RNS Number:6649N
Cambridge Antibody Tech Group PLC
26 November 2001
01/CAT/22
FOR IMMEDIATE RELEASE
07.00 GMT, 02.00 EST Monday 26 November 2001
For Further Information Contact:
Cambridge Antibody Technology Weber Shandwick Square Mile
(Europe)
Tel: +44 (0) 1763 263 233
Tel: +44 (0) 20 7601 1000
David Chiswell, CEO
Kevin Smith
John Aston, Finance Director
Graham Herring
Rowena Gardner, Head of Corporate
Communications
BMC Communications/The Trout Group
(USA)
Tel: 001 212 477 9007
Brad Miles, ext 17 (media)
Brandon Lewis, ext.15 (investors)
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
PRELIMINARY STATEMENT OF RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2001
Highlights
1. Six CAT-derived antibody candidates at clinical trials stage
2. Long term supply agreement with Lonza Biologics
3. Initiation of management succession
4. CAT-152 European Orphan Drug Status
5. Major profit sharing alliances with Elan and Immunex
6. NASDAQ listing achieved
7. Pivotal patents granted in US
8. First phase of relocation completed
9. Cash and liquid resources at 30 September 01: #157m
Professor Peter Garland, CAT's Chairman, said, "I am pleased to report that
CAT has made further progress in the year, consolidating the Company's
position as a world leader in the development of human monoclonal antibodies
as therapeutics. Using CAT's technologies, the Company and its partners are
continuing to build value by creating and developing a growing pipeline of new
antibody drugs. "
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
PRELIMINARY STATEMENT OF RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2001
CAT secured seven new alliances this year, many with leading companies, and
the Company is becoming highly respected by both major pharmaceutical
companies and emerging technology companies thus widening the choice of
potential alliance partners. This year, CAT secured alliances with Elan,
Immunex (two), Randox, Weston Medical, Zyomyx and Xerion; and, since year end,
Merck & Co. Inc.
Our collaborations with Elan and Immunex are particularly significant because
we have the opportunity for greater investment throughout the drug development
process, allowing us to gain access to more potential revenue. Together with
our alliance signed last year with Genzyme, we now have three agreements in
which we have the opportunity to build greater value by sharing the costs and
risks of developing antibody drugs and, in turn, sharing any revenues that
result. The collaboration with Merck & Co., Inc is also of note since it is
our first initiative in infectious diseases, where CAT's technology is being
used in the research and development of products specific to a key target
involved in HIV-mediated disease.
We are pleased to report that with six CAT-derived human monoclonal antibody
products making good progress in clinical trials, CAT maintains its leading
position. Encouraging two-year Phase I/IIa trial results for CAT-152 as a
potential treatment to prevent post-operative scarring after glaucoma surgery
have led to the initiation of a European Phase II/III trial for this
indication. This year CAT-152 was awarded European Orphan Drug status, which
brings the prospect of reduced regulatory fees, grants, protocol assistance
and, if approved, 10 years' market exclusivity in the EU.
With Genzyme, we have initiated a Phase I/IIa clinical study to evaluate
CAT-192 as a possible treatment for patients with diffuse scleroderma.
Finally, the move of CAT-213 from pre-clinical to clinical studies and the
recent approval for a Phase I/IIa trial in patients with allergic rhinitis
demonstrates further the expansion in our pipeline of clinical candidates.
In June of this year trading in CAT ADRs commenced on the US Nasdaq exchange.
This allows US shareholders the opportunity to trade on a local market and
provides us with greater commercial and financial visibility in the US. During
the year, we also continued to build and defend our patent estate covering
both technologies and product candidates. Our efforts were rewarded with the
granting of a number of US, Japanese and European patents including the
pivotal Winter II and Winter/Lerner/Huse patents in the US.
The first phase of our relocation to Granta Park, South Cambridgeshire, UK,
was completed in the summer. The next phase of building work is progressing
and we are on schedule to consolidate our operations at Granta Park by the end
of 2002. The new facilities will provide an efficient and modern working
environment, and enable us to house all our current staff on one site and
provide an environment in which we can continue to attract the best new
talent.
With a view to ensuring that CAT has access to manufacturing capacity for both
ongoing programmes and future projects, CAT has today announced that it has
signed a long term agreement with Lonza for the manufacture and supply of
clinical grade antibody drugs for up to five years.
Board and senior management
Since its formation in 1990 Cambridge Antibody Technology has grown to be one
of the world's leading antibody companies, led by David Chiswell, CAT's
founder. CAT is now positioning itself for transition to a profitable
biopharmaceutical company based on the discovery and development of
therapeutic antibody products.
Against this background the Board and David Chiswell have been considering the
needs of CAT in terms of future leadership and feel that this is the right
time to effect orderly management succession at the top of the Company.
Accordingly, they have initiated the process of recruiting a new CEO to
succeed David Chiswell in due course. He remains CAT's CEO until a suitable
replacement is identified and he will continue to lead the company as he has
done for the last five years.
David Chiswell, CAT's CEO, commented, "With a strong stable and experienced
management team supported by skilled and committed staff I believe now is the
right time to initiate the process of bringing in new leadership to drive CAT
through the next phase of its development. I will, of course, continue to lead
the Company until my successor is in post".
