MONTREAL, QUEBEC--(Marketwire - July 07, 2009) - Theratechnologies (TSX: TH)
- New Drug Application filed with the FDA
- Awarded Le Prix Sante by the Fondation Armand-Frappier
- Clinical data presented at two important scientific meetings
- $64 million liquidity position with a lower burn rate
Theratechnologies (TSX: TH) today announced its financial results for the second quarter ended May 31, 2009 and reviewed recent corporate highlights.
"The second quarter of 2009 was marked by the filing of our New Drug Application in the United States, a very significant milestone achieved through a great team effort," stated Mr. Yves Rosconi, President and CEO of Theratechnologies. "In the coming months, we expect to be working closely with the Food and Drug Administration on our filing, all while advancing other aspects of our business plan," he continued. "The next objective of this plan is to enter into partnership agreements for tesamorelin outside the United States," Mr. Rosconi concluded.
"With a liquidity position of $64 million, Theratechnologies maintained a strong financial position over the course of a second quarter that was characterized by a forecasted decrease in the burn rate," noted Mr. Luc Tanguay, Senior Executive Vice President and CFO.
Recent Highlights
New Drug Application filed with the FDA
On May 29, 2009, Theratechnologies filed a New Drug Application ("NDA") with the Food and Drug Administration ("FDA") in the United States for tesamorelin, an analogue of the growth hormone releasing factor, proposed for the treatment of excess abdominal fat in HIV patients with lipodystrophy. If approved by the FDA, tesamorelin could be the first product available to treat this condition.
Awarded Le Prix Sante by the Fondation Armand-Frappier
On June 19, Theratechnologies was awarded the Fondation Armand-Frappier's Prix Sante 2009 at the 16th annual Fete Champetre held on the campus of the INRS-Institut Armand-Frappier in Laval. Presented by the Fondation on the recommendation of its scientific committee, Le Prix Sante recognizes success by Quebec companies in the health sector. In order to qualify, companies must have conceived, developed and commercialized a scientific innovation, or be about to do so. As recipient of Le Prix Emergence from the Fondation Armand-Frappier in 1998, Theratechnologies is the only company to date that has received a prize from the Fondation on two separate occasions.
Clinical data presented at two important scientific meetings
In recent months, the Company presented additional data taken form the combined results of the Phase 3 studies and studies evaluating pharmacokinetic aspects of tesamorelin at the 18th Annual Canadian Conference on HIV/AIDS Research in Vancouver and the Endocrine Society's 91st Annual Meeting (ENDO) in Washington, D.C.
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE SECOND QUARTER
Revenues
Consolidated revenues for the three-month period ended May 31, 2009, amounted to $2,317,000 compared to $716,000 for the same period in 2008. For the six-month period ended May 31, 2009, consolidated revenues were $4,326,000 compared to $1,315,000 for the same period in 2008. The higher revenues in 2009 are related to the payment received on December 15, 2008 upon the closing of the collaboration and license agreement with EMD Serono, Inc. ("EMD Serono"). This payment of US $30,000,000 (CAD $36,951,000) included an initial payment of US $22,000,000 (CAD $27,097,000) and a subscription for common shares by Merck KGaA at a price of US $3.67 (CAD $4.52) per share, resulting in gross proceeds of US $8,000,000 (CAD $9,854,000).
The initial payment of $27,097,000 has been deferred and is being amortized over its estimated service period on a straight-line basis. This period may be modified based on additional future information. For the six-month period ended May 31, 2009, an amount of $3,137,000 related to this transaction was recognized as revenue. At May 31, 2009, the deferred revenues related to this transaction amounted to $23,960,000.
