RNS No 6649m
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC
24 May 1999
For Further Information Contact:
Cambridge Antibody Technology Group plc On 24.04.99: +44 (0) 171 496 3300
Dr David Chiswell, Chief Executive Officer Thereafter on: +44 (0) 1763 263233
John Aston, Finance Director
HCC.De Facto Tel: +44 (0) 171 496 3300
City/Financial, Nicola How
Trade/Science, Andrew Worsfold
CAMBRIDGE ANTIBODY TECHNOLOGY
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 1999
Highlights
- Broad-ranging deal signed with Wyeth-Ayerst
- BASF / GI to begin Phase I clinical trials with J695 (anti-IL 12)
- CAT partner, BASF Pharma, to report new data on D2E7 in June
- CAT collaboration with BASF Pharma extended to third programme
- Second Phase II clinical trial in glaucoma surgery expected to start this
summer
- Intellectual property position further strengthened with issue of US patent
- Appointment of two new non-executive directors bringing extensive
pharmaceutical industry experience to the Board
- Loss for the six months ended 31 March 1999 of #6.5 million
- Cash & liquid resources at 31 March 1999: #27.4 million
Professor Peter Garland, Chairman of Cambridge Antibody Technology, commented:
"The first six months of the year have been both exciting and rewarding. CAT's
first major deal for its functional genomics tools ProAb(R) and ProxiMol(R)
with Wyeth-Ayerst brings in both cash and drug targets. It represents a
powerful validation of our technologies and an endorsement of our commercial
strategy."
CAMBRIDGE ANTIBODY TECHNOLOGY
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 1999
OVERVIEW
The highlight of the six months was the recently announced deal with
Wyeth-Ayerst, a division of American Home Products. This is a significant
milestone for CAT and is an important validation of the Group's technology.
The alliance is CAT's first major functional genomics deal; it is both broad
ranging and provides CAT with significant revenue potential.
CAT receives research funding of $4 million per year for up to four years, as
well as possible library option, milestone and product licence fees and
royalties. Work has already commenced at CAT involving the screening of
potential disease targets from Wyeth-Ayerst to generate data that will be
combined with information already contained in CAT's bioinformatics framework,
CONT1NUITY(TM). This will aid in the selection of candidates for therapeutic
development.
The other key part of the deal is the product collaboration, under which
Wyeth-Ayerst and CAT will validate and develop product candidates directed at
novel proprietary Wyeth targets, with the goal of developing a broad portfolio
of human antibody-based drug candidates. Both CAT and Wyeth-Ayerst will be
able to take product candidates forward.
In March of this year it was announced that agreement had been reached with
BASF Pharma on an extension and modification of CAT's collaborative programme
with BASF. Under this programme BASF may select up to six target antigens
against which CAT will develop antibodies. CAT receives milestone and
royalty payments for developed antibodies entering the clinic and subsequently
commercialised by BASF. BASF has now selected a third target and CAT has
started work in collaboration with BASF on developing a fully human monoclonal
antibody against this target.
PRODUCT PIPELINE
The status of CAT's product pipeline is summarised in the table below.
PRODUCT DISEASE PROGRAMME STATUS
CANDIDATE TARGET
D2E7 Rheumatoid Arthritis In Phase II trials, conducted by BASF.
TNFa New data from these trials to be presented
in June 1999
CAT-152 Glaucoma Surgery Patient recruitment for first Phase I/IIa
TGFb2 clinical study complete. Phase II clinical
trials to start this summer
CAT-152 Proliferative Results of follow up to Phase I/IIa
Vitreoretinopathy clinical study due later in the year
TGFb2
CAT-192 Fibrosis - Phase I start due late 1999
Local and Systemic Phase I / IIa start expected 2000
TGFb1
J695 Autoimmunity/ BASF / GI to commence Phase I clinical
Inflammation study this summer.
IL12
D2E7
D2E7 is the fully human anti-TNF alpha monoclonal antibody developed for BASF
Pharma by CAT and is in Phase II clinical trials conducted by BASF Pharma.
New data will be presented by BASF Pharma at the EULAR 99 Conference in
Glasgow, June 1999.
CAT-152
CAT-152 (formerly known as 6B1) is a fully human anti-TGFb2 monoclonal
antibody developed by CAT to specifically neutralise the cytokine TGFb2,
overactivity of which is believed to cause scarring in and around the eye.
