ExonHit Therapeutics (Paris:ALEHT) announced its consolidated financial results for the year ending December 31, 2009.
In Therapeutics:
* For its internal programs, the strategy of the Company is to bring drug candidates through proof-of-concept studies, and then partner the programs to accelerate product development. The milestone payments received will allow ExonHit to finance the development of other drug candidates and advance its diagnostics programs.
* ExonHit is looking for additional research collaborations to further leverage its discovery capabilities and expand its sources of financing and revenues.
* Starting in 2010, the company will focus its internal therapeutic activities on cancer projects to take advantage of shorter development timelines and earlier partnering opportunities than for neurodegenerative diseases. Work in neurodegeneration will continue with partners as demonstrated by the February 23, 2010 announcement that proprietary ExonHit lead compounds from an internal neuro-related program were being included into the Allergan collaboration.
In Diagnostics:
* ExonHit intends to become recognized as a player in molecular diagnostics which is a particularly attractive market with more rapid development timelines than for therapeutics.
* To strengthen its commercial portfolio, generate revenues rapidly and hence, reach break-even faster, the Company announced it is planning to acquire a revenue-generating US-based diagnostics company specializing in molecular diagnostics with a focus in oncology and/or neurodegeneration.
2010 will be a year of change for ExonHit. Assuming completion of the planned diagnostic acquisition in the US in the second half of 2010, the new global entity will have a commercial product portfolio and an increased presence in the United States.
2009 consolidated financial results
* Income Statement
Consolidated revenues amounted to € 4.9 million, an increase of 16% compared to the € 4.2 million achieved in 2008. These increased revenues mainly relate to the collaboration with Allergan under which more activities were performed in 2009, combined with a stronger dollar against the euro, all payments from Allergan being made in US dollars.
Research and Development expenses decreased by 9% to € 9.0 million in 2009 compared to € 9.9 million in 2008. The reduction is linked to a € 0.8 million loan that was forgiven by OSEO, a French government organization dedicated to financing innovative R&D projects. Excluding this loan, R&D expenses remained stable compared to 2008.
Marketing and Sales expenses amounted to € 1.2 million, an increase of 8% as compared to € 1.1 million in 2008, mainly driven by expenses for market studies.
General and Administrative costs decreased by 6% to € 4.3 million in 2009, compared to € 4.6 million for the same period in 2008. This decrease is linked to lower salary expenses subsequent to the CFO leaving the company, partially offset by an increase in legal fees.
As a result, the group’s operating expenses decreased by 7% to € 14.6 million in 2009 compared to € 15.6 million in 2008. In 2009, 62% of these expenses were allocated to R&D compared to 63% for the same period in 2008.
Consequently, the company posted an operating loss of € 9.7 million for 2009, a decrease of 15% compared to € 11.4 million for 2008.
Financing income decreased to € 0.34 million in 2009 from € 0.38 million in 2008. While financing costs decreased by 47%, following the conversion of convertible bonds and the ensuing reduction in interest payments, revenues also decreased by 22% due to lower cash reserves and lower interest rates in 2009 compared to 2008.
The estimated research tax credit amounted to € 1.6 million in 2009, compared to € 2.1 million in 2008. This decrease is essentially due to the deduction of the forgiven OSEO loan.
As a consequence, ExonHit recorded a consolidated net loss of € 7.7 million in 2009, compared to € 8.9 million in 2008.
* Balance sheet
On December 31, 2009, the cash position of the Company amounted to € 30.2 million, compared to € 21.1 million at the end of 2008. ExonHit cash is only invested in high quality funds which liquidity is reasonably guaranteed.
Three financings took place in 2009, namely the conversion of more than half of outstanding convertible bonds, the partial exercise of 08/09 warrants, and the December 2009 capital increase; in addition free shares were granted in 2009 and stock-options were exercised during the second half of 2009. As a result, total shareholder’s equity increased to € 25.5 million on December 31, 2009 against € 9.7 million on December 31, 2008.
Product Update
* Therapeutics
Following the review of its internal therapeutic portfolio, ExonHit decided to focus on oncology and to only pursue additional neuro-related programs with partners. As a result, further development of the EHT 207 program in epilepsy and the EHT 206 program in Alzheimer’s disease are being discontinued; however development of the EHT 206 sister program EHT 101 in cancer is maintained. ExonHit will refocus resources towards the new EHT 107 program, whose current lead has demonstrated broad low to sub-nanomolar activity across a panel of more than 70 cancer cell lines and is entering in vivo preclinical testing.
EHT 0202, ExonHit’s lead candidate in Alzheimer’s disease and potentially first in a new class of disease modifying therapies, which stimulate the α-secretase pathway, has successfully completed Phase 2a testing. The clinical results communicated in September 2009 showed that EHT 0202 is safe and generally well tolerated in patients and that it could potentially enhance cognition in patients suffering from Alzheimer’s disease. Discussions are ongoing to find a partner in 2H 2010.
EHT/AGN 0001, the lead compound from the most advanced program in the Allergan collaboration, as well as EHT/AGN 0002 and its associated back-up compounds were out licensed by Allergan to Bristol-Myers Squibb in March 2010. ExonHit continues its collaboration with Allergan dedicated to the identification, development and commercialization of drugs for the treatment of ophthalmology, pain and neurodegenerative diseases.
* Diagnostics
AclarusDx Alzheimer’s test is a blood-based biomarker identifying patients suffering from Alzheimer’s disease (AD). This test is designed to discriminate AD patients from healthy individuals and is intended to be used in association with standard methods of assessment.
As first market entry, it was launched in December 2009 as a “research use only” product, to improve patient selection for clinical trials, thus targeting pharmaceutical companies and leading academic centers performing clinical research.
ExonHit is anticipating a CE marking in Q4 2010, and is preparing the launch of AclarusDx in the clinical in vitro diagnostic (IVD) market with laboratory partners for a European launch in Q1 2011. Regarding US marketing approval, discussions have been initiated with the FDA to define the exact regulatory pathway to meet IVD requirements.
EHT Dx14, a novel breast cancer diagnostic biomarker developed using ExonHit’s SpliceArray platform, was licensed from Institut Gustave Roussy in May 2009. This test is intended to facilitate the reading of samples obtained by fine-needle aspiration (FNA) after a suspicious mass is discovered during mammography. Current methods are core needle biopsy or exploratory surgery. Performing EHT Dx14 could reduce the use of these invasive procedures and would shorten time to result. The molecular signature has been confirmed in a pilot study and ExonHit is proceeding with a large cohort for full validation. ExonHit plans to launch the test as a “research use only” product for oncology centers in Q3 2010.
The collaboration with bioMérieux to develop blood-based biomarkers for the detection of prostate cancer is ongoing. Collaborations on breast and colon cancer programs were discontinued. The technology was demonstrated to be robust and reproducible, however the clinical results did not reach the performance criteria set for the programs.
IP/Legal update
The lawsuit between ExonHit and Jivan Biologics Inc (Jivan) has been resolved by Consent Judgment entered by the Court against Jivan for infringement of ExonHit’s US Patent 6,881,571 (‘571 Patent). Jivan has been held to infringe the ’571 Patent and is enjoined from further infringement. ExonHit agreed to release Jivan from claims for damages for Jivan’s infringing devices sold prior to the Consent Judgment.
License agreements have been signed with Sigma Aldrich and Tocris allowing both companies to commercialize EHT 1864 for research use only, ExonHit’s proprietary and widely tested Rac 1/Rac 1b inhibitor.
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