RNS Number:1205S
Cambridge Antibody Tech Group PLC
17 November 2003
03/CAT/30
FOR IMMEDIATE RELEASE
07.00 GMT, 02.00 EST Monday 17 November 2003
For further information contact:
Cambridge Antibody Technology Weber Shandwick Square Mile (Europe)
Tel: +44 (0) 1223 471 471 Tel: +44 (0) 20 7067 0700
Peter Chambre, Chief Executive Officer Kevin Smith
John Aston, Chief Financial Officer Rachel Lankester
Rowena Gardner, Director of Corporate
Communications
BMC Communications/The Trout Group (USA)
Tel: +1 212 477 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 2003
Cambridge, UK... Cambridge Antibody Technology Group plc (LSE: CAT;
NASDAQ: CATG) today announces preliminary results for the year ended 30
September 2003.
Highlights
* Three CAT products now in clinical development, with two further product
candidates in pre-clinical development
* Significant enhancement of collaboration with Genzyme
* Equity investment by Genzyme of #22.9 million
* HUMIRA(TM), isolated and optimised by CAT in collaboration with Abbott,
and licensed to Abbott, approved for marketing in the US and EU for the
treatment of rheumatoid arthritis
* Five further licensed CAT-derived products in clinical development, with
three further licensed product candidates in pre-clinical development
* Legal proceedings commenced against Abbott in the High Court in London in
respect of the dispute over the level of HUMIRA royalties
* LymphoStat-B(TM) commenced Phase II clinical trials in systemic lupus
erythematosus (HGSI)
* Professor Peter Garland to retire as Chairman at forthcoming AGM and be
succeeded by Dr Paul Nicholson
* Financial results for the year in line with expectations:
* Net cash outflow before financing for the year ended 30 September 2003:
#33.6 million
* Net cash outflow after financing for the year ended 30 September 2003:
#21.9 million
* Cash and liquid resources at 30 September 2003: #107.8 million
Professor Peter Garland, CAT's Chairman, said, "This has been a
highly significant year for CAT, with the approval of HUMIRA, the first
CAT-derived drug, for marketing as a treatment for rheumatoid arthritis in the
US and the European Union. It is the first of a new generation of human
monoclonal antibody drugs, and likely to be a blockbuster. The stance taken by
Abbott concerning royalty payments due to us on HUMIRA sales is very
disappointing. The matter remains unresolved, but we remain confident in the
strength of our position."
"There are now eight further products from CAT's technology in clinical
development, reflecting our leadership in human monoclonal antibody
therapeutics. We are also continuing to enhance the Company's
technologies and capabilities, especially in the area of ribosome display."
"After 13 years on the Board of CAT, and eight years as Chairman, I will
retire from the Board after the AGM on 30 January 2004. Dr Nicholson, our Senior
Independent Director, will take over from me as Chairman. I wish him and the
Company every success."
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
PRELIMINARY STATEMENT OF RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2003
Chairman's Statement
This has been a highly significant year for CAT, with the approval of HUMIRA,
the first CAT-derived drug, for marketing as a treatment for rheumatoid
arthritis (RA) in the US and the European Union. Approval of the first product
is a critical milestone in the development of any biopharmaceutical company and
especially for CAT, where HUMIRA is both the first of a new generation of human
monoclonal antibody drugs, and likely to be a blockbuster. There are now eight
further human antibody product candidates from CAT's technology in clinical
development - with more to come - a demonstration of CAT's strength.
The success of HUMIRA is clearly tainted for us by the fact that Abbott has
chosen to contest the level of royalties due to CAT. The announcement of this
dispute with Abbott coincided with our plan to merge with Oxford GlycoSciences
which was ultimately unsuccessful.
Notwithstanding these disappointments, CAT has made substantial progress during
the year towards its goals. The core of the Company's value will be in
products in which we invest and in which we have a substantial long-term
interest. Of these, Trabio(TM) is in Phase III clinical trials, we have
announced a significant enhancement of our alliance with Genzyme in the area of
TGFb antagonism and, in CAT-354, we have a major new opportunity in asthma and
possibly other indications.
There has also been significant progress with the other clinical drug
candidates, with a number moving into the next stage of clinical development at
our licensees. We remain focussed on developing CAT's product candidate pipeline
and building on our leading position as the Company originating the most human
monoclonal antibodies in clinical development.
It has been my intention to retire on reaching three score years and ten. That
event is due at the end of next January. I will therefore retire from the Board
as of the AGM on 30 January 2004. I have been on the Board of CAT since its
formation in 1990 and Chairman since 1995. I have had the privilege and pleasure
of working with my many colleagues in the building of an exceptional company,
outstanding in its field. I am delighted to be succeeded by Dr Paul Nicholson,
who will take over as Chairman after the AGM. Paul has been on our Board since
1999 and is currently Senior Independent Director. He will bring considerable
talents, vision and experience to the Chair. I wish him, and the Company, every
success. Finally, I wish to express my deep gratitude to all my colleagues at
CAT, our advisors, and our shareholders, for their support during my term as
Chairman.
Chief Executive Officer's Statement
In my first full year at CAT the Company has set clear goals for the next five
years of achieving profitability with a substantially enhanced pipeline of CAT
drugs in development. During the year we have made good progress towards the
goals. Critically the launch of HUMIRA in the US and EU has provided an
important validation of our technologies and capabilities, and indeed of fully
human monoclonal antibodies as a new drug class. There are three CAT products in
clinical development, and we expect that our partner, Genzyme, will file an
Investigational New Drug (IND) application for the fourth before the end of the
year.
