TORONTO, Feb. 12 /PRNewswire-FirstCall/ - Transition Therapeutics Inc. ("Transition" or the "Company") , a product-focused biopharmaceutical company developing therapeutics for disease indications with large markets including Alzheimer's Disease and Diabetes, today announced its financial results for the quarter ended December 31, 2007.
Selected Highlights
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During the second quarter of fiscal 2008 and up to the date of this press release, the Company achieved the following significant milestones:
Transition's lead Alzheimer's disease compound ELND005 (AZD-103) is a disease modifying agent with the potential to both prevent and reduce disease progression, and improve symptoms such as cognitive function.
In September 2006, Transition announced a global collaboration with Elan to develop and commercialize ELND005 (AZD-103). In April 2007, Transition announced that the FDA granted Fast Track designation to the investigational drug candidate ELND005 (AZD-103).
On August 30, 2007, the Company announced the completion of Phase I clinical studies with ELND005 (AZD-103). Transition and its development partner Elan have performed multiple Phase I studies evaluating the safety, tolerability and pharmacokinetic profile of ELND005 (AZD-103) in healthy volunteers. Approximately 110 subjects have been exposed to ELND005 (AZD-103) in multiple Phase I studies, including single and multiple ascending dosing; pharmacokinetic evaluation of levels in the brain; and CSF and plasma studies. ELND005 (AZD-103) was safe and well-tolerated at all doses and dosing regimens examined. There were no severe or serious adverse events observed. ELND005 (AZD-103) was also shown to be orally bio-available, cross the blood-brain barrier and achieve levels in the human brain and CSF that were shown to be effective in animal models for Alzheimer's disease.
On December 21, 2007, Elan and Transition announced that the first patient had been dosed in a Phase II clinical study of ELND005 (AZD-103) in patients with Alzheimer's disease. The study is a randomized, double-blind, placebo-controlled, dose-ranging, safety and efficacy study in approximately 340 patients with mild to moderate Alzheimer's disease. Approximately 65 sites in North America are expected to participate in the program. The study will evaluate both cognitive and functional endpoints, and each patient's participation is planned to last approximately 18 months.
In connection with the initiation of the Phase II clinical study, the Company issued the former shareholders of ENI the first contingent consideration milestone in the form of 174,123 Transition common shares at a price of $10.86 per share. The shares issued had a fair value of $1,890,976 which represents additional consideration paid to acquire the technology, products and patents from ENI and accordingly, has been capitalized as intangible assets and will be amortized over the remaining useful life of the technology, products and patents.
TT-223 for Diabetes
Preclinical data in diabetes animal models demonstrate the efficacy of gastrin analogues alone, or in combination with GLP-1 analogues or epidermal growth factor analogues. In humans, Transition's recent Phase IIa clinical trial data showed that 4-weeks of E1-I.N.T. therapy (combination of gastrin analogue and epidermal growth factor analogue) in type 2 diabetes patients resulted in sustained reductions in blood glucose control parameters, including haemoglobinA1C, for 6 months post-treatment. Pre-clinical and clinical data suggests gastrin plays an important role in beta cell differentiation and function, capable of providing sustained glucose control in type 2 diabetes. Based on these data, Transition has commenced the studies to advance its lead gastrin analogue, TT-223, formerly known as "G1", into Phase II clinical trials in type 2 diabetes patients.
To support the Phase II clinical development program for TT-223, Transition is currently performing two Phase I studies to expand the dose ranges for TT-223. Transition expects to initiate the following Phase II clinical studies evaluating TT-223 in type 2 diabetes:
For the three-month period ended December 31, 2007, the Company recorded a net loss of $1,552,208 ($0.07 per common share) compared to a net loss of $4,858,107 ($0.25 per common share) for the three-month period ended December 31, 2006.
For the six-month period ended December 31, 2007, the Company recorded a net loss of $5,651,186 ($0.25 per common share) compared to a net loss of $7,182,830 ($0.39 per common share) for the six-month period ended December 31, 2006.
The decrease in net loss of $3,305,899 or 68% for the three-month period ended December 31, 2007 and $1,531,644 or 21% for the six-month period ended December 31, 2007 is largely due to decreased amortization expense resulting from the Waratah technology being fully amortized in the third quarter of fiscal 2007, recognition of the remaining unamortized upfront fee from Novo, increased interest income resulting from higher cash and held-to-maturity investment balances and the receipt of the second milestone payment from SCT. For the three-month period ended December 31, 2007, the decrease in net loss was partially offset by increases in research and development expense, and general and administrative expenses. For the six-month period ended December 31, 2007, the decrease in net loss was offset by the future income tax recovery of $2,729,422 that was recognized in the first quarter of fiscal 2007, and was also offset by increases in research and development and general expense and general and administrative expenses.
