BIOTIE THERAPIES CORP. INTERIM REPORT August 7, 2009
at 8.30 a.m.
Biotie Therapies Corp. interim report January 1 - June 30, 2009
January - June 2009 in brief
- On August 6, 2009 the Board of Directors have taken the decision to
pool capacities and strengthen the Company's focus on the more
advanced key research and development programs and terminate
development of certain early R&D programs as a result of the
completion of the integration process with the German subsidiary
Biotie Therapies GmbH.
- In February and March 2009, Biotie initiated two clinical studies
in rheumatoid arthritis and psoriasis patients with its fully human
VAP-1 monoclonal antibody. Results from these studies are expected to
become available during the first half of 2010.
- In March 2009, Lundbeck acquired the North-American and Mexican
rights for Nalmefene from Somaxon Pharmaceuticals. In April 2009,
Lundbeck acquired the Turkish marketing and distribution rights for
Nalmefene from Eczacibasi Ilac Pazarlama A.S. and now has worldwide
rights, excluding South-Korea
- Biotie's Annual General Meeting was held on 29 May 2009.
- Revenue for January - June 2009 amounted to EUR 2.7 million (EUR
3.2 million in 2008). Cash flow in January - June from operating
activities was EUR -6.7 million (EUR -5.8 million in 2008).
- The net loss for January - June 2009 stood at EUR 5.7 million (net
loss for comparable period in 2008 was EUR 3.3 million) excluding
extraordinary items in relation to write-offs of certain intangible
assets. Total net loss for January-June 2009 including extraordinary
items in relation to write-offs of intangible assets was EUR 9.6
million (net loss for January - June 2008 was EUR 3.3 million) and
earnings per share for the period was EUR -0.07 (EUR -0.04 in 2008).
- As of June 30, 2009, the company's liquid assets amounted to EUR
18.8 million (EUR 23.0 million as of June 30, 2008).
Q2/2009 in brief:
- The net loss in April - June, 2009 stood at EUR 2.9 million (net
loss of comparable period in 2008 was EUR 1.3 million) excluding
extraordinary items in relation to write-offs of certain intangible
assets. Total net loss for April - June 2009 including extraordinary
items amounted to 6.7 million (net loss for April - June 2008 was 1.3
million). Cash flow in April - June, 2009 from operating activities
was EUR -3.3 million (EUR -2.5 million in 2008).
- Revenue for April - June, 2009 stood at EUR 1.4 million (EUR 1.8
million in 2008) and earnings per share was EUR -0.05 (EUR -0.01 in
2008).
Strengthening focus on key programs
- As a result of the completion of the integration process with the
German subsidiary Biotie Therapies GmbH, on August 6, 2009 the Board
of Directors have taken the decision to pool capacities and
strengthen the Company's focus on the more advanced research and
development programs and terminate certain early R&D programs.
The key programs in the central nervous system disease area continue
to be nalmefene for alcohol dependence and the PDE10 inhibitor
program for schizophrenia. In the inflammatory disease area the focus
remains in the clinical phase programs: the PDE4 inhibitor program
for COPD and the VAP-1 fully human monoclonal antibody program for
rheumatoid arthritis and psoriasis.
The company has a portfolio of earlier phase R&D programs. Active
development of the PDE platform program, SSAO inhibitor program, and
integrin alpha2beta1 inhibitor program will continue. Active
development and investing in the immunosuppression program, the
buprenorphin depot program, the bioheparin program, and the HCV
infection program will be terminated. Gilead informed the Company
during Q2 about its decision to terminate the license agreement
pertaining to certain research compounds and their development for
the treatment of HCV infection. Related to this, Biotie has decided
to wind-down its wholly owned Belgian subsidiary 4AZA IP NV, which
held the patents for the immunosuppression and the HCV infection
programs.
These decisions lead to a write-off of intangible assets which were
originally recorded in the balance sheet as a result of restructuring
of former elbion group prior to the purchase of elbion GmbH. These
one-time impairment losses amount to EUR 5.4 million and have no
impact on the cash position of the group. There is also no change in
the future outlook of the Company. Biotie is now more focused to
pursuing the development programs it expects to deliver high
commercial value for the Company.
Timo Veromaa, Biotie's President and CEO:
"Over the past quarters since the acquisition of our German
subsidiary we have achieved our strategic goal of integrating and
streamlining the operations and clinical development programs from
both companies. While we are discontinuing development of certain
earlier stage candidates, we continue to see strong clinical progress
for our partnered alcohol dependence candidate and our VAP-1 antibody
and PDE10 inhibitor programs for inflammation and CNS disorders. With
renewed focus and improved structure, we are well-positioned for
future growth and evolution."
About Biotie Therapies
Biotie is a drug discovery and development company focused on central
nervous system and inflammatory diseases. It has a broad range of
innovative small molecule and biological drug candidates at different
stages of clinical and pre-clinical development.
