amount to EUR 4.2 million, a decrease of 22% compared to the EUR 5.4 million achieved in 2007. This decrease mainly comes from our Therapeutics activities as in 2007 we recognized a milestone payment in our strategic collaboration with Allergan in addition to the annual R&D payments.
Consolidated R&D revenues were EUR 4.2 million in 2008, down 21% compared to EUR 5.3 million in 2007. R&D revenues from grants decreased to EUR 0.01 million in 2008 from EUR 0.05 million in 2007.
R&D expenses have increased by 15% to EUR 9.9 million in 2008 compared to EUR 8.6 million in 2007, mainly as a result of increased expenses in clinical trials in both our therapeutics and diagnostics activities. In 2008, R&D revenues covered 43% of the Company’s R&D expenses, as opposed to 62% in 2007.
Marketing and selling expenses have increased by 9% to EUR 1.1 million in 2008, compared to EUR 1.0 million in 2007. This rise is driven by increased marketing effort in the diagnostic field.
General and administrative costs increased by 30% to EUR 4.6 million in 2008, compared to EUR 3.5 million in 2007. This increase is primarily due to significant expenses incurred to defend our IP portfolio.
Operating expenses increased by 18% to EUR 15.6 million in 2008 compared to EUR 13.2 million in 2007. In 2008, 63% of these expenses were allocated to R&D compared to 65% in 2007.
Consequently, the company posted an operating loss of EUR 11.4 million in 2008, compared to EUR 7.8 million in 2007.
The end of some leasing agreements explains the decrease in interest expenses between 2007 and 2008 from EUR 0.8 million to EUR 0.5 million. Meanwhile, a decrease on our cash and cash equivalent balances combined with the decrease of interest rates over 2008 leads to lower financial gains in 2008 at EUR 0.9 million versus EUR 1.3 million in 2007. Nonetheless, the favorable evolution of the euro/dollars exchange rate between the two years has led to a currency rate gain of EUR 0.02 million during 2008, compared to a loss of EUR 0.7 million in 2007. As a consequence, the financial result amounts to a gain of EUR 0.38 million in 2008 compared to a loss of EUR 0.22 million in 2007.
The modification of the way research tax credits have been calculated since January 1, 2008 led to an increase of the income tax benefit from EUR 0.7 million in 2007 to EUR 2.1 million in 2008.
As a consequence, ExonHit recorded a consolidated net loss of EUR 8.9 million in 2008, compared to EUR 7.3 million in 2007.
- Balance sheet
On December 31, 2008, the cash position of the Company amounted to EUR 21.0 million, compared to EUR 31.3 million at the end of 2007.
- Cash flow statements
In 2008, ExonHit’s net use of cash due to operating activities was EUR 9.6 million compared to EUR 4.9 million in 2007. This difference is mainly due to the increased operating losses and to the increased Research Tax Credit line.
The equipment necessary to strengthen our service laboratory and prepare it for GLP mainly explains the capital expenditure level of EUR 1.2 million in 2008, compared to EUR 1.1 million in 2007.
Due to unfavorable market conditions, financial operations generated EUR 0.2 million in 2008, to be compared with the generation of EUR 13.3 million in 2007.
Product Update
- Diagnostics
EHT Dx21, our internally developed blood diagnostic test for Alzheimer’s disease (AD), is undergoing clinical validation. The clinical study EHT AD/002 initiated early in 2008 to recruit blood samples for patients suffering from AD, other dementias and controls achieved its first goal with the recruitment of 311 samples in Q3 2008. The second part of the study was initiated in January 2009 with the recruitment of 250 additional samples making the total number of samples included in the validation the largest for an array based AD blood diagnostic test.
Assuming successful clinical validation, ExonHit Therapeutics plans to launch EHT Dx21 as a Research Use Only product in the clinical trial market in Q4 2009, and in the clinical diagnostic market in a second step through a partnering model.
In February 2009, bioMerieux and ExonHit Therapeutics agreed on new research and development plans as part of their existing collaboration to develop blood-based cancer detection biomarkers. Both companies are jointly pursuing their programs on colorectal and prostate cancers (respectively EHT Dx12 and EHT Dx13) using ExonHit’s next generation of human genome-wide SpliceArray(tm) biochips for biomarker discovery; and ExonHit takes the lead in the breast cancer program (EHT Dx11) using the same platform. Results are expected in Q4 2009.
EHT Dx11 could become the first blood-based diagnostic test providing an alternative to mammography for younger women whose sensitivity to mammography is low, or for women who decide not to undergo mammography screening. EHT Dx12 has the potential to offer an alternative to very uncomfortable colonoscopy. EHT Dx13 may become the first blood based diagnostic test with a significantly increased accuracy compared to the widely used PSA (prostate specific antigen) test.
- Therapeutics
EHT 0202, ExonHit’s lead candidate in Alzheimer’s disease, is currently in Phase IIa testing. Patient enrolment was completed at the end of February and study results are expected in Q4 2009. EHT 0202 has the potential to be the first in a new class of disease modifying Alzheimer’s disease therapies that stimulate the α-secretase pathway and may have neuroprotective and procognitive effects in addition to a symptomatic action.
As part of our repositioning efforts, several proprietary compounds are being evaluated for development in central nervous system and cancer indications.
In January 2009, ExonHit Therapeutics announced the early renewal of its strategic drug discovery collaboration with Allergan. The partnership term was extended until December 2011 and its scope expanded to include epitope discovery in ophthalmology.
As part of this collaboration expansion, ExonHit Therapeutics is further leveraging its technology to investigate a variety of ocular disease related models in order to discover novel epitope targets for the development of therapeutic antibodies.
EHT/AGN 0001, the most advanced compound of the Allergan collaboration, continues to make progress and is ending Phase I clinical testing for pain indications.
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 Therapeutics 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 Therapeutics 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.
In parallel, ExonHit Therapeutics 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 Therapeutics 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. For more information, please visit http://www.exonhit.com.
Disclaimer
This press release contains elements that are not historical facts including, without limitation, certain statements on future expectations and other forward-looking statements. Such statements are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated.
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.
CONTACT: ExonHit Therapeutics: Media Contact, Corinne Hoff,
+33-1-58-05-47-04, corinne.hoff@exonhit.com; Investor Contact: Philippe
Rousseau, CFO, +1-240-393-3993/+1-240-40-40-191,
philippe.rousseau@exonhit.com
