Medivir Interim Report 1 January-30 June 2000

MEDIVIR INTERIM REPORT 1 January-30 June 2000 * Over 400 patients recruited in the Phase II clinical trials for ME-609. * First Phase I clinical trial for MIV-150 completed. * Profit after financial items amounted to SEK -33.9 (28.5) million. Net turnover amounted to SEK 54.7 