Company Announcement no. 13/2009 Interim report for the 3 Months Ended March 31, 2009 To: NASDAQ OMX Nordic Copenhagen Hørsholm, Denmark, May 14, 2009 LifeCycle Pharma achieved strong progress in its pipeline. Positive Results in the Phase 2 extension study for LCP-AtorFen as well as in Phase 2 for LCP-TacroTM in de novo kidney patients. LifeCycle Pharma A/S (OMX:LCP) today announced the Interim Report for the 3 months ended March 31, 2009. Highlights: • LCP achieved strong progress in its two lead programs; LCP-TacroTM and LCP-AtorFen. LCP announced in April 2009 positive interim results of the Phase 2 Clinical Trial of LCP-TacroTM for the prevention of organ rejection in de novo kidney transplant patients and today positive results in the Phase 2 extension study for LCP-AtorFen. • LCP reported a net loss of DKK 69.7 million for the first quarter of 2009, compared to a net loss of DKK 65.2 million for the same period in 2008. This is in line with the expectations for 2009 which were announced in the annual report published on March 3, 2009. • For the first quarter of 2009 LCP recognized DKK 0.3 million in revenues compared to DKK 2.9 million in the same period of 2008. Revenue consists of payments under LCP's collaboration agreements. • For the first quarter of 2009, LCP's research and development costs amounted to DKK 62.8 million compared to DKK 52.9 million during the same period in 2008. The increase in research and development costs primarily reflects the ongoing Phase 3 clinical trial for LCP-TacroTM (Kidney), along with increased activity in the Company's pipeline. • On March 31, 2009, LCP had cash and cash equivalents of DKK 520.2 million. In connection with the announcement of the Interim Report for the 3 month ended March 31, 2009 LCP's President and CEO Jim New said: “I'm very pleased with the positive developments in LCP's pipeline to date in 2009. Today, we also announced positive results in the one-year extension study for LCP-AtorFen along with the recently disclosed solid data from our Phase 2 study in LCP-TacroTM de novo kidney patients. These results are very exciting and re-affirm the uniqueness of our proprietary MeltDose® technology showing great progress and the strength of our pipeline. Subsequent Events On April 14, 2009, LCP announced that Karin Hamberg, Executive Vice President and Chief Medical Officer had decided to step down from her position in order to pursue other career opportunities outside LCP. On April 23, 2009, LCP convened the Annual General Assembly and at a subsequent board meeting Paul Edick was appointed new Chairman of the Board of Directors. On April 30, 2009, LCP announced positive Interim Results of Phase 2 Clinical Trial of LCP-Tacro for the prevention of organ rejection in de novo kidney transplant patients. Data confirms the once daily profile of LCP's extended release tablet formulation of tacrolimus when compared to twice daily Prograf® capsules. Expectations for 2009 LCP maintains its 2009 guidance with an operating loss of DKK 450 - 480 million and a net loss of DKK 430 - 460 million. As of December 31, 2008, the Company's cash position equaled DKK 600.1 million and the Company's December 31, 2009 cash position is expected to be in the range of DKK 150 - 200 million. Research & Development Update LCP-Tacro™ in kidney patients The current Phase 3 clinical study in stable patients is presently recruiting patients in study centers in both U.S. and now also in Europe and the study is progressing according to plan. This study is a supportive study for the pivotal study in de novo patients and is still expected to report top line results in the second half of 2010. As announced on April 30, 2009 LCP announced positive interim data for Phase 2 pharmacokinetic clinical studies in de novo kidney transplant patients. LCP will draw on these emerging data to form the basis for LCP's planning and preparation of the pivotal Phase 3 study in de novo kidney transplant patients and