We expect that the core of CAT's future value will come from products which we
develop ourselves and in which CAT has a substantial long-term economic
interest. We have already demonstrated progress with our strategy to build a
broader, deeper portfolio of human monoclonal therapeutic antibody candidates
and continue to invest significantly in our core proprietary programmes.
There is a continuing stream of opportunities from our drug discovery 'engine',
and we have progressed a number of early stage projects currently at discovery
stage.
There has also been strong progress in our licensing business. Here our aim is
to licence our technology and capability broadly to others, in return for a
share in the products they are developing outside our core areas of focus.
During the year, this has been successful, and licensing agreements have been
agreed with eight companies.
Product Development
The pipeline of CAT-derived human monoclonal antibody product candidates
continues to expand, with three CAT products in clinical development and two
further product candidates in pre-clinical development. At CAT's
licensees there are six CAT-derived products in various stages of clinical
development and a further three in pre-clinical development. In
addition, there are ongoing research programmes at CAT involving 14 distinct
molecular targets.
Genzyme Alliance
In September 2003, CAT and Genzyme announced a significant strengthening and
enhancement of their broad strategic alliance for the development and
commercialisation of human monoclonal antibodies directed against TGFb. The
partners' intention is to develop products in multiple indications in
this exciting field. The first of these, CAT-192, is in clinical development for
scleroderma and we plan to submit an IND for the second, GC1008, for the
treatment of idiopathic pulmonary fibrosis by the end of 2003.
Under an amended collaboration agreement, CAT, through its wholly-owned
subsidiary Aptein, has increased its commitment to the programme by agreeing to
fund fifty per cent of programme costs through to early 2006. CAT will receive
an additional credit in the formula by which profits arising from the programme
are apportioned between the parties, which significantly enhances CAT's
position with respect to its share of profits from the programme. The agreement
also amended the rights of the parties in the event of a 'change of control',
giving the party not subject to the change of control the right to purchase the
other's interest in the programme for fair value.
Separately, Genzyme has made a further equity investment in CAT of approximately
#22.9 million through a subscription in cash for 4.3 million shares. Following
this subscription Genzyme now holds approximately 11 per cent of the enlarged
issued share capital of CAT.
Other CAT Product Candidates
There are three ongoing clinical trials of Trabio (lerdelimumab, CAT-152), a
human anti-TGFb2 monoclonal antibody with anti-scarring effects being developed
for improving outcomes in glaucoma filtration surgery (trabeculectomy).
In June 2003, CAT announced the completion of enrolment in the Phase II/III
European clinical trial of Trabio, with 344 patients undergoing first time
trabeculectomy enrolled at major eye hospitals in six countries. Data from this
trial are expected to be available towards the end of 2004 when all patients
will have completed at least one year of follow-up post surgery.
In the International Phase III clinical trial in patients undergoing
trabeculectomy, patient enrolment is nearing completion. This trial is being
carried out in major eye hospitals in six European countries and South Africa.
Data from this trial are expected in early 2005.
Following the Company's first successful IND application and regulatory
clearance from the FDA at the end of 2002, a clinical trial of Trabio has been
initiated in the US. The trial is a head-to-head comparison of Trabio with
5-Flurouracil (5-FU) in patients undergoing trabeculectomy. Patient recruitment
in this trial is ongoing.
In May 2003, three-year follow-up results of an earlier trial of Trabio, the
Phase I/IIa clinical trial of Trabio in patients undergoing trabeculectomy, were
presented at the annual meeting of the Association for Research in Vision and
Ophthalmology (ARVO). The results show a clinically significant benefit in the
outcome of surgery in patients treated with Trabio. Additionally, there were no
significant long-term safety issues observed.
Having held initial discussions with a number of potential marketing partners
for Trabio, it is now more likely that CAT will wait until the results of the
European Phase III clinical trial are available before bringing in a partner.
In the Phase I/II clinical trial of CAT-192 (metelimumab), a human anti-TGFb1
monoclonal antibody being developed with Genzyme as a potential treatment for
diffuse systemic sclerosis, patient recruitment was completed early in 2003. 45
Patients in five countries were recruited to the trial, which is being conducted
by Genzyme, and data are expected to be made available in January 2004.
GC-1008 is a pan-specific human anti-TGFb monoclonal antibody, one of the GC1000
series of human monoclonal antibodies against TGFb that are being developed by
CAT and Genzyme. It is currently in pre-clinical studies and it is expected that
an IND application will be filed towards the end of the fourth quarter of 2003
for a clinical trial in the US in idiopathic pulmonary fibrosis.
CAT-213 (bertilimumab) is a human anti-eotaxin1 monoclonal antibody which CAT
has been evaluating as a treatment for severe allergic disorders. During the
year, a Phase I/IIa allergen challenge study of a topically applied single dose
of CAT-213 in patients with allergic conjunctivitis was carried out. The results
showed CAT-213 to be safe and well tolerated, however, there was no effect on
symptoms. Analysis has shown that the allergen challenge did not provoke a large
enough late phase response involving eosinophils, thus denying the opportunity
to show an effect of CAT-213.
Data from a non-interventional study of the effects of CAT-213 on sputum from
asthmatic sufferers, carried out separately, suggest a possible role for CAT-213
as a treatment for severe and unstable asthma. These results add to those
obtained from the single-dose Phase I/IIa allergic rhinitis challenge study
carried out in 2002 which showed that CAT-213 had a significant positive effect
upon nasal patency and reduced the numbers of tissue eosinophils and mast cells
associated with nasal allergen challenge. Following an internal review of its
product development portfolio, and specifically the opportunities in asthma, CAT
has commenced the process of partnering CAT-213.
