WILEX publishes 9-month financial report 2011*

ENGLISH DEUTSCH

*Important note for readers of this press release:
Please be aware that this publication is to be read together with this Ad-hoc announcement. It has an influence on the published interim consolidated financial statements according to IFRS as of 31 May 2011 and 31 August 2011, in particular on the balance sheet. All other content remains unaffected.

• Income and earnings significantly improved
FDA granted Fast Track designation for RENCAREX®
• US marketing and distribution agreement for diagnostics signed
• Further Phase I trial with WX-554 commenced

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Munich, Germany, 13 October 2011. WILEX AG (ISIN DE0006614720 / WL6 / Frankfurt Stock Exchange) today published its financial report for the first nine months of the 2011 financial year (1 December 2010 – 31 August 2011) and reported on the status of the Company’s projects.

Peter Llewellyn-Davies, Chief Financial Officer of WILEX AG, commented: “Over the past nine months we successfully completed the integration of our two subsidiaries, continued the development of our product candidates and completed new and important partnerships. During this reporting period we generated sales revenue and other income of € 5.6 million, more than a fourfold increase compared with the previous year.”

Business performance, research and development activities in 2011

The process related to the interim analysis for efficacy for the therapeutic RENCAREX® commenced in January 2011. This involves collecting the data of all 864 patients, analyses by radiologists of some 30,000 CT scans, entering all data in databases and quality control. The data will be analysed by an external service provider and the results presented to the Independent Data Monitoring Committee (IDMC). We expect the IDMC to make its recommendation during the fourth quarter of 2011. Whilst the data remain blinded for WILEX, they will nonetheless provide critical information regarding the endpoint of the trial – disease-free survival.

The US Food and Drug Administration (FDA) granted RENCAREX® Fast Track designation in October 2011. This milestone triggers a payment of USD 2.5 million from the US partner Prometheus Laboratories Inc. (Prometheus), with whom WILEX signed a licence agreement for RENCAREX® at the end of April 2011. Fast Track designation in the United States is a process designed to expedite the review of drugs to treat serious diseases which fill an unmet medical need.

The serine protease inhibitor MESUPRON® is in a Phase II programme and currently tested in patients with metastatic, HER2 receptor negative breast cancer. Patient recruitment was completed in the second quarter of 2011.

In September 2011 WILEX started a further Phase I trial with the orally-administered version of the MEK inhibitor WX-554 in healthy volunteers. The small-molecule inhibitor is one of the programmes acquired from UCB for further clinical development. The Phase I trial with the orally-administered WX-554 follows the successfully completed Phase I trial with the intravenous formulation and will therefore provide an estimate of the drug candidate’s bioavailability.

The Pre-BLA Meeting for the diagnostic candidate REDECTANE® took place in the second quarter. The FDA confirmed at this meeting that the Phase III REDECT trial delivers reasonable evidence of the diagnostic efficacy and safety of REDECTANE®. The FDA suggested that WILEX and IBA might consider an outcomes based study to provide additional evidence of clinical benefit before BLA filing. WILEX and IBA have discussed the trial design and strategy with the medical advisory board and will subsequently discuss this with the FDA. The second set of issues discussed with the FDA concerns matters related to the manufacturing of REDECTANE® and is being addressed by IBA and WILEX respectively.

The WILEX Inc. production facility in Cambridge, MA, USA, was certified to both ISO 9001:2008 and 13485:2003 in August 2011. The ISO certifications are the prerequisite for WILEX Inc. to proceed with its Oncogene Science® business – to manufacture and distribute biomarker tests. WILEX Inc. further expanded its customer base in the reporting period. WILEX Inc. entered into an exclusive co-marketing and distribution agreement in October 2011 with American Laboratory Products Company Inc. (ALPCO) for the commercialisation of the Serum HER-2/neu ELISA test in North America (USA and Canada).

Heidelberg Pharma AG has successfully expanded its preclinical service business and reports increasing sales revenue.