Professor Peter Garland, CAT's Chairman, commented, "David's contribution to
CAT's success has been immense and the Company has been privileged to have had
the benefit of his unique blend of skills over the last 11 years. David is
staying with CAT through this transitional period, enabling us to put in place
an orderly succession and giving us the opportunity to identify the best
candidate for this key and challenging position."
In further recognition of the challenges ahead, it is CAT's's intention that
its Board will be strengthened in the coming months by the appointment of
further non-executive directors with skills and experience relevant to the
Company's increasing focus on drug discovery and development.
We would like to thank everyone who has contributed to CAT's success this year
- our staff, the Board, the scientific advisory board and other expert
advisors, our partners and our shareholders, and we look forward to another
rewarding year in 2002.
Review of the year
This year CAT strengthened its therapeutic pipeline, both through its own
development activities and by working collaboratively with others. The Company
has entered into a number of significant drug discovery and technology
alliances and, by establishing partnerships in which CAT retains greater
participation in the drug development process, has demonstrated its intention
to retain greater value. CAT's innovative platform technologies, including
integrated automation and custom-developed software, ensure that the Company
is positioned to take advantage of interesting opportunities and to offer the
pharmaceutical industry a rich source of potential antibody therapeutic
candidates and drug discovery tools.
Company expertise
Antibodies are an increasingly significant class of drugs. CAT uses a similar
high throughput screening (HTS) approach in its antibody drug discovery and
development processes to that used by the major pharmaceutical companies for
new chemical entity (NCE) discovery. The Company's phage display system has
created comprehensive human monoclonal antibody libraries that contain more
than 100 billion different antibodies (over ten million times the size of an
average small molecule library). By using automated HTS with these libraries,
CAT rapidly isolates and optimises lead antibodies for use as potential
therapeutics. Since these are human antibodies, they offer superior safety and
tolerability.
Partnerships and alliances
With the signing of seven new agreements during the year, CAT continued to
capitalise on the increasing interest shown by the pharmaceutical industry in
developing antibodies as drugs.
This year, CAT strengthened its commitment to its own human monoclonal
antibody development programme by entering into alliances with Elan (January
2001) and Immunex (May 2001). CAT and Elan are working together to produce
novel antibody-based therapeutics for certain human neurological diseases.
Immunex and CAT are co-developing human monoclonal antibodies for autoimmune
and inflammatory disorders, for which Immunex has contributed two proprietary
targets.
In both agreements, CAT is providing its display technologies and HTS
capabilities to identify human antibodies and is optimising any lead
antibodies isolated. CAT will work closely with Elan and Immunex on
pre-clinical evaluation, with the collaborator taking primary responsibility
for clinical trials and product commercialisation. CAT has the opportunity
through equal sharing of product development costs to receive an equal share
of any profits generated by product sales. These two collaborations, in
conjunction with last year's active drug co-development alliance with Genzyme,
demonstrate CAT's intent to retain greater value from developing antibody
drugs.
Since the year end, in October 2001, CAT entered into its first product
development initiative in infectious disease with Merck & Co., Inc. The
five-year collaboration allows Merck access to CAT's phage antibody libraries
for the research and development of products specific for a key target
involved in disease mediated by HIV. Under the agreement, Merck obtains
exclusive rights to prophylactic and therapeutic products developed. In turn,
CAT has received a technology access fee and will receive milestone payments
and royalty revenue from the sale of any human monoclonal antibodies and
non-antibody products validated using CAT's technology.
During the year, CAT extracted value from its antibody phage display
technology in other areas of the drug discovery process by signing licensing
agreements with Immunex (December 2000) and Xerion (June 2001). Immunex can
use CAT's libraries for validation of disease-associated targets, while Xerion
is utilising it in conjunction with its integrated functional proteomics
technology platform for the broader applications of target discovery and
target validation. Both companies committed to CAT a licence fee for the use
of the library. Immunex also received options to exclusive licences for up to
eight therapeutic antibody products, which could provide CAT with milestone
and royalty payments on any future product sales.
The other three alliances CAT entered into this year are research
collaborations, which have potential to build novel capabilities. With Randox
and Zyomyx CAT is investigating protein biochip technologies, an exciting new
area in which CAT's antibodies could become a critical component. The third
collaboration, with Weston Medical, is to evaluate its Intraject needle-free
drug delivery system.
The functional genomics programme under CAT's collaboration with Wyeth-Ayerst
has been completed and, accordingly, the committed payments from Wyeth-Ayerst
to CAT have reduced. However, this has been supplemented to some extent by
additional work on antibody development programmes, and the agreement has been
extended to a fourth year.
These new alliances described above highlight CAT's ability to seize and
develop commercial opportunities both in and out of the therapeutic antibody
field, while still remaining committed to its main goal of building an
outstanding human therapeutic antibody pipeline delivering significant value
to CAT.
Clinical development pipeline - CAT-funded
There has been very good progress during 2001 in CAT's own product pipeline,
with two product candidate moving from pre-clinical studies into clinical
trials, and the other starting its next phase of clinical trials.
CAT-152 (lerdelimumab), a human anti-TGFb 2 monoclonal antibody being
developed by CAT as a treatment to prevent post-operative scarring in patients
undergoing surgery for glaucoma, made good progress in trials this year.
