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Basel, Switzerland, Nov 14, 2007 - (Hugin via ABN Newswire) - Full year cash-burn guidance about CHF 75 million
Basel/Switzerland and Bridgewater NJ/USA, 14 November 2007 Speedel Holding Ltd (SWX: SPPN) today announced consolidated financial results for the three and nine months ending 30 September 2007.
Financial Highlights
* CHF 1.34 million recognised as estimated revenues for first nine months from sales of SPP100 (Tekturna/Rasilez[1]) by Novartis * Speedel announces disagreement with Novartis about reporting by Novartis in respect of cost-of-goods savings for SPP100 * At 30 September 2007 liquid assets on hand were CHF 120.1 million * Cash-burn was CHF 58.1 million for first nine months; guidance updated for 2007 to CHF 75 million * Remaining 2005 convertible loan fully converted into equity by end July 2007
Alice Huxley, CEO, stated: "We are disappointed that Novartis has failed to fully comply with its reporting obligations to us in respect of the cost-of-goods savings for SPP100. Speedel's accomplishment in devising a new chemical synthesis route for producing SPP100 was fundamental and has enabled Novartis to successfully develop the first new hypertension therapy for over a decade. We trust that this disagreement can be amicably resolved as soon as possible."
Konrad P. Wirz, Chief Financial Officer, commented: "Our recent pipeline decisions to partner SPP200 and to start a new Phase II programme for SPP301 in diabetic kidney disease in 2008, means that cash-burn for the full year 2007 will come in at the lower end of our original guidance of CHF 75-85 million. With liquid assets of CHF 120 million we have sufficient funds to finance our pipeline well into 2009."
Footnotes i-iv can be found on last page of this press release. Consolidation is based on IFRS, but these results for the period are unaudited. Complete financial statements and notes for the 9 months ending 30 September 2007 can be accessed at http://www.speedel.com/section/6/subsections/4
Revenues SPP100 (Tekturna/Rasilez[1]) was approved by the FDA in March 2007 and by the European Commission in August 2007, and subsequently launched by Novartis in the US and Europe respectively. On 18 October Novartis for the first time publicly reported sales about the product, disclosing $20 million sales for the nine months to 30 September 2007 and $9 million sales for the third quarter ending 30 September 2007.
Accrued revenues reflect Speedel management's best estimate regarding royalties from reported sales of SPP100 in accordance with International Accounting Standard (IAS) 18. The reported royalties for the first nine months are CHF 1,340,000. This is comprised of actual royalties for Q2 of CHF 769,000 received from Novartis, plus estimated royalties for Q3 of CHF 571,000 based on management's best estimate for the third quarter. This Q3 estimate is subject to revision when the company reports its full year results as Speedel has not yet received the Q3 revenue report from Novartis.
Previously with the company's Q2 results of 15 August, management reported estimated royalties for Q2 of CHF 1 million. This best estimate was made on the basis of all publicly known data at that point in time, and was communicated to Novartis in accordance with our contractual obligations, but Speedel did not receive any modifications from Novartis before its publication on 15 August. Subsequently Speedel received the actual royalties of CHF 769,000 from Novartis. The accrued revenues of CHF 340,000 shown for the third quarter consist of management's estimate of CHF571,000 less CHF231,000 (being the difference between the Q2 estimate of CHF 1 million and the actual royalties received from Novartis).
The revenues booked to date by Speedel only relate to royalties owed by Novartis on worldwide sales of SPP100. These revenues contain no estimate for payments equivalent to a portion of the savings resulting from a reduction in the cost-of-goods below a predetermined threshold, if Novartis Pharma has used the production method developed by Speedel for the commercial supply of SPP100. Novartis has only in the last few days notified Speedel that it is not entitled to any revenues from this cost-of-goods component for Q2 and Q3 2007. However Novartis has, despite formal requests by Speedel, failed to provide to Speedel the relevant information necessary to validate Novartis' claim. Furthermore, Novartis has also denied Speedel its right to audit the underlying information with respect to the cost-of-goods component of the license agreement. The two components of the total potential revenue stream owed to Speedel have been consistently advised to the investment community by Speedel in all its public reporting materials.
Speedel has requested Novartis to fully comply with its reporting obligations towards Speedel in respect of the cost-of-goods savings element in the contract. Speedel's objective is to resolve this disagreement as quickly as possible. However, Speedel can give no guidance at this point in time as to when it may start to report revenues based on the cost-of-goods savings achieved by Novartis using Speedel's production method for SPP100.