will consult with the U.S. Food and Drug Administration (FDA) with the goal to submit a final Phase 3 protocol in the second half of 2009. The Phase 3 program will evaluate the use of LCP-Tacro™ with mycophenolate mofetil and corticosteroids compared to the FDA-approved standard treatment of mycophenolate mofetil in combination with cyclosporine and corticosteroids in de novo kidney transplant patients. The upcoming Phase 3 studies in de novo kidney transplants will run in parallel with LCP's current ongoing Phase 3 studies in stable kidney transplant patients. LCP-Tacro™ in liver patients Phase 2 pharmacokinetic clinical studies in de novo liver transplant patients are presently ongoing. LCP is expecting to have interim data towards the end of Q2 2009 and result from the 1 year extended maintenance stage in 1H 2010. In addition LCP expects to have data in Q3 2009 from the 1 year maintenance phase for the Phase 2 study in stable liver patients. Following the results from the Phase 2 in de novo patients and the results from the one year extension study in stable liver patients in H2 2009, LCP will initiate discussions in H2 09 with the FDA for the design of the pivotal Phase 3 program in de novo liver patients. LCP-AtorFen LCP has now completed the open label Phase 2 extension study for one year on LCP-AtorFen with positive results. The Phase 2 clinical extension program confirms the positive Phase 2 results previously reported for LCP-AtorFen in May 2008 and confirms that the excellent lipid control obtained with LCP-AtorFen within the first 12 weeks of therapy is maintained throughout the 52-week extension period. Further, the study confirms that patients who switched at week 12 from atorvastatin or fenofibrate monotherapy, respectively, to treatment with LCP-AtorFen achieved additional benefits on lipid parameters with important prognostic value. Also, the Phase 2 clinical extension program further showed that treatment with LCP-AtorFen is safe and well tolerated with a non-significant trend towards an improved safety profile for the fixed-dose combination than for each of the individual monotherapies. LCP intends to discuss the clinical Phase 3 plans with the FDA in the H2 2009. Key Figures Q1 Q1 Year 2009 2008 2008 DKK'000 DKK'000 DKK'000 Income Statement Revenue 349 2,928 170,122 Research and development costs (62,810) (52,916) (270,875) Administrative expenses (16,981) (17,545) (73,311) Operating loss (79,443) (67,533) (174,064) Net financial income / (expenses) 9,735 2,323 24,285 Net loss for the period (69,708) (65,210) (149,779) Balance Sheet Cash and cash equivalents 520,228 265,501 600,130 Total assets 574,148 311,892 646,293 Share capital 56,439 32,105 56,288 Total equity 507,712 266,277 572,323 Investment in property, plant and equipment 2,515 801 6,571 Cash Flow Statement Cash flow from operating activities (77,772) (65,832) (102,560) Cash flow from investing activities (2,600) (801) (6,628) Cash flow from financing activities (105) 897 373,637 Cash and cash equivalents at period end 520,228 265,501 600,130 Financial Ratios Basic and diluted EPS (1.24) (2.05) (3.06) Weighted average number of shares 56,297,561 31,833,188 49,006,500 Average number of employees (FTEs) 102 93 102 Assets/equity 1.13 1.17 1.13 The interim report is unaudited. Revenues For the first quarter of 2009 LCP recognized DKK 0.3 million in revenues compared to DKK 2.9 million in the same period of 2008. Revenue consists of payments under LCP's collaboration agreements. Research and Development Costs For the first quarter of 2009, LCP's research and development costs amounted to DKK 62.8 million compared to DKK 52.9 million during the same period in 2008. The increase in research and development costs primarily reflects the ongoing Phase 3 clinical trial for LCP-Tacro (Kidney), along with increased activity in the company's pipeline. Research and development cost in the first quarter of 2009 was realized at a lower level compared to the