LEIDEN, NETHERLANDS--(Marketwire - August 06, 2009) -
OctoPlus N.V. (“OctoPlus” or the “Company”) (Euronext: OCTO), the drug delivery company, announces today its results for the six-month period ended 30 June 2009.
Highlights for the first six months
Financial results
- Increase of 168% in revenues to EUR 10.0 million for the first six-month period in 2009 from EUR 3.7 million in 2008
- Revenue growth well on track with previous guidance for the full year of EUR 19 million
- Successful equity raising of EUR 6.0 million (gross) with an international consortium of investors completed in February 2009
- Net loss for the first six-month period significantly decreased to EUR 1.6 million, as a result of the new service-based strategy, despite restructuring costs and costs related to the new manufacturing facility (H1 2008: net loss of EUR 6.4 million)
Operational results
- Collaboration with Biolex Therapeutics for Locteron® progressing as planned
-Significant clinical progress for Locteron with completion of patient enrollment in Phase IIb study; key results expected in the fourth quarter
- New GMP manufacturing facility opened in June
- One-off costs associated with the new manufacturing facility and with the transition to a fully service-based business have been higher than expected, which has had a significant impact on the Company’s operating result
- OctoPlus’ new CFO Susan Swarte joined the Company in August
Strategy
- Ongoing success for OctoPlus’ new service-oriented strategy with two additional drug delivery technology evaluation contracts signed in 2009
Outlook
- OctoPlus reiterates the forecasted 2009 revenues of approximately EUR 19 million
Simon Sturge, CEO of OctoPlus comments: “We are very pleased with the accomplishments made in the first six months of 2009. Revenues increased significantly as a result of our new service-based strategy and we were able to report two new drug delivery technology evaluation contracts, the opening of our new manufacturing facility as well as great progress in the clinical development of Locteron. We have been more aggressive in reducing the cost base of the business than originally planned in order to be able to be more competitive in winning new business, and as a consequence restructuring costs in the first half of the year have been higher than expected. These one-off costs, along with final costs related to the new manufacturing facility, have prevented us from being operationally cash flow positive in the first six months of 2009.”
Conference call and webcast presentation
OctoPlus will hold a conference call and webcast presentation today at 10:00 AM CET. This event can also be followed live via OctoPlus’ website www.octoplus.nl. If you would like to participate in the conference call, please dial in on telephone number +31 (0) 45 631 6901. After the presentation, Simon Sturge, CEO of OctoPlus, Susan Swarte, CFO, and Leo Vissers, Financial Controller, will be available to answer questions. After the event, the webcast will be available for replay on the Company’s website.
Contact
For further information, please contact: Rianne Roukema, Corporate Communications: telephone number +31 (71) 524 1071 or send an e-mail to Investor Relations at IR@octoplus.nl.
About OctoPlus
OctoPlus is a product-oriented biopharmaceutical company committed to the creation of improved pharmaceutical products that are based on OctoPlus’ proprietary drug delivery technologies and have fewer side effects, improved patient convenience and a better efficacy/safety balance than existing therapies. Rather than seeking to discover novel drug candidates through early stage research activities, OctoPlus focuses on the development of long-acting, controlled release versions of known protein therapeutics, other drugs, and vaccines on behalf of its clients.
The clinically most advanced product incorporating our technology is Biolex Therapeutics’ lead product Locteron, a controlled release formulation of interferon alpha for the treatment of chronic hepatitis C. Locteron is being manufactured for Biolex Therapeutics by OctoPlus and is currently in Phase IIb clinical studies.
In addition, OctoPlus is a leading European provider of advanced drug formulation and clinical scale manufacturing services to the pharmaceutical and biotechnology industries, with a focus on difficult-to-formulate active pharmaceutical ingredients.
OctoPlus is listed on Euronext Amsterdam by NYSE Euronext under the symbol OCTO. For more information about OctoPlus, please visit our website www.octoplus.nl.
This document may contain certain forward-looking statements relating to the business, financial performance and results of OctoPlus and the industry in which it operates. These statements are based on OctoPlus’ current plans, estimates and projections, as well as its expectations of external conditions and events. In particular the words “expect”, “anticipate”, “predict”, “estimate”, “project”, “plan”, “may”, “should”, “would”, “will”, “intend”, “believe” and similar expressions are intended to identify forward-looking statements. We caution investors that a number of important factors, and the inherent risks and uncertainties that such statements involve, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. In the event of any inconsistency between an English version and a Dutch version of this document, the English version will prevail over the Dutch version.
