Announcement no. 23/2007
To the OMX Nordic Exchange
Copenhagen, November 22, 2007
Interim report for the period January 1 to September 30, 2007 (unaudited and
unreviewed)
Curalogic now has two Phase III clinical studies in progress
Curalogic's program for the development of patient friendly immunotherapy
products is among the most ambitious in the industry with two Phase III clinical
studies in progress. The status of the clinical studies is:
Treatment has been completed of all patients in the Phase III clinical study
(RPE 04) with the ragweed product, and Curalogic has now moved on to the
reporting stage of the study.
For the grass product, treatment of patients in a Phase III clinical study (GPE
03) has been initiated.
In the house dust mite project, the regulatory authorities have asked clarifying
questions to the medium the house dust mites were cultivated on. Curalogic's
supplier of house dust mites is in direct dialogue with the German regulatory
authorities to answer the questions. This means that Curalogic has not, as was
planned, commenced the treatment of patients in a Phase II clinical study (DME
01).
Financial performance during the period July 1 to September 30, 2007
Curalogic recorded an operating loss (EBIT) of DKK 55.0 million in Q3 2007
compared to an operating loss of DKK 15.6 million in Q3 2006. This was in line
with the company's expectations. The main reason for the difference in operating
loss compared to Q3 2006 is that research and development costs increased by DKK
38.1 million as a result of increased clinical development activities.
The company's cash and cash equivalents amounted to DKK 393.2 million as of
September 30, 2007, compared to DKK 185.4 million as of September 30, 2006.
The company adjusts the expectations for 2007
The Company now expects a net loss in the range of DKK 180 - 190 million for the
full year 2007, compared to previous expectations of a net loss in the range of
DKK 195 - 210 million. Research and development costs are now expected to be in
the range DKK 175 - 185 million in 2007, administrative expenses are expected to
be approximately DKK 12 million and financial income are expected to be
approximately DKK 8 - 10 million. The change is primarily due to savings in the
Phase III study on the grass product as well as savings and postponed costs on
the product for treatment of house dust mite allergy.
Events during the period July 1 to September 30, 2007
Preparations for Phase III clinical study (GPE 03) of the grass product
The clinical protocol was filed with the health authorities and ethical
committees in the countries where it is planned that the study will be
conducted.
Protocol filed for Phase II clinical study (DME 01) of the house dust mite
product
In the house dust mite project, a clinical protocol was filed with the
regulatory authorities and the ethical committee in Germany in August 2007.
Overallotment option exercised
Curalogic made an offering of 18 million new shares in June 2007, and in July
2007 an overallotment option for 2 million shares was exercised in full,
bringing the gross proceeds to the company from the offering to DKK 340 million.
The net proceeds from the offering totaled DKK 323 million net of transaction
costs of DKK 17 million. After the exercise of the overallotment option,
Curalogic's share capital consists of 56,428,816 shares of DKK 0.50 nominal
value each.
Warrants issued
On September 1, 2007, Curalogic issued a total of 975,000 warrants to new
employees, current employees, the members of the Management Board and the Board
of Directors.
Key events after September 30, 2007
Treatment completed in the Phase III clinical study (RPE 04)
All patients in Curalogic's Phase III clinical study of the ragweed product have
completed the planned treatment. The next steps are first quality control of all
data and then calculation of the results of the study.
Treatment initiated of patients in Phase III clinical study (GPE 03) with the
grass product
In November 2007, treatment of the first patients in Curalogic's Phase III
clinical study on the grass product was initiated. The study is conducted in a
large number of European countries.
Dialogue with the regulatory authorities regarding clinical Phase II study (DME
01) on the house dust mite product
The ethical committee has approved the DME 01 protocol, and the regulatory
authorities have asked clarifying questions about the medium the house dust
mites were cultivated on. Curalogic's supplier of house dust mites is in direct
dialogue with the German regulatory authorities to answer the questions. This
means that Curalogic has not, as was planned, initiated the treatment of
patients in a Phase II clinical study (DME 01). Curalogic expects to have
provided satisfactory answers to the questions from the authorities shortly and
to be able to initiate the DME 01 study in early 2008.
Statement by the Management Board and the Board of Directors on the interim
report
We have today considered and adopted the interim report of Curalogic A/S for the
nine-month period January 1 to September 30, 2007.
The interim report has been prepared in accordance with IAS 34, the Company's
accounting policies for the financial year 2006 and additional Danish disclosure
requirements for interim reports of listed companies. The interim report is
unaudited and unreviewed.
