Interim Report, 1 January – 30 September 2011

Operating profit/loss of SEK 156.0 m

Huddinge, Sweden—Today, Medivir AB (OMX: MVIR), a research-based specialty pharmaceutical company focused on infectious diseases, is publishing its Interim Report for the period 1 January – 30 September and its operational report for the third quarter of 2011.

Unless otherwise stated all figures are for the group and comparisons in this Interim Report are with the corresponding period of 2010.

Interim period (January – September)

• Net sales were SEK 566.8 (53.6) m
• Profit/loss after tax amounted to SEK 166.9 (-77.7) m
• Basic and diluted earnings per share were SEK 5.58 (-3.30)
• Cash flow from operating activities amounted to SEK 44.7 (-35.0) m; cash and cash equivalents and investments in securities etc. amounted to SEK 550.0 (421.8) m at the end of the period

Third quarter (July – September)

• Net sales were SEK 122.2 (17.9) m
• Profit/loss after tax amounted to SEK -53.4 (-27.3) m
• Earnings per share were SEK -1.71 (-1.04)

Business highlights in the third quarter

• Maris Hartmanis was appointed as Medivir’s new Chief Executive Officer in September and in addition the company’s management was strengthened
• Patient enrolment was completed in the three global phase 3 studies on TMC435
• TMC435 was granted Fast Track status by the FDA in the USA
• Medivirs partner Tibotec will conduct a combination study involving TMC435 and Pharmasset’s PSI-7977 for hepatitis C genotype 1 patients
• Four TMC435 abstracts, one of which is an oral presentation of the final analysis, including SVR24 data, from the TMC435 phase 2b PILLAR study have been accepted for presentation at the AASLD Meeting in San Francisco on 4-8 November
• Medivir’s subsidiary, BioPhausia, divested its generics business, BMM Pharma AB

“We are standing on a solid foundation for taking the company forward towards its goal of becoming a profitable pharmaceutical company”

CEO’s comment
At the end of September, I accepted the invitation from the Board of Directors and my predecessor, Ron Long, to take on the responsibility of becoming Chief Executive Officer of Medivir. Under Ron Long’s leadership, the company has gained a clear commercial focus and took important steps towards its goal of becoming a profitable pharmaceutical company. Accordingly, we are now standing on a solid foundation for driving and enhancing the assets we possess in our project portfolio and continuing to build on our commercial platform.

In September, we also executed changes to our management team to strengthen Medivir operationally and strategically in its R&D activities. Bertil Samuelsson was appointed as Chief Scientific Advisor, and simultaneously, Charlotte Edenius took over as Executive Vice President of R&D. We also strengthened our clinical development segment by appointing Jens D. Kristensen as Executive Vice President of Clinical.

The company’s business operations
Since the acquisition of BioPhausia, Medivir has been organized into two business segments, Pharmaceuticals and Parallel Import.

The Pharmaceuticals business segment includes the group’s research and development portfolio, the cold sore product Xerclear® and the original pharmaceuticals owned by BioPhausia. In the third quarter of 2011, our generics business, BMM Pharma, was sold to Bluefish Pharmaceuticals. The divestment was a natural step in the strategic refocusing of BioPhausia that commenced in 2010.

Net sales from pharmaceutical sales in the quarter were SEK 47.4 (0) m, and SEK 0.0 (17.1) m from outlicensing and collaboration agreements. EBITDA for the third quarter not adjusted for accounting estimates for the acquisition of BioPhausia amounts to SEK -27.8 m, equivalent to a margin of -58.4%.

Our business segment for parallel import, Cross Pharma, imports, packages and sells original pharmaceuticals. At the beginning of the quarter, Cross Pharma’s net sales were somewhat weaker than expected, but staged a recovery at the end of the period. The business area continued to grow in year-on-year terms. In the third quarter, a number of products with insufficient market potential were identified, resulting in a SEK 5.8 m inventory impairment loss. EBITDA for the third quarter not adjusted for inventory impairment and accounting estimates for the acquisition of BioPhausia amounts to SEK 4.6 m, equivalent to a margin of 6.2%

R&D
Within Infectious Diseases, the hepatitis C portfolio is continuing its positive progress. This applies to in-house preclinical projects and the clinical projects, where TMC435 is our leading investigational candidate drug (CD). In November, we will be presenting final efficacy data from TMC435 phase 2b study on treatment-naïve patients, C205 (PILLAR) in a late breaker oral presentation at the AASLD conference in San Francisco 4-8 November.

In other disease areas, we are developing Cathepsin K against skeletal disorders and Cathepsin S against neuropathic pain. Cathepsin K, MIV-711, is currently in a number of preclinical safety studies including mapping its safety profile. If the outcome of these studies is positive for the project, the next step is to commence clinical development. The next milestone in the Cathepsin S project will be to designate a CD.

Future
Myself and the Medivir team are looking forward to continuing to develop Medivir towards the company’s stated objective of becoming a profitable pharmaceutical company. Our challenge is to work on a goal-oriented basis to create the best possible prospects of developing the company’s research and development projects and pharmaceutical products. We expect to be able to report further data from clinical studies through the coming quarters that corroborate the potential of TMC435.

We will continue to drive high-quality and innovative pharmaceutical research and exploit the commercial opportunities of the products we received in the acquisition of BioPhausia. Medivir has a solid financial position, and the strategy the Board and my predecessor set remains in place—to become a profitable Nordic research-based specialty pharmaceutical company focusing on infectious diseases.

Maris Hartmanis
CEO and President

For more information, please contact
Rein Piir, EVP Corporate Affairs & IR, mobile: +46 (0)70 53 72 92
Maris Hartmanis, CEO, phone: +46 (0)8 5468 3113

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