4SC AG — Earnings Release 2008

Mar 27, 2009

News Details

Corporate | 27 March 2009 08:00

4SC publishes results for the 2008 financial year

4SC AG / Final Results

Release of a Corporate News, transmitted by DGAP - a company of EquityStory
AG.
The issuer / publisher is solely responsible for the content of this announcement.

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Planegg-Martinsried, 27 March 2009 - The biotech company 4SC AG (Frankfurt
Stock Exchange, Prime Standard Segment: VSC) today published its financial
result in accordance with IFRS (International Financial Reporting
Standards) for the 2008 financial year, which ended on 31 December 2008.

The company generated total sales of just under 3.0 million EUR, more than
doubling their level for the 2007 financial year of 1.4 million EUR.
Primarily as a result of increased expenses for research and development
due to the broadened and maturing development pipeline, the operating loss
increased from 8.3 million EUR in 2007 to 12.7 million EUR. The annual
result amounted to - 11.9 million EUR (2007: - 8.1 million EUR) or - 0.51
EUR per share, the latter on account of the increased number of shares
arising from the capital increase conducted in July 2008 (2007: - 0.57 EUR
per share).

At the end of the reporting period, funds totalled 21.8 million EUR (2007:
17.2 million EUR). This puts 4SC AG in a good financial position to meet
its pending development targets, whereas potential future licensing fees
and milestone payments from possible collaboration partners have not yet
been taken into account. Overall 4SC AG starts the new financial year with
good prospects of success.

Highlights of the past 2008 financial year:

· Capital increase generates 29.5 million EUR in cash and strengthens
shareholders' structure

· Acquisition of Nycomed's oncology pipeline for 14 million EUR

· First clinical results for cancer drug 4SC-201

· Stake in biotechnology firm Nexigen, plus exclusive takeover option

· Collaboration with AiCuris as well as licensing and cooperation agreement
with ViroLogik

'We took a big step forward in the 2008 financial year,' commented Dr
Ulrich Dauer, CEO of 4SC AG. 'By acquiring the Nycomed oncology projects,
we have broadened our pipeline significantly with potential value drivers
and diversified the development risk. At the same time, we have raised
fresh capital and therefore given ourselves more room for manoeuvre
financially in a difficult capital market climate.'

Dr Bernd Hentsch, Chief Development Officer of 4SC AG, added, 'In 2008, we
laid the foundations for substantially increasing the future value of the
company. With our portfolio of drug candidates and our research
collaborations, we are very well positioned to create significant
development progress in the 2009 financial year.'

Capital increase secures sound financial basis

The capital increase completed in July 2008 increased the number of shares
from 19.0 million to 28.5 million tradable securities. By issuing 9.5
million new shares at a subscription price of 3.10 EUR per share, 4SC AG
generated gross proceeds of 29.5 million EUR. The capital increase from
authorised capital comprised an indirect subscription offer to existing
shareholders at a subscription price of 3.10 EUR per share. Unsubscribed
shares were issued in full in context of a private placement at the
subscription price. The capital measure was supported by Santo Holding, the
largest single shareholder of 4SC AG with now just under 50%. This
shareholder structure has leant the share price stability during a
turbulent period for the stock markets since September 2008. Equity climbed
from 19.6 million EUR to 37.2 million EUR at the end of the 2008 financial
year, resulting in an equity ratio of 90.4%.

Sustainability of research pipeline constantly improved

By acquiring the Nycomed projects for 14 million EUR on 31 July 2008, 4SC
AG obtained eight oncology programmes. Almost simultaneously, 4SC AG
announced the appointment of Dr Bernd Hentsch, a seasoned expert in cancer
research, as the new Chief Development Officer.

After reviewing the Nycomed candidates, three oncology programmes were
integrated into 4SC AG's current development portfolio, which presently
consists of three clinical and five pre-clinical projects. Of the
pre-clinical development candidates, no fewer than up to four projects may
meet all the criteria for beginning the first clinical trials in the near
future. 4SC AG is holding to its strategy of developing all candidates up
to proof of concept with a view to then licensing them out in agreements
with prospective partners in the biopharmaceutical industry in return for
performance-based milestone payments and royalties.

The most advanced candidate is 4SC-101. This substance administered in
tablet form has already demonstrated its efficacy in clinical phase IIa in
patients with Rheumatoid Arthritis (RA). 4SC-101 works on the basis of a
clinically tested mechanism, but has significantly fewer side effects than
conventional treatments. 4SC AG's primary goal is to develop this drug in
combination with the standard medication Methotrexate for patients with RA
that have already received prior therapies. In the coming months, 4SC AG
will commence an advanced phase II trial while, at the same time,
continuing its discussions with prospective partners in the pharmaceutical
industry.

In order to boost the value of this product, in March 2009 4SC AG started a
further phase II trial for 4SC-101 for the treatment of Crohn's disease, a
chronic inflammatory bowel disease that occurs episodically and for which
there is currently no adequate treatment available. The clinical outcome of
this open-label, non-randomised phase II trial is designed to successfully
reduce the dosage of steroids in patients as a standard treatment without a
fresh bout of illness manifesting itself.

