Tripep AB (publ) - Year-end 2001

Tripep AB (publ) - Year-end report 2001 · New plan adopted, entailing three areas of operation for Tripep: - the HIV-inhibiting pharmaceutical GPG®, - a focused preclinical research portfolio, - acquisitions of projects/companies with drugs in the clinical phase. · Preclinical research activities have been focused on three projects that are judged to have the fastest track to commercial agreement, namely, drugs for combating nosocomial (hospital acquired) infections, and vaccines for hepatitis C and HIV. · The company's budgeted costs for 2002 were halved as a result of the decision not to carry out phase III studies under own management and reprioritizations in the research portfolio. This has entailed a painful yet necessary reduction by nearly half in the number of contracted consultants and staff. · Tripep has approximately SEK 100 million available for acquisitions of research companies and/or inlicensing of projects in the clinical phase. Careful analysis and evaluation is currently being conducted of a number of projects/companies with drugs in the clinical phase that may be interesting for Tripep. Tripep's business mission is to develop and commercialize pharmaceuticals based on proprietary and inlicensed research. With its PPI (protein polymerization inhibition) technology, Tripep can develop candidate drugs for treating HIV. Tripep's second technology platform, RAS (Redirecting Antibody Specificity), involves redirecting existing antibodies in the body to attack a new target. Tripep also conducts research on therapeutic and prophylactic vaccines for HIV and hepatitis C. For a description of the company's technologies, please visit our website www.tripep.se Operations Following the negative result of the phase II study of GPG,® operations have been restructured. The new plan entails a focus on three operating areas: - development of the HIV inhibiting drug GPG®, - a preclinical research portfolio focused on development of therapeutic and prophylactic vaccines for HIV and hepatitis C, and the RAS (Redirecting Antibody Specificity) technology platform, - acquisitions of pharmaceutical projects in the clinical phase. Restructuring In order to free resources to be used for acquisitions of research companies and/or inlicensing of drug development projects in the clinical phase, a restructuring of the project portfolio has been carried out. The restructuring entails a new plan for the development of GPG® and a stronger focus on preclinical projects judged to have the fastest track to commercialization. The decision has also been made to sell the company's organic chemistry laboratory to an independent company, which will also take over the affected employees. Further, the company's own biosafety laboratory will be closed. These measures all entail cost reductions and create scope for additional resources to be used for acquisitions of projects in the clinical phase. GPG A new plan has been adopted for the clinical development of GPG®. The company has developed an analysis method that enables direct measurement of GPG® concentrations in blood. Quality assurance of the method is expected to be completed by March/April 2002. Tripep has found that one of the breakdown products of GPG® has a favorable HIV-inhibiting effect. GPG® may be a "pro-drug," i.e., a molecule from which an active drug is created within the body. A separate patent application has been filed for this active breakdown product. An analysis method for this metabolite is also under development. Preclinical research portfolio Vaccines Hepatitis C, ChronVac-Ctm - therapeutic vaccine The difficulty in developing a drug targeted at hepatitis C is that, like HIV, this virus constantly mutates, thereby evading the immune system. Tripep's researchers have therefore directed their research at trying to attain an immunity against stable components of hepatitis C, i.e., components that cannot be changed by mutation. The discovery made by Tripep's researchers results in a considerably better immune response in model systems than that found by other research groups. A patent application has been filed for this discovery, and further development of the vaccine, ChronVac-Ctm, may be conducted with an industrial partner. HIV 1 - Tripep's patented amino acid sequences are used in research on a prophylactic HIV vaccine as well as on a therapeutic vaccine combined with inhibitory agents. Collaboration surrounding this is in progress with the Vaccine Research Institute of San Diego, from which Tripep has inlicensed a promising carrier technology which likely leads to better immune response than existing technologies. This collaboration is developing according to plan. Hepatitis C - prophylactic vaccine Also in collaboration with the Vaccine Research Institute of San Diego, Tripep is developing a prophylactic vaccine targeted at hepatitis C. RAStm, Redirecting Antibody Specificity Staphylococcus Aureus - Research is under way of a novel method of attacking resistant staphylococci that cause nosocomial (hospital acquired) infections. A number of interesting substances have been identified for evaluation in in-vivo studies on mouse models that resemble a clinical situation. Acquisitions Tripep has approximately SEK 100 million at its disposal for acquisitions and operation of research companies and/or inlicensing of candidate drugs in the clinical phase. At present, careful analysis and evaluation is being conducted of a number of companies that have drugs in the clinical phase that may be interesting for Tripep. Research projects being evaluated PPI, Protein Polymerization Inhibitors The current research programs in the PPI/hepatitis C and TNF-alpha research projects will be concluded and thereafter evaluated. Research projects being discontinued PVC, Parvovirus-capsid In collaboration with an external partner, Tripep has been running a development project on a new candidate drug for the disease polycythemia vera. As it is unlikely that the company will be able to develop an oral preparation of the drug within a reasonable amount of time, which makes the competitive situation difficult. Consequently, the PVC/PCV project will be discontinued. Concluded and planned studies In CTN 002, the concluded phase II study of GPG®, treatment was completed on a total of 36 patients, and efficacy analyses have been performed. Only three patients met the study criteria for a positive response. The company has determined that in humans it has not been possible to satisfactorily reproduce the favorable HIV-inhibiting effect that has been achieved in test tubes. Final