CAT-354, a human anti-IL13 monoclonal antibody derived from CAT's proprietary
research programmes and optimised using ribosome display, has commenced
pre-clinical development. It is being developed as a potential treatment for
asthma and also, possibly, for other indications. Subject to the achievement of
pre-clinical milestones it is expected that CAT-354 will enter clinical
development by the end of 2004.
Licensed Product Candidates
HUMIRA(TM)
HUMIRA (adalimumab), a human anti-TNFa monoclonal antibody, has become the first
CAT-derived antibody to receive approval for marketing and the first human
monoclonal antibody approved anywhere in the world for the treatment of RA. It
was isolated and optimised by CAT as part of a broad scientific collaboration
with Abbott Laboratories.
On 31 December 2002, Abbott Laboratories announced that it had received US Food
and Drug Administration (FDA) approval to market HUMIRA in the US as a treatment
for RA. On 16 April 2003 Abbott received marketing approval for HUMIRA in
Switzerland and on 10 September Abbott announced that it had received approval
from the European Commission to market HUMIRA for the treatment of adult RA in
the European Union (EU). HUMIRA is now being marketed in the US, the UK and
Germany. Abbott reported global sales of HUMIRA of $161 million in the first
nine months of 2003, and has stated global sales expectations of over $250
million for 2003, over $500 million in 2004 and peak sales of over $1 billion in
RA alone, excluding the potential of the other indications in development.
During the year, Abbott announced the expansion of its HUMIRA programme. Phase
III clinical trials are now underway in psoriatic arthritis, juvenile arthritis,
Crohn's disease and ankylosing spondylitis, and a Phase II clinical trial in
patients with chronic plaque psoriasis continues.
CAT receives royalties on the sales of HUMIRA and received its first payment in
October 2003. This payment represented Abbott's calculation of the royalties due
to CAT on HUMIRA sales in the six month period ended 30 June 2003.
CAT's entitlement to royalties in relation to sales of HUMIRA is
governed by an agreement dated 1 April 1995 between Cambridge Antibody
Technology Limited and Knoll Aktiengesellschaft. The agreement allows for
offset, in certain circumstances, of royalties due to third parties against
royalties due to CAT, subject to a minimum royalty level. Abbott indicated to
CAT in March 2003 its wish to initiate discussions regarding the applicability
of these royalty offset provisions for HUMIRA. CAT strongly believes that the
offset provisions do not apply and is seeking an outcome consistent with that
position. Following unsuccessful efforts to resolve the matter with Abbott, CAT
has commenced legal proceedings against Abbott Biotechnology Limited and Abbott
GmbH in the High Court in London.
Other Licensed Product Candidates
During the year, there has been significant progress in CAT's
collaboration with Human Genome Sciences, Inc (HGSI), with four CAT-derived
antibodies being developed by HGSI now in clinical trials.
In April 2003, HGSI announced that LymphoStat-B(TM) (belimumab) had received
Fast Track Product Designation from the US FDA for the treatment of systemic
lupus erythematosus (SLE) and reported positive results from the Phase I
clinical trial which showed LymphoStat-B to be safe and biologically active in
patients with SLE. In September, HGSI announced that it had commenced a double-
blind, placebo-controlled, multi-centre Phase II clinical trial in approximately
300 patients with SLE, designed to evaluate safety, optimal dosing and
preliminary efficacy. In addition, HGSI plans to initiate a Phase II clinical
trial of LymphoStat-B for the treatment of RA before the end of 2003.
TRAIL-R1 mAb is an apoptosis-inducing human monoclonal antibody that binds to
TRAIL Receptor-1 (TRAIL-R1) expressed on a number of solid tumour and
haematopoietic cancer cells. Phase I clinical trials, being carried out by HGSI
in patients with advanced cancers, continue and HGSI expects to report results
in 2004. A Phase I clinical trial in patients with multiple myeloma has also
commenced.
At the annual meeting of the American Association for Cancer Research (AACR) in
July 2003, HGSI presented data that demonstrated that TRAIL-R2 mAb (a human
monoclonal antibody which binds to TRAIL Receptor-2 (TRAIL-R2) expressed on the
surface of some types of cancer cell) induces apoptosis and has anti-tumour
activity in a broad range of tumour types, both as a single agent and in
combination with chemotherapy. HGSI subsequently initiated a Phase I open-label,
dose-escalating study in the UK to evaluate the safety and pharmacology of
TRAIL-R2 mAb in patients with advanced tumours.
In March 2003, HGSI publicised its work in developing a human anti-protective
antigen monoclonal antibody, ABthrax(TM), and reported its effect in protecting
against anthrax exposure in multiple experimental models. This antibody was
isolated and developed by HGSI from antibody libraries licensed from CAT. In
June 2003, HGSI announced that it had received clearance from the US FDA to
begin human trials and, in August 2003, HGSI announced that it had received Fast
Track Product Designation from the US FDA for ABthrax and confirmed that it had
initiated a Phase I placebo-controlled, dose-escalation clinical trial in
healthy adult volunteers.
ABthrax has been demonstrated to be effective in preventing the lethal effects
of anthrax exposure in two relevant models and, more recently, has been
demonstrated to be effective in protecting against the lethal effects of anthrax
when administered at different time points following spore challenge. According
to the guidelines of the US Bioterrorism Act, clinical trials will be required
to establish safety, tolerability, and pharmacology, but not efficacy in man.
HGSI has stated that large-scale development and manufacture of ABthrax is
dependent on US government funding.
