Inflazyme Pharmaceuticals Announces Financial Results for the Quarter Ended December 31, 2005
February 13, 2006
VANCOUVER, B.C., CANADA – Inflazyme Pharmaceuticals Ltd. (TSX: IZP) today announced its third quarter financial results for the period ended December 31, 2005.
Dear Shareholder:
I am pleased to provide you with an update on Inflazyme since our last quarterly financials issued on November 7, 2005. Since November, we have made good progress and I would like to take this opportunity to share this with you.
Progress with our LSAID™, IPL512,602 in Asthma
Throughout 2005 we have been advancing our once a day, oral asthma product, IPL512,602, toward its next clinical study. In the first quarter of 2005, we evaluated in detail the results of the Phase IIa asthma study and identified important activities of the product. This information was shared with various asthma experts who endorsed both the profile of the product and its continued development. In particular, IPL512,602 showed activity on a number of what are referred to as “patient reported outcomes” that include Quality of Life measures, as well as the need for “rescue” medication – i.e. need to use a bronchodilator, to alleviate symptoms or prevent an asthma attack. These “patient reported outcomes” have been increasingly recognized as an important determinant of how well the asthma is controlled – a key goal of any therapy.
These results were formally shared with the FDA as a basis for continuing the development of this product for asthma. We reported in August 2005 that the agency also acknowledged that patient-reported outcomes such as quality of life measures would be considered among the primary endpoints suitable for future clinical studies, including Phase III studies.
Based on this information, we designed the next clinical study for the asthma compound, and on December 20th, 2005, we announced our intention to begin a Phase IIb asthma study in early 2006. Building on the Phase IIa results, which were obtained in mild to moderate asthmatics, the next Phase IIb study looks at the moderate to severe asthma population. The purpose of this Phase IIb study is to further evaluate the potential of IPL512,602 and its effect on asthma control. This clinical trial is an international, multi-center study being conducted in the US, Russia and several Central European countries. The study is expected to start end of Q1 2006 or early Q2 2006 with results anticipated Q1 2007.
In clinical trial parlance, the study is described as a double blind, placebo controlled, parallel group design in moderate to severe male or female asthmatics, 18–50 years old, evaluating 20mg IPL512,602 given orally, once a day for 8 weeks. Since these patients have pronounced asthma, they will be on a background therapy of an inhaled steroid, but still suffer from significant symptoms which impact their lives, and require additional treatment with a short acting bronchodilator to alleviate their asthma. IPL512,602 will be added to their treatment to determine if it improves asthma control.
Asthma control will be measured in a number of ways. The primary endpoint will be Asthma Quality of Life (AQLQ) scores, measured using the FDA validated Juniper scale. This is an asthma disease specific instrument developed by Dr. E. Juniper and colleagues, who retain rigorous control of its appropriate application, and has been used in numerous clinical trials of asthma. The secondary endpoints include additional measures of asthma control such as need for short acting bronchodilators, nighttime awakenings, and symptom scores. Measures of lung function, FEV1 and peak expiratory flow will also be made.
Moreover, we are in the process of completing a commercial assessment of the product conducted by an independent consultant that shows, using the efficacy profile of IPL512,602 obtained from the Phase IIa study, a compelling market opportunity for our drug.
Progress with our PDE4 Inhibitor, IPL455,903
In November 2005, we announced the results from the multi-dose, double-blinded, placebo controlled Phase Ib clinical study with IPL455,903 (also known as HT-0712), as provided to us by Helicon Therapeutics, Inc. (New York). The study was completed in healthy young and elderly subjects at doses up to 135mg per subject per day for 14 days. Helicon reported that IPL455,903 was safe and well tolerated in all volunteers and at all doses tested. Based on these results together with the Phase Ia results reported in May 2005, Helicon has advised Inflazyme that they are on track to advance IPL455,903 into Phase IIa clinical studies for the treatment of memory disorders, in Q1 2006.
Our drug has shown to be safe and well tolerated at all doses tested to date in Phase I studies, with no serious adverse events noted. In particular, there has been no evidence of nausea or vomiting (also referred to as emesis). Other PDE4 inhibitors in development have frequently been observed to cause nausea and emesis even after a single dose of the drug has been administered, contributing to an unacceptable safety profile which has hampered the clinical advancement of this particular class of drugs.
We have the option to participate, under a joint venture structure, in the continued development of IPL455,903 in memory disorders beyond Phase IIa by buying into the partnership agreement with Helicon at any time up until 90 days after the completion of the first Phase IIa study. In order to participate in a joint venture, we would pay to Helicon 50% of the clinical development costs incurred to the date of exercise. In return, we would receive the right to participate financially, on an equal basis with Helicon, in the continued development and commercialization of the product. If we elect not to exercise our option, we will receive certain royalties on net sales on any product commercialized.
Research Programs
Since IPL455,903 has to date demonstrated that it is non-emetic, our research team is working to identify further PDE4 inhibitors for respiratory and inflammatory indications based on our active, non-emetic pharmacophore from the IPL455,903 series. The objective is to identify compounds which demonstrate efficacy and safety advantages over other PDE4 inhibitors currently in development by competitor pharmaceutical and biotechnology companies.