previous sequential quarter, with DKK 62.8 million compared to DKK 78.7 million in the fourth quarter of 2008. This decrease is mainly due to fluctuations in activity in connection with the ongoing Phase 3 trial on LCP-Tacro (Kidney). Administrative Expenses For the first quarter of 2009, LCP's administrative cost amounted to DKK 17.0 million compared to DKK 17.5 million during the same period in 2008 and DKK 18.3 million in the previous quarter. The decrease in cost is attributable to the cost containment program that was initiated in the fourth quarter of 2008, reducing headcount in back office functions, along with focusing on reducing external cost. Share-based Compensation Costs For the first three months of 2009, a total of DKK 3.8 million was recognized as share-based compensation. The comparable expense for 2008 was DKK 3.1 million. In the first quarter of 2009, a total of 200,000 warrants were granted to members of the Executive Management at a strike price of DKK 10.5, while other employees were granted a total of 646,250 warrants at a strike price of DKK 10.5. In the first quarter of 2009, a total of 1,381,606 warrants have been cancelled, and a total of 150,813 warrants have been exercised at an average exercise price of DKK 6.40, in total reducing the number of outstanding warrants with 12%. As of March 31, 2009, there were a total of 5,089,717 warrants outstanding at an average strike price of DKK 22.8. Members of the Board of Directors held 237,842 warrants at an average strike price of DKK 30.2. Members of the Executive Management held 937,572 warrants at an average strike price of DKK 18.4, while other current and former employees held 3,914,303 warrants at an average strike price of DKK 23.4. Please refer to LCP's latest annual report for additional details on the Company's warrant programs. Operating Loss LCP's operating loss for the first three months of 2009 was DKK 79.4 million compared to DKK 67.5 million in the corresponding period of 2008. Financial Income During the first three months of 2009, the Company recognized net financial income of DKK 9.7 million compared to DKK 2.3 million in the first three months of 2008. The increase is due to a higher average cash position and currency gains related to the increased DKK / USD rate. Net Loss LCP's net loss for the first three months of 2009 was DKK 69.7 million compared to DKK 65.2 million in the corresponding period of 2008. Cash Flow As per March 31, 2009, the balance sheet reflects cash and cash equivalents to DKK 520.2 million compared to DKK 600.1 million as per December 31, 2008. This represents a decrease of DKK 79.9 million primarily related to the Company's operating activities for the period. Balance Sheet As per March 31, 2009, total assets were DKK 574.1 million compared to DKK 646.3 million at the end of 2008. Shareholders' equity equalled DKK 507.7 million as of March 31, 2009, compared to DKK 572.3 million at the end of 2008. Accounting Policies The interim report is prepared in compliance with International Accounting Standard No. 34 (IAS 34), “Interim Financial Reporting” and in accordance with the OMX Nordic Exchange Copenhagen's financial reporting requirements for listed companies. There have been no changes in accounting policies used for the interim report compared to the accounting policies used in the preparation of LifeCycle Pharma group's annual report for 2008. As mentioned in the 2008 annual report the International Accounting Standards Board (IASB) has issued and updated, and the EU has endorsed, a number of new and existing standards, effective from January 1, 2009. Therefore LifeCycle Pharma has implemented the following standards and interpretations as of 1 January 2009: IFRS 8, “Operating Segments” IAS 1 “Presentation of Financial Statements” (amendment) IFRS 2 “Share-based payment” (amendment) Besides the implementation of IAS 1, the standards and interpretations have not changed the recognition, measurement and