Current Status of Drug Development Projects in Clinical or
Pre-clinical Stages:
Nalmefene, a new treatment paradigm for alcohol dependence. Nalmefene
builds on a novel principle of treating alcohol dependence. Unlike
existing therapies, the treatment with Nalmefene is not aimed at
keeping the patients from drinking. Nalmefene instead removes the
desire to drink, thereby controlling and limiting the intake of
alcohol. Nalmefene distinguishes itself by being available as an oral
tablet formulation to be taken on an as needed basis.
At the end of 2008, Lundbeck launched three phase III trials, which
seek to enroll about 1,800 patients. The first two trials, in which
patients are treated over a period of six months, serve to confirm
the efficacy of Nalmefene, whilst the objective of the last study, in
which patients are treated for 12 months, is to assess the safety
and tolerability of the compound. We expect preliminary trial data to
become available during the first half of 2011. Biotie is
participating in financing some of the clinical development costs.
In March 2009, Lundbeck acquired the North-American and Mexican
rights to Nalmefene from Somaxon Pharmaceuticals. In April 2009
Lundbeck acquired the Turkish rights from Eczacibasi Ilac Pazarlama
A.S. and has now worldwide rights for Nalmefene, excluding
South-Korea. Under the terms of the Biotie-Lundbeck license
agreement, Biotie is eligible for up to EUR 84 million in upfront and
milestone payments plus royalties on sales.
ELB353, an oral PDE4 inhibitor for COPD in clinical development.
ELB353 is a once-daily, oral phosphodiesterase 4 (PDE4) inhibitor
with therapeutic potential in chronic inflammatory disorders,
particularly in chronic obstructive pulmonary disease (COPD), a
serious disorder with major unmet medical need.
ELB353 has been well tolerated in a Phase I single and multiple
dosing studies, particularly with respect to central nervous system
and gastrointestinal side effects, areas which have posed a
significant development hurdles for PDE4 inhibitors in the past.
Futhermore, blood plasma profiles of ELB353 showing pronounced and
long lasting exposure support once-daily dosing.
Biotie intends to initiate additional clinical studies later in 2009
with the aim to obtain proof of pharmacodynamic activity in
humans, corroborate the safety profile and establish dose ranges for
further therapeutic studies.
VAP-1, a key inflammation receptor. Vascular Adhesion Protein-1
(VAP-1) is Biotie's proprietary target. VAP-1 has been shown to play
a key role in mediating the inflammatory events associated with
chronic diseases such as rheumatoid arthritis, psoriasis and
diabetes. VAP-1 also may be potentially applicable to other chronic
inflammatory diseases for which there is a clear unmet medical need.
VAP-1 function can be blocked by either antibody (biologic) drugs or
small molecule drugs which target the enzyme (SSAO) domain of the
receptor. Both approaches are being pursued by Biotie for various
therapeutic indications.
VAP-1 antibody, a high value biologic for inflammatory diseases in
clinical development. Biotie is developing a fully human monoclonal
antibody which blocks VAP-1 function. Biotie completed the
first-in-man, single dose, placebo-controlled clinical study with the
VAP-1 antibody in 2008 and is now conducting two multiple dose
clinical studies in rheumatoid arthritis and psoriasis patients,
which were respectively initiated in February and March 2009. These
studies aim to establish appropriate dosing regimens for subsequent
therapeutic studies and provide initial information on the antibody's
therapeutic potential.
In 2006, Biotie and Roche have signed an option agreement for
Biotie's fully human antibody program targeting VAP-1 in inflammatory
disease. Roche has paid Biotie EUR 5 million, which grants Roche an
exclusive option right to an exclusive, worldwide license agreement
for Biotie's VAP-1 antibody, excluding Japan, Taiwan, Singapore, New
Zealand, and Australia. The initial option right will end upon
completion of phase I.
Seikagaku Corporation has licensed the rights for the product for
Japan, Taiwan, Singapore, New Zealand, and Australia against up to
USD 16.7 million in milestone payments plus royalties of sales in the
territory. Biotie has already received USD 2.7 million from
Seikagaku.
VAP-1 SSAO inhibitors. Biotie and Roche also collaborate on the
development of small molecule VAP-1 SSAO inhibitors. Under the terms
of the collaboration, both parties carry their own costs, but Biotie
retains ownership of the developed compounds until Roche chooses to
exercise its option for in-licensing. Under the terms of the
collaboration and option agreement, Roche may pay Biotie up to EUR 5
million to maintain its exclusive option for rest-of-world rights
excluding Seikagaku's territory (Japan, Taiwan, Singapore, New
Zealand and Australia).
Seikagaku has an option to license a VAP-1 enzyme inhibitor in its
territory. If Seikagaku exercises its option, Biotie will receive up
to USD 16.7 million in milestone payments plus royalties of sales in
the territory based on the pre-negotiated licensing agreement.
Seikagaku will also be responsible for clinical development costs to
bring the product to market in the territory.
