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4SC AG. (3/26/14). "Press Release: 4SC Publishes Results for Financial Year 2013 and Announces Changes to the Management Board". Planegg-Martinsried.

Organisations Organisation 4SC AG
  Group 4SC (Group)
  Organisation 2 4SC Discovery GmbH
  Today BioNtech Small Molecules GmbH
  Group BioNTech (Group)
Products Product resminostat (4SC-201)
  Product 2 drug discovery services
Persons Person Spillner, Enno (Evotec 201607– CFO before 4SC CEO + CFO before BioM Venture Capital GmbH)
  Person 2 Hentsch, Bernd (4SC 201009–201403 Chief Development Officer LEFT 3/14)
     


4SC AG (Frankfurt, Prime Standard: VSC), a discovery and development company of targeted small molecule drugs for cancer and autoimmune diseases, today published the financial results of the 4SC Group for the financial year ended 31 December 2013.

Revenue rose by 13% year on year to EUR 4.90 million, largely as a result of the growing volume of business in marketing early-stage research handled by Group subsidiary 4SC Discovery GmbH. Growing revenue and strict cost reductions improved the consolidated operating loss (EBIT) by 21% to EUR -10.59 million. Adjusted for one-off extraordinary factors in connection with the adjustment of the development strategy, EBIT improved by as much as 28%. Earnings per share improved by 28% to EUR -0.21. 4SC Discovery GmbH generated a positive cash flow from operations in 2013 and thus was able to finance itself from its own resources. The Group's cash and cash equivalents of EUR 4.90 million as at the end of 2013 based on the current cost and revenue planning and the financing agreement signed in February 2014 with YA Global Master SPV Ltd. (Yorkville), enable financing for 4SC over at least the next twelve months (not including the cost of funding the start of further clinical trials).

Key business events during the 2013 financial year:

- Strategic focus and restructuring: Management Board headed by CEO Enno Spillner focuses strategy on compounds with the largest potential to increase value and adjusts corporate and staffing structures (May/June 2013)

- Resminostat: Decision taken to focus on first-line therapy of liver cancer (HCC), preparations begun for a Phase II/III study programme (May 2013)

- Resminostat: In Japan, partner Yakult Honsha starts two Phase I/II studies with resminostat in HCC and non-small-cell lung cancer (May/July 2013)

- Resminostat: Elevated expression of the ZFP64 biomarker leads to doubling of patient survival in Phase II trials in HCC and Hodgkin's lymphoma (Sept 2013)

- 4SC Discovery: Growth trajectory maintained by partnering deals with LEO Pharma and Panoptes Pharma, plus joint research ventures with BioNTech, UCB and AiCuris; strategic marketing partnership with CRELUX expanded (2013)

Key business events after the reporting date:

- Downsizing of the Management Board: Dr Bernd Hentsch will leave the company when his contract expires on 31 March 2014, but will continue to act in an advisory capacity to 4SC. At Management Board level, development activities will now be the responsibility of Chief Scientific Officer Dr Daniel Vitt. To support the strategic and operational management of clinical development programmes, 4SC hired Dr Samson Fung, an experienced pharmaceuticals manager, from 1 February 2014. An oncologist, Dr Fung will initially work for 4SC on a freelance basis, focusing in particular on further development of resminostat.

- Increase in short- and medium-term financing In February 2014, 4SC signed an agreement with Yorkville for underwriting convertible bonds in the amount of up to EUR15.0 million at an issuing price of 95% of the nominal amount. According to this agreement, which runs until 31 December 2016, 4SC can issue convertible bonds in tranches of EUR 0.5 million each at its discretion. The first tranche was issued in early March 2014.

Enno Spillner, CEO of 4SC AG, comments:

"For 4SC, 2013 was a very dynamic year. We made important progress in our research and development programmes, especially as regards our main value driver resminostat and our research subsidiary 4SC Discovery. I am pleased to announce that we significantly increased consolidated revenue in the reporting year and used significant reductions in costs to disproportionately improve our bottom line. The decisions we have made to place our strategic focus on our main value drivers and adjust our corporate structures accordingly have established the environment needed to focus the company's value drivers precisely on their targets and make 4SC better able to engage with the tasks that lie ahead."

"Our objective for 2014 is clear," Enno Spillner continues. "We wish to secure financing and clinical development for resminostat in the indication of liver cancer and continue advancing it towards market approval. I will pursue this objective with my colleague Daniel Vitt as part of a leaner Management Board team. We would also like to thank our colleague and Board member Dr Bernd Hentsch for his many years of dedicated work for 4SC. At the same time, we are confident that we have found a seasoned oncologist and pharmaceuticals manager in Dr Samson Fung, who has been supporting us in the past two months in the management of our clinical development projects. His extensive experience in the design and execution of late-stage clinical trials clearly benefits our projects."

