4SC AG — Earnings Release 2013

Nov 7, 2013

News Details

Corporate | 7 November 2013 07:31

Press Release: 4SC announces improved financial results for the third quarter and first nine months of 2013

4SC AG / Key word(s): Quarter Results/Miscellaneous

07.11.2013 / 07:31

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Press Release

4SC announces improved financial results for the third quarter and first nine months of 2013

Planegg-Martinsried, Germany, 7 November 2013 – 4SC AG (Frankfurt, Prime Standard: VSC), a discovery and development company of targeted small molecule drugs for cancer and autoimmune diseases, today announced the financial results for the 4SC Group in accordance with International Financial Reporting Standards (IFRS) for the third quarter and first nine months of 2013.

Operating highlights in Q3 (1 July – 30 September 2013):

– Resminostat: Expression of ZFP64 biomarker and other patient characteristics strongly correlate with patient survival in liver cancer (HCC) and Hodgkin’s lymphoma; study results presented at ILCA (Washington) and ECCO (Amsterdam) research conferences

– Resminostat: Partner Yakult Honsha starts clinical development in non-small-cell lung cancer (NSCLC) in Japan, making this the fourth tumour indication

– 4SC-202: Patent protection in China, Hong Kong and the USA expanded significantly

– 4SC Discovery: Partnership with Panoptes Pharma initiated in the field of inflammatory eye diseases

– Process of focusing the development strategy and adjusting the corporate structure completed

Financial highlights for the first nine months (1 January – 30 September 2013):

– Revenue increases by 262% to EUR 3.72 million (9M 2012: EUR 1.03 million)

– Operating result improves by 33% to EUR -8.25 million and by 41% to EUR -7.23 million after adjusting for one-off extraordinary factors (9M 2012: EUR -12.32 million)

– Earnings per share improve by 41% to EUR -0.16 (9M 2012: EUR -0.27)

– Liquid funds amounting to EUR 6.75 million secure the Company’s financing into the third quarter of 2014

Enno Spillner, CEO of 4SC AG, commented:

‘In the third quarter, we continued the successful implementation of our programme for concentrating on 4SC’s long-term value drivers by reducing our operating costs, streamlining our administrative activities and conducting a targeted reorganisation of our R&D work. In our business operations, centre stage is currently taken by resminostat, our promising compound for the treatment of liver cancer (HCC), for which we want to start a pivotal trial in mid-2014. Our goal is to achieve market approval for resminostat as a personalised cancer therapy based on the impressive new biomarker data. We successfully expanded the activities of our subsidiary 4SC Discovery GmbH in the field of research collaboration and we are working on additional funding models and partnerships for our development candidates.’

Telephone conference

Today, 7 November 2013, at 3:00 pm CET (9:00 am EST), 4SC will host a telephone conference in English in which the Management Board of 4SC AG will report on the principal developments in the reporting period and beyond. To participate in the telephone conference, please use the following dial-in data:

+49-6103-485-3001 (Germany)

+44-207-153-2027 (UK)

+1-480-629-9822 (USA)

+49-6103-485-3001 (other countries)

Conference-ID: 4647613

After the conference call, an audio replay will be available at www.4sc.com under Investors / Events & Presentations / Conference Calls & Webcasts.

Detailed financial review (9 months 2013 and Q3 2013)

The 4SC Group, which comprises 4SC AG and its wholly-owned subsidiary 4SC Discovery GmbH, reports consolidated figures for the Group and financial figures for the two operating segments Development (the clinical development of the compounds resminostat, 4SC-202, 4SC-205 and vidofludimus consolidated within 4SC AG) and Discovery & Collaborative Business (drug discovery and early-stage research activities as well as their commercialisation through the service business and research collaborations of 4SC Discovery GmbH). The figures for the 4SC Group are reported below; for more information on segment reporting, see the full 9-month consolidated financial report at http://4sc.de/investors/financial-reports .

