CAT preliminary statement
Cambridge Antibody Tech Group PLC
18 November 2002
02/CAT/26
FOR IMMEDIATE RELEASE
07.00 GMT 02.00 EST 18 November 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: 001 212 477 9007
Brad Miles, ext 17 (media)
Brandon Lewis, ext 15 (investors)
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
PRELIMINARY STATEMENT OF RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2002
Highlights
Significant pipeline progress:
Humira filed for approval (Abbott)
CAT-152 IND filed; Phase III trials underway
CAT-192 granted US and European Orphan Drug Status
Encouraging Phase I/II results for CAT-213
TRAIL-R1 mAb IND filed and approved (HGSI)
Five exclusive therapeutic licences granted (HGSI, Amgen, Wyeth Research)
Research alliance signed with Chugai
Second agreement with Merck & Co., Inc. (since year end)
Royalty obligations to DRC bought back
Net Cash Outflow: £28.3m
Cash & liquid resources at 30 September 2002: £129.8m
Professor Peter Garland, CAT's Chairman, said, "With significant progress in a
number of areas, CAT continues to demonstrate its strength and inherent value.
The prospect of the first CAT-derived human monoclonal antibody therapeutic,
Humira (previously known as D2E7), being commercialised in 2003 by Abbott is a
strong validation of our technology as a major drug discovery platform."
"Alongside the news of Humira, it is important also to emphasise the growing
strength and breadth of CAT's product portfolio, which is underpinned by our
leading antibody display technologies and development capabilities. This year we
continued to see CAT's product pipeline, which will ultimately drive our
commercial success, make good progress."
Peter Chambre, Chief Executive Officer at CAT, said, "Over the past few months
we have set ourselves the ambitious goal of completing CAT's transition to a
profitable, product based biopharmaceutical company over the next five years.
We are also aiming to build a broad portfolio of products that will secure rapid
revenue and profit growth beyond that point."
"CAT currently has the largest number of antibodies in clinical development of
any company involved in human antibody therapeutics. Despite this success we
believe that we need to strengthen further our product pipeline in the coming
years. We expect to do this by continuing our internal discovery research,
advancing the programmes currently in pre-clinical development, seeking to
expand the indications for products already in human clinical trials and through
the acquisition and in-licensing of other new products."
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc PRELIMINARY STATEMENT OF RESULTS FOR THE
YEAR ENDED 30 SEPTEMBER 2002
Chairman's Statement
With significant progress in a number of areas, CAT continues to demonstrate its
strength and inherent value. The prospect of the first CAT-derived human
monoclonal antibody therapeutic, Humira (previously known as D2E7), being
commercialised in 2003 by Abbott is a strong validation of our technology as a
major drug discovery platform.
Alongside the news of Humira, it is important also to emphasise the growing
strength and breadth of CAT's product portfolio, which is underpinned by our
leading antibody display technologies and development capabilities. This year we
continued to see CAT's product pipeline, which will ultimately drive our
commercial success, make good progress. Both CAT-152 (lerdelimumab), an
anti-scarring agent to be used as an adjunct to surgery for glaucoma, and
CAT-213, our human anti-eotaxin1 antibody treatment for allergic disorders, have
shown promise. With the entry into trials this year of the seventh CAT-derived
human monoclonal antibody, TRAIL-R1 mAb, a potential anti-cancer treatment, CAT
continues to lead the world in the development of human antibody therapeutics,
there being more CAT-derived human antibodies in clinical trials than from any
other company.
In a competitive environment for antibody product discovery it is encouraging
that a growing number of CAT's partners elected to develop antibody therapeutic
drug candidates exclusively with CAT in 2002. CAT issued four exclusive product
licences during the year and one after the year end, each of which was the fruit
of an existing partnership.
CAT has also entered into new international alliances with well-respected pharma
and biotech companies. These collaborations expand the number and breadth of
licencees of CAT's proprietary technologies and offer the prospect of CAT
deriving significant long-term value from third party development and
commercialisation of human monoclonal antibody drugs. Our alliance with Chugai,
one of Japan's leading pharma companies, is particularly significant as our
first collaboration in one of the world's largest pharmaceutical markets.
Our offer to acquire Drug Royalty Corporation of Canada (DRC) in February of
this year, though ultimately unsuccessful, gave us the opportunity to buy back
our royalty obligations to DRC. We exercised this right in April.
CAT would like to thank Jim Foght, who has recently announced his intention to
retire from CAT's Board of Directors after the AGM in February 2003. Jim has
been a Non-Executive Director since 1996, prior to CAT's flotation, and we have
benefited greatly from his experience of the biotechnology and investment
industries. We are grateful to him for his valuable contribution.
CAT is pleased to announce the appointment of Ake Stavling as a new
Non-Executive Director. Ake has extensive senior management experience, covering
finance and the pharmaceutical industry, and most recently held the post of
Executive Director at AstraZeneca PLC, with responsibility for business
development, incorporating corporate strategy and mergers & acquisitions.
