2011-05-13 08:00:00 CEST
2011-05-13 08:01:06 CEST
REGULATED INFORMATION
Biotie Therapies - Interim report (Q1 and Q3)
Biotie Therapies Corp. interim report 1 January - 31 March 2011
BIOTIE THERAPIES CORP. INTERIM REPORT 13 May 2011 at 9.00 a.m.
Biotie Therapies Corp. interim report 1 January - 31 March 2011
Acquisition of Synosia Therapeutics, positive results from nalmefene studies
being conducted by Lundbeck and completion of share offering
Biotie has undergone significant changes during the first quarter that have
transformed the nature of its operations and its financial status. Most notably,
in February 2011, Biotie acquired Synosia Therapeutics, a drug development
specialist with key operations in the US and a strategic alliance with UCB
Pharma. In January 2011 Biotie was informed by its licensing partner H. Lundbeck
A/S of positive phase 3 results with nalmefene, its lead product for the
treatment of alcohol dependence. In March 2011 Biotie raised EUR 27 million in a
directed share issue to institutional and strategic investors, strengthening its
financial position. The company now employs approximately 40 people, has
operations in Finland, the United States and Switzerland and is exclusively
focused on the development of its promising pipeline of clinical-stage drug
candidates.
Financial review Q1 2011
Financial statements for the Q1 2011 are not directly comparable to the same
period in 2010 due to the Synosia Therapeutics acquisition and the consolidation
of the new subsidiaries' results into the Biotie group's consolidated financial
statements from the acquisition date 1 February onwards.
Revenues in January - March 2011 amounted to EUR 0.5 million (EUR 1.2 million in
the same period in 2010). Net loss in January - March was EUR 7.7 million (EUR
3.7 million in the same period in 2010). Total comprehensive income including
the currency translation differences amounted to EUR -9.5 million (EUR -3.7
million in the same period 2010). Basic earnings per share amounted to EUR -0.03
(EUR -0.02 for the same period 2010).
Cash flow from operating activities in January - March amounted to EUR -4.2
million for continuing operations (EUR -4.4 million in the same period in 2010)
and EUR -1.2 million for discontinued operations (no discontinued operations
reported in Q1 2010).
As of 31 March 2011, liquid assets amounted to EUR 46.8 million (EUR 15.2
million as of 31 March 2010).
Timo Veromaa, Biotie's President and CEO:"We have had a very successful first quarter, which was underpinned by positive
data from the first set of phase 3 nalmefene studies from Lundbeck, the
transformational merger with Synosia and our directed share offer. We have made
rapid progress with integration activities and have continued to advance our
newly enlarged pipeline which now includes nine clinical development candidates.
In the coming months, we expect to receive important data from Lundbeck for
nalmefene in alcohol dependence and for our Parkinson's disease product SYN118,
for which UCB Pharma has an option to license. These are exciting times for
Biotie and we believe that with our broad pipeline, strong balance sheet and
experienced management team, we are well positioned to drive long-term growth
and shareholder value".
Key events after the reporting period
Start of a Phase 2b trial of SYN115 in Parkinson's disease: As announced on 7
April 2011, the phase 2b trial is a randomized, double-blind, placebo-controlled
study that will evaluate four doses of SYN115 versus placebo as adjunctive
therapy in 400 levodopa-treated Parkinson's disease (PD) patients with end of
dose wearing off. In these patients, treatment with levodopa is insufficient to
control PD symptoms until their next dose, resulting in an 'off' period when
symptoms reappear. The aim of the phase 2b study is to determine the efficacy
and safety of SYN115 in reducing the mean time spent in the 'off' state over a
12 week treatment period. The trial will also assess the impact of SYN115 on
various measures of motor symptom severity, dyskinesia and non-motor symptoms.
Results from the study are expected in H1 2013.
Re-election of Board members: All existing board members, Bradley J. Bolzon,
William M. Burns, Peter Fellner, Merja Karhapää, Bernd Kastler, Ismail Kola,
Guido Magni, Andrew J. Schwab, Piet Serrure and James S. Shannon were re-
appointed at Biotie's Annual General Meeting on 6 May 2011. At the organization
meeting of the re-appointed Board of Directors, which convened immediately after
the Annual General Meeting on 6 May 2011, Peter Fellner was re-elected as the
Chairman of the Board of Directors and Bradley J. Bolzon was re-elected as the
deputy chairman.
Outlook for 2011
Biotie will continue to support its licensing partner Lundbeck in the
development of nalmefene for the treatment of alcohol dependence. Final clinical
data from the ongoing phase 3 study is expected Q2 2011; a possible marketing
authorization submission in the EU is anticipated H2 2011.
SYN118, for the treatment of Parkinson's disease, is currently in a phase 2a
study and data from this trial is expected to become available Q2 2011. UCB
Pharma has an option to license this product after the clinical data is
available for their review.
SYN120, for the treatment of cognitive disorders associated with Alzheimer's
disease and schizophrenia, is expected to enter a phase 1 PET ("positron
emission tomography") imaging study during Q2 2011. The study is scheduled to be
completed H1 2012. Roche has an option to license this compound from Biotie.
Biotie will announce development plans for its proprietary VAP-1 antibody later
this year. While the rights to the product in Japan, Taiwan, Singapore,
Australia and New Zealand have been granted to Seikagaku, Biotie retains
ownership in the rest of the world and will be looking for additional
collaboration opportunities.
Biotie will announce development plans for ronomilast for the treatment of COPD
later this year. Biotie will be looking for potential collaboration
opportunities for this product.
