Final Results
Cambridge Antibody Tech Group PLC
22 November 2004
04/CAT/13
FOR IMMEDIATE RELEASE
07:00 GMT, 02:00 EST Monday 22 November 2004
For further information contact:
Cambridge Antibody Technology Weber Shandwick Square Mile (Europe)
Tel: +44 (0) 1223 471 471 Tel: +44 (0) 20 7067 0700
Peter Chambre, Chief Executive Officer Kevin Smith
John Aston, Chief Financial Officer Sarah MacLeod
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 ANNOUNCES PRELIMINARY RESULTS FOR THE YEAR ENDED
30 SEPTEMBER 2004
Cambridge, UK Cambridge Antibody Technology (LSE: CAT; NASDAQ: CATG) today
announces preliminary results for the year ended 30 September 2004 and an update
for the fourth quarter.
Developments since the third quarter results
Major strategic alliance with AstraZeneca in the field of inflammatory diseases
announced separately today:
Joint discovery and development of human antibody therapeutics
CAT to share directly in the success of products resulting from the
alliance
AstraZeneca to subscribe for a 19.9 per cent equity shareholding in CAT at
a price of £7.34 per share, investing £75 million
Trial against Abbott Laboratories in relation to HUMIRA(TM) royalties commences
today
Plans for Genzyme anti-TGF-beta collaboration:
Additional pre-clinical studies of GC-1008 completed and discussions with
FDA underway
Clinical trials of GC-1008 in Idiopathic Pulmonary Fibrosis and oncology to
commence in 2005, subject to final regulatory approval
Trabio(R) failed to reach primary endpoint in first pivotal clinical trial
Phase I clinical trial of CAT-354 in severe asthma initiated with preliminary
results expected at end of Q2 2005
Net cash and liquid resources of £93.7 million at 30 September 2004 (£107.8
million at 30 September 2003)
Net cash outflow before management of liquid resources and financing: £27.9
million for the year ended 30 September 2004 compared with £33.6 million for the
year ended 30 September 2003
Chairmans Statement
I am honoured to have followed Peter Garland as Chairman of CAT. Peter retired
from the Board at the AGM in February, having been a Board member since the
companys formation in 1990 and Chairman since 1995. Peter contributed much to
CAT and its development, and it has been my privilege to have worked with him
since I joined the Board in 1999. We wish him an enjoyable retirement.
CAT is a company with a strong scientific foundation, broadly applicable
technology and a clear vision for its future evolution as a product-based
biopharmaceutical company. We expect the core of our future value to come from
products we develop, in which we invest and in which we have a substantial
economic interest. Todays announcement of our major alliance with AstraZeneca,
which we will complete in December subject to the sanction of our shareholders,
represents a major step forward in CATs achievement of that vision.
Another very important event for CAT commences today when the trial in which CAT
is claiming full royalties under its contract with Abbott with respect to HUMIRA
begins in the High Court in London. HUMIRA is the first CAT-derived product to
be marketed. It is anticipated to reach blockbuster status in 2005, with Abbott
forecasting sales of more than $1.2 billion.
There is a rapidly growing market for antibody therapeutics in which we intend
to participate actively and to be amongst those leading expansion in the
industry. CAT is committed to operating at the highest standards, whether they
are ethical, scientific or of corporate governance.
I was delighted to welcome Professor Christopher Marshall who took up his
position as a Non-Executive Director of CAT on 24 September 2004. He is Director
of the Cancer Research UK Centre for Cell and Molecular Biology at the Institute
of Cancer Research London, UK and a Fellow of the Royal Society. He brings a new
perspective and scientific breadth to the Board of CAT and we look forward to
working with him.
I am also delighted to welcome four new members to our Scientific Advisory Board
(SAB): Professor John Forrester, Professor Stephen Holgate, Professor Peng Khaw
and Professor Stephen ORahilly. They are all well-known specialists in their
fields and will bring fresh perspectives to the evolution of the companys
scientific endeavours - ensuring that CAT has access to the experience it needs
as it focuses further on its chosen areas and maintains its position of
scientific leadership. I would like to acknowledge the hard work of those
members of the SAB who stood down during the year, and to thank them for their
valuable contributions to the company over the years.
Finally, I am grateful to everyone who has contributed to CAT during the year -
our staff, our Board, our SAB, our partners, our licensees and our shareholders,
and look forward to the year ahead.
Paul Nicholson
CEOs Statement
Our ambitions for the business are clear - to become a leading biopharmaceutical
company with a pipeline of products that improve the lives of patients in which
we have a major economic stake and thereby achieve rapid revenue and profit
growth for our shareholders.
We add the new alliance with AstraZeneca to an existing CAT pipeline that has
grown during this year - but one that reflects both the opportunities and risks
of discovering and developing important new medicines. Overall, there is one
CAT-derived antibody on the market, HUMIRA, and 10 others which have entered
clinical development - an increase of two since a year ago. HUMIRA sales
continue to advance strongly and Abbott has stated that it will file for
regulatory approval in Psoriatic Arthritis by the end of 2004. HUMIRA was
isolated and optimised by CAT in conjunction with BASF (subsequently acquired by
Abbott).