Phosphodiesterase 10 (PDE10) inhibitors, a novel treatment paradigm
for Schizophrenia. PDE10 is a novel molecular drug target in
schizophrenia and Biotie has shown antipsychotic activity of PDE10
inhibitors in animal models. Biotie's PDE10 inhibitors are believed
to serve the unmet medical need for novel anti-psychotic drugs with
an improved side effect profile and improved efficacy in
schizophrenia.
PDE10 discovery and development program is partnered with Wyeth
Pharmaceuticals in December 2006. Biotie is eligible for up to USD
110 million in signing fee, milestone payments and research funding.
Biotie will in addition be eligible for royalties on sales.
Revenues
Revenue for the period of January 1 to June 30, 2009 was EUR 2.7
million (in the same period 2008, EUR 3.2 million). Revenue consisted
of income from the ongoing research collaboration with Wyeth and
periodization of previously received up-front payments of the
licensing agreements the company has in place with several licensing
partners. No new milestones or signing fees were received during the
reporting period.
In August 2007, the central development agency for the state of
Saxony (Sächsische Aufbaubank, SAB) awarded a research and technology
grant for drug discovery and early development activities to the
German subsidiary Biotie Therapies GmbH in the amount of EUR 3.8
million. The money has been awarded as a non-refundable grant to be
drawn down during the period between August 2007 and July 2010
against reported realized costs. As of June 30, 2009, EUR 1.8 million
of this grant were still available to the company. The grant covers
65% of personnel and project related cost, so Biotie Therapies GmbH
must show a total expenditure of EUR 2.8 million until July 2010 in
relation to the research projects in order to benefit from the full
amount still available. Payments to Biotie Therapies GmbH in relation
to this grant are reported as other operating income.
Financial results
The net loss for the reporting period was EUR 5.7 million excluding
extraordinary items in relation to write-offs of intangible assets.
Total net loss for January-June 2009 including extraordinary items
amounted to EUR 9.6 million. The corresponding loss for the previous
year was EUR 3.3 million, no extraordinary items were reported.
Research and development costs for the period amounted to EUR 7.5
million, excluding extraordinary items (in 2008 EUR 5.2 million).
Impairment losses were recorded due to the decision of the Board of
Directors as of August 6, 2009 to pool capacities for the development
of the more advanced projects and terminating active development of
the immunosuppression program (EUR 1,0 million), termination of the
development of the Buprenorphine Depot product (EUR 2 million),
termination of the HCV infection program after the termination of the
license agreement with Gilead, and subsequent winding down of
Biotie's wholly owned Belgian subsidiary 4AZA IP NV (EUR 2,4
million).
Patent costs have been booked as expenses and were not capitalized.
Financing
Cash and cash equivalents totaled EUR 18.8 million on June 30, 2009
(EUR 23.0 million on June 30, 2008).
The company has predominantly invested its liquid assets into bank
deposits and money market funds. Bank deposits with maturity more
than 3 months are reported in "investments held to maturity" whereas
deposits with maturity less than 3 months are reported in the "cash
and cash equivalents". Money market funds are reported at fair value
in financial assets at fair value through profit or loss.
In September 2008, The Finnish Funding Agency for Technology and
Innovation (Tekes) granted EUR 0.6 million additional funding for
Biotie Therapies' VAP-1 antibody program. The R&D funding granted
covers drug development costs of the project from August 2008 to
December 2009.
The funding granted is in the form of a loan and it covers about 70
per cent of the costs of the project. The loan will be paid to Biotie
against reported realized costs. In order to receive the full amount
of granted financing, Biotie must show a total expenditure of EUR 0.8
million in the project.
In January 2008, The Finnish Funding Agency for Technology and
Innovation (Tekes) granted EUR 1.7 million additional funding for
Biotie Therapies' integrin alpha2beta1 inhibitor program for
thrombosis. The R&D funding granted covers drug development costs of
the project from July 2007 to December 2009.
The funding granted is in the form of loan and it covers 50 per cent
of the costs of the project. The loan will be paid to Biotie against
reported realized costs. In order to receive the full amount of
granted financing, Biotie must show a total expenditure of EUR 3.4
million in the project.
New option program
On April 26, 2009, Biotie's Board resolved to issue option rights.
The resolution of the Board of Directors is based on the resolution
of the company's Extraordinary General Meeting of 14 November 2008
according to which the Board of Directors was authorised to resolve
on the issuance of a maximum of 7,000,000 shares through a share
issue or by granting option rights or other specific rights to the
shares pursuant to chapter 10 of the Companies Act in order to, for
example, create new incentive schemes.
The company issued a total of 7,000,000 option rights that entitle
the option holders to subscribe for a total 7,000,000 new shares in
the company.
In the event the shares subscribed on the basis of the issued option
rights are subscribed in full, the proportion of the subscribed
shares shall be approximately 4.6 per cent of the shares of the
company after the registration of the increase in the share capital,
without taking into account the new shares to be possibly subscribed
pursuant to the convertible loans and other option schemes issued by
the company.