CAT-152 is being developed as a treatment to prevent scarring in the eye
following glaucoma surgery.
Patient recruitment has now been completed in a two centre clinical trial
investigating the safety of treating patients undergoing surgery for treatment
of glaucoma with CAT-152. The results from this initial study are expected to
become available later this summer. CAT expects to commence a second larger
study in this indication in the summer.
In a second Phase I/IIa study with CAT-152 in patients with Proliferative
Vitreoretinopathy (PVR), in which patient recruitment was stopped, as
previously reported in November 1998, the results of following up patients
over a twelve month period will be available in late autumn.
CAT-192
CAT's fully human anti-TGFb1 antibody CAT-192 (formerly known as SL15) offers
the potential to provide the first specific treatment for a range of local and
systemic fibrotic conditions.
CAT-192 is currently in the pre-clinical phase of development and is expected
to move forward into clinical trials by the end of 1999. It is CAT's
intention to extend the clinical programme in 2000. The likely lead
indication is pulmonary fibrosis.
J695
J695 is a fully human monoclonal antibody against IL12, a pro-inflammatory
molecule associated with many severe autoimmune and inflammatory disorders.
Phase I clinical trials, conducted by BASF Pharma and Genetics Institute, will
commence this summer.
It is the second joint development programme involving BASF Pharma, together
with a further partner Genetics Institute.
DISCOVERY & TECHNOLOGY
CAT has ongoing antibody drug discovery programmes in the areas of
inflammation, autoimmunity, allergy, and asthma. In the anti-adipocyte project
for morbid obesity, CAT has developed antibodies that bind to human adipocytes
(fat storage cells), however following a review of pre-clinical data this
project has been discontinued.
As part of its commitment to maintaining the strength of its technology
platform, CAT has acquired rights to a number of gene libraries from
Progenitor, many of them containing gene sequence information not accessible
through any publicly available database. These libraries give CAT exclusive
access to a number of potential targets involved in angiogenesis (blood vessel
formation) and haematopoeisis (blood cell formation). In March 1998 CAT
began a research collaboration with Progenitor. Following the closure of
Progenitor at the end of 1998 this collaboration has been terminated. CAT
retains rights to the work carried out to date and there are no adverse
financial implications to CAT of this termination.
INTELLECTUAL PROPERTY
In March 1999, CAT was granted a broad US patent ("Griffiths et al") that
significantly strengthens its patent portfolio in phage display. This patent
covers the isolation of human antibodies against human proteins, except for
those that generate natural antibodies in humans, through the use of phage
display technology. Targets for drugs designed to treat many human diseases
will often be such human proteins.
As announced in September 1998, CAT commenced a patent infringement action
against MorphoSys AG, a German company. This infringement suit has since been
postponed pending the outcome of opposition proceedings before the European
Patent Office; an oral hearing in relation to these proceedings is expected to
take place in the autumn. In April of this year MorphoSys informed CAT that it
had filed a complaint in the US District Court for the District of Columbia
seeking a declaration that MorphoSys is not infringing the Griffiths patent
and that the patent is invalid. CAT has been advised that there is no sound
basis in US law for this complaint.
Neither the complaint in the US nor the action in Germany and opposition
proceedings in any way impact on CAT's freedom to operate its technology.
In 1998 CAT acquired rights to novel polysome display technology and
underlying intellectual property through the acquisition of Aptein Inc., a US
company. Under the terms of the agreement $6 million in CAT shares was paid
up-front. The balance, up to $5 million in CAT shares (1,075,245 shares),
was due to be satisfied after Aptein had received a European patent for its
key technology and this patent had been sustained through opposition or
appeal. The patent was granted in July 1998 and the related period of
opposition ended in April 1999. The second and final tranche of CAT shares
will be issued to Aptein shareholders when CAT has received formal
notification from the European Patent Office that no oppositions to the
granting of these patents have been filed.
PEOPLE & FACILITIES
Alistair Cumming, non-executive director of CAT, died in November after a
battle against cancer. Alistair joined the Board of CAT in March 1998 but in
his brief time with us the Board both enjoyed working with him and benefited
enormously from his invaluable experience.
In February we announced the appointment of two new non-executive directors,
Paul Nicholson and Uwe Bicker. Dr Nicholson has over thirty years'
experience in the pharmaceutical industry, most recently with SmithKline
Beecham as Senior Vice President of Clinical Research and Worldwide
Development. Professor Bicker, who has over twenty years' experience in the
pharmaceutical and diagnostic industries, is Chairman of Dade Behring Inc. and
a member of the board of management of Hoechst Marion Roussel AG.