R&D Activities
Research and Development (R&D) expenditures, before tax credits, totalled $5,696,000 for the second quarter of 2009, compared to $9,927,000 for the same period in 2008, representing a decrease of 42.6%. For the six-month period ended May 31, 2009, R&D expenditures were $12,011,000, compared to $19,411,000 for the same period in 2008, representing a decrease of 38.1%. The decrease in R&D expenses is due to the end of the Phase 3 clinical trials evaluating tesamorelin in HIV-associated lipodystrophy. The R&D expenses incurred in the second quarter of 2009 are principally related to the preparation of the New Drug Application ("NDA"), which was submitted to the US Food and Drug Administration ("FDA") on May 29, 2009.
Other Expenses
For the second quarter of 2009, general and administrative expenses amounted to $1,857,000, compared to $1,401,000 for the same period in 2008. For the six-month period ended May 31, 2009, general and administrative expenses amounted to $4,178,000 compared to $2,999,000 for the same period in 2008. The higher expenses in 2009 are principally due to an increase in the exchange loss as well as costs associated with revising the Company's business plan in the first quarter.
Selling and market development costs amounted to $540,000 for the second quarter of 2009, compared to $949,000 for the same period in 2008. For the six-month period ended May 31, 2009, selling and market development expenses amounted to $1,021,000, compared to $1,406,000 for the same period in 2008. The decrease in selling and market development costs is due to the signing of an agreement with EMD Serono for the US commercialization of tesamorelin in HIV-associated lipodystrophy. Following the signing of this agreement, the sales and market development expenses are principally composed of business development expenses outside the United States and the costs of managing the agreement with EMD Serono.
Net Results
Taking account of the changes in revenues and expenses described above, the Company recorded a second-quarter net loss of $5,430,000 ($0.09 per share), compared to $11,382,000 ($0.20 per share) for the same period in 2008. For the six-month period ended May 31, 2009, the net loss was $16,184,000 ($0.27 per share), compared to a net loss of $22,246,000 ($0.39 per share) for the same period in 2008.
The second-quarter net loss includes revenue of $1,711,000 related to the agreement with EMD Serono. Excluding this item, the adjusted net loss (see Annex A) amounted to $7,141,000, a decrease of 37.3% compared to the same period in 2008.
For the six-month period ended May 31, 2009, the net loss included revenue of $3,137,000 and a non-recurring charge of $4,269,000 related to the agreement with EMD Serono. Excluding these two items, the adjusted net loss (see Annex A) amounted to $15,052,000, a decrease of 32.3% compared to the same period in 2008.
Quarterly Financial Information
The selected financial information provided below is derived from the Company's unaudited quarterly financial statements for each of the last eight quarters. This information has been restated following the adoption of the Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3064, Goodwill and Intangible Assets.
(in thousands of Canadian dollars, except per share amounts)
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2009 2008
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Q2 Q1 Q4 Q3 Q2 Q1
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Revenues $2,317 $2,009 $616 $710 $716 $599
Net loss $(5,430) $(10,754) $(15,145) $(11,220) $(11,382) $(10,864)
Basic and
diluted loss
per share $(0.09) $(0.18) $(0.26) $(0.19) $(0.20) $(0.20)
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2007
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Q4 Q3
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Revenues $1,294 $748
Net loss $(10,300) $(9,820)
Basic and diluted loss per share $(0.19) $(0.18)
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As descried above, the higher revenues in 2009 are related to the amortization of the initial payment received at the closing of the agreement with EMD Serono. The increase in the fourth quarter net loss in 2008 is due to an impairment loss related to intellectual property.
Financial Position
At May 31, 2009, liquidities, which include cash and bonds, amounted to $61,324,000, and tax credits receivable amounted to $2,874,000 for a total of $64,198,000.
For the three-month period ended May 31, 2009, the burn rate for operating activities, excluding changes in operating assets and liabilities, was $4,988,000, compared to $10,876,000 for the same period in 2008. Excluding the revenue of $1,711,000 related to the agreement with EMD Serono, the adjusted burn rate from operating activities, excluding changes in operating assets and liabilities (see Annex A), was $6,699,000, a decrease of 38.4%, compared to the corresponding period in 2008.
