Forward Pharma A/S (NASDAQ:FWP) (“We” or “Forward” or the
“Company”), today reported financial results for the six-month
period ended June 30, 2017. Net income for the six-month
period ended June 30, 2017 was $941.2 million, or $1.91 per diluted
share, versus net loss of $(32.0) million, or $(0.07) per share for
the six-month period ended June 30, 2016.
“We are pleased to announce our results for the first half year
of 2017, where major events occurred. With the recently completed
capital reduction and shareholder distribution, the transformation
of Forward Pharma initiated upon signing the Settlement and License
Agreement with Biogen is nearing completion,” said Dr. Claus Bo
Svendsen, Chief Executive Officer of Forward.
Six-month period ended June 30, 2017 Operational
Results
The net income for the six-month period ended June 30, 2017 was
$941.2 million compared to a net loss of $(32.0) million for the
comparable period in 2016.
During the six-month period ended June 30, 2017, the Company
recognized as revenue the $1.25 billion nonrecurring non-refundable
fee (“Non-refundable Fee”) that was received during February 2017
in connection with the Settlement and License Agreement (“License
Agreement”) entered into with two wholly owned subsidiaries of
Biogen, Inc. (collectively “Biogen”).
The Company was obligated to pay Aditech Pharma AG a royalty
equal to 2% of the Non-refundable Fee, or $25 million.
Research and development costs for the six-month period ended
June 30, 2017 decrease to $7.0 million compared to
$23.1 million for the comparable period in 2016. The decrease
in research and development costs for the six-month period ended
June 30, 2017 is the result of lower costs incurred in connection
with patent matters, including the Interference Proceeding in the
US, lower share-based compensation and the wind-down of our
development efforts of FP187. Fees to patent advisors and other
patent-related costs decreased from $10.1 million in the six-month
period ended June 30, 2016 to $1.1 million in the six-month
period ended June 30, 2017. The decrease is the result of reduced
activities subsequent to the oral argument on November 30, 2016 for
the Interference Proceeding and the United States Patent Trial and
Appeal Board’s issuance of the decision in the Interference
Proceeding in favor of Biogen on March 31, 2017. Share-based
compensation decreased from $3.9 million in the six-month period
ended June 30, 2016 to $2.6 million in the six-month period ended
June 30, 2017. We currently expect our research and development
costs will decline further during the balance of 2017 and into 2018
as we continue to wind down development activities of FP187.
General and administrative costs for the six-month period ended
June 30, 2017 decreased to $4.4 million compared to $6.2 million
for the comparable period in 2016. The decrease in general and
administrative costs resulted from a decrease in share-based
compensation offset by increased legal and accounting costs.
Share-based compensation decreased from an expense of $3.4 million
in the six-month period ended June 30, 2016 to a benefit of $2.2
million in the six-month period ended June 30, 2017. The favorable
change was related to the benefit recognized during the six-month
period ended June 30, 2017 in connection with equity awards that
were forfeited as the result of employee terminations where the
forfeited equity awards were initially expected to vest in full.
Legal and accounting fees were $4.6 million in the six-month period
ended June 30, 2017 compared to $884,000 for the comparable period
in 2016. The increase in legal and accounting fees is related to
the License Agreement. We expect our general and administrative
costs will remain at current levels.
Income tax expense for the six-month period ended June 30, 2017
totaled $271.8 million. The tax expense for the six-month period
ended June 30, 2017 resulted from the receipt of the Non-refundable
Fee, partially offset by operating expenses, giving rise to pretax
income of $1.2 billion. The effective tax rate for the period is
22.4%, which is slightly higher than the Danish statutory tax rate
of 22.0%. The difference between the effective tax rate and the
statutory tax rate is primarily derived from a higher tax rate in
Germany where the Group has taxable nexus in addition to
Denmark.
Non-cash share-based compensation expense included in total
operating expenses was $384,000 for the six-month period ended June
30, 2017 versus $7.3 million for the same period in 2016.
Events Occurring Subsequent to June 30,
2017
On July 18, 2017, the Company announced plans to distribute
a total of 917.7 million Euros to its shareholders through a
capital reduction (“Capital Reduction”). The Capital Reduction and
a 10 for 1 share split (“Share Split”) were approved by the
Company’s shareholders on August 2, 2017. The proceeds from the
Capital Reduction were distributed to shareholders during September
2017. The Capital Reduction was executed through the annulment of
80% of the ordinary shares outstanding post Share Split. Subsequent
to the Share Split and the Capital Reduction, the Company has 94.4
million ordinary shares outstanding and each American Depositary
Share (“ADS”) represents 2 ordinary shares.