The subscription periods and prices for the shares are as follows:
+-------------------------------------------------------------------+
| Tranche | Subscription period | Subscription | Number of |
| | | price | option rights |
| | | | |
|---------+---------------------+-------------------+---------------|
| 2009 A | 1 Jan 2010 - 31 Dec | EUR 0.4 per share | 2,000,000 |
| | 2013 | | |
|---------+---------------------+-------------------+---------------|
| 2009 B | 1 Jan 2011 - 31 Dec | EUR 0.7 per share | 2,500,000 |
| | 2013 | | |
|---------+---------------------+-------------------+---------------|
| 2009 C | 1 Jan 2012 - 31 Dec | EUR 1 per share | 2,500,000 |
| | 2013 | | |
|---------+---------------------+-------------------+---------------|
| Total | | | 7,000,000 |
+-------------------------------------------------------------------+
The determination of the subscription price of the share is based on
the market price of the Company's share and, thus, it sets an
incentive to the key personnel in order to add ownership value. The
subscription price of the shares shall be recorded in the company's
reserve for invested unrestricted equity.
The Board of Directors may decide on other than essential amendments
and specifications to the terms and conditions of the option rights,
as well as other matters related to the option rights.
The board has made a resolution on the allocation of 5,000,000 option
rights to the management team of the company; 2,000,000 option rights
were granted to the Managing Director and 3,000,000 to other
management team members. 2,000,000 option rights were left
unallocated for eventual future use.
Out of the 5 million option rights that have been allocated to the
management, the rights to subscribe shares with 1,250,000 options are
conditional to achieving certain set targets. The full cost is booked
also for conditional option rights.
Shareholder's equity
The shareholders' equity of the group amounts to EUR -9.4 million.
Biotie's equity ratio was -29.8 % on June 30, 2009 (-57.6 % in 2008).
According to Finnish Accounting Standards (FAS), shareholders' equity
is less than half of the parent company's share capital. The
company's share capital is EUR 44.3 million, shareholders' equity is
EUR 10.0 million and capital loans stand at EUR 21.3 million. Thus,
shareholders' equity plus capital loans add up to EUR 31.3 million.
The Company does not have funds that could be used for profit
distribution.
Investments and cash flow
The cash flow from operations was EUR -6.7 million for January - June
2009 (comparable period in 2008 EUR -5.8 million). The group's
investments during the reporting period amounted to EUR 86 thousand
(EUR 109 thousand in 2008).
Personnel
During the reporting period January - June 2009, the company's
personnel was on average 80 (35 during January - June, 2008) and at
the end of the reporting period 81 (36 on June 30, 2008). The
increase is due to the inclusion of the German subsidiary, which was
acquired in November 2008.
Annual General Meeting
The Annual General Meeting (AGM) of Biotie Therapies Corp. was held
on 29 May 2009. The key resolutions of the AGM are summarized below.
The AGM of Shareholders adopted the financial statements for the
financial year 1 January - 31 December 2008. The Annual General
Meeting resolved in accordance with the proposal of the Board of
Directors that the loss of the financial year shall be transferred to
the unrestricted equity and no dividend shall be paid.
The AGM discharged the members of the Board of Directors and the
President and CEO from liability concerning the financial year from 1
January - 31 December 2008.
The number of the members of the Board of Directors was resolved to
be seven. Juha Jouhki, Ann Hanham, Bernd Kastler, Pauli Marttila,
Riku Rautsola, Christoph Schröder and Pierre Serrure were re-elected
as the members of the Board of Directors.
The Annual General Meeting resolved that the remuneration payable to
the members of the Board of Directors be EUR 3,000 per month for the
Chairman and each member residing abroad and EUR 1,500 per month for
each member residing in Finland. In addition, reasonable travelling
expenses for the meetings shall be compensated.
PricewaterhouseCoopers Oy, Authorized Public Accountants, and Janne
Rajalahti, Authorized Public Accountant, were re-elected as auditors
of the company.
At the organization meeting of the new Board of Directors, which
convened immediately after the Annual General Meeting, Juha Jouhki
was elected as the Chairman of the Board of Directors and Pauli
Marttila as the deputy chairman.
Juha Jouhki, Christoph Schröder, and Pauli Marttila were elected to
the Board's internal Nomination and Remuneration Committee and Bernd
Kastler, Riku Rautsola, and Piet Serrure were elected to the Audit
Committee.
The AGM authorised the Board of Directors to resolve on the right to
issue new shares or dispose of the shares in the possession of the
company and to issue options or other specific rights to the shares
pursuant to chapter 10 of the Finnish Companies Act. The
authorisation consists of up to 25,000,000 shares in the aggregate. A
maximum of 819,000 own shares in the possession of the company may be
conveyed.
The authorisation does not exclude the Board of Directors' right to
decide on a directed share issue. The authorisation may be used for
material arrangements from the company's point of view, such as
financing or implementing business arrangements or investments or for
other such purposes determined by the Board in which case a weighty
financial reason for issuing shares, options or other specific rights
and possibly directing a share issue exists. Further, the
authorisation may be used to create new share-based incentive
schemes.