For the six-month period ending May 31, 2009, the burn rate from operating activities, excluding changes in operating assets and liabilities, was $15,400,000, compared to $21,283,000 for the same period in 2008. The forecasted decrease in the 2009 burn rate is related to the decline in research and development expenditures. Excluding the revenue of $3,137,000 and the non-recurring charge of $4,269,000 related to the agreement with EMD Serono, the adjusted burn rate from operating activities, excluding changes in operating assets and liabilities (see Annex A), was $14,268,000, a decrease of 33.0%, compared to the corresponding period in 2008.
New Accounting Policies
Refer to Note 2 of the Company's unaudited Consolidated Financial Statements for the first quarter of 2009.
The impact of adopting Section 3064, Goodwill and Intangible Assets, of the CICA Handbook was to increase the opening deficit and to reduce other assets at the beginning of 2007 and 2008 by $941,000 and $599,000 respectively. These amounts correspond to adjustments made to patent costs related to periods prior to these dates. Furthermore, following the adoption of this standard, patents and amortization of other assets presented on the consolidated statements of earnings were reduced by $43,000 for the six-month period ended May 31, 2008.
Outstanding Share Data
On July 6, 2009, the number of shares issued and outstanding was 60,397,477, while outstanding options granted under the stock option plan were 2,691,967.
Contractual obligations
There were no material changes in contractual obligations during the first six months of the year, other than in the ordinary course of business.
Economic and Industry Factors
Economic and industry factors were substantially unchanged from those reported in the Company's 2008 Annual Report.
About Theratechnologies
Theratechnologies (TSX: TH) is a Canadian biopharmaceutical company with core expertise in peptide-based therapeutics. Its most advanced compound, tesamorelin, is an analogue of the growth hormone releasing factor.
In 2008, Theratechnologies completed its Phase 3 clinical program evaluating tesamorelin in treating excess abdominal fat in HIV patients with lipodystrophy. In addition, the Company signed a collaboration and licensing agreement with EMD Serono, Inc., for the commercialization of tesamorelin in the United States.
With a New Drug Application recently filed with the US authorities, Theratechnologies' growth strategy is firmly focused on the development of tesamorelin, in the United States and in other potential lipodystrophy markets, as well as through additional clinical programs.
Additional information about Theratechnologies
Further information about Theratechnologies is available on the Company's website at www.theratech.com. Additional information is also available on SEDAR at www.sedar.com.
Forward-Looking Information
This press release and the management's discussion and analysis for the second quarter incorporated therein contain certain statements that are considered "forward-looking information" within the meaning of applicable securities legislation. This forward-looking information includes, in particular, the approval by the FDA of tesamorelin as a therapeutic product, the commercialization of tesamorelin and its success in the treatment of HIV-associated lipodystrophy as well as, the ability of the Company to conclude partnership agreements. Words such as "will", "may", "could", "should", "outlook", "believe", "plan", "envisage", "anticipate", "expect" and "estimate", or variations of these terms and similar expressions denote forward-looking information.
Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from those that are disclosed in or implied by such information. These risks and uncertainties include, in particular, the risk that the Company may not obtain all required approvals from the FDA to market its products, the risk that the Company's products may not be accepted by the market, delays or cost overruns that could result from the use of third-party suppliers and the risk that the Company may not conclude partnership agreements outside of the United States.
Although the forward-looking information is based upon what the Company believes are reasonable assumptions. Certain assumptions used in these forward looking statements, and the Company's anticipated objectives, take into consideration that the FDA will approve the US commercialization of tesamorelin for the treatment of HIV-associated lipodystrophy, that the Company will continue to have a good business relationship with its third party suppliers and that the Company will be able to interest other Companies for the signing of partnership agreements.
Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences or effects on the Company, its business, its financial condition or its results of operation. Furthermore, the forward-looking information reflects current expectations regarding future events only as of the date of release of this press release.
Investors are referred to the Company's public filings available at www.sedar.com. In particular, further details and descriptions of these risks and other factors are disclosed in the "Risk and Uncertainties" section of the Company's Annual Information Form, dated February 24, 2009, for the year ended November 30, 2008. The Company does not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.
