Report for the third quarter of 2015 (un-audited)

Transcription

1 SERODUS ASA Report for the third quarter of 2015 (un-audited) Oslo, 27 October 2015 Serodus Q Report

2 ABOUT SERODUS Serodus ASA is a Norwegian drug development company, focusing on new therapeutic products for the treatment of cardiovascular and metabolic diseases with large unmet clinical needs. The company's business model is to seek partnering with international pharmaceutical companies after having demonstrated clinical effect in humans. HIGHLIGHTS FOR THE THIRD QUARTER 2015 Business development and Financial highlights (Comparative figures for the same period 2014 are shown in brackets) o The placement of MNOK 25 in a right issues was completed in Q3 o The strengthened management group was up and running 1. September 2015 o Serodus is scheduling partnering meetings with different business development representatives from pharmaceutical companies and investors at the Bio-Europe meeting in Munich November Pipeline Highlights SER150 Diabetic Nephropathy o Patients are being randomized to the Phase IIa safety study. o The study is running with a high activity level. o No serious adverse events have been observed. SER100 Pulmonary Hypertension o A draft Orphan Drug application has been finalized. Serodus is in discussions to EMA Orphan Drug Office. SER130 Acute Myocardial Infarction o The pre-clinical study program is now finalized and SER130 is ready for Clinical Phase I study. o Pharmacological study in a relevant test model is expected to be initiated in Q SER140 Type 2 Diabetes o A pharmacological study in a second experimental model is currently at the final stage and we expect to present results from the study during Q

3 Commenting on the report, Eva Steiness, CEO of Serodus: The clinical phase IIa study in Diabetic Nephropathy with SER150 is now recruiting patients which is a great step forward. Serodus continuously receives positive feedback to the presentations of its pipeline and potential partners are being kept updated on further development. Serodus new VP, Business Development, will further strengthen our efforts in generating interest in our individual projects as well as in the company. Serodus managed to raise 25 MNOK allowing us to continue the planned project programs in accordance with the financials. We follow our strategy by continuing the development of the pipeline while in parallel seeking strategic partners. OPERATIONAL REVIEW Serodus has taken significant steps towards being a successful biotech company during The company has an extensive development program with indications of strategic importance in the pharma industry. During the year the company has reached several important milestones such as completing the preclinical program for SER130, thus being ready to enter into the clinical stage, initiating the Phase IIa study within Diabetic Nephropathy (SER150) as well as a pre-submission for and Orphan Drug Designation in Pulmonary Hypertension for SER100. Serodus completed a placement of MNOK 25 during third quarter, which enabled the company to advance selected project to value inflicting milestones. However, with the available financing and the extensive development planes the company has, priorities have been made in order to secure that ongoing activities are completed and milestones are reached. In order to advance other development projects the company will seek additional financing. Clinical development An update from the various development programs are given below SER150 for Diabetic Nephropathy (DN) All ten German centres have now screened and most have randomized their first patient. All centres have high screening activity. No serious adverse events have been reported. No patients have dropped out from the study. The primary parameter for the Phase IIa study is safety and tolerability, with secondary endpoints exploring efficacy. SER100 for Pulmonary Hypertension (PH) 3

4 The draft application for Orphan Drug Designation has been finalized and submitted for a pre-submission meeting with the EMA Orphan Drug Office. Serodus is currently performing a pharmacological in vivo study in a relevant experimental model to further support the potential effect in Pulmonary Hypertension. This study is carried out at Queen Mary University Hospital, London. SER130 for Acute Myocardial Infarction (AMI) The protocol for a supplementary pharmacological study in a clinical relevant experimental model is finalized. The study is initiated in mid October with expected results in first half of The pre-clinical data from the regulatory required safety and tolerability studies have been assessed. The required regulatory documentation for the forthcoming clinical study is under preparation. SER140 for Type 2 Diabetes As reported Q SER140 significantly preserved the pancreatic beta cells. Due to this positive outcome the next pharmacological, comparative study with long-term dosing in a relevant diabetic animal model has been initiated. The first results will be available in Q SER100 for Therapy Resistant Isolated Systolic Hypertension Studies were performed to develop an oral formulation of SER100 in a proprietary technology. The results from the studies showed that SER100 penetrates the intestinal wall and gave low oral bioavailability. Since the tested technology did not provide the expected results, Serodus will continue working with other technologies for the development of an oral formulation of SER100. Financial results Q The financial statement has been finalized according to IAS 34. Serodus ASA has used same accounting principles in Q as were used in the financial statement for Year-to-date Serodus ASA had at the end of Q an operating result of minus MNOK 19,7 compared to minus MNOK 9,8 at end of Q

