Herantis Pharma Plc announces half year financial report January 1 - June 30, 2019 (unaudited)
Herantis Pharma Plc
Company release August 28, 2019 at 9:00am
Herantis Pharma Plc announces half year financial report January 1 - June 30, 2019 (unaudited)
- Randomized clinical studies in Parkinson’s and lymphedema proceed as planned
- Pipeline expansion with next generation xCDNF
Highlights January-June 2019
- In March, Herantis Pharma Plc (“Herantis” or “Company”) issued 1,111,982 new shares for the subscription price of €5.20 per share in a directed issue, as authorized by the Extraordinary General Meeting.
- In March, Herantis announced that its randomized Phase 2 Lymfactin® clinical study, AdeLE, was expanded within Sweden to include Karolinska University Hospital in Stockholm, and Uppsala University Hospital.
- In April, the Company announced 12-month follow-up results from the Phase 1 study with the Company’s gene therapy, Lymfactin®, concluding that the treatment continued to be safe and well-tolerated in all patients without severe adverse events.
- In May, 32,000 new shares were issued as a result of share subscriptions by stock options.
- Im May, Timo Veromaa was nominated as the Vice Chairman of the Company.
- Revenue was €0.0 (in the corresponding period in 2018: €0.0) thousand.
- Cash flow from operations was €-2.7 (-1.8) million.
- Earnings per share were €-0.60 (-0.36).
- Cash and cash equivalents on June 30, 2019 amounted to €5.6 (4.0) million.
- The Company’s financial position in the last half-year period is solid and there have not been any exceptional events.
|Depreciation and amortization||562.2||601.2||1,202.5|
|Other expenses for business operations||1,729.2||1,348.3||2,654.3|
|Profit for the period||-3,318.9||-1,764.7||-4,179.7|
|Cash flow from operations||-2,746.8||-1,803.8||-3,732.2|
|Equity ratio %||24.0||24.7||-1.2|
|Earnings per share €||-0.60||-0.36||-0.85|
|Number of shares at the end of period||6,062,287||4,918,305||4,918,305|
|Average number of shares||5,544,814||4,918,305||4,918,305|
|€ thousands||30 Jun 2019||30 Jun 2018||31 Dec 2018|
|Cash and cash equivalents||5,599.4||3,965.1||2,185.5|
|Balance sheet total||9,894.7||9,424.9||7,147.5|
Formulae used in calculating key figures
Equity ratio = Equity / balance sheet total
Earnings per share = Profit for period / average number of shares
Average number of shares = Weighted average number of shares. The number of shares is weighted by the number of days each share has been outstanding during the review period.
Guidance for 2019
Herantis does not expect meaningful revenues in 2019. The company continues to invest in its ongoing drug development programs in the treatment of Parkinson's disease and secondary lymphedema as well as in the development of xCDNF: the next generation, non-invasive CDNF.
Outlook for 2019
Herantis’ long-term goal is to significantly increase its business through commercialization agreements for its drug candidates. The company continues to discuss collaboration opportunities with potential partners for its drug development programs.
The main objectives for 2019 are to present topline results of the Phase 1-2 clinical study of CDNF, advance patient recruitment in the Phase 2 clinical study with Lymfactin®, select a lead molecule for the formal development of the next generation xCDNF, and secure financing for the company’s planned operations through the end of 2020.
Pekka Simula, CEO:
“As a team, Herantis’ focus is on the successful execution of two randomized, placebo-controlled, multi-center clinical studies in Parkinson’s disease and lymphedema. We are also seeking strategically to expand our pipeline and advance corporate development discussions.”
“Our CDNF program aims to be the first disease-modifying treatment of Parkinson’s disease. We have completed patient recruitment in the first clinical study with CDNF and expect initial results at the end of the year. While available data suggest further potential in additional neurodegenerative diseases, the current invasive administration of CDNF may limit its applicability in other indications. Therefore, there has been a lot of interest in our non-invasive next generation CDNF, xCDNF, which is currently in preclinical development in lead selection stage. The data we have accumulated on xCDNF continues to support moving forward with full speed. Our objective is to select a lead molecule by the end of this year. While xCDNF is still at an early stage of development, it holds a very exciting promise for the treatment of several neurodegenerative diseases.”
