Aphton Corporation Reports First-Quarter 2005 Financial Results and Corporate Update
May 11 2005 - 10:09AM
Business Wire
Conference Call Today to Review Financials, Operational
Restructuring and Refocus of Priority Programs Aphton Corporation
(NASDAQ:APHT) today reported financial results for the first
quarter ended March 31, 2005. Patrick Mooney, M.D., Chairman and
Chief Executive Officer and Jim Smith, Chief Financial Officer of
Aphton will host a conference call and live audio webcast today at
4:30 PM EDT to discuss financial results, operational restructuring
and the latest developments in the Company's pipeline. After
closing the acquisition of Igeneon AG and after further analysis of
the results of its Phase III clinical trial of Insegia(TM) (G17DT
immunogen) in combination with chemotherapy for the treatment of
pancreatic cancer, Aphton began a consolidated review of its
research and development program with the goal of prioritizing
programs that would result in the best allocation of both financial
and human resources. As a result of such review, Aphton has
implemented a cost-reduction program intended to align expenses
with product development priorities with the goal of improving its
operating efficiencies. As such, Aphton expects that its pro-forma
burn-rate will decrease by approximately 50% for the coming year.
As part of this cost-reduction plan, Aphton intends to reduce the
number of its employees by approximately 35%, which will include
the closing of certain of its research facilities and corporate
offices. In addition to workforce reductions there will be
continued effort to consolidate key operations to Aphton's
headquarters in Philadelphia, PA. Aphton estimates that it will
incur approximately $1.5 million of costs associated with the
implementation of this plan and it believes that these steps are
critical to the identification and allocation of adequate resources
to those projects that Aphton believes offer the best opportunity
to create value for its shareholders. In addition to implementing
its cost reduction plan, Aphton has decided to discontinue
allocating further financial resources towards actively pursuing
the clinical development of the anti-gastrin immunogen Insegia as
either a monotherapy or in combination with chemotherapy for the
treatment of pancreatic cancer. Although encouraged by the results
observed in patients who achieved an antibody response in clinical
trials with Insegia as both a monotherapy and in combination with
chemotherapy, upon further review the Company believes that the
costs associated with the further development and manufacturing
would exceed its current capabilities. As a consequence Aphton will
be withdrawing its monotherapy applications for Insegia in
Switzerland, Canada and Australia. Aphton believes that the market
opportunity does not warrant the additional expense that it would
incur to manufacture, market and sell Insegia in those countries.
Aphton does intend to continue to seek strategic partners that have
the financial resources necessary to support additional clinical
studies and other research and development activities that may be
necessary to support regulatory approval of Insegia for use in
patients with gastrin-sensitive cancers, such as gastric,
pancreatic or colorectal cancer. Aphton believes that the activity
demonstrated by Insegia in numerous studies of patients with these
types of cancers should enhance the Company's ability to find an
appropriate partner to assist in developing Insegia. Despite
Aphton's decision to cease active clinical development of Insegia,
Aphton continues to strongly believe that gastrin is an important
and critical therapeutic target in gastrin-sensitive tumors. As
such, Aphton intends to devote significant financial and human
resources to accelerate the optimization of a fully-humanized
monoclonal antibody that is currently being optimized by Xoma, a
strategic partner of Aphton. In addition, Aphton will continue its
organic research and development priorities, which will include the
continued funding of the ongoing clinical trials and the other
efforts associated with IGN101 and IGN311, and the acceleration of
other important preclinical activities such as the gastrin
radioligand and other gastrin monoclonal antibody programs. The
company currently has ongoing a randomized double blind clinical
trial of IGN101 in non-small cell lung cancer. Target accrual of
approximately 760 patients has recently been reached in this trial,
three months ahead of schedule. The company expects to have final
data available from this study in 2007 with the possibility of an
