TORONTO, Sept. 15 /PRNewswire-FirstCall/ -- Transition Therapeutics Inc. ("Transition" or the "Company") (TSX: TTH, NASDAQ:TTHI) a product-focused biopharmaceutical company developing therapeutics for disease indications with large markets, today announced its financial results for the year ended June 30, 2008.
Selected Highlights -------------------
During fiscal 2008 and up to the date of this press release, the Company achieved the following significant milestones:
ELND005 (AZD-103) - Alzheimer's Disease: ---------------------------------------- - On January 22, 2008, the Company received a US$5,000,000 milestone payment from Elan. The milestone payment was triggered by the initiation of a Phase II clinical study of Alzheimer's disease drug candidate, ELND005 (AZD-103) on December 21, 2007; - On December 21, 2007, Elan and Transition Dose First Patient in Phase II Clinical Study of ELND005 (AZD-103) in Alzheimer's Disease. The study is a randomized, double-blind, placebo-controlled, dose- ranging, safety and efficacy study in approximately 340 patients with mild to moderate Alzheimer's disease. Approximately 65 sites in North America are expected to participate in the program. The study will evaluate both cognitive and functional endpoints and each patient's participation is planned to last approximately 18 months; - On October 26, 2007, the Company Received the Remaining US$7,500,000 Upfront Payment from Elan. The receipt of US$7,500,000 represents the second half of the US$15 million upfront payment under the Company's global collaboration agreement with Elan; - On August 30, 2007, the Company Announced Completion of Multiple Phase I Clinical Studies with Alzheimer's Disease Drug Candidate ELND005 (AZD-103). ELND005 (AZD-103) was safe and well-tolerated at all doses and dosing regimens examined. There were no severe or serious adverse events observed. ELND005 (AZD-103) was also shown to be orally bio-available, cross the blood-brain barrier and achieve levels in the human brain and cerebral spinal fluid ("CSF") that were shown to be effective in animal models of Alzheimer's disease. TT-223 - Diabetes: ------------------ - On September 12, 2008, Transition announced that the first patient has been dosed in a Phase II clinical study of gastrin analogue, TT- 223, in patients with type 2 diabetes. The study is a randomized, double-blind, placebo-controlled, dose-ranging study to evaluate the safety, tolerability and efficacy of daily TT-223 treatments for 12 weeks with a 6-month follow-up. Approximately 80 patients with type 2 diabetes are expected to be enrolled in the study and will receive a daily treatment of TT-223 in addition to their current regimen of oral glucose lowering agents (metformin and/or thiazolidinediones). - On March 13, 2008, Eli Lilly and Company ("Lilly") and Transition announced that the two companies had entered into a licensing and collaboration agreement granting Lilly exclusive worldwide rights to develop and commercialize Transition's gastrin based therapies, including the lead compound TT-223, which is currently in early Phase II testing. Under the terms of the agreement, Transition received a US$7 million upfront payment on April 17, 2008, and may also receive up to US$130 million in potential development and sales milestones, as well as royalties on sales of gastrin based therapies if any product is successfully commercialized.; - On November 5, 2007, the Company Announced an Update on the Clinical Development and Partnership activities for the Company's diabetes program. Following negotiations, Novo Nordisk and Transition were not able to come to agreement for an exclusive license to the Company's diabetes programs. Accordingly, Transition sent notice to Novo Nordisk terminating the agreement between the companies, returning to Transition all rights held by Novo Nordisk, relating to E1-I.N.T.(TM) Drug Discovery Initiatives: --------------------------- - On August 18, 2008, the Company announced the acquisition of certain assets and the exclusive rights to selected drug discovery projects from Forbes Medi-Tech (Research) Inc., a wholly owned subsidiary of Forbes Medi-Tech Inc. ("Forbes"). In consideration for the acquisition of these assets and intellectual property rights, Forbes has received from Transition US$1 million, and will potentially receive up to an additional US$6 million in contingent consideration dependent on the successful achievement of certain developmental and regulatory milestones. These acquired discovery projects and other internal projects will be the focus of a small group of research scientists which shall operate through a newly formed United States- based subsidiary called Transition Therapeutics (USA) Inc. Corporate Developments: ----------------------- - On January 7, 2008 the Company's common shares were approved for listing and commenced trading on the NASDAQ Global Market. Prior to this change, the Company's common shares were listed on the NASDAQ Capital Market since August 20, 2007 under the symbol "TTHI". The Company's common shares continue to trade on the Toronto Stock Exchange in addition to the NASDAQ; - On October 31, 2007 the Company received the third anniversary payment of $650,000 from the sale of its subsidiary, Stem Cell Therapeutics ("SCT"). Total payments received to date amount to $1,850,000 with the final payment of $1,650,000 due in the first quarter of fiscal 2009; - On July 11, 2007 the Company completed a private placement financing issuing 1,736,107 common shares at a price of $14.40 per common share, raising gross proceeds of approximately $25,000,000 from a number of funds managed by Oracle Investment Management Inc., The Invus Group LLC, and a large Boston based investment management company. The Company incurred total share issuance costs of $1,031,433 resulting in net cash proceeds of $23,968,567; - On July 9, 2007 the Company completed a consolidation of its issued and outstanding common shares on the basis of one (1) post- consolidation common share for every nine (9) pre-consolidation common shares. The share consolidation was effected to satisfy the NASDAQ listing criteria regarding minimum bid price.