Clinical data on CAT-152 were accepted and presented at a number of major
ophthalmology conferences, including the Association for Research in Vision
and Ophthalmology (ARVO), the American Academy of Ophthalmology (AAO) and the
European Glaucoma Society. This, in conjunction with the recent acceptance for
publication of a scientific paper in one of the leading medical journals,
Ophthalmology is testament to the promise of CAT-152 that is being well
received by internationally renowned, independent ophthalmic experts.
Results of a 56 patient Phase II study presented at the AAO in November 2001
showed that patients treated with CAT-152 experienced lower intraocular
pressure six months after combined glaucoma and cataract surgery
(phakotrabeculectomy). Also, at the annual ARVO meeting in May 2001, follow-up
results of a 24 patient Phase I/IIa clinical trial suggested that two years
post surgery for glaucoma (primary trabeculectomy) and treatment with CAT-152,
patients continued to experience significantly lower intraocular pressure.
Both sets of results indicate that CAT-152 can produce clinically relevant
anti-scarring activity and, as a result, reduce the risk of progressive visual
field loss.
Based on these promising early clinical results, CAT is recruiting around 350
patients in six European countries for a Phase II/III trial to test CAT-152 in
conjunction with primary trabeculectomy. This European trial is ready to
commence and further trials in the US and Europe are being considered for the
first half of 2002.
During the year CAT-152 was awarded European Orphan Drug status. Among the
benefits for CAT are reduced regulatory fees for CAT-152, grants, protocol
assistance and, if approved, 10 years' market exclusivity in the EU. CAT
estimates up to 250,000 operations per year for glaucoma in the US and Western
Europe could benefit from CAT-152 treatment.
CAT-213 is a human anti-eotaxin monoclonal antibody which neutralises eotaxin1
and inhibits the major stimulus that attracts a type of white blood cell known
as eosinophils into tissues. CAT-213 may have clinical applications in the
treatment of severe allergic disorders. Allergies of all forms of severity are
estimated to affect approximately 20 per cent of the population of the Western
world. Results from pre-clinical testing were presented at the American
Thoracic Society meeting in May 2001. Based on these results, the Company
carried out a Phase I clinical trial to assess CAT-213's safety, tolerability
and pharmacokinetics that was successfully completed. Following this, the UK
Medicines Control Agency recently gave regulatory approval for a Phase I/IIa
trial of CAT-213 in patients with allergic rhinitis. Enrolment into the trial
is underway.
Clinical development pipeline - co-funded
CAT-192 is a human anti-TGFb 1 monoclonal antibody being developed as a
potential treatment for a range of scarring and fibrotic conditions including
scleroderma. CAT's partner for CAT-192, Genzyme, has begun enrolling patients
for a Phase I/II clinical trial to evaluate CAT-192 as a potential therapy for
diffuse systemic sclerosis, a chronic, life-threatening form of scleroderma
affecting an estimated 300,000 people worldwide.
Clinical development pipeline - collaborator funded
In addition to those programmes in which CAT is actively involved and
providing funds, CAT has a number of collaborations where the partner is
responsible for pre-clinical and clinical development and CAT receives
milestones and royalties on product sales. During the year there have been
further advances in these programmes, with one antibody candidate receiving
approval to start a Phase I clinical trial - the sixth CAT-derived antibody to
enter trials.
D2E7 (adalimumab), the human monoclonal antibody that neutralises TNFa being
developed by Abbott, made good progress as a potential treatment for
rheumatoid arthritis. Encouraging Phase II trial data were presented at the
November 2001 American College of Rheumatology (ACR) meeting and at the
European League Against Rheumatology (EULAR) meeting in June 2001.
Rheumatoid arthritis is a condition which currently affects an estimated one
million patients in the US and Europe, many of whom could potentially benefit
from D2E7 treatment. Abbott has now completed its Phase III clinical trials of
D2E7, with over 2,000 patients treated worldwide with D2E7 and more than 2,800
patient years of treatment exposure documented. Abbott is on schedule to file
for a Biologics License Application (BLA) in the US by the second quarter of
2002 and Europe shortly thereafter. It expects to launch the product in 2003.
In addition to its clinical trials in rheumatoid arthritis, Abbott anticipates
starting Phase II clinical trials of D2E7 in Crohn's disease in 2002.
Also being developed in conjunction with Abbott and Genetics Institute, J695,
a human anti-IL12 monoclonal antibody that could potentially be used to treat
autoimmune diseases including rheumatoid arthritis, Crohn's disease, multiple
sclerosis and sepsis, continues to make progress in Phase II clinical trials.
CAT completed its work on a programme with Human Genome Sciences, Inc.(HGSI)
developing antibodies raised against B-Lymphocyte Stimulator (BLyS), a protein
which may have a central role in several autoimmune and neoplastic disorders.
HGS completed pre-clinical studies on candidate antibodies and has received
approval to take one anti-BLyS antibody, LymphoStat-BTM, into a Phase I
clinical trial to determine its safety and pharmacology in patients with
systemic lupus erythematosus. LymphoStat-BTM is believed to be the first
antibody to a genomics-derived target to enter trials.
