4SC AG — Earnings Release 2007

Aug 9, 2007

News Details

Corporate | 9 August 2007 10:00

4SC publishes first half year results

Planegg-Martinsried, Germany, 9 August 2007 – Today the drug discovery and development company 4SC AG (Frankfurt, Prime Standard: VSC) published its financial results for the first half year 2007. The revenue in the first half year 2007 amounted to 0.635 million Euro after 1.032 million Euro in the first half year 2006 (- 38.5 percent). They resulted almost exclusively from the segment ‘Collaborative Business’ and were fundamentally achieved within the scope of the research and development cooperation with the US-American QuoNova LLC. The research and development costs rose by 19.4 percent from 2.712 million Euro in the first half year 2006 to 3.237 million Euro in the first half year 2007. The background is, in addition to higher patent costs due to the initiation of national registrations, above all the elevated costs for external services in the context of the current pre-clinical and clinical studies for 4SC AG’s various substances – primarily for the project SC12267, which is at present in the advanced clinical phase IIa. Against the background of elevated personnel expenses, fundamentally caused by non-cash affecting personnel expenses from stock options, the administrative costs rose in the first two quarters by 12.3 percent to 1.292 million Euro (1.151 million Euro in the first half year 2006).

The result from operating activities in the first half year 2007 amounted to – 4.259 million Euro (Reference period 2006: – 3.473 million Euro). The period result lay with – 4.241 million Euro in the framework of expectations (Reference period 2006: – 3.462 Mio. Euro). The undiluted and diluted earnings per share amounted to – 0.36 Euro (Reference period 2006: – 0.32 Euro). The equity of 4SC AG as at 30 June 2007 amounts to 6.710 million Euro after 7.854 million Euro as at 31 December 2006. The equity ratio at the end of the reporting half year stood at 71.6 percent after 78.8 percent as at 31 December 2006.

In the course of the capital increase of 21 May 2007 the holdings of cash and cash equivalents improved from 2.522 million Euro as at 31 December 2006 to 3.861 million Euro as at the end of the reporting period. Furthermore, the company holds securities not admitted in the cash and cash equivalents at a level of 0.869 million Euro (31 December 2006: 1.949 million Euro).

Results of the second quarter 2007

In the second quarter 2007 the 4SC AG achieved revenues at a level of 0.348 million Euro, in comparison to 0.529 million Euro in the second quarter 2006. Research and development costs laid by 1.656 million Euro after 1.312 million Euro in the second quarter 2006. Administrative costs amounted to 0.625 million Euro after 0.596 million Euro in the same quarter of the previous year. The result from operating activities in the reporting quarter amounted to – 2.101 million Euro (- 1.736 million Euro in the second quarter 2006).

**Several projects shortly before their clinical trials

**In the most important business segment, ‘Drug Discovery and Development’, the current six pipeline projects have been speedily driven along, explained Ulrich Dauer, CEO of 4SC AG. Well within timetable is the clinical phase IIa study with the lead compound SC12267: ‘The recruitment of the targeted number of 120 patients with active rheumatoid arthritis could be finalised as planned at the end of June and we expect the study results in the course of this year’, said Dauer.

For the same drug candidate 4SC AG was recently also able to report positive results from a pre-clinical proof of concept study for chronic inflammatory bowel diseases such as Colitis Ulcerosa and Morbus Crohn. ‘With the conclusion of this study important prerequisites have been created for clinical trial – added proof that SC12267’s potential is by no means limited to a rheumatoid arthritis application’, declared Dauer.

Also in advanced pre-clinical studies are the drug candidates SC68896, against haematopoietic and solid tumours, and SC71570 from the NFkB project, against chronic-inflammatory bowel diseases. They too are almost ready for clinical trials.

**Prospects

**After the extensive programmatic course of the first half year the company holds itself firm to the defined targets for 2007, stressed Dauer. Thereby, the focus within the most important business segment, ‘Drug Discovery and Development’, continues to lie on completion of the clinical phase IIa study for the drug candidate SC12267, against rheumatoid arthritis, which is planned for the fourth quarter of 2007. ‘Should the results proceed positively as expected, this will clearly once again raise the appeal of the drug candidate for potential licensees and open new latitudes for the company’, said Dauer.

The potential of SC12267 is also substantiated by the positive results of the pre-clinical proof of concept study against chronic-inflammatory bowel diseases such as Colitis Ulcerosa and Morbus Crohn. With these, important hurdles have also been removed from the route to clinical trials. Moreover, two further projects from 4SC AG are also in advanced pre-clinical studies and are themselves approaching clinical study maturity. ‘However, for the moment we will concentrate our clinical capacity on the completion of the current phase IIa studies’, announced Dauer.

The capital increase finalised at the end of May in a difficult market environment has contributed to 4SC AG being able to bring several projects close to clinical development and to continue to press ahead as per programme with the phase IIa study of SC12267. The management will also continue to examine, and if applicable take advantage of all options in order to better exploit the potential of the project pipeline in the future.

The establishment of a comprehensive and sustainable pipeline with attractive drug candidates for the pharmaceutical industry remains the primary objective of 4SC AG and a fundamental lever for raising the value of the enterprise. The company has progressed well on this route over the past several months, accentuated Dauer. ‘There is scarcely a German biotech company that disposes over such an extensive pipeline, with several projects at the same time that are, to a large extent, mature for clinical testing.’

Accordingly, the interest of potential pharmaceutical partners is also not just limited to the drug candidate SC12267.

The management of 4SC AG assume that, in the short and above all in the medium term, it will come to the conclusion of further turnover-relevant licence agreements with pharmaceutical partners as well as additional service and research cooperations.

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 61, 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. There are currently six projects in the pipeline. The first project on the treatment of rheumatoid arthritis is currently undergoing clinical phase IIa. Four other product candidates are in preclinical development and another project is in the research stage. Furthermore, the company has its technology platform in co-operation projects with biotech and pharma companies and is already generating initial revenues.

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