3rd Quarter Results
Cambridge Antibody Tech Group PLC
28 August 2002
02/CAT/23
EMBARGOED UNTIL
07.00 BST 02.00 EST Wednesday 28 August 2002
For further information contact:
Cambridge Antibody Technology Weber Shandwick Square Mile (Europe)
Tel: +44 (0) 1763 263 233 Tel: +44 (0) 20 7950 2800
Peter Chambre, Chief Executive Officer Kevin Smith
John Aston, Chief Financial Officer Graham Herring
Rowena Gardner, Director of Corporate
Communications
BMC Communications/The Trout Group
(USA)
Tel: +1 212 477 9007
Brad Miles, ext. 17 (media)
Brandon Lewis, ext. 15 (investors)
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC ("CAT") ANNOUNCES FINANCIAL RESULTS FOR
THE NINE MONTHS ENDED 30 JUNE 2002
Melbourn, UK ... Cambridge Antibody Technology Group plc (LSE: CAT; NASDAQ:
CATG) today reports financial results for the nine months ended 30 June 2002 and
an update on business for the period since the Interim Report in May 2002.
Business Update
CAT-213, a human anti-eotaxin1 monoclonal antibody, has completed a single dose
Phase I/II allergic rhinitis allergen challenge trial. Preliminary results of
this trial show a significant positive effect of CAT-213 upon nasal patency, and
reductions in tissue eosinophils and mast cells. CAT-213 by nasal aerosol
generally produced greater effects than intravenous injection. It is expected
that the data will be submitted for presentation at a major allergy congress.
These results are consistent with CAT-213 being developed further for the
treatment of allergic disorders. Accordingly, the next stage in the development
of CAT-213 will be a challenge study in allergic eye disease.
Overall, the timetable for future product licence applications of CAT-152
(lerdelimumab) remains on track. Recruitment to the first Phase II/III clinical
trial of CAT-152, a human anti-TGFb 2 monoclonal antibody being developed as
treatment to prevent post-operative scarring in patients undergoing surgery for
glaucoma (trabeculectomy), continues but has progressed at a slower rate than
previously expected which means that completion of enrollment is expected in the
first half of 2003. Recruitment to a further Phase II/III trial in Europe and
South Africa is expected to start shortly. Discussions with the United States
(US) Food & Drug Administration (FDA) regarding US trials for CAT-152 are
continuing.
Patient enrollment is continuing in the Phase I/II clinical trial of CAT-192, a
human anti-TGFb 1 monoclonal antibody being developed with Genzyme (NASDAQ:GENZ)
as a potential treatment for diffuse systemic sclerosis. An IND has been granted
for clinical trials in the US, and the recruitment of patients has started at
several leading scleroderma centres.
In August 2002, Human Genome Sciences, Inc (NASDAQ: HGSI) granted Takeda
Chemical Industries an option to develop and commercialise the TRAIL Receptor 1
human monoclonal antibody (TRAIL-R1 mAb) in Japan. TRAIL-R1 mAb was developed in
a collaboration between CAT and HGSI and is currently being evaluated, by HGSI,
as an anti-cancer drug in Phase I clinical trials.
In June 2002, CAT granted Wyeth Research (the pharmaceutical research arm of
Wyeth, NYSE: WYE) an exclusive product licence to a human monoclonal antibody
identified by CAT against a target supplied by Wyeth Research. Under the terms
of the agreement, CAT receives a licence fee and will potentially receive
clinical milestone and royalties associated with product sales.
In August 2002, CAT and Xerion Pharmaceuticals AG announced the expansion of
their existing business relationship into a research collaboration for target
characterisation and drug discovery. CAT and Xerion will explore and evaluate
the therapeutic potential of a cell surface protein known to play a role in
allergic reactions in man. CAT and Xerion will jointly own the results
generated.
Financial Results
CAT made a loss after taxation for the nine months ended 30 June 2002 of £21.5
million (nine months ended 30 June 2001: £8.2 million; year ended 30 September
2001: £11.8 million). This figure is stated after costs of £7.9 million related
to the buy out of its future royalty obligations from and offer for Drug Royalty
Corporation Inc. of Canada (DRC). Excluding this one-time cost, the loss would
have been £13.6 million. Net cash outflow before management of liquid resources
and financing for the period was £20.1 million (nine months ended 30 June 2001:
£9.6 million; year ended 30 September 2001: £14.3 million). Cash and liquid
resources at 30 June 2002 amounted to £137.9 million (30 June 2001: £162.5
million; 30 September 2001: £156.8 million).