presentation in the financial statements. The implementation has not had any material effect on the numbers or the presentation hereof. The interim report is unaudited. Financial Review LCP publishes its financial statements in Danish Kroner (DKK), which is the functional currency of the Company and the group. Solely for the convenience of the reader, this Interim Report contains a conversion of certain DKK amounts into Euro (EUR) at a specified rate. These converted amounts should not be construed as representations that the DKK amounts actually represent such EUR amounts or could be converted into EUR at the rate indicated or at any other rate. Unless otherwise indicated, conversion herein of financial information into EUR has been made using the Danish Central Bank's spot rate on March 31, 2009, which was EUR 1.00 = DKK 7.4482. Grant of Warrants At a board meeting held on May 14, 2009, the Board of Directors decided to issue 128,000 warrants to employees of the Company and the Company's US subsidiary. Each warrant entitles the holder to subscribe one share of nominal DKK 1 in the Company against cash contribution equal to the closing price of the Company's shares at the NASDAQ OMX Nordic Exchange on May 14, 2009, thus ensuring that the exercise price reflects the fair market price per share following the disclosure of the interim report for the first three months of 2009. By application of the Black-Scholes formula, the market value of the warrant program can be calculated as DKK 6.2 per warrant assuming an exercise price of DKK 13.80, equal to the closing price of the Company's share at the OMX Nordic Exchange on May 13, 2009, based on an interest rate of 2.93% and a volatility of the Company's shares set to 52%. The volatility is based on the Company's historical share prices since its IPO in November 2006, which is a change compared to previously, where the volatility was based on a basket of Danish and European pharma and biotech companies. Historical numbers has not been restated. Conference Call On May 14, 2009, at 3.00 PM (CET), LCP will be hosting a conference call. To access the call, please dial one of the following numbers: +1 866 966 5335 (US), +44 2030 032 666 (UK), +45 8088 8649 (DK). Subsequently, a recording will be available on the Company's website www.lcpharma.com. Additional information: Jim New Peter Schøtt Knudsen President & CEO Head of Investor Relations +45 70 33 33 00 +45 20 55 38 17 jsn@lcpharma.com psk@lcpharma.com The forward looking statements and targets contained herein are based on LifeCycle Pharma A/S's management's current view and assumptions. Such statements involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those anticipated herein. LifeCycle Pharma A/S expressly disclaim any obligation or undertaking to update or revise any forward looking statements, targets or estimates contained in this interim report to reflect any change in events, conditions, assumptions, or circulations on which any such statements are based unless required by applicable law. Executive Management's and the Board of Directors' Statement on the Interim Report The Executive Management and the Board of Directors have considered and adopted the Interim Report of LifeCycle Pharma A/S. The Interim Report is prepared in accordance with International Accounting Standard No. 34 (IAS 34), “Interim Financial Reporting” and additional Danish disclosure requirements for financial reporting of listed companies. We consider the applied accounting policies to be appropriate and, in our opinion, the Interim Report gives a true and fair view of the assets and liabilities, financial position, results of the operation and cash flow of the group for the period under review. Furthermore, in our opinion the management review includes a fair review of the development and performance of the business and the financial position of the group, together with a description of the material risks and uncertainties the group faces. The