Revenues
Licensing fees increased to $1,563,911 for the three-month period ended December 31, 2007 from $32,811 for the three-month period ended December 31, 2006. For the six-month period ended December 31, 2007, licensing fees increased to $1,596,722 from $65,622 for the same period in fiscal 2007. These increases are due to the fact that the licensing agreement with Novo Nordisk was terminated during the three-month period ending December 31, 2007 and all remaining deferred amounts have been recognized as licensing fee revenue during the period.
Research and Development
Research and development expenses increased to $2,480,123 for the three-month period ended December 31, 2007 from $1,680,714 for the three-month period ended December 31, 2006. For the six-month period ended December 31, 2007, research and development expenses increased to $5,245,922 from $3,769,702 for the same period in fiscal 2007. These increases are primarily the result of an increase in clinical development costs related to ELND005 (AZD-103) and TT-223. The increase was also amplified in the three and six month periods ended December 31, 2007 as the comparative prior year period included the reimbursement by Novo Nordisk of E1-I.N.T.(TM) development costs in the amount of $201,000 and $703,293 for the three-month and six-month periods respectively resulting from the amended Novo Nordisk agreement. These increases were partially offset by decreases in clinical program expenses that related to the Company's completed I.E.T. clinical trials and a reduction of costs relating to the drug discovery platform.
General and Administrative
General and administrative expenses increased to $1,506,199 for the three-month period ended December 31, 2007 from $1,051,963 for the three-month period ended December 31, 2006. For the six-month period ended December 31, 2007, general and administrative expenses increased to $2,838,380 from $2,081,356 for the same period in fiscal 2007. These increases primarily resulted from increased professional fees, insurance and regulatory fees resulting from the NASDAQ listing, increased option expenses and increased corporate governance costs.
Amortization
Amortization for the three-month period ended December 31, 2007, was $663,906 as compared to $2,465,726 for the three-month period ended December 31, 2006. For the six-month period ended December 31, 2007, amortization was $1,323,224 as compared to $5,434,033 for the same period in fiscal 2007. These decreases primarily resulted from the Waratah technology being fully amortized during the third quarter of fiscal 2007. This decrease was partially offset by the full quarter impact of the amortization relating to the NeuroMedix technology acquired during the fourth quarter of fiscal 2007.
Recovery of Future Income taxes
Recovery of future income taxes remained unchanged from Nil for the three-month periods ended December 31, 2007 and 2006. For the six-month period ended December 31, 2007, recovery of future income taxes was Nil compared to $2,729,422 for the same period in fiscal 2007. The decrease in recovery of future income taxes is due to the recognition of future income tax assets resulting from the amalgamation of Ellipsis Neurotherapeutics Inc., 1255205 Ontario Inc., 1255206 Ontario Inc. and Waratah Pharmaceuticals Inc. which occurred during the three-month period ended September 30, 2006.
Interest Income, net
Interest income for the three-month period ended December 31, 2007, was $692,552 as compared to $331,423 for the same period in fiscal 2007. For the six-month period ended December 31, 2007, interest income was $1,289,031 as compared to $404,664 for the same period in fiscal 2007. These increases primarily resulted from increased cash balances due to the November 2006 and July 2007 private placements and the upfront payments received from Elan.
SCT Anniversary Payment
During the three month period ending December 31, 2007, the Company received the third anniversary payment of $650,000 in cash which has been recorded as a gain in the statement of loss and comprehensive loss. As of December 31, 2007, total payments received amount to $1,850,000. The final payment of $1,650,000 is due in the first quarter of fiscal 2009.
About Transition
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Transition is a biopharmaceutical company, developing novel therapeutics for disease indications with large markets. Transition's lead products include ELND005 (AZD-103) for the treatment of Alzheimer's disease and TT-223 for the treatment of diabetes. Transition has an emerging pipeline of preclinical drug candidates acquired externally or developed internally using its proprietary drug discovery engine. Transition's shares are listed on the NASDAQ under the symbol "TTHI" and the Toronto Stock Exchange under the symbol "TTH". For additional information about the Company, please visit www.transitiontherapeutics.com.
Notice to Readers: Information contained in our press releases should be considered accurate only as of the date of the release and may be superseded by more recent information we have disclosed in later press releases, filings with the OSC, SEC or otherwise. Except for historical information, this press release may contain forward-looking statements, relating to expectations, plans or prospects for Transition, including conducting clinical trials. These statements are based upon the current expectations and beliefs of Transition's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include factors beyond Transition's control and the risk factors and other cautionary statements discussed in Transition's quarterly and annual filings with the Canadian commissions.
CONTACT: on Transition, visit www.transitiontherapeutics.com or contact:
Dr. Tony Cruz, Chief Executive Officer, Transition Therapeutics Inc.,
Phone: (416) 260-7770, x.223, tcruz@transitiontherapeutics.com; Elie Farah,
Chief Financial Officer, Transition Therapeutics Inc., Phone: (416)
260-7770, x.203, efarah@transitiontherapeutics.com