Research & Development Expenses R&D expenses decreased by CHF 3.6 million for the third quarter and by CHF 0.8 million for the first nine months compared to the corresponding periods in 2006. This primarily reflects the reduced costs of our SPP301 programme this year compared to last year, although we continue to incur closure costs for the SPP301 Phase III trial which are being both accrued and paid out in cash during each quarter of 2007. We continue to invest in our next generation renin inhibitor programmes both in clinical development (SPP635 in Phase IIa, SPP1148 Phase I, SPP676 Phase I) and in research (SPP1100 series, SPP800 series, SPP600 series).
General & Administration Expenses G&A expenses increased by CHF 0.7 million for the third quarter and increased by CHF 0.6 million for the first nine months compared to the corresponding periods in 2006.This was due principally to increased employee costs.
Finance Costs, net Net finance costs increased by CHF 0.6 million for the third quarter and decreased by CHF 6.3 million for the first nine months compared to the corresponding periods in 2006. These variances mainly reflect timing differences for the lower amortisation costs related to the CHF 55.5 million gross convertible bond issued in January 2007 compared to those of the CHF 70.0 million gross convertible loan issued in 2005. The company is also benefiting from the increased funds available for investment and improved money market rates, and therefore expects that the net financial result will be significantly improved for 2007 compared with 2006.
Balance Sheet As of 30 September 2007, liquid assets on hand were CHF 120.1 million compared to CHF 121.1 million at 31 December 2006. These funds provide a comfortable base to finance the company's current pipeline well into 2009. This is a conservative statement as it excludes any possible sources of revenue such as from sales of SPP100 or from licensing activities.
During the third quarter and first nine months of 2007 some 23,800 and 63,800 shares respectively were issued for conversion by holders of the 2005 CHF 70 million loan, which matured on 31 July 2007. These conversions generated a cash inflow premium of CHF 0.6 million for the third quarter and CHF 1.6 million for the first nine months, booked in equity. As a result of these conversions there is no outstanding liability for this loan.
In January 2007 the company issued a 3.5% p.a. convertible bond with a nominal value of CHF 55.5 million which is listed on the SWX Swiss Exchange under the symbol SPP07. The bond matures four years from the date of issue and can be converted at any time into voting shares at a fixed conversion rate of CHF 226 per share.
Share Capital On 30 September 2007, Speedel Holding Ltd had 7,793,060 registered shares with a nominal value of CHF 2 per share which are listed on the SWX Swiss Exchange under the symbol SPPN. In addition the company had outstanding conditional share capital of 527,535 shares with a nominal value of CHF 2 per share, mainly to cover the 2007 convertible bond and the company's employee share option plan.
Cash-burn Historically the company has provided guidance on cash-burn excluding any revenues from sources such as sales of SPP100 or other licensing agreements. It will continue to use this definition to ensure like-for-like comparisons with previous years when it had no recurring revenues.
The cash-burn for the third quarter and for the first nine months was CHF 16.2 million and CHF 58.1 million respectively. The company's original guidance for full year 2007 cash-burn was between CHF 75-85 million; the company now expects full-year cash-burn to come in at about CHF 75 million, principally because the major costs for the new SPP301 Phase II programme in diabetic kidney disease will not be incurred until 2008, and because we have decided to look for a partner for SPP200.
Third quarter news flow
* On 27 August the European Commission approved SPP100 under the trade name Rasilez for the treatment of hypertension alone or in combination with other high blood pressure therapies, based on data from more than 7,800 patients in 44 clinical studies. The approval applies to all 27 EU member states plus Iceland and Norway.
* In September results from the ALOFT trial showed that SPP100 is generally well-tolerated and can potentially reduce the severity of heart failure, as indicated by significant reductions in brain naturietic peptide (BNP).
* In September it was announced that Speedel and Novartis have won the overall Gold Award in the seventh annual Wall Street Journal contest for Technology Innovation. This Gold Award was given to both companies for their work in discovering and developing SPP100 (aliskiren) the first direct renin inhibitor for treating hypertension.