Previously, he was Chief Financial Officer at Astra AB. Ake takes up his
position on 2 December 2002 and will succeed Jim Foght as chairman of the Audit
Committee.
This year's achievements demonstrate that CAT is fundamentally a strong company
underpinned by a talented organisation and exceptional science. However, the
progress made during the year has not been reflected in the share price, which
has fallen considerably over the period. We recognise that CAT has been as
affected as other companies in the sector by the current lack of investor
appetite for biotechnology stocks. This notwithstanding, we remain committed to
developing therapeutic antibodies as the best way of creating value for
shareholders from our capabilities and technologies.
Chief Executive Officer's Statement
Over the past few months we have set ourselves the ambitious goal of completing
CAT's transition to a profitable, product based biopharmaceutical company over
the next five years. We are also aiming to build a broad portfolio of products
that will secure rapid revenue and profit growth beyond that point.
CAT will focus on the exploitation of its leadership position in the antibody
field in two ways: through the development of products in a selected number of
areas of disease, and through the licensing of our capabilities and technology
for the discovery and development of therapeutic antibodies outside those
specific target areas.
For some time, CAT has been developing the application of industrialised
microarray technology for use in personalised medicine. We see this as a very
exciting opportunity. As a result of our focus on therapeutic antibodies CAT
will be seeking independent financing for this business, which Kevin Johnson,
our Chief Technology Officer, will lead.
CAT currently has the largest number of antibodies in clinical development of
any company involved in human antibody therapeutics. Despite this success we
believe that we need to strengthen further our product pipeline in the coming
years. We expect to do this by continuing our internal discovery research,
advancing the programmes currently in pre-clinical development, seeking to
expand the indications for products already in human clinical trials and through
the acquisition and in-licensing of other new products.
As we plan the management of our resources for the future, we anticipate further
growth in expenditure during the next year due principally to the growth in our
clinical trials programme. After a period of rapid growth in capability and
resource level, however, we do not expect further significant growth in
headcount next year. There will be some increase in development and
commercialisation resources.
Review of the Year
Product Development
HumiraTM
Humira (D2E7, adalimumab), a human monoclonal antibody that neutralises
TNFalpha, is being developed by Abbott as a treatment for rheumatoid arthritis
(RA), juvenile rheumatoid arthritis (JRA) and Crohn's disease.
April 2002 Abbott simultaneously filed Humira with the US Food and
Administration (FDA) and European Agency for the Evaluation of Medicinal
Products (EMEA) for marketing approval. Humira remains under review and results
of both filings are expected in the first half of 2003. If approved, Humira will
be the first human monoclonal antibody therapy on the market. RA is a condition
which affects an estimated five million patients in Europe and the US, of whom
around one million of the most severely affected could potentially benefit from
treatment with Humira.
June 2002 Encouraging Phase III data were presented at the European League
Against Rheumatology (EULAR) meeting. The trial results showed Humira improved
signs and symptoms of RA in up to 50 per cent of patients and was safe and well
tolerated at the doses used.
September 2002 Abbott began enrolling patients into a Phase III clinical trial
to assess the efficacy of Humira to treat patients with JRA. JRA causes swollen
and tender joints and can lead to permanent joint damage. It affects around
90,000 children in Europe and North America.
September 2002 Abbott started recruiting patients to a Phase II/III clinical
trial to evaluate the safety and effectiveness of Humira as a treatment for
Crohn's disease, a chronic inflammatory disorder of the gastrointestinal tract.
Crohn's disease affects around half a million patients in Europe and North
America.
October 2002 Further promising Phase III data were presented at the American
College of Rheumatology (ACR) meeting, particularly the slowing of progression
of joint disease (as evidenced by X-rays).
CAT development programmes
Encouraging clinical data on CAT-152 (lerdelimumab), a human anti-TGFbeta2
monoclonal antibody being developed by CAT as a treatment to prevent
post-operative scarring in patients undergoing surgery for glaucoma
(trabeculectomy), were presented this year. CAT estimates up to 250,000 patients
per year undergoing an operation for glaucoma in the US and Western Europe could
potentially benefit from treatment with CAT-152.
November 2001 Six month follow-up results from a Phase II clinical trial using
CAT-152 in patients undergoing combined surgery for glaucoma and cataract
(phakotrabeculectomy) presented at an American Academy of Ophthalmology meeting.
February 2002 Phase II/III clinical trial commenced in six European countries to
investigate CAT-152 in conjunction with first time trabeculectomy.
May 2002 Encouraging twelve month follow-up results of the Phase II
phakotrabeculectomy trial of CAT-152 were presented at the Association for
Research in Vision and Ophthalmology (ARVO) meeting. The results support
findings from the earlier clinical trial of CAT-152 in trabeculectomy, and
demonstrate that the benefits of CAT-152 treatment have become more apparent
with longer term follow-up: patients treated with CAT-152 achieved lower
intraocular pressure (IOP) and fewer needed to return to topical medication.
October 2002 Enrolment commenced for an International Phase III trial of CAT-152
in Europe and South Africa in patients undergoing first time trabeculectomy.