5 The total assets were MNOK 36,7 at the end of Q compared to MNOK 38,1 for the same period in The company currently has a cash/bank account of MNOK 27,3 compared to MNOK 29,4 at the end of Q The total equity was MNOK 34,1 which gave an equity percentage of 92,9%. Price per share has varied between NOK 2.49 and NOK 3.36 during third quarter. Price per share at the end of first quarter was NOK The 20 largest shareholders have 73.3% of the shares. Key Figures (All figures in thousand NOK) Q Q YTD 2015 YTD 2014 Total operating revenue Net operating expenses Operating profit (loss) (7 733) (4 142) (19 558) (10 285) Financial Items, net (80) 92 (287) 447 Total comprehensive income(loss) for the period (7 813) (4 050) (19 845) (9 838) Diluted earnings (loss) per share (0,28) (0,15) (0,70) (0,36) Number of employees Cash and equivalents at end of period OUTLOOK Serodus initiated the Phase IIa study in Diabetic Nephropathy (SER150) during the third quarter. Patients are currently screened and randomized for the study. Diabetic Nephropathy is a disease which affects about 1/3 of all diabetic patients and where todays treatments options are limited. Serodus enters this study with high expectations, as it is an area with great interest from the industry. We expect the results to be presented mid The company is currently also performing a pharmacology study for SER140 for which we expect to present interesting results in Q The study is intended to show how SER140 controls glucose levels and thus Type 2 Diabetes in an experimental model.. The company also initiates an in vivo pharmacological study with SER130 in a relevant experimental model with induced acute myocardial infarction. The first results are expected early

6 Serodus completed the placement of MNOK 25 during Q3-2015, which enables the continued development of selected projects and to reach important milestones for these projects. However, the financial constraints has put a limitation to the current development program. In order to reach the ambitious value creating milestones identified by the company, further funding will be sought. During Q the management group became fully operational, with their proven track record within the industry, their presence is instantly noticeable. This, together with strong product candidates constitutes two important elements towards building a successful biotech company. 6

7 PIPELINE SER150 for Diabetic Nephropathy (DN) SER150 is an anti-inflammatory compound with a novel mode of action and is expected to specifically inhibit the inflammatory processes in the renal arterioles and reduce the progression of renal impairment whereby the amount of protein excreted in urine will decrease. Treatment with antihypertensives is the golden standard treatment of diabetic nephropathy but the treatment does not inhibit the fundamental causes of renal damage. Since the inflammation is a progressive process causing loss of the renal function, SER150 could potentially become a very significant add-on therapy as standard daily treatment of patients with diabetic nephropathy. It is expected that SER150 treatment delays or even prevents the progression of the disease. Consequently, SER150 may have a blockbuster market potential. Disease Diabetic nephropathy is seen in patients after several years with diabetes. The condition is characterized by increased amount of protein in the urine. Protein is a marker of inflammatory processes in the renal arterioles. If the inflammation is not treated, the kidney function deteriorates and the patient will require chronic dialysis or even a kidney transplant. Patients with diabetic nephropathy have a high morbidity and mortality. Standard treatment of diabetic nephropathy is antidiabetics in addition to an antihypertensive drug, like an ACE inhibitor or angiotensin receptor blocker. This therapeutic combination has demonstrated a significant decrease in urinary loss of protein and prolonged the time until dialysis. 7