In May 2003, Abbott announced development progress with ABT-874 (formerly J695),
a human anti-IL12 monoclonal antibody isolated and optimised by CAT in
collaboration with Abbott and licensed by CAT to Abbott under the same 1995
agreement between CAT and Knoll Aktiengesellschaft as HUMIRA. Abbott discussed
promising Phase II Crohn's disease data for ABT-874, and announced plans for a
Phase II study in multiple sclerosis in the first half of 2004.
There are three product candidates at pre-clinical development stage at CAT's
collaborators.
Discovery Stage Programmes
There are ongoing research programmes to 14 distinct molecular targets at CAT.
Over half of these programmes are funded or co-funded by CAT, including
co-development programmes with Amgen, Amrad and Elan.
Operations
In December 2002, CAT completed its relocation to new, purpose-built
laboratories and offices at Granta Park, Cambridge, UK.
CAT employed 279 staff at 30 September 2003 (293 at 30 September 2002).
Oxford GlycoSciences
In January 2003, CAT and Oxford GlycoSciences Plc (OGS) announced that they had
agreed the terms of a merger between the two companies by way of a share for
share exchange. CAT shareholders subsequently approved the merger at an EGM held
in February. However, a decline in CAT's share price, particularly after the
announcement of the dispute with Abbott over the level of HUMIRA royalties,
depressed the value of CAT's offer. A competing cash offer made to OGS
shareholders by Celltech Group plc subsequently became unconditional and CAT's
offer lapsed.
Antibody Microarrays
In November 2002, CAT announced its intention to seek independent financing for
its development of the application of antibodies on microarrays for personalised
medicine, as this fell outside CAT's focus on therapeutic antibodies. In the
event it was not possible to procure finance for this activity; as a result all
development activity at CAT was terminated in the summer.
Financial Review
The following review is based on the Group's consolidated financial
statements which are prepared under UK generally acceptable accounting
principles ('GAAP').
Results of operations
Years ended 30 September 2003 and 2002
Revenues, consisting of licence fees, contract research fees and technical and
clinical milestone payments, decreased by 8 per cent to #8.7 million in the 2003
financial year from #9.5 million in the 2002 financial year.
The decrease in revenue from the 2002 financial year to the 2003 financial year
was primarily as a result of the reductions in activity levels on research
collaborations reflecting the recent weak market in this area between
biotechnology and major pharmaceutical companies. Contract research fees fell by
#1.7 million from 2002 to the 2003 financial year. Against this, revenues
arising from milestone payments and licences increased by #1.6 million as CAT
granted new licences in the year, as well as CAT's collaborators continuing to
ultilise the libraries they had licensed from CAT in previous years.
Revenue arising from clinical milestone payments increased from #1.4 million in
the 2002 financial year to #1.8 million in the 2003 financial year. HGSI
received clearance to begin Phase I trials for both ABthrax and TRAIL-R2 mAb
during the 2003 financial year triggering milestone payments for each. A
clinical milestone payment was received from Abbott during the third quarter of
the 2003 financial year following product licence approval of HUMIRA in
Switzerland. During the 2002 financial year clinical milestone payments were
received from HGSI with the initiation of Phase I clinical trials on
LymphoStat-B and TRAIL-R1 mAb. All of the above clinical milestone payments have
been recognised in full as revenue under the Group's accounting policy.
Technical milestone payments increased from #0.04 million in the 2002 financial
year to #0.2 million in the 2003 financial year. Technical milestone payments of
#0.2 million were received from Pfizer during the 2003 financial year. A
technical performance milestone payment was received during the 2002 financial
year under a collaboration arrangement. The above technical milestone payments
have been recognised in full as revenue under the Group's accounting
policy.
Revenues recognised from licence fees increased from #1.7 million for the 2002
financial year to #2.6 million in the 2003 financial year. The library licences
granted to Chugai in September 2002 and Merck in October 2002 both came into
effect during the 2003 financial year, on completion of the successful transfer
of CAT's technology, accounting for the majority of this increase. In
December 2002, CAT entered into agreements with Crucell and MorphoSys. Licence
fees have been recognised during the 2003 financial year regarding both these
agreements. CAT received licence fees following the grant of five exclusive
product licences during the 2002 financial year. Three were to HGSI, for
TRAIL-R1 mAb, TRAIL-R2 mAb and ABthrax. In addition, licences for undisclosed
targets were granted to Amgen and Wyeth Research. Revenues derived from licence
payments have been deferred and are being spread over the licence term or the
period to expiration of the relevant patents. Therefore, in addition to revenues
being recognised from the new licence agreements in each financial year, revenue
is also realised on licence fees released from deferred income brought forward
at the beginning of each financial year.
Contract research fees decreased from #5.6 million in the 2002 financial year to
#3.9 million in the 2003 financial year. Through both financial years contract
research fees were recognised from ongoing collaborations with HGSI, Pfizer,
Wyeth Research and Merck. The research collaboration with HGSI concluded in
March 2003 when the planned three year term expired. The three year term of the
research collaboration with Pfizer expired in December 2002. In January 2003, it
was agreed with Pfizer that the term of the research contract be extended by
nine months to 30 September 2003. Since then both parties have agreed to extend
the agreement by a further two months to 30 November 2003.
Other revenues of #0.2 million were received in the 2003 financial year as
compared to #0.7 million in 2002. During the 2002 financial year revenue of #0.7
million was recognised under an agreement with Drug Royalty Corporation (DRC) as
compared to nil in the 2003 financial year. Under that agreement, the Group
received a payment of #1.5 million in 1994 in return for rights to a percentage
of revenues (and certain other payments) received by the Group over a period
terminating in 2009. This obligation was bought out during the 2002 financial
year resulting in the remaining balance of deferred income of #0.6 million being
released and recognised as revenue.
