Milan, Italy – September 10, 2010 - Newron Pharmaceuticals S.p.A. (“Newron”), a research and development company focused on novel CNS and pain therapies, today announces its financial results for the half year ended June 30, 2010.
Key events
• Newron held positive meetings with the FDA and MHRA to determine the development of NW-3509 as an add-on to antipsychotics in patients with schizophrenia, a major psychiatric disorder which is inadequately served.
• Newron and its partner, Merck Serono, presented new results on safinamide at the 14th
Annual meeting of the Movement Disorder Society (MDS), in Buenos Aires.
• The inconclusive results seen with ralfinamide in the SERENA phase IIb/III study were reviewed by an independent US advisory board, that recommended its evaluation in other pain conditions.
• A tight cost control program has been put in force, allowing the company to progress key assets of its clinical pipeline and explore other strategic opportunities.
Luca Benatti, CEO, said: “The first six months have been mixed for Newron. Similar to other R&D companies, some things have gone well and others less so. We remain optimistic on the value of our pipeline, and our priority now is to work with Merck Serono on the successful conclusion of safinamide’s clinical trials to allow regulatory filing in PD.”
The results seen with ralfinamide in the SERENA study, announced in May, were unexpected and extremely disappointing. The phase IIb/III study, which was initiated at the end of 2008, recruited 411 patients with Neuropathic Low Back Pain (NLBP). The top-line results, which continued to show that the compound was safe and well- tolerated, demonstrated no statistical significance in efficacy against placebo. This outcome is in contradiction to results that had previously been achieved in a phase II study in mixed neuropathic pain, including NLBP patients. All associated work on the SERENA trial and its extension have been halted. In the meantime, a scientific advisory board has met and recommended that ralfinamide is further developed in another indication, based on their view that its pharmacology is extremely exciting and predictive of efficacy in neuropathic pain conditions, especially those with a central component. Therefore, Newron has decided to keep the long-term preclinical studies ongoing, which are required for a potential filing of the compound at a later point in time. Based on the feedback from potential licensees to the outcome of SERENA, Newron is currently evaluating their interest to share the potential of ralfinamide in pain and psychiatric diseases.
Progress on other fronts
Newron and its partner Merck Serono advanced safinamide development in late-stage clinical trials, with results from a 78-week placebo-controlled double-blind extension study in 544 patients with mid- to late-stage idiopathic Parkinson’s disease anticipated soon. Newron and Merck Serono are moving steadily towards completion of the MOTION and SETTLE trials and on to filing for regulatory approval in the US and Europe, which will trigger a material milestone payment to Newron.
Further progress was also made in the preclinical development of HF1020. Trident Pharmaceuticals (Special Purpose Vehicle in which Newron holds a 17 % equity stake) has continued the preclinical studies required for a CTA filing in the U.K. Assuming acceptance of the CTA filing by the U.K. regulatory authorities, Trident expects to start phase I during the second half of 2010. The compound is expected to be developed for treatment of inflammatory diseases.
Assessing licensing opportunities for NW-3509 and HF0220 Newron is on target to complete preclinical development for NW-3509, an innovative compound from its ion channel programme addressing unmet needs in schizophrenia, in the second half of 2010. NW-3509, acting through a different mechanism from current antipsychotics, has the potential to address cognitive symptoms, mood disorders, partial responders, suicidality and co-morbidities such as anxiety and depression. Newron is currently assessing licensing opportunities for this compound.
In experimental models, HF0220 showed strong neuroprotective, pro-cognitive and anti-inflammatory properties. Newron is currently assessing potential licensing opportunities, which would initiate further clinical development of the compound. Newron returned the rights to an early-stage compound, HF0420, to its inventor who intends to take it forward in development. Newron would receive milestones and royalties based on its future success.
Spending reviewed and reprioritized Upon disclosure of the SERENA trial results in Neuropathic Low Back Pain for ralfinamide, Newron has reviewed and reprioritized its spending, to extend its cash reach. While spending in the first half year of 2010 has been dominated by the completion of the SERENA study and the termination of the 40 week extension study of SERENA, the remainder of the year will see significantly decreased spending. Amongst the actions taken was a significant reduction in research and general & administrative expenses, including personnel. Effective July 5, 2010, Newron has placed 16 employees in “Cassa Integrazione Guadagni”, which is a government- supported programme under Italian law, which allows for employees to be kept in a contractual relationship, without any material cost to the Company. In addition, temporary employment agreements were not prolonged and employment agreements with several managers were terminated in mutual agreement. All in all, the cost of 21
employees was taken off the Company’s books. The number of fully paid employees is currently 21.