The Board of Directors was authorised to decide on all other terms
and conditions of a share issue, options and other specific share
entitlements as referred to in chapter 10 of the Finnish Companies
Act, including the payment period, determination grounds for the
subscription price and subscription price or allocation of shares,
option rights or specific rights free of charge or that the
subscription price may be paid besides in cash also by other assets
either partially or entirely.
The authorisation is effective until 30 June 2010 and it does not
supersede earlier authorisations.
Group structure
The parent company of the group is Biotie Therapies Corp. The
domicile of the Company is Turku, Finland. The group has an operative
subsidiary, Biotie Therapies GmbH, located in Radebeul, Germany.
Furthermore, Biotie Therapies GmbH has a wholly owned subsidiary,
4AZA IP NV, based in Leuven, Belgium. This company is a special
purpose company with the sole activity of holding certain
intellectual property rights. On August 6, 2009, the Board of
Directors has taken the decision to wind down the wholly owned
Belgian subsidiary 4AZA IP NV.
The parent company also has a non-operational subsidiary named Biotie
Therapies International Ltd in Finland and an associated company with
no activities, Contral USA which is domiciled in Delaware, USA.
Share capital and Shares
Biotie's shares are quoted on the NASDAQ OMX Helsinki Ltd (Small cap,
Healthcare). Biotie Therapies has 144,320,560 shares outstanding and
the share capital amounts to EUR 44,290,678.10 (under Finnish
Accounting Standards, FAS). All the company's shares are of the same
series and have equal rights. All the shares are freely transferable
and contain one voting right each.
The company has in its possession 819.000 of its own shares. The
company has a stock lending agreement with EVLI Bank in place in
relation to the company's option programs. Pursuant to this
agreement, the number of the company's own shares in its possession
may be temporarily less than 819,000.
At the end of June, 2009, the share price was EUR 0.33, the highest
price during January - June was EUR 0.48, the lowest was EUR 0.23,
and the average price was EUR 0.30. Biotie's market capitalization at
the end of June was EUR 47.6 million.
The trading volume during the reporting period January - June, 2009
was 20,710,329, corresponding to a turnover of approximately EUR 6.2
million.
Changes in ownership
In February 2009, the company became aware of a notice of change in
ownership exceeding the disclosure threshold. Information on notices
of change in ownership are available on the company's website at
www.biotie.com/investors.
Short-term risks and uncertainties
Biotie's strategic risks are predominantly related to the technical
success of the drug development programs, regulatory issues, the
strategic decisions of its commercial partners, ability to obtain and
maintain intellectual property rights for its products, validity of
its patents, launch of competitive products and the development of
the sales of its products and availability of funds to support its
operations. For example, even though the commercialization and
collaboration agreements on the company's product development
projects have been concluded, there can be no assurance that the
contracting partner will act in accordance with the agreement, the
authorities will approve the product under development or the
approved product will be commercialized. The development and success
of the company's products depends to a large extent on third parties.
Any adverse circumstance in relation to any of its R&D programs might
jeopardize the value of the asset and thus, represent a severe risk
to the company. Such adverse events could happen on a short term
notice and are not possible to foresee.
The key operational risks of Biotie's activities include the
dependency on key personnel, assets (especially assets in relation to
intellectual property rights) and dependency on its license partners'
decisions.
Significant financial resources are required to advance the drug
development programs into commercialized pharmaceutical products. To
fund the operations, the group relies on its ability to secure
financing from four major sources: income from its license partners,
grant income, loans from TEKES and raising equity financing in the
capital markets.
Entering into commercialization, collaboration and licensing
agreements with larger pharmaceutical companies entitles the Company
and its subsidiaries to receive up-front, milestone dependent and
royalty payments from these partners. Although Biotie has currently
several active license agreements in place, any decision by one of
its partners to terminate an agreement would have a negative effect
on the short to medium term access to liquidity of the Company.
In addition, the Company relies on different sources of research and
development grants and loans. These funds, which are provided through
regional, national or EU level institutions with the aim of fostering
economic and technological progress in the region in which the group
operates, have been historically available to Biotie at substantial
levels. Availability of such funds in the mid- to long term future
cannot be guaranteed and thus this poses a potential risk to the
income situation of the group in the future. Income and loans from
such sources have been secured until 2009. So far, the Company has no
indication that this source of financing will be available beyond
2009.
Furthermore, the Company relies on capital market to raise equity and
debt financing from time to time. There can be no assurance that
sufficient financing can be secured in order to permit the Company to
carry out its planned activities. Current capital market conditions
are volatile and it is currently uncertain whether the Company can
secure equity financing if and when it needs it from capital markets.
