4SC AG — Earnings Release 2009

Nov 6, 2009

News Details

Corporate | 6 November 2009 07:45

4SC Reports Nine Months 2009 Financial Results

4SC AG / Quarter Results

06.11.2009

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Planegg-Martinsried, Germany, 6 November 2009 - 4SC AG (Frankfurt, Prime
Standard: VSC), a drug discovery and development company today announced
its financial results for the nine months ended 30 September 2009,
according to International Financial Reporting Standards (IFRS).

Highlights of the Third Quarter 2009:

* Phase II 'SHELTER' study for oncology compound 4SC-201 (resminostat) in
hepatocellular carcinoma (HCC) commenced

* All preparations for initiation of proof-of-concept Phase IIb 'COMPONENT'
trial with small-molecule 4SC-101 in Rheumatoid Arthritis (RA) completed

* Second indication for 4SC-201 in Hodgkin's lymphoma (HL) chosen and Phase
II study preparations ongoing

Dr. Ulrich Dauer, CEO of 4SC, commented: 'In the past quarter we made
significant progress in advancing our two lead products and positioning
them for future partnering. With our lead oncology candidate 4SC-201, we
commenced the Phase II trial in HCC, a cancer indication with high unmet
medical need. Additionally, we expect to start another Phase II study in HL
until the end of 2009, positioning 4SC-201 as a multiple-indication
oncology product. Concurrently, we are imminently due to start a Phase IIb
study with 4SC-101 in RA, a synthetic, small-molecule DMARD which will be
investigated in combination with methotrexate (MTX), the standard of care
treatment for this indication. As our pipeline grows, we continue to assess
which product should advance through our portfolio, ensuring we are
allocating our human and financial resources on the most promising
value-drivers within our pipeline.'

Financial Review

For the first nine months of 2009 revenues, which resulted solely from
research collaborations, amounted to EUR1.4m, compared to EUR2.5m in the
prior reporting period. The revenues for the first nine months 2008
included a payment of EUR0.8m from ViroLogik GmbH, based in Erlangen,
Germany, for a license and collaboration agreement. Revenue in the third
quarter amounted to EUR0.4m, compared to EUR0.5m in the same quarter last
year. This decline reflects the increased allocation of resources to
progressing 4SC's proprietary clinical programmes.

Primarily due to the growing number of clinical development programmes in
progress, research and development costs increased from EUR7.7m to EUR10.3m
in the first nine months of 2009, in line with expectations. Total
operating expenses were EUR13.4m (first nine months 2008: EUR11.5m), with
EUR2.5m accounting for administrative costs which increased by 10%. Total
operating expenses for the third quarter amounted to EUR4.8m, compared to
EUR4.6m in the same period in 2008.

Lower revenues and increased spending for research & development resulted
in an operating loss of EUR12.0m - an increase by 41% compared to the nine
month period last year. Net loss for January to September 2009 was at
EUR11.6m (first nine months 2008: loss of EUR7.8m). The resulting operating
loss for the third quarter amounted to EUR4.4m, compared to a loss of
EUR3.8m in the third quarter of 2008. As of 30 September 2009, 4SC AG held
EUR10.6m in funds, compared to EUR21.8m on 31 December 2008.

Advancing Product Portfolio

In August this year, 4SC commenced the Phase II 'SHELTER' study in advanced
HCC. HCC is the most frequent form of liver cancer and the third leading
cause of cancer deaths worldwide. Sorefanib (trade name: Nexavar) is
currently the only approved treatment and is a first-line therapy. SHELTER
is an open-label, two-arm and multicentre study that is examining whether
4SC-201, as monotherapy or in combination with sorafenib can induce
progression free survival and tumour responses in HCC patients with
progressive disease under treatment with sorafenib.

The first study arm comprises an initial dose escalation assessing 200mg to
600mg of 4SC-201 in combination with sorafenib, and will include 15
patients at the estimated MTD of this treatment combination, whilst the
second arm includes 15 patients taking 4SC-201 only. The primary endpoint
of the study is to determine the progression free survival rate (PFSR)
after twelve weeks of study treatment. The secondary endpoints will include
analysis of tumour responses, time-to-progression (TTD), PFSR estimated
after six and beyond twelve weeks of treatment, overall survival, analysis
of drug safety and tolerability, pharmacokinetics and the investigation of
biomarkers. The patients will be assessed after six and 12 weeks through
radiography and can extend the study until they choose to withdraw or have
progressive disease. In addition, an extension study with ten additional
patients can be completed per arm.

4SC-201 belongs to the class of histone deacetylase (HDAC) inhibitors. In
September, 4SC presented the strong anti-tumour activity shown by this
compound in a Phase I trial, in a poster presentation at the European
Multidisciplinary Cancer Conference ECCO 15 - ESMO 34 in Berlin, the
largest cancer conference in Europe. In addition, 4SC choose Hodgkin's
lymphoma, a haematological cancer, as the second indication for this
compound as HDACs have shown prior efficacy in this cancer type. This Phase
II trial is planned to commence before the end of 2009.

