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4SC AG. (5/8/14). "Press Release: 4SC Announces Financial Results for the First Quarter of 2014". Planegg-Martinsried.

Organisations Organisation 4SC AG
  Group 4SC (Group)
  Organisation 2 Yakult Honsha Co., Ltd.
  Group Yakult Honsha (Group)
Products Product resminostat (4SC-201)
  Product 2 drug discovery services
Persons Person Hentsch, Bernd (4SC 201009–201403 Chief Development Officer LEFT 3/14)
  Person 2 Vitt, Daniel (Immunic 201701– CEO before 4SC 1997–201612 CSO + Co-Founder before Univ Würzburg)
     


4SC AG (Frankfurt, Prime Standard: VSC), a discovery and development company of targeted small molecule drugs for cancer and autoimmune diseases, today published its consolidated financial results for the first three months of 2014 (1 January - 31 March 2014).


Key operating events in Q1 2014 and beyond:

- 4SC Discovery GmbH: The Group subsidiary receives confirmation of a grant totalling EUR 1.3 million for a research collaboration with Heidelberg University Hospital focusing on the research and preclinical development of a new malaria compound (March 2014).

- Changes to the Management Board and strengthening of clinical development expertise in the extended management team: Dr Bernd Hentsch left the company on 31 March 2014, the same date his contract expired. Chief Scientific Officer Dr Daniel Vitt has added Development to his portfolio of responsibilities effective 1 April 2014. Since February 2014, the external pharmaceutical manager Dr Samson Fung has been contributing his broad expertise to the operational and strategic management of 4SC's clinical development programmes - and resminostat in particular (March 2014).

- Resminostat: Completion of a Phase I trial by our partner Yakult Honsha in Japan confirms the compound's positive safety profile in Japanese cancer patients, triggering a milestone payment to 4SC from Yakult (May 2014).

Key financial figures for the first three months of 2014:

- Consolidated revenue almost doubles to EUR 1.44 million (Q1 2013: EUR 0.79 million)

- Operating loss improves by 22% to EUR 2.12 million (Q1 2013: EUR 2.74 million)

- Taken together, an agreement with Yorkville to underwrite convertible notes in the amount of up to EUR 15 million by the end of 2016 (signed in February 2014), plus cash and cash equivalents at the end of the first quarter 2014 and current revenue and expense planning, by current estimate of 4SC safeguard company financing until the end of the first quarter of 2015

- First convertible note tranche of nominally EUR 0.5 million is issued (March 2014)

Enno Spillner, CEO of 4SC AG, commented:

"We have made a good start to the new financial year. The agreement we signed with Yorkville makes a contribution to safeguarding the ongoing financing of our company, enabling us to lay the groundwork for the next steps in clinical development that we have planned for resminostat. We have made good progress in preparing the Phase II trial that shall investigate resminostat in combination with the cancer drug sorafenib as a first-line therapy in the indication of liver cancer. With this trial, we wish to take the next significant step towards the market approval of our lead product in this medically and commercially important indication."

Enno Spillner continued: "For 4SC-202, our second epigenetic anti-cancer compound, we are currently in the process of evaluating the data from the Phase I trial in haematological tumours and will soon be presenting data from this study. I am also very pleased to report that our research subsidiary 4SC Discovery GmbH posted a moderate profit for the first time in the first quarter. While we are still aware that we have a challenging year ahead of us, especially in terms of securing continued financing, we are confident to be on the right track here. We are redoubling our efforts to pursue a range of options that will ensure both the sustainable financing of the company and of the planned further development of resminostat."


Telephone conference

Today, on 8 May 2014, at 3:00 pm CEDT (9:00 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 first quarter of 2014 and beyond. To participate in the telephone conference, please use the following data:

+49-6103-485-3000 (Germany)
+44-207-153-2027 (UK)
+1-480-629-9726 (USA)
+49-6103-485-3000 (other countries)
Conference ID: 4681817

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


Financial summary:

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 and Discovery & Collaborative Business. The figures for the 4SC Group are reported below; for more information on segment reporting, see the full 3-month financial report at http://4sc.de/investors/financial-reports.