Turnover in the period was £6.9 million (nine months ended 30 June 2001: £4.3
million; year ended 30 September 2001: £7.1 million). Milestone payments of £1.4
million were received during the nine month period, including a payment in the
third quarter from HGSI with the initiation of Phase I clinical trials of
TRAIL-R1 mAb.
Turnover of £3.4 million was generated under ongoing collaborations for research
and development services. Turnover included £0.7 million (principally licence
fees) released from deferred income brought forward at 1 October 2001. In
addition, £0.6 million of deferred revenue was recognised during the third
quarter as a result of CAT opting to buy out its future royalty rights
obligations to DRC.
Research and development expenses for the period amounted to £21.0 million (nine
months ended 30 June 2001: £15.0 million; year ended 30 September 2001: £21.4
million). This results from increasing spend on clinical trials to support the
Company's proprietary product development and increasing levels of research and
development activity across the Company.
General and administration expenses for the period were £13.2 million (nine
months ended 30 June 2001: £4.4 million; year ended 30 September 2001: £6.4
million). These include £7.9 million of costs relating to DRC (comparative
periods - none), comprising professional fees of £1.8 million in connection with
CAT's offer for DRC and £6.1 million (settled through the issue of CAT ordinary
shares) for the buy-back of CAT's royalty obligation. During the period the cost
of patent litigation, including patent oppositions, was £0.8 million (nine
months ended 30 June 2001: £1.7 million; year ended 30 September 2001: £2.0
million).
The Group accrued interest receivable on its cash deposits of £5.0 million (nine
months ended 30 June 2001: £7.1 million; year ended 30 September 2001: £9.3
million), reflecting the reduced level of cash and liquid resources held in
interest bearing securities and the lower interest rates available over the
period.
Additions to tangible fixed assets for the period were £4.7 million (nine months
ended 30 June 2001: £2.8 million; year ended 30 September 2001: £3.8 million),
with the purchase of a significant amount of laboratory equipment and costs
associated with the construction of CAT's new premises at Granta Park. The
addition to intangible fixed assets represents the Incyte LifeSeq licence that
was capitalised as an intangible asset in the first quarter and for which the
first of two payments has been made.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited)
Proforma Nine Nine months Year ended
months ended 30 30 September
nine ended 30 2001
months June 2002 June 2001
ended 30
June 2002
US$'000 £'000 £'000 £'000
Turnover 10,478 6,873 4,294 7,121
Direct costs (98) (64) (254) (351)
Gross profit 10,380 6,809 4,040 6,770
Research and development expenses (31,966) (20,968) (14,963) (21,393)
Drug Royalty Corporation (12,063) (7,913) - -
transaction costs
Other general and administration (8,062) (5,288) (4,395) (6,443)
expenses
General and administration expenses (20,125) (13,201) (4,395) (6,443)
Operating loss (41,711) (27,360) (15,318) (21,066)
Interest receivable (net) 7,562 4,960 7,077 9,295
Loss on ordinary activities before (34,149) (22,400) (8,241) (11,771)
taxation
Taxation on loss on ordinary activities 1,403 920 - -
Loss for the financial period (32,746) (21,480) (8,241) (11,771)
Loss per share - basic and diluted (pence) 60.2p 23.4p 33.3p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
(Unaudited)
Proforma Nine Nine months Year ended
months ended 30 30 September
nine ended 30 June 2001 2001
months June 2002
ended 30
June 2002
US$'000 £'000 £'000 £'000
Loss for the financial period (32,746) (21,480) (8,241) (11,771)
Gain on foreign exchange translation 99 65 - 1
Total recognised loss (32,647) (21,415) (8,241) (11,770)
Prior year adjustment (6,594)
Total recognised losses since last Annual (18,364)
Report and financial statements
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
CONSOLIDATED BALANCE SHEET
(Unaudited)
Proforma As at 30 As at 30 As at 30
June 2002 September
as at 30 June 2001 2001
June 2002
US$'000 £'000 £'000 £'000
Fixed Assets
Intangible assets 12,580 8,252 4,168 4,075
Tangible fixed assets 13,923 9,133 6,127 6,642
Investments 328 215 - -
26,831 17,600 10,295 10,717
Current Assets
Debtors 7,270 4,769 4,345 4,940
Investment in liquid resources 206,675 135,569 161,776 156,228
Cash at bank and in hand 3,560 2,335 710 585
217,505 142,673 166,831 161,753
Creditors
Amounts falling due within one year (14,499) (9,511) (10,027) (8,335)
Net current assets 203,006 133,162 156,804 153,418
Total assets less current liabilities 229,837 150,762 167,099 164,135
Creditors
Amounts falling due after more than (12,699) (8,330) (7,804) (8,085)
one year
Net Assets 217,138 142,432 159,295 156,050
Capital and Reserves
Called-up share capital 5,520 3,621 3,540 3,546
Share premium account 308,719 202,505 194,739 195,017
