Forward Pharma A/S (NASDAQ:FWP) (“We”, “Forward” or the “Company”
and together with its subsidiaries, the “Group”), today reported
consolidated financial results for the six-month period ended June
30, 2018. Net loss for the six-month period ended June 30, 2018 was
$(5.3) million, or $(0.06) per diluted share, versus net income of
$941.2 million, or $1.67 per diluted share for the six-month period
ended June 30, 2017.
“We are pleased to announce our results for the first half year
of 2018. The results reflect the effect of our strategic and
organisational transformation initiated upon signing the Settlement
and License Agreement with Biogen. Forward Pharma is narrowly
focused on the appeals of the initial decisions in both the U.S.
patent interference and the ‘355 patent opposition in Europe,” said
Dr. Claus Bo Svendsen, Chief Executive Officer of Forward.
Six-month period ended June 30, 2018
operational results
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”). During the six-month
period ended June 30, 2018, the Group did not earn any revenues
under the License Agreement nor from other sources. Accordingly,
there were no revenues recognized during the six-month period ended
June 30, 2018.
The terms of the agreement between Aditech Pharma AG (“Aditech”)
and the Company, including the addendum to the agreement executed
in January 2017, provided for Aditech to receive a one-time payment
of $25 million, equal to 2% of the Non-refundable Fee. During the
six-month period ended June 30, 2018, there were no amounts due
Aditech.
Research and development costs for the six-month periods ended
June 30, 2018 and 2017 were $1.8 million and
$7.0 million, respectively. The decrease in research and
development costs for the six-month period ended June 30, 2018 of
$5.2 million is the result of lower costs incurred in connection
with the U.S. patent interference (“Interference Proceeding”) and
the EP2801355 patent (“‘355 Patent”) opposition in Europe
(“Opposition Proceeding”), lower share-based compensation and the
wind-down of our development efforts of FP187 ®.
General and administrative costs for the six-month periods ended
June 30, 2018 and 2017 were $5.8 million and $4.4 million,
respectively. The increase in general and administrative costs in
the six-month period ended June 30, 2018 of $1.4 million resulted
from an increase in share-based compensation, which was partially
offset by a decrease in legal and accounting costs.
During the six-month period ended June 30, 2018, the Group
recognized a foreign exchange gain of $1.9 million. The $1.9
million non-cash foreign exchange gain resulted primarily from the
strengthening of the U.S. dollar compared to the Danish Krone
(“DKK”) during the period. During the six-month period ended
June 30, 2017, the Group recognized a foreign exchange gain of
$1.0 million. The $1.0 million foreign exchange gain resulted
primarily from the Company benefiting from favorable exchange rates
when the proceeds of the Non-refundable Fee were converted from
U.S. dollars to Euros.
Other income (expense) primarily includes interest income on
U.S. dollar cash deposits net of bank fees (“negative interest”) on
EUR and DKK cash deposits. The favorable change during the
six-month period ended June 30, 2018 is the result of reduced cash
holdings of Euros subsequent to the capital reduction of EUR 917.7
million (“Capital Reduction”) that occurred in September 2017 and
increased interest income on U.S. dollar cash deposits resulting
from higher rates.
The tax benefit recognized during the six-month period ended
June 30, 2018 of $204,000 results in part from an adjustment
relating to the prior year of $161,000 and the balance from changes
in deferred tax balances during the period. Income tax expense for
the six-month period ended June 30, 2017 resulted from the receipt
of the Non-refundable Fee, partially offset by operating expense,
giving rise to pretax income of $1.2 billion. The effective tax
rate for the six-month period ended June 30, 2017 was 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.
Update on Intellectual Property Proceedings
On March 31, 2017, the PTAB issued a decision in the
Interference Proceeding in favour of Biogen. The Patent Trademark
and Appeal Board (“PTAB”) ruled that the claims of the U.S. patent
application 11/576,871 (“'871 Application”) are not patentable due
to a lack of adequate written description. The Company has appealed
the decision to the U.S. Court of Appeals for the Federal Circuit
(“Federal Circuit”), where the appeal was heard at an oral hearing
on June 4, 2018. The appeal is expected to be decided before
the end of the year. If the Company prevails in this appeal, we
expect the Federal Circuit to remand the case to the PTAB, in order
for the PTAB to resolve both parties' other outstanding motions,
including Biogen's priority motion.
