4SC AG — Earnings Release 2011

Mar 29, 2012

News Details

Corporate | 29 March 2012 07:00

4SC Announces Financial Results 2011:

4SC AG / Key word(s): Final Results

29.03.2012 / 07:00

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Press Release

4SC Announces Financial Results 2011

Planegg-Martinsried, 29 March 2012 – 4SC AG (Frankfurt, Prime Standard: VSC), a discovery and development company of targeted small molecule drugs for autoimmune diseases and cancer, today announced the financial results of the Group managed by 4SC AG (4SC) in accordance with International Financial Reporting Standards (IFRS) for the financial year ended 31 December 2011.

For 4SC, 2011 was an eventful and successful year for its business. In the course of the year, the Company made significant progress in its clinical development portfolio, primarily advancing its two main drugs along the path to market maturity: the anti-cancer compound resminostat and the therapeutic agent vidofludimus for the treatment of autoimmune diseases. In a difficult industry and capital market environment, 4SC also ensured the Company's continued financing into the first quarter of 2013. This laid the foundations for further strong performance of 4SC and strengthened its successful business model.

Highlights in the 2011 financial year

In clinical drug development:

– Publication of the results from three Phase II studies:

– Phase IIa ENTRANCE study with vidofludimus in inflammatory bowel disease (IBD) – the primary efficacy endpoint was reached

– Phase IIb COMPONENT study with vidofludimus in rheumatoid arthritis – while the primary endpoint was not reached, the results of the study confirmed a substantial anti-inflammatory activity of the drug in this indication

– Phase II SAPHIRE study with resminostat in Hodgkin's lymphoma – the primary endpoint was reached

– Commencement of two more clinical studies:

– Phase I/II SHORE study with resminostat in colorectal cancer

– Phase I TOPAS study with 4SC-202 in advanced haematological tumours

– After the reporting year (January 2012): Publication of data from a further Phase II study:

– Phase II SHELTER study with resminostat in advanced liver cancer (HCC) – the primary endpoint was reached ahead of time

In the partnering environment:

– Conclusion of a licensing deal with Yakult Honsha for the further development and marketing of resminostat in various cancer indications in Japan – receipt of an upfront payment of EUR6 million and entitlement to milestone payments of up to EUR127 million plus royalties in the double-digit percentage range in the coming years

In the positioning of the drug programmes in the competitive environment:

– Award of orphan drug status in the United States as well as the status of an orphan medicinal product in Europe for resminostat in the liver cancer (HCC) and Hodgkin's lymphoma (HL) indications

– Key patent awarded for resminostat in Japan

In the Company's development:

– Successful conclusion of a capital increase of EUR11.74 million

– Management Board's decision on a temporary focus on the Company's main value drivers – resminostat, vidofludimus and 4SC-202 – to extend cash reach into the first quarter of 2013

– Establishment (December 2011) and start of operations (January 2012) of 4SC Discovery GmbH for the marketing of 4SC's early drug research programmes and to strengthen the business model by generating additional revenue from research collaborations; this strategic decision provides a clear focus on the two operational value drivers of the company – advanced drug development and early research utilizing 4SC's technology platform in two dedicated units.

Dr. Ulrich Dauer, CEO of 4SC AG, commented: 'I am delighted that we were able to take critical leaps forward in 2011 in 4SC's highly promising development projects. Entering into our first regional development and marketing partnership with Yakult Honsha in Japan for the cancer drug resminostat gave us vital commercial validation of resminostat's high overall potential. We also gathered impressive efficacy and safety data on our main products, vidofludimus and resminostat, from Phase II studies, thereby setting the scene for the next major value-defining development steps. We are currently working hard on preparing a Phase IIb study for vidofludimus in inflammatory bowel disease so as to be able to start this trial with a potential partner in the near future. For resminostat, based on the excellent Phase II study data for liver cancer (HCC) published at the beginning of 2012, we are looking to conduct a pivotal study with a partner in this indication to continue development along the path to market maturity.'

Financial results in 2011

In the 2011 financial year, 4SC concentrated on the development of its value-enhancing drug programmes. As a consequence of the systematic scaling back of research collaborations up to the end of the financial year together with the deferred revenue for 2011 resulting from the upfront payment from the licensing agreement with Yakult Honsha, total revenue amounted to approximately EUR0.8 million, down from the EUR1.0 million generated in the previous year, as forecast.

Operating expenses stood at EUR19.6 million in 2011, down 9% on the prior-year figure of EUR21.3 million. Research and development costs, the largest block of operating expenses, accounting for 77% (previous year: 80%) of total expenditure, decreased by 12%, from EUR17.0 million in the previous year to EUR15.0 million in 2011 due to the conclusion of four of the eight clinical studies being conducted in parallel. Administrative costs rose from EUR3.6 million in 2010 to EUR4.0 million in 2011, principally as a result of higher legal and consulting costs.

4SC was able to reduce its net loss by 5%, from EUR20.1 million in the previous year to EUR19.1 million in 2011, principally on the back of lower operating expenses.

The capital increase implemented in early 2011 and the issuance of employee shares in May 2011 raised the average number of shares to 41,455,379 in the year under review (previous year: 38,502,739 shares). The higher number of shares and the reduction in the loss for the year accordingly brought down the loss per share to EUR0.46 from EUR0.52 in the previous year.

Cash flows

At 31 December 2011, 4SC had funds of EUR15.8 million (2010: EUR17.6 million).