Calendar 2007- 8 Q4 2007 07 March 08 Annual Report 25 March 08 R&D Day 31 March 08 AGM 15 April 08 Q1 2008 15 May 08 Q2 2008 19 August 08 Q3 2008 14 November 08
Slides for the web cast will be downloadable from 12:00 CET today and the webcast will be accessible on the company's website until 14 December 2007. A podcast will also be available.
About Speedel Speedel is a public biopharmaceutical company that seeks to create value for patients, partners and investors by developing innovative therapies for cardiovascular and metabolic diseases. Speedel is a world leader in renin inhibition, a promising new approach with significant potential for treating cardiovascular diseases. Our lead compound SPP100 (Tekturna/Rasilez[1]), the first-in-class direct renin inhibitor, was in-licensed from Novartis in 1999 and licensed-back to Novartis Pharma in 2002 for further development and commercialisation; SPP100 was approved by the FDA in the US in March 2007, and filed by Novartis with the EMEA in the EU in Q3 2006. Our pipeline covers three different modes of action, and in addition to SPP100, includes SPP301 in Phase II, SPP200 in Phase II, SPP635 in Phase Il, SPP1148 in Phase I, SPP676 in Phase I and several pre-clinical projects.
Speedel develops novel product candidates through focused innovation and smart drug development from lead identification to the end of Phase II. We either partner with big pharma for Phase III and commercialisation in primary-care indications, or we may ourselves complete Phase III development in specialist indications. Candidate compounds for development and the company's intellectual property come from our late-stage research unit Speedel Experimenta and from in-licensing. Our team of approximately 80 employees, including over 30 experienced pharmaceutical scientists, is located at our headquarters and laboratories in Basel, Switzerland and at offices in New Jersey, USA and Tokyo, Japan.
In January 2007 the company raised gross proceeds of CHF 55.5 million (approximately EUR 34.3 million or USD 44.5 million) through a convertible bond issue. In March 2006 the company raised gross proceeds of CHF 83.95 million (approximately EUR 53m or USD 64m) through the public offering of 500,000 treasury shares. Previously, as a private company, we raised gross proceeds of CHF 255 million (approximately EUR 157 million or USD 204 million) from private placements of equity securities and two convertible loans including the conversion premiums. We have had total revenues, principally from milestone payments, of CHF 57.7 million (approximately EUR 37 million or USD 44 million). The company's shares were listed in September 2005 on the SWX Swiss Exchange under the symbol SPPN.
Forward looking statements This press release includes forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are based on our current expectations and projections about future events. All statements, other than statements of historical facts, regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The word "may" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations described in these forward-looking statements and you should not place undue reliance on them. There can be no assurance that actual results of our research and development activities and our results of operations will not differ materially from these expectations. Factors that could cause actual results to differ from expectations include, among others: our or our partners' ability to develop safe and efficacious products; our or our partners' ability to achieve positive results in clinical trials; our or our partners' ability to obtain marketing approval and market acceptance for our product candidates; our ability to enter into future collaboration and licensing agreements; the impact of competition and technological change; existing and future regulations affecting our business; changes in governmental oversight of pharmaceutical product development; the future scope of our patent coverage or that of third parties; the effects of any future litigation; general economic and business conditions, both internationally and within our industry, including exchange rate variations; and our future financing plans.
End Notes to Financial Key Data [1] Tekturna/ Rasilez ® are Novartis trademarks
[i] Numbers may not add up due to rounding [ii] Earnings per share are calculated on the weighted average of registered shares outstanding for the periods: Q3 2007 = 7,779,131; Q3 2006 = 7,200,681 ; 9m 2007= 7,702,402; 9m 2006 = 6,725,730 [iii] Cash-burn is defined as the difference in liquid assets between the beginning and end of the period, minus any cash inflow during the period [iv] Includes cash and cash equivalents and financial assets at fair value through profit or loss
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For further information please contact:
Nick Miles Director Communications & Investor Relations Speedel Hirschgässlein 11 CH - 4051 Basel Switzerland
T +41 (0) 61 206 40 00 D +41 (0) 61 206 40 14 F +41 (0) 61 206 40 01 M +41 (0) 79 446 25 21 E nick.miles@speedel.com www.speedel.com
Frank LaSaracina Managing Director Speedel Pharmaceuticals Inc 1661 Route 22 West P.O. Box 6532 Bridgewater, NJ 08807 United States of America
T +1 732 537 2290 F +1 732 537 2292 M +1 908 338 0501 E frank.lasaracina@speedel.com www.speedel.com