9 months 2013:

In the first nine months of 2013, revenue increased by 262% year on year to EUR 3.72 million (9M 2012: EUR 1.03 million). This increase is mainly due to two factors: the cooperation agreements 4SC Discovery GmbH signed with BioNTech AG and LEO Pharma A/S, Denmark, in December 2012 and February 2013 and revenue from costs allocated by 4SC AG to cooperation partners for developing and carrying out compound production.

The Company’s loss from operating activities improved by 33% to EUR 8.25 million in the first nine months of the year on the back of higher revenue and a 10% reduction in operating expenses (9M 2012: EUR -12.32). After adjusting for one-off extraordinary factors of EUR 1.02 million associated with the change in the development strategy and corporate structure implemented in the second quarter of 2013, the operating loss in the first nine months of the year was EUR 7.23 million, down 41% on the prior-year figure. The loss for the period decreased by 33% to EUR 8.19 million in the first nine months (9M 2012: EUR -12.14 million). Earnings per share improved by 41% to EUR -0.16 (9M 2012: EUR -0.27) because there was also a higher average number of shares in the 9-month comparison due to the capital increase completed in July 2012.

This results in an average monthly outflow of cash from operations amounting to EUR 0.59 million in the first nine months of 2013 (9M 2012: EUR 1.31 million). As at 30 September 2013, the Company thus had cash and available-for-sale securities totalling EUR 6.75 million, compared with EUR 12.06 million as at 31 December 2012. Based on the current planning, 4SC expects these funds to be sufficient to secure the Company’s financing into the third quarter of 2014. The start of a registration trial in advanced liver cancer (HCC) has not been taken into account in this planning.

Q3 2013:

Compared with the third quarter of the previous year, consolidated revenue was up again in the reporting quarter, increasing significantly to EUR 1.77 million (Q3 2012: EUR 0.29 million). This fact plus the 19% reduction in operating expenses resulted in a 54% decrease in the loss from operations to EUR 2.08 million in the third quarter (Q3 2012: EUR -4.50 million). The loss for the period decreased by 53% to EUR 2.11 million (Q3 2012: EUR -4.46 million), resulting in earnings per share of EUR -0.04 (Q3 2012: EUR -0.09).

Detailed review of operations (Q3 2013):

In the third quarter of 2013, 4SC completed the process of focusing its development strategy and adjusting its corporate and personnel structures. The Company advanced its defined research and development activities and achieved key operating milestones. Operations at 4SC mainly focused on further developing its epigenetic lead compound resminostat in the indication of advanced liver cancer (HCC).

Development segment (clinical development activities of 4SC AG)

Resminostat:

New study results for resminostat were presented at two scientific conferences (ILCA, Washington, and ECCO, Amsterdam) in September 2013: The biomarker analysis of two Phase II trials with resminostat in liver cancer (HCC) and Hodgkin’s lymphoma (HL) revealed that patients with a high level of the ZFP64 biomarker apparently respond especially well to treatment with resminostat. Around two-thirds of patients exhibit elevated ZFP64 blood levels before treatment commenced. This translates into a statistically significant (p=0.04) doubling of overall survival for this patient group. In the indication of advanced liver cancer (HCC), further patient characteristics before the start of treatment with resminostat correlate with an extension of overall survival. 4SC will apply these results in designing the planned registration trial with resminostat in advanced HCC, so as to make further progress towards market approval for resminostat in combination with the potential predictive biomarker ZFP64 as a personalised cancer therapy in the indication of liver cancer (HCC).

Yakult Honsha Co., Ltd., 4SC’s exclusive partner for the development and marketing of resminostat in Japan since 2011, commenced a clinical Phase I/II trial in the indication of non-small-cell lung cancer (NSCLC) in July 2013. Alongside liver cancer, colorectal cancer and Hodgkin’s lymphoma, this marks the clinical development of resminostat in a fourth tumour indication.

4SC-202:

The Company succeeded in significantly expanding patent protection after having been granted a patent in China and obtaining notifications of allowance in Hong Kong and the United States for its second epigenetic anti-cancer compound, 4SC-202, thus extending the duration of patent protection.

