NeuroSearch A/S – Q1 report 2012 and update on the company's activities


Announcement
25.04.2012

Update on the company's activities
As stated in announcement no. 9-12 of 10 April 2012, NeuroSearch is seeking a partner for the global marketing rights for Huntexil® in order to provide financing to conduct the Prime-HD study with Huntexil®, and the further development of the asset.

Upon signing of a partnership for Huntexil® based on global rights, NeuroSearch will be open to discuss various development scenarios, business models and strategic alternatives.

Concurrently, NeuroSearch is seeking support among existing and potential new investors for their participation in a possible capital increase. This will enable NeuroSearch to retain all rights to Huntexil®.

The Board of Directors expects to be able to conclude on the company's search for a partner or investors in the short term, and will on a regular basis evaluate if the company's activities can be continued in consideration of all the company's financial stakeholders.

Q1 report for 2012
The operating result of continuing actives was a loss of DKK 22 million (a loss of DKK 37 million in the same period 2011). The operating result of continuing activities after tax was a loss of DKK 27 million (loss of DKK 47 million in the same period 2011).

On 31 March 2012, the company's cash and cash equivalents including securities totalled DKK 144 million (DKK 412 million at 31 March 2011). Securities primarily consist of highly liquid short-term bonds. In addition, NeuroSearch will receive future contingent payments from the collaboration partner Janssen of DKK 31 million and has DKK 9 million in an escrow account relating to the sale of Sophion Bioscience A/S.

Important events in Q1 2012 and until today

  • In the course of Q1, NeuroSearch received the preliminary results from the Multiple Ascending Dose study (MAD) in which healthy volunteers received ascending doses of Huntexil®. From these preliminary results, it can be concluded that Huntexil® is both safe and well-tolerated in the doses planned for in Prime-HD. The evaluation of data from the MAD study is still on-going and the final results are expected in the course of Q2 2012.
     
  • On the company's Extraordinary General Meeting on 20 February 2012, it was decided to reduce the company's share capital from DKK 491,078,940 to DKK 24,553,947 by transfer to a special reserve and reduction of the nominal value of the company's shares from DKK 1 to DKK 0.05. The face value of the company's shares at the NASDAQ OMX Copenhagen A/S thereby changed from DKK 20 to DKK 1.
     
  • On 10 April 2012, NeuroSearch announced that the company now seeks a partnership based on global rights for Huntexil® and in this connection the company confirmed that it would intensify the search for partners or investors and in the short run to reach a conclusion regarding financing with a view to continuing the development of Huntexil® and the operations of NeuroSearch. Please see announcement no. 9-12 for further information.

Financial expectations for 2012
NeuroSearch maintains its expectations for the financial year 2012 as announced in connection with the company's Annual Report and thus expects an operating loss on continuing operations of approximately DKK 75 million excluding any possible costs related to the phase III programme on Huntexil®. Costs mainly relate to the continuing organisation, fixed costs and continuation of Open-HART and the compassionate use programme. The Prime-HD study will not be initiated before financing is secured to finalise the study.

No further costs related to the discontinuing operations are expected in 2012 except for the costs already recognised as provision, and the company still expects the cash flow effect to be in the region of DKK 70 million.


Patrik Dahlen
CEO


Contact persons:
Patrik Dahlen, CEO, telephone: +45 4460 8214 or +45 2629 7296
René Schneider, EVP & CFO, telephone: +45 4460 8700 or +45 2911 2097


Teleconference
NeuroSearch will host a conference call today at 9.30 am CET (8.30 pm UK time, 3.30 am New York time) during which the Q1 report will be presented. Participating in the call will be CEO Patrik Dahlen and EVP & CFO René Schneider.