To protect the continuity of Biotie's operations, sufficient
liquidity and capital has to be maintained and the Company and its
subsidiaries. The group aims to have cash funds to finance at least
one year's operations at all times. The group can influence the
amount of capital by adapting its cost basis according to the
financing available. Management monitors the capital and liquidity on
the basis of the amount of equity and cash funds. These are reported
to the Board on a monthly basis.
Events after the reporting period
Strengthening focus on key programs
On August 6, 2009, the Board of Directors decided to strengthen the
company's focus on the more advanced key research and development
projects and decided to terminate certain early R&D programs.
The key programs in the central nervous system disease area continue
to be nalmefene for alcohol dependence and the PDE10 inhibitor
program for schizophrenia. In the inflammatory disease area the focus
remains in the clinical phase programs: the PDE4 inhibitor program
for COPD and the VAP-1 fully human monoclonal antibody program for
rheumatoid arthritis and psoriasis.
The company has a portfolio of earlier phase R&D programs. Active
development of the PDE platform program, SSAO inhibitor program, and
integrin alpha2beta1 inhibitor program will continue. Active
development and investing in the immunosuppression program, the
buprenorphin depot program, the bioheparin program, and the HCV
infection program will be terminated.
Gilead informed the Company during Q2 about its decision to terminate
the license agreement pertaining to certain research compounds and
their development for the treatment of HCV infection. Related to
this, Biotie has decided to wind-down its wholly owned Belgian
subsidiary 4AZA IP NV, which held the patents for the
immunosuppression and the HCV infection programs.
These decisions lead to a write-off of intangible assets which were
originally recorded in the balance sheet as a result of restructuring
of former elbion group prior to the purchase of elbion GmbH. These
one-time impairment losses amount to EUR 5.4 million and have no
impact on the cash position of the group and have no immediate impact
in the future outlook of the Company. Biotie is now more focused to
pursuing the development programs it expects to deliver high
commercial value for the Company.
Changes in ownership
Biotie has on July 22, 2009 gained knowledge of the notifications
regarding the following changes in holdings in accordance with
Chapter 2, Section 9 of the Finnish Securities Markets Act.
Elbion NV, Biotie's current largest shareholder notified the Company
that as a result of a series of share transactions carried out on
July 20, 2009, the holdings of elbion NV in the Company have
decreased from above 31.20% to below 5%. As a consequence, elbion NV
has no longer the obligation to make a public tender offer in
accordance with Chapter 6, Section 10 of the Finnish Securities
Markets Act. In November 2008, elbion NV was granted an exemption
from the obligation to make such a public tender offer for all the
Biotie shares even though its holdings exceeded 3/10 of the voting
rights attached to all shares of the Company. The originally granted
exemption provided for a reduction of the elbion NV voting rights in
Biotie referred to in Chapter 6, Section 10 of the Finnish Securities
Markets Act to or below 3/10 within nine months from the date the
Shares issued to elbion NV in connection with the Exchange Offer had
been entered into the Trade Register.
Moreover, TVM Life Science Ventures VI GmbH & Co. KG and Burrill &
Company LLC have notified the Company that as a result of these share
transactions carried out on July 20, 2009, the aggregate holdings of
these shareholders have increased to above 10% and 5% respectively.
Future outlook
- During 2009, Biotie will provide support to its license partner
Lundbeck for the ongoing phase III studies with Nalmefene in alcohol
dependence.
- Biotie will perform two clinical studies with its proprietary VAP-1
antibody in psoriasis and rheumatoid arthritis patients in the course
of 2009. Results of these studies will become available in the first
half of 2010.
- The company intends to initiate a clinical trial for its
proprietary, small molecule PDE-4 inhibitor ELB353 with the aim to
obtain proof of pharmacodynamic activity in humans, corroborate the
safety profile and establish dose ranges for further therapeutic
studies.
- In its collaboration with Wyeth on the discovery and development of
novel PDE10 inhibitors for the treatment of psychiatric disorders,
Biotie and its partner intend to identify development candidates.
- Due to the increasing clinical trial activity it is foreseeable
that the company's R&D expenses excluding the extraordinary
impairment costs will increase in comparison to previous financial
year. At the same time, income will also be higher due to the
additional income generated through the company's newly acquired
subsidiary. Overall, negative cash flow from operational activities
is expected to moderately increase in comparison to previous
financial year.
Next financial report
Biotie's interim report for the January - September 2009 period will
be published on October 23, 2009.
IFRS and Accounting principles
The 2009 interim report has been prepared in accordance with IFRS
recognition and measurement principles, and applying the same
accounting policy as for the 2008 financial statements. In addition,
the changes in the presentation of statement of comprehensive income
and the statement of changes in equity according to the revised IAS 1
have been applied in the interim report. The IFRS 8 'operating
segments' standard does not have an impact on the presentation of the
Group's financial statements since the Group is operating as one
segment. The interim report has been prepared in accordance with IAS
34, Interim Financial Reporting.
Financial statements for the period from January 1, 2009 to June 30,
2009 are not directly comparable to those of the same period in 2008
due to the inclusion of the operating result of the wholly owned
subsidiary Biotie Therapies GmbH (formerly elbion GmbH) in 2009.