November 2002 Investigational new drug (IND) application submitted to the FDA to
start clinical trials in the US.
Recruitment of patients for the European Phase II/III and International Phase
III clinical studies of CAT-152 continues, with enrolment in the European trial
expected to be complete in the first half of 2003.
Data from these clinical trials is expected to be available towards the end of
2004. CAT has commenced discussions with a number of potential partners, with a
view to the partner marketing and selling CAT-152. The timetable for future
product licence applications of CAT-152 remains on schedule.
CAT-192 (metelimumab), a human anti-TGFbeta1 monoclonal antibody being jointly
developed by CAT and Genzyme as a potential treatment for scarring and fibrotic
conditions, including scleroderma, continues its progress in trials. CAT and
Genzyme estimate that around 300,000 patients worldwide suffer from diffuse
progressive scleroderma, a chronic, life-threatening autoimmune disease that
causes inflammation and pain in the muscles, joints and connective tissue.
November 2001 CAT-192 commenced European Phase I/II clinical trials in patients
with scleroderma to assess safety and efficacy.
December 2001 Pre-clinical data for CAT-192 in pulmonary fibrosis were presented
at the British Pharmacological Society (BPS).
January 2002 Orphan Drug Status in the US was awarded to CAT-192 as a treatment
for scleroderma.
February 2002 Orphan Drug Status in Europe was awarded to CAT-192 as a treatment
for scleroderma.
June 2002 Successful IND application for CAT-192 to start Phase I/II clinical
trials of CAT-192 as a treatment for scleroderma. Patient recruitment is now
underway.
Results of the Phase I/II clinical trials are expected to be available in late
2003.
Good progress was also shown this year in trials of CAT-213, a human
anti-eotaxin1 monoclonal antibody being developed as a treatment for allergic
disorders.
December 2001 Data from a Phase I clinical trial of CAT-213 in healthy
volunteers were presented at the BPS.
April 2002 Recruitment to a single-dose Phase I/II allergic rhinitis challenge
study completed.
August 2002 Preliminary results of the challenge study released, showing that
CAT-213 has a significant positive effect upon nasal patency and reduces the
numbers of tissue eosinophils and mast cells associated with allergen challenge.
The data also show that CAT-213 by nasal aerosol generally produced greater
effects than by intravenous injection.
November 2002 CAT began recruiting patients for a Phase I/II challenge study of
CAT-213 in allergic conjunctivitis.
The results of the allergic rhinitis challenge study have been submitted for
presentation at the American Academy of Allergy, Asthma and Immunology (AAAAI)
meeting in March 2003. Data from the allergic conjunctivitis challenge study are
expected to be available in the third quarter of 2003.
Licensed programmes
As well as Humira, described above, CAT has a number of partners who have taken
licences to CAT antibodies under arrangements whereby they have total
responsibility for the pre- clinical/clinical development and marketing of the
product candidates.
J695, a human anti-IL-12 monoclonal antibody being developed by Abbott and Wyeth
Research continues to be tested in multi-centre Phase II clinical trials as a
potential treatment for RA and Crohn's disease.
LymphoStat-BTM, a human monoclonal antibody against B-Lymphocyte Stimulator
(BLyS) being developed by Human Genome Sciences, Inc. (HGSI) entered a Phase I
clinical trial to determine its safety and pharmacology in patients with
systemic lupus erythematosus (SLE).
TRAIL-R1 mAb, an agonistic human monoclonal antibody that recognises
TRAIL-Receptor-1 expressed on a number of solid tumours and haematopoietic
cancer cells, is being evaluated as an anti-cancer treatment by HGSI. TRAIL-R1
mAb was isolated directly from CAT's libraries without needing further
optimisation and it was delivered to HGSI just six months from the start of the
project. This is the first CAT-derived human monoclonal antibody directed to a
cell-surface receptor protein to enter clinical trials and acts as an agonist
for apoptosis (ie: triggers cancer cells to undergo programmed cell death).
January 2002 HGSI exercised an option for an exclusive licence on TRAIL-R1 mAb.
April 2002 Pre-clinical data presented by HGSI at the American Association for
Cancer Research (AACR) meeting demonstrated that TRAIL-R1 mAb has anti-tumour
activity in animal models of human breast, colon and uterine cancers.
April 2002 HGSI was granted regulatory clearance to begin Phase I clinical
trials of TRAIL-R1 mAb in the US in patients with advanced cancer.
August 2002 HGSI granted Takeda Chemical Industries an option to develop and
commercialise TRAIL-R1 mAb in Japan, while retaining development and
commercialisation rights for the US, Europe, and the rest of the world.
Pre-clinical development programmes
There are currently five CAT-derived human monoclonal antibodies in pre-clinical
development, both at CAT and at CAT's collaborators, including:
The GC1000 series are human monoclonal antibodies against TGFbeta that are being
jointly developed by CAT and Genzyme for non-ophthalmic indications. Several
candidates with differing specificities and potencies have been identified and
assessments of the potential medical and commercial opportunities they present
are currently being evaluated. Pre-clinical studies of GC1008 have commenced.
