4SC publishes results for the third quarter

Planegg-Martinsried, (PresseBox) - Today drug discovery and development company 4SC AG (Frankfurt, Prime Standard: VSC) published the results of the first nine months of 2007. Net sales came to KEUR 960 for the period, following KEUR 1,769 in the first nine months of 2006. At that level they were down 46% on that of the same period of the prior year after 4SC AG had been able to book a one-off payment arising from the successfully concluded research cooperation with the Japanese company Sanwa Kagaku Kenkyusho. The current sales came from the "Collaborative Business"segment and were largely achieved within the framework of the research and development partnership with the US firm QuoNova LLC.. Research and development costs rose by 9% to KEUR 4,711 during the period under review (same period of 2006: KEUR 4,304). The background is above all increased costs for the current preclinical and clinical studies for the various drug candidates of 4SC AG as well as the higher patent costs. At KEUR 1,905, administrative costs for the first nine months were up 18% on the same period of the prior year (KEUR 1,615). This was due to essential new recruitments in the course of the year and increased personnel expenses arising from share options, albeit not affecting cash flows, as well as legal and consulting costs in connection with an application for a grant in the US.

The result from operating activities for the first nine months of this year came to KEUR - 6,203 (same period of 2006: KEUR - 5,072). The period result was KEUR - 6,189 compared with KEUR - 5,062 in the same period of the prior year. The undiluted and diluted earnings per share stood at EUR - 0.49 in the period under review compared with EUR - 0.46 in the first nine months of 2006. Successful capital increases in the months of May and September triggered increases in equity to KEUR 21,457 on 30 September 2007, compared with KEUR 7,854 on 31 December 2006. The equity ratio on 30 September 2007 increased to 89.5% as a result, compared with 78.8% on 31 December 2006.

The level of cash and cash equivalents had soared to KEUR 18,600 by the end of the period under review (30 September 2006: KEUR 2,916). Moreover, the company currently holds securities valued at KEUR 761 (30 September 2006:KEUR 3,448) that were not posted under cash and cash equivalents.

Results for the third quarter of 2007
In the third quarter of 2007, 4SC AG achieved net sales of KEUR 325, which was down 56% on the level of the same period of 2006 (KEUR 737). Research and development costs fell by 7% in the third quarter of 2007 to KEUR 1,474 (third quarter of 2006: KEUR 1,592) because in the same period of the prior year the bulk of costs was due to preparations for the clinical phase IIa trial of the drug candidate SC12267. At KEUR 613, the administrative costs were up 32% on the same quarter of the prior year (KEUR 464). The result from operating activities for the quarter under review totalled KEUR -1,944 compared with KEUR - 1,599 in the third quarter of 2006.

Several projects nearing readiness for clinical testing
In the "Drug Discovery & Development" business segment, the focus in the last quarter has been on the clinical phase IIa trial of the drug candidate SC12267. The study proceeded according to schedule and the last of a total of 121 participating patients was released from the study at the beginning of October. "If the study results expected some time during the fourth quarter turn out as planned, our company is likely once again to become significantly more attractive to potential licensing partners and the capital market," remarked Ulrich Dauer, CEO of 4SC AG.

Dauer emphasised that the 4SC AG business model is not based around a single promising project, however. Drug candidate SC68896, for example, designed for the treatment of haemapoietic and solid tumours, is in advanced preclinical studies, thus nearing readiness for clinical trials.The same is said to be the case for a back-up substance from the NFkB project for chronic inflammatory bowel disease. Due to its better bioavailability, the company will now be moving forward with the substance SC71492 towards clinical study, instead of the previously nominated SC71570. Finally, comprehensive preclinical studies are reportedly in the planning for the protein kinase blocker SC71710 from the 4iP project, developed jointly with the Freiburg company ProQinase, after this substance was said to be proven to be the most effective growth inhibiting substance thus far for acute myeloid leukaemia in animal cancer trials.

Outlook
Dauer stressed that 4SC AG has progressed largely as planned in the first nine months of the 2007 financial year. The establishment of a comprehensive, sustainable pipeline with drug candidates that are attractive to the pharmaceutical industry remains the primary goal of 4SC AG and a major lever for increasing the company value. In this respect the company has made good progress so far. The management reportedly assumes that in both the short and medium term it will come to the signing of new sales-generating licensing agreements with partners in the pharmaceutical industry as well as additional service and research collaborations.

The focus in the most important business segment "Drug Discovery & Development" continues to be on the completion of the clinical trial phase IIa for the drug candidate SC12267 for treating rheumatoid arthritis, which is reportedly planned for the fourth quarter of 2007. Subject to positive study data, the management is expecting to be able to outlicence SC12267 to a pharmaceutical partner within a few months.

In actual fact, there will also continue to be a lot of movement in the downstream project pipeline. For example, three additional 4SC AG projects are said to be currently undergoing advanced preclinical studies and nearing readiness for clinical studies.

According to the management, the capital increase successfully conducted at the beginning of September creates a good basis for the continued development of the pipeline. This measure was said to enable 4SC AG to drive all three of the more advanced projects vigorously forwards towards readiness for clinical studies. Due to this capital increase, Santo Holding, the investment company owned by Hexal founders Dr Thomas and Dr Andreas Strüngmann, had become the company’s largest shareholder. The 4SC AG Management Board was delighted to welcome the Strüngmann brothers on board, since they are known as long-term strategic investors with extensive expertise and contacts in the industry. Plus, cooperation with other companies in the Santo portfolio have opened up new opportunities for the company, one example being the Wuppertal-based company AiCuris in the area of research into anti-infective drugs.

The Management Board did not comment on the fact that in mid-October the Santo Holding exceeded the threshold of 30% ownership of 4SC AG equity and, as a consequence, is obliged to make a tender offer to the other shareholders in the coming weeks. The Management Board will await the offer and comment on it at the appropriate time.

Legal Note
This document may contain projections or estimates relating to plans and objectives relating to our future operations, products, or services; future financial results; or assumptions underlying or relating to any such statements; each of which constitutes a forward-looking statement subject to risks and uncertainties, many of which are beyond our control. Actual results could differ materially, depending on a number of factors.

4SC AG

4SC AG (ISIN DE0005753818) has been listed in the Prime Standard of Frankfurt Stock Exchange since 15 December 2005. Founded in 1997 and now with a staff of 74, the company develops novel drug candidates for inflammatory diseases, cancer and infectious diseases using a cheminformatics based technology platform. Traditional high throughput screening of therapeutic agents has been transferred from the lab to the computer. Thus, the company offers substantial cost and time advantages as well as increased success rates in drug development. 4SC AG utilises its technology platform, which is protected by patent, to create a sustainable project pipeline of active agents to be developed up to the early clinical phases ('proof of concept') and subsequently licensed to the pharmaceutical industry in return for advance and milestone payments as well as royalties.

There are currently six projects in the pipeline and a so-called ideas'pool with further development candidates. The first project for the treatment of rheumatoid arthritis has already successfully completed clinical phase IIa. Four other product candidates are in pre-clinical development and another project is in the research stage. In addition, the company is implementing its technology platform in partnerships with pharmaceutical and biotechnology companies, and is already generating initial revenues.

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