Financial Summary (IFRS) In EUR thousand (except per share information) HY1 2010 HY1 2009 Licence income 424 469 Other income 15 1,599 Research and development expenses* 9,747 6,515 General and administration expenses 3,517 4,102 Net loss 12,924 8,430 Loss per share
1.96 1.40
30/6/2010 31/12/2009 Cash, cash equivalents, other short term fin. assets 13,144 24,294 Total assets 28,824 41,678 Net cash used in operating activities 11,740 11,679
* Net of safinamide development cost reimbursed by Merck Serono and R&D grants/tax credits
Interim financial statements Compared to the first six months of 2009, other income in the reporting period is lower by EUR 1.6m. This is mostly due to a one-time effect in 2009, when EUR 1.5m grants and tax credits were approved in favour of Newron for prior periods. Investment into ongoing drug development has increased significantly to EUR 9.7m (2009: EUR 6.5m), mostly due to the completion of the SERENA core study in Neuropathic Low Back Pain and the termination of the ongoing 40-week extension to the SERENA study in early May. While the effects of closing down this phase IIb/III study have well reached into the second half of 2010, all related expenses have been accrued at the end of the reporting period. Further reasons for the increase of R&D spending over 2009 are the upcoming completion of preclinical development of NW- 3509 and restructuring cost as a consequence of work force reduction. The R&D cost are net of reimbursements by Merck Serono of cost incurred in the development of safinamide by Newron, as well as Italian and European government grants and Italian and UK tax credits. The gross R&D expense for the reporting period was EUR 13.3m, compared to EUR 11.2m in 2009. Newron further reduced the G&A expenses to EUR 3.5m (2009: EUR 4.1m), as a result of overall cost containment measures, although one-time payments came due as a result of reduction of the work force in the administrative sections. The net cash used in operating activities is unchanged compared to 2009, at EUR 11.7m.
Outlook
• Newron’s number one priority is to work with Merck Serono on the successful conclusion of safinamide’s clinical trials to allow regulatory filing of safinamide in PD.
• Newron expects to file an Investigational New Drug (IND) application for the development of NW-3509 in schizophrenia during the coming months.
• Product development is the key goal overall in parallel with the strategy to pursue partnering and appropriate M&A opportunities. Newron is working hard on all fronts to regain value lost through the unsuccessful SERENA study.
• Newron’s cash position is on a firm footing, with EUR 13.1m in cash plus an option to up to CHF 27.5m under its Yorkville equity line, prior to any licensing income, taking Newron at least another 12 months through most of 2011.
For further details see the full Half-Year Report 2010 which is available for download at: http://www.newron.com/presentationandfactsheet.asp
About Newron Pharmaceuticals
Newron Pharmaceuticals S.p.A. (www.newron.com) is a biopharmaceutical company focused on novel therapies for diseases of the Central Nervous System and pain. Newron is undertaking phase III trials with safinamide for the treatment of Parkinson’s disease (PD) in conjunction with its partner, Merck Serono, which has exclusive worldwide rights to develop, manufacture and commercialize the compound in PD, Alzheimer’s disease, and other therapeutic applications. Newron is currently evaluating the further clinical development of ralfinamide for pain and psychiatric diseases. Newron’s additional projects are in development at various stages of preclinical and clinical development, including HF0220 for neuroprotection and NW-3509 for the treatment of schizophrenia. Newron is headquartered in Bresso, near Milan, Italy. The company is listed at SIX Swiss Exchange, trading symbol NWRN.
For more information, contact:
Media Investors and analysts Italy Luca Benatti - CEO Phone: +39 02 6103 4 626 E-mail: pr@newron.com
UK/Global media Julia Phillips Financial Dynamics Phone: +44 (0) 20 7269 7187
Switzerland Martin Meier-Pfister IRF Communications Phone: +41 43 244 81 40
Stefan Weber - CFO Phone: +39 02 6103 46 30 E-mail: ir@newron.com
Important Notices This document contains forward-looking statements, including (without limitation) about (1) Newron’s ability to develop and expand its business, successfully complete development of its current product candidates and current and future collaborations for the development and commercialisation of its product candidates and reduce costs (including staff costs), (2) the market for drugs to treat CNS diseases and pain conditions, (3) Newron’s anticipated future revenues, capital expenditures and financial resources, and (4) assumptions underlying any such statements. In some cases these statements and assumptions can be identified by the fact that they use words such as “will”, “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, and other words and terms of similar meaning. All statements, other than historical facts, contained herein regarding Newron’s strategy, goals, plans, future financial position, projected revenues and costs and prospects are forward-looking statements.
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