Forward Pharma A/S |
Condensed Consolidated Statement of Profit or
Loss |
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(in thousands, except per share
amounts) |
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Six-Month Period
Ended |
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June 30, |
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2017 |
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2016 |
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Revenue from settlement
and license agreement |
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$1,250,000 |
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Royalty cost Aditech
Pharma AG |
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(25,000) |
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Research and
development |
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(6,993) |
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$(23,142) |
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General and
administrative |
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(4,413) |
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(6,153) |
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Total
operating income (loss) |
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1,213,594 |
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(29,295) |
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Other |
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(584) |
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(2,705) |
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Income
(loss) before taxes |
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1,213,010 |
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(32,000) |
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Income tax expense |
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(271,774) |
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- |
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$941,236 |
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$(32,000) |
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Net
income (loss) |
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Net income (loss) per
share, basic (1) |
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$2.00 |
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$(0.07) |
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Net income (loss) per
share, diluted (1) |
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$1.91 |
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$(0.07) |
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Weighted average shares
used to compute net income (loss) per share basic (1) |
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471,647 |
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469,020 |
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Weighted average shares
used to compute net income (loss) per share diluted (1) |
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491,674 |
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469,020 |
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(1) The shareholders of the Company approved a 10 for 1 share
split on August 2, 2017 (“Share Split”). All share and per share
information contained herein has been adjusted to reflect the Share
Split as if it had occurred at the beginning of the earliest period
presented. Accordingly, share and per share information previously
reported for the six-month period ended June 30, 2016 has been
revised to reflect the Share Split.
Forward Pharma A/S |
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Condensed Consolidated Statement of Financial
Position |
(in thousands) |
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June 30, |
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December 31, |
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2017 |
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2016 |
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Assets |
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Cash, cash equivalents
and investments |
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$1,440,441 |
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$138,723 |
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Other assets |
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1,393 |
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24,420 |
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Total
assets |
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$1,441,834 |
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$163,143 |
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Equity and
Liabilities |
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Shareholders'
equity |
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$1,174,295 |
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$155,802 |
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Liabilities |
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267,539 |
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7,341 |
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Total
equity and liabilities |
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$1,441,834 |
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$163,143 |
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About Forward Pharma: Forward Pharma
A/S is a Danish biopharmaceutical company that commenced
development in 2005 of FP187, a proprietary formulation of DMF for
the treatment of inflammatory and neurological
indications. The Company owns a significant intellectual
property (IP) portfolio related to DMF formulations. The Company
granted to Biogen an irrevocable license to all of its IP through
the recent Settlement and License Agreement and received from
Biogen a non-refundable cash fee of $1.25
billion in February 2017, with the return of EUR 917.7
million to shareholders through a capital reduction in September
2017. The Company has the opportunity to receive royalties from
Biogen on sales of Tecfidera® or other DMF products for MS,
dependent on, among other things, successfully appealing the U.S.
interference and a favorable outcome in Europe with
respect to the EP2801355 opposition proceeding.
The principal executive offices are located at Østergade 24A,
1st Floor, 1100 Copenhagen K, Denmark and our American
Depositary Shares are publicly traded on NASDAQ Stock
Market (FWP). For more information about the Company,
please visit our web site
at http://www.forward-pharma.com.
Forward Pharma A/S Investor Relations Contact:
Forward Pharma A/S Dr. Claus Bo Svendsen, Chief Executive
Officer Investor Relations investors@forward-pharma.com
The Trout Group John Graziano jgraziano@troutgroup.com +1 (646)
378 2942
Forward Looking Statements: Certain statements
in this press release may constitute “forward-looking statements”
of Forward Pharma A/S within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, but are not limited to, statements which
contain language such as “believe”, “expect”, “anticipate”,
“estimate”, “would”, “may”, “plan” and “potential”. Forward-looking
statements are predictions only, which involve known and unknown
risks, uncertainties and other factors that may cause actual
results to be materially different from those expressed in such
statements. Many such risks, uncertainties and other factors are
taken into account as part of our assumptions underlying these
forward-looking statements and include, among others, risks related
to the following: the satisfaction of certain conditions, and the
accuracy of certain representations of the Company, in the
Settlement and License Agreement entered into with subsidiaries
of Biogen Inc. and certain other parties thereto; our
ability to obtain, maintain, enforce and defend issued patents with
royalty-bearing claims; our ability to prevail in the interference
proceeding after all appeals and obtain issuance of the ’871
application; our ability to prevail in or obtain a favorable
decision in the ‘355 European opposition proceedings, after all
appeals; the expected timing for key activities and an ultimate
ruling in such legal proceedings; the issuance and term of our
patents; future sales of Tecfidera®, including impact on such sales
from competition, generic challenges, regulatory involvement and
pricing pressures; the scope, validity and enforceability of our
intellectual property rights in general and the impact on us of
patents and other intellectual property rights of third parties;
and our ability to generate revenue from product sales in the U.S.
directly or through an assignee of our U.S. co-exclusive license
rights in the event Biogen does not obtain an exclusive license
from us in the U.S. Certain of these and other risk factors are
identified and described in detail in certain of our filings with
the United States Securities and Exchange Commission,
including our Annual Report on Form 20-F for the year
ended December 31, 2016. We are providing this information as
of the date of this release and do not undertake any obligation to
update any forward-looking statements contained in this press
release as a result of new information, future events or
otherwise.
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