Research stage antibodies
There are 12 projects currently within CAT's antibody discovery and
development programme, of which approximately four may enter pre-clinical
development during the next financial year. It is anticipated that this number
of projects will increase slightly during 2002. Approximately one third of
these programmes are CAT-funded or co-funded
programmes, with the remaining two thirds coming from collaborator-funded
programmes. These programmes include an anti-TGFb antibody (with Genzyme),
anti-IL-18 (with Abbott), and anti-CD30 L and anti IL-18R accessory protein
(both with Immunex).
This year, CAT delivered to its partner Wyeth-Ayerst a candidate human
monoclonal antibody specific to amyloid-b , a molecular target implicated in
Alzheimer's disease. The candidate is currently being evaluated at
Wyeth-Ayerst. In addition, a number of promising therapeutic antibody product
candidates have been identified and are currently in development at
Wyeth-Ayerst.
With Pharmacia, good progress has been made on a number of antibody drug
discovery programmes in the field of cancer. There has been a modest level of
increase in activity at CAT in these programmes over the last six months; a
research milestone was recently achieved on one programme and further progress
is anticipated.
In its collaboration with HGSI substantial progress has been made towards the
identification of additional novel antibody drugs to genomics targets across
multiple disease areas and further developments are anticipated during the
next financial year. In July, CAT gained access to HGSI's proprietary genomics
database, giving CAT access to selected HGSI antigens. Research has commenced
on identifying suitable candidates for development into potential antibody
drugs. Importantly CAT has rights to develop six such products on its own and
up to 18 equally with HGSI, providing CAT with the opportunity to broaden its
pipeline of CAT-funded and co-funded products.
Research has already commenced in the collaboration between CAT and Merck &
Co., Inc. In the partnership with Elan two drug discovery programmes have
already started, and in the partnership with Immunex, it is anticipated that
two drug discovery programmes will start in early 2002.
Intellectual property
CAT has a strong patent estate, which it protects through timely patent filing
and rigorous, appropriate legal defence. An extensive portfolio of
approximately 30 patent families (300 patents) is evidence of CAT's
world-leading position in phage display technology. The Company's key patents
are grouped into three families: Winter II covers production of expression
libraries of antibody genes; McCafferty protects CAT's phage display method
used to obtain specific antibodies from these libraries; and Griffiths covers
antibodies that recognise human 'self' antigens isolated from CAT's libraries.
During the year, in the US there were four Winter/Lerner/Huse patents granted
as well as a separate Winter II patent (following the earlier settlement of an
interference proceeding between CAT, The Scripps Research Institute and
Stratagene over the Winter II and Huse/Lerner patents in 1999). CAT now has
worldwide commercial rights to all five of these patents.
In addition, another patent in the McCafferty patent family was granted. It
has claims relating to the display of functional protein binding domains
derived from natural repertoires of nucleic acids, where each phage contains a
phagemid genome. Dependent claims include the display of antibodies, and of
scFv or Fab antibody fragments. Also, CAT inventors are listed on two US
patents which were granted in the year relating to D2E7 owned by Abbott Labs.
Also during the year, CAT obtained Japanese patents on ribosome display
(Kawasaki) and phage display (McCafferty). In Europe, patents were granted on
diabodies, chemisynthetic libraries, anti-CEA antibodies and anti-TGFb 1
antibodies. CAT's previously granted European patent on antibodies binding to
TGFb 2 (including CAT-152) was not opposed.
In Europe, CAT's patent infringement action against MorphoSys relating to the
European Winter II and McCafferty patents in Munich is currently stayed
pending the outcome of appeal proceedings at the European Patent Office. Both
patents were upheld by the Opposition Division, there is an appeal pending on
Winter II and it is anticipated that there will also be an appeal on the
McCafferty patent.
In the US, the litigation bought by MorphoSys against CAT relating to the
Griffiths patent was the subject of a trial in Washington DC in April 2001.
MorphoSys asked the court to revoke the Griffiths patent claiming it was
invalid on a number of grounds. They also asked for a declaration that they
did not infringe the patent. CAT counter-claimed that MorphoSys did infringe
the patent. After the trial, the jury was unable to agree on a decision apart
from finding that CAT was entitled to the priority dates of its British patent
applications. The Judge subsequently ruled in favour of CAT denying MorphoSys'
claims that the patent was invalid on the grounds of anticipation, written
description, indefiniteness and enablement. The Judge also ruled that the
issue of whether the patent was invalid on the ground that it was obvious
could only be decided by a jury and therefore would be retried before a new
jury. The Judge took the preliminary view that MorphoSys should prevail on the
issue of infringement, but asked for further briefing on this point. This has
been provided and we are currently awaiting his decision.
MorphoSys' action (which is similar to the Griffiths matter) against CAT in
respect of the parent US McCafferty patent is expected to be subject of a jury
trial in February 2003. Also during the year, CAT commenced an action claiming
MorphoSys infringed the Winter II patent and two of the Winter/Lerner/Huse
patents.
Whatever the outcome of this current litigation, CAT believes that its ability
to operate its own technology will not be materially and adversely affected.