Biotie is currently assessing options for evaluating rufinamide (SYN115) in the
treatment of bipolar disorder.
Financial calendar 2011
Interim Report for January - June 5 August 2011
Interim Report for January - September 4 November 2011
Conference call
An analyst and media conference call will take place on 13 May 2011 at 2.00 p.m.
Central European Time. The conference call will be held in English.
Callers may access the conference directly at the following telephone numbers:
US: +1 212 444 0481, UK: +44 (0)20 7138 0825 and Finland: +358 (0)9 2319 4344
access code 4052511. Lines are to be reserved ten minutes before the start of
conference call. The event can also be viewed as a live webcast at
www.biotie.com. An on demand version of the conference will be published on
Biotie's website later during the day. In case you need additional information
or assistance, please contact: Virve Nurmi, IR Manager Biotie Therapies, Tel
+358 2 2748 911
About Biotie
Biotie is a specialized drug development company focused on the development of
drugs for neurodegenerative and psychiatric disorders (Parkinson's disease,
Alzheimer's disease and other cognitive disorders, bipolar disorder, and alcohol
and drug dependence) and inflammatory diseases (rheumatoid arthritis, psoriasis,
chronic obstructive pulmonary disease and others). It has several innovative
small molecule and biological drug candidates at different stages of clinical
development. Biotie's products address diseases with high unmet medical need and
significant market potential.
Partnerships with top tier pharmaceutical partners are in place for several
programs as well as a strategic collaboration with UCB Pharma S.A. Biotie's most
advanced product, nalmefene for alcohol dependence, is currently in Phase 3
clinical development by licensing partner H. Lundbeck A/S.
Drug development projects:
Nalmefene, a new treatment paradigm for alcohol dependence. Nalmefene builds on
a novel principle of treating alcohol dependence. Unlike existing therapies, the
treatment with Nalmefene is not aimed at keeping the patients from drinking.
Nalmefene instead removes the desire to drink, thereby controlling and limiting
the intake of alcohol. Nalmefene distinguishes itself by being available as an
oral tablet formulation to be taken on an as needed basis.
Biotie's partner Lundbeck announced in January 2011 that it had completed two
phase 3 clinical trials evaluating nalmefene for the treatment of alcohol
dependence (ESENSE1, SENSE). The data from these studies was consistent with the
profile of nalmefene observed in previous clinical studies and demonstrated that
nalmefene was safe and efficacious in helping patients to reduce drinking.
Lundbeck expects to complete a further efficacy study (ESENSE2) in Q2 2011 and
is on track to file a marketing authorization application (MAA) in Europe in H2
2011, depending on the outcome of the final study. Lundbeck plans to submit
detailed efficacy and safety data for presentation at scientific and medical
meetings after all three trials have been completed. Launch of the product in
the EU is expected H2 2012. Biotie is participating in financing some of the
clinical development costs. Biotie has granted worldwide rights for nalmefene to
Lundbeck.
SYN115 is an orally bioavailable, potent and selective adenosine A2a receptor
antagonist in development for Parkinson's disease (PD). Adenosine A2a
inhibition with SYN115 has been shown in preclinical studies to reverse motor
deficits and enhance the effect of current PD therapies, e.g. levodopa and
dopamine agonists, without inducing troublesome dyskinesia (involuntary
movements). In addition, SYN115 also displays activity in preclinical models on
non-motor symptoms of PD including depression, cognition and anxiety.
After the reporting period, Biotie announced the start of a phase 2b trial
evaluating SYN115 in PD. The trial is a randomized, double-blind, placebo-
controlled study that will evaluate four doses of SYN115 versus placebo as
adjunctive therapy in 400 levodopa-treated PD patients with end of dose wearing
off. In these patients, treatment with levodopa is insufficient to control PD
symptoms until their next dose, resulting in an 'off' period when symptoms
reappear. The aim of the trial is to determine the efficacy and safety of SYN115
in reducing the mean time spent in the 'off' state over a 12 week treatment
period. The study will also assess the impact of SYN115 on various measures of
motor symptom severity, dyskinesia and non-motor symptoms. Results from the
phase 2b trial are expected H1 2013.
Biotie has granted UCB Pharma S.A. a license for exclusive, worldwide rights to
SYN115. UCB will be responsible for phase 3 development and commercialization.
Nitisinone (SYN118) is a potent and selective inhibitor of hydroxyphenylpyruvate
dioxygenase (HPPD), an enzyme responsible for the catabolism of tyrosine, the
precursor of the neurotransmitter dopamine. Preclinical studies have shown that
nitisinone is active in animal models of PD. Clinical studies and patient
experience with nitisinone have shown pronounced and predictable elevations in
the circulating concentrations of tyrosine. The company has completed an open
label, proof-of-mechanism study with nitisinone for PD and a proof-of-concept
trial in restless leg syndrome, both of which demonstrated encouraging efficacy
and safety. A randomized, placebo controlled phase 2a study in PD patients is
currently ongoing and data are expected in Q2 2011. UCB has an option to obtain
an exclusive license to this product.
SYN120 is an orally bioavailable, potent and selective antagonist of the 5-HT6
receptor. The 5-HT6 receptors are exclusively located in the brain and
antagonism of these receptors modulates the release of acetylcholine and
glutamate, two neurotransmitters known to be involved with memory function.