Discovery & Collaborative Business segment (early-stage research and collaborations of 4SC Discovery GmbH)

In September 2013, the 4SC subsidiary 4SC Discovery GmbH transferred the patent for a compound discovered in-house for combating inflammatory eye diseases to the Austrian biotech company Panoptes Pharma Ges.m.H. In return, 4SC Discovery received a 24.9% share in Panoptes Pharma and will participate in future development successes in the form of milestone and royalty payments.

Operational and financial Outlook for 2013 and beyond:

Resminostat:

4SC continues to work on preparations for a clinical Phase IIb/III registration trial for resminostat as first-line therapy for HCC in combination with the cancer drug sorafenib and in consideration of the predictive biomarker ZFP64. The Company plans to start the trial around mid-2014 after completing all the required preparations including securing financing of the study’s Phase IIb part and obtaining approval from the regulatory authorities. 4SC is now talking to potential partners with the aim of ensuring the financing and successful completion of the study.

Anti-cancer compounds 4SC-202 and 4SC-205:

4SC plans to publish the first results of the Phase I TOPAS dose-finding study with 4SC-202 in patients with advanced haematological tumours in the fourth quarter of 2013. 4SC expects results from the Phase I AEGIS study with the compound 4SC-205 in patients with solid tumours to be available in late 2013 or early 2014.

Vidofludimus:

For the compound vidofludimus in autoimmune diseases, activities are now focusing on talks with potential external project partners with whose support the Company plans to finance and conduct a Phase IIb trial in the Crohn’s disease indication.

4SC Discovery GmbH:

This Group subsidiary aims to secure further service and research partnerships with pharmaceutical and biotech companies.

Financial outlook:

The funds of the 4SC Group are sufficient to secure the Company’s financing into the third quarter of 2014. This forecast is based on the assumption that the average monthly operating cash burn rate in 2013 will be approximately EUR 0.6 million and that 4SC’s research and development programmes will continue to run according to plan.

4SC expects its loss situation to continue in the short to medium term. Taking into account the expected contribution to earnings of the activities of 4SC Discovery GmbH and lower research and development costs, the consolidated operating loss for 2013 – before extraordinary effects – should improve further compared with the previous year. The one-off effects from the adjustment of the Company’s development strategy will increase the consolidated loss by slightly less than EUR 1.0 million in 2013. As a result of the restructuring, 4SC expects a significant reduction in annual staff costs in the high six-digit euro range starting from the 2014 financial year.

The assumptions do not take into account the execution of the planned pivotal liver cancer study. In this case, development costs can be anticipated to rise substantially, which would in turn cause the cash burn rate and operating loss to increase again.

Based on the operating performance of 4SC Discovery GmbH to date, the Management Board of 4SC AG continues to expect this subsidiary to be able to achieve a balanced cash flow from operating activities in the current financial year.

End of press release

About 4SC

The Group managed by 4SC AG (ISIN DE0005753818) discovers and develops targeted, small-molecule drugs for treating diseases with high unmet medical needs in various cancer and autoimmune 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 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 and biotech companies. Founded in 1997, 4SC had a headcount of 78 employees (57 FTEs) at 30 September 2013. 4SC AG has been listed on the Prime Standard of the Frankfurt Stock Exchange since December 2005.

Cautionary statement regarding forward-looking statements

This press release contains certain forward-looking statements. Any forward-looking statement applies only on the date of this press release. By their nature, forward-looking statements are subject to a number of known and unknown risks and uncertainties that may or may not occur in the future and as a result of which the actual results and performance may differ substantially from the expected future results or performance expressed or implied in the forward looking statements. No warranties or representations are made as to the accuracy, achievement or reasonableness of such statements, estimates or projections, and 4SC AG has no obligation to update any such information or to correct any inaccuracies herein or omission herefrom which may become apparent.

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

4SC AG

Jochen Orlowski, Corporate Communications & Investor Relations

jochen.orlowski(at)4sc.com, Tel.: +49-89-7007-6366

MC Services

Raimund Gabriel

raimund.gabriel(at)mc-services.eu , Tel.: +49-89-2102-2830

The Trout Group

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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