We consider the accounting policies to be appropriate. Accordingly, the interim
report gives a true and fair view of the company's financial position as of
September 30, 2007 and of the results of operations and cash flows for the
nine-month period January 1 to September 30, 2007.
Copenhagen, November 22, 2007
Curalogic A/S
Board of Directors
Jakob Schmidt Christian Karsten Hansen
Pamela J. Kirby Alf A. Lindberg
Carl Spana
Management Board
Peter Moldt
For additional information, please contact:
Peter Moldt, President and CEO Tel +45 99 99 24 00, mobile +45 26 25 04 22
Helle Busck Fensvig, EVP and CFO Tel +45 99 99 24 24, mobile +45 20 70 55 37
This announcement contains forward-looking statements regarding the company's
future financial development and performance and other statements which are not
historical facts. Such statements are made on the basis of assumptions and
expectations which, to the best of the company's knowledge and belief, are
reasonable, at this time, but may prove to be erroneous in the future.
Status of Curalogic's activities
Development activities
Curalogic has four products in clinical development for the treatment of allergy
to ragweed pollen, grass pollen, house dust mites and cat hair. The development
of the products aims for registration both in the United States and Europe.
Ragweed (ambrosia)
Curalogic's product for the treatment of ragweed allergy is in clinical Phase
III. The ragweed product has been thoroughly tested in seven clinical studies
involving 1,066 patients. The results from the clinical studies have shown the
same good reduction of allergy symptoms as achieved with injection-based
immunotherapy, and that the product is safe and has very few adverse effects.
During the 2007 ragweed pollen season, Curalogic conducted a clinical Phase III
study (RPE 04), and a total of 545 patients participated in the study in the
United States, Italy, Hungary and Serbia. The clinical stage of the study has
now been completed, and the next step will be the work involved in reporting the
study. Curalogic expects to publish results from the study in the first quarter
of 2008.
The primary objective of the RPE 04 study is to evaluate the efficacy and safety
of one daily dose of orally administered ragweed extract or placebo in patients
suffering from ragweed allergy, with treatment being initiated at least eight
weeks prior to, and continuing throughout, the ragweed pollen season. Based on
data from the study, Curalogic plans to file a registration application in
Europe in H2 2008.
In Denmark, ragweed is called ambrosia. About 4 million people in Europe and 29
million people in the United States suffer from ragweed allergy. Patients
experience ragweed allergy as one of the worst allergies. This is partly due to
the fact that pollen from ragweed is very potent and partly that the pollen
season is very long (6-8 weeks).
Grass
Curalogic's product for the treatment of grass allergy is in clinical Phase III.
The grass product has been studied in two clinical Phase II studies: one in the
United States and one in Europe. The studies involved a total of 93 patients
with moderate to severe grass allergy who were dosed on a daily basis for 1 to
10 weeks. The highest dose tested is 64,000 BAU, which is approximately 30 times
higher than the maintenance dose recommended in the United States for injection
immunotherapy. No treatment-related serious adverse events or anaphylactic
reactions were reported in the studies. The grass product was well-tolerated,
both with and without up-dosing, and the adverse events were of a similar nature
as those observed for the ragweed product.
Curalogic will conduct a clinical Phase III study (GPE 03) in the 2008 grass
pollen season, and treatment of the first patients began in November 2007. The
study will be conducted in a number of European countries, and more than 600
patients are expected to be included in the study.
The primary objective of the GPE 03 is to evaluate the efficacy and safety of
two doses of orally administered grass pollen extract to patients suffering from
grass allergy. Patients with moderate to severe grass allergy will be treated
daily with one of the two active doses or placebo. Treatment will begin at least
eight weeks prior to and will continue throughout the grass pollen season. The
grass pollen season begins in May and lasts throughout the summer.
It is expected that results from the study will be announced in the first
quarter of 2009, and Curalogic plans to file a registration application for the
grass product in Europe in the second half of 2009.
About 51 million people in Europe and 30 million people in the United States
suffer from grass allergy.
House dust mites
Curalogic's product for the treatment of house dust mite allergy is currently in
the preclinical Phase. Curalogic is ready to commence a clinical Phase II study
(DME 01) and expects to start treatment of the first patients as soon as
satisfactory answers to the clarifying questions from the regulatory authorities
have been provided. It is expected that DME 01 can be initiated in Q1 2008.