Cognitive deficits are an important component of many CNS diseases, especially
Alzheimer's and schizophrenia. SYN120 has completed single and multiple
ascending dose phase 1 clinical studies. Biotie plans to initiate a PET imaging
study for SYN120 in Q2 2011. The compound was originally licensed from Roche and
Roche has an option to reacquire this program after the results of the planned
study have been obtained.
VAP-1 antibody. VAP-1 (vascular adhesion protein-1) has been shown to play a key
role in chronic inflammatory diseases such as COPD, rheumatoid arthritis,
psoriasis and diabetes. Biotie has significant know-how and a strong
intellectual property position around this target and is developing a fully
human monoclonal antibody, BTT-1023, which blocks VAP-1 function. In 2010 Biotie
reported the successful completion of phase 1b clinical trials with BTT-1023 in
24 rheumatoid arthritis and 26 psoriasis patients. The compound has demonstrated
a favorable safety profile in a total of 83 study subjects and has shown
promising signals of clinical activity, especially with higher doses in the
rheumatoid arthritis study. These data support further clinical development of
the product, plans for which will be announced later this year. Biotie has
granted a license to Seikagaku Corporation for the commercial rights to the
product in Japan, Taiwan, Singapore, New Zealand, and Australia, and is seeking
additional collaboration partners.
Ronomilast is a once-daily, oral phosphodiesterase 4 (PDE4) inhibitor with
therapeutic potential in chronic inflammatory disorders, particularly in chronic
obstructive pulmonary disease (COPD), a serious respiratory disorder with major
unmet medical need. In three clinical studies with a total of 126 study subjects
ronomilast has been demonstrated to be safe and well tolerated at all tested
doses up to 100mg once daily. No serious or severe adverse events were reported
in any of the study subjects. Robust and statistically highly significant
biomarker responses confirmed the pharmacological activity of well tolerated
doses of ronomilast in man. These data support further clinical development,
plans for which will be announced later this year. Biotie will be looking for
potential collaboration opportunities for this product.
Nepicastat (SYN117) is a potent, competitive, and selective inhibitor of the
enzyme dopamine beta-hydroxylase. The inhibition of this enzyme has been shown
to raise dopamine levels in the central nervous system (CNS). Nepicastat is
available as an oral treatment and has been well-tolerated in preclinical models
at doses significantly above the expected therapeutic range for the current CNS
indications under investigation. A phase 2 study of nepicastat in post traumatic
stress disorder is ongoing, funded by the US Department of Defense. No data from
this study is expected to become available before 2013.
Rufinamide (SYN111) is a potent, specific, and orally bioavailable sodium
channel blocker with proven anti-epileptic activity. The compound is marketed in
the EU and the US as adjunctive therapy in Lennox Gastaut Syndrome (LGS), a
severe form of epilepsy. Biotie holds rights to rufinamide in medical
indications outside of LGS and is currently assessing options for evaluating
this product in the treatment of bipolar disorder.
Financial review for reporting period January - March 2011
Biotie acquired Synosia Therapeutics Holding AG in February 2011. The
acquisition and its impacts on consolidated financial statements are described
in more detail in the notes of this financial statements (see acquisition of
Synosia Therapeutics Holding AG),
Financial statements for the Q1 2011 are not directly comparable to the same
period in 2010 due to the Synosia Therapeutics acquisition and the consolidation
of the new subsidiaries' results into the Biotie group's consolidated financial
statements from the acquisition date 1 February onwards.
Revenues: Revenues for the reporting period Q1 2011 amounted to EUR 0.5 million
(EUR 1.2 million in the same period in 2010). Revenues consisted of
periodization of previously received upfront payments from licensing agreements.
Financial result: Net loss for the reporting period 2011 was EUR 7.7 million
(EUR 3.7 million in the same period in 2010). Total comprehensive income
including the currency translation differences amounted to EUR -9.5 million (EUR
-3.7 million in the same period 2010). Research and development costs for the
reporting period amounted to EUR 4.9 million (EUR 3.8 million in the same period
in 2010).
Financing: Cash and cash equivalents and short term investments totaled EUR
46.8 million on 31 March 2011 (EUR 15.2 million on 31 March 2010).
Biotie announced in March 11 execution of a private placement of shares in the
amount of EUR 27 million. The shares were allocated to Finnish and international
institutional and strategic investors. A total of 35,230,000 newly issued and
14,747,084 treasury shares were offered at a subscription price of EUR 0.54 per
share.
Biotie has a standby equity distribution agreement (SEDA) in place with US fund
Yorkville. Yorkville is obliged to subscribe and pay for ordinary no-par Biotie
shares up to a total value of EUR 20 million during the period until September
2012 at Biotie's discretion (Biotie option). The purpose of this arrangement is
to have an option to secure the financing of Biotie's working capital in the
short and medium term. Biotie has made use of this arrangement three times since
August 2010 and has raised a total amount of EUR 1.1 million.
Shareholder's equity: The shareholders' equity of the group amounted to EUR
87.7 million (IFRS) on 31 March 2011. Biotie's equity ratio was 62.4% on 31
March 2011 (-46.2% on 31 March 2010).
Investments and cash flow: Cash flow from operating activities in January -
March amounted to EUR -4.2 million for continuing operations (EUR -4.4 million
in the same period in 2010) and EUR -1.2 million for discontinued operations (no
discontinued operations reported in Q1 2010). The group's investments during the
reporting period amounted to EUR 20 thousand (EUR 80 thousand in the same period
in 2010).