There is considerable interest in the role played by TGFbeta in tissue repair,
with overproduction of TGFbeta inducing the deposition of excess extracellular
matrix, the hallmark of tissue fibrosis and scar tissue. The development of
fibrosis in internal organs can give rise to conditions such as pulmonary
fibrosis, liver cirrhosis and diabetic nephropathy where progressive fibrosis
leads to organ dysfunction and ultimately organ failure. More than 100 other
indications where anti-TGFbeta antibodies may have an important role to play,
including Acute Respiratory Distress Syndrome (ARDS), glioma and the treatment
of burns, have been identified. Overall, fibrotic diseases account for a large
number of cases of morbidity and mortality, with many millions of patients
affected worldwide. Together, CAT and Genzyme believe they have a significant
lead over other competitive approaches in the development of new treatments for
this major area of medical need that is poorly served by existing medicines.
TRAIL-R2 mAb is an agonistic human monoclonal antibody, which recognises the
TRAIL-Receptor-2 expressed on the surface of some types of cancer cell. Early
pre-clinical data presented at the AACR meeting in April 2002 shows that
TRAIL-R2 mAb has anti-cancer activity, and in May 2002 HGSI exercised an option
for an exclusive licence to TRAIL-R2 mAb. HGSI hopes to file an IND application
for TRAIL-R2 mAb in the first half of 2003. It is the third human monoclonal
antibody to come from CAT's collaboration with HGSI and is the second
CAT-derived human monoclonal antibody candidate directed to a cell-surface
receptor protein rather than a soluble cytokine.
In June 2002 CAT granted Wyeth Research an exclusive product licence to a human
antibody identified by CAT against a disease target supplied by Wyeth.
In October 2002, CAT granted HGSI an option for an exclusive licence to an
antibody to an undisclosed target, the fourth human monoclonal antibody to come
from CAT's collaboration with HGSI.
Discovery stage antibody programmes
CAT is currently working on 15 drug discovery projects. Of these CAT funds or
co-funds around one third; the remaining projects are collaborator funded. The
active programmes include Anti-IL-18R (with Amgen), a programme with Elan and
one proprietary programme at a late-stage of drug discovery. CAT believes that
up to five of these antibodies may enter pre-clinical studies in 2003.
Drug discovery programmes are also underway at those CAT partners who have
licensed CAT's libraries for their own use, enabling CAT to broaden the
application of its technologies for the creation of antibody therapeutic
candidates.
October 2001 CAT entered a collaboration and licence agreement with Merck & Co.,
Inc. for the research and development of products specific for a key target
involved in disease mediated by HIV.
December 2001 CAT entered a co-development collaboration with Amrad to develop
human monoclonal antibodies against the receptor for granulocyte-macrophage
colony stimulating factor (GMCSF-R) as a potential therapeutic for RA, with CAT
and Amrad jointly funding development up to completion of Phase II trials. After
this, CAT will have responsibility for further trials and commercialisation.
Amrad retains an option to receive milestone and royalty payments or participate
jointly in development and commercialisation.
January 2002 Amgen exercised an exclusive licence option to develop and
commercialise human monoclonal antibodies raised to an undisclosed disease
target. CAT received a licence fee and will obtain milestone and royalty
payments on any therapeutics commercialised by Amgen.
August 2002 CAT expanded its existing relationship with Xerion Pharmaceuticals
into a research collaboration to evaluate a cell surface protein involved in
allergic reactions. CAT and Xerion jointly own any intellectual property
generated.
September 2002 CAT signed a research agreement with Chugai, one of Japan's
leading pharma companies, to license CAT's libraries for discovery and
development of potential human antibody therapeutics.
October 2002 CAT entered into a second agreement with Merck & Co., Inc, granting
Merck a licence to CAT's libraries. The libraries will be used by Merck to
support and promote discovery research and development across a broad range of
therapeutic areas.
In order to secure CAT's human monoclonal antibody drug pipeline into the
future, CAT continues to develop its pool of drug targets. As part of this
process, CAT has built a team which focuses on identifying and validating novel
drug targets against which to develop new antibodies. To further this goal, CAT
is using its own technology and also seeking access to external databases of
targets or potential targets. To this end, in December 2001, CAT licensed Incyte
Genomics' LifeSeq Gold database and sequence-verified human cDNA clones, thus
adding an additional source of potential genomics-derived targets for antibody
drugs and complementing the access CAT already has to HGSI's proprietary
genomics database.
Operations
During the year, work continued on CAT's new facilities, the "Milstein Building"
at Granta Park. This new 66,000 sq. ft. building comprises laboratories and
offices and will be occupied during December 2002, at which point the company's
Melbourn premises will be vacated.
CAT announced in November 2001 that it had signed a long term agreement with
Lonza Biologics to manufacture clinical trial supplies of antibody drugs to CAT
for up to five years. This secures CAT access to manufacturing capacity for both
ongoing programmes and future projects.
Financial Review
The following review is based on the Group's consolidated financial statements
which are prepared under UK generally acceptable accounting principles ('GAAP').