Building for drug development
CAT continues to invest in its people, its technology and its processes. In
particular, the drug discovery team has increased in size by 35 per cent
during the year and the pre-clinical team numbered 50 at year end. With many
new recruits coming from biotechnology and major pharmaceutical companies,
this has added to the expertise and experience of the group.
During the year, CAT has refined its proprietary ribosome display system. This
technology, which allows rapid construction of larger compound libraries than
those made by phage display, is now being used as a complementary tool for
lead antibody isolation and optimisation in CAT's drug discovery process.
In addition, CAT has continued to automate its in-house discovery processes by
refining and integrating a number of systems. These include a powerful and
effective informatics capability that links the control of CAT's laboratory
automation together to form a 'drug discovery factory' capable of massive
parallel processing and which can be controlled remotely.
To capitalise on the vast amounts of information generated by its automated
systems, CAT continued in 2001 to strengthen its CONT1NUITYper mil , data
management and bioinformatics software solutions. The effectiveness of this
software is continually being assessed with in-house drug discovery programmes
and is currently providing effective and timely reporting of results as well
as analysis of complex proprietary data.
The Company also continues to establish reciprocal partnerships for creating
analytical tools to measure protein structure and activity. To this end, in
December 2000, CAT formed a research collaboration with Zyomyx to develop
high-density protein biochips based on parallel antibody microarrays. This was
followed in April 2001 by an agreement with Randox to evaluate the use of
CAT's antibodies for diagnostic biochip products.
CAT now has three active protein biochip collaborations (the other being with
Oxford GlycoSciences) and it anticipates these alliances could produce
capabilities in which CAT's antibodies will be a critical component. These
capabilities may be used in a variety of ways including drug development and
disease diagnosis.
At the drug delivery end of the drug development process, CAT signed an
agreement in March 2001 with Weston Medical to assess the suitability of
delivering CAT's antibodies through a needle-free system. The collaboration
could potentially overcome one of the main perceived drawbacks to receiving
monoclonal antibody therapy and may be particularly welcomed by patients who
need regular injections; for example those suffering with chronic inflammatory
conditions.
With a view to ensuring the supply of clinical grade antibodies in the future,
CAT and Lonza today announce that they have signed a long term agreement for
Lonza to manufacture and supply clinical grade antibody drugs to CAT for up to
five years. The agreement, which is effective immediately, builds on the
existing close relationship between the companies and will guarantee that CAT
has access to manufacturing capacity for both ongoing programmes and future
projects.
Significant corporate milestones
In June 2001, CAT listed American Depository Receipts (ADRs) on the US Nasdaq
exchange, helping to raise CAT's visibility in the US, both in the commercial
and financial arenas, and supporting CAT's significant US investor base by
enabling trading on a local market.
Also this year, CAT successfully completed the first phase of its relocation
to new enhanced facilities at Granta Park, 10 miles from the Company's
existing location. In May 2001, the Medical and Pre-Clinical Departments
occupied the Franklin Building, consisting of 20,500 sq. ft. of new offices
and laboratories. The relocation project is progressing well with the
remaining CAT employees expected to move to a 66,000 sq. ft. building, also at
Granta Park, by the end of next year, enabling the Company to consolidate its
operations on one site.
CAT made certain management changes during the year. These gave specific
responsibility for focused units covering technology development and antibody
drug development. Kevin Johnson, previously CAT's Research Director, has taken
on the role of Chief Technology Officer and now heads the Company's Technology
Department, and Alex Duncan, previously Head of Antibody Engineering, has
taken on the role of Vice President Drug Discovery.
Financial review
The following review is based on the Group's consolidated financial statements
which are prepared under UK generally acceptable accounting principles ('
GAAP'). Those financial statements for prior periods have been restated to
reflect the Group's revised accounting policy for revenue recognition as
described below. Comparative figures in this review have been restated where
appropriate.
Revenues increased to #7.1 million in the 2001 financial year from #7.0
million in the 2000 financial year.
As a result of CAT's reliance on collaboration arrangements, CAT's revenue
profile has historically fluctuated from period to period, because the
majority of revenue to date has been in the form of license fees and milestone
payments. The Group has now changed its accounting policy for revenue
recognition, the principal impact of which is that license fees, which were
previously recognised as income when received, will be deferred and recognised
over the term of the license. Revenues recognised in prior periods have been
restated and therefore the receipt of a license fee will be a less significant
factor in revenue volatility. CAT anticipates that over time and with the
revised policy on revenue recognition, the profile of revenues is likely to
become more regular as the number of collaborations increases, and ultimately
as royalty income from product sales is realised.
The increase in revenue from the 2000 financial year to the 2001 financial
year resulted from an increase in license revenues recognised and contract
research fees offset by a decrease in milestone payments. CAT received
non-recurring license fees in the 2001 financial year pursuant to CAT's
collaborative arrangement with Immunex and in the 2000 financial year pursuant
to collaborative arrangements with HGSI and for the grant of a product license
for amyloid b to Wyeth-Ayerst. These revenues will be recognised over the term
of the license granted. Revenues recognised from license fees increased from #
0.7 million for the 2000 financial year to #1.6 million for the 2001 financial
year, reflecting revenues recognised from the new license fees received in the
2001 financial year in addition to license fees recognised in both periods
which were received in the 2000 and prior financial years. CAT recognised #
0.1m of milestone or other revenues in the 2001 financial year compared to #
1.8 million in the 2000 financial year. Milestone payments are typically
earned based on achievements in research and product development and may not
be comparable from period to period. In the 2000 financial year the Group
received a milestone payment from Knoll following the entry of D2E7 into phase
III clinical trials, and a milestone pursuant to its arrangement with Astra
Zeneca. CAT recognised #5.4 million of revenues from contract research fees in
the 2001 financial year compared to #4.5 million in the 2000 financial year.