As at 31 March 1999 CAT employed 147 staff and now operates from approximately
45,000 sq ft of facilities in Melbourn. This includes the newly refurbished
facilities at Cambridge House, which were occupied in November.
CAT was honoured to receive the 1998 UK Prix Galien Research Award for its
phage antibody technology. The prize, which was awarded to CAT by The
Secretary of State for Health, the Rt Hon Frank Dobson MP, in January of this
year, represents the top award in pharmaceutical research for outstanding
achievement in technology development.
FINANCIALS
Net cash outflow for the six months ended 31 March 1999 was #7.7 million (six
months ended 31 March 1998 (H1) #3.8 million; six months ended 30 September
1998 (H2) #6.3 million). CAT made a loss for the period of #6.5 million
(1998: H1 #3.0 million; H2 #4.0 million). Cash and liquid resources at 31
March 1999 amounted to #27.4 million (31 March 1998 #40.9 million; 30
September 1998 #34.8 million).
The profile of revenues continues to be irregular due to the nature of CAT's
business, the exact timing of licence fees and milestone payments being
uncertain. No revenues were recorded in the period although revenues are
anticipated in the second half from the Wyeth-Ayerst and BASF collaborations.
Operating costs for the period amounted to #7.6 million (1998: H1 #5.4
million; H2 #5.8 million). This includes an increased depreciation charge of
#0.9 million (1998: H1 #0.4 million, H2 #0.5 million), reflecting the higher
level of capital investment and a full six months amortisation of the Aptein
intellectual property costs.
Capital expenditure during the period amounted to #1.9 million (1998: H1 #1.0
million; H2 #2.9 million) of which approximately #1.0 million related to the
freehold purchase and final stage refurbishment costs for Cambridge House.
The remainder relates chiefly to the purchase of scientific equipment.
Interest receivable during the period was #1.1 million (1998: H1 #1.6 million;
H2 #1.4 million). The decline reflects a reduction in both cash balances and
interest rates.
CAT's average monthly net cash burn over the period was approximately #1.2
million per month, which is within expectations. It is anticipated that the
level of net cash burn (taking account of revenues) during the next six months
will be broadly similar.
CAMBRIDGE ANTIBODY TECHNOLOGY
Consolidated Profit & Loss (Unaudited)
Six months Six months Year
ended 31 ended 31 ended 30
March '99 March '98 Sept.'98
#'000 #'000 #'000
Turnover - 945 1,354
Direct costs - (42) (61)
Gross profit - 903 1,293
Research and development expenses (6,331) (4,507) (9,125)
General and administration expenses (1,242) (931) (2,078)
Operating loss (7,573) (4,535) (9,910)
Interest receivable (net) 1,109 1,567 2,959
Loss on ordinary activities
before taxation (6,464) (2,968) (6,951)
Taxation on loss on ordinary
activities - (4) (4)
Loss for the financial period (6,464) (2,972) (6,955)
Loss per share -
basic and fully diluted (pence) 27.1 13.4 31.0
Consolidated Statement of Total Recognised Gains and Losses
Six months Six months Year
ended 31 ended 31 ended 30
March '99 March '98 Sept.'98
#'000 #'000 #'000
Loss for the financial period (6,464) (2,972) (6,955)
(Loss) / gain on foreign
exchange translation (1) (2) 1
Total recognised loss (6,465) (2,974) (6,954)
CAMBRIDGE ANTIBODY TECHNOLOGY
Consolidated Balance Sheet (Unaudited)
As at As at As at
31 March '99 31 March '98 30 Sept '98
#'000 #'000 #'000
Fixed Assets
Intangible assets 5,358 - 4,576
Tangible fixed assets 5,987 2,347 4,792
11,345 2,347 9,368
Current Assets
Debtors 1,525 1,512 1,449
Investment in liquid resources 26,858 40,753 34,824
Cash at bank and in hand 512 155 20
28,895 42,420 36,293
Creditors
Amounts falling due within
one year (2,065) (2,013) (2,194)
Net current assets 26,830 40,407 34,099
Total assets less current
liabilities 38,175 42,754 43,467
Creditors
Amounts falling due after
one year - (11) (9)
Net Assets 38,175 42,743 43,458
Capital and Reserves
Called-up share capital 2,398 2,220 2,349
Share premium account 45,969 42,840 45,820
Other reserve 13,339 13,403 13,339
Shares to be issued 2,634 - 1,650
Profit and loss account (26,165) (15,720) (19,700)
Shareholders' funds - all equity 38,175 42,743 43,458
CAMBRIDGE ANTIBODY TECHNOLOGY
Consolidated Cash Flow Statement (Unaudited)
Six months Six months Year
ended 31 ended 31 ended 30
March '99 March '98 Sept. '98
#'000 #'000 #'000
Operating loss (7,573) (4,535) (9,910)