“As we build value through both the Parkinson’s and lymphedema clinical programs, we continue discussions with potential partners related to further development and commercialization of our drug candidates. Thanks to the successful funding round in early 2019, adding the global healthcare fund Swedbank Robur Medica from Sweden as our major shareholder, we can evaluate all partnering opportunities from a position of strength and therefore optimize the potential for building shareholder value.”
REVIEW OF OPERATIONS JANUARY 1-JUNE 30, 2019
Herantis’ drug development
Herantis develops drugs based on leading scientific research, aiming for breakthroughs in the treatment of severe diseases. The Company’s strategy is to obtain rights to early stage drug candidates, develop them into the clinical stage, and when considered beneficial, negotiate commercialization agreements with larger pharmaceutical companies on their late stage development and marketing.
In the review period, the drug development of Herantis proceeded according to plan with the ongoing placebo-controlled clinical studies of CDNF and Lymfactin®, the favorable safety data from Phase 1 study with Lymfactin®, and progress toward xCDNF lead molecule selection.
CDNF for the treatment of Parkinson’s disease
Herantis develops its drug candidate, CDNF, for the treatment of Parkinson’s disease. Parkinson’s is a slowly progressing neurodegenerative disease that cannot be cured. An estimated 7 million people worldwide have Parkinson’s disease. Currently available treatments only alleviate the motor symptoms of the disease and their efficacy is typically reduced with disease progression. Herantis strives for significant improvement over the current treatments.
Scientific research has shown that CDNF, a natural human protein discovered by Professor Mart Saarma’s group at the University of Helsinki, is a promising neuroprotective drug candidate. It efficiently protects dopaminergic neurons, restores the function of already degenerated neurons, and alleviates both motor and non-motor symptoms in Parkinson’s disease models. Based on preclinical data, CDNF may even stop disease progression. Herantis has patented CDNF internationally.
Herantis has advanced CDNF into a Phase 1-2, randomized, placebo-controlled clinical study, that evaluates safety and initial efficacy of CDNF compared to a placebo in patients with Parkinson’s disease. The study is conducted at three university hospitals in Finland and Sweden, and its topline results are expected to be announced in 2019.
CDNF is a protein that does not penetrate the blood-brain barrier, a semipermeable border in the human brain that protects our brain from harmful substances in blood circulation but also prevents many pharmaceutical substances from reaching the brain. Therefore, in the first clinical study, CDNF is administered directly into the brain via a sophisticated medical device. As of the end of June 2019, the medical device has been implanted in 17 patients in the CDNF study and patient recruitment has been completed.
xCDNF: Next generation CDNF for easier administration
To enable a less invasive administration of CDNF, Herantis acquired intellectual property rights from the University of Helsinki in 2018 and formally launched a development program of CDNF-derived peptides that penetrate the blood-brain barrier. Based on early scientific data, the xCDNF peptides are as efficacious as CDNF yet suitable for a much simpler subcutaneous administration, similar to the common insulin dosing by patients with diabetes. The development of xCDNF is currently in lead selection stage. Herantis has not yet announced a timeline or target indication of a possible clinical development program with xCDNF.
Lymfactin® for the treatment of secondary lymphedema
Injuries of the lymphatic system caused, e.g., by an accident, surgery, or illness can lead to secondary lymphedema. Common symptoms are permanent swelling of the affected limb, thickening and hardening of skin, limited limb mobility, pain, and increased sensitivity to infections. Secondary lymphedema is a chronic, progressive disease that often severely decreases the patient’s quality of life. Currently available treatments such as compression garments, special massages, and exercise may relieve the symptoms in some patients, but they do not address the cause the disease.
Professor Kari Alitalo’s group at the University of Helsinki discovered the human growth factor, VEGF-C, which is necessary for the development of lymphatic vessels. Herantis’ drug candidate, Lymfactin®, is based on this scientific breakthrough. It is the first and only clinical stage gene therapy aimed at repairing the lymphatic system.