The increase resulted from increased activity or a first full year of activity
from the Group's collaborative arrangements with Pharmacia and HGSI offset by
a reduction in activity with Wyeth-Ayerst following the completion of the
functional genomics element of that arrangement.
CAT's direct costs are typically fees payable as a percentage of its revenues.
Substantially all of the direct costs reported in these financial statements
are Drug Royalty Corporation's share of revenues. In future periods, when CAT
receives royalties on product sales under its various licenses and
collaboration agreements, direct costs will also include royalties payable to
Medical Research Council and other licensors.
Operating expenses for the 2001 financial year were #27.8 million compared to
#20.6 million in the 2000 financial year reflecting the increasing scale and
complexity of CAT's activities.
Staff numbers rose over the 2001 financial year from 180 to 247 (the average
over the year was 224). There was a credit during the 2001 financial year of #
0.4 million for employer's National Insurance payable on the exercise of
certain options granted in December 1999, compared with a charge of #0.5
million in the 2000 financial year, and a charge for the cost of shares to be
allocated under the employee share scheme of #0.6 million, compared with #0.5
million in the 2000 financial year.
Research and development expenses increased to #21.4 million in the 2001
financial year from #15.7 million in the 2000 financial year. The increase
reflects an increase in the scale of CAT's activities, research and
development staff numbers increasing to 212 at the end of the 2001 financial
year, and increased expenditures for laboratory and general supplies. The
increase also reflects a commitment to CAT's product development activities
and the resulting expenditures with external suppliers on pilot manufacture
and clinical trials. Research and development expenditures in the 2000
financial year were also affected by payments of #1.1 million for access to
intellectual property, primarily to The Burnham Institute and Integra Life
Sciences, Stratagene and The Whittier Institute for Diabetes and
Endocrinology.
General and administrative expenses increased to #6.4 million in the 2001
financial year from #4.8 million in the 2000 financial year. These expenses
include fees relating to patent litigation of #2.0 million in the 2001
financial year compared to #1.7 million in the 2000 financial year. The
remaining increase in the 2001 financial year was primarily caused by costs
associated with increased personnel, larger facilities and more complex
operations.
Total depreciation expenses increased from #1.8 million in the 2000 financial
year to #2.1 million in the 2001 financial year. This reflected a substantial
investment in fixed assets in recent years, particularly fitting out and
equipping the Franklin Building during the 2001 financial year. Amortisation
expenses amounted to #0.4 million in the 2000 and 2001 financial years
reflecting the amortisation of the Aptein patents.
Net interest income increased to #9.3 million in the 2001 financial year from
#5.6 million in the 2000 financial year. In the 2000 and 2001 financial years,
cash and investments in liquid resources increased due to ordinary share
issues in connection with strategic collaborations in December 1999, April
2000 and October 2000 and a share offering in April 2000. These resulted in
increased interest income during those periods.
Liquidity and capital resources
During the 2001 and 2000 financial years, CAT's net cash used by operating
activities was #19.2 million and #3.6 million respectively, in each case
resulting principally from operating losses, offset by depreciation and
amortisation. In the 2000 financial year, operating losses were also offset by
increases in deferred income resulting from income received during that year
which will be recognised as turnover in future periods.
CAT made capital expenditures of #3.8 million and #1.0 million in the 2001 and
2000 financial years, respectively. CAT's capital expenditures are primarily
for laboratory equipment, laboratory facilities and related information
technology equipment. CAT also invests in office and administrative
facilities. The increase in capital expenditures from the 2000 financial year
to the 2001 financial year primarily resulted from the fitting out and
equipping of 20,000 sq ft of specialist laboratory and office facilities at
the Franklin Building at Granta Park.
CAT's net cash inflow from financing activities during the 2001and 2000
financial years was #15.4 million and #132.3 million respectively, in each
case primarily resulting from the issue of ordinary shares. During the 2001
financial year, CAT completed one significant financing transaction: in
October 2000, CAT issued 307,942 ordinary shares to Genzyme for US$20 million
(or approximately #13.4 million net of expenses) in connection with a
strategic collaboration.
As at 30 September 2001, CAT had net current assets of #153.4 million. CAT
does not currently borrow to finance its operations. CAT's creditors at the
end of the 2001 financial year included a total of #10.5 million of deferred
income, representing non-refundable income received which will be recognised
in future periods. The corresponding amount in the 2000 financial year was #
11.4 million.
CAT has incurred net losses of #11.8 million and #8.3 million in the 2001 and
2000 financial years respectively. As of 30 September 2001 CAT had an
accumulated loss of #56.0 million. CAT's losses have resulted principally from
costs incurred in performing research and development on human monoclonal
antibody product candidates, and from general and administration costs
associated with CAT's operations.