Other reserve 20,514 13,456 13,451 13,451
Profit and loss account (117,615) (77,150) (52,435) (55,964)
Shareholders' funds - all equity 217,138 142,432 159,295 156,050
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
CONSOLIDATED CASH FLOW STATEMENT
(Unaudited)
Proforma Nine months Nine months Year ended
ended 30 ended 30 30
nine June 2002 September
months June 2001 2001
ended 30
June 2002
US$'000 £'000 £'000 £'000
Net cash outflow from operations (30,737) (20,162) (13,257) (19,150)
Returns on investments and servicing of finance
Interest received 9,658 6,335 6,357 8,322
Taxation - - - -
Capital expenditure and financial investment
Purchase of fixed assets (9,629) (6,316) (2,695) (3,485)
Sale of fixed assets - - - 4
(9,629) (6,316) (2,695) (3,481)
Net cash outflow before management of (30,708) (20,143) (9,595) (14,309)
liquid resources and financing
Management of liquid resources 31,495 20,659 (5,274) 274
Financing
Issue of ordinary shares 2,163 1,419 15,096 15,380
Increase in cash 2,950 1,935 227 1,345
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
Basis of preparation
These interim financial statements have been prepared in accordance with the
policies set out in the statutory financial statements for the year ended 30
September 2001 with the exception that the Company has adopted FRS19 "Deferred
Tax" in order to comply with the latest UK accounting standards. This has no
effect on either the current period or prior periods. The Group did not make any
announcement of results for the nine months ended 30 June 2001 during the prior
financial year and therefore the comparative figures for that period in these
statements are being presented for the first time.
These interim financial statements do not constitute statutory financial
statements within the meaning of section 240 of the Companies Act 1985. Results
for the nine month periods ended 30 June 2001 and 30 June 2002 have not been
audited. The results for the year ended 30 September 2001 have been extracted
from the statutory financial statements, which have been filed with the
Registrar of Companies and upon which the auditors reported without
qualification and did not contain statements under s237(2) or (3) Companies Act
1985.
Convenience translation
The consolidated financial statements are presented in pounds sterling. The
consolidated financial statements as of and for the period ended 30 June 2002
are also presented in United States Dollars as proforma financial information.
The Dollar amounts are presented solely for the convenience of the reader and
have been calculated using an exchange rate of £1: US$1.5245, the noon buying
rate as of 28 June 2002. No representation is made that the amounts could have
been or could be converted into United States Dollars at this or any other rate.
Drug Royalty Corporation transaction costs
General and administration costs expenses include £7.9 million of costs incurred
in the nine months ended 30 June 2002 relating to the two transactions entered
into with Drug Royalty Corporation Inc. of Canada (DRC) during the period
(comparative periods: none). In January 2002, CAT announced a recommended offer
for the whole of DRC. A competing offer was made by Inwest Investments Ltd of
Canada which was accepted in April. The professional fees incurred in CAT's bid
were £1.8 million. Under an agreement with DRC, the Group received a payment of
£1.5 million in 1994 in return for rights to a percentage of revenues (and
certain other payments) received by the Group over a period terminating in 2009.
The £1.5 million was deferred and recognised over the period for which the
rights were purchased. On 2 May 2002, CAT bought out this royalty obligation to
DRC for £6.1 million (C$14 million) with the issue of 463,818 CAT shares to DRC.
The remaining balance of £0.6 million of deferred income has all been released
in the period.
Prior year adjustment
The Group policy for recognising turnover was changed during the year ended 30
September 2001 in accordance with emerging best practice in the UK. Under the
revised policy, where contractual performance is incomplete despite the Group
having received non-refundable payments, revenue is only recognised to the
extent that the Group has performed its obligations and such performance has
resulted in benefits accruing to the customer.
Loss per share
The loss per ordinary share and fully diluted loss per share are equal because
share options are only included in the calculation of diluted earnings per share
if their issue would decrease the net profit per share or increase the net loss
per share. The calculation is based on the following: for the nine months ended
30 June 2002, the nine months ended 30 June 2001 and the year ended 30 September
2001 respectively. Losses of £21,480,000, £8,241,000, and £11,771,000. Weighted
average number of shares in issue of 35,699,076, 35,143,318 and 35,313,260. The
Company has 36,206,224 ordinary shares in issue and a total of 1,531,787
ordinary shares under option as of 30 June 2002.