CAT's direct costs are typically payable as a proportion of certain
types of its revenues, such as royalties payable to third parties. Direct costs
were #0.7 million in the 2003 financial year and #0.1 million in the 2002
financial year. Direct costs in both years included agency fees incurred in
obtaining new contracts. In addition, in the 2003 financial year, direct costs
included an amount payable to The Scripps Research Institute and Stratagene
following CAT Limited's settlement of all pending litigation with
MorphoSys. In future periods, when CAT receives royalties on product sales under
its various licences and collaboration agreements, direct costs will also
include royalties payable to the Medical Research Council and other licensors.
Operating expenses for the 2003 financial year were #54.2 million compared to
#47.5 million (#39.6 million excluding DRC transaction costs) in the 2002
financial year. The increase reflects, in particular, the continuing increase in
activity on clinical trials.
Research and development expenses increased to #45.0 million in the 2003
financial year from #31.3 million in the 2002 financial year. External
development costs rose from #8.3 million in the 2002 financial year to #15.2
million in the 2003 financial year. The increase reflects a significant rise in
spend on clinical trials over the last year, on CAT-funded programmes,
particularly Trabio, and on CAT's co-funded collaboration with Genzyme.
The combined external development costs for Trabio and the Genzyme programme
were #12.8 million and #6.6 million for the 2003 and 2002 financial years
respectively. Research and development staff numbers increased from 212 at the
start of the 2002 financial year to 232 at the end of the 2003 financial year.
Staff costs and spend on laboratory and general supplies rose in line with this
growth in staff numbers. Research and development expenditures in the 2003
financial year include the one-off cost of the cross-licensing arrangement with
Xoma for antibody related technologies, entered into during December 2002, for
antibody related technologies.
General and administrative expenses decreased to #9.2 million in the 2003
financial year from #16.2 million, (#8.3 million excluding the DRC transaction
costs) in the 2002 financial year. For the 2003 financial year, general and
administrative expenses include #0.6 million of net costs incurred relating to
the offer made for OGS (comparative periods: none). This comprised costs
incurred of #1.7 million offset by a break fee of #1.1 million received from
OGS. Included in the 2002 financial year were #7.9 million of costs incurred
with regard to the two DRC transactions entered into during that year
(comparative years: none). CAT made a bid for DRC in January 2002, however a
competing offer was subsequently accepted. Following acceptance of the competing
offer, CAT bought out its obligation to DRC for #6.1 million with the issue of
463,818 CAT shares to DRC. The professional fees incurred in
CAT's bid and buy-back were #1.8 million. Other general and
administrative expenses include fees relating to patent litigation of #0.9
million in the 2003 financial year compared to #1.9 million in the 2002
financial year. The reduction in these costs in the 2003 financial year results
from the successful resolution of all principal outstanding patent litigation in
the first quarter of the financial year. The remaining increase in general and
administrative costs in the 2003 financial year (excluding DRC costs in 2002)
was primarily caused by costs associated with increased personnel (from 35
employees at the start of the 2002 financial year to 47 employees at the end of
2003 financial year), larger facilities and more complex operations.
Due to the nature of CAT's business, its staff are a key resource and
represent a significant proportion of operating expenses. Staff numbers
decreased over the 2003 financial year from 293 to 279 (the average over the
year was 296) and increased over the 2002 financial year from 247 to 293 (the
average over the year was 274). The charge for the cost of shares to be
allocated under employee share schemes was #0.5 million in the 2003 financial
year compared to #0.6 million in the 2002 financial year.
Total depreciation costs, the majority of which are included within research and
development expenses, increased from #2.6 million in the 2002 financial year to
#3.0 million in the 2003 financial year. This reflected a substantial investment
in fixed assets in recent years, particularly the fitting out and equipping of
the Milstein Building during the 2002 financial year. The total cost of the fit
out of the Milstein and Franklin Buildings was #6.7 million. Amortisation
expenses, included within research and development expenses, amounted to #1.1
million in the 2003 financial year and #0.9 million in the 2002 financial year.
Amortisation of the Aptein patents was #0.4 million in both financial years.
Amortisation of the Incyte licence purchased during the 2002 financial year was
#0.7 million in the 2003 financial year and #0.5 million in the 2002 financial
year.
Net interest income fell to #4.4 million in the 2003 financial year from #6.4
million in the 2002 financial year, resulting from lower average balances of
cash and liquid resources and lower prevailing interest rates. CAT established a
finance leasing facility during the 2003 financial year which resulted in
interest payments of #0.05 million in the year (comparative periods: none).
The Group submitted one claim in the 2003 financial year and two claims in the
2002 financial year under the research and development tax credit scheme for
small and medium sized companies in the UK. The scheme was operative from 1
April 2000. The Group chose to surrender tax losses created through qualifying
research and development expenditure in exchange for a cash refund. A claim of
#0.9 million was made for the 2000 financial year, #2.6 million for the 2001
financial year and #3.1 million for the 2002 financial year. The Group no longer
qualifies as a Small and Medium sized Enterprise and hence no further claims for
cash refunds under this scheme can be made. Tax of #0.6 million was withheld on
the licence payments received from Chugai during the year.
Liquidity and capital resources
During the 2003 and 2002 financial years, CAT's net cash used by
operating activities was #35.8 million and #26.8 million respectively, in each
case resulting principally from operating losses, offset by depreciation,
amortisation and other non-cash movements. In both financial years operating
losses were also offset by increases in creditors. In the 2003 financial year
this was due to increases in deferred income resulting from licence income
received from Chugai and Merck during the year to be recognised as revenue in
future periods. In the 2002 financial year the increase in creditors arose as a
result of higher trade creditor balances. This was due to the invoice for the
second payment on the Incyte licence being received in September 2002.