ANNEX A
Non-GAAP measures
The Company uses measures that do not conform to generally accepted accounting principles ("GAAP") to assess its operating performance. Securities regulators require that companies caution readers that earnings and other measures adjusted to a basis other than GAAP do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, these measures should not be considered in isolation. The Company uses non-GAAP measures such as adjusted net loss and the adjusted burn rate from operating activities before changes in operating assets and liabilities, to measure its performance from one period to the next without including changes caused by certain items that could potentially distort the analysis of trends in its operating performance, and because such measures provide meaningful information on the Company's financial condition and operating results.
Definition and reconciliation of non-GAAP measures
In order to measure performance from one period to another, without accounting for changes related to revenues and fees associated with the collaboration and license agreement with EMD Serono, management uses adjusted net loss and adjusted burn rate before changes in operating assets and liabilities. These items are excluded because they affect the comparability of the financial results and could potentially distort the analysis of trends in the Company's operating performance. The exclusion of these items does not necessarily indicate that they are non-recurring.
(Thousands of dollars)
May 31st May 31st
(3 months) (6 months)
Adjusted net loss 2009 2008 2009 2008
Net loss, per the
financial
statements $(5,430) $(11,382) $(16,184) $(22,246)
Adjustments:
Revenues associated
with a collaboration
and license
agreement (note 7
to the consolidated
financial
statements) (1,711) - (3,137) -
Fees associated
with collaboration
and license agreement - - 4,269 -
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Adjusted net loss $(7,141) $(11,382) $(15,052) $(22,246)
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May 31st May 31st
(3 months) (6 months)
Adjusted burn rate
before changes in
operating assets
and liabilities 2009 2008 2009 2008
Burn rate before
changes in
operating assets
and liabilities,
per the financial
statements $(4,988) $(10,876) $(15,400) $(21,283)
Adjustments:
Revenues associated
with a collaboration
and license
agreement (note 7
to the consolidated
financial
statements) (1,711) - (3,137) -
Fees associated
with collaboration
and license
agreement - - 4,269 -
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Adjusted burn rate
before changes in
operating assets
and liabilities $(6,699) $(10,876) $(14,268) $(21,283)
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Consolidated Financial Statements of (Unaudited)
THERATECHNOLOGIES INC.
Six-month periods ended May 31, 2009 and 2008
THERATECHNOLOGIES INC.
Consolidated Balance Sheets
(Unaudited)
May 31, 2009 and November 30, 2008
(In thousands of dollars)
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May 31, November 30,
2009 2008
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(Restated -
note 2 (a))
Assets
Current assets:
Cash $3,834 $133
Bonds 12,776 10,955
Accounts receivable 276 610
Tax credits receivable 2,874 1,784
Inventories 1,594 -
Research supplies 697 301
Prepaid expenses 523 397
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22,574 14,180
Bonds 44,714 35,249
Investments in public companies 261 41
Property and equipment 1,211 1,299
Other assets (note 3) 2,129 2,776
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$70,889 $53,545
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $5,483 $7,198
Current portion of deferred revenues (note 7) 6,853 -
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12,336 7,198
Deferred revenues (note 7) 17,114 -
Shareholders' equity:
Capital stock (note 4) 279,080 269,219
Contributed surplus 6,085 5,585
Accumulated other comprehensive income 1,287 372
Deficit (245,013) (228,829)
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(243,726) (228,457)
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Total shareholders' equity 41,439 46,347
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$70,889 $53,545
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See accompanying notes to unaudited consolidated financial statements.
THERATECHNOLOGIES INC.