Depreciation in the period 727 370 832
Amortisation of patents 202 - 54
Profit on disposal of fixed assets - (6) (13)
Decrease / (increase) in debtors 143 111 (54)
(Decrease) / increase in
creditors (144) 206 343
Net cash outflow from
operations (6,645) (3,854) (8,748)
Returns on investments and servicing of finance
Interest received 891 1,055 2,694
Interest paid (1) (2) (3)
890 1,053 2,691
Taxation
Overseas taxation paid - - (4)
Capital expenditure and financial investment
Purchase of fixed assets (1,922) (960) (3,874)
Sale of fixed assets - 8 26
(1,922) (952) (3,848)
Acquisitions
Acquisition of subsidiary
undertaking - - (153)
Cash acquired with subsidiary
undertaking - - 43
- - (110)
Net cash outflow before management of
liquid resources and financing (7,677) (3,753) (10,019)
Management of liquid resources 7,966 3,429 9,358
Financing
Issue of ordinary shares 198 80 298
Capital element of finance
lease payments (2) (11) (22)
196 69 276
Increase / (decrease) in cash 485 (255) (385)
NOTES
Basis of preparation
These interim financial statements have been prepared in accordance with the
policies set out in statutory financial statements for the year ended 30
September 1998, except as noted below.
Following the introduction of Financial Reporting Standard Number 10 Goodwill
and Intangible Assets, the group's accounting policies will be amended as
follows. Purchased goodwill will be capitalised as an asset on the balance
sheet and amortised over its useful economic life, subject to reviews for
impairment where necessary. Purchased goodwill previously written off
directly to reserves will remain so eliminated. In addition, purchased
intangible assets, which are separately identifiable, falling within the scope
of the standard (which does not apply to research and development costs) will
be capitalised as an asset on the balance sheet and amortised over their
useful economic lives, subject to reviews for impairment where necessary.
This applies to intangibles purchased separately from a business and also to
intangibles acquired as part of the acquisition of a business, if their value
can be measured reliably on initial recognition. The adoption of these
revised policies does not impact on figures reported in previous periods.
These interim financial statements do not constitute statutory financial
statements within the meaning of section 240 of the Companies Act 1985.
Results for the six month periods ended 31 March 1999 and 31 March 1998 have
not been audited. The results for the year ended 30 September 1998 have been
extracted from the statutory financial statements, which have been filed with
the Registrar of Companies and upon which the auditors reported without
qualification.
Loss per share
The loss per ordinary share and fully diluted loss per share are equal because
the Group is sustaining losses. The calculation is based on the following,
for the six months ended 31 March 1999, the six months ended 31 March 1998 and
the year ended 30 September 1998 respectively. Losses of #6,464,000,
#2,972,000 and #6,955,000. Weighted average number of shares in issue of
23,828,470, 22,169,842 and 22,457,778. The company currently has 23,981,634
ordinary shares in issue and a total of 3,812,728 under option or contingently
issueable.
Shares to be issued
Shares to be issued represents the fair value of 1,075,245 shares in the
Company contingently issueable as deferred consideration for the acquisition
of Aptein Inc. The fair value is based on the market value of the shares at
the respective period ends. Adjustments to the fair value of shares to be
issued gives rise to a corresponding adjustment to the cost of the
intellectual property acquired.
Year 2000
As previously reported the group is conducting a programme to identify any
exposure and take any corrective actions necessary. This programme is
ongoing, on schedule and no major issues likely to have a material impact on
group activities have been identified. The current and future cost of
implementing the action plan is not anticipated to have a material effect on
operating costs.
This is a complex and pervasive problem so it will not be possible to provide
absolute assurance that no year 2000 issues will remain. However, considering
the nature of the group's business and scientific activities and actions taken
and planned, the board believes that a sufficient level of readiness will be
achieved.
END
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