group does not face any material risks or uncertainties relating to the financial statements. Hørsholm, May 14, 2009 Executive Management Jim New Peter G. Nielsen President & CEO Executive Vice President Board of Directors Paul Edick Thomas Dyrberg Kurt Anker Nielsen (Chairman) Jean Deleage Gérard Soula Anders Götzsche Quarterly Numbers in DKK Q1 Q4 Q3 Q2 Q1 2009 2008 2008 2008 2008 DKK'000 DKK'000 DKK'000 DKK'000 DKK'000 Income Statement Revenue 349 4,809 154,433 7,952 2,928 Research and development costs (62,810) (78,684) (69,738) (69,537) (52,916) Administrative expenses (16,981) (18,286) (18,626) (18,854) (17,545) Operating loss (79,443) (92,161) 66,069 (80,439) (67,533) Net financial income / (expenses) 9,735 11,507 5,150 5,305 2,323 Net loss for the period (69,708) (80,654) 71,219 (75,134) (65,210) Balance Sheet Cash and cash equivalents 520,228 600,130 666,895 588,001 265,501 Total assets 574,148 646,293 708,915 634,100 311,892 Share capital 56,439 56,288 56,288 56,093 32,105 Total equity 507,712 572,323 648,456 571,863 266,277 Investment in property, plant and equipment 2,515 1,358 1,205 3,207 801 Cash Flow Statement Cash flow from operating activities (77,772) (68,616) 80,250 (48,362) (65,832) Cash flow from investing activities (2,600) (1,415) (1,205) (3,207) (801) Cash flow from financing activities (105) (1,653) 463 373,930 897 Cash and cash equivalents at period end 520,228 600,130 666,895 588,001 265,501 Financial Ratios Basic and diluted EPS (1.24) (1.43) 1.27 (1.46) (2.05) Weighted average number of shares 56,297,561 56,287,507 56,135,241 51,611,713 31,833,188 Average number of employees (FTEs) 102 107 113 101 93 Assets/equity 1.13 1.13 1.09 1.11 1.17 Quarterly Numbers in Euro Q1 Q4 Q3 Q2 Q1 2009 2008 2008 2008 2008 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Income Statement Revenue 47 645 20,734 1,067 393 Research and development costs (8,433) (10,564) (9,363) (9,336) (7,104) Administrative expenses (2,280) (2,455) (2,501) (2,531) (2,356) Operating loss (10,666) (12,374) 8,870 (10,800) (9,067) Net financial income / (expenses) 1,307 1,545 692 712 312 Net loss for the period (9,359) (10,829) 9,562 (10,088) (8,755) Balance Sheet Cash and cash equivalents 69,846 80,574 89,538 78,945 35,646 Total assets 77,085 86,772 95,179 85,135 41,875 Share capital 7,578 7,557 7,557 7,531 4,310 Total equity 68,166 76,840 87,062 76,779 35,751 Investment in property, plant and equipment 338 182 162 431 108 Cash Flow Statement Cash flow from operating activities (10,442) (9,212) 10,774 (6,493) (8,839) Cash flow from investing activities (349) (190) (162) (431) (108) Cash flow from financing activities (14) (222) 62 50,204 120 Cash and cash equivalents at period end 69,846 80,574 89,538 78,945 35,646 Financial Ratios Basic and diluted EPS (0.17) (0.19) 0.17 (0.20) (0.28) Weighted average number of shares 56,297,561 56,287,507 56,135,241 51,611,713 31,833,188 Average number of employees (FTEs) 102 107 113 101 93 Assets/equity 1.13 1.13 1.09 1.11 1.17 Income Statement Consolidated (DKK'000) Q1 Q1 Year 2009 2008 2008 Revenue 349 2,928 170,122 Research and development costs (62,810) (52,916) (270,875) Administrative expenses (16,981) (17,545) (73,311) Operating loss (79,443) (67,533) (174,064) Financial income 15,213 4,290 45,474 Financial expenses (5,478) (1,967) (21,189) Loss before tax (69,708) (65,210) (149,779) Tax for the period - - - Net loss for the period (69,708) (65,210) (149,779) Basic and diluted EPS (1.24) (2.05) (3.06) Weighted average number of shares 56,297,561 31,833,188 49,006,500 Statement for comprehensive income Consolidated (DKK'000) Q1 Q1 Year 2009 2008 2008 Net loss for the period (69,708) (65,210) (149,779) Other comprehensive income: Currency translation differences 305 511 922 Other comprehensive income for the period 305 511 922 Total comprehensive income for the period (69,403) (64,699) (148,857) Assets Consolidated (DKK'000) Mar. 31 Mar. 31 Dec. 31 2009 2008 2008 Licenses and rights 667 