In February 2011, 4SC successfully concluded a capital increase. The Company placed 3,452,647 new shares with new international institutional investors from Germany, the Benelux countries, Scandinavia and the United States at a price of EUR3.40 per share. The gross issue proceeds amounted to approximately EUR11.74 million. This increased the free float from around 19.4% at the beginning of 2011 to the current figure of approximately 26.4%.

Particularly on the strength of the proceeds from this capital increase, the upfront payment received from Yakult Honsha in 2011 and the decision by the Management Board of 4SC AG to focus its clinical drug programmes temporarily on resminostat, vidofludimus and the cancer drug 4SC-202 from the beginning of the fourth quarter of 2011, 4SC was able to safeguard its cash reach into the first quarter of 2013.

Group outlook

4SC has set itself the goal of working with strong partners from the pharmaceutical and biotech industry to develop its proprietary compounds further along the path to market maturity.

4SC is currently preparing a Phase IIb trial with vidofludimus in inflammatory bowel disease. This is the penultimate stage of clinical development on the way to market approval. This trial is planned to be initiated in late 2012/early 2013, ideally in collaboration with a partner.

4SC is looking to conduct a pivotal study for the anti-cancer compound resminostat in the liver cancer (HCC) indication together with a partner. The Company is concentrating its efforts on getting resminostat approved for the treatment of patients with advanced liver cancer who no longer respond to therapy with the cancer drug Sorafenib. So far, no drugs have been approved for this patient group. If the outcome of the talks with the authorities and potential partners is successful, a study of this nature could be initiated before the end of the first half of 2013.

Elsewhere in its clinical product portfolio, 4SC is expecting initial interim results from the Phase I/II SHORE study with resminostat in the colorectal cancer indication in 2012. In addition, the ongoing Phase I studies with the anti-cancer compounds 4SC-202 and 4SC-205 are due to be concluded this year.

In the area of research, by establishing 4SC Discovery GmbH in December 2011, which commenced operations at the beginning of 2012, the Group laid the foundations for increasing the visibility of its research activities on the market and enabling its subsidiary to act with greater flexibility in the market. 4SC hopes that this will generate additional revenue from the Group's early-stage research activities. In the cooperation and services business with pharmaceutical companies and through the marketing of the Group's own drug programmes in early research phases, further revenue is expected to be generated in 2012 which will strengthen the Company's business model and reduce its financial dependence on the capital markets.

Following the first pioneering licensing deal with Yakult Honsha, 4SC is looking to enter into further licensing partnerships with pharmaceutical and biotechnology companies. Under the umbrella of such partnerships, the Company expects to further develop its lead compounds, vidofludimus and resminostat, into marketable products, with cash inflows being generated to finance 4SC's operating business through upfront payments, milestone payments, licensing revenue and royalties.

Taking the current forecast of further expense and revenue planning into account, the current volume of funds will safeguard 4SC's financing well over the next twelve months. The monthly operating cash burn rate in 2012 will be around 10% higher than in 2011 (2011: EUR1.07 million). Under the Company's current plans for 2012 and 2013, research and development costs will be slightly lower than in the 2011 reporting year.

The complete annual financial report will be available for download at www.4sc.com/investors today from 7:00 am CET.

Telephone Conference and Webcast

Today at 3:00 pm CET (9:00 am EST), 4SC will host a telephone conference with a webcast in English, in which the Management Board of 4SC AG will report on the principal developments in the 2011 financial year and beyond.

To participate in the telephone conference, please use the following data:

Date: 29 March 2012

Time: 3:00 pm CET (9:00 am EST)

Dial-in numbers:

0800 10 12 072 (Germany)

0800 358 2337 (UK)

+1 877 941 6013 (USA)

+49 6958 999 0806 (other countries)

Conference ID: 4521601

Investors, analysts and media representatives who dial into the teleconference can follow the presentation slides live at www.equitystory.com (login: 4sc0312).

The complete webcast, including the presentation and audio recording, can also be followed from 3:00 pm at the following link: http://4sc290312-live.cyber-presentation.de

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

*Ends

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About 4SC

The Group managed by 4SC AG (ISIN DE0005753818) discovers and develops targeted, small-molecule drugs for treating diseases with a high unmet medical need in various autoimmune and cancer indications. These drugs are intended to provide innovative treatment options that are more tolerable and efficacious than existing therapies, and provide a better quality of life. The Company's balanced pipeline comprises promising products that are in various stages of clinical development. 4SC's aim is to generate future growth and enhance its enterprise value by entering into partnerships with leading pharmaceutical companies. Founded in 1997, 4SC currently has 96 employees and has been listed on the Prime Standard of the Frankfurt Stock Exchange since December 2005.

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.

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For more information please visit www.4sc.com or contact:

4SC

Jochen Orlowski, Investor Relations & Public Relations

jochen.orlowski(at)4sc.com, Tel.: +49 (0) 89 70 07 63 66

Bettina v. Klitzing-Stückle, Corporate Communications

bettina.von.klitzing(at)4sc.com, Tel.: +49 (0) 89 70 07 63 0

MC Services

Raimund Gabriel

raimund.gabriel(at)mc-services.eu , Tel.: +49 (0) 89 21 02 28 30

Mareike Mohr

mareike.mohr(at)mc-services.eu, Tel.: +49 (0) 89 21 02 28 40

The Trout Group (USA)

Chad Rubin

Crubin(at)troutgroup.com, Tel.: +1 646 378 2947

End of Corporate News

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Language:	English
Company:	4SC AG
	Am Klopferspitz 19a
	82152 Martinsried
	Germany
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

End of News	DGAP News-Service

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