Reconciliation of operating loss to operating cash outflow
Proforma Nine months Nine months Year ended
ended 30 ended 30 30
nine June 2002 September
months June 2001 2001
ended 30
June 2002
US$'000 £'000 £'000 £'000
Operating loss (41,711) (27,360) (15,318) (21,066)
Depreciation in the period 3,761 2,467 1,576 2,146
Amortisation of intangible assets 428 281 280 373
Loss on disposal of fixed assets - - - 1
Shares issued to buy out DRC royalty 9,374 6,149
agreement
Increase in debtors (439) (288) (173) (515)
(Decrease) / increase in creditors (2,150) (1,411) 378 (89)
Net cash outflow from operations (30,737) (20,162) (13,257) (19,150)
Quarterly financial information
Three Three Three
months
ended 30 months months
June 2002
ended 31 ended 31
March December
2002 2001
£'000 £'000 £'000
Consolidated profit and loss account
(unaudited):
Turnover 2,021 2,974 1,878
Direct costs - 20 (84)
Gross profit 2,021 2,994 1,794
Research and development expenses (7,206) (7,652) (6,110)
Drug Royalty Corporation (6,678) (1,235) -
transaction costs
Other general and administration (2,005) (1,726) (1,557)
expenses
General and administration expenses (8,683) (2,961) (1,557)
Operating loss (13,868) (7,619) (5,873)
Interest receivable (net) 1,536 1,564 1,860
Loss on ordinary activities before taxation (12,332) (6,055) (4,013)
Taxation on loss on ordinary activities - 920 -
Loss for the financial period (12,332) (5,135) (4,013)
Consolidated cash flow statement
(unaudited):
Net cash outflow from operations (9,296) (6,569) (4,297)
Returns on investments and servicing of finance
Interest received 2,254 1,688 2,393
Taxation - - -
Capital expenditure and financial investment
Purchase of fixed assets (2,384) (3,021) (911)
Net cash outflow before management of (9,426) (7,902) (2,815)
liquid resources and financing
Management of liquid resources 8,653 6,551 5,455
Financing
Issue of ordinary shares 51 583 785
(Decrease) / increase in cash (722) (768) 3,425
Notes to Editors:
Cambridge Antibody Technology (CAT)
• CAT is a leader in the discovery and development of human therapeutic
antibodies and has an advanced proprietary platform technology for rapidly
isolating human monoclonal antibodies using phage display systems. CAT has
extensive phage antibody libraries, currently incorporating more than 100
billion distinct antibodies. These libraries form the basis for the
Company's strategy to develop a portfolio of antibody-based drugs.
• CAT is a UK biotechnology company based near Cambridge, England. CAT
currently employs around 280 people.
• Six CAT-derived human therapeutic antibodies are at various stages of
clinical trials, with a seventh CAT-derived antibody, D2E7, having been
submitted for regulatory review by Abbott (responsible for development and
marketing) following the completion of Phase III trials.
• CAT has alliances with a large number of pharmaceutical and biotechnology
companies to discover, develop and commercialise human monoclonal
antibody-based products. CAT has also licensed its proprietary human phage
antibody libraries to several companies for target validation and drug
discovery. CAT's collaborators include: Abbott, Amrad, Elan, Genzyme, Human
Genome Sciences, Immunex, Merck & Co, Pharmacia and Wyeth Research.
• CAT is listed on the London Stock Exchange and on NASDAQ since June 2001.
CAT raised £41m in its IPO in March 1997 and £93m in a secondary offering in
March 2000.
Glossary
• Negative regulator: Controls by inhibiting normal biological function
• Superfamily of proteins: A large group of proteins with similar structure
and function derived from a common evolutionary ancestor.
• Nasal patency: The openness, or lack of blockages, in the airways of the
nose.
• Potent: The measure of the effectiveness of a drug related to its
concentration.
• Eosinophil: A type of white blood cell particularly involved in allergic
disorders.
• Mast cells: Granular cells found in connective tissue. They release
substances such as histamine and heparin in response to allergic or immune
reactions.
• IND (Investigational NewDrug): Licence granted by the US Food and Drug
Administration (FDA) to allow testing of a new drug in humans.
Application of the Safe Harbor of the Private Securities Litigation Reform Act
of 1995: This press release contains statements about CAT that are forward
looking statements. All statements other than statements of historical facts
included in this press release may be forward looking statements within the
meaning of Section 21E of the US Securities Exchange Act of 1934.
These forward looking statements are based on numerous assumptions regarding
CAT's present and future business strategies and the environment in which CAT
will operate in the future. Certain factors that could cause CAT's actual
results, performance or achievements to differ materially from those in the
forward looking statements include: market conditions, CAT's ability to enter
into and maintain collaborative arrangements, success of product candidates in
clinical trials, regulatory developments and competition.
This information is provided by RNS
The company news service from the London Stock Exchange
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