"Transition's pursuit of life-changing therapies continued to gain momentum during fiscal 2008. Phase II clinical trials of ELND005 (AZD-103) - a potential disease modifying compound for the treatment of Alzheimer's disease - are underway, and we have formed a significant new strategic partnership with Lilly for the development and commercialization of our gastrin-based therapies for diabetes," said Dr. Tony Cruz, Chairman and CEO of Transition. "Looking forward, we have promising product candidates, outstanding partners, and a strong cash position to achieve the next stage of growth for the Company."
Pipeline Review --------------- ELND005 (AZD-103) for Alzheimer's Disease
Transition's lead Alzheimer's disease compound ELND005 (AZD-103) is a disease modifying agent with the potential to both prevent and reduce disease progression, and improve symptoms such as cognitive function.
In September 2006, Transition announced a global collaboration with Elan to develop and commercialize ELND005 (AZD-103). In April 2007, Transition announced that the FDA granted Fast Track designation to the investigational drug candidate ELND005 (AZD-103).
On August 30, 2007, the Company announced the completion of Phase I clinical studies with ELND005 (AZD-103). Transition and its development partner Elan have performed multiple Phase I studies evaluating the safety, tolerability and pharmacokinetic profile of ELND005 (AZD-103) in healthy volunteers. Approximately 110 subjects have been exposed to ELND005 (AZD-103) in multiple Phase I studies, including single and multiple ascending dosing; pharmacokinetic evaluation of levels in the brain; and CSF and plasma studies. ELND005 (AZD-103) was safe and well-tolerated at all doses and dosing regimens examined. There were no severe or serious adverse events observed. ELND005 (AZD-103) was also shown to be orally bio-available, cross the blood-brain barrier and achieve levels in the human brain and CSF that were shown to be effective in animal models for Alzheimer's disease.
On December 21, 2007, Elan and Transition announced that the first patient had been dosed in a Phase II clinical study of ELND005 (AZD-103) in patents with Alzheimer's disease. The study is a randomized, double-blind, placebo-controlled, dose-ranging, safety and efficacy study in approximately 340 patients with mild to moderate Alzheimer's disease. Approximately 65 sites in North America are expected to participate in the program. The study will evaluate both cognitive and functional endpoints, and each patient's participation is planned to last approximately 18 months.
Patient enrolment of this study is on-going and its progress is on target. TT-223 for Diabetes
Pre-clinical data in diabetes animal models demonstrate the efficacy of gastrin analogues alone, or in combination with GLP-1 analogues or epidermal growth factor analogues. In humans, Transition's Phase IIa clinical trial data showed that a 4-week therapy with TT-223 in combination with EGF (combination of gastrin analogue and epidermal growth factor analogue) in type 2 diabetes patients resulted in sustained reductions in blood glucose control parameters, including haemoglobinA1C, for 6 months post-treatment. Pre-clinical and clinical data suggests gastrin plays an important role in beta cell differentiation and function, capable of providing sustained glucose control in type 2 diabetes.