8 However, when the diabetic inflammatory process develops further, protein will again be found in the urine and be the marker of the progression in diabetic nephropathy. Market Today there are 20 million patients suffering from diabetic nephropathy in the seven major markets (excluding emerging markets such as China, India and Brazil) with an annual growth rate of 4 %. These patients are today insufficiently treated with antidiabetics and ACE inhibitors, and are expected to end up with dialysis treatment. SER100 Pulmonary Hypertension (PH) Pulmonary hypertension (PH) is a lung disorder subdivided into 5 groups based on their pathophysiological background. Patients are severely ill with a life expectancy of few years after the first symptoms have occurred. In the 1980 is, the median survival time was 2-3 years, but based on novel treatment schedules and medication the survival time has doubled. Disease PH is a chronic, progressive disease characterized by elevated blood pressure in the pulmonary arteries. This elevated pressure ultimately results in right ventricular failure and death. The first symptom of PH is usually shortness of breath with everyday activities, such as climbing stairs. Fatigue, dizziness and fainting spells can also be symptoms. Swelling of the ankles, abdomen or legs, bluish lips and skin and chest pain may occur as strain on the heart increases. Eventually, it may become difficult to carry out any physical activities as the disease worsens. Symptoms range in severity, however, a given patient may not have all of the symptoms. Among the 5 sub-groups, group I and group IV are rare disease and give the background for Orphan Drug Designation. Market SER100 will be administrated as IV infusion in severely ill hospitalized PH patients. In the western world approximately PH patients are hospitalized. Obtaining an Orphan Designation means: Reduced Regulatory fees Regulatory assistance with development 10 years (US 7 yrs) exclusivity after Market Authorization SER130 for Acute Myocardial Infarction (AMI) SE130 is an IL-4 receptor partial agonist. In vitro and in vivo studies have confirmed that SER130 has anti-inflammatory potential by inhibiting the mediators of inflammation (i.e. TNF-a down-regulation and inhibition of proliferation of IFN-g producing cells). In vivo SER130 inhibit inflammatory joint processes. Disease In patients suffering from an AMI the blood supply to an area of the heart is acutely 8

9 reduced or completely blocked, which immediately initiates an inflammatory process in the surrounding tissue. The consequence of the inflammation is damage to the heart muscle cells. Treatment of the patients with AMI is first of all pain killers as morphine, and diuretic treatment if signs of pulmonary congestion appears. A more detailed diagnosis with ECG measurements and cardiac imaging follows. Market The average prevalence of AMI in the Western World is 50/ inhabitants. No treatment is currently focusing on the inflammatory processes causing further damages to the cardiac tissue. SER130 will be the first in class anti-inflammatory compound to be used in treatment of AMI. SER130 is expected to inhibit the myocardial inflammatory processes and thereby protect the myocardial cells from further damage. Being first in class SER130 possesses a huge market potential and the product may have block buster potential. SER140 for Type 2 Diabetes SER140 is an anti-inflammatory compound which is expected to prevent cell death (apoptosis) of the insulin-secreting cells (βcells), leading to delayed progression of type 2 diabetes and thus be the first disease modifying anti-diabetic drug candidate. Market In the 10 major markets (US, major 5 in EU, Japan, China, India and Brazil) the prevalent diabetic population is approximately 190 million people of which 120 million are treated. The pharmaceutical market in 2012 was more than $ 28 billion with projected sales in 2022 of $68 billion. SER100 for Treatment Resistant Isolated Systolic Hypertension (TRISH) TRISH is a large group of patients with systolic blood pressure >140 mmhg and diastolic blood pressure <90 mmhg, in treatment with three or more different antihypertensive drugs and still not having normal blood pressure. It is estimated that nearly 50 % of all incidences of stroke and other cardiovascular events are caused by high systolic blood pressure. SER100 is expected to reduce the abnormally high systolic blood pressure in patients already treated with three antihypertensives and will thus be an important additional medical treatment. Market According to estimates the global patient population for TRISH is predicted to be approximately 25 million. Thus with a reasonable market share SER100 has a blockbuster market potential. 9