A clinical milestone payment was received from Abbott during the 2003 financial
year following US FDA approval of HUMIRA. This has not been recognised as
revenue in the period as it is creditable against future royalties receivable
from Abbott.
CAT received #5.7 million research and development tax credit during the 2003
financial year and #0.9 million during the 2002 financial year. The credit
received in the 2003 financial year was based on the claims for the 2002 and
2001 financial years, the credit received in the 2002 financial year was based
on the claim for the 2000 financial year.
CAT made capital expenditures of #8.1 million and #10.0 million in the 2003 and
2002 financial years, respectively. CAT's capital expenditures are
primarily for laboratory equipment, laboratory facilities and related
information technology equipment. CAT also invested in office and administrative
facilities. The fall in capital expenditure from the 2002 to 2003 financial year
was due to lower spend on laboratory equipment with the completion of the fit
out of the Milstein Building early in the 2003 financial year.
CAT's net cash inflows from financing activities during the 2003 and
2002 financial years were #11.7 million and #1.4 million respectively, in each
case primarily resulting from the issue of ordinary shares. In the 2003
financial year Genzyme increased its equity stake in CAT through a subscription
of #9.6 million for 1.8 million shares. The subscription for shares was the
first of two tranches, the second tranche was a further 2.5 million shares with
a value of #13.3 million, issued following shareholder approval at the EGM held
in October 2003. No significant financing transactions were completed during the
2002 financial year.
As at 30 September 2003, CAT had net current assets of #101.3 million. During
August 2003, CAT received 588,160 newly issued shares from MorphoSys as part of
an agreement entered into in December 2002. A proportion of these shares have
been recognised as a current asset investment, reflecting the amount due to The
Scripps Research Institute and Stratagene. The shares are due to be transferred
to The Scripps Research Institute and Stratagene in three equal tranches during
the next two years. The remaining shares have been accounted for as a fixed
asset investment. During the 2003 financial year CAT established a finance
leasing facility under which equipment with a cost of #1.4 million has been
financed. This is repayable over four years. Creditors included an amount of
#1.2 million at the 30 September 2003 regarding this finance lease facility. CAT
's creditors at the end of the 2003 financial year included a total of
#21.7 million of deferred income, representing non-refundable income received
which will be recognised in future periods. The corresponding amount in the 2002
financial year was #11.1 million.
CAT incurred net losses of #39.2 million and #28.2 million in the 2003 and 2002
financial years respectively. As at 30 September 2003 CAT had an accumulated
loss of #122.4 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 administrative costs
associated with CAT's operations.
As at 30 September 2003, CAT had cash and liquid resources of approximately
#107.8 million. CAT has invested funds that are surplus to its current
requirements in highly liquid short-term securities managed on a discretionary
basis by a third party. Realisation of losses from interest rate movements is
unlikely as investments are generally held to maturity. Declines in interest
rates over time would, however, reduce CAT's interest income.
In October 2003 CAT's shelf registration with the US Securities and
Exchange Commission was declared effective. Under this registration CAT may, in
future, raise up to $175 million in one or more fund raisings, the size and
terms of which would be determined at the relevant time.
HUMIRA royalties
CAT received the first payment of royalties on sales of HUMIRA from Abbott in
October 2004, representing Abbott's calculation of royalties due on
HUMIRA sales in the six month period ended 30 June 2003. This payment has not
been accounted for as revenue in the 2003 financial year. The royalty payment
will be recognised as revenue in the first quarter of the 2004 financial year.
Financial outlook for 2004
Recurring revenues, representing contract research revenues and release of
deferred income from licensing arrangements entered into prior to 30 September
2003, are expected to be in the order of #4 million for the 2004 financial year.
Additional revenues may arise from technical and clinical milestone payments and
any further licensing or contract research arrangements, including extensions to
existing arrangements. In addition, royalty income from Abbott in respect of
HUMIRA will be recognised as revenue during the 2004 financial year.
In line with the Company's strategy, CAT's plans for the 2004
financial year are to continue to focus on its core development programmes,
including Trabio, CAT-354 and its co-funded programmes with Genzyme. As a
result, external development expenditure, including expenditure on clinical
trials, is expected to rise again, leading to an overall increase in operating
costs over 2003.
Capital expenditure over the year is expected to be significantly lower than
last year's level following the completion of the fit out of CAT
's new facilities at Granta Park. Total capital expenditure for the year
is expected to be of the order of #1.5 million.
It is expected that CAT's net cash outflow before financing for the
current year will be up to #40 million which, net of the proceeds of the Genzyme
subcription, would result in a net cash outflow after financing of up to #27
million.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Convenience Year ended Year ended
translation 30 September 30 September
year ended 2003 2002
30 September
2003
US$'000 #'000 #'000
Turnover 14,531 8,743 9,471
Direct costs (1,147) (690) (80)
Gross profit 13,384 8,053 9,391
Research and development expenses (74,758) (44,981) (31,307)
Drug Royalty Corporation - - (7,913)
transaction costs
Other general and administration (15,284) (9,196) (8,321)
expenses
General and administration expenses (15,284) (9,196) (16,234)
Operating loss (76,658) (46,124) (38,150)
Interest receivable (net) 7,246 4,360 6,386
Loss on ordinary activities before (69,412) (41,764) (31,764)
taxation
Taxation on loss on ordinary activities 4,276 2,573 3,557
Loss for the financial period (65,136) (39,191) (28,207)
Loss per share - basic and diluted 107.5p 78.7p
(pence)
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Convenience Year ended Year ended
translation 30 September 30 September
year ended 2003 2002
30 September
2003
US$'000 #'000 #'000
Loss for the financial period (65,136) (39,191) (28,207)
Gain on foreign exchange translation 1,007 606 96
Total recognised losses relating to the period (64,129) (38,585) (28,111)
The losses for all periods arise from continuing operations.