Lymfactin® is currently in a Phase 2 clinical study, AdeLE, to evaluate safety and efficacy in patients with breast cancer associated lymphedema (BCAL) compared to placebo. Altogether, 40 patients are planned to be recruited in the study and results are expected by the end of 2020. The previous Phase 1 study was conducted in 15 BCAL patients and 12-month follow-up data, announced in April 2019, demonstrated Lymfactin® treatment was safe and well-tolerated.
If the safety and efficacy of Lymfactin® are established in the treatment of breast cancer associated lymphedema, it may be applicable also for the treatment of other secondary lymphedemas.
FINANCIAL REVIEW JANUARY 1-JUNE 30, 2019
Income from business operations, R&D expenses
Herantis group did not have meaningful revenues in the review period or in the corresponding period in the previous year.
The R&D expenses for the review period were €1.4 million, recorded in the profit and loss statement as an expense for the period. The R&D expenses for the review period mainly comprised of the clinical studies with Lymfactin® for the treatment of breast cancer associated lymphedema and CDNF for the treatment of PD. The group’s R&D expenses for the corresponding period in the previous year, €1.1 million, were recorded as the review period’s expenses in the profit and loss statement.
The profit for the review period was €-3.3 (-1.8) million.
Financing and capital expenditure
The company’s cash and cash equivalents on June 30, 2019 amounted to €5.6 (4.0) million.
In addition, the Company has R&D loans previously granted by Business Finland to be drawn in the amount of €0.6 million at the end of the review period. During the review period Herantis drew €0.3 million of the granted loans.
Furthermore, the European Union has awarded the Company a grant of €6.0 million for the project TreatER. The TreatER project comprises the Phase 1-2 clinical study of Herantis’ CDNF for the treatment of Parkinson’s disease.
The Company estimates that its current funding will suffice approximately to the end of 2020 for the ongoing development programs.
The consolidated cash flow from operations in the review period was €-2.7
Acquisitions and directed share issues
The Company reported on March 12, 2019 that the Board of Directors of Herantis had decided on a directed share issue of 1,111,982 new shares in aggregate, at a per-share subscription price of €5.20, to certain institutional investors and a limited number of investors other than qualified investors as well as to certain directors of the Company.
The share capital was not increased, but instead the entire subscription price of €5,782,306.40 was recorded in the invested unrestricted equity reserve of the Company. As a result of the share subscriptions, the number of shares in Herantis increased to 6,030,287 shares.
Herantis reported on May 28, 2019 that 32,000 new shares of the Company had been subscribed with option rights of the option programs 2010 and 2014. The share capital was not increased but instead the entire subscription price of €1.60 was recorded in the invested unrestricted equity reserve of the Company. As a result of the share subscriptions, the number of shares in Herantis increased to 6,062,287 shares.
The consolidated balance sheet of Herantis stood at €9.9 (9.4) million on June 30, 2019.
At the end of the review period on June 30, 2019, the consolidated balance sheet included short-term debt in the amount of €1.0 (1.4) million, long-term loans in the amount of €6.5 (5.7) million, and capital loans in the amount of €0.0 (0.0) million. Financing earnings and expenses totaled €-0.4 (0.7) million. The increase of the financing expenses was mainly related to the funding round in the review period.
No R&D expenses were capitalized during the review period.
Consolidated equity on June 30, 2019 was €2.4 (2.3) million. The change is the result of the share issue and consolidated loss of the review period.
Personnel, management, and administration
The number of personnel at the end of the review period on June 30, 2019 was 9 (9) persons.
During the review period, the Company’s Board of Directors comprised Pekka Mattila (Chairman), Timo Veromaa (Vice Chairman) Jim Phillips, Aki Prihti, and Frans Wuite, and from March 12, 2019, Ingrid Atteryd Heiman. The Managing Director for the company was Pekka Simula.
Ordinary Annual General Meeting 2019
Herantis’ ordinary Annual General Meeting (“AGM”) was held in Helsinki on April 11, 2019.
The AGM adopted the annual accounts for the financial year 2018 and resolved to discharge the members of the Board of Directors and the Managing Director from liability. In accordance with the proposal by the Board of Directors, the AGM resolved that no dividend be paid for the financial period January 1-December 31, 2018, and that the loss for the period be recorded on the profit and loss account.