The conference call will be conducted in English and the dial-in numbers are:
 

UK and international: +44 207 509 5139
US: +1 718 354 1226
Denmark +45 3271 4767


Listening to the teleconference is also possible via the company’s website, along with the accompanying presentation. Following the call, the presentation will be available on the company's website


About NeuroSearch
NeuroSearch is a European-based biopharmaceutical company specialising in CNS diseases. The company is listed on NASDAQ OMX Copenhagen A/S. The company’s product pipeline comprises Huntexil® for the treatment of motor symptoms in patients with Huntington's disease and ordopidine and seridopidine, which have both completed phase I development. Huntexil® is currently in Phase III development. The overall objective for NeuroSearch is to create a profitable, specialty pharma company building on the platform the company will achieve from a successful development and marketing of Huntexil®. The company also has a portfolio of assets for outlicensing or divestment.

Financial review

Liquidity and capital resources
As of 31 March 2012, cash and cash equivalents including securities totalled DKK 144 million (DKK 412 million in the same period 2011). Securities primarily consist of highly liquid short-term bonds. In addition, NeuroSearch has granted contingent future payments from the collaboration partner Janssen of DKK 31 million and contingent proceeds from the divestment of Sophion Bioscience A/S of DKK 9 million.

The interim report has been prepared on a going concern basis. The company’s capital is considered to be sufficient to fund the current level of activity and a controlled closure of the discontinued operations.

The company’s funding of the start-up of additional phase III studies of Huntexil® will require additional capital. As announced on 10 April 2012, management continues to seek a partner based on global rights. Entering in to such a partnership, NeuroSearch is open to discuss various development paths, business models and strategic alternatives.

In addition, NeuroSearch is in close dialogue with existing shareholders, as well as potential new investors, regarding their participation in a potential capital increase which will enable the company to retain all rights to Huntexil® until the results from Prime-HD are available.

Income statement

An operating loss on continuing activities of DKK 22 million (a loss of DKK 37 million in the same period 2011) was reported. A loss after tax on continuing activities of DKK 27 million was posted (a loss of DKK 47 million in the same period 2011).

Revenue

No revenue has been generated in the period, nor in the same period in 2011.

Costs

Consolidated costs totalled DKK 22 million (DKK 37 million in the same period 2011) of which development costs amounted to DKK 19 million (DKK 31 million in the same period 2011). The development costs were primarily attributable to the Huntexil® development programme.

Net financials
Financials amounted to a net expense of DKK 5 million (net expenses of DKK 11 million in the same period 2011).

The group’s shares of results of associates – NsGene A/S and Atonomics A/S – are recognised in the income statement as a combined loss of DKK 1 million (a loss of DKK 3 million in the same period 2011).

By the end of Q1 2012, other financials amounted to a loss of DKK 4 million (loss of DKK 8 million in the same period 2011).

Net loss for the continuing activities

The result for the period for the continuing activities was a loss of DKK 27 million (a loss of DKK 47 million in the same period 2011). 

Discontinuing operations

The restructuring of the company’s activities, which was announced in September 2011, proceeds as planned. No further costs related to the discontinuing operations are expected in 2012 except for the costs already recognised as a provision, and the company still expects the cash flow effect to be in the region of DKK 70 million.

Balance sheet

By the end of the first quarter 2012, the balance sheet stood at DKK 768 million (DKK 1,320 million in the same period 2011).

Subsidiaries and associated companies
At 31 March 2012, NeuroSearch held equity interests in the following companies: NeuroSearch Sweden AB (100%), NsExplorer A/S (100%), Poseidon Pharmaceuticals A/S (100%), NsGene A/S (26.8%) and Atonomics A/S (18.9%).

Except for NeuroSearch Sweden AB, which is based in Sweden, all other subsidiaries and associated companies are based in Denmark.

Organisation
NeuroSearch has its head office in Ballerup, Denmark. Total number of employees for the group was 121 as of 31 March 2012 and is expected to be reduced to about 35 employees, when the restructuring is fully and finally implemented in mid-2013.

Financial expectations for 2012

NeuroSearch maintains its financial expectations for the full financial year 2012, which were reported in connection with the announcement of the Annual Report 2011.
No other costs are expected in connection with discontinuing activities in 2012.


 

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