10 INTERIM FINANCIAL STATEMENT Profit & Loss (All figures in thousand NOK) Q Q YTD 2015 YTD 2014 Operating income Revenue Operating expenses Cost of sales - Personnel expenses Depreciation of assets Amortization of assets - Other Operating Expenses Total Operating Expenses Operating result (7 733) (4 142) (19 558) (10 285) Financial income Interest Other financial income Total Financial income Financial Expenses Interest Other Financial Expenses Total financial expenses Net finance (80) 92 (287) 447 Profit/ (loss) before tax (7 813) (4 050) (19 845) (9 838) Tax - - Profit/ (loss) after tax (7 813) (4 050) (19 845) (9 838) Earnings per share (NOK) Basic earnings per share (0,28) (0,18) (0,72) (0,43) Diluted earnings per share (0,28) (0,15) (0,70) (0,36) Statement of comprehensive income (All figures in thousand NOK) Q Q YTD 2015 YTD 2014 Profit/ (loss) after tax (7 813) (4 050) (19 845) (9 838) Other comprehensive income: Exchange difference on translating (19) foreign operations Total coprehensive income (7 721) (4 077) (19 761) (9 856) 10

11 Balance Sheet (All figures in thousand NOK) ASSETS Assets Intangible assets Goodwill Sum intangible assets Current assets Other short term receivables Bank Sum Current assets Sum assets EQUITY AND DEBT Share capital Share premium reserve Other equity (3 404) (1 770) (1 613) Capital not registered Retained earnings (61 327) (37 322) (42 502) Sum equity Long term debt Deferred tax Sum long term debt Short term debt Accounts payable Other short term debt Sum short term debt Sum equity and debt

12 Cash flow (All figures in thousand NOK) Q Q YTD 2015 YTD 2014 Cash flow from operating activities Ordinary profit/(loss) before tax (7 721) (4 077) (19 761) (9 856) Amortization of assets - Depreciation of assets Placement expenses booked booked directly to equity Share based payments Changes in accounts receivables, (4 047) 632 (160) creditors and inventory Changes in accruals (240) (169) 907 (4 743) Net cash flow from operating activities (5 981) (8 222) (17 708) (14 545) Cash flow from investing activities Investment in assets - (841) (841) net cash flow from investing activities - - (841) (841) Cash flow from financing activities - (841) Proceeds from issue of share capital Capital not registered Emmision acquision of shares Phlogo - Issue expences recognized directly in (2 171) (2 025) equity Net cash flow from financing activities Net changes in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period (8 105)

13 Equity Q Share (All figures in thousand NOK) Share capital premium reserve Other paid inn equity Retained earnings Total equity Equity (1 465) (53 607) Profit/(loss) for the period (7 721) (7 721) - Other revenue/expenses Total comprehensive income (7 721) (7 721) Transaction costs (2 171) (2 171) Sharebased payments Convertion of debt Not registered capital Issue of shares - Equity (3 404) (61 327) Q Share (All figures in thousand NOK) Share capital premium reserve Other paid inn equity Retained earnings Total equity Equity (1 823) (30 324) Profit/(loss) for the period (2 921) (2 921) - Other revenue/expenses Total comprehensive income (2 921) (2 921) Emission costs - Sharebased payments Equity (1 796) (33 245) YTD 2015 Share (All figures in thousand NOK) Share capital premium reserve Other paid inn equity Retained earnings Total equity Equity (1 613) (41 566) Profit/(loss) for the period (19 761) (19 761) - Other revenue/expenses Total comprehensive income (19 761) (19 761) Transaction costs (2 171) (2 171) Sharebased payments Convertion of debt Capital not registered - Issue of shares Decrease in capital Equity (3 404) (61 327)