717 679 Intangible assets 667 717 679 Property, plant and equipment 21,165 20,871 20,628 Leasehold improvements 4,939 5,920 5,224 Property, plant and equipment 26,104 26,791 25,852 Non-current assets 26,771 27,508 26,531 Trade receivables 3,240 3,937 1,670 Other receivables 5,164 10,249 10,928 Prepayments 18,745 4,697 7,034 Receivables 27,149 18,883 19,632 Cash and cash equivalents 520,228 265,501 600,130 Current assets 547,377 284,384 619,762 Assets 574,148 311,892 646,293 Equity & Liabilities Consolidated (DKK'000) Mar. 31 Mar. 31 Dec. 31 2009 2008 2008 Share capital 56,439 32,105 56,288 Share premium 1,079,554 726,456 1,078,740 Translation reserves 2,048 1,332 1,743 Retained earnings/loss (630,329) (493,616) (564,448) Equity 507,712 266,277 572,323 Provisions 10,492 - 10,492 Finance lease 14,955 19,266 16,082 Non-current liabilities 25,447 19,266 26,574 Finance lease 4,507 4,993 4,450 Trade payables 11,178 11,451 22,910 Deferred revenue - 858 - Other payables 25,304 9,047 20,036 Current liabilities 40,989 26,349 47,396 Liabilities 66,436 45,615 73,970 Equity and liabilities 574,148 311,892 646,293 Cash Flow Statement Consolidated (DKK'000) Q1 Q1 Year 2009 2008 2008 Operating loss (79,443) (67,533) (174,064) Share-based payment 3,827 3,142 16,879 Depreciation and amortization 2,297 2,049 8,834 Net loss on sale of fixed assets - - - Changes in working capital (16,146) (5,873) 23,371 Cash flow from operating activities before interest (89,466) (68,215) (124,980) Interest received 17,155 4,200 43,503 Interest paid (5,461) (1,817) (21,083) Cash flow from operating activities (77,772) (65,832) (102,560) Purchase of property, plant and equipment (2,515) (801) (6,571) Net loss on sale of property, plant and equipment - - - Cash transfer to restricted security deposit (85) - (57) Cash flow from investing activities (2,600) (801) (6,628) Proceeds from bank borrowings and finance lease - - - Installments on bank borrowings and finance lease (1,070) (1,249) (4,975) Proceeds from issuance of shares, net 965 2,146 378,612 Cash flow from financing activities (105) 897 373,637 Increase/(decrease) in cash and cash equivalents (80,477) (65,736) 264,449 Cash and cash equivalents at beginning of period 598,735 330,402 330,402 Exchange gains/(losses) on cash and cash equivalent 491 (413) 3,884 Cash and cash equivalents at end of period 518,749 264,253 598,735 Cash and cash equivalents at end of period comprise: Restricted bank deposit 1,479 1,248 1,395 Deposit on demand and cash 518,748 264,253 598,735 520,228 265,501 600,130 Consolidated Equity Number of Shares Share Capital Share Premium Translation Reserves Retained Earnings Total DKK'000 DKK'000 DKK'000 DKK'000 DKK'000 Equity as of January 1, 2008 31,770,705 31,771 724,645 821 (431,548) 325,689 Total comprehensive income 511 (65,210) (64,699) Warrant exercises 334,469 334 1,927 2,261 Share-based payment 3,142 3,142 Costs related to capital increases (116) (116) Equity as of March 31, 2008 32,105,174 32,105 726,456 1,332 (493,616) 266,277 Total comprehensive income 411 (84,569) (84,158) Issuance of shares 23,987,771 23,988 383,804 407,792 Warrant exercises 194,562 195 1,633 1,828 Share-based payment 13,737 13,737 Costs related to capital increases (33,153) (33,153) Equity as of December 31, 2008 56,287,507 56,288 1,078,740 1,743 (564,448) 572,323 Total comprehensive income 305 (69,708) (69,403) Warrant exercises 150,813 151 814 965 Share-based payment 3,827 3,827 Equity as of March 31, 2009 56,438,320 56,439 1,079,554 2,048 (630,329) 507,712 The share capital is not available for distribution, while other reserves are distributable for dividend purposes subject to the provision of the Danish Public Company Act.
LifeCycle Pharma achieved strong progress in its pipeline. Positive Results in the Phase 2 extension study for LCP-AtorFen as well as in Phase 2 for LCP-TacroTM in de novo kidney patients.
| Source: Veloxis Pharmaceuticals A/S
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