The primary objective of the DME 01 study is to determine the maximum tolerated
dose. The plan is for patients with moderate to severe house dust mite allergy
to participate in this study which will be conducted at a single clinical centre
in Germany.
The two most predominant house dust mite species in the United States and Europe
are D. pteronyssinus and D. farinae, which are typically found in carpets and
bedclothes. The active ingredients in the product for house dust mite allergy
will therefore comprise a mixture of extracts from these two species of house
dust mites.
About 30 million people in Europe and 52 million people in the United States are
allergic to house dust mites. Patients who are allergic to house dust mites
suffer from allergy symptoms all year.
Cat
Curalogic's product candidate for the treatment of cat hair allergy is in
clinical Phase II. The active ingredient in the clinically tested cat product is
an extract from cat hair. A successful oral product for the treatment of allergy
to cats would require cat hairs in quantities exceeding the currently available
supply. Curalogic has explored several options for sourcing the cat allergen,
and the Company has concluded that, commercially, the establishment of
recombinant manufacturing is the best solution. Curalogic continues to
investigate the practical possibilities of how to establish recombinant
manufacturing capabilities.
Other activities
Overallotment option exercised in July 2007
Curalogic made an offering of 18 million new shares in June 2007, and in July
2007 an overallotment option for 2 million shares was exercised in full,
bringing the gross proceeds to the Company from the offering to DKK 340 million.
The net proceeds from the offering totaled DKK 323 million net of transaction
costs of DKK 17 million.
The net proceeds from the offering of the 2 million shares, which concern the
period after June 30, 2007, were DKK 33 million net of transaction costs of DKK
1 million for that part of the offering.
On September 30, 2007, Curalogic's share capital consists of 56,428,816 shares
of DKK 0.50 nominal value each.
Investor relations
In Q3 2007, Curalogic presented the Company at various venues for institutional
as well as private investors.
Strengthening of the organization
The organization was strengthened by one new staff member on September 1, 2007:
a finance and administration manager. The organization thus had a total of 14
employees as of September 30, 2007.
Warrants issued
On September 1, 2007, Curalogic issued a total of 975,000 warrants to new
employees, current employees, the members of the Management Board and the Board
of Directors.
Financial review for the nine months ended September 30, 2007
Developments in Curalogic's activities in Q3 2007 were in generel in line with
the company's plans. The clinical activities for the ragweed product progressed
as scheduled. The Phase II clinical study of the grass product was completed
ahead of schedule, and the proceeds from the equity offering in June 2007 have
given the company the opportunity to accelerate the development of the grass
project, so that this project has now been progressed to Phase III. The product
for treatment of house dust mite allergy has been delayed as a consequence of
the regulatory authorities clarifying questions about the product. Curalogic is
ready for the clinical Phase II study (DME 01) and expect to start treatment of
the first patients as soon as the questions from the authorities have been
answered to their satisfaction.
Revenue
Curalogic did not generate any revenue in the first nine months of 2007.
Research and development costs
Curalogic's research and development costs totaled DKK 52.2 million in Q3 2007
(Q3 2006: DKK 14.1 million).
Research and development costs totaled DKK 120.2 million for the nine months
ended September 30, 2007 (nine months 2006: DKK 19.7 million). Staff costs
included in research and development costs totaled DKK 4.3 million for the nine
months ended September 30, 2007 (nine months 2006: DKK 1.5 million). Development
costs incurred for clinical trials and maturing of production totaled DKK 115.9
million for the nine months ended September 30, 2007 (nine months 2006: DKK 18.3
million). The most significant development costs in the period were the costs
incurred for the clinical Phase III study on the ragweed allergy product (RPE
04), the costs incurred for the clinical Phase II study on the grass allergy
product (GPE 02) and costs incurred for the start-up of the clinical Phase III
study of the product against grass allergy (GPE 03). The preparations for the
clinical Phase II study with the product for house dust mite allergy (DME 01)
also account for part of these costs.
Administrative expenses
Curalogic's administrative expenses totaled DKK 2.8 million in Q3 2007 (Q3 2006:
DKK 1.5 million).
Administrative expenses totaled DKK 6.9 million for the nine months ended
September 30, 2007 (nine months 2006: DKK 4.1 million). Out of the
administrative expenses, staff costs - including costs relating to the Board of
Directors - totaled DKK 3.7 million for the nine months ended September 30, 2007
(nine months 2006: DKK 2.6 million). Costs relating to the head office and fees
to the legal advisor, auditor and other advisors totaled DKK 3.2 million for the
nine months ended September 30, 2007 (nine months 2006: DKK 1.5 million).