We recently announced that the first pivotal trial of Trabio failed to meet the
primary endpoint of improving the outcome of surgery for glaucoma compared to
placebo. This is obviously a disappointing outcome. However, our work on Trabio
has enhanced CATs biopharmaceutical development capability, which we have
applied successfully to CATs other current product candidates. This will be a
key component of our relationship with AstraZeneca.
In September, we commenced the first clinical study of CAT-354, a product
candidate with potential in the treatment of severe asthma.
We have been working closely with Genzyme during the year in order to plan the
broad clinical development of our collaboration in the field of antibodies
against TGF-beta. We are pleased to confirm that, subject to regulatory
approval, we intend to commence a first clinical trial with GC-1008 in
Idiopathic Pulmonary Fibrosis (IPF) and a trial in oncology during 2005. We
continue to examine the opportunity for our antibody candidates in other
indications, including diffuse systemic sclerosis.
During the year ABT-874, being developed by Abbott, progressed to a Phase II
clinical trial in multiple sclerosis. Three of the four CAT-derived antibodies
licensed to HGSI also progressed, with the fourth dependent on US government
decisions. We are particularly pleased that during the year, Wyeth announced
plans to take its first CAT-derived antibody, MYO-029, into a Phase I clinical
trial for muscular dystrophy and age-related sarcopenia.
We also continue to invest in our core technologies, a key asset of our company,
so that we can retain our leadership position in the field of antibody discovery
and development. We believe our Phage and Ribosome Display technologies and
capabilities put CAT at the forefront of fully human antibody therapeutics.
Peter Chambre
Review of the year
Product Development
CAT products
Trabio (lerdelimumab) is a fully human anti-TGF-beta2 monoclonal antibody
developed by CAT as a potential treatment for improving the outcome of surgery
for glaucoma.
In November, CAT announced preliminary results from its first pivotal (European
Phase II/III) clinical trial of Trabio. The trial, which started in February
2002, was carried out in 344 patients in six European countries. Trabio failed
to meet the primary endpoint of improving the outcome of surgery for glaucoma
compared to placebo. Overall, the percentage of patients achieving intraocular
pressure in the range 6 - 16 mm Hg at six and 12 months was Trabio 60 per cent,
compared to placebo 68 per cent. This compares to, and contrasts with, the
earlier smaller clinical trials which showed that 56 - 61 per cent of patients
treated with Trabio and 35 - 38 per cent of patients treated with placebo
achieved this endpoint.
This result will delay the filing of a Biologics Licence Application (BLA) and,
if repeated in the second pivotal study, will terminate development of the
product in this indication.
Following the preliminary results of the first pivotal trial, we are minimising
future costs of Trabio development, consistent with our obligations in the two
continuing trials. In the second pivotal (International Phase III) clinical
trial in 393 patients in six European countries and South Africa, enrolment is
complete and preliminary results are expected in the first quarter of 2005. In
the US clinical trial comparing Trabio with 5-Flurouracil (5-FU) in 236
patients, enrolment is complete and preliminary results are expected at the end
of 2005.
CAT-354 is a fully human anti-IL13 monoclonal antibody being developed by CAT,
initially as a potential treatment for severe asthma. In September 2004, CAT
commenced a Phase I clinical trial in the UK: a placebo-controlled, rising
single intravenous dose study in up to 36 patients, with objectives to study the
safety, tolerability and pharmacokinetics of CAT-354. Enrolment is progressing
and dosing has started. Preliminary results are expected to be available at the
end of the second quarter of 2005. If this initial trial meets its primary
objectives, CAT intends to commence further clinical trials later in 2005.
CAT-213 is a fully human anti-eotaxin1 monoclonal antibody directed at severe
allergic disorders. Discussions with potential partners continue regarding the
further development of CAT-213.
Genzyme alliance
CAT and Genzyme believe that the neutralisation of TGF-beta offers a number of
important and valuable opportunities for addressing unmet medical needs.
Following discussions with the US Food and Drug Administration (FDA), a further
pre-clinical safety study of GC-1008 has been undertaken and the results
presented to the FDA with regard to the commencement of a Phase I clinical trial
in IPF. During 2005, it is also intended to commence a clinical trial of GC-1008
in various cancers.
In February 2004, preliminary results of a double-blind, placebo-controlled
Phase I/II clinical trial of CAT-192 (metelimumab) in 45 patients suffering from
diffuse systemic sclerosis at 12 medical centres in the US and Europe were
announced. The primary objective of the trial was to assess the safety,
tolerability and pharmacokinetics of CAT-192 in patients. The primary objective
of the trial was met; CAT-192 was generally safe and well-tolerated at each dose
level. Elimination half-life was consistently around three weeks. There were no
treatment-related serious adverse events observed. The secondary objective was
to evaluate the potential clinical outcomes for any future trial in systemic
sclerosis, however, it has not proved possible to reach definitive conclusions
regarding the efficacy of CAT-192 from the results of the trial. The results
were presented at the American College of Rheumatology in October 2004. Work
continues to identify a route forward for clinical trials in diffuse systemic
sclerosis.