interim analysis in 2006. "The decision to cease active development
of Insegia in pancreatic cancer is difficult but, critical to the
continued viability of the organization," commented Patrick Mooney,
MD, Chairman and CEO of Aphton. "We firmly believe in gastrin as an
important therapeutic target and therefore intend to accelerate
activities related to the funding and development of both the
anti-gastrin monoclonal antibody and the gastrin radioligand
program." Dr. Mooney continued, "We intend to seek alternative
funding for further development of Insegia in gastrin sensitive
cancers however, the consolidation of operations and
discontinuation of certain activities is necessary so that we can
better focus on the near-term opportunities available in our broad
and deep pipeline. We are very excited about the possibility of
having numerous product-candidates in the clinic in 2006 lead by
IGN101 and IGN311 and two additional Investigational New Drug
application (IND) for the gastrin monoclonal and radioligand
products." Financial Strength Cash, cash equivalents, and
short-term investments totaled $41.8 million as of March 31, 2005,
compared to $43.4 million at the end of the 4th quarter of 2004 and
compared to $62.2 million as of March 31, 2004. In the 1st quarter
ended March 31, 2005, Aphton's net loss applicable to common
shareholders was $40.7 million, or $(1.02) per share, compared to a
loss of $6.2 million, or $(0.20) per share for the same period in
2004. In the 1st quarter, total operating costs and expenses
increased from $5.6 million in 2004 to $40.2 million in 2005. The
increase in the 1st quarter was due primarily to an increase in
general and administrative expenses due to the acquisition of
Igeneon and an increase in professional fees, premiums for our
director and officer insurance policies and an increase in salary
and benefits of our administrative personnel and the write off of
acquired in process research and development expenses associated
with the Igeneon acquisition in the amount of approximately $33
million. The higher cash burn rate in this quarter was a result of
the reduction in current liabilities (before impact of Igeneon
acquisition) of approximately $2.9 million. Included in the
reduction of current liabilities were payments to Aventis and other
vendors related to manufacturing costs obligations and professional
fees and costs associated with the acquisition of Igeneon.
Conference Call and Webcast Aphton Corporation will host a
conference call and live audio webcast today, Wednesday, May 11,
2005 to discuss today's press release. Patrick Mooney, M.D.,
Chairman and Chief Executive Officer of Aphton, and Jim Smith,
Chief Financial Officer, will host the call and webcast at 4:30 PM
EST. The conference call can be accessed live as follows:
U.S./Canada: Dial (800) 946-0720, reference Aphton International:
Dial (719) 457-2646, reference Aphton An audio webcast will also be
available on Company's website at: http://www.aphton.com and will
be archived for 14 days. Audio replay will be available
approximately two hours after the completion of the call, and will
be archived for 14 days. Access numbers for replay are:
U.S./Canada: (800) 203-1112 International: (719) 457-0820;
conference ID number is 8719412. About Aphton Aphton Corporation,
headquartered in Philadelphia, Pennsylvania is a clinical stage
biopharmaceutical company focused on developing targeted
immunotherapies for cancer. Aphton's products seek to empower the
boy's own immune system to fight disease. Through the acquisition
of Igeneon AG in March 2005 Aphton acquired additional late-stage
products, IGN101, a cancer vaccine designed to induce an immune
response against EpCAM positive tumor cells, and IGN311, a fully
humanized antibody against the Lewis Y antigen. Aphton is currently
seeking partners that will support the further development of
Insegia (G17DT immunogen), its immunogen targeting the hormone
gastrin. Aphton has strategic alliances with sanofi-aventis for the
development and commercialization of Insegia related to cancers of
the gastrointestinal system and other cancers in North America and
Europe; Daiichi Pure Chemicals for the development, manufacturing
and commercialization of gastrin-related diagnostic kits; and Xoma
for treating gastrointestinal and other gastrin-sensitive cancers
using anti-gastrin monoclonal and other antibodies. For more
information about Aphton or its programs please visit Aphton's
website at http://www.aphton.com. Safe Harbor This press release
includes forward-looking statements, including statements about:
(1) Aphton's ability to best allocate its resources in connection