Changes to our Board of Directors
Towards the end of last quarter, we announced the appointment of John Hodgman as the Chairman of our Board of Directors. John brings to Inflazyme extensive experience in finance, management and leadership positions gained in the US in public and private biotechnology, software and high technology companies. John has a proven track record with companies transitioning from research and development through to commercial operations with worldwide sales. We are very excited to have John join our team. Mr. Hodgman succeeded Dr. Walt Lovenberg who served as our Chairman since 1997. We benefited greatly from Walt’s counsel during his Chairmanship. Dr. Lovenberg will continue to assist Inflazyme through his participation as a member of our Board.
In addition, in January this year, we also announced the appointment of Louis Drapeau as a Director of Inflazyme and Chairman of our Audit Committee. Mr. Drapeau has over 30 years experience in the financial and biotechnology sectors. He was Acting CEO of BioMarin Pharmaceutical Inc. and oversaw the successful development of BioMarin’s lead product Phenoptin and the successful filing of marketing drug applications in the US and Europe for Naglazyme.
We are equally very excited that Louis has joined our team. Mr. Drapeau succeeded Graham Wilson who served as Chairman of our Audit Committee and was a member of our Board of Directors for the past few years.
Conclusion
I am very encouraged by the progress we are making. If we go back to my shareholder letter of April 2005, where I indicated that our goal was to be a Phase II company with two Phase II products in clinical trials by early 2006, I believe we are delivering on that promise. Our next major strategic turning point for the company, assuming our clinical trials proceed as expected and we obtain positive results, is the potential to be a Phase III company by the second half of 2007. In order for us to achieve this, several major strategic initiatives need to be successfully completed. These include continued strengthening of our financial position through divestiture of our non-core assets, inking a partnership deal for the asthma program as well as securing other sources of financing. My team and I are working diligently to achieve these initiatives.
I look forward to keeping you updated on our continued progress.
Yours sincerely,
Kevin Mullane, Ph.D.
President & Chief Executive Officer
Results of operations for the quarter ended December 31, 2005
The net income for the quarter ended December 31, 2005 was $277,717 ($0.00 per common share) compared to a net loss of $4,410,189 ($0.04 per common share) in the corresponding quarter in the prior year. The net income for the period relates primarily to a gain on the sale of a subsidiary of $3,484,049 which was recognized in the quarter, and a reduction in research and development, general and administration, and amortization expenses. Interest and licensing revenue were both lower during the current quarter compared to the same quarter in the prior period.
Research and development expenses
Research and development expenses for the quarter ended December 31, 2005 were $1,229,330 versus $1,890,546 during the quarter ended December 31, 2004. The decrease was due to a reduction in contract research activity and lower personnel expenses through headcount reductions. Contract research activity was lower because in the corresponding quarter last year, the Company incurred contract research costs related to Mirococept® which were not incurred in the current quarter.
The Company expects that research and development expenditures, more specifically the contract research expenses, will increase in the near future as a result of its Phase IIb Asthma study with IPL512,602. The estimated contract research costs of the Phase IIb study will be approximately $6 million dollars.
General and administration expenses
General and administration expenses for the quarter ended December 31, 2005 were $1,288,644 compared to $1,454,656 for the corresponding quarter of the prior year, a decrease of $166,012. The decrease was primarily due to reduced corporate and office expenses offset by higher professional fees.
Amortization expenses
The Company recorded $819,394 in amortization expense during the quarter ended December 31, 2005 compared to $1,203,432 during the corresponding period of the prior year. The amortization amount has decreased due to write-downs in the acquired intangible asset balances taken during fiscal 2005.
Liquidity and Capital Resources
At December 31, 2005 the Company’s cash, cash equivalents and short-term investments totaled $15,878,263 compared to $15,860,738 at March 31, 2005. Working capital at December 31, 2005 was $15,102,507 compared to $15,057,698 at March 31, 2005. The similar working capital balances reflect the use of capital resources in the on-going operations of the business offset by the proceeds realized from the sale of the wholly-owned subsidiary.
Cash and cash equivalents were $10,822,898 at December 31, 2005 compared to $15,650,334 at March 31, 2005, a decrease of $4,827,436. The decrease in cash and cash equivalents resulted from cash provided by operating activities of $400,631 offset by cash used in investing activities of $5,178,807 and cash used in financing activities of $49,260.
The Company believes that its working capital position at December 31, 2005 will enable the Company to fund operating expenses and capital requirements into the second quarter of calendar 2007.
To download the financial statements, please click here.
Conference Call
Inflazyme will host a conference call to discuss this announcement on Tuesday, February 14, 2006 at 7:00 a.m. Pacific Time/10:00 a.m. Eastern Time. To access the call, please dial 416‑695‑5261 or 1-877-888-3855. Audio replay of the conference call will be available until March 14, 2006 by calling 416-695-5275 or 1-888-509-0081.
About Inflazyme
Inflazyme Pharmaceuticals is a biopharmaceutical company pioneering medical breakthroughs to transform the lives of patients with respiratory and inflammatory diseases worldwide. Further information on the Company may be obtained from its website at www.inflazyme.com.
Statements in this news release other than historical information are forward-looking statements subject to risks and uncertainties. Actual results could differ materially depending on factors such as the availability of resources, the timing and effects of regulatory actions, the strength of competition, the outcome of litigation and the effectiveness of patent protection. Additional information regarding risks and uncertainties is set forth in the current Annual Information Form for Inflazyme on file with the Canadian Securities Commissions. The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this information.
Contact:
Inflazyme Pharmaceuticals Ltd.
Julie Rezler, Sr. Director, Corporate Development
Tel: 1.800.315.3660/604.279.8511
Fax: 604.279.8711
E-mail: ir@inflazyme.com
Website: www.inflazyme.com