The partners also believe that there are further therapeutic opportunities for
the collaboration and pre-clinical work is continuing to evaluate these.
Licensed products
HUMIRA (adalimumab) is a fully human anti-TNF-alpha monoclonal antibody,
isolated and optimised by CAT in collaboration with Abbott and approved for
marketing as a treatment for rheumatoid arthritis (RA) in over 50 countries.
Abbott reported sales of $280 million in 2003, HUMIRAs first year on the market,
and sales for the first nine months of 2004 of $578 million. Abbott forecasts
total 2004 sales of over $800 million, and 2005 sales of over $1.2 billion.
Abbott continues to develop HUMIRA as a potential treatment for a number of
additional indications: Phase III trials continue in psoriatic arthritis and
Abbott has announced plans to submit applications to the US FDA and the European
Medicines Agency (EMEA) in 2004 to request approval for use of HUMIRA as a
treatment for psoriatic arthritis. Further Phase III clinical trials in Crohns
disease, juvenile RA and ankylosing spondylitis also continue. A Phase II
clinical trial continues in chronic plaque psoriasis.
In August 2004, Abbott announced that the US FDA had approved an expanded
indication for HUMIRA to include improvement in physical function for adult
patients with moderately to severely active RA.
In November 2003, CAT commenced legal proceedings against Abbott Biotechnology
Limited and Abbott GmbH in the High Court in London concerning the level of
royalties due to CAT. The trial commences today, with an estimated length of
three weeks.
ABT-874 is a fully human anti-IL12 monoclonal antibody, isolated and optimised
by CAT in collaboration with Abbott, and is licensed to Abbott. Abbott continues
to develop ABT-874 as a potential treatment for a number of autoimmune diseases
and announced the start of a Phase II clinical trial in multiple sclerosis in
June 2004.
LymphoStat-B(TM) (belimumab) is a fully human anti-BLyS monoclonal antibody and
the first of four antibody drug candidates to be licensed by CAT to Human Genome
Sciences, Inc (HGSI). HGSI is developing LymphoStat-B as a potential treatment
for systemic lupus erythematosus (SLE) and RA.
A Phase II clinical trial in each indication is underway and in July 2004 HGSI
completed the enrolment, randomisation and initiation of dosing in both studies.
283 patients were enrolled in the double-blind, placebo-controlled multi-centre
Phase II trial to evaluate safety, optimal dosing and efficacy of LymphoStat-B
in patients with active RA who have failed prior therapy. HGSI expects that
results of this clinical trial will be available in the Spring of 2005. 449
patients have been enrolled in the double-blind, placebo-controlled,
multi-centre Phase II clinical trial of LymphoStat-B in patients with active
SLE. HGSI expects that the results of this clinical trial will be available in
the Autumn of 2005.
HGS-ETR1 (previously known as TRAIL-R1 mAb) is a fully human monoclonal antibody
licensed by CAT to HGSI and being developed by HGSI as a potential treatment for
a number of cancers.
Phase I clinical trials to evaluate its safety and pharmacology in patients with
advanced solid tumours or non-Hodgkins lymphoma continue. Interim results of two
Phase I trials were presented at the 40th Annual Meeting of the American Society
of Clinical Oncology (ASCO) in New Orleans, US in June 2004. Interim results
from these trials were also presented at the 16th EORTC-NCI-AACR Symposium on
Molecular Targets and Cancer Therapeutics in Geneva in September 2004. These
interim results demonstrate the safety and tolerability of HGS-ETR1 and support
its further evaluation in Phase II trials. Based on these results and strong
pre-clinical evidence, HGSI announced in September 2004 that it had commenced
dosing patients in a Phase II clinical trial of HGS-ETR1. This US Phase II
clinical trial is a multi-centre, open-label, single-arm study in a maximum of
30 patients with relapsed or refractory non-small cell lung cancer. Each patient
will receive four 10 mg/kg doses of HGS-ETR1 administered as an infusion 21 days
apart. The primary objective of the study is to evaluate tumour response. The
secondary objectives are to evaluate the safety and tolerability of HGS-ETR1,
and to determine plasma concentrations of HGS-ETR1 for use in a population
pharmacokinetic analysis.
Also, in September, HGSI announced that it had begun to dose patients in an
open-label, dose-escalation Phase 1b clinical trial of HGS-ETR1 to evaluate its
safety and tolerability in combination with chemotherapy (paclitaxel and
carboplatin) in patients with advanced solid malignancies.
In October 2004, HGSI announced the initiation of two further Phase II clinical
trials of HGS-ETR1. One of the trials will take place in Germany and is a
multi-centre, open-label study to evaluate the efficacy, safety and tolerability
of HGS-ETR1 in a maximum of 30 patients with advanced colorectal cancer. The
other is a multi-centre, open-label study to evaluate efficacy, safety and
tolerability of HGS-ETR1 in a maximum of 30 patients with relapsed or refractory
non-Hodgkins lymphoma.