Financial results of the first nine months of 2011

The WILEX Group generated sales revenue and other income of € 5.6 million in the first nine months of 2011 (previous year: € 1.2 million). Sales revenue totalled € 4.7 million (previous year: € 0). The revenue from deferred income in the Therapeutics segment relating to the Prometheus transaction of € 3.6 million accounts for a large portion of that amount. The Diagnostics segment accounts for € 0.2 million of the sales revenue, and the Customer Specific Research segment for € 0.9 million. WILEX Groups’ internal sales revenue of € 0.3 million was not taken into account. Other income was € 0.8 million (previous year: € 1.2 million). This arises from prepayments received for research projects accrued and recognised as other income in line with project costs using the percentage-of-completion method.

Operating expenses including depreciation and amortisation were € 18.4 million and thus slightly lower than the previous year (€ 18.5 million), despite the consolidation of the subsidiaries. Research and development costs at 73.8% account for the majority of operating expenses. These were € 13.6 million in the first nine months of 2011 and thus 9.9% lower than 2010 (€ 15.1 million). This decrease stems from the progress of the clinical trials and the resulting decrease in expenditures.

The ongoing clinical development of the monoclonal antibody Girentuximab (for RENCAREX® and REDECTANE®) accounted for 48.8% of research and development costs (previous year: 47.6%). As expected, this figure was lower than 2010 in absolute terms, reflecting the progress of the two Phase III trials. The uPA programme involving the small-molecule drug candidate MESUPRON® accounted for 23.8% of the research and development costs (previous year 35.1%) which is due to the Phase II breast cancer trial. The previous year’s figure included expenses for the Phase II trial in the pancreatic cancer indication, which was completed in 2010. The other projects, which mainly comprise the programmes acquired from UCB, account for 15.0% of research and development costs. Expenditures have declined compared to the previous year (17.3%) as in 2010 they included the costs for a Phase I trial of WX-554, which was completed during the year. The Customer Specific Research segment incurred research and development costs for the first time in the reporting period due to the integration of Heidelberg Pharma AG; these accounted for 12.4% of the Group’s total research and development costs.

The WILEX Group posted a loss of € 13.2 million for the first nine months of 2011. This represents an improvement of 23.2% compared to the previous year (€ -17.2 million), largely due to higher income and lower research and development costs. Earnings per share improved by 38.7% to € -0.65 (previous year: € -1.06) as a result of the lower loss for the period and the increase in the number of shares.

At the end of the third quarter of 2011, the WILEX Group had cash and cash equivalents of € 8.1 million (30 November 2010: € 1.9 million; 31 August 2010: € 7.8 million). The Company’s equity situation improved in the reporting period thanks to the non-cash capital increase as a result of acquiring Heidelberg Pharma. Equity as of 31 August 2011 was € 4.6 million (30 November 2010: € -1.3 million).

Outlook

WILEX adjusted the financial guidance for the current financial year in the half-yearly financial report 2011, taking into account the progress of its projects and the licence agreement for RENCAREX® with Prometheus. This adjusted guidance still applies.

WILEX expects the following clinical milestones in the coming months:

WILEX continues to prepare the approval application for REDECTANE® jointly with its partner IBA. WILEX and IBA have been planning to file for approval in late 2011. Due to the on-going process and pending discussions with the FDA this timeline is becoming more and more ambitious and may change according to the progress and outcome of these on-going regulatory discussions. The next FDA meeting is expected in the fourth quarter to discuss the study design of the outcomes based study. Following the meeting with the FDA WILEX will update the market regarding the approval process and timeline for REDECTANE®.

The IDMC recommendation from the interim analysis in the RENCAREX® Phase III ARISER trial is expected during the fourth quarter of 2011.

Under the agreement signed in late April 2011 with Prometheus, the US partner for RENCAREX®, WILEX will review and decide whether to take over an approved and marketed product for Europe or receive a compensation payment of USD 15.0 million after six months or USD 20.0 million after twelve months following the signature of the agreement.

WILEX will continue the Phase I programme with the MEK inhibitor WX-554 and start a trial with cancer patients in early 2012. The final data of progression-free survival from the Phase II trial of MESUPRON® in HER2 receptor negative breast cancer are expected during 2012.