Notes to Consolidated Statements of Earnings
(Unaudited)
Periods ended May 31, 2009 and 2008
(In thousands of dollars, except per share amounts)
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May 31, May 31,
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2009 2008 2009 2008
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(Restated - (Restated -
note 2 (a)) note 2 (a)
(3 months) (6 months)
Revenues:
Royalties, technologies
and other (note 7) $1,717 $5 $3,149 $10
Interest 600 711 1,177 1,305
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2,317 716 4,326 1,315
Operating costs and expenses:
Research and development 5,696 9,927 12,011 19,411
Tax credits (422) (701) (1,090) (1,189)
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5,274 9,226 10,921 18,222
General and administrative 1,857 1,401 4,178 2,999
Selling and market
development 540 949 1,021 1,406
Patents and amortization of
other assets 76 163 121 332
Fees associated with the
strategic review process - 359 - 602
Fees associated with
collaboration and licensing
agreement (note 7) - - 4,269 -
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7,747 12,098 20,510 23,561
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Net loss $(5,430) $(11,382) $(16,184) $(22,246)
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Basic and diluted loss
per share
(note 4 ©) $(0,09) $(0.20) $(0.27) $(0.39)
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Weighted average number of
common shares outstanding 60,395,481 58,112,741 60,227,527 56,675,416
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See accompanying notes to unaudited consolidated financial statements.
THERATECHNOLOGIES INC.
Consolidated Statements of Comprehensive Earnings
(Unaudited)
Periods ended May 31, 2009 and 2008
(In thousands of dollars)
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May 31, May 31,
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2009 2008 2009 2008
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(Restated - (Restated -
note 2 (a)) note 2 (a)
(3 months) (6 months)
Net loss $(5,430) $(11,382) $(16,184) $(22,246)
Unrealized gains (losses)
on available-for-sale
financial assets 668 (276) 985 42
Reclassification adjustment
for gain and losses on
available-for-sale
financial assets (47) - (70) -
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Comprehensive loss $(4,809) $(11,658) $(15,269) $(22,204)
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See accompanying notes to unaudited consolidated financial statements.
THERATECHNOLOGIES INC.
Consolidated Statements of Shareholders' Equity
(Unaudited)
Six-month period ended May 31, 2009
(In thousands of dollars)
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Accu-
mulated
other
Capital stock Con- compre-
---------------- tributed hensive
Number Dollars surplus income Deficit Total
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Balance,
November
30, 2008 58,215,090 $269,219 $5,585 $372 $(228,230) $46,946
Change in
accounting
policies
(note 2 (a)) - - - - (599) (599)
Issuance of
share capital
(notes 4 and 7) 2,182,387 9,861 - - - 9,861
Stock-based
compensation - - 500 - - 500
Net loss - - - - (16,184) (16,184)
Unrealized gains
on available-
for-sale financial
assets - - - 915 - 915
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Balance, May 31,
2009 60,397,477 $279,080 $6,085 $1,287 $(245,013) $41,439
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See accompanying notes to unaudited consolidated financial statements.
THERATECHNOLOGIES INC.
Consolidated Statements of Shareholders' Equity
(Unaudited)
Six-month period ended May 31, 2008
(In thousands of dollars)
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Accu-
mulated
other
Capital stock Con- compre-
---------------- tributed hensive
Number Dollars surplus income Deficit Total
--------------------------------------------------------------------------
Balance,
November 30,
2007 54,531,133 $238,842 $4,807 $(333)$(177,339) $65,977
Change in
accounting
policies
(note 2 (a)) - - - - (941) (941)
Issuance of
share capital 3,503,671 29,778 - - - 29,778
Share issue
costs - - - - (1,938) (1,938)
Exercise of
stock options:
Cash proceeds 91,332 286 - - - 286
Ascribed value - 77 (77) - - -
Stock-based
compensation - - 461 - - 461
Net loss - - - - (22,246) (22,246)
Unrealized gains
on available-
for-sale financial
assets - - - 42 - 42
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Balance, May
31, 2008 58,126,136 $268,983 $5,191 $(291) (202,464) $71,419
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See accompanying notes to unaudited consolidated financial statements.
THERATECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(Unaudited)
Periods ended May 31, 2009 and 2008
(In thousands of dollars)
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May 31, May 31,
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