On March 13, 2008, Lilly and the Company entered into a licensing and collaboration agreement granting Lilly exclusive worldwide rights to develop and commercialize Transition's gastrin based therapies, including the lead compound TT-223, which is currently in early Phase II testing. Under the terms of the agreement, Transition has received a US$7 million upfront payment, and may also receive up to US$130 million in potential development and sales milestones, as well as royalties on sales of gastrin based therapies if any product is successfully commercialized.
Transition and Lilly are both funding the Phase II clinical trial with lead compound TT-223 in type 2 diabetes. Upon completion of this trial, Lilly will be responsible for further development activities and the commercialization of all gastrin based therapeutic products worldwide.
To support the Phase II clinical development program for TT-223, Transition has performed two Phase I studies to expand the dose ranges for TT-223. The first study, a single ascending dose study of TT-223 in healthy volunteers and the second study, a multiple ascending dose study of TT-223 have both been completed.
Transition and its collaboration partner Lilly have initiated a Phase II trial evaluating TT-223 in type 2 diabetes patients receiving metformin and/or thiazolidinediones (TZDs). The companies are also in discussions regarding the timing and planning of another Phase II study with TT-223 in combination with a GLP1 analogue in type 2 patients.
Sustaining Financial Strength -----------------------------
During the year ended June 30, 2008, the Company strengthened its cash position by completing another private placement, issuing 1,736,107 common shares resulting in net cash proceeds of $23,968,567. The Company's cash and cash equivalents and short-term investments were $63,663,630 at June 30, 2008. The Company currently believes that it has adequate financial resources for anticipated expenditures until the end of fiscal 2010.
Financial Review ----------------
For the fiscal year ended June 30, 2008, the Company recorded a net loss of $16,119,202 ($0.70 per common share) compared to a net loss of $16,961,790 ($0.87 per common share) for the fiscal year ended June 30, 2007.
In fiscal 2008, the Company recorded licensing fees of $1,596,722. In fiscal 2007, the Company recognized milestone revenue and licensing fees of $683,894. The increase of $912,828 or 133% is due to the fact that the licensing agreement with Novo Nordisk was terminated during the second quarter of fiscal 2008 and all remaining deferred amounts were recognized as licensing fee revenue during the period.
During fiscal 2008, under the terms of the licensing and collaboration agreements, the Company received the second half of the up-front payment in the amount of $7,284,000 (US$7.5 million), as well as the milestone payment of $5,015,500 (US$5 million) from Elan for the initiation of the Phase II clinical trial. In addition, the Company also received a $7,017,000 (US$7 million) upfront payment from Lilly. These payments are recorded as deferred revenue and will be recognized as income on a systematic basis once the profitability of the collaboration arrangements can be reasonably estimated.
Research and development expenses increased to $12,822,913 for the fiscal year ended June 30, 2008 from $9,839,170 for the fiscal year ended June 30, 2007. The increase, $2,983,743 or 30%, is primarily due to an increase in clinical development costs related to ELND005 (AZD-103), salaries and option expense. The increase was partially offset by decreases in direct clinical program expenses that related to the Company's TT-223 and the completed I.E.T. clinical trials and reduced drug discovery expenses.
General and administrative expenses increased to $5,820,864 for the fiscal year ended June 30, 2008 from $5,317,524 for the fiscal year ended June 30, 2007. The increase, $503,340 or 9%, primarily resulted from increased stock option expense, insurance, salaries, and investor relation costs, which were partially offset by a decrease in professional fees.
Amortization for the fiscal year ended June 30, 2008 decreased by $4,075,516 or 60% to $2,747,743 as compared to $6,823,259 for the fiscal year ended June 30, 2007. The decrease is primarily due to the Waratah technology being fully amortized during the third quarter of fiscal 2007. This decrease was partially offset by the full period impact of the amortization relating to the NeuroMedix technology acquired during the fourth quarter of fiscal 2007.
Interest income, net for the fiscal year ended June 30, 2008, was $2,417,537 as compared to $1,226,099 for the fiscal year ended June 30, 2007. The increase in interest income, net of $1,191,438 primarily resulted from increased cash balances due to the July 2007 private placement and the upfront and milestone payments received from Elan and Lilly.