Consolidated revenue was EUR 1.44 million in the first quarter of 2014, almost double the figure in the comparative period in 2013 (Q1 2013: EUR 0.79 million). This positive development was mainly attributable to the cooperation agreements with BioNTech AG and Leo Pharma A/S that began in 2013.

Operating expenses stood at EUR 3.56 million in the first quarter of 2014 and thus were on par with the prior-year figure of EUR 3.53 million. The Company's loss from operating activities decreased by 22% to EUR 2.12 million in the first quarter of 2014, primarily on the back of higher revenue (Q1 2013: EUR -2.74 million). The Discovery & Collaborative Business segment posted its first operating profit of EUR 0.11 million. The net loss for the period improved by 21% year on year to EUR 2.12 million (Q1 2013: loss of EUR 2.68 million), corresponding to earnings per share of EUR -0.04 (Q1 2013: EUR -0.05).

This results in an average monthly outflow of cash from operations amounting to EUR 0.71 million in the reporting period (Q1 2013: cash inflow from operations of EUR 0.06 million). As at 31 March 2014, the Company had cash totalling EUR 2.77 million, compared with EUR 4.90 million as at the close of 2013.

4SC signed an agreement with YA Global Master SPV Ltd. (Yorkville) in February 2014, thus contributing to the Company's short and medium term funding. Under this agreement, Yorkville pledged to subscribe for convertible notes in an amount of up to EUR 15 million at an issue price corresponding to 95% of the nominal amount. According to this agreement, which runs until 31 December 2016, 4SC can issue convertible notes in tranches of nominally EUR 0.5 million each at its discretion. The first tranche was issued in early March 2014.


Review of operations in Q1 2104 and outlook for 2014


Development segment (clinical development activities of 4SC AG)


Resminostat:

This epigenetic compound with an innovative mechanism of action is 4SC's most highly advanced anti-cancer compound and has been researched clinically to date in four indications by 4SC in Europe and by 4SC's Japanese development partner Yakult Honsha Co., Ltd. (Yakult) in Japan. 4SC is prioritising the further development of resminostat as a first-line therapy for liver cancer. Following consultations with regulatory agencies, potential pharmaceutical partners and clinical key opinion leaders (KOLs), 4SC is now pursuing a blinded randomised controlled Phase II trial in advanced liver cancer (hepatocellular carcinoma, HCC) as the next stage in development. By testing resminostat in combination with sorafenib in the first-line therapy of patients with HCC, the trial aims to compare this combination with the current standard treatment (monotherapy with sorafenib) and demonstrate the superiority of the resminostat-sorafenib combination under controlled study conditions. In contrast to a previously considered combined Phase IIb/III trial with no interim unblinding and an adaptive study design, this study design, which has been fine-tuned over the last few months, can deliver a significant, clearly-defined addition to enterprise value while also significantly reducing study costs. The above Phase II study also aims to further qualify the potentially predictive biomarker ZFP64 for possible subsequent investigation in a Phase III registration trial.

4SC is currently working with a service partner on the preparation of the study protocol. Following discussion of the study plan with regulatory agencies and the incorporation of any amendments as desired by regulators, the next step is to submit the application for performing the clinical trial. At the same time, 4SC is talking to potential partners and investors about financing the study. Assuming adequate funding is secured, the Company currently expects that it will be in a position to submit the study programme application before the end of the year - based on a US-IND to the US health authority FDA, among others - and that the first patients can be included in the study in early 2015.

Over the last few months, 4SC's Japanese partner Yakult has continued to forge ahead with the development of resminostat in Japan. In early May this year, a Phase I trial evaluating the safety and tolerability of the anti-cancer compound in Japanese patients with solid tumours was completed successfully, confirming resminostat's positive safety profile in Japanese cancer patients. This result triggered a contractually agreed milestone payment from Yakult to 4SC. Also in the first quarter of 2014, Yakult proceeded with its two ongoing Phase I/II trials investigating resminostat in the indications of liver cancer (HCC) and non-small-cell lung cancer (NSCLC). These studies investigate the combination of resminostat with the standard cancer drugs sorafenib (in HCC) and docetaxel (in NSCLC), in comparison to the respective drugs in monotherapy, in Asian patients.