HGS-ETR2 (previously known as TRAIL-R2 mAb) is a fully human monoclonal antibody
licensed by CAT to HGSI, and being developed by HGSI as a potential treatment
for cancer. In September 2004, HGSI announced that initial results of an ongoing
Phase I clinical trial demonstrate the safety and tolerability of HGS-ETR2 in
cancer patients with advanced solid tumours, and that these results support the
continued dose escalation and evaluation of HGS-ETR2 in these patients. Safety,
pharmacokinetic and biological activity data were presented at the 16th
EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics in Geneva.
ABthrax(TM) is a fully human anti-protective antigen monoclonal antibody
isolated and developed by HGSI from antibody libraries licensed by CAT to HGSI.
It has been developed by HGSI as a potential treatment for anthrax.
In March 2004, HGSI presented results from its Phase I placebo-controlled,
dose-escalation clinical trial to evaluate the safety, tolerability and
pharmacokinetics of ABthrax. The results demonstrate that ABthrax is safe and
well tolerated in healthy adult volunteers, and achieved the blood levels
predicted in relevant animal models as necessary to afford significant
protection from the lethal effects of anthrax toxin. HGSI has stated that
further development of ABthrax will depend on the US governments willingness to
commit to the purchase of ABthrax.
MYO-029 is a fully human monoclonal antibody which neutralises the effects of
GDF-8 (a protein which is associated with reduced skeletal muscle mass). The
antibody was discovered by CAT in collaboration with Wyeth and is licensed to
Wyeth, which is studying it as a potential therapy for muscle-wasting diseases,
including muscular dystrophy and age-related sarcopenia. Wyeth announced in June
2004 that it had filed an Investigational New Drug (IND) application for MYO-029
and is now moving forward with a Phase I clinical trial.
Research and pre-clinical stage programmes
There are ongoing research programmes to 18 distinct molecular targets at CAT -
11 CAT proprietary programmes and seven on behalf of partners. In addition there
is one CAT proprietary candidate, GC-1008 (partnered with Genzyme) and six
antibody drug candidates licensed to partners which are at the pre-clinical
stage of development.
In December 2003, CAT restructured its agreement with Amgen, with Amgen taking
over responsibility for the further development and marketing of the therapeutic
antibody candidates isolated by CAT against two targets identified by Amgen and
covered by an earlier collaboration agreement between CAT and Immunex
(subsequently acquired by Amgen). In return, CAT receives from Amgen an initial
fee and potential milestone payments and royalties on future sales. This
agreement allows CAT to focus its investment on a smaller number of core
programmes, while retaining significant interest in the success of these two
antibody candidates.
In February 2004, after three years, CAT exercised its right to terminate its
agreement with Elan. The collaboration involved research on a number of targets.
Terminating this exclusive agreement allows CAT to collaborate with third
parties in the fields of neurology and pain, and does not preclude future
collaboration with Elan.
In October 2001, CAT entered into a collaboration with Merck & Co., Inc that
focussed on the research and development of products specific for a key target
involved in diseases mediated by HIV-1. Mercks proprietary technologies and
experience in HIV biology, combined with CATs libraries and expertise in
antibodies, has resulted in the isolation of a neutralising antibody (known as
D5) specific for the envelope glycoprotein gp41, which is present on the outside
of the HIV molecule and which mediates the fusion of the viral and cellular
membranes. During the year, Merck presented the results of early research at
two conferences: the XIII International HIV Resistance Workshop in June, in
Tenerife, and AIDS Vaccine 2004 in August in Lausanne, Switzerland.
Library Licences
In the last year, CAT has continued to develop its licensing business through
the licensing of its proprietary phage antibody libraries in return for upfront
fees and potential option, milestone and royalty payments.
In February 2004, Wyeth exercised an option to license CATs libraries for
in-house use. The libraries will support Wyeths activities in therapeutic
antibody drug discovery and development across a broad range of therapeutic
areas. This option was granted to Wyeth as part of the collaboration agreement
entered into in March 1999. Wyeth has a number of exclusive therapeutic and
diagnostic antibody product options related to its use of the libraries.
In April 2004, CAT granted Genzyme a Library licence. Genzyme will use CATs
phage antibody libraries in its research and development of antibody-based
treatments across a range of medical areas. Genzyme also received option rights
to develop therapeutic and diagnostic products on an exclusive basis.
Intellectual Property
During the year, CAT strengthened its three key patent families, Winter II,
McCafferty and Griffiths.
The Winter II patent family covers the production of expression libraries of
antibody genes. The European Winter II patent EP 0 368 684 had been maintained
in amended form by the Opposition Division in 2000. CAT and MorphoSys both
appealed this decision (MorphoSys later withdrew), and in January 2004 the
Technical Board of Appeal decided to maintain and broaden the scope of the
amended patent.
The McCafferty patent family protects CATs phage display method used to obtain
specific antibodies from the expression libraries of antibody genes. A further
US continuation application, relating to phagemid-based display of scFv, Fab and
VH (dAb) fragments, issued in October 2004 as US 6,806,079.
The Griffiths family of patents covers antibodies that specifically recognise
human self antigens isolated from CATs libraries. In September 2004 the European
Griffiths patent issued as EP 0 616 640, adding to the six US patents already
issued in this family.
