BioInvent Interim Report 1 January – 30 September 2012

New focus
The company has decided to focus the business with the goal of achieving self-financing of operations before external costs for new clinical trials. Proprietary development of novel antibody therapeutics will mainly concentrate on the field of oncology and thus gain a clear focus on a specific indication.

During the period from July to October the number of full-time employees was reduced from 89 to 48. In July 2012 the number of full-time employees was reduced by 21. After completion of union negotiations in October, it was decided that the number would be reduced by another 20 people in a second round of personnel reductions. The measures will reduce costs next year to about SEK 75 million. The goal is to balance these costs with revenues from external programs based on product candidates from the antibody library n-CoDeR®.

Important events in the third quarter

• Dosing with BI-505 (cancer) is in progress in the last dose group at optimal biological dose.
• Two new product candidates primarily for treatment of hematologic cancer designated; next development phase involves toxicological studies.
• Final analysis of the secondary endpoints in the GLACIER study confirms the discontinuation of development of BI-204 for acute coronary artery disease.

Key financial points

• A rights issue of SEK 105 million before transaction costs was successfully completed in April.
• Net revenues for January – September 2012 amounted to SEK 34 (123) million, whereof the third quarter SEK 13 (7.2) million.
• Earnings for January – September 2012: SEK -166 (-7.9) million including restructuring costs of SEK 24 million and a provision of SEK 31 million for the termination of TB-402. Earnings for the third quarter: SEK -37 (-36) million including restructuring costs of SEK 16 million.
• Earnings per share SEK -2.33 (-0.12), whereof the third quarter SEK -0.50 (-0.53).
• Current investments together with cash and bank balances as of 30 September 2012: SEK 153 (217) million. Cash flow of current operations and investment activities for January – September 2012: SEK -118 (-18) million, whereof the third quarter SEK -34 (-37) million.

BioInvent is a research-based pharmaceutical company that focuses on discovery and development of antibody drugs. The Company currently engages in innovative drug projects, primarily in cancer. At the same time, BioInvent develops antibody drugs for partners where such partners finance development and where, upon success, BioInvent also receives milestone payments and royalties.

 
Comments from the CEO
For many years, BioInvent has developed a strong platform for discovery and development of antibody therapeutics—the fastest growing group of medicines in today’s pharmaceutical market. Our unique n-CoDeR antibody library, the source of the Company’s product candidates, comprises the cornerstone of the technology platform, along with our know-how and our efficient system for isolating drug candidates from the library.

The drug candidates that have been developed are well tolerated in humans and have favourable properties in terms of a long half-life and the ability to recruit the body’s own immune defence for enhanced efficacy. Advances in our partnerships with major pharmaceutical companies, which develop antibody therapeutics based on the Company’s technology and know-how, build on these qualities in n-CoDeR and in the Company. Product candidates from these collaborations are currently being tested in toxicological studies, the stage prior to initiation of clinical trials. In order to best utilize and develop our assets, BioInvent is now implementing a strategic realignment initiative with the following objectives:

• A stronger indication focus in the proprietary development
• Self-financing of operations before external costs for clinical trials

Proprietary development of novel antibody therapeutics moving forward will focus on selected cancer indications. In the short term, the emphasis will be placed on various forms of hematologic cancer with a program now undergoing phase I clinical trials (BI-505) and two new drug candidates, where the next developmental phase involves toxicological studies. In addition to these projects, the Company’s development activities include a focused research program in cooperation with Cancer Research Technology, UK, with the goal of discovering novel drug candidates that inhibit the action of tumour-associated macrophages in the development of cancer.

This strategy entails a change moving forward, as the Company shifts from working with several different medical areas to a narrow indication focus. This focus increases our ability to establish competitive positions in a market with high unmet clinical need. The strategy for proprietary product development in the short term is to link a development partner to one of the prioritized programs at an early stage. However, in the longer term we may opt to take selected projects further in the value chain.

We have currently five partnerships progressing with major pharmaceutical companies developing therapeutic antibodies from n-CoDeR. We expect that clinical trials of at least two product candidates from these collaborations will begin as early as next year, which will lead to revenues for BioInvent in the form of milestone payments.

In 2012 revenues from this business mainly comprise research funding and license fees. Each product candidate in clinical phase will provide BioInvent with revenues in the form of several milestone payments as the candidate advances in the clinical program. Provided that clinical development is successful and the product is launched, such payments could reach up to EUR 13 million per product candidate. Royalties on future sales of the product after a successful launch adds to this. Typically the first milestone payment is received upon initiation of Phase I studies with the product candidate. In these partnerships, the Company takes no financial risk because all costs are covered by the partner company.

We see good opportunities to increase revenues from such partnerships, both by virtue of successes as more drug candidates with existing partners enter clinical trials, and through opportunities for new business. In order to take advantage of opportunities to enter into new agreements, the Company is strengthening its marketing resources.

The number of employees has been reduced from 89 to 48 after two rounds of staff cuts. This reduction is expected to lower the Company’s costs to about SEK 75 million next year. The goal is to balance these operational costs with revenues from collaborations where partners work with BioInvent to develop antibody therapeutics based on n-CoDeR.

We expect to fund operations with cash on hand throughout 2014, including implementation of Phase I studies for two new product candidates, as a result of the implemented cost-cutting measures and revenue from partners that develop products from n-CoDeR. If we succeed in establishing collaboration with a development partner on one of our proprietary projects, the financial prospects will be further strengthened.

Svein Mathisen

  
Contact
Any questions regarding this report will be answered by:
BioInvent International AB (publ.)
Svein Mathisen, President & CEO, phone.+46 (0)46 286 85 67, mobile +46 (0)708 97 82 13

   
Information disclosed in this press release is provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 8.45 a.m. CET, on 18 October, 2012.

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