On January 29, 2018, the Opposition Division of the
European Patent Office (“EPO”) concluded oral proceedings
concerning the ‘355 Patent. The Opposition Division revoked the
‘355 Patent after considering third-party oppositions from several
opponents. On March 22, 2018, the Opposition Division issued
its detailed reasons for the decision. On May 7, 2018, the Company
appealed the Opposition Division’s decision to the Technical Board
of Appeal (“TBA”) of the EPO and filed its detailed grounds of
appeal on August 1, 2018. The appeal process has an expected
duration of an additional two to three years. By initiating the
appeal, the revocation will only become effective if and when
confirmed by the TBA. If the Company prevails in such appeal, we
expect the TBA to remand the case to the Opposition Division, for
the Opposition Division to resolve the remaining elements of the
original opposition.
Forward has filed with the U.S. Securities and Exchange
Commission on Form 6-K unaudited financial statements for the six
months ended June 30, 2018. Investors are encouraged to read this
filing for more complete information about the results of
operations for this period, as well as other important information
about Forward.
Forward Pharma A/S |
Unaudited 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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2018 |
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2017 |
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Revenue from the
License Agreement |
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$1,250,000 |
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Cost of Aditech
agreement |
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(25,000) |
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Research and
development |
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$(1,843) |
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(6,993) |
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General and
administrative |
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(5,803) |
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(4,413) |
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Total operating (loss)
income |
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(7,646) |
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1,213,594 |
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Foreign exchange
gain |
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1,859 |
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1,011 |
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Other |
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|
313 |
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(1,595) |
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(Loss) income before
taxes |
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(5,474) |
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1,213,010 |
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Income tax benefit
(expense) |
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204 |
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(271,774) |
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$(5,270) |
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$941,236 |
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Net (loss) income |
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Net (loss) income per
share, basic (1) |
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$(0.06) |
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$1.74 |
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Net (loss) income per
share, diluted (1) |
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$(0.06) |
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$1.67 |
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Weighted average number
of shares used to compute net (loss) income per share basic
(1) |
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94,407 |
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542,394 |
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Weighted average number
of shares used to compute net (loss) income per share diluted
(1) |
|
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94,407 |
|
|
|
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562,421 |
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(1 |
) |
During August 2017, the
Company’s shareholders approved a 10 for 1 share split (“Share
Split”). All share and per share information disclosed above
has been adjusted to reflect the Share Split as if it had occurred
at the beginning of the earliest period presented. In addition,
there was a Capital Reduction in September 2017 that was effected
by the annulment of 80% of the ordinary shares outstanding and was
deemed, for financial reporting purposes, to have been at a 15%
premium (“15% Premium”). For purposes of computing the per share
amounts only, the 15% Premium has been accounted for in a manner
similar to the Share Split and reflected in the above per share
amounts as if it had occurred at the beginning of the earliest
period presented. The combined effect of the Share Split and the
15% Premium is as if a 11.5 for 1 share split had occurred at the
beginning of the earliest period presented. Subsequent to the Share
Split and the Capital Reduction, each American Depositary Receipt
(“ADS”) represents two ordinary shares and each ordinary share has
a nominal value of DKK 0.01. |
Forward Pharma A/S |
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Unaudited Condensed Consolidated Statement of Financial
Position |
(in thousands) |
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June 30, |
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December 31, |
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2018 |
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2017 |
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Assets: |
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Cash and
cash equivalents |
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$89,261 |
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$109,554 |
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Other
assets |
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1,204 |
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|
1,454 |
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Total
assets |
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$90,465 |
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|
|
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|
$111,008 |
|
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Equity and
Liabilities: |
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Shareholders' equity |
|
|
|
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$85,215 |
|
|
|
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$89,680 |
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Liabilities |
|
|
|
|
|
5,250 |
|
|
|
|
|
|
21,328 |
|
|
Total
equity and liabilities |
|
|
|
|
$90,465 |
|
|
|
|
|
|
$111,008 |
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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 granted to Biogen an irrevocable
license to all of its IP through the 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 net 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 '355 Patent Opposition Proceedings, including
any appeal thereto.
The principal executive offices are located at Østergade 24A,
1st Floor, 1100 Copenhagen K, Denmark and our American
Depositary Shares are publicly traded on the Nasdaq Stock
Market (FWP). For more information about the Company,
please visit our website at http://www.forward-pharma.com.
Forward Pharma A/S Investor Relations Contact:
Forward Pharma A/S Claus Bo Svendsen, MD, PhD Chief Executive
Officer Investor Relations investors@forward-pharma.com
Solebury Trout John Graziano jgraziano@troutgroup.com +1 (646)
378 2942
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