Results of operations
Years ended 30 September 2002 and 2001
Revenues increased by 34 per cent to £9.5 million in the 2002 financial year
from £7.1 million in the 2001 financial year.
The increase in revenue from the 2001 financial year to the 2002 financial year
was primarily as a result of the achievement of product development milestones
on collaborator funded programmes. Milestone payments of £1.4 million were
received in the 2002 financial year as compared to none in the 2001 financial
year. Milestone payments are typically earned based on achievements in research
and product development and may not be comparable from period to period. In the
first half of the year a clinical milestone payment was received with the
initiation of Phase I clinical trials on LymphoStat-B under the HGSI
collaboration. During the third quarter a further clinical milestone was
received from HGSI with the initiation of Phase I trials for TRAIL-R1 mAb and a
technical performance milestone was received under another collaboration
arrangement. All of the above milestone payments have been recognised in full as
revenue under the Group's accounting policy.
Revenues recognised from licence fees increased from £1.6 million for the 2001
financial year to £1.7 million in the 2002 financial year reflecting revenues
recognised from the new licence fees received in the 2002 financial year in
addition to licence fees recognised in both periods which were received in the
2001 and prior financial years. CAT received non-recurring licence fees
following the grant of five exclusive product licences during the 2002 financial
year. Three were to HGSI, for TRAIL-R1 mAb during the first quarter of the
financial year, TRAIL-R2 mAb in the third quarter and one further antibody in
the final quarter of the financial year. In addition, licences for undisclosed
targets have been granted to Amgen and Wyeth Research. During the 2001 financial
year one non-recurring licence fee was received pursuant to collaborative
arrangements with HGSI. Revenues derived from these licence payments have been
deferred and are being spread over the shorter of the licence term or the period
to expiration of the relevant patents.
Contract research fees increased from £5.4 million in the 2001 financial year to
£5.6 million in the 2002 financial year. Through both 2001 and 2002, contract
research fees were recognised from ongoing collaborations with HGSI, Wyeth
Research and Pharmacia. In addition, fees were recognised during the 2002
financial year from Merck & Co., Inc as a result of the research and development
arrangement entered into in October 2001.
During the 2002 financial year revenue of £0.7 million was recognised under an
agreement with Drug Royalty Corporation (DRC) as compared to £0.1 million in the
2001 financial year. Under the agreement, 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. This
obligation was bought out during the 2002 financial year resulting in the
remaining balance of deferred income of £0.6 million being released and
recognised as revenue.
CAT's direct costs are typically fees payable as a percentage of its revenues.
Substantially all of the direct costs reported in these financial statements are
DRC's share of revenues. Direct costs were £0.4 million in the 2001 financial
year, falling to £0.1 million in the 2002 financial year. This fall in costs is
due to the termination of the agreement with DRC.
Operating expenses for the 2002 financial year were £47.5 million (£39.6 million
excluding DRC transaction costs) compared to £27.8 million in the 2001 financial
year reflecting the continuing increase in scale and complexity of CAT's
activities.
Research and development expenses increased to £31.3 million in the 2002
financial year from £21.4 million in the 2001 financial year. The increase
reflects a significant rise in spend on clinical trials over the last two years,
both on CAT funded programs and on CAT's co-funded collaboration with Genzyme.
Research and development staff numbers increased from 212 at the start of the
2001 financial year to 251 at the end of the 2002 financial year.
General and administrative expenses increased to £16.2 million (£8.3 million
excluding the DRC transaction costs) in the 2002 financial year from £6.4
million in the 2001 financial year. General and administrative expenses include
£7.9 million of costs incurred with regard to the two DRC transactions entered
into during the 2002 financial year (2001: none). CAT made a bid for DRC in
January 2002, however a competing offer was subsequently accepted. Following
acceptance of the competing offer, CAT bought out its obligation to DRC for £6.1
million with the issue of 463,818 CAT shares to DRC. The professional fees
incurred in CAT's bid and buy-back were £1.8 million. Other general and
administrative expenses include fees relating to patent litigation of £1.9
million in the 2002 financial year compared to £2.0 million in the 2001
financial year.
Staff numbers rose over the 2002 financial year from 247 to 293 (the average
over the year was 274) and in the 2001 financial year from 180 to 247 (the
average over the year was 224). There was a credit during both the 2002 and
2001 financial years of £0.2 million for employer's National Insurance payable
on the exercise of certain options granted in December 1999. The charge for the
cost of shares to be allocated under employee share schemes was £0.6 million in
the 2002 financial year compared to £0.4 million in the 2001 financial year.
Total depreciation expenses increased from £2.1 million in the 2001 financial
year to £2.6 million in the 2002 financial year. This reflected a substantial
investment in fixed assets, particularly the fitting out and equipping of the
Franklin Building during the 2001 financial year and the Milstein Building
during the 2002 financial year. Amortisation expenses amounted to £0.9 million
in the 2002 financial year and £0.4 million in the 2001 financial year.
Amortisation of the Aptein patents was £0.4 million in both of the above
financial years. Amortisation of the Incyte licence purchased during the 2002
financial year was £0.5 million (2001: none.)