CAT also has a number of patent applications pending or granted in relation to
its ribosome display technology and its pipeline products.
Operations
Employees
CAT employed 281 staff at 30 September 2004 (279 at 30 September 2003).
Manufacturing
In January, CAT and Lonza announced the extension of their November 2001
agreement, confirming that Lonza Biologics will manufacture and supply clinical
grade antibody drugs to CAT through to the end of 2006. This will enable CAT to
plan further ahead with confidence and will guarantee that CAT and its
collaborators have access to Lonzas world-class manufacturing capability at
production scale (up to 2,000L), for both ongoing programmes and future
projects, in a cost-effective way.
Management
During the year, the company reorganised its research and development functions,
to reflect the needs of CAT as it evolves to a product-focussed company. The
Discovery and Development team structures are now organised around CATs product
and therapeutic focus and the enlarged Development team now includes CATs
class-leading biopharmaceutical development group. Nigel Burns, Senior Vice
President, has taken over responsibility for the strategic management of CATs
product collaborations.
During the year, three key positions were appointed. In January 2004, Dr Diane
Wilcock was promoted to the position of Vice President, Intellectual Property,
responsible for managing the Companys patent portfolio and patent strategy. In
April 2004, Dr Neil Stutchbury joined CAT as Vice President, Informatics and
Information Technology and is leading the delivery of an Informatics and
Information Technology strategy to support CATs development. In May 2004, Dr
Patrick Round joined CAT as Vice President, Development, responsible for CATs
product development activities.
Financial Review
The following review is based on the Groups consolidated financial statements
which are prepared under UK Generally Accepted Accounting Principles (GAAP).
Results of operations
Years ended 30 September 2004 and 2003
Revenues, consisting of contract research fees, licence fees, technical and
clinical milestone payments and royalties, increased by 82% percent to £15.9
million in the 2004 financial year (2004) from £8.7 million in the 2003
financial year (2003).
The increase in revenue from 2003 to 2004 was primarily as a result of the
receipt of three royalty payments from Abbott in respect of HUMIRA during the
year. Royalties of £6.3 million were received as compared to nil in 2003. Sales
of HUMIRA commenced in January 2003. The three royalty payments received, and
recognised as revenue, represent Abbotts calculation of the royalties due on
HUMIRA sales in the period from January 2003 to 30 June 2004.
Revenues recognised from licence fees increased to £4.6 million in 2004 from
£2.6 million in 2003. A full years revenue was recognised under the Chugai
library licence for the first time which, with the new library licences granted
to Wyeth in February 2004 and Genzyme in April 2004, account for the majority of
this increase. Library licences were granted to Wyeth in February 2004 and
Genzyme in April 2004, and revenues have been recognised during 2004 regarding
both these agreements. Four product licences were granted to Dyax and two to
Amgen during 2004. In addition to revenues being recognised from the new licence
agreements in each financial year, revenue is also realised on licence fees
released from deferred income brought forward at the beginning of each financial
year.
Revenues arising from technical milestones increased from £0.2 million in 2003
to £1.6 million in 2004. Four technical milestone payments were received from
Pfizer and one from Amgen during 2004. Technical milestone payments of £0.2
million were received from Pfizer during 2003. The above technical milestone
payments have been recognised in full as revenue under the Groups accounting
policy.
Clinical milestone payments recognised fell from £1.8 million in 2003 to £1.1
million in 2004. A milestone payment was received from Wyeth in the fourth
quarter of the 2004 financial year with the initiation of a Phase I clinical
trial for MYO-029. Fifty percent of the value of this milestone receipt is
creditable against any future royalties payable by Wyeth and therefore, only
half the value has been recognised as revenue in the year. A clinical milestone
payment was received from Abbott during 2003 following US FDA approval of
HUMIRA. The milestone was not recognised as revenue during 2003 as it is
creditable against the royalties receivable from Abbott. Three fifths of this
milestone was released as revenue during 2004, the remainder is expected to be
released as revenue during the 2005 financial year on receipt of two further
royalty payments. HGSI received clearance to begin Phase I trials for both
ABthrax and HGS-ETR2 during the 2003 financial year triggering milestone
payments for each. Unless otherwise stated, all of the above clinical milestone
payments have been recognised in full as revenue under the Groups accounting
policy.
Contract research fees decreased from £3.9 million in 2003 to £1.8 million in
2004 resulting from reduced activity levels on funded research collaborations.
CATs direct costs are typically payments made to third parties as a proportion
of certain CAT revenues. Direct costs were £3.0 million in 2004 and £0.7 million
in 2003. The majority of direct costs for 2004 comprised royalties payable to
Medical Research Council and other licensors, primarily arising on the payments
received from Abbott regarding sales of HUMIRA. In addition, in 2004, direct
costs included an amount payable to Medical Research Council and in 2003,
included an amount payable to The Scripps Research Institute and Stratagene
arising following CATs settlement of all pending litigation with MorphoSys.
Direct costs for both financial years included agency fees incurred in obtaining
new contracts.
Operating expenses, consisting of research and development expenses and general
and administration expenses, for 2004 were £55.1 million compared to £54.2
million in 2003.
