TORONTO, May 14 /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 March 31, 2008.
Selected Highlights
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During the third 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 patents 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.
Pre-clinical 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.
On March 13, 2008, Lilly and the Company entered into a licensing and collaboration agreement granting Lilly exclusive worldwide rights to develop and commercialize Transition's gastrin based therapies, including the lead compound TT-223, which is currently in early Phase II testing. Under the terms of the agreement, Transition has received a $7 million upfront payment, and may also receive up to $130 million in potential development and sales milestones, as well as royalties on sales of gastrin based therapies if any product is successfully commercialized.
Transition and Lilly are both participating in the Phase II clinical trial with lead compound TT-223 in type 2 diabetes. Upon completion of this trial, Lilly will be responsible for further development activities and the commercialization of all gastrin based therapeutic products worldwide.
To support the Phase II clinical development program for TT-223, Transition has performed two Phase I studies to expand the dose ranges for TT-223. The first study, a single ascending dose study of TT-223 in healthy volunteers and the second study, a multiple ascending dose study of TT-223 have both been completed.
Transition and its collaboration partner Lilly expect to initiate a Phase II trial evaluating TT-223 in type 2 diabetes patients receiving metformin with or without thiazolidinediones (TZDs) early in the second half of calendar 2008. The companies are also in discussions regarding the timing and planning of another Phase II study with TT-223 in combination with a GLP1 analogue in type 2 patients. The next steps in the development of TT-223 in combination with epidermal growth factor analogue, will be evaluated following the review of data from the above proposed Phase II trials.
For the three-month period ended March 31, 2008, the Company recorded a net loss of $4,977,020 ($0.22 per common share) compared to a net loss of $3,804,694 ($0.19 per common share) for the three-month period ended March 31, 2007.
The increase in net loss of $1,172,326 or 31% is primarily due to increases in research and development expense and general and administrative expenses. The increase in net loss is partially offset by increased interest income resulting from higher cash and held-to-maturity investment balances and increased foreign exchange gains resulting from the strengthened Canadian dollar.
For the nine-month period ended March 31, 2008, the Company recorded a net loss of $10,628,206 ($0.46 per common share) compared to a net loss of $10,987,524 ($0.58 per common share) for the nine-month period ended March 31, 2007.
The decrease in net loss of $359,318 or 3% 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, increased foreign exchange gains resulting from the strengthened Canadian dollar and the receipt of the second milestone payment from SCT. For the nine-month period ended March 31, 2008, 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 and administrative expenses.
Revenues
Licensing fees decreased to nil for the three-month period ended March 31, 2008 from $32,811 for the same three-month period in fiscal 2007. The decrease is due to the fact that the licensing agreement with Novo Nordisk was terminated during the second quarter of fiscal 2008 and all remaining deferred amounts were recognized at that time.
Licensing fees and milestone revenue increased to $1,596,722 for the nine-month period ended March 31, 2008, from $651,083 for the same period in fiscal 2007. The increase is due to the fact that the licensing agreement with Novo Nordisk was terminated during the second quarter of fiscal 2008 and all remaining deferred amounts were recognized as licensing fee revenue during the period.
The $7,017,000 (US$7 million) upfront payment received from Lilly in April 2008 under the terms of the licensing and collaboration agreement will be recorded as deferred revenue and will be recognized as income on a systematic basis once the profitability of the collaboration arrangement can be reasonably estimated.
Research and Development
Research and development expenses increased to $3,780,429 for the three-month period ended March 31, 2008 from $2,281,406 for the three-month period ended March 31, 2007. For the nine-month period ended March 31, 2008, research and development expenses increased to $9,026,351 from $6,051,108 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). The increase was also amplified in the three and nine month periods ended March 31, 2008 as the comparative prior year period included the reimbursement by Novo Nordisk of E1-I.N.T.(TM) development costs resulting from the amended licensing agreement and development costs related to the gastrin program reimbursed by the JDRF totalling $635,238 and $1,370,153 for the three-month and nine-month periods respectively. These increases were partially offset by decreases in clinical program expenses that related to the Company's completed I.E.T. clinical trials.
TT-223 research and development costs decreased by $139,392 for the three-month period ended March 31, 2008 compared with the three-month period ended March 31, 2007. For the nine-month period ended March 31, 2008, TT-223 research and development expenses increased by $357,979 from the same period in fiscal 2007. For the nine-month period ended March 31, 2008 costs increased due to the expense associated with the TT-223 Phase I trials. The decrease in the three-month period resulted from the fact that significant program costs were not incurred between the completion of the TT-223 Phase I trials and the preparation for the TT-223 Phase II clinical trial.
General and Administrative
General and administrative expenses increased to $1,456,308 for the three-month period ended March 31, 2008 from $1,212,103 for the three-month period ended March 31, 2007. For the nine-month period ended March 31, 2008, general and administrative expenses increased to $4,294,688 from $3,293,459 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 March 31, 2008 was $729,329 as compared to $803,164 for the three-month period ended March 31, 2007. For the nine-month period ended March 31, 2008, amortization was $2,052,553 as compared to $6,237,197 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 period 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 March 31, 2008 and 2007. For the nine-month period ended March 31, 2008, 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 in the nine month period ended March 31, 2008 as compared to the same period in fiscal 2007 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 first quarter of fiscal 2007.
Interest Income, net
Interest income for the three-month period ended March 31, 2008, was $638,959 as compared to $464,653 for the same period in fiscal 2007. For the nine-month period ended March 31, 2008, interest income was $1,927,990 as compared to $920,317 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 and milestone payments received from Elan.
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