Telephone conference

Today, on 26 March 2014 at 3:00 pm CET (10:00 am EDT), 4SC will host a telephone conference in English, in which the Management Board of 4SC AG will report on the principal developments in the 2013 financial year and beyond. To participate in the telephone conference, please use the following data:

+49-6958-999-0805 (Germany)
+44-207-153-2027 (UK)
+1-480-629-9771 (USA)
+49-6958-999-0805 (other countries)
Conference ID: 4675141

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


Financial summary 2013:

The 4SC Group, which comprises 4SC AG and its wholly-owned subsidiary 4SC Discovery GmbH, reports consolidated figures for the Group in accordance with International Financial Reporting Standards (IFRSs) and financial figures for the two operating segments Development (resminostat, 4SC-202 and 4SC-205) and Discovery & Collaborative Business (drug discovery and early-stage research activities as well as their commercialisation through the service business and research collaborations). The figures for the 4SC Group are reported below; for more information on segment reporting, see the full annual report at (http://www.4sc.de/investors/financial-reports).

In the 2013 financial year, revenue increased by 13% year on year to EUR 4.90 million (2012: EUR 4.35 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 to cooperation partners for compound production in connection with the clinical development of resminostat.

The loss from operations (EBIT) improved by 21% in 2013 to EUR -10.59 million (2012: EUR -13.37 million) due to higher revenue and lower expenses. The one-off items from the adjustment of the Company's development strategy and the restructuring pushed up the consolidated loss by slightly less than EUR 1.0 million in 2013. As a result, the loss from operations (EBIT) adjusted for the restructuring costs improved by as much as 28%. The net loss for the period fell by 20% to EUR 10.53 million in 2013 on the basis of the developments described, particularly through significantly higher revenue and lower operating expenses (2012: EUR 13.22 million). Earnings per share improved by 28% to EUR -0.21 (2012: EUR -0.29) because in addition to the improved consolidated net loss there was also a higher average number of shares in financial year 2013 due to the capital increase executed in mid-2012.

This results in an average monthly outflow of cash from operations amounting to EUR 0.60 million in the reporting period (2012: EUR 1.26 million per month). As at 31 September 2013, the Company had cash and available-for-sale securities totalling EUR 4.90 million, compared with EUR 12.06 million as at 31 December 2012.


Detailed review of operations (2013):


Development segment (clinical development activities of 4SC AG)


Resminostat:

In May 2013, 4SC published initial findings from the ex-post biomarker analysis performed on the two completed Phase IIa trials with the epigenetic compound resminostat in the indications of liver cancer (HCC, SHELTER study) and Hodgkin's lymphoma (HL, SAPHIRE study). Both studies identified the potentially predictive biomarker ZFP64, whose expression levels correlated to the expected rates of survival for the patients treated with resminostat. These data were presented in detail at two research conferences (ILCA, Washington, and ECCO, Amsterdam) in September 2013: Around two-thirds of HCC and HL patients exhibit elevated ZFP64 blood levels before treatment commenced. These patient groups (both HCC and HL) showed a statistically significant (p=0.04) doubling of overall survival compared with the patients exhibiting lower ZFP64 levels.

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

At the ASCO Conference in Chicago in early June 2013, 4SC announced positive Phase I results from the clinical SHORE trial with resminostat in combination therapy with FOLFIRI chemotherapy in patients with advanced colorectal cancer (CRC). At all dosage levels administered, resminostat proved to be safe and well-tolerated, once again confirming the compound's positive safety profile and its broad applicability in combination with established cancer therapies. In addition, the treatment showed encouraging signs of clinical activity: In the course of strategically focusing resources on the development of resminostat for treating liver cancer, 4SC's Management Board decided for the time being not to initiate the originally planned clinical development of resminostat in a Phase II trial stage in the indication of colorectal cancer.

In 2013, 4SC obtained the composition-of-matter patent for resminostat in Europe. 4SC thus now holds the key composition-of-matter patent for its lead compound in the world's key pharmaceutical markets, including China, Europe, the USA, India, Russia, Japan and South Korea.


4SC-202:

In the reporting year, the Company continued its open clinical Phase I trial (TOPAS study) with its second epigenetic cancer compound 4SC-202 in patients with advanced haematological tumours. On account of the positive tolerability observed to date, work here focused on the investigation of a further range of doses and dosage regimes to determine the optimum treatment regime and possible indications for a possible Phase II development at a later date. In a number of patients, the compound also exhibited some promising initial signs of clinical efficacy and clear anti-tumour activity.

Furthermore, the Company significantly expanded patent protection for 4SC-202 after having been granted a patent in China and obtaining notifications of allowance in Hong Kong and the United States.


Discovery & Collaborative Business segment (early-stage research at 4SC Discovery):

Group subsidiary 4SC Discovery GmbH maintained its trajectory of growth in 2013, achieving an operating cash surplus for the first time since commencing operations in early 2012. On the terms of a licence option agreement and research collaboration in the field of psoriasis with the Danish company LEO Pharma signed in February 2013, the 4SC subsidiary receives an upfront payment of EUR 1.0 million EUR plus payments to finance ongoing research work, as well as the assurance of later performance-based milestone payments of up to EUR 95.0 million and royalties pegged at a double-digit percentage of sales.