Operating loss (EBIT)
Curalogic posted an operating loss (EBIT) of DKK 55.0 million in Q3 2007 (Q3
2006: DKK 15.6 million).
An operation loss (EBIT) of DKK 127.1 million was posted for the nine months
ended September 30, 2007 (nine months 2006: a loss of DKK 23.8 million).
Net financials
Curalogics net financials amounted to an income of DKK 2.9 million in Q3 2007
(Q3 2006: DKK 2.4 million).
Net financials amounted to net income of DKK 5.4 million for the nine months
ended September 30, 2007 (nine months 2006: net income of DKK 2.3 million). The
net financial income was again attributable to interest income on the proceeds
from the IPO on the OMX Nordic Exchange in June 2006 and interest income on the
proceeds from the company's secondary offering in June 2007. The net financial
expenses were attributable to the technical losses on currency exchange
contracts entered into in the summer of 2006 and in Q3 2007 to secure the
exchange rate of development costs paid in USD.
Loss before tax
Curalogic's loss before tax was DKK 52.1 million in Q3 2007 (Q3 2006: a loss of
DKK 13.1 million).
The loss before tax was DKK 121.7 million for the nine months ended September
30, 2007 (nine months 2006: a loss of DKK 21.5 million).
Tax on the loss on ordinary operations for the nine months ended September 30,
2007 was DKK 0.0 million (nine months 2006: DKK 0.0 million). The Company has
not recognized the value of the tax losses as assets in the balance sheet as the
Management considers that the criteria for such recognition have not been met.
Liquidity and capital resources
The cash flow from primary operations was an outflow of DKK 102.7 million for
the nine months ended September 30, 2007 (nine months 2006: an outflow of DKK
14.4 million). The cash flow from financing activities was an outflow of DKK 7.1
million for the nine months ended September 30, 2007 (nine months 2006: an
outflow of DKK 2.1 million). This brought the cash flow from operating
activities to an outflow of DKK 95.6 million for the nine months ended September
30, 2007 (nine months 2006: an outflow of DKK 12.3 million).
The cash flow from investing activities was an outflow of DKK 0.1 million for
the nine months ended September 30, 2007 (nine months 2006: DKK 0.0 million).
The cash flow from financing activities was an inflow of DKK 322.9 million for
the nine months ended September 30, 2006 (nine months 2007: an inflow of DKK
189.4 million). The cash inflow of DKK 322.9 million in 2007 related to the
offering of 18 million new shares in June and the exercise of the overallotment
option of 1 million new shares in July, whilst the amount of DKK 189.4 million
primarily related to the proceeds from the company's IPO in June 2006.
Cash and cash equivalents stood at DKK 393.2 million at September 30, 2007
(September 30, 2006: DKK 185.4 million).
Equity stood at DKK 362.1 million as of September 30, 2007 (September 30, 2006:
DKK 176.1 million).
Outlook for the financial year 2007
The Company now expects a net loss in the range of DKK 180 - 190 million for the
full year 2007, compared to previous expectations of a net loss in the range of
DKK 195 - 210 million. Research and development costs are now expected to be in
the range DKK 175 - 185 million in 2007, administrative expenses are expected to
be approximately DKK 12 million and financial income are expected to be
approximately DKK 8 - 10 million. The change is primarily due to savings in the
Phase III study on the grass product as well as savings and postponed costs on
the product for treatment of house dust mite allergy.
Appendix - Interim financial statements and notes to the financial statements
for the nine months ended September 30, 2007
Notes to the financial statements
1. Accounting policies
The interim report is presented in accordance with IAS 34, Interim Financial
Reporting and additional Danish disclosure requirements for listed companies.
The accounting policies applied in the interim report are unchanged relative to
the accounting policies applied in the company's annual report for 2006 and are
in accordance with the International Financial reporting Standards (IFRS) as
adopted by the EU and additional Danish disclosure requirements for annual
reports of listed companies.
Segment information
The Company has only one business area: the development of drug for the
treatment of allergic diseases. As the company does not generate income in the
form of revenue from external customers, this interim report for Q3 2007 does
not include segment information for geographical areas.
Notes to the financial statements
Interim report for the period January 1 to September 30, 2007 (unaudited and unreviewed)
| Quelle: Curalogic A/S
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