Personnel
During the reporting period January - March 2011, the average number of
employees amounted to 41 (82 during January - March 2010) and at the end of the
reporting period, after the restructuring in Q4 2010 and acquisition of Synosia
in Q1 2011, Biotie employed 40 people (83 on 31 March 2010).
Changes in the management team
In connection with the acquisition of Synosia Therapeutics, Steve Bandak
replaced Antero Kallio as Chief Medical Officer and Ian Massey joined as Chief
Operating Officer and President of US Operations in February 2011. Antero Kallio
now reports to Steve Bandak. In January 2011, Biotie announced that its Chief
Financial Officer Thomas Taapken would leave the company as of 31 March 2011. He
has been replaced ad interim by Biotie's VP Finance & Administration Ms. Ulla
Sjöblom.
Changes in the Board of Directors
Composition of the Board of Directors elected at the Extraordinary General
Meeting 1 February 2011
The number of the members of the Board of Directors was resolved to be ten.
Bradley J. Bolzon, William M. Burns, Peter Fellner, Merja Karhapää, Bernd
Kastler, Ismail Kola, Guido Magni, Andrew J. Schwab, Piet Serrure and James S.
Shannon, were elected as the members of the Board of Directors.
At the organization meeting, which convened after the Extraordinary General
Meeting in February 2011, Peter Fellner was elected as the Chairman of the Board
of Directors and Bradley J. Bolzon was elected as the Deputy Chairman.
Option rights
Biotie has issued option rights to certain of its employees and managers
pursuant to two different option programs in 2006 and 2009. Each option right
granted based on these two option programs entitle to subscribe one share in the
company.
The Swiss company Synosia Therapeutics Holding AG (currently Biotie Therapies
Holding AG) acquired by Biotie in February 2011 also has a stock option plan
based on which stock options have been granted to employees, directors and
consultants. In connection with the completion of the acquisition of Synosia,
the option plan was amended so that instead of shares in former Synosia
Therapeutics Holding AG an aggregate maximum of 14,912,155 shares in Biotie
Therapies Corp. may be subscribed based on the plan. Biotie Therapies Corp.
issued these 14,912,155 shares to its current subsidiary Biotie Therapies
Holding AG in connection with the acquisition to be further conveyed to the
option holders when they potentially exercise their option rights in accordance
with the terms and conditions of the option rights. At the end of the reporting
period, on 31 March 2011, the total number of shares which can be subscribed by
virtue of these option rights deriving from Synosia Therapeutics Holding AG
amounts to 14,912,155, which represents 3.8% of the total amount of shares in
the company as of 31 March 2011.
Share capital and shares
Biotie shares are all of the same class and have equal rights. Each share
entitles the holder to one vote at the general meeting of shareholders. All
shares are quoted on NASDAQ OMX Helsinki Ltd (Small cap, Healthcare).
As described in more detail in Biotie's stock exchange releases issued on 1 and
2 February 2011, resolutions necessary for the completion of the acquisition of
Synosia Therapeutics Holding AG (currently Biotie Therapies Holding AG) were
passed at the Extraordinary General Meeting held on 1 February 2011 and, as a
result, Biotie issued 161,448,371 shares to the shareholders and warrant holders
of Synosia as consideration for the entire issued share capital and outstanding
warrants of Synosia. In connection with this transaction, the company also
issued 14,912,155 new shares to Synosia to be held in treasury and used to
fulfill the requirements of future potential exercise of Synosia's options. The
new shares were registered on 3 February 2011.
Furthermore, Biotie announced on 11 March 2011 the successful placement of
35,230,000 new shares and 14,747,084 treasury shares to institutional and
strategic investors.
On 31 March 2011 the registered number of shares in Biotie Therapies Corp. was
387,594,457. Of these shares 14,912,155 were held by the company or its group
companies. The registered share capital of Biotie was EUR 165,919,181.95
Market capitalization and trading
At the end of the reporting period the share price was EUR 0.56, the highest
price during the reporting period January - March 2011 was EUR 0.82, the lowest
was EUR 0.49, and the average price was EUR 0.61. Biotie's market capitalization
at the end of the reporting period was EUR 217.1 million.
The trading volume on NASDAQ OMX Helsinki during the reporting period was
121,439,322 shares, corresponding to a turnover of EUR 72,874,030.
Changes in ownership
During the reporting period, January - March 2011, Biotie made eleven
announcements according to Chapter 2, Section 10 of the Finnish Securities
Market Act.
Information on notices of changes in ownership and a monthly updated list of
Biotie's major shareholders is available on the company's website at
www.biotie.com/investors.
Group structure
The parent company of the group is Biotie Therapies Corp. The domicile of the
company is Turku, Finland. The company has two non-operational subsidiaries
named Biotie Therapies GmbH, located in Radebeul, Germany and Biotie Therapies
International Ltd in Finland.
The company now also has a holding subsidiary, Biotie Therapies Holding AG,
located in Basel, Switzerland, which has two operative subsidiaries, Biotie
Therapies AG, located in Basel, Switzerland and Biotie Therapies, Inc. located
in South San Francisco, California.
Shareholders' meetings
Extraordinary General meeting held on 1 February:
On 1 February 2011, the Extraordinary General Meeting of Biotie passed
resolutions necessary for the completion of the acquisition of Synosia
Therapeutics Holding AG ("Synosia"), deciding on the issue of 161,448,371 new
Biotie shares to the shareholders and warrant holders of privately-owned Synosia
in exchange for the entire issued share capital and outstanding warrants of
Synosia.