This interim report is unaudited.
In Turku, August 7, 2009
Biotie Therapies Corp.
Board of Directors
For further information, please contact:
Virve Nurmi, Investor Relations Manager
tel. +358 2 274 8900, e-mail: virve.nurmi@biotie.com
Distribution:
NASDAQ OMX Helsinki Ltd
Main Media
www.biotie.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(IFRS)
1.4.- 1.4.- 1.1.- 1.1.- 1.1.-
30.6.2009 30.6.2008 30.6.2009 30.6.2008 31.12.2008
EUR 3 months 3 months 6 months 6 months 12 months
1,000
Revenue 1,357 1,838 2,740 3,159 5,127
Research and -8,988 -2,797 -12,913 -5,200 -8,730
development
expenses
General and -937 -424 -1,899 -899 -2,020
administrative
expenses
Other operating 352 61 760 120 502
income
Other operating -8 0 -12 0 0
expense
Operating -8,224 -1,322 -11,324 -2,820 -5,121
profit/loss
Financial income 187 231 446 235 1,432
Financial expenses -267 -191 -544 -717 -1,864
Profit/loss before -8,304 -1,282 -11,422 -3,302 -5,553
taxes
Taxes 1,624 0 1,859 0 76
Net income/loss -6,680 -1,282 -9,563 -3,302 -5,477
Total -6,680 -1,282 -9,563 -3,302 -5,477
comprehensive
income of the
period
Net income/loss
attributable to
Parent company -6,680 -1,282 -9,563 -3,302 -5,477
shareholders
Total
comprehensive
income
attributable to:
Parent company -6,680 -1,282 -9,563 -3,302 -5,477
shareholders
Earnings per share -0.05 -0.01 -0.07 -0.04 -0.06
(EPS)
basic & diluted,
EUR
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IFRS)
EUR 1,000 30.6.2009 30.6.2008 31.12.2008
Assets
Non-current assets
Intangible assets 7,217 720 10,352
Goodwill 379 0 379
Property, plant and equipment 2,903 370 2,792
Other shares 10 0 0
10,509 1,090 13,523
Current assets
Prepaid expenses 0 0 2,400
Available for sale investment 131 0 131
Investments held to maturity 10,000 17,500 18,500
Accounts receivables and other 2,170 726 1,512
receivables
Financial assets at fair value through 3,011 0 0
profit or loss
Cash and cash equivalents 5,769 5,504 6,738
21,081 23,730 29,281
Total 31,590 24,820 42,804
Equity and liabilities
Shareholders' equity
Share capital 36,361 19,850 36,361
Reserve for invested unrestricted 980 980 980
equity
Retained earnings -37,204 -31,832 -31,754
Net income/loss -9,563 -3,302 -5,477
Shareholders' equity total -9,426 -14,304 110
Non-current liabilities
Provisions 153 3 121
Non-current financial liabilities 25,403 24,538 24,930
Pension benefit obligation 586 0 574
Other non-current liabilities 6,359 5,375 5,881
Non-current deferred revenues 1,593 3,253 2,966
Deferred tax liabilities 0 0 1,859
34,094 33,169 36,331
Current liabilities
Provisions 641 20 641
Pension benefit obligation 15 0 10
Current financial liabilities 233 143 144
Current deferred revenues 3,056 4,497 3,501
Accounts payable and other current 2,977 1,294 2,067
liabilities
6,922 5,955 6,363
Liabilities total 41,016 39,124 42,694
Total 31,590 24,820 42,804
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Attributable to equity holders of the parent company
EUR 1,000 Shares Share Reserve Own Retained Share-
(1000 Capital For Shares Earnings holders'
pcs) invested equity
Un- total
restricted
equity
Balance at 90,212 19,850 980 -15 -31,930 -11,117
1.1.2008
Total -3,302 -3,302
comprehensive
income for the
period
Options granted 115 115
0 0 0 0 -3,187 -3,187
BALANCE AT 90,212 19,850 980 -15 -35,117 -14,304
30.6.2008
Total -2,175 -2,175
comprehensive
income for the
period
Options granted 78 78
Share issue 54,109 16,873 16,873
Cost of share -362 -362
issue
54,109 16,511 0 0 -2,097 14,414
BALANCE AT 144,321 36,361 980 -15 -37,215 110
31.12.2008
Total -9,563 -9,563
comprehensive
income for the
period
Options granted 27 27
0 0 0 0 -9,536 -9,536
BALANCE AT 144,321 36,361 980 -15 -46,751 -9,426
30.6.2009
CONSOLIDATED STATEMENT OF CASH FLOWS
1.1.- 1.1.- 1.1.-
30.6.2009 30.6.2008 31.12.2008
EUR 1,000 6 months 6 months 12 months
Cash flow from operating Activities
Net income/loss -9,563 -3,302 -5,477
Adjustments:
Non-cash transactions 4,141 240 -4,303
Addition/disposal due to -11 0 0
revaluation
of financial assets at fair
value through profit or loss
Interest and other 544 717 1,863
financial expenses
Interest income -445 -235 -1,431
Taxes -1,859 0 -76
Change in working capital:
Change in accounts receivables and -589 245 446
other receivables
Change in accounts payable and 904 -3,499 -277
other liabilities
Change in mandatory provisions 32 -10 -152