In 2008, significant clinical progress was made with 4SC-201, the product
from the Nycomed pipeline at the most advanced stage of development. This
drug belongs to the class of so-called HDAC inhibitors, which block the
cell division process and therefore the starting point for the
multiplication of tumour cells. In the phase I trial concluded at the end
of 2008, the compound demonstrated good levels of tolerability and a very
good pharmacokinetic profile when administered orally. In addition, 4SC-201
showed first signs of efficacy for different types of tumours, which was
manifested in the frequent stabilisation of the disease. This series of
clinical trials forms the basis for the dosage of efficacy studies
currently in preparation. For the 2009 financial year, 4SC AG has set
itself the target of beginning phase II clinical trials for 4SC-201 in at
least two different types of tumours.

Of the pre-clinical portfolio, two more cancer drugs are expected to soon
meet all the criteria for starting the first clinical trials. The relevant
scientific and regulatory work has now been completed. More pre-clinical
candidates are currently being validated with a view to further clinical
development.

Three new collaborations with biotechnology companies

In the last financial year, 4SC AG entered into a total of three research
partnerships with a view to adding to its own research expertise in a
targeted manner. The aim of the collaboration with the company AiCuris from
Wuppertal, announced at the beginning of 2008, is to build up a joint
product pipeline of drugs for the treatment of infectious diseases.
Anti-infective drugs are also the focus of the contract entered into with
ViroLogik in the second quarter. The Erlangen-based company acquired an
exclusive licence to develop and later market 4SC-206 in the indication for
viral infections. In return, 4SC AG received an up-front payment of 750 t
EUR, which may be followed at the relevant successful clinical stages by up
to 56.5 million EUR, as well as a percentage of sales. The investment
reported in May 2008 of just under four per cent in the Bonn-based company,
Nexigen, which has specialised in research into protein interactions as new
target structures for the development of novel drugs, is also an investment
into the future. In this case, 4SC AG secured itself an exclusive option of
taking over the company completely until August 2009.

Financial result for the 2008 financial year

Of sales, 2.2 million EUR was attributable to the 'Collaborative Business'
segment and 0.8 million EUR to the 'Drug Discovery & Development' segment.
'Drug Discovery & Development' sales came from the licensing and
cooperation agreement with ViroLogik GmbH entered into in the second
quarter of 2008. Net sales from 'Collaborative Business' stemmed from
collaborations with AiCuris and QuoNova.

Operating expenses rose from 9.8 million EUR in the 2007 financial year to
16.3 million EUR. Of that sum, 11.5 million EUR was due to research and
development costs, which were up 84% compared with 2007, mainly as a result
of the significantly broader and more mature pipeline. Administrative costs
edged up slightly from 2.8 to 3.0 million EUR. The increase in the average
number of employees from 64 to 80 in the 2008 financial year is intended to
ensure the prompt and high-quality development of the extended pipeline.

4SC AG reported a pre-tax loss of 11.8 million EUR in 2008, an increase of
45% on the 8.1 million EUR loss in the previous year. The net loss totals
11.9 million EUR (2007: - 8.1 million EUR). In terms of operating cash
flow, the company posted a minus of 9.4 million EUR (2007: - 6.6 million
EUR).

Outlook

For 2009, 4SC AG set itself the target of carrying out proof-of-concept
studies on its two clinical products. In order to further boost the value
of our lead compound 4SC-101, the company will press ahead with phase II
trials in both indications of Rheumatoid Arthritis and Crohn's disease. At
the same time, we will continue negotiations with a view to entering into
licensing agreements on attractive terms for us.

For the cancer drug 4SC-201, 4SC AG wants to start with phase II trials in
at least two different indications. Moreover, the company intends to get
clinical phase I under way for at least two other pre-clinical candidates.

Despite the wide range of research projects, 4SC AG remains committed to
keeping research costs within reasonable limits. Nevertheless, due to the
extended and maturing development pipeline the company is anticipating a
further rise in development costs for 2009.

The full annual report was published today on our homepage at www.4sc.com.

Telephone Conference and Webcast

Today 4SC AG at 2:00 p.m. CET (8:00 a.m. EST), the Management Board of 4SC
AG will host a public conference call in English language to present the
financial results and all important highlights of the reporting period.

Participants of the conference call can dial in under the following numbers
and with the passcode 6807440.

Participants from Europe: +49 (0)89 9982 99911 or +44 (0)20 7806 1955
Participants from the U.S.: +1 212 444 0413

Simultaneously to the call, the presentation slides can be followed via
internet under http://www.euvisioncast.com (Meeting ID: 6807440; Meeting
Password: pw8712).

Please dial in ten minutes before the beginning of the conference.

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

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 85 employees, the company develops novel drug candidates
against inflammatory diseases and cancer. 4SC AG utilises its patent
protected platform, to create a sustainable project pipeline of drug
candidates, which are to be developed up to clinical efficacy in early
clinical phases ('proof of concept') and subsequently partnered with the
pharmaceutical industry in return for advance and milestone payments as
well as royalties. There are currently eight projects in the development
pipeline and a rich pool of further discovery projects. Clinical phase IIa
for the first project for the treatment of rheumatoid arthritis has already
successfully been completed. The project is now being prepared for clinical
phase II trials. An additional project for the treatment of various cancers
has completed a clinical phase I trial and will commence clinical phase II
testing shortly. Further projects are in advanced pre-clinical stages.
Further information is to be found at 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 more information please contact:

Bettina von Klitzing
Manager Investor Relations & Public Relations
4SC AG
Tel: +49 (0) 89 70 07 63 0
Bettina.von.Klitzing@4sc.com

27.03.2009 Financial News transmitted by DGAP

Language: English
Issuer: 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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