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
CONSOLIDATED BALANCE SHEET
Convenience As at As at
translation 30 September 30 September
as at 2003 2002
30 September
2003
US$'000 #'000 #'000
Fixed assets
Intangible fixed assets 11,440 6,883 7,933
Tangible fixed assets 23,876 14,366 12,429
Investments 5,606 3,373 215
40,922 24,622 20,577
Current assets
Debtors 7,522 4,526 6,556
Short term investments 180,073 108,347 126,694
Cash at bank and in hand 1,755 1,056 3,081
189,350 113,929 136,331
Creditors
Amounts falling due within one year (21,036) (12,657) (12,563)
Net current assets 168,314 101,272 123,768
Total assets less current liabilities 209,236 125,894 144,345
Creditors
Amounts falling due after more than one year (30,169) (18,152) (8,580)
Net assets 179,067 107,742 135,765
Capital and reserves
Called-up share capital 6,372 3,834 3,621
Share premium account 353,812 212,883 202,534
Other reserve 22,364 13,456 13,456
Profit and loss account (203,481) (122,431) (83,846)
Shareholders' funds - all equity 179,067 107,742 135,765
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
CONSOLIDATED CASH FLOW STATEMENT
Convenience Year ended 30 Year ended 30
translation September September
year ended 2003 2002
30 September
2003
US$'000 #'000 #'000
Net cash outflow from operations (59,532) (35,819) (26,808)
Returns on investments and servicing of
finance
Interest received 8,468 5,095 7,558
Interest paid (76) (46) -
8,392 5,049 7,558
Taxation 8,659 5,210 920
Capital expenditure and financial
investment
Purchase of intangible assets (4,443) (2,673) (2,067)
Purchase of tangible fixed assets (8,996) (5,413) (7,894)
Sale of tangible fixed assets 7 4 -
(13,432) (8,082) (9,961)
Net cash outflow before management of
liquid resources and financing (55,913) (33,642) (28,291)
Management of liquid resources 31,209 18,778 29,534
Financing
Issue of ordinary share capital 17,554 10,562 1,448
Proceeds from new finance lease 2,309 1,389 -
commitments
Capital elements of finance lease rental (367) (221) -
payments
19,496 11,730 1,448
(Decrease)/increase in cash (5,208) (3,134) 2,691
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
Notes to the financial information
Accounting policies
This financial information has been prepared in accordance with the policies set
out in the statutory financial statements for the year ended 30 September 2003.
Convenience translation
The consolidated financial statements are presented in pounds sterling. The
consolidated financial statements as of and for the year ended 30 September 2003
are also presented in United States Dollars as a convenience translation. The
Dollar amounts are presented solely for the convenience of the reader and have
been calculated using an exchange rate of #1:US$1.6620, the noon buying rate as
of 30 September 2003. No representation is made that the amounts could have been
or could be converted into United States Dollars at this or any other rates.
Drug Royalty Corporation transaction costs
General and administration expenses include #7.9 million of costs incurred in
the year ended 30 September 2002 relating to the two transactions entered into
with Drug Royalty Corporation Inc. of Canada (DRC) during that year. In January
2002, CAT announced a recommended offer for the whole of DRC. A competing offer
was made by Inwest Investments Ltd of Canada which was accepted in April 2002.
Under an agreement with DRC, the Group received a payment of #1.5 million in
1994 in return for rights to a percentage of revenues (and certain other
payments) received by the Group over a period terminating in 2009. The #1.5
million was deferred and recognised over the period for which the rights were
purchased. On 2 May 2002, CAT bought out this royalty obligation to DRC for #6.1
million (C$14 million) with the issue of 463,818 CAT shares to DRC. The
remaining balance of #0.6 million of deferred income was all released in 2002.
The professional fees incurred in the Group's bid and royalty buy-back
were #1.8 million.
Loss per share
The loss per ordinary share and diluted loss per share are equal because share
options are only included in the calculation of diluted earnings per share if
their issue would decrease the net profit per share or increase the net loss per
share. The calculation is based on the following for the year ended 30 September
2003 and the year ended 30 September 2002 respectively: Losses of #39,191,000
and #28,207,000. Weighted average number of shares in issue of 36,440,993 and
35,828,446. The Company has ordinary shares in issue of 38,338,320 and a total
of 1,726,607 ordinary shares under option as of 30 September 2003.
