APHT Aphton (MM)

Aphton Corporation (NASDAQ: APHT) today reported financial results for the second quarter ended June 30, 2005. The company ended the second quarter with cash, cash equivalents and short-term investments of $27.3 million. "Based on the progress made in the first half of the year, we believe that Aphton is in a stronger position in terms of our pipeline, our finances and our operations," commented Patrick Mooney, M.D., Chairman and CEO of Aphton Corporation. "We have cut our going-forward burn rate by almost 50% this year without sacrificing our priority programs and we are continuing to evaluate further steps that could conserve even more capital as we move ahead. We are pleased with the creativity and thought being used by our business development team, as noted by the most recent deal with Celltrion for IGN311, which we believe will advance the product's development without a significant negative impact to our cash flow." Dr. Mooney continued, "Additionally, we have recently initiated discussions with sanofi-aventis regarding the possible dissolution of our strategic alliance related to the development of the company's lead anti-cancer product Insegia. We believe that it is in the best interests of both the Company and the product to dissolve this alliance. We began these discussions to facilitate the opportunity to seek a new corporate partner for the further development of Insegia in gastric cancer. We are hopeful that we will be able to come to an agreement that would be as favorable to Aphton as possible." -0- *T Pipeline Highlights The quarter was highlighted by progress in the company's pipeline with the presentation of detailed data at the American Society of Clinical Oncology (ASCO) meeting in May 2005. Highlights of those presentations included: IGN101 -- Preliminary data presented at ASCO demonstrated that the median number of circulating tumor cells was reduced by approximately 50% in 17 patients enrolled in a single-arm non-randomized study of IGN101 in patients with various solid tumors. The study, which is intended to accrue a total of 45 patients, is ongoing. The primary objective of the trial is to assess the ability of IGN101 to decrease circulating tumor cells in peripheral blood. Elevation of circulating tumor cells has been shown to predict short-term survival in multiple types of cancer, including breast cancer and hormone refractory prostate cancer. Investigators presented data from 239 evaluable patients in a Phase II randomized, double-blind, placebo-controlled clinical trial of IGN101 for patients with epithelial cancers, which consist of colorectal cancer, gastrointestinal tract cancer, non-small cell lung cancer and liver cancer. While no difference was seen in survival for the intent-to-treat patient population, a statistically significant survival prolongation was observed in the 53 stage IV rectal cancer patients. Median survival in rectal cancer patients was 415 days for patients receiving IGN101, compared to 253 days for patients receiving placebo (p = 0.037). Analysis of one-year survival indicated that survival doubled to 62%, from 29.5% for patients receiving placebo, for patients receiving IGN101. A trend for prolonged survival was also observed in stage IV colon cancer patients during the first year. Twelve-month survival was 60% for patients receiving IGN101 versus 48.8% for patients receiving placebo (p = 0.28). Substantially all of the patients in the IGN101 group mounted an antibody response to the vaccine antigen. Insegia(TM) (G17DT immunogen) -- Data from the randomized, double-blind, placebo-controlled study in previously untreated patients with locally advanced, recurrent or metastatic pancreatic cancer were also presented at the ASCO meeting. In this study 383 patients were randomly assigned to receive Insegia plus gemcitabine or gemcitabine plus placebo. The primary endpoint of this study was overall survival. Secondary endpoints included overall tumor response, time to tumor progression and an evaluation of survival by antibody response levels. Results demonstrated no statistically significant difference in overall survival, tumor response or time to tumor progression. However approximately 75% of patients achieved an antibody response to treatment with Insegia. An evaluation of survival by antibody response showed that patients who achieved the highest levels (in this case 74 patients) demonstrated a statistically significant difference in survival relative to the control group (264 days versus 201 days; p = 0.03). The differences in survival were seen across covariant factors such as stage of disease and performance status. *T Operational Highlights Operational highlights for the quarter included the appointment of Manfred Ruediger, Ph.D., to the newly created position of Executive Vice President and Chief Operating Officer. Financial Update Cash, cash equivalents, and short-term investments totaled $27.3 million as of June 30, 2005, compared to $41.8 million at the end of the first quarter of 2005 and compared to $55.5 million as of June 30, 2004. In the second quarter ended June 30, 2005, Aphton's net loss applicable to common shareholders was $12.7 million, or $(0.21) per share, compared to a loss of $6.7 million, or $(0.18) per share for the same period in 2004. In the second quarter, total operating costs and expenses increased from $6.2 million in 2004 to $12.1 million in 2005. The increase in costs and expenses for the full three months ended June 30, 2005 was due primarily to the inclusion of the costs associated with the operation of our wholly-owned subsidiary, Igeneon, (acquired March 24, 2005); research and development of our newly acquired product candidates, IGN101 and IGN311; and a restructuring charge. The restructuring charge of $818,000 relates to the cost-reduction program implemented by the company in order to align expenses with product development priorities. About Aphton Aphton Corporation, headquartered in Philadelphia, PA, is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton's products seek to empower the body's own immune system to fight disease. Through the acquisition of Igeneon AG in March 2005, Aphton acquired late-stage product, 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 in Phase I/II clinical trial. Aphton is currently seeking partners that will support the further development of Insegia (G17DT immunogen), its immunogen targeting the gastrin hormone. 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: www.aphton.com. -0- *T Aphton Corporation Selected Condensed Financial Data (In thousands, except per share data) (unaudited) Three Months Ended June 30, --------------------- 2005 2004 --------- -------- Revenues $ - $ - Total revenues Costs and expenses: General and administrative 2,972 850 Research and development 8,329 5,371 Restructuring Expense 818 --------- -------- Loss from operations (12,119) (6,221) Dividend and interest income 268 119 Interest expense including amortized discount (870) (658) Unrealized gains from investments 8 13 --------- -------- Net loss applicable to common shareholders ($12,714) ($6,747) ========= ======== Basic and diluted loss per common share $(0.21) $(0.18) ========= ======== Shares used in computing net loss per share 59,649 37,632 ========= ======== *T Safe Harbor This press release includes forward-looking statements, including statements about: (1) Aphton's belief that it is in a stronger position in terms of its pipeline, finances and operations; (2) the amount of reductions in Aphton's cash burn rate and the impact on its priority programs; (3) Aphton's belief that the Celltrion deal will advance IGN311's development without a significant negative impact to Aphton's cash flow; (4) Aphton's expectations regarding its ability to dissolve the strategic alliance with sanofi-aventis and the terms of any such dissolution; (5)Aphton's belief that dissolution of its strategic alliance with sanofi-aventis will facilitate the opportunity to seek a corporate partner for Insegia in gastric cancer; and (6) Aphton's expectation regarding the purpose and effectiveness of fully-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 programs; (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 rate 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) scientific developments regarding immunotherapies; (7) Aphton's ability to close on its anticipated collaboration with Celltrion and recognize its anticipated benefits; (8) Aphton's ability to dissolve the strategic alliance with sanofi-aventis on terms favorable to it or at all; and (9) the actual design, results and timing of preclinical and clinical studies for both companies' products and product candidates.