4SC AG — Earnings Release 2006

May 15, 2006

News Details

Corporate | 15 May 2006 10:00

4SC reports results of first quarter

Planegg-Martinsried, Germany, 15 May 2006 – The drug discovery and development company 4SC AG, based in Martinsried (Frankfurt, Prime Standard: VSC), reported its financial results for the first quarter today. The company was able to increase its net sales by 11.3 percent to 0.503 million Euros in the first three months of 2006 (same period last year: 0.452 million Euros). As expected, the net sales derive from the ‘Collaborative Business’ segment. Compared to the first quarter of 2005, the costs of research and development rose by 38.3 percent to 1,400 million Euros (same period last year: 1,012 million Euros). The background are principally increased expenditures as part of the preparation of the clinical study phase IIa of the most advanced pipeline project SC12267 for the treatment of rheumatoid arthritis. In the context of the public listing, the administrative costs rose by 21.2 percent to 0.555 million Euros compared to 2005 (same period last year: 0.458 million Euros).

Results from operating activities in the first quarter 2006 amounted to -1,737 million Euros (same period last year: -1,313 million Euros). At -1,742 million Euros (same period last year: -1,402 million Euros) the period result was in line with expectations. Undiluted and diluted earnings per share amounted to -0.17 Euros (same period last year: -0.20 Euros). As a result of the negative period result, the equity of 4SC AG fell to 7,432 million Euros (31 December 2005: 9,159 million Euros). The equity ratio on the reporting date was 78.9 percent (31 December 2005: 81.5 percent). Its cash and cash equivalents amounted to 5,376 million Euros (31 December 2005: 6,878 million Euros).

‘The first quarter of the financial year 2006 has developed positively for 4SC AG.’ commented Ulrich Dauer, CEO of 4SC AG. Apart from the increased revenues in the Collaborative Business segment, he referred to the milestone in research cooperation reached with the Japanese partner Sanwa Kagaku Kenkuysho. In its core business of research and development of drugs, 4SC AG will continue to concentrate on preparation of the clinical phase IIa for the development candidate SC12267. In all likelihood it would be possible to begin with patient treatment in the fourth quarter of the current financial year.

Successful capital increase

On 11 May 2006 4SC AG was able to report the successful conclusion of a capital increase consisting of authorised capital amounting to 0.9 million Euros. Excluding the shareholders’ subscription rights, a total of 931,288 shares of 4SC AG were placed with institutional investors at a price of 4.65 Euros per share. ‘The background was rising demand by institutional investors, who are increasingly interested in biotech shares and evidently see potential in our company. The demand for higher unit numbers could not be satisfied by way of free float,’ explained Dauer.

The received funds in the amount of 4.3 million Euros strengthen the company’s liquidity and will benefit the further expansion of the project pipeline. ‘We can not only speed up our project in clinical development, but also make more rapid progress towards clinical development in the other projects.’

**About 4SC AG

**4SC AG (ISIN DE0005753818) has been listed in the Prime Standard of Frankfurt Stock Exchange since 15 December 2005. Founded in 1997 and now with a staff of 53, the company develops novel drug candidates for inflammatory diseases and cancer using a cheminformatics based technology platform. Traditional high throughput screening of therapeutic agents has been transferred from the lab to the computer. Thus, the company offers substantial cost and time advantages as well as increased success rates in drug development. 4SC AG uses its patented technology platform to create a sustainable product pipeline for active agents that are developed in early clinical phases (‘proof of concept’) and subsequently result in upfront and milestone payments as well as participation in sales generated by out-licensed products to the pharmaceutical industry. The pipeline currently has five projects, the first of which, on the treatment of rheumatoid arthritis, has successfully completed clinical phase I. Preparations for the conduct of the IIa clinical phase are well under way. A further one to two other product candidates should go into clinical development in 2006. Furthermore, the company has its technology platform in co-operation projects with biotech and pharma companies and is already generating initial revenues.

**Legal note

**This document may contain forecasts, estimates and assumptions concerning business plans and goals, products and services and future results or assumptions based on or relating to them. Any statements about the future are subject to risks and uncertainty that are not predictable and are beyond the control of 4SC AG. Many factors may cause the actual results to differ substantially from the results contained in such statements about the future.