The AGM resolved that the remuneration payable to the members of the Board of Directors shall be €1,500 per month except for the Chairman of the Board who shall be paid €2,500 monthly, and a possibly elected Vice Chairman of the Board who shall be paid €2,000 monthly. Board members are also reimbursed for reasonable travel expenses related to Board of Director’s duties. Six members were elected to the Board of Directors: Ingrid Atteryd Heiman, Pekka Mattila, James (Jim) Phillips, Aki Prihti, Timo Veromaa, and Frans Wuite.
The Annual General Meeting decided that the Auditor will be paid reasonable remuneration in accordance with the invoice approved by the Company. The firm of authorised public accountants, PricewaterhouseCoopers Oy, was appointed as Herantis Pharma Plc's Auditor for the term ending at the end of the next Annual General Meeting of Shareholders, with APA Martin Grandell as the responsible auditor.
Share based incentive program
Herantis has four stock option programs: Stock option program 2010, Stock option program 2014 I, Stock option program 2016 I, and Stock option program 2018 I, whereby stock options have been offered to key employees of the company to increase their commitment toward long-term contribution to growing shareholder value. The essential details of the stock option programs are listed in the table below. More detailed information is provided on the company’s web site at www.herantis.com.
|Stock option program||Number of shares at most¹||Share subscription price||Decision on the stock option program made by|
|2010||35,600||€ 0.00005||General Meeting 26.8.2010|
|2014 I||20,800||€ 0.00005||General Meeting 20.3.2014|
|2016 I||70,000||€ 2.92||General Meeting 9.4.2015, Board Meeting 19.5.2016|
|2018 I||100,000||€ 5.85||General Meeting 9.4.2015, Board Meeting 28.8.2018|
1 The maximum remaining number of shares to be subscribed for with stock options.
Risks and uncertainties
Herantis is a drug development company and the general risks and uncertainties present in drug development also apply to its operations. For instance, the production, stability, safety, efficacy, and regulatory aspects of drug candidates involve risks, the realization of which can render the commercialization of the drug candidate impossible or significantly delayed.
The risks and uncertainties associated with Herantis’ operations are described in more detail in the Company’s Annual Report for 2018.
Shares and shareholders
The market capitalization of Herantis Pharma Plc at the end of the review period on June 30, 2019 was approximately €35.5 million. The closing price of the company’s share on June 28, 2019 was €5.85. The highest share price during the review period was €6.00, lowest €4.80, average €5.43, and trading volume amounted to 1.3% of the shares in the company.
According to Herantis’ shareholder register dated on June 30, 2019, the company had 947 registered shareholders.
On June 30, 2019 the members of Herantis’ Board of Directors and the CEO held in aggregate 107,792 (69,089) shares including shares held through their controlled companies, which equaled to 1.8% (1.4%) of the company’s total stock. Information on insider trading with the company’s shares is published on the Company’s website.
Events after the review period
No essential updates have taken place after the review period.
These financial statements have been prepared according to good accounting practice, local legislation and the rules of the First North market. The figures in the half-year report are not audited. The figures are individually rounded from exact figures.
Financial information 2019
The financial statements release January 1 - December 31, 2019 will be published 27 Feb 2020.
In case of any discrepancies between the language versions of this half-year financial report the Finnish version shall prevail.
Herantis Pharma Plc
Board of Directors
Profit and loss statement and Balance sheet January 1-June 30, 2019
Statement of cash flow January 1-June 30, 2019
Statement of changes in equity
Distribution: Nasdaq, principal media, Herantis’ web site
Herantis Pharma Plc, Pekka Simula, CEO, telephone +358 40 7300 445
Company website: www.herantis.com
Certified Advisor: UB Securities Oy, telephone +358 9 25 380 225
Herantis Pharma in brief:
Herantis Pharma Plc is an innovative drug development company focused on regenerative medicine and unmet clinical needs. Our clinical stage assets CDNF and Lymfactin® are based on globally leading scientific research in their fields. They both aim at breakthrough in the treatment of severe diseases: CDNF in neurodegenerative diseases such as Parkinson’s disease; and Lymfactin® in breast cancer associated lymphedema with potential also in other lymphedemas. The shares of Herantis are listed on the First North Finland marketplace run by Nasdaq Helsinki stock exchange.