As at 30 September 2001, CAT had cash and marketable securities of
approximately #156.8 million. CAT has invested funds that are surplus to its
requirements in highly liquid short term securities.
Financial outlook for 2002
Recurring revenues, representing contract research revenues and income from
licensing arrangements entered into this and prior periods, are expected to be
in the range of #6 to #7 million for the 2002 financial year. Additional
revenues may arise from technical and clinical milestone payments and any
further licensing arrangements.
A further significant increase in operating costs are expected over the level
in the second half of the 2001 financial year. This reflects in particular
additional spending on clinical trials and further increases in staff and
infrastructure costs. Staff numbers are expected to increase to approximately
300 during the 2002 financial year.
Capital expenditure over the year is expected to be above last year's level,
in particular because of the anticipated spend on CAT's further new facilities
at Granta Park. Total expenditure is expected to be of the order of #10
million.
It is anticipated that CAT's net cash burn rate for the current year, taking
account of expected revenues, will be in the range #2.5 to #3.0 million per
month.
Future reporting
The Group will, with effect from the 2002 financial year, report financial
results and issue a review of operations on a quarterly basis. The reports for
the first and third quarters will be made available as a press release and
through the Group's web site. For the half year the Group will continue its
customary practice of additionally posting a printed statement to all
shareholders.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
Preliminary Statement of Results for the Year ended 30 September 2001
Consolidated Profit and Loss Account
For the year ended 30 September 2001 2001 2000 1999
unaudited restated restated
#'000 #'000 #'000
Turnover 7,121 7,018 2,165
Direct costs (351) (381) (81)
Gross profit 6,770 6,637 2,084
Research and development expenses (21,393) (15,728) (13,574)
General and administration expenses (6,443) (4,842) (2,684)
Operating loss (21,066) (13,933) (14,174)
Interest receivable (net) 9,295 5,644 1,810
Loss on ordinary activities before taxation (11,771) (8,289) (12,364)
Taxation on loss on ordinary activities - - (1)
Loss on ordinary activities after taxation and (11,771) (8,289) (12,365)
retained loss for the financial year
Loss per share - basic and fully diluted (pence) 33.3p 27.5p 50.9p
Consolidated Statement of Total Recognised Gains and Losses
2001 2000 1999
unaudited #'000 #'000
#'000
Loss for the financial year (11,771) (5,161) (12,731)
Loss on foreign exchange translation 1 (7) (1)
Total recognised losses relating to the year (11,770) (5,168) (12,732)
Prior year adjustment (6,594)
Total recognised losses since last annual report (18,364)
and financial statements
The losses for all years arise from continuing operations.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
Preliminary Statement of Results for the Year ended 30 September 2001
Consolidated Balance Sheet
At 30 September 2001 2001 2000
unaudited restated
#'000 #'000
Fixed assets
Intangible assets 4,075 4,448
Tangible fixed assets 6,642 5,008
10,717 9,456
Current assets
Debtors 4,940 3,452
Investment in liquid resources 156,228 156,502
Cash at bank and in hand 585 26
161,753 159,980
Creditors
Amounts falling due within one year (8,335) (9,627)
Net current assets 153,418 150,353
Total assets less current liabilities 164,135 159,809
Creditors
Amounts falling due after more than one year (8,085) (7,369)
Net assets 156,050 152,440
Capital and reserves
Called-up share capital 3,546 3,477
Share premium account 195,017 179,706
Other reserve 13,451 13,451
Profit and loss account (55,964) (44,194)
Shareholders' funds - all equity 156,050 152,440
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
Preliminary Statement of Results for the Year ended 30 September 2001
Consolidated Cash Flow Statement
2001 2000 1999
unaudited restated restated
For the year ended 30 September 2001 #'000 #'000 #'000
Operating loss (21,066) (13,933) (14,174)
Depreciation charge 2,146 1,808 1,627
Amortisation of patents 373 374 389
Loss/(profit) on disposal of fixed assets 1 (5) -
(Increase)/decrease in debtors (515) (1,159) 264
(Decrease)/increase in creditors (89) 9,306 706
Net cash outflow from operating activities (19,150) (3,609) (11,188)
Returns on investments and servicing of finance
Interest received (net) 8,322 4,245 2,100
Taxation - - (1)
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,485) (1,018) (2,672)
Sale of tangible fixed assets 4 44 -
(3,481) (974) (2,672)
Net cash outflow before management of liquid (14,309) (338) (11,761)
resources and financing
Management of liquid resources 274 (133,729) 12,051
Financing
Issue of ordinary share capital 15,380 132,302 539
Capital elements of finance lease rental - (9) (4)
payments
15,380 132,293 535
Increase/(decrease) in cash 1,345 (1,774) 825
Notes to the financial information
Accounting policies
This financial information has been prepared on a basis consistent with the
accounting policies set out in the annual report for the year ended 30
September 2000 with the exception of the policy for revenue recognition. This
policy was changed during the year in accordance with emerging best practise.
The Directors believe that the revised policy provides a fairer presentation
of the results and financial position of the Group because under the revised
policy, where contractual performance is incomplete, despite the Group having
received non-refundable payments, revenue is only recognised to the extent
that the Group has performed its obligations and such performance has resulted
in benefits accruing to the customer. The impact of this change in accounting
policy is summarised below.
