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4SC reports results for first quarter 2008

4SC AG / Interim Report/Quarter Results

(PresseBox) (Planegg-Martinsried , ) The Martinsried-based drug discovery and development company 4SC AG (Frankfurt, Prime Standard: VSC) published its results for the first three months of 2008 today.

Net sales totalled KEUR 640 in this period, compared to KEUR 287 in the same period of 2007. The result from operating activities amounted to KEUR
- 2,320, compared to KEUR - 2,158 in same quarter of 2007. The period result for the first quarter of 2008 amounted to KEUR - 2,221. resp. EUR 0.12 per share, compared to KEUR - 2,156, resp. EUR 0.19 per share in the first three months of 2007. As of the end of the reporting period, the total balance of liquid funds was KEUR 15,137 (31 December 2007: KEUR 17,193).

Due to the successfully-launched cooperation with AiCuris GmbH & Co. KG in Wuppertal the company was able to more than double its net sales compared to the first three months of 2007. At the same time, also the research and development costs in the reporting period increased by 30.1% to KEUR 1,973 (comparable period 2007: KEUR 1,517). The main reason for this are the increased costs for the further development of the company's own project pipeline, along with increased costs for external services and patent costs. To provide additional capacities for research activities, 4SC AG has also expanded its team in scientific areas, which resulted in higher personnel costs. In the field of administration, the total costs in the first three months of 2008 decreased to KEUR 678, compared to KEUR 698 in the prior year. The higher costs in the prior-year period were caused by high accruals, partly in connection with the capital increase in the second quarter of 2007.

The financial result for the first three months of 2008 could be improved to KEUR 99 (prior-year period: KEUR 2).

As of 31 March 2008, the company's equity amounted to KEUR 17,472 (31 December 2007: KEUR 19,616). The equity ratio as of the end of the reporting quarter decreased to 86.6%, compared to 88.9% as of 31 December 2007. A of the end of the reporting period, the balance of cash and cash equivalents reached KEUR 11,672 (31 December 2007: KEUR 10,335). Moreover, the company currently holds KEUR 3,465 (31 December 2007: KEUR 6,858) in current and non-current securities that are not posted under cash and cash equivalents, resulting in a total balance of liquid funds of KEUR 15,137(31 December 2007: KEUR 17,193).

Four pipeline projects on the threshold of clinical development In the first three months of 2008, the research and development activities of 4SC AG mainly focused on the further development of the preclinical pipeline projects toward clinical studies. Two of a total of four projects are to enter the clinical development stage before the end of the current financial year. In the reporting period, substantial progress was made in all four preclinical projects.

The substance SC68896 against haematopoietic and solid tumours has been systematically further optimised in particular with regard to its formulation. Moreover, a new study has been initiated to check the efficacy against colon carcinoma. For the drug candidate SC71710 from the 4iP project, 4SC AG has prepared the design for an initial clinical study for the indication acute myeloid leukaemia and developed a dosage scheme. At the same time, 4SC AG is endeavouring to establish a clinical expert network of leading oncologists.

Moreover, the development team of 4SC AG has completed important animal studies for the project SC71492 for the treatment of inflammatory diseases, which also serve as the basis for clinical examination. For this project as well, a suitable study design has been defined, and the process for selecting suitable external research institutes has been launched. For the substance SC75741, the activity against avian influenza viruses, which was already detected in 2007, could be confirmed and concretised. In view of its repeatedly demonstrated efficacy against other virus types, application for other indications such as HCV infections may also be possible.

Dr Ulrich Dauer, CEO of 4SC AG commented: 'Which of the four candidates will enter the clinical examination before the end of this year mainly depends on which of them will be the first to successfully complete the formal safety-related studies, thereby fulfilling all conditions for official approval.' He draws attention to the fact that for these projects, all of which originate from the company's own research and development, regular contact is maintained with potential partners from the biotechnology and pharmaceutical industries. According to Dauer, these contacts guarantee that the further development of these projects will be closely aligned to the actual interests of potential partners.

'Thanks to last year's successful capital increase, we are able to concurrently drive all projects from our own strength, thereby successively increasing the company's goodwill,' emphasises Dauer.

Outlook for 2008

In the first three months of the financial year 2008, 4SC AG performed according to plan, and the targets set for the year as a whole remain unchanged.

For the lead project SC12267 for the treatment of rheumatoid arthritis, the company is currently concentrating on ongoing talks with pharmaceutical enterprises about a possible license partnership. To efficiently use the terms of relevant patents, 4SC AG is in the course of preparing a clinical phase II study for rheumatoid arthritis as well as a clinical phase IIa study for chronic inflammatory bowel diseases. Additionally, the company is focusing on the further development of the four preclinical projects. The formal preclinical stage will be completed speedily, in order to obtain approval for a clinical phase I study for at least two of them before the end of 2008.

In the 'Collaborative Business' segment, the established partnerships with AiCuris GmbH & Co. KG and QuoNova LLC. are to be maintained and intensified if possible. Moreover, new projects and new customers are to be obtained in this segment in the course of the year.

'Basically, the establishment of a comprehensive, sustainable pipeline with drug candidates that are attractive for the pharmaceutical industry is and will remain the primary goal of 4SC AG, and a major lever for increasing our enterprise value', explains Dauer. According to Dauer, the company expects one or several major license agreements to be concluded in the short term and especially in the medium term, though the exact scope and timing are difficult to estimate as yet. He points out that in the opinion of the management, the company has sufficient flexibility for conducting negotiations without any time pressure and at the same time pushing the further development of the drug candidates in the pipeline forward.

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.