In September 2013, 4SC Discovery transferred the patent for a compound discovered in-house for combating inflammatory eye diseases to the young Austrian biotech company Panoptes Pharma. In return, 4SC Discovery received a 24.9% interest in Panoptes Pharma and participates in future development successes in the form of milestone and royalty payments.

4SC Discovery has also started research collaborations in a variety of indications with the companies BioNTech (oncology), UCB (neurological disorders) and AiCuris (infectious diseases), in which the 4SC subsidiary is responsible for performing drug discovery and optimisation. In this context, the strategic marketing partnership with CRELUX based on the shared technology platform i2c ("idea to candidate") has also been expanded further within pharmaceutical early-stage research.


Outlook for 2014:

4SC is seeking to secure further licensing deals with companies from the pharmaceutical and biotech sectors, to both establish and advance the further clinical development of its products. The aim is to achieve a short-term flow of funds while optimally exploiting the development programmes' value creation potential over the long term.


Resminostat:

Development planning for resminostat has also been revised in the light of refocusing 4SC's strategy. 4SC is now pursuing the development of resminostat in first-line therapy for HCC. The Company plans to conduct a Phase II/III study programme in order to compare combination therapy with resminostat and sorafenib to the current standard therapy option of sorafenib alone. The Phase II part of this programme is intended to first validate the ZFP64 biomarker, among others, in order to then deploy this marker for the targeted selection of the patient population in Phase III. This could additionally improve the meaningfulness of the data with regard to the option of using resminostat as a personalised cancer therapy. Moreover, in this development scenario, particularly through analysis after Phase II, important answers are to be obtained based on randomised and controlled data to the question of the efficacy of the resminostat-sorafenib combination compared with sorafenib monotherapy, which is important in terms of discussions with potential pharmaceutical partners.

The initial focus here is on preparation of the Phase II stage. 4SC is currently working together with service partners on the preparation of the study protocol and on process optimisation work targeting the compound formulation for tablet production. The next step will then be to discuss the study plan with regulatory agencies to incorporate any amendments to the study protocol as desired by regulators and to then submit the application for performing the clinical trial programme.

Alongside these operational preparations, 4SC continues to engage in discussions with potential regional and global partners as well as investors with a view to securing funding for the study programme, and the Phase II stage of the HCC first-line scenario in particular. Assuming adequate funding is secured, 4SC currently expects that it will be in a position to submit the study programme application before the end of the year.


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

4SC plans to publish the first results of the Phase I TOPAS dose-finding study with the epigenetic compound 4SC-202 in patients with advanced haematological tumours in the second quarter of 2014. As a result of testing additional dosage regimes, findings from the Phase I AEGIS study with the Eg5 kinesin inhibitor (cell division inhibitor) 4SC-205 in patients with solid tumours are not expected until the third quarter of 2014.


Vidofludimus:

For the compound vidofludimus in autoimmune diseases, activities are now focusing on talks with potential external project partners and investors in order to be able to conduct a Phase IIb trial in the Crohn's disease indication. As part of its new strategic focus, 4SC will not invest own funds in the development of this compound.


4SC Discovery GmbH:

In addition to supporting and expanding its existing partnerships, our subsidiary is also pursuing the goal of initiating further partnerships in service provision and research. This not only has the goal of maintaining its successful business development in 2014 but also aims to ensure the company can continue to make a contribution to Group financing. 4SC Discovery GmbH is also planning to enter into further early-stage partnering deals in relation to its own research programmes to create additional value potential for 4SC in the long term.


Financial outlook:

The 4SC Group had funds of EUR 4.9 million at the end of 2013. Based on current revenue and expense planning and the convertible note agreement signed in February 2014 with Yorkville, 4SC expects the current funds to suffice to finance the Company's activities for the next twelve months and beyond, not including the launch of additional clinical trials, particularly the Phase-II part of the planned HCC programme with resminostat. This forecast is based on the assumption that the average monthly operating cash burn rate in 2014 will be reduced to approximately EUR 0.4 million and that the Company's research and development programmes will continue to run according to plan.

According to the current planning, research and development costs for 2014 are much lower than in the previous year, additional clinical trials not included. The consolidated net loss for 2014 should improve further year-on-year given the cost reductions in human resources resulting from the restructuring completed in 2013 and the expected contributions by 4SC Discovery GmbH's positive activities to earnings. However, 4SC expects its loss situation to continue in the short to medium term. Provided there is funding, development costs can be anticipated to rise again sharply from the start of the planned study programme with resminostat in the indication of liver cancer due to the associated expenses, which would in turn cause the cash burn rate and operating loss to increase again.

4SC expects 4SC Discovery GmbH at least to break-even again in terms of cash flow from operating activities thanks to the subsidiary's good operating performance to date, which has continued into the current financial year so far.


Ends


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 73 employees (56 FTEs) at 31 Dezember 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
Katja Arnold, Michelle Kremer
katja.arnold(at)mc-services.eu, Tel.: +49-89-2102-2840

The Trout Group
Chad Rubin
crubin(at)troutgroup.com, Tel.: +1-646-378-2947

   
Record changed: 2017-04-02

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