WILEX Inc. will work with the new marketing and distribution partner ALPCO on the expansion of its customer base for the HER-2/neu ELISA test. Heidelberg Pharma AG will continue the expansion of contract-based business activities.

Key figures

9M 20111)
EUR ‘000

9M 20101)
EUR ‘000

Change
in %

Income

5,552

1,244

446.3

of which sales revenue 4,738 0

n/a

of which other income

814

1,244

(34.6)

Other expenses

(18,416)

(18.479)

(0.3)

of which research and development costs

(13,595)

(15,095)

(9.9)

Operating result

(12,864)

(17,235)

(25.4)

Earnings before tax

(13,228)

(17,217)

(23.2)

Net loss for the period

(13,230)

(17,222)

(23.2)

Earnings per share in EUR

(0.65)

(1.06)

(38.7)

Balance sheet as of end of period
Total assets 32,398 10,994

194.7

Cash and cash equivalents 8,073 7,762

4.0

Equity 4,638 4,530

2.4

Equity ratio2) in %
14.3 41.2

(65.3)

Cash flow
from operating activities (3,370) (13,934)

(75.8)

from investing activities (399) (11)

n/a

from financing activities 9,907 18,296

(45.9)

Employees
Employees as of the end of the period3)
119 72 65,3
Employees – average for the reporting period3)
101 72 40,3

1 The reporting period begins on 1 December and ends on 31 August.

2 equity/total assets

3 including WILEX Inc. (2011), Heidelberg Pharma (2011) and members of the Executive Management Board

Rounding of exact figures may result in differences.

The 9-month Financial Report 2011 including the consolidated financial statements prepared in accordance with IFRS has been published on the Company’s website: www.wilex.com.

Invitation to the conference call

On 13 October 2011, WILEX will hold a public conference call for media, analysts and investors in English at 3:00 p.m. CET. Please dial in ten minutes before the conference call using the following dial-in numbers:

1. Germany: +49 69 6677 75756

2. UK: +44 20 3003 2666

3. USA: +1 212 999 6659

4. USA Freephone: +1 866 966 5335

You will be welcomed by an operator taking your name and company. The presentation for the conference will be available for download from http://www.wilex.com/ at 2:00 p.m. CET. A replay of the conference will be available from 14 October on the website http://www.wilex.de/press-investors/presentations/.

Contact
Katja Arnold (CIRO)
Corporate Communications
WILEX AG
Grillparzerstr. 10
81675 Munich
Germany
Tel.: +49 (0)89-41 31 38-126
Fax: +49 (0)89-41 31 38-99
E-Mail: investors [at] wilex.com

About WILEX AG
WILEX AG is a biopharmaceutical company based in Munich, Germany. Focused on oncology, the company has a broad portfolio of near-to-market therapeutic and diagnostic products for the targeted treatment and specific detection of various types of cancer. The company’s therapeutic product candidates are based on antibodies and small molecules. Through its US subsidiary WILEX Inc. in Cambridge, MA, WILEX markets a portfolio of research use only and in vitro diagnostic tests under the brand Oncogene Science®. These diagnostic tests could be developed as companion diagnostics in clinical trials and for therapy monitoring. The wholly owned subsidiary Heidelberg Pharma AG gives WILEX access to an attractive and highly promising antibody drug conjugate technology platform and a pre-clinical service business. The business model of WILEX covers the entire value chain in the oncology market and comprises research, technology, development collaboration as well as sales and marketing. WILEX’s customers and partners include leading international pharmaceutical companies. ISIN DE0006614720 / WKN 661472 / Symbol WL6

This communication contains certain forward-looking statements relating to the Company’s business, which can be identified by the use of forward-looking terminology such as “estimates”, “believes”, “expects”, “may”, “will” “should” “future”, “potential” or similar expressions or by a general discussion of the Company’s strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results of operations, financial position, earnings, achievements, or industry results, to be materially different from any future results, earnings or achievements expressed or implied by such forward-looking statements. Given these uncertainties, prospective investors and partners are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such forward-looking statements to reflect future events or developments.

 

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