4SC-202:

4SC-202 is a selective inhibitor of demethylase LSD1 and the deacetylases HDAC 1, 2 and 3, and 4SC's second epigenetic compound. Since its properties differ significantly from those of resminostat, 4SC-202 possesses an individual therapeutic profile. 4SC-202 is currently being investigated in patients with advanced haematological tumours in the Phase I TOPAS trial. Following confirmation of the compound's good tolerability, several new doses and different dosage schemes were tested in 2013, ultimately generating promising initial indications of clinical efficacy. Patient recruitment for the study was completed in the first quarter of 2014.

4SC is currently evaluating the TOPAS data and expects to be able to publish initial study findings before the end of the second quarter of 2014.


4SC-205:

The company's third anti-cancer compound, 4SC-205, an oral Eg5 kinesin inhibitor that blocks tumour cell division, has now entered the last phase of the ongoing Phase I AEGIS trial, where it is currently undergoing thorough evaluation in patients with a specific disease condition (lung tumours/metastases). Patient recruitment continued into the first quarter of 2014, and the last group of patients is now being recruited and treated.

Initial results for this study are expected for the third quarter of 2014.


Vidofludimus:

No development activities are currently ongoing for vidofludimus, 4SC's lead compound in the field of autoimmune diseases. The objective here is the execution of a Phase IIb trial in the indication of Crohn's disease together with a project partner whose role will be to organise and fund the further development of the compound externally.


Discovery & Collaborative Business segment (early-stage research and marketing conducted by 4SC Discovery GmbH):

Positive development continued for the collaborative ventures of our Group subsidiary 4SC Discovery GmbH in the first quarter of 2014. Further steps were also taken to strengthen a strategic technology and sales partnership with CRELUX GmbH in the first quarter of 2014.

Furthermore, 4SC Discovery GmbH announced a collaboration with Heidelberg University Hospital in March 2014, which takes place within the scope of a project run by the German Centre for Infection Research (DZIF). This two-year period of research will focus on the preclinical development of a new 4SC compound targeting resistant strains of malaria. The study is being financed by a government grant of EUR 1.3 million. Since malaria is not one of the company's core indication areas, 4SC plans to ideally out-license the active ingredient to an industry or development partner following the successful conclusion of the joint venture.

In addition to expanding its existing partnerships, 4SC Discovery GmbH is also pursuing the goal of entering into further partnerships in service provision and research in order to maintain its successful business development in 2014 and continue making a contribution to Group financing. The Group subsidiary is also planning to enter into further early-stage partnering deals in relation to its own research programmes to create value potential for 4SC in the long term too.


Financial outlook:

4SC confirms its financial outlook for the 2014 financial year. The 4SC Group had funds of EUR 2.77 million at the end of the quarter (31 March 2014). Based on current revenue and expense planning and the convertible note agreement signed in the first quarter with Yorkville, 4SC expects these funds to suffice to finance the Company's activities up until the end of the first quarter of 2015. 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 due to cost reductions and the expected contributions by 4SC Discovery GmbH's positive activities to earnings. This estimate is based on the assumption that the average monthly operating cash burn rate in 2014 will be reduced to EUR0.4 million (not taking into account the commencement of any further studies) and that the Company's research and development programmes and existing partnerships will continue to run according to plan.

In the event of funding being secured and the start of further clinical trials - particularly the Phase II liver cancer study with resminostat - the Company's cost structure will change markedly, with significant rises in both development expenses and the cash burn rate.

Given its positive business development to date, 4SC Discovery GmbH should achieve at least break-even for operating cash flow in 2014.

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 64 employees (55 FTEs) at 31 March 2014. 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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