The stock exchange release regarding the resolutions of the Extraordinary
General Meeting of Biotie Therapies Corp. was published on 1 February 2011.
After the reporting period, on 6 May 2011, the Annual General Meeting was held
and resolved the following items:
- The financial statements 2010 were adopted
- It was resolved to transfer of loss of the financial year 2010 to the
unrestricted equity and that no dividend shall be paid
- Discharge from liability was granted for the members of the Board of Directors
and the Managing Director
- It was resolved that the remuneration payable to the members of the Board of
Directors will be as follows: EUR 4,000 per month for the Chairman and EUR
3,000 per month for other Board members. In addition, it is proposed that
reasonable travelling expenses for the meetings would be compensated.
- The number of members of the Board of Directors will be ten (10)
- Peter Fellner, Bradley J. Bolzon, William M. Burns, Merja Karhapää, Bernd
Kastler, Ismail Kola, Guido Magni, Andrew J. Schwab, Piet Serrure and James S.
Shannon were re-elected as members of the Board of Directors for the term
expiring at the end of the following Annual General Meeting.
- The auditors' fees will be paid pursuant to a reasonable invoice
- PricewaterhouseCoopers Oy, a firm of auditors approved by the Central Chamber
of Commerce, and Mr. Janne Rajalahti, Authorized Public Accountant, were elected
as the auditors of the company
- The Board of Directors was authorized to resolve on one or more issues,
containing the right to issue new shares or dispose of the shares in the
possession of the company and to issue options or other rights to the shares
pursuant to chapter 10 of the Companies Act. The authorization consists of up to
115,000,000 shares in aggregate, is effective until 30 June 2012 and supersedes
earlier authorizations.
The stock exchange release regarding the resolutions of the Annual General
Meeting of Biotie Therapies Corp. was published on 6 May 2011.
Short-term risks and uncertainties
Biotie's strategic risks are predominantly related to the technical success of
the drug development programs, regulatory issues, strategic decisions of its
commercial partners, ability to obtain and maintain intellectual property rights
for its products, launch of competitive products and the development of the
sales of its products. The development and success of Biotie's products depends
to a large extent on third parties. Any adverse circumstance in relation to any
of its R&D programs might impair the value of the asset and thus, represent a
severe risk to the company. Such adverse events could happen on a short term
notice and are not possible to foresee.
The key operational risks of Biotie's activities include the dependency on key
personnel, assets (especially in relation to intellectual property rights) and
dependency on its license partners' decisions.
Furthermore, significant financial resources are required to advance the drug
development programs into commercialized pharmaceutical products. To fund the
operations, Biotie relies on financing from two major sources: income from its
license partners and raising equity financing in the capital markets.
The company relies on capital markets to raise equity financing from time to
time. There can be no assurance that sufficient funds can be secured in order to
permit the company to carry out its planned activities. Current capital market
conditions are very volatile. While in March 2011 the company was able to raise
a significant amount of cash from a share issue to fund its operations in the
mid-term future, there can be no assurance that the company can secure equity
financing in the future if and when it needs it.
Although Biotie has currently active license agreements in place, the
termination of any such agreement would have a negative effect on the short to
medium term access to liquidity for the company. While income generated from
commercial agreements with third parties relating to its clinical programs might
significantly improve Biotie's financial position, a forecast on possible income
from future licensing arrangements cannot be provided reliably. Therefore it is
possible that Biotie will need to secure additional financing from share issues
in the future.
The group can influence the amount of capital used in its operations by adapting
its cost base according to the financing available. The restructuring measures
announced in Q4 2010 highlight such an approach. Management monitors the capital
and liquidity on the basis of the amount of equity and cash funds. These are
reported to the Board on a monthly basis.
IFRS and accounting principles
This interim financial report has been prepared in accordance with IFRS
recognition and measurement principles, and applying the same accounting
policies as for the 2010 financial statements. The interim report has not been
prepared in accordance with IAS 34, Interim Financial Reporting.
In addition, as a result of the acquisition of Synosia Therapeutics, Biotie has
applied the following principle in its Q1 2011 financial statements:
The results and financial position of all the group entities that have a
currency different from the presentation currency are translated into the
presentation currency as follows:
a. Assets and liabilities for each balance sheet presented are translated at
the closing rate at the date of that balance sheet.
b. Income and expenses for each income statement are translated at average
exchange rates.
c. All resulting exchange differences are recognised in the income statement as
part of the gain or loss on sale.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations, and of inter-company borrowings that are
considered of being part of the net investment, are taken to other comprehensive
income. When a foreign operation is disposed of or sold (either partially or as
a whole), exchange differences that were recorded in equity are recognised in
the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
This interim report is unaudited.
Turku, 13 May 2011
Biotie Therapies Corp.