About Transition ----------------
Transition is a biopharmaceutical company, developing novel therapeutics for disease indications with large markets. Transition's lead products include ELND005 (AZD-103) for the treatment of Alzheimer's disease and TT-223 for the treatment of diabetes. Transition has an emerging pipeline of preclinical drug candidates acquired externally or developed internally using its proprietary drug discovery engine. Transition's shares are listed on the NASDAQ under the symbol "TTHI" and the Toronto Stock Exchange under the symbol "TTH". For additional information about the Company, please visit http://www.transitiontherapeutics.com/.
Extracts of the Financial Statements to Follow: CONSOLIDATED BALANCE SHEETS As at June 30 (in Canadian dollars) June 30, June 30, 2008 2007 $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 22,952,865 1,377,387 Held-to-maturity investments 40,710,765 33,414,383 SCT receivable 1,650,000 - Due from Eli Lilly and Company 472,220 - Receivables 278,784 317,979 Investment tax credits receivable 693,057 559,405 Prepaid expenses and deposits 974,426 519,937 ------------------------------------------------------------------------- Total current assets 67,732,117 36,189,091 Capital assets, net 958,689 1,174,028 Intangible assets 26,185,155 26,632,609 ------------------------------------------------------------------------- 94,875,961 63,995,728 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 1,576,190 2,866,655 Due to Elan Pharma International Limited 1,795,242 697,743 Current portion of deferred revenue - 131,244 ------------------------------------------------------------------------- Total current liabilities 3,371,432 3,695,642 Deferred revenue 27,736,750 9,885,733 Leasehold inducement 80,024 91,456 ------------------------------------------------------------------------- Total liabilities 31,188,206 13,672,831 ------------------------------------------------------------------------- Commitments Guarantees Shareholders' equity Common shares 160,262,540 133,988,318 Contributed surplus 4,492,251 4,487,752 Stock options 3,093,735 1,538,396 Deficit (104,160,771) (89,691,569) ------------------------------------------------------------------------- Total shareholders' equity 63,687,755 50,322,897 ------------------------------------------------------------------------- 94,875,961 63,995,728 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS Years ended June 30 (in Canadian dollars) 2008 2007 $ $ ------------------------------------------------------------------------- REVENUES Milestone revenue - 552,650 Licensing fees 1,596,722 131,244 ------------------------------------------------------------------------- 1,596,722 683,894 ------------------------------------------------------------------------- EXPENSES Research and development 12,822,913 9,839,170 General and administrative 5,820,864 5,317,524 Amortization 2,747,743 6,823,259 Foreign exchange loss (gain) (608,059) 6,875 Loss on disposal of capital assets and assets held for sale - 14,377 ------------------------------------------------------------------------- 20,783,461 22,001,205 ------------------------------------------------------------------------- Loss before the following (19,186,739) (21,317,311) Interest income, net 2,417,537 1,226,099 Gain on note receivable 650,000 400,000 ------------------------------------------------------------------------- Loss before income taxes (16,119,202) (19,691,212) Future income taxes recovery - 2,729,422 ------------------------------------------------------------------------- Net loss and comprehensive loss for the year (16,119,202) (16,961,790) ------------------------------------------------------------------------- Basic and diluted net loss per common share $(0.70) $(0.87) ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY For the years ended June 30, 2008 and 2007 (in Canadian Dollars) Number of Share Contributed Shares Capital Surplus ------------------------------------------------------------------------- # $ $ Balance, July 1, 2006 17,494,269 99,563,853 4,469,987 ------------------------------------------------------------------------- Adjustment to opening deficit for change in accounting policy related to research inventory - - - Stock options exercised 63,654 601,571 - Stock options expired - - 17,765 Stock-based compensation expense - - - Issued pursuant to private placement, net 2,986,867 23,964,751 - Issued on acquisition of NeuroMedix Inc., net 685,951 9,858,143 - Net loss and comprehensive loss for the year - - - ------------------------------------------------------------------------- Balance, June 30, 2007 21,230,741 133,988,318 4,487,752 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Adjustment to opening deficit for change in accounting policy related to financial instruments - - - Issued pursuant to private placement, net 1,736,107 23,968,567 - Issued as additional consideration