For 4SC-101, the lead candidate in autoimmune disease, patient recruitment
for the exploratory Phase IIa study 'ENTRANCE' in patients with
inflammatory bowel disease is ongoing. 4SC expanded the trial from Crohn's
disease to include patients with ulcerative colitis, after the German
Federal Institute for Drugs and Medical Devices (BfArM) approved the
extension of the eligibility criteria to now cover both major sub-types of
inflammatory bowel diseases. This will enable the Company to assess the
potential maintenance therapy benefit of this compound in inflammatory
bowel disease as a whole and accelerate recruitment. Interim results
continue to be expected in Q1 2010.

Concurrently, the preparations for the start of the Phase IIb COMPONENT
trial of 4SC-101 in RA are fully completed, with the recruitment of the
first patient imminent. In this trial, 4SC plans to position 4SC-101 as a
new, efficacious, synthetic small molecule DMARD, which will enable
physicians to prescribe 4SC-101 in combination with MTX to those patients
that inadequately respond to MTX alone, the standard of care
first-line-therapy for RA patients.

Outlook

By the end of 2009, 4SC expects to have its two Phase II lead compounds
4SC-101 and 4SC-201 moving forward in four efficacy studies. The
successful results of these trials should profile and position these drug
candidates for partnering with the pharmaceutical industry at financially
attractive terms. As a next value inflection point, the open-label
exploratory study for 4SC-101 in IBD is estimated to deliver preliminary
results in the first half of 2010, whilst the RA trial is set to deliver
final, headline results at the end of 2010.

As part of the strategic third development arm for 4SC-201, this oncology
drug candidate is currently being investigated in pre-clinical testing
against various solid tumours in combination with different
chemotherapeutic agents, paving the way for potential entry into even
larger cancer markets. In addition, the Company's advanced pre-clinical
candidates 4SC-203 and 4SC-205 are in final preparations for the initiation
of Phase I trials, which are expected to begin within the next months.

In order to further support the development of its maturing pipeline of
drug candidates in commercially attractive indications, 4SC intends to
strengthen its cash position through a capital increase during the fourth
quarter of 2009. With this capital increase, 4SC intends to raise between
EUR25 to 30 million. The new shares, with dividend rights from 1 January,
2009, can be obtained by shareholders in a ratio of 5:2 until 10 November,
2009. This will enlarge the cash-reach beyond the time period in which the
lead compounds are expected to deliver proof-of-concept data and will
provide a solid foundation for negotiations with potential pharmaceutical
partners.
The complete Q3 report is available on our website www.4sc.com/investors.

Conference Call and Webcast

4SC will hold a public conference call today at 3:00pm CET (9:00am EST) in
English where the management will present the Q3 results and report on
current developments. Access to the presentation slides can be obtained at:

http://www.cyber-presentation.de/cgi-bin/visitors.ssp?fn=visitor&id=1092

Dial-in numbers:

0800 10 12 072 (Germany)
0800 358 0886 (UK)
+1 877 941 2928 (USA)
+49 6103 485 3002 (other countries)
Conference ID: 4179961

Approximately two hours after the live presentation, an audio replay of the
conference will be available on the 'investors' section of the homepage
www.4sc.com.

Notes to Editor

About 4SC
4SC AG (ISIN DE0005753818) is a drug discovery and development Company
focused on autoimmune and cancer indications. The Company currently has
three clinical programs, with three further clinical trials planned to
commence in 2009. 4SC-101, a small molecule, is in a Phase IIa exploratory
study in inflammatory bowel diseases and is due to commence a Phase IIb
study in rheumatoid arthritis. The Company's lead oncology compound,
4SC-201, a histone deacetylase (HDAC) inhibitor, is in a Phase II trial in
hepatocellular carcinoma and is due to commence a further Phase II trial in
Hodgkin's lymphoma in 2009. Drug candidates are developed until
proof-of-concept in order to generate value creating partnerships with the
pharmaceutical industry in return for advance and milestone payments as
well as royalties.

4SC was founded in 1997, has 93 employees, and is listed on the Prime
Standard of the Frankfurt Stock Exchange since December 2005. For further
information please visit www.4sc.com.

Legal Note

This document may contain projections or estimates relating to plans and
objectives relating to our future operations, products, or services; future
financial results; or assumptions underlying or relating to any such
statements; each of which constitutes a forward-looking statement subject
to risks and uncertainties, many of which are beyond our control. Actual
results could differ materially, depending on a number of factors.
For further information please contact:

4SC AG
Ulrich Dauer, Chief Executive Officer
Yvonne Alexander, IR & PR
Tel.: +49 (0) 89 70 07 63 66

MC Services (Europe)
Stefan Riedel
Tel.: +49 (0) 89 21 02 28 40

The Trout Group (USA)
Chad Rubin
Tel.: +1 646 378 2947

06.11.2009 Financial News distributed by DGAP. Media archive at www.dgap-medientreff.de and www.dgap.de

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Language: English
Company: 4SC AG
Am Klopferspitz 19a
82152 Martinsried
Deutschland
Phone: +49 (0)89 7007 63-0
Fax: +49 (0)89 7007 63-29
E-mail: public@4sc.com
Internet: www.4sc.de
ISIN: DE0005753818
WKN: 575381
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, München, Stuttgart

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