Board of Directors
For further information, please contact:
Virve Nurmi, Investor Relations Manager
tel. +358 2 274 8900
e-mail:virve.nurmi@biotie.com
Distribution:
NASDAQ OMX Helsinki Ltd
Main media
www.biotie.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)
1.1.- 1.1.-3 1.1.-
31.3.2011 1.3.2010 31.12.2010
EUR 1,000 3 months 3 months 12 months
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Continuing operations
Revenue 473 1,201 1,955
Research and -4,928 -3,769 -5,538
development expenses
General and -3,072 -1,045 -4,216
administrative expenses
Other operating income 258 95 166
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Operating profit/loss -7,268 -3,518 -7,633
Financial income 18 45 101
Financial expenses -460 -213 -930
-----------------------------------------------------------------------------
Profit/loss before taxes -7,711 -3,687 -8,462
Taxes 0 0 0
-----------------------------------------------------------------------------
Net income/loss, continuing operations -7,711 -3,687 -8,462
Net income/loss, discontinued operations 0 0 -13,111
-----------------------------------------------------------------------------
Net income/loss -7,711 -3,687 -21,573
Other comprehensive income:
Currency translation differences -1,831 0 0
-----------------------------------------------------------------------------
Total comprehensive income of the period -9,542 -3,687 -21,573
Net income/loss attributable to
Parent company shareholders -7,711 -3,687 -21,573
Total comprehensive income attributable to:
Parent company shareholders -9,542 -3,687 -21,573
Earnings per share (EPS) -0.03 -0.02 -0.06
basic & diluted, EUR, continuing operations
Earnings per share (EPS) - - -0.09
basic & diluted, EUR, discontinued operations
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IFRS) EUR 1,000
31.3.2011 31.3.2010 31.12.2010
-----------------------------------------------------------------------------
Assets
Non-current assets
Intangible assets 84,773 7,204 4,042
Goodwill 5,100 379 0
Property, plant and equipment 394 2,588 365
Investment property 1,466 0 1,468
Other shares 10 10 10
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91,743 10,181 5,885
Current assets
Available for sale investment 0 34 0
Investments held to maturity 19,000 0 0
Accounts receivables and other receivables 2,008 1,761 1,261
Financial assets at fair value through 6,786 8,881 0
profit or loss
Cash and cash equivalents 21,005 6,351 4,059
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48,799 17,028 5,320
Total 140,542 27,209 11,205
Equity and liabilities
Shareholders' equity
Share capital 166,510 43,057 43,378
Share issue 0 0 500
Reserve for invested unrestricted equity 3,842 1,180 1,180
Cumulative translation adjustment -1,831 0 0
Retained earnings -73,090 -53,130 -52,951
Net income/loss -7,711 -3,687 -21,573
-----------------------------------------------------------------------------
Shareholders' equity total 87,720 -12,580 -29,466
Non-current liabilities
Provisions 0 150 0
Non-current financial liabilities 25,623 25,552 25,640
Pension benefit obligation 430 549 430
Other non-current liabilities 9,673 6,913 7,442
Non-current deferred revenues 338 902 368
Deferred tax liabilities 9,929 0 0
-----------------------------------------------------------------------------
45,993 34,066 33,880
Current liabilities
Provisions 582 597 589
Pension benefit obligation 16 16 16
Current financial liabilities 115 219 144
Current deferred revenues 563 1,891 1,006
Accounts payable and other current liabilities 4,353 3,000 2,637
Liability related to discontinued operations 1,200 0 2,400
-----------------------------------------------------------------------------
6,830 5,723 6,791
Liabilities total 52,822 39,789 40,671
Total 140,542 27,209 11,205
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Attributable to equity holders of the parent company
EUR 1,000 Shares Share Share Reserve Own Retained Share-
(1000 Capital issue for Shares Earnings holders'
pcs) invested equity
un- total
restricted
equity
--------------------------------------------------------------------------------
BALANCE AT 158,753 43,057 0 1,180 -15 -53,160 -8,938
1.1.2010
--------------------------------------------------------------------------------
Total -21,573 -21,573
comprehensive
income for the
period
Options granted 108 108
SEDA costs 116 116
Share issue to the 17,251 0
company itself
without
consideration
Directed issue of 550 500 1,050
treasury shares
Cost of share -229 -229
issue
--------------------------------------------------------------------------------
17,251 321 500 0 0 -21,349 -20,528
--------------------------------------------------------------------------------
BALANCE AT 176,004 43,378 500 1,180 -15 -74,509 -29,466
31.12.2010
--------------------------------------------------------------------------------
Total -9,542 -9,542
comprehensive
income for the
period
Options granted 2,662 1,434 4,096
Directed issue of 500 -500 0
treasury shares
Directed issues of 211,590 115,893 115,893
new shares
Directed offer of 7,964 7,964
treasury shares
Cost of share -1,224 -1,224
issue
--------------------------------------------------------------------------------
211,590 123,133 -500 2,662 0 -8,108 117,187
--------------------------------------------------------------------------------
BALANCE AT 387,594 166,511 0 3,842 -15 -82,617 87,720
31.3.2011
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
1.1.- 1.1.- 1.1.-
31.3.2011 31.3.2010 31.12.2010
EUR 1,000 3 months 3 months 12 months
--------------------------------------------------------------------------------
Cash flow from operating activities
Continuing operations
Net income/loss -7,711 -3,687 -8,462
Adjustments:
Non-cash transactions 3,136 -297 -1,287
Acquisition related costs 704 0 0
Addition/disposal due to revaluation of financial 0 -28 0
assets at fair value through profit or loss
Interest and other financial expenses 215 213 930
Interest income -15 -17 -101
Foreign exchange losses/gains on operating -86 0 0
activities
Change in working capital:
Change in accounts receivables and other 318 -196 626
receivables
Change in accounts payable and other -739 -305 436
liabilities
Change in mandatory provisions -6 -7 -25
Interests paid -27 -46 -42
Interests received 15 3 68
Taxes paid 0 -49 0
--------------------------------------------------------------------------------
Net cash from operating activities, continuing -4,196 -4,416 -7,856
operations
Net cash from operating activities, discontinued -1,200 0 -7,011
operations
--------------------------------------------------------------------------------
Net cash from operating activities -5,396 -4,416 -14,867
Cash flow from investing activities
Continuing operations