analysis of the study will be completed in February 2002. In terms of safety profile, GPG® is very well tolerated. Following consultation with the company's Scientific and Clinical Advisory Boards, Tripep has decided to start a new phase I study aimed at ascertaining the best administration form for GPG®. In this study a number of dosage forms will be clinically evaluated, including a dose powder for drinking developed by Tripep. Parallel with this, GPG® may also be administered intravenously to another group. Contingent upon favorable results in these uptake studies on healthy volunteers, the start of phase II clinical studies under own management is planned. The patients in the phase II study will be therapy-naive HIV- infected patients, i.e., patients who have not previously been treated for their HIV infection, as opposed to therapy-resistant patients in earlier studies. The objective of the study is to determine if GPG® affects the replication of HIV in humans in the same beneficial way as has been shown in test tubes. Patents Tripep's patent strategy is to establish patent protection in world regions that are important for the company, namely, North America, Europe and Asia. During the year, Tripep strengthened its patent portfolio with eleven patent applications. At year-end the company had nine approved patents and 48 patents pending. Collaboration agreements Tripep's strategy is to develop parts of the company's project portfolio in collaboration with partners that can contribute both expertise and other resources. Tripep has a collaboration agreement with the Vaccine Research Institute of San Diego on the development of a vaccine for HIV and a vaccine for hepatitis C. As previously reported, the company is working actively to reach a collaboration agreement on ChronVac-Ctm, its therapeutic hepatitis C vaccine. Collaboration with an external partner on the development of a drug for treating polycythemia vera has been concluded. Human resources At year-end the company had a staff of 45 (51 at the end of the third quarter), of whom 26 were employees (26 at the end of the third quarter). Following completion of restructuring in first quarter 2002, the number of staff will be 26, of whom 17 will be employed by the company. Changes within the Board of Directors and Clinical Advisory Board Magnus Persson, a director of Tripep AB (publ.), resigned from the Board on October 4, 2001. Persson is a partner of HealthCap, which has sold its entire shareholding in Tripep AB (publ.). In January 2002 Professor Anders Sönnerborg resigned from the company's Clinical Advisory Board due to other commitments. Earnings The company does not yet have any revenue. Costs for 2001 were below budget. 4th quarter Full year R&D expenditure, SEK million 11.1 (7.3) 34.6 (20.6) Of which, external researchers and subcontractors, SEK million 7.5 (4.8) 29.3 (15.3) In connection with the 2001 year-end closing, a review has been made of all of Tripep's capitalized patent costs. Against the background of the restructuring that has been conducted of the company's research portfolio, a write-down of SEK 2.2 million has been made. In the company's judgment the remaining patents continue to have a commercial value that is at least equivalent to their book value. Capital expenditures 4th quarter Full year Net capital expenditures, SEK million 0.4 (0.2) 1.9 (2.9) Financial position The company's liquid assets amounted to SEK 157.3 million at December 31, 2001 (September 30, 2001: SEK 178.6 million). In addition, the company has a confirmed, unutilized conditional loan of SEK 15 million from the Swedish Industrial Development Fund. Since it is now unlikely that Tripep will be conducting phase III studies of GPG® under its own management, this can entail that the conditional loan will not be used. In such case, 75,000 options that the Industrial Development Fund holds will be returned to the company's ownership. Given the company's current operations, it will not need to raise additional capital for several years. Any acquisitions made in the future may change this. The market value of short-term investments in fixed-income and other yield-generating funds was SEK 147.5 million at December 31, 2001. Shareholders' equity was SEK 145.2 million at December 31, 2001 (September 30, 2001: SEK 167.1 million). The Swedish Industrial Development Fund has subscribed for 100,000 new shares in Tripep (publ.) at a price of SEK 0.20 per share, in accordance with previously issued warrants. These options were issued in May 2000 in connection with Tripep's receipt of a conditional loan of SEK 20 million for the GPG® project. The company's capital stock subsequently amounts to SEK 2,770,000, divided among 13,850,000 shares with a par value of SEK 0.20 each. In addition, warrants corresponding to 2,021,120 shares have been issued. Of these, 432,000 are owned by the company. During the year 53,880 Class A options were canceled. A total of 97,000 Class B options and 10,400 Class C options were sold to key persons at market price. The sale generated SEK 0.205 million, which was added directly to shareholders' equity. Future outlook Tripep's research and development expenditures are estimated to amount to approximately SEK 33 million in 2002. The date for licensing of various projects cannot be specified at this time. Consequently, no earnings forecast can be made for 2002. Dividend The Board proposes that no dividend be paid for the 2001 fiscal year. Annual General Meeting Tripep's 2002 Annual General Meeting will be held at 9.30 a.m. on Tuesday, April 9, 2002, in the lecture hall of the Swedish Medical Society, Klara Östra Kyrkogata 10, in Stockholm. The Annual Report for the 2001 fiscal year is expected to be available on March 22, and will be distributed to all shareholders. Financial calendar First-quarter interim report 2002 Friday, April 26, 2002 Second-quarter interim report 2002 Thursday, August 29, 2002 Third-quarter interim report 2002 Wednesday, October 23, 2002 Year-end report 2002 Friday, January 31, 2003 Huddinge, Sweden, January 25, 2002 Tripep AB (publ) Hans Möller President and CEO Website: www.tripep.se For further information, please contact: Hans Möller, President and CEO Tel. +46-8-449 84 80, mobile +46-708-15 16 89 e-mail: hans.moller@tripep.se or Inga Lundberg, VP Investor Relations Tel. +46-8-449 84 89, mobile +46-709-83 94 89 e-mail: inga.lundberg@tripep.se ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/01/25/20020125BIT00230/bit0001.doc The full Year-end report http://www.waymaker.net/bitonline/2002/01/25/20020125BIT00230/bit0001.pdf The full Year-end report