Reconciliation of operating loss to operating cash outflow
Convenience Year ended Year ended
translation 30 September 30 September
year ended 30 2003 2002
September 2003
US$'000 #'000 #'000
Operating loss (76,658) (46,124) (38,150)
Depreciation charge 4,968 2,989 2,617
Amortisation of intangible fixed assets 1,745 1,050 882
Shares received from MorphoSys (5,965) (3,589) -
Shares issued to buy out DRC royalty - - 6,149
agreement
Loss on disposal of fixed assets 156 94 -
Increase in debtors (2,136) (1,285) (158)
Increase in deferred income 17,612 10,597 84
Increase in creditors 746 449 1,768
(excluding deferred income) (59,532) (35,819) (26,808)
Analysis and reconciliation of net funds
1 October Cash flow Exchange 30 September
2002 movement 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 3,081 (1,990) (35) 1,056
Overdrafts - (1,144) - (1,144)
(3,134)
Finance leases - (1,168) - (1,168)
Liquid resources 126,694 (18,778) - 107,916
Net funds 129,775 (23,080) (35) 106,660
Year ended 30 Year ended 30
September September
2003 2002
#'000 #'000
(Decrease)/increase in cash in the period (3,134) 2,691
Cash inflow from increase in lease financing (1,168) -
Decrease in liquid resources (18,778) (29,534)
Change in net funds resulting from cash flows (23,080) (26,843)
Exchange movement (35) (32)
Movement in net funds in period (23,115) (26,875)
Net funds at 1 October 2002 129,775 156,650
Net funds at 30 September 2003 106,660 129,775
Reconciliation of movements in group shareholders' funds
Year ended Year ended
30 30 September
September 2002
2003
#'000 #'000
Loss for the financial period (39,191) (28,207)
Other recognised gains and losses relating to the period 606 325
(38,585) (27,882)
New shares issued 10,562 7,597
Net decrease in shareholders' funds (28,023) (20,285)
Opening shareholders' funds 135,765 156,050
Closing shareholders' funds 107,742 135,765
Financial Statements
The preceding information, comprising the Consolidated Profit and Loss Account,
Consolidated Statement of Total Recognised Gains and Losses, Consolidated
Balance Street, Consolidated Cash Flow Statement and associated notes, does not
constitute the Company's statutory financial statements for the years
ended 30 September 2003 and 2002 within the meaning of section 240 of the
Companies Act 1985, but is derived from those financial statements. Statutory
financial statements for the year ended 30 September 2002 have been delivered to
the Registrar of Companies and those for the year ended 30 September 2003 will
be delivered to the Registrar of Companies after the Company's Annual
General Meeting. The auditors have reported on those financial statements;
their reports were unqualified and did not contain any statements under s237 (2)
or (3) Companies Act 1985.
The annual report and financial statements for the year ended 30 September 2003
will be posted to shareholders by 31 December 2003 and will be available shortly
thereafter from our registered office:
The Company Secretary
Cambridge Antibody Technology Group plc
Milstein Building
Granta Park
Cambridge
CB1 6GH, UK
Tel: +44 (0) 1223 471471
This preliminary announcement was approved by the Board on Friday 14 November
2003.
Quarterly financial information
Three months Three months Three months Three months
ended 30 ended 30 ended 31 ended 31
September June March December 2002
2003 2003 2003
#'000 #'000 #'000 #'000
Consolidated profit and loss account
(unaudited):
Turnover 2,349 2,417 2,572 1,405
Direct costs (458) (207) (16) (9)
Gross profit 1,891 2,210 2,556 1,396
Research and development expenses (12,663) (10,973) (10,111) (11,234)
General and administration expenses (2,681) (2,593) (1,914) (2,008)
Operating loss (13,453) (11,356) (9,469) (11,846)
Interest receivable (net) 866 1,016 1,172 1,306
Loss on ordinary activities before taxation (12,587) (10,340) (8,297) (10,540)
Taxation on loss on ordinary activities (127) 2,700 - -
Loss for the financial period (12,714) (7,640) (8,297) (10,540)
Consolidated cash flow statement (unaudited):
Net cash outflow from operations (14,606) (8,726) (7,073) (5,414)
Returns on investments and servicing of
finance
Interest received 598 912 2,537 1,048
Interest paid (18) (18) (10) -
580 894 2,527 1,048
Taxation (127) 2,700 - 2,637
Capital expenditure and financial investment
Purchase of intangible assets - - - (2,673)
Purchase of tangible fixed assets (465) (683) (1,439) (2,826)
Sale of tangible fixed assets - 1 3 -
(465) (682) (1,436) (5,499)
Net cash outflow before management of liquid
resources and financing (14,618) (5,814) (5,982) (7,228)
Management of liquid resources 4,469 4,914 (850) 10,245
Financing
Issue of ordinary share capital 9,376 479 19 688
Proceeds from new finance lease commitments 313 - 572 504
Capital elements of finance lease rental (60) (58) (67) (36)
payments
9,629 421 524 1,156
(Decrease) /increase in cash (520) (479) (6,308) 4,173
Notes to Editors
Cambridge Antibody Technology (CAT):
* CAT is a UK-based biotechnology company using its proprietary
technologies and capabilities in human monoclonal antibodies for drug discovery
and drug development. Based near Cambridge, England, CAT currently employs
around 280 people.
* CAT is a leader in the discovery and development of human therapeutic
antibodies and has an advanced proprietary platform technology for rapidly
isolating human monoclonal antibodies using phage display and ribosome 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.
* HUMIRA, the leading CAT-derived antibody, isolated and optimised in
collaboration with Abbott has been approved by the US Food and Drug
Administration for marketing in the US and by the European Commission for
marketing in the EU as a treatment for rheumatoid arthritis.
* Eight further CAT-derived human therapeutic antibodies are at various
stages of clinical trials. There are five candidate therapeutic antibodies in
pre-clinical development.
* CAT has alliances with a number of pharmaceutical and biotechnology
companies to discover, develop and commercialise human monoclonal antibody-based
products. CAT has co-development programmes with Amgen, Amrad, Elan and Genzyme.
* CAT has also licensed its proprietary technologies to several companies.
CAT's licensees include: Abbott, Amgen, Chugai, Human Genome Sciences,
Merck & Co, Pfizer and Wyeth Research.
* 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.
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 the company's present and future business
strategies and the environment in which the company will operate in the future.
Certain factors that could cause the company'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. We caution investors
not to place undue reliance on the forward looking statements contained in this
press release. These statements speak only as of the date of this press release,
and we undertake no obligation to update or revise the statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR USSRROORAAUA