Acquisition of subsidiary, net of cash acquired 15,544 0 0
Change in financial assets at fair value through
profit or loss
Additions 0 0 0
Disposals 0 0 8,886
Change in investments held to maturity
Additions -19,000 0 0
Disposals 0 0 0
Investments to tangible assets -20 -80 -54
--------------------------------------------------------------------------------
Net cash used in investing activities, continuing -3,476 -80 8,832
operations
Net cash used in investing activities, 0 0 -1,587
discontinued operations
--------------------------------------------------------------------------------
Net cash used in investing activities -3,476 -80 7,245
Cash flow from financing activities
Continuing operations
Proceeds from issuance of shares 26,988 0 0
Payments from share issue 0 0 1,050
Share issue costs -1,125 0 -229
Proceeds from borrowings 0 0 6
Repayment of loans 0 0 -40
Repayment of lease commitments -46 -43 -177
--------------------------------------------------------------------------------
Net cash from financing activities, continuing 25,817 -43 610
operations
Net cash from financing activities, discontinued 0 0 180
operations
--------------------------------------------------------------------------------
Net cash from financing activities 25,817 -43 791
Net increase (+) or decrease (-) 16,946 -4,450 -6,832
in cash and cash equivalents
Effect on changes in exchange rates on cash and -83 0 0
cash equivalents
Cash and cash equivalents in the 4,059 10,891 10,891
beginning of the period
Cash and cash equivalents in the 21,005 6,351 4,059
end of the period
ACQUISITION OF SYNOSIA THERAPEUTICS HOLDING AG
Biotie entered into a combination agreement with Synosia Therapeutics Holding AG
("Synosia") on 10 January 2011. The acquisition was subject to the necessary
resolutions passed by Biotie's shareholders at the Extraordinary General Meeting
which was held on 1 February 2011. Biotie issued 161.448.371 new shares to the
shareholders and warrant holders of Synosia to acquire the entire issued share
capital and outstanding warrants of Synosia. In addition, 14.912.155 shares were
issued to Synosia and are held in treasury to satisfy future potential exercise
of Synosia's options in accordance with the terms of the existing option plans.
The fair value of the shares issued as the consideration paid for Synosia is
based on the published share price on 1 February 2011. Synosia is a
biopharmaceutical company focused on developing and commercializing innovative
and clinically differentiated products for neurodegenerative and psychiatric
disorders. As a result of the combination, Synosia is a wholly-owned subsidiary
of Biotie and is consolidated into Biotie's consolidated financial statements
from the acquisition date 1 February 2011 onwards.
Details of net assets acquired and goodwill are as follows:
Purchase consideration
Shares related to the Transaction 161.448.371
EUR per share 0.60
Shares total (million EUR) 96.9
Consideration provided under Synosia option-plan 2.7
Total consideration transferred (million EUR) 99.5
Fair value of assets acquired (see below)
Goodwill
Direct cost relating to the acquisition - charged in P&L
The assets and liabilities arising from the acquisition, provisionally
determined, are as follows:
Fair value (million EUR)
In process research and development projects IPRD 82,5
(Intangible assets)
Property, plant and equipment 0,1
Investments held-to-maturity 0,0
Accounts receivables and other receivables 1,1
Financial assets at fair value through profit and loss 6,9Cash and cash equivalents 16,3
Deferred tax liability (net) -10,1
Accounts payable and other current liabilities -2,5
Net assets acquired 94,3
Goodwill 5,2
Fair values of net assets acquired are determined provisionally. Based on the
preliminary fair valuation, in process research and development projects
("IPRD") have been valued at 82.5 million EUR. The development projects are not
amortized until the start of commercialization and they are subject to an annual
impairment test.
A preliminary goodwill, 5.2 million EUR, arises from expected synergy benefits
in different areas of drug development as well as from the competent personnel
and the integration of functions. Expected synergy benefits will be gained from
the possibility to create new drug development projects corresponding to the
needs of international pharmaceuticals companies and from the possibility to
utilize new knowledge and new technologies for the development of the existing
businesses. Furthermore, access to the very important US market and established
relationships to the regulatory authorities (FDA) is gained through the existing
operations of Synosia in the US.
Synosia's result is consolidated into Biotie's consolidated financial statements
from the acquisition date of 1 February 2011. The total acquisition-related
costs were EUR 1.1 million. Acquisition-related costs of EUR 0.7 million are
included in general and administrative expenses in the consolidated income
statements for the Q1 2011.
SYNOSIA OPTION PLAN
Biotie Therapies Corp. has issued 14,912,155 shares as a bonus issue to its
subsidiary Biotie Therapies Holding AG to be held in treasury and to be used to
satisfy future potential exercise of Biotie Therapies Holding AG (formerly
Synosia Therapeutics Holding AG) options in accordance with the existing Biotie
Therapies Holding AG option plans. Biotie Therapies Corp. was obliged in the
combination agreement to issue 22.432 Biotie Therapies Corp shares in exchange
for each share option granted to employees and service providers of the acquired
Synosia companies (Biotie Therapies Holding AG, Biotie Therapies AG and Biotie
Therapies, Inc). The fair value for these replacement awards has been included
in measuring the consideration transferred in the business combination. In order
to determine the portion of the replacement award that is part of the
consideration for the Synosia acquisition and the portion that is remuneration
for post-combination services, Biotie has measured both the value of the options
on the acquisition date closing price (effectively the value of the replacement
awards granted by Biotie) and the existing Synosia awards based on the
consideration in the combination agreement in accordance with IFRS 2. The
difference in the fair values of the replacement awards has been split between
pre-combination and post-combination services based on the vesting periods of
the awards. The amount of EUR 437 thousand of the excess that relates to pre-
combination services is expensed immediately as no further employee services is
required and is included in the consolidated comprehensive income statement line
items Research and Development Expenses and General and Administrative Expenses.