Research and development expenses decreased to £44.1 million in 2004 from £45.0
million in 2003. External development costs rose by £3.3 million to £18.5
million in 2004. The increase reflects a rise in spend on clinical trials over
the last year on CAT funded programmes, particularly Trabio and CAT-354.
Research and development staff costs and spend on laboratory consumables fell in
line with the reduction in staff numbers following the termination of the
antibody microarray project in 2003, and reflect some reallocations of staff
between departments. Research and development expenditures in 2003 include the
one-off cost of the cross-licensing arrangement with Xoma for antibody related
technologies, entered into during December 2002.
General and administration expenses increased to £11.0 million in 2004 from £9.2
million in 2003. The increase in costs was primarily due to the rise in
litigation costs incurred during 2004, from £0.9 million in 2003 to £2.5 million
in 2004, as a result of the legal proceedings commenced by CAT against Abbott in
the High Court in London. For 2003, general and administration expenses included
£0.6 million of net costs incurred relating to the offer made for OGS. General
and administration staff costs have increased reflecting the reallocation of
staff from research and some increase in staff numbers. General and
administration expenses for 2004 include a foreign exchange translation charge
of £1.1 million (2003: £0.8 million) relating primarily to the non-cash charge
arising from the retranslation of CATs trading balances with its US subsidiary,
Aptein, due to the significant depreciation of the US Dollar compared to
sterling.
Interest income fell from £4.4 million in 2003 to £4.1 million in 2004. Average
balances of cash and liquid resources decreased during 2004 as cash was consumed
by operating activities which resulted in reduced interest income.
Under the research and development tax credit scheme for Small and Medium sized
Enterprises in the UK, the Group submitted one claim in 2003 for £3.1 million
relating to the 2002 financial year. The Group chose to surrender tax losses
created through qualifying research and development expenditure in exchange for
a cash refund. The Group no longer qualifies as a Small and Medium sized
Enterprise and hence no further claims for cash refunds under this scheme can be
made. Tax of £0.6 million and £0.1 million was withheld on the licence payments
received from Chugai during the 2003 and 2004 financial years respectively.
Liquidity and capital resources
Net cash outflow before management of liquid resources and financing was £27.9
million for 2004 as compared to £33.6 million for 2003. As at 30 September 2004,
CAT had net cash and liquid resources of £93.7 million (£107.8 million at 30
September 2003).
During 2004 and 2003, CATs net cash used by operating activities was £31.1
million and £35.8 million respectively, in each case resulting principally from
operating losses, offset by depreciation, amortisation and other non-cash
movements. In both years, operating losses were also offset by increases in
creditors primarily due to the increase in deferred income resulting from
licence income received, to be recognised as revenue in future periods.
CAT received £5.7 million research and development tax credit during 2003 based
on claims for the 2002 and 2001 financial years.
CAT made capital expenditures of £1.0 million and £8.1 million in 2004 and 2003,
respectively. CATs capital expenditures are primarily for laboratory equipment,
laboratory facilities and related information technology equipment. CAT has also
invested in office and administrative facilities. The fall in capital
expenditure from 2003 to 2004 was primarily due to the completion of the fit out
of the Milstein Building early in the 2003 year.
CATs net cash inflows from financing activities during 2004 and 2003 were £13.9
million and £11.7 million respectively, in each case primarily resulting from
the issue of ordinary shares. In 2003, Genzyme increased its equity stake in CAT
through a subscription of £9.6 million for 1.8 million shares. The subscription
for shares was the first of two tranches, the second tranche was a further 2.5
million shares with a value of £13.3 million, issued during the 2004 financial
year following shareholder approval at the EGM held in October 2003.
As at 30 September 2004, CAT had net current assets of £84.6 million. CATs
creditors at the end of the 2004 financial year included a total of £25.8
million of deferred income, representing non-refundable income received which
will be recognised in future periods. The corresponding amount in 2003 was £21.7
million.
International Accounting Standards
The Group will be required to adopt International Financial Reporting Standards
and International Accounting Standards for the financial year ending 30
September 2006 onwards. The most notable change for the Group will be the
adoption of IFRS 2, Share Based Payment, which requires the fair value of equity
based compensation to be recognised in the Groups profit and loss account.
Financial outlook for 2005
Further royalty income from Abbott in respect of HUMIRA is expected in the 2005
financial year. Abbott has stated that it expects HUMIRA sales to be in excess
of $800 million for the 2004 calendar year and in excess of $1.2 billion for the
2005 calendar year. Recurring revenues, representing release of deferred income
from licensing arrangements entered into prior to 30 September 2004 and contract
research revenues are expected to be of the order of £5 million for the 2005
financial year. Additional revenues may arise from technical and clinical
milestone receipts and any further licensing or contract research arrangements.
External development expenditure is expected to decrease in the 2005 financial
year given cost savings identified on the Trabio programme following the
announcement of the European Phase II/III clinical trial result. Other operating
expenses are not expected to increase significantly during 2005.
It is expected that CATs net cash outflow before financing for the current year
will be of the order of £32 million.