regarding Ellipsis Neurotherapeutics Inc. 174,123 1,890,976 - Stock options exercised or forfeited 45,736 414,679 4,499 Stock-based compensation expense - - - Net loss and comprehensive loss for the year - - - ------------------------------------------------------------------------- Balance, June 30, 2008 23,186,707 160,262,540 4,492,251 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total Stock Shareholders' Options Deficit Equity ------------------------------------------------------------------------- $ $ $ Balance, July 1, 2006 774,858 (69,504,180) 35,304,518 ------------------------------------------------------------------------- Adjustment to opening deficit for change in accounting policy related to research inventory - (3,225,599) (3,225,599) Stock options exercised (221,177) - 380,394 Stock options expired (17,765) - - Stock-based compensation expense 1,002,480 - 1,002,480 Issued pursuant to private placement, net - - 23,964,751 Issued on acquisition of NeuroMedix Inc., net - - 9,858,143 Net loss and comprehensive loss for the year - (16,961,790) (16,961,790) ------------------------------------------------------------------------- Balance, June 30, 2007 1,538,396 (89,691,569) 50,322,897 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Adjustment to opening deficit for change in accounting policy related to financial instruments - 1,650,000 1,650,000 Issued pursuant to private placement, net - - 23,968,567 Issued as additional consideration regarding Ellipsis Neurotherapeutics Inc. - - 1,890,976 Stock options exercised or forfeited (166,534) - 252,644 Stock-based compensation expense 1,721,873 - 1,721,873 Net loss and comprehensive loss for the year - (16,119,202) (16,119,202) ------------------------------------------------------------------------- Balance, June 30, 2008 3,093,735 (104,160,771) 63,687,755 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended June 30 (in Canadian dollars) 2008 2007 $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the year (16,119,202) (16,961,790) Add (deduct) items not involving cash: Amortization of: capital assets 240,787 317,780 intangible assets 2,689,296 6,748,787 leasehold inducement (11,432) (11,432) Write-off of research inventory acquired from NeuroMedix Inc. - 387,667 Recovery of future income taxes - (2,729,422) Stock-based compensation expense 1,721,873 1,002,480 Gain on note receivable (650,000) (400,000) Loss on disposal of capital assets and assets held for sale - 45,073 Unrealized foreign exchange loss (gain) (279,282) 8,583 Accrued interest on held-to-maturity investments (696,467) (423,628) Net change in operating assets and liabilities 16,505,641 6,792,452 ------------------------------------------------------------------------- Cash provided by (used in) operating activities 3,401,214 (5,223,450) ------------------------------------------------------------------------- INVESTING ACTIVITIES Maturity of short-term investments 337,988,232 108,694,797 Purchase of short-term investments (344,308,865) (130,361,807) Proceeds from disposal of short-term investments - 30,738 Proceeds from assets held for sale - 265,401 Purchase of capital assets (25,448) (49,526) Purchase of intangible assets (350,866) (345,425) Proceeds on disposal of capital assets - 60,754 Cash received on note receivable 650,000 400,000 Cash received on acquisition of NeuroMedix Inc. - 109,730 NeuroMedix Inc. acquisition costs - (322,842) ------------------------------------------------------------------------- Cash used in investing activities (6,046,947) (21,518,180) ------------------------------------------------------------------------- FINANCING ACTIVITIES Repayment of long term debt - (300,707) Proceeds from issuance of common shares, net 24,221,211 24,345,142 ------------------------------------------------------------------------- Cash provided by financing activities 24,221,211 24,044,435 ------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents during the year 21,575,478 (2,697,195) Cash and cash equivalents, beginning of year 1,377,387 4,074,582 Cash and cash equivalents, end of year 22,952,865 1,377,387 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Notice to Readers: Information contained in our press releases should be considered accurate only as of the date of the release and may be superseded by more recent information we have disclosed in later press releases, filings with the OSC, SEC or otherwise. Except for historical information, this press release may contain forward-looking statements, relating to expectations, plans or prospects for Transition, including conducting clinical trials. These statements are based upon the current expectations and beliefs of Transition's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include factors beyond Transition's control and the risk factors and other cautionary statements discussed in Transition's quarterly and annual filings with the Canadian commissions.