A total of EUR 2,662 thousand of the fair value relates to pre-combination
services and has been accounted for as part of the purchase consideration, see
note Acquisition of Synosia Therapeutics Holding AG. The remaining amount of EUR
3,576 thousand represents payment for employees for post-combination services
and will be charged through the income statement over the remaining vesting
periods of the options which extends through Q4 2014. The average vesting period
for the options is 3.1 years. Of this amount, EUR 1,022 thousand has been
recorded as post-combination compensation expense through the interim period
comprehensive income statement for the period ended 31 March 2011 and is
included in lines Research and Development expenses and General and
Administrative expenses. The expense was recorded to retained earnings.
Biotie estimated the fair value of stock options using the Black-Scholes
valuation model with the following assumptions:
Expected volatility 50 %
Expected term 5.74
Risk - free interest rate 2.0 %
Dividend rate 0.0 %
The following table provides information on the number and pricing of options
outstanding and exercisable at the acquisition date (February 1, 2011) and at
March 31, 2011:
Options outstanding Options
exercisable
Weighted
average
Weighted average Options exercise
Options granted exercise price exercisable price
Acquisition date
(February
1, 2011) 14,912,153 0.19 € 12,029,097 0.19 €
March 31, 2011 14,912,153 0.19 € 12,030,032 0.19 €
No options have been exercised during the period ending March 31, 2011.
DIRECTED SHARE ISSUE
In March 2011 Biotie executed a private placement of shares (the "Offering") in
the amount of EUR 27 million that had been fully subscribed for. The shares were
allocated to Finnish and international institutional and strategic investors. A
total of 35 230 000 newly issued and 14 747 084 treasury shares were offered in
the Offering at a subscription price of EUR 0.54 per share.
As a result of the issue of the new shares and the sale of the treasury shares,
the share capital of Biotie was increased by EUR 26 987 625.36. After March
18, 2011 after the registration of the new shares with the Finnish Trade
Register and the registration of the share capital increase related to the new
shares and the sale of the treasury shares, the share capital of Biotie is EUR
165 919 181.95, the total number of shares amounts to 387 594 457, and the
number of votes outstanding is 372 682 302 (taking into consideration the
treasury shares held by Biotie and its subsidiaries).
Contingent liabilities
EUR 1,000 31.3.2011 31.3.2010 31.12.2010
----------------------------------------------------------
Operating lease commitments 143 125 159
Due within a year 79 84 70
Due later 64 41 88
Rent commitments 386 343 243
Due within a year 316 237 243
Due later 71 106 0
----------------------------------------------------------
Total 529 468 402
The Group leases motor vehicles, machines and equipment with leases of 3 to 5
years. Rent commitments include subleased Pharmacity premises until 30 November
2011.
Commitments
On 31 March 2011 Biotie had purchase commitments, primarily for contract
research work services, totaling EUR 9.9 million.
KEY FIGURES
The formulas for the calculation of the key
figures are presented in the notes of the
consolidated financial statements 2010
Incl. both continuing and discontinued 1.1.- 1.1.- 1.1.-
operations 31.3.2011 31.3.2010 31.12.2010
EUR 1,000 3 months 3 months 12 months
--------------------------------------------------------------------------------
Business development
Revenues 473 1,201 2,928
Personnel on average 41 82 70
Personnel at the end of period 40 83 23
Research and development costs 4,928 3,769 12,229
Capital expenditure 20 80 270
Profitability
Operating profit/loss -7,268 -3,519 -20,720
as percentage of revenues, % -1536.58 -292.9 -707.65
Profit/loss before taxes -7,711 -3,687 -21,573
as percentage of revenues, % -1630.23 -307.0 -736.78
Balance sheet
Liquid assets 46,791 15,232 4,059
Shareholders' equity 87,720 -12,580 -29,466
Balance sheet total 140,542 27,209 11,205
Financial ratios
Return on equity, % - - -
Return on capital employed, % -14.7 -25.9 -341.5
Equity ratio, % 62.4 -46.2 -263.0
Gearing, % 5.4 -83.8 -73.7
Per share data
Earnings per share (EPS) basic, EUR -0.03 -0.02 -0.15
Earnings per share (EPS) diluted, EUR -0.03 -0.02 -0.17
Shareholders' equity per share,€ 0.23 -0.02 -
Dividend per share, EUR - - -
Pay-out ratio, % - - -
Effective dividend yield, % - - -
P/E-ratio - - -
Share price
Lowest share price, EUR 0.49 0.53 0.30
Highest share price, EUR 0.82 0.65 0.65
Average share price, EUR 0.61 0.57 0.48
End of period share price, EUR 0.56 0.55 0.50
Market capitalization 217.1 87.3 88.0
at the end of period MEUR
Trading of shares
Number of shares traded 121,439,322 24,649,500 90,049,678
As percentage of all 31.3 15.5 51.2
Adjusted weighted average 296,081,465 158,752,560 161,919,250
number of shares during the period
Adjusted number of shares 387,594,457 158,752,560 176,003,931
at the end of the period
[HUG#1515600]
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