with prioritizing its programs; (2) Aphton's ability to implement a
cost reduction plan that would improve its operating efficiencies
and its estimates regarding the costs of implementing its plan; (3)
Aphton's expectation that it can reduce its burn rate by
approximately 50% for the coming year; (4) Aphton's intention to
reduce the number of its employees by approximately 35% and to
close certain research facilities and corporate offices; (5)
Aphton's intention to consolidate key operations in its corporate
headquarters; (6) Aphton's intent to withdraw its applications for
the use of Insegia as a monotherapy in patients with pancreatic
cancer in Australia, Switzerland and Canada; (8) Aphton's
expectation belief that it could have up to 5 product-candidates in
the clinic in 2006; (9) Aphton's intent to continue to seek
partners and its belief that the activity demonstrated by Insegia
will enhance Aphton's ability to find a viable partner to
financially support the further development of Insegia; (10)
Aphton's intent to devote significant financial and human resources
to accelerate the development of a humanized monoclonal antibody
currently being optimized by Xoma, LLC; (11) Aphton's belief in
gastrin as a viable target in treating cancer; (12) Aphton's intent
to continue funding of ongoing clinical trials and the other
efforts associated with IGN 101 and IGN 311 and the development of
both anti-gastrin monoclonal antibody and the gastrin radioligand
program; and (13) Aphton's expectation regarding the purpose and
effectiveness of - humanized monoclonal antibodies, IGN101 and
IGN311. These forward-looking statements may be affected by the
risks and uncertainties inherent in the drug development process
and in Aphton's and Igeneon's business. This information is
qualified in its entirety by cautionary statements and risk factor
disclosure contained in Aphton's Securities and Exchange Commission
filings, including Aphton's report on Form 10-K filed with the
Commission on March 16, 2005. Aphton wishes to caution readers that
certain important factors may have affected and could in the future
affect Aphton's beliefs and expectations and could cause the actual
results to differ materially from those expressed in any
forward-looking statement made by or on behalf of Aphton. These
risk factors include, but are not limited to, (1) Aphton's ability
to identify and realize anticipated cost efficiencies and to reduce
the combined cash burn rate; (2) Aphton's ability to fund the
further development of its research and development;, (3) Aphton's
ability to effectively prioritize its research and development
programs and allocate adequate resources to projects (4) unexpected
expenses or repayments of indebtedness that may negatively impact
Aphton's ability to reduce its burn rat and/or fund its research
and development or clinical programs; (5) Aphton's ability to
identify a partner willing to fund the continued development of
Insegia; (6) Aphton's ability to successfully identify and
consummate opportunities to broaden and progress its research and
development pipeline; (7) scientific developments regarding
immunotherapies; (8) Aphton's ability to successfully integrate
Igeneon's operations and product portfolio with Aphton's operations
and product portfolio; and (9) the actual design, results and
timing of preclinical and clinical studies for both companies'
products and product candidates. -0- *T Aphton Corporation Selected
Condensed Financial Data (In thousands, except per share data)
Unaudited Three Months Ended March 31,
------------------------------ 2005 2004 ---------------
-------------- Revenues $ - $ - Total revenues Costs and expenses:
General and administrative 2,382 812 Research and development 4,818
4,791 Acquired in-process research and development 32,992 -
--------------- -------------- Total cost and expenses 40,192 5,603
Dividend and interest income 275 25 Interest expense including
amortized discount (723) (641) Unrealized losses from investments
(31) (2) --------------- -------------- Net loss applicable to
common shareholders ($40,671) ($6,222) ===============
============== Dividends imputed on warrants ---------------
-------------- Basic and diluted loss per common share $(1.02)
$(0.20) =============== ============== Weighted average shares
outstanding 39,808 31,890 =============== ============== March 31,
December 31, ------------------------------ 2005 2004
--------------- -------------- Cash and current investments $41,799
$43,414 Total assets 51,907 52,635 Total stockholders' equity 7,704
20,990 *T
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