14 YTD 2014 Share (All figures in thousand NOK) Share capital premium reserve Other paid inn equity Retained earnings Total equity Equity (27 466) Profit/(loss) for the period (5 779) (5 779) - Other revenue/expenses Total comprehensive income (5 779) (5 779) Transaction costs (2 025) (2 025) Sharebased payments Decrease in capital Equity (1 796) (33 245) Note 1 - General information Serodus ASA (the company) is a public limited company incorporated and domiciled in Norway, with headquarters in Oslo. Serodus is a bio-medical company that works on the development of new and innovative medicines for cardiovascular and metabolic diseases. The figures in this third quarter 2015 report are non-audited figures. This financial statement where approved for issue by the Board of Directors on 26 October Note 2 - Basis of preparation and significant accounting principles The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and in compliance with additional requirements pursuant to the Norwegian Accounting Act. These principles has been consistently applied in all periods presented, and may be found in the Annual Report The functional currency is NOK. The company was listed on Oslo Axess in April Through placements in Serodus ASA has sufficient capital to carry out planned activities through The company has seven employee. The going concern assumption is considered to exist and the financial statements have been prepared on this basis. Note 3 - Use of accounting estimates and assumptions The preparation of financial statements in compliance with IFRS requires the management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Future events could cause the estimates to change. Estimates and the underlying assumptions are reviewed on an ongoing basis. Changes to accounting estimates are recognized in the period the change occurs. If changes also apply to future periods, the effect is distributed across the current and future periods. Accounting items affected by estimates and assumptions are; 14

15 a) Intangible assets Recognition and measurement of intangible assets: The application of the criteria for when development costs qualify for recognition as intangible assets are subject to the judgement of the management is stated in the Annual Report 2014 cf. note 2.4. Even though projects have been capitalized, there may exist uncertainty about the market and future margins, and consequently it is difficult to estimate the recoverable amount in relation to impairment tests. To determine whether an intangible asset is impaired, one must calculate the utility value of the asset or the cash generating unit. Calculation of utility value requires management to make estimates of future cash flows and to determine an appropriate discount rate to calculate present value. b) Share-based compensation Expenses related to share-based compensation is sensitive to assumptions used in the calculation of fair value, but the total expenses related to share-based compensation are small. Note 4 - Government grants Government grants are recognised as a reduction in costs over the period in which the Company accrues costs that the grants are intended to cover. (All figures in thousand NOK) Q Q YTD 2015 YTD 2014 Other operating expenses The company has received approval from the Research Council of Norway (BIA funding) as a contribution to the development of SER 100 and SER130. The funding period runs from 2012 to 2015 for SER100 and from 2014 to 2017 for SER130. There are no specific guidelines associated with grants, beyond that documentation of costs incurred and hours must be in accordance with the application and approval letter. During the period, the company has three ongoing SkatteFUNN projects. Recognition does not include marketing activities and does not cover experimental production and testing of products, services or production processes that can be used or modified in order to be used for industrial or commercial purposes. In other respects, the Research Council's minimum requirements for project management shall apply. The main objectives of the projects are development of medicine to reduce systolic blood pressure and the treatment of patients with heart failure. 15

16 Note 5 20 largest shareholders The largest shareholders per : SHAREHOLDER # SHARES % Viggo Harboe Holding 2006 Aps ,1 % Bjørn Invest AS ,1 % Danske Bank A/S (NOM) ,8 % Holberg Norge Verdipapirfondet ,0 % Eva Steiness ,6 % Storebrand Vekst JP Morgan Europe Ltd ,4 % MP Pensjon PK ,2 % Spar Kapital Investor ,0 % Credit Foncier De Monaco (NOM) ,0 % Rolfs Holding AS ,8 % Nordea Bank Norge AS ,8 % Cat Invest 1 AS ,6 % Invent2 AS ,4 % Nordnet Bank AB(NOM) ,3 % Herseth AS ,0 % Acadia Holding AS ,0 % Bøni Roland Martin Walter ,9 % Nordea Bank Danmark S/A (NOM) ,9 % Las Invest AS ,8 % Norsemeter AS ,7 % Others ,8 % TOTALS

17 Statement by the Board of Directors and the Chief Executive Officer We confirm to the best of our knowledge that the financial statements for the third quarter of 2015, that have been prepared in accordance with IAS 34 Interim Reporting, gives a true and fair view of the Company s assets, liabilities, financial position and results of operation. We also declare, to the best of our knowledge, that the quarterly report provides a fair view of the information required under 5-6 (4) of the Norwegian Securities Act. The Board of Directors and CEO Serodus ASA Oslo, 27 October 2015 Svein S. Jacobsen Chairman (sign.) Christina Carnegie Board member (sign.) Ole Peter Nordby Board member (sign.) Søren Elmann Ingerslev Board member (sign.) Terri B. Sebree Board member (sign.) Eva Steiness CEO (sign.) 17