Interests paid -81 -2 -29
Interests received 242 31 66
Taxes paid -5 0 0
Net cash from operating activities -6,690 -5,815 -9,370
Cash flow from investing activities
Acquisition of subsidiary, net of cash 1,881
acquired
Change in financial assets at
fair value through profit or loss
Additions -3,000 0 0
Disposals 0 27,685 27,685
Change in investments held to maturity
Additions -900 -22,500 -46,300
Disposals 9,400 5,000 28,321
Investments to tangible assets -86 -27 -34
Net cash used in investing activities 5,414 10,158 11,553
Cash flow from financing activities
Payments from share issue 0 0 3,300
Share issue costs 0 0 -362
Proceeds from borrowings 360 888 1,374
Repayment of loans 0 0 -40
Repayment of lease -52 -32 -21
Commitments
Net cash from financing activities 308 856 4,250
Net increase (+) or decrease (-) -969 5,199 6,433
in cash and cash equivalents
Cash and cash equivalents in the 6,738 305 305
beginning of the period
Cash and cash equivalents in the 5,769 5,504 6,738
end of the period
Contingent liabilities
EUR 30.6.2009 30.6.2008 31.12.2008
1,000
Operating lease 145 152
commitments 123
Due within a year 82 62 64
Due later 63 90 59
Rent commitments 454 578 532
Due within a year 233 222 233
Due later 221 356 299
Total 599 730 655
The Group leases motor vehicles, machines and equipment with leases
of 3 to 5 years.
Rent commitments include Pharmacity premises until 30 November 2011.
These premises have been subleased.
Commitments
On June 30, 2009 Biotie had outstanding purchase obligations,
primarily for contract research work services, totaling EUR 5.4
million.
RELATED PARTY TRANSACTIONS
There have not been other material changes than option allocation to
Managing Director and management team within the related party
transactions in 2009. More information in section new option
programs.
KEY
FIGURES
1.1.- 1.1.- 1.1.-
30.6.2009 30.6.2008 31.12.2008
EUR 1,000 6 months 6 months 12 months
Business
development
Revenues 2,740 3,159 5,127
Personnel on average 80 35 42
Personnel at the end of period 81 36 80
Research and development costs 12,913 5,200 8,730
Capital expenditure 86 109 116
Profitability
Operating profit/loss -11,324 -2,820 -5,121
as percentage of revenues, % -413.3 -89.3 -99.9
Profit/loss before taxes -11,422 -3,302 -5,553
as percentage of revenues, % -416.9 -104.5 -108.3
Balance sheet
Cash and cash equivalents 18,780 23,004 25,238
Shareholders equity -9,426 -14,304 110
Balance sheet total 31,590 24,820 42,804
Financial ratios
Return on equity, % - - -
Return on capital employed, % -53.9 -45.0 -18.3
Equity ratio, % -29.8 -57.6 0.3
Gearing, % -72.7 -11.7 -148.5
Per share data
Earnings per share (EPS) basic & -0.07 -0.04 -0.06
diluted, EUR
Shareholders'equity per share, EUR -0.07 -0.16 0.0008
Dividend per share, EUR
Pay-out ratio, %
Effective dividend yield, %
P/E-ratio
Share price
Lowest share price, EUR 0.23 0.50 0.24
Highest share price, EUR 0.48 0.94 0.94
Average share price, EUR 0.30 0.70 0.51
End of period share price, EUR 0.33 0.53 0.26
Market capitalization 47.6 47.8 37.5
at the end of period MEUR
Trading of shares
Number of shares traded 20,710,329 7,103,973 15,350,613
As percentage of all 14.4 7.9 10.6
Adjusted weighted average 144,320,560 90,211,860 96,734,553
number of shares during the period
Adjusted number of shares 144,320,560 90,211,860 144,320,560
at the end of the period
Formulas for the Calculation of the Key figures
Return on capital employed, %
Profit (loss) before taxes + interest expenses and other financial
expenses
--------------------------------------------------------------- x 100
Balance sheet total - non-interest bearing liabilities
Equity ratio, %
Shareholders' equity
--------------------------------------------------------------- x 100
Balance sheet total - advanced received
Gearing, %
Interest bearing liabilities - cash and cash equivalents
-------------------------------------------------------------- x 100
Shareholders' equity
Earnings per share (EPS)
Profit attributable to parent company shareholders
------------------------------------------------------------------
Adjusted average number of outstanding shares during the period
Shareholders' equity per share
Shareholders' equity
------------------------------------------------------------------
Adjusted number of shares at the end of the period