Interim Financial Report from the Executive Board
Business overview
OctoPlus’ consolidated external revenues for the first six-month period increased by 168% from EUR 3.7 million in 2008 to EUR 10.0 million in 2009. A significant part of the external service revenues came from process development work for and clinical manufacturing of Locteron, and from other long-term contracts. The Company also signed a significant number of new customer contracts during the period, including two additional drug delivery technology evaluation contracts with pharmaceutical companies who have engaged OctoPlus to develop a controlled release formulation of their products, using OctoPlus’ patented drug delivery technologies.
Financing
On 27 February 2009, OctoPlus announced the successful completion of an equity raising of EUR 6.0 million (gross) through a private placement of ordinary shares with new and existing institutional investors. As part of this equity raising, the bridge loans provided by Life Sciences Partners and S.R. One amounting to EUR 4.5 million (including accumulated interest) were converted into equity under similar conditions. Following the equity raising, ABN Amro Bank N.V. reduced OctoPlus’ credit facility to EUR 1.5 million from July 2009 onwards and intends to further reduce the facility to EUR 1.0 million from October 2009 onwards.
Locteron
The collaboration with Biolex Therapeutics (‘Biolex’) for Locteron is progressing as planned. Biolex initiated a Phase IIb clinical study with Locteron in April and completed patient enrollment for this study in June. OctoPlus continues to perform process development work for and clinical manufacturing of Locteron. Locteron remains a major product in our revenue forecast through to 2010 and should this product not progress in line with our expectations this will have a major impact on our business.
Expanded manufacturing facility
OctoPlus announced in June the start of pharmaceutical production in its new manufacturing facility in Leiden. With the expansion, OctoPlus’ manufacturing capacity more than doubled and the Company can now produce clinical scale Phase I, II, III and even small-scale commercial supplies of injectable pharmaceutical products and other complex formulations.
Financial overview
The table below outlines the key financial figures of the Company for the six-month period ended 30 June 2009 and 2008. These financial figures are unaudited and are in accordance with International Financial Reporting Standards, as adopted by the European Union. Now that OctoPlus no longer invests in its own product development, inter-segment revenues have diminished.
Key figures first six months 2009 (Unaudited, in Euro x 1,000; except per share data) 1H 2009 1H 2008 % change Gross revenues 10,071 5,978 68% Inter-segment revenues (68) (2,240) 97% Consolidated revenues 10,003 3,738 168% Result for the period (1,627) (6,414) 75% Result per share (basic and diluted) (0.06) (0.40) 85% Cash, cash equivalents and bank 1,514 (3,713) overdrafts per end of period
First six months ended 30 June 2009
Over the first six months of 2009, consolidated revenues showed an increase of 168% to EUR 10,003 (2008: EUR 3,738). The Company sold and out-licensed its rights to its lead product Locteron to former co-development partner Biolex in October 2008. From that date onwards, OctoPlus is reimbursed for all process development for and clinical manufacturing of Locteron. This resulted in a significant increase in consolidated external revenues and it diminished inter-segment revenues.
Total operating costs for the first six months of 2009 increased by 13% from EUR 9,621 in 2008 to EUR 10,885 in 2009. Expenditures for clinical development decreased significantly after the sale and out-licensing of OctoPlus’ rights to Locteron in October 2008. On the other hand, the Company incurred restructuring charges in the first six months of 2009 as a result of the transition from a product development company to a company that focuses on providing pharmaceutical development services to clients. In addition, the Company’s new manufacturing facility became operational, requiring additional staff and other costs to operate this facility.
Interest costs for the six-month period increased by 40% to EUR 745 (2008: EUR 531) as a result of higher interest charges for finance lease contracts.
As a result of the above, net loss for the period decreased by 75% to EUR 1,627 (2008: net loss of EUR 6,414).
Cash flow
The total cash and cash equivalents balance (net of bank overdrafts) increased significantly from EUR -/- 3,713 per 30 June 2008 to EUR 1,514 per 30 June 2009.
The cash and cash equivalent balance between 30 June 2008 and 30 June 2009 increased as a result of:
- an $11.0 million up-front payment received from Biolex in October 2008 for the sale and out-licensing of OctoPlus’ rights to Locteron
- the EUR 6.0 million (gross) received as part of the equity raising in February 2009
- the EUR 3.7 million received as part of a sale-and-lease-back of part of the equipment used in the Company’s new manufacturing facility in the second part of 2008.