Prior Year Adjustment
2001 2000 1999
#'000 #'000 #'000
Profit and Loss account
Turnover:
Revised accounting policy 7,121 7,018 2,165
Previous accounting policy 9,595 10,146 1,799
(Increase)/decrease in loss for the financial year (2,474) (3,128) 366
Balance sheet
Creditors:
Amounts falling due within one year - deferred income (1,564) (1,200) (655)
Amounts falling due after more than one year - deferred (7,504) (5,394) (2,811)
income
Decrease in net assets (9,068) (6,594) (3,466)
Loss per share
Potentially dilutive issueable shares are only included in the calculation of
fully diluted earnings per share if their issue would decrease net profit per
share or increase net loss per share. The Group's basic and fully diluted loss
per share are therefore equal.
Loss per ordinary share (basic and fully diluted) is based on the loss for the
financial year of #11,771,000 (2000: loss, restated #8,289,000, 1999: loss,
restated #12,365,000) and a weighted average number of ordinary shares of
35,313,260 (2000: 30,179,818, 1999: 24,314,191).
Analysis and reconciliation of net funds (unaudited)
1 October Cash flow Exchange movement 30
2000 September2001
#'000 #'000 #'000 #'000
Cash at bank 26 559 - 585
Overdrafts (949) 786 - (163)
1,345
Liquid resources 156,502 (274) - 156,228
Net funds 155,579 1,071 - 156,650
2001 2000 1999
unaudited #'000 #'000
#'000
Increase/(decrease) in cash in the year 1,345 (1,774) 825
Decrease/(increase) in liquid resources (274) 133,729 (12,051)
Decrease in lease financing - 9 4
Change in net funds resulting from cash flows 1,071 131,964 (11,222)
Exchange movement - 2 4
Movement in net funds in year 1,071 131,966 (11,218)
Net funds at 1 October 2000 155,579 23,613 34,831
Net funds at 30 September 2001 156,650 155,579 23,613
Reconciliation of movements in group shareholders' funds
2001 2000
unaudited
#'000 #'000
Loss for the financial year (11,771) (5,161)
Other recognised gains and losses relating to the year 1 (7)
(11,770) (5,168)
New shares issued 15,380 132,302
Net increase in shareholders' funds 3,610 127,134
Opening shareholders' funds as previously stated 159,034 31,900
Prior year adjustment (6,594) -
Opening shareholders' funds as restated 152,440 31,900
Closing shareholders' funds 156,050 159,034
Financial Statements
The preceding information does not constitute the Company's statutory
financial statements for the year ended 30 September 2001 within the meaning
of section 240 of the Companies Act 1985. The auditors have not yet reported
on the financial statements for the year ended 31 September 2001. Those
financial statements will be delivered to the Registrar of Companies after the
Company's Annual General Meeting.
The annual report and financial statements for the year ended 30 September
2001 will be posted to shareholders by 22 December 2001 and will be available
shortly thereafter from:
The Company Secretary
Cambridge Antibody Technology Group plc
The Science Park
Melbourn
Cambridgeshire
SG8 6JJ, UK
Tel: +44 (0) 1763 263233
This preliminary announcement was approved by the Board on 23 November 2001.
-ENDS-
Notes to Editors:
Cambridge Antibody Technology (CAT)
* CAT is a UK biotechnology company using its proprietary technologies in
human monoclonal antibodies for drug discovery and drug development. Based
near Cambridge, England, CAT currently employs around 260 people.
* CAT is listed on the London Stock Exchange and on NASDAQ since June
2001. CAT raised #41m in its IPO in March 1997 and #93m in a secondary
offering in March 2000.
* CAT has an advanced platform technology for rapidly isolating human
monoclonal antibodies using phage display systems. CAT has extensive phage
antibody libraries, currently incorporating more than 100 billion distinct
antibodies. These libraries form the basis for the Company's strategy to
develop a portfolio of antibody-based drugs and to utilise antibodies as
tools for target validation. Six human therapeutic antibodies developed by
CAT are at various stages of clinical trials.
* CAT has alliances with a large number of biotechnology and
pharmaceutical companies to discover develop and commercialise human
monoclonal antibody-based products. CAT has also licensed its proprietary
human phage antibody libraries to several companies for target validation
and drug discovery. CAT's partners include: Eli Lilly, Pfizer, Abbott ,
Genetics Institute, Wyeth-Ayerst, Human Genome Sciences, Pharmacia, Oxford
GlycoSciences, Genzyme, Immunex, Zyomyx, Elan, Merck & Co and Xerion.
Application of the Safe Harbor of the Private Securities Litigation Reform Act
of 1995: This press release contains statements about Cambridge Antibody
Technology Group plc ("CAT") that are forward looking statements. All
statements other than statements of historical facts included in this press
release may be forward looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934.
These forward looking statements are based on numerous assumptions regarding
CAT's present and future business strategies and the environment in which CAT
will operate in the future. Certain factors that could cause CAT's actual
results, performance or achievements to differ materially from those in the
forward looking statements include: market conditions, CAT's ability to enter
into and maintain collaborative arrangements, success of product candidates in
clinical trials, regulatory developments and competition.
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