Net interest income fell to £6.4 million in the 2002 financial year from £9.3
million in the 2001 financial year. Average balances of investments in liquid
resources decreased during the 2002 financial year as cash was consumed by
operating activities which, alongside lower prevailing rates of interest,
resulted in reduced interest income.
Liquidity and capital resources
During the 2002 and 2001 financial years, CAT's net cash used by operating
activities was £26.8 million and £19.2 million respectively, in each case
resulting principally from operating losses, offset by depreciation,
amortisation and other non-cash movements. In the 2002 financial year operating
losses were also offset by increases in creditors (particularly trade
creditors).
CAT received £0.9 million research and development tax credit during the 2002
financial year. The credit was based on the level of expenditure incurred on
research and development activities during the 2000 financial year. No similar
tax credits were received in the comparative period.
CAT made capital expenditures of £10.0 million and £3.5 million in the 2002 and
2001 financial years, respectively. CAT's capital expenditures are primarily for
laboratory equipment, laboratory facilities and related information technology
equipment. Approximately half the increase in capital expenditures from the 2001
to 2002 financial year was due to the fit out of the Milstein Building situated
on Granta Park. The Milstein building comprises approximately 66,000 sq ft and
has been constructed specifically for CAT to lease. Soon after the completion of
the Milstein Building, CAT will be vacating the premises it currently leases in
Melbourn with an agreement having been reached with the landlord whereby CAT has
an option to surrender the leases early. The remainder of the increase in
capital expenditure was as a result of investment in laboratory equipment made
during the 2002 financial year.
CAT's net cash inflow from financing activities during the 2002 and 2001
financial years was £1.4 million and £15.4 million respectively, in each case
primarily resulting from the issue of ordinary shares. No significant financing
transactions were completed during the 2002 financial year. In the 2001
financial year shares were issued to Genzyme for US$20 million as part of a
strategic collaboration.
As at 30 September 2002, CAT had net current assets of £123.8 million. CAT does
not currently borrow to finance its operations. CAT's creditors at the end of
the 2002 financial year included a total of £11.1 million of deferred income,
representing non-refundable income received which will be recognised in future
periods. The corresponding amount in the 2001 financial year was £11.0 million.
CAT has incurred net losses of £28.2 million and £11.8 million in the 2002 and
2001 financial years respectively. As at 30 September 2002 CAT had an
accumulated loss of £83.8 million. CAT's losses have resulted principally from
costs incurred in performing research and development on human monoclonal
antibody product candidates, and from general and administration costs
associated with CAT's operations.
As at 30 September 2002, CAT had cash and marketable securities of approximately
£129.8 million. CAT has invested funds that are surplus to its requirements in
interest bearing marketable securities.
Financial outlook for 2003
Recurring revenues, representing contract research revenues and income from
licensing arrangements entered into prior to 30 September 2002, are expected to
be in the range of £3 to £4 million for the 2003 financial year. Additional
revenues may arise from technical and clinical milestone payments and any
further licensing or contract research arrangements, including extensions to
existing arrangements. Assuming approval in the first half of 2003, royalty
revenues for CAT from Humira are expected to commence in the 2004 financial
year. Cash receipts from collaborators and licencees in the 2003 financial year
are expected to be at least comparable to 2002.
A further significant increase in operating costs is expected over the level
incurred in the 2002 financial year. This reflects in particular additional
spending on clinical trials and further increases in infrastructure costs. Staff
numbers are not expected to increase significantly from current levels.
Capital expenditure over the year is expected to be significantly lower than
last year's level as spend on CAT's new facilities at Granta Park (Milstein
Building) will fall substantially with the completion of the fit out in the
first quarter. Total capital expenditure for the year is expected to be of the
order of £6 million; in addition the second installment on the Incyte Lifeseq
Gold database license was made in October 2002.
It is anticipated that CAT's net cash burn for the current year, taking account
of expected revenues, will be up to £40 million. This compares with the figure
for the 2002 financial year of £28.3 million. The expected increase is primarily
due to the increase in operating costs as described above offset by lower levels
of capital expenditure.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Convenience Year ended 30 Year ended 30 Year ended 30
translation September September September 2000
year ended 30 2002 2001
September
2002
US$'000 £'000 £'000 £'000
Turnover 14,869 9,471 7,121 7,018
Direct costs (126) (80) (351) (381)
Gross profit 14,743 9,391 6,770 6,637
Research and development expenses (49,152) (31,307) (21,393) (15,728)
Drug Royalty Corporation transaction (12,423) (7,913) - -
costs
Other general and administration (13,064) (8,321) (6,443) (4,842)
expenses
General and administration expenses (25,487) (16,234) (6,443) (4,842)
Operating loss (59,896) (38,150) (21,066) (13,933)
Interest receivable (net) 10,026 6,386 9,295 5,644
Loss on ordinary activities before taxation (49,870) (31,764) (11,771) (8,289)
Taxation on loss on ordinary activities 5,584 3,557 - -
Loss for the financial year (44,286) (28,207) (11,771) (8,289)
Loss per share - basic and diluted (pence) 78.7p 33.3p 27.5p
Consolidated Statement of Total Recognised Gains and Losses
Convenience Year ended Year ended Year ended
translation 30 September 30 September 30 September
year ended 2002 2001 2000
30 September
2002
US$'000 £'000 £'000 £'000
Loss for the financial year (44,286) (28,207) (11,771) (8,289)
Loss on foreign exchange translation 151 96 1 (7)
Total recognised losses relating to the year (44,135) (28,111) (11,770) (8,296)
The losses for all years arise from continuing operations.
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2002
Consolidated Balance Sheet
Convenience As at 30 As at 30
translation September 2002 September
as at 2001
30 September 2002
US$'000 £'000 £'000
Fixed assets
Intangible assets 12,455 7,933 4,075
Tangible fixed assets 19,514 12,429 6,642
Investments 338 215 -
32,307 20,577 10,717
Current assets
Debtors 10,293 6,556 4,940
Investment in liquid resources 198,910 126,694 156,228
Cash at bank and in hand 4,837 3,081 585
214,040 136,331 161,753
Creditors
Amounts falling due within one year (19,724) (12,563) (8,335)
Net current assets 194,316 123,768 153,418
Total assets less current liabilities 226,623 144,345 164,135
Creditors
Amounts falling due after more than one year (13,471) (8,580) (8,085)
Net assets 213,152 135,765 156,050
Capital and reserves
Called-up share capital 5,685 3,621 3,546
Share premium account 317,978 202,534 195,017
Other reserve 21,126 13,456 13,451
Profit and loss account (131,637) (83,846) (55,964)
Shareholders' funds - all equity 213,152 135,765 156,050
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP plc
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2002
Consolidated Cash Flow Statement
Convenience Year ended 30 Year ended Year ended 30
translation September 30 September September
year ended 2002 2001 2000
30 September
2002
US$'000 £'000 £'000 £'000
Net cash outflow from operations (42,088) (26,808) (19,150) (3,609)
Returns on investments and servicing of finance
Interest received 11,866 7,558 8,322 4,245
Taxation 1,444 920 - -
Capital expenditure and financial investment
Purchase of tangible fixed assets (15,639) (9,961) (3,485) (1,018)
Sale of tangible fixed assets - - 4 44
(15,639) (9,961) (3,481) (974)
Net cash outflow before management of liquid (44,417) (28,291) (14,309) (338)
resources and financing
Management of liquid resources 46,368 29,534 274 (133,729)
Financing
Issue of ordinary share capital 2,273 1,448 15,380 132,302
Capital elements of finance lease rental payments - - - (9)
2,273 1,448 15,380 132,293
Increase/(decrease) in cash 4,224 2,691 1,345 (1,774)
This financial information has been prepared in accordance with UK GAAP. The
dollar translations are solely for the convenience of the reader.
Notes to the financial information
Accounting policies
This financial information has 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.
Convenience translation
The consolidated financial statements are presented in pounds sterling. The
consolidated financial statements as of and for the period ended 30 September
2002 are also presented in United States Dollars as a convenience translation.
The Dollar amounts are presented solely for the convenience of the reader and
have been calculated using an exchange rate of £1:US$1.5700, the noon buying
rate as of 30 September 2002. No representation is made that the amounts could
have been or could be converted into United States Dollars at this or any other
rates.
Drug Royalty Corporation transaction costs
General and administration expenses include £7.9 million of costs incurred in
the year ended 30 September 2002 relating to the two transactions entered into
with Drug Royalty Corporation Inc. of Canada (DRC) during the year (2001: 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. 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$14 million) with the issue of 463,818 CAT shares to DRC.
The remaining balance of £0.6 million of deferred income has all been released
in the period. The professional fees incurred in the Group's bid and royalty
buy-back were £1.8 million.
Loss per share
The loss per ordinary share diluted loss per share are equal because share
options are only included in the calculation of diluted earnings per share if
their issue would decrease the net profit per share or increase the net loss per
share. The calculation is based on the following: for the year ended 30
September 2002, the year ended 30 September 2001 and the year ended 30 September
2000 respectively. Losses of £28,207,000, £11,771,000, and £8,289,000.
Weighted average number of shares in issue of 35,828,446, 35,313,260 and
30,179,818. The Company has ordinary shares in issue of 36,214,349 and a total
of 1,501,807 ordinary shares under option as of 30 September 2002.