The cash and cash equivalent balance between 30 June 2008 and 30 June 2009 decreased as a result of
- significant cash outflows in the third quarter of 2008 when the Company still paid for its own product development (mainly Locteron)
- investments in the Company’s new manufacturing facility
- restructuring payments in the first half of 2009.
In the first six months of 2009, a total of EUR 1,958 of cash was used for OctoPlus’ operating activities (first six months of 2008: EUR 5,554 cash outflow). This cash outflow mainly related to the negative operating result for the six-month period. The Company showed a cash outflow from investing activities for the first six months of 2009 of EUR 1,039 (2008: EUR 4,045 cash outflow). A very significant part of this cash outflow in both years related to investments in the Company’s new manufacturing facility. In the first six months of 2009, a total of EUR 5,393 of cash was generated through OctoPlus’ financing activities (first six months of 2008: EUR 3,371 cash inflow). The 2009 cash inflow mainly related to the funds received from the February 2009 equity raising and the 2008 cash inflow mainly related to a EUR 3,481 bridge loans provided by Life Sciences Partners and S.R. One. The bridge loans increased to EUR 4.5 million (including accumulated interest) in the beginning of 2009 and were converted into equity as part of the February 2009 equity raising.
Outlook second half-year 2009
OctoPlus reiterates its prior full year guidance for revenues of EUR 19 million. The larger part of expenditures for restructuring and investments in the validation of the new manufacturing facility have been made and no similar activities are planned for the rest of the year. Although the economic downturn has a significant impact on our clients and may influence our ability to gain new business, the Company aims to continue to grow the service business during the rest of the year by increasing the amount of manufacturing work in the new facility, and by pursuing additional drug delivery technology evaluation contracts.
Related party transactions
A number of existing shareholders and the Company’s CEO Simon Sturge participated in the February 2009 equity raising. After the equity raising was completed, OctoPlus’ major shareholders comprised of:
- Life Sciences Partners: 17.2%
- S.R. One: 16.9%
- Signet Healthcare Partners: 16.6%
- Sodoro B.V., the personal holding company of Joost Holthuis, Chief Scientific Officer of OctoPlus: 10.2%
- Innoven Partenaires: 9.3%
- Fagus: 7.2%
- SurModics: 4.9%
The Company’s CEO Simon Sturge participated in the financing and purchased 133,333 shares (0.4%).
In the Annual General Meeting of Shareholders on 23 April 2009, Mr. James Gale, Managing Partner at Signet Healthcare, was appointed to the Board of Supervisory Directors. Due to his position within Signet, Mr. Gale is not independent within the meaning of the Dutch Corporate Governance Code.
As per 1 April 2009, Mr. Hans Pauli, who was Chief Financial Officer and member of the Executive Board, left the Company.
In May and June 2009, Mr. Joost Holthuis, Chief Scientific Officer, decreased his number of OctoPlus shares from 3.092.400 to 3.009.239, thereby decreasing his share in the Company to 10.0%.
Auditor’s involvement
The contents of this Interim Financial Report from the Executive Board and the Condensed Consolidated Interim Financial Statements have not been audited or reviewed by an external auditor.
Risks and uncertainties
Pages 23 to 25 of the Annual Report 2008 include an extensive overview of the Company’s general business risks and specific industry risks, specifically the risks associated with Locteron’s development success, intense competition, rapid technological change, significant product liability exposure, availability of fruitful collaborative relationships, enforceability of intellectual property rights, sustainable profitability, possible dilution of shareholders’ ownership interest and the availability of additional capital.
Responsibility statement
As required by section 5:25d of the Dutch Act on Financial Supervision, each member of the Executive Board hereby confirms that to the best of their knowledge:
- the Condensed Consolidated Interim Financial Statements of the Company for the first six-months of 2009 give a true and fair view of the assets, liabilities, financial position and result of the Company and its consolidated activities;
- the Interim Financial Report from the Executive Board for the first six months of 2009 gives a true and fair view of the Company’s position and of the development and performance of the business during the first six months of 2009, and gives a fair description of the outlook for the rest of the year.
Leiden, 6 August 2009
Simon Sturge, Chief Executive Officer Gerben Moolhuizen, Chief Business Officer Joost Holthuis, Chief Scientific Officer
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