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended Year ended Year ended
30 September 30 September 30 September
2004 2004 2003
Convenience
translation
US$000 £000 £000
Turnover 28,808 15,925 8,743
Direct costs (5,469) (3,023) (690)
Gross profit 23,339 12,902 8,053
Research and development expenses (79,822) (44,125) (44,981)
General and administration expenses (19,843) (10,969) (9,196)
Operating loss (76,326) (42,192) (46,124)
Interest receivable (net) 7,471 4,130 4,360
Loss on ordinary activities before (68,855) (38,062) (41,764)
taxation
Tax on loss on ordinary activities (116) (64) 2,573
Loss for the financial period (68,971) (38,126) (39,191)
Loss per share - basic and diluted 93.3p 107.5p
(pence)
Consolidated Statement of Total Recognised Gains and Losses
Year ended Year ended Year ended 30
30 September 30 September September 2003
2004 2004
Convenience
translation
US$000 £000 £000
Loss for the financial period (68,971) (38,126) (39,191)
Gain on foreign exchange translation 1,988 1,099 606
Total recognised losses relating to the (66,983) (37,027) (38,585)
period
The losses for all periods 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
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2004
CONSOLIDATED BALANCE SHEET
As at As at As at
30 September 2004 30 September 30 September
2004 2003
Convenience
translation
US$000 £000 £000
Fixed assets
Intangible assets 10,550 5,832 6,883
Tangible assets 22,363 12,362 14,366
Investments 5,322 2,942 3,373
38,235 21,136 24,622
Current assets
Debtors 8,068 4,460 4,526
Short term investments 168,347 93,061 108,347
Cash at bank and in hand 4,845 2,678 1,056
181,260 100,199 113,929
Creditors
Amounts falling due within one year (28,226) (15,603) (12,657)
Net current assets 153,034 84,596 101,272
Total assets less current liabilities 191,269 105,732 125,894
Creditors
Amounts falling due after more than one (37,356) (20,650) (18,152)
year
Net assets 153,913 85,082 107,742
Capital and reserves
Called-up share capital 7,437 4,111 3,834
Share premium account 410,334 226,829 212,883
Other reserve 24,342 13,456 13,456
Profit and loss account (288,200) (159,314) (122,431)
Shareholders funds - all equity 153,913 85,082 107,742
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
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2004
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended Year ended
30 September 30 September 30 September
2004 2004 2003
Convenience
translation
US$000 £000 £000
Net cash outflow from operations (56,199) (31,067) (35,819)
Returns on investments and servicing of 7
finance
Interest received 7,770 4,295 5,095
Interest element of finance leases (141) (78) (46)
7,629 4,217 5,049
Taxation (116) (64) 5,210
Capital expenditure and financial investment
Purchase of intangible fixed assets - - (2,673)
Purchase of tangible fixed assets (1,867) (1,032) (5,413)
Sale of tangible fixed assets 11 6 4
(1,856) (1,026) (8,082)
Net cash outflow before management of liquid
resources and financing (50,542) (27,940) (33,642)
Management of liquid resources 27,781 15,357 18,778
Financing
Issue of ordinary share capital 25,729 14,223 10,562
Proceeds from new finance lease commitment - - 1,389
Capital elements of finance lease rental (630) (348) (221)
payments
25,099 13,875 11,730
Increase/(decrease) in cash 2,338 1,292 (3,134)
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 2004.
Convenience translation
The consolidated financial statements are presented in Sterling. The
consolidated financial statements as of and for the period ended 30 September
2004 are also presented in US 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$1.809, the noon buying rate as of 30
September 2004. No representation is made that the amounts could have been or
could be converted into US Dollars at this or any other rates.
Loss per share
The loss per ordinary share and 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 information in the table shown below.
Year ended Year ended
30 September 30 September
2004 2003
Losses (£000) 38,126 39,191
Weighted average number of shares 40,866,684 36,440,993
The Company had ordinary shares in issue of 41,109,938 and a total of 2,066,913
ordinary shares under option as of 30 September 2004.
Reconciliation of operating loss to operating cash outflow
Year ended Year ended Year ended
30 September 30 September 30 September
2004 2004 2003
Convenience
translation
US$000 £000 £000
Operating loss (76,326) (42,192) (46,124)
Depreciation charge 5,112 2,826 2,989
Amortisation of intangible fixed assets 1,901 1,051 1,050
(Profit)/loss on disposal of fixed assets (5) (3) 94
Shares received from MorphoSys - - (3,589)
Amounts written off fixed asset investments 389 215 -
EIP charge 261 144 -
Increase in debtors (43) (24) (1,285)
Increase in deferred income 7,392 4,086 10,597
Increase in creditors (excluding deferred 5,120 2,830 449
income)
(56,199) (31,067) (35,819)
Analysis and reconciliation of net funds
1 October Cash flow Exchange 30 September
2003 movement 2004
£000 £000 £000 £000
Cash at bank and in hand 1,056 1,660 (38) 2,678
Overdrafts (1,144) (368) - (1,512)
1,292 (38)
Liquid resources 107,916 (15,357) - 92,559
Net cash and liquid resources 107,828 (14,065) (38) 93,725
Finance leases (1,168) 348 - (820)
Net funds 106,660 (13,717) (38) 92,905
Liquid resources shown above are included within short-term investments on the
Balance Sheet, which also includes a part of the investment in MorphoSys shares.