Reconciliation of operating loss to operating cash outflow
Convenience Year ended 30 Year ended 30 Year ended 30
translation September September September
year ended 30 2002 2001 2000
September
2002
US$'000 £'000 £'000 £'000
Operating loss (59,896) (38,150) (21,066) (13,933)
Depreciation charge 4,109 2,617 2,146 1,808
Amortisation of intangible fixed assets 1,385 882 373 374
Shares issued to buy out DRC royalty agreement 9,654 6,149 - -
Loss/(profit) on disposal of fixed assets - - 1 (5)
(Increase) in debtors (248) (158) (515) (1,159)
Increase/(decrease) in creditors 2,908 1,852 (89) 9,306
(42,088) (26,808) (19,150) (3,609)
Analysis and reconciliation of net funds
1 October Cash flow Exchange 30
2001 movement September
2002
£'000 £'000 £'000 £'000
Cash at bank and in hand 585 2,528 (32) 3,081
Overdrafts (163) 163 - -
2,691 (32)
Liquid resources 156,228 (29,534) - 126,694
Net funds 156,650 (26,843) (32) 129,775
2002 2001 2000
£'000 £'000 £'000
Increase/(decrease) in cash in the year 2,691 1,345 (1,774)
(Decrease)/increase in liquid resources (29,534) (274) 133,729
Decrease in lease financing - - 9
Change in net funds resulting from cash flows (26,843) 1,071 131,964
Exchange movement (32) - 2
Movement in net funds in year (26,875) 1,071 131,966
Net funds at 1 October 2001 156,650 155,579 23,613
Net funds at 30 September 2002 129,775 156,650 155,579
Reconciliation of movements in group shareholders' funds
2002 2001
£'000 £'000
Loss for the financial year (28,207) (11,771)
Other recognised gains and losses relating to the year 325 1
(27,882) (11,770)
New shares issued 7,597 15,380
Net (decrease)/increase in shareholders' funds (20,285) 3,610
Opening shareholders' funds 156,050 152,440
Closing shareholders' funds 135,765 156,050
Financial Statements
The preceding information, comprising the Consolidated Profit and Loss Account,
Consolidated Statement of Total Recognised Gains and Losses, Consolidated
Balance Street, Consolidated Cash Flow Statement and associated notes, does not
constitute the Company's statutory financial statements for the years ended 30
September 2002, 2001 and 2000 within the meaning of section 240 of the Companies
Act 1985, but is derived from those financial statements. Statutory financial
statements for the year ended 30 September 2001 have been delivered to the
Registrar of Companies and those for the year ended 30 September 2002 will be
delivered to the Registrar of Companies after the Company's Annual General
Meeting. The auditors have reported on those financial statements; their
reports were unqualified and did not contain any statements under s237 (2) or
(3) Companies Act 1985.
The annual report and financial statements for the year ended 30 September 2002
will be posted to shareholders by 31 December 2002 and will be available shortly
thereafter from our registered office (as of December 2002):
The Company Secretary
Cambridge Antibody Technology Group plc
Milstein Building
Granta Park
Cambridge
CB1 6GH, UK
Tel: +44 (0) 1223 471471
This preliminary announcement was approved by the Board on Friday 15 November
2002.
Quarterly financial information
Three months Three months Three Three
ended 30 ended 30 months months
September June 2002 ended 31 ended 31
2002 March 2002 December 2001
unaudited unaudited unaudited unaudited
£'000 £'000 £'000 £'000
Consolidated profit and loss account
Turnover 2,598 2,021 2,974 1,878
Direct costs (16) - 20 (84)
Gross profit 2,582 2,021 2,994 1,794
Research and development expenses (10,339) (7,206) (7,652) (6,110)
Drug Royalty Corporation transaction - (6,678) (1,235) -
costs
Other general and administration (3,033) (2,005) (1,726) (1,557)
expenses
General and administration expenses (3,033) (8,683) (2,961) (1,557)
Operating loss (10,790) (13,868) (7,619) (5,873)
Interest receivable (net) 1,426 1,536 1,564 1,860
Loss on ordinary activities before taxation (9,364) (12,332) (6,055) (4,013)
Taxation on loss on ordinary activities 2,637 - 920 -
Loss for the financial period (6,727) (12,332) (5,135) (4,013)
Consolidated cash flow statement
Net cash outflow from operations (6,646) (9,296) (6,569) (4,297)
Returns on investments and servicing of finance
Interest received 1,223 2,254 1,688 2,393
Taxation 920 - - -
Capital expenditure and financial investment
Purchase of fixed assets (3,645) (2,384) (3,021) (911)
Net cash outflow before management of liquid (8,148) (9,426) (7,902) (2,815)
resources and financing
Management of liquid resources 8,875 8,653 6,551 5,455
Financing
Issue of ordinary shares 29 51 583 785
(Decrease)/increase in cash 756 (722) (768) 3,425
Notes to Editors:
Cambridge Antibody Technology (CAT)
CAT is a UK-based biotechnology company using its proprietary technologies and
capabilities in human monoclonal antibodies for drug discovery and drug
development. Based near Cambridge, England, CAT currently employs around 290
people.
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.
D2E7, the leading CAT-derived antibody, has been submitted for regulatory review
by Abbott (responsible for development and marketing) following the completion
of Phase III trials. Six other CAT-derived human therapeutic antibodies are at
various stages of clinical 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, Amgen, Amrad, Chugai, Elan, Genzyme, Human Genome
Sciences, 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.
Application of the Safe Harbor of the Private Securities Litigation Reform Act
of 1995:
This press release contains statements about Cambridge Antibody Technology Group
plc ("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 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.
--------------------------
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