Reconciliation of movements in group shareholders funds
Year ended Year ended
30 September 30 September
2004 2003
£000 £000
Loss for the financial period (38,126) (39,191)
Other recognised gains and losses relating to the period 1,243 606
(36,883) (38,585)
New shares issued 14,223 10,562
Net decrease in shareholders funds (22,660) (28,023)
Opening shareholders funds 107,742 135,765
Closing shareholders funds 85,082 107,742
Financial Statements
The preceding information, comprising the Consolidated Profit and Loss Account,
Consolidated Statement of Total Recognised Gains and Losses, Consolidated
Balance Sheet, Consolidated Cash Flow Statement and associated notes, does not
constitute the Companys statutory financial statements for the years ended 30
September 2004 and 2003 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 2003 have been delivered to the
Registrar of Companies and those for the year ended 30 September 2004 will be
delivered to the Registrar of Companies after the Companys 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 2004
will be posted to shareholders by 31 December 2004 and will be available shortly
thereafter from our registered office:
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 Sunday 21 November
2004.
Quarterly financial information
Three Three Three Three
months months months months
ended 30 ended 30 ended 31 ended 31
September March December
2004 June 2004 2004 2003
£000 £000 £000 £000
Consolidated profit and loss
account:
Turnover 5,807 1,650 4,650 3,818
Direct costs (1,496) (4) (1,275) (248)
Gross profit 4,311 1,646 3,375 3,570
Research and development expenses (12,096) (10,543) (11,066) (10,420)
General and administration expenses (2,949) (2,540) (2,283) (3,197)
Operating loss (10,734) (11,437) (9,974) (10,047)
Interest receivable (net) 1,053 1,024 1,070 983
Loss on ordinary activities before (9,681) (10,413) (8,904) (9,064)
taxation
Taxation on loss on ordinary (64) - - -
activities
Loss for the financial period (9,745) (10,413) (8,904) (9,064)
Consolidated cash flow statement:
Net cash outflow from operations (8,165) (7,138) (8,355) (7,409)
Returns on investments and servicing
of finance
Interest received 1,260 798 1,032 1,205
Interest paid (17) (18) (21) (22)
1,243 780 1,011 1,183
Taxation (64) - - -
Capital expenditure and financial
investment
Purchase of tangible fixed assets (303) (130) (226) (373)
Sale of tangible fixed assets 5 1 - -
(298) (129) (226) (373)
Net cash outflow before management
of liquid resources and financing (7,284) (6,487) (7,570) (6,599)
Management of liquid resources 7,097 7,705 5,241 (4,686)
Financing
Issue of ordinary share capital 52 56 235 13,880
Capital elements of finance lease (90) (88) (86) (84)
rental payments
(38) (32) 149 13,796
(Decrease) /increase in cash (225) 1,186 (2,180) 2,511
Notes to Editors
Cambridge Antibody Technology (CAT):
CAT is a biopharmaceutical company using its proprietary technologies and
capabilities in human monoclonal antibodies for drug discovery and drug
development. Based near Cambridge, UK, CAT currently employs around 280 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 and ribosome display systems. CAT has
extensive phage antibody libraries, currently incorporating more than 100
billion distinct antibodies. These libraries form the basis for the Companys
strategy to develop a portfolio of antibody-based drugs.
Four CAT human therapeutic antibody products are now at various stages of
clinical development, with one further product candidate in pre-clinical
development.
HUMIRA, the leading CAT-derived antibody, isolated and optimised in
collaboration with Abbott, has been approved for marketing as a treatment for
rheumatoid arthritis in 51 countries. Six further licensed CAT-derived human
therapeutic antibodies are in clinical development, with six further licensed
product candidates in pre-clinical development.
CAT has alliances with a number of pharmaceutical and biotechnology companies to
discover, develop and commercialise human monoclonal antibody-based products. In
particular, CAT has a broad collaboration with Genzyme for the development and
commercialisation of antibodies directed against TGF- beta, a family of proteins
associated with fibrosis and scarring. This collaboration has so far given rise
to one antibody product candidate at clinical development stage, and one at
pre-clinical development stage.
CAT has also licensed its proprietary technologies to several companies. CATs
licensees include: Abbott, Amgen, Chugai, Genzyme, Human Genome Sciences, Merck
& Co, Pfizer and Wyeth Research.
CAT is listed on the London Stock Exchange and on NASDAQ. 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 the companys present and future business strategies and
the environment in which the company will operate in the future. Certain factors
that could cause the companys actual results, performance or achievements to
differ materially from those in the forward looking statements include: market
conditions, CATs ability to enter into and maintain collaborative arrangements,
success of product candidates in clinical trials, regulatory developments and
competition. We caution investors not to place undue reliance on the forward
looking statements contained in this press release. These statements speak only
as of the date of this press release, and we undertake no obligation to update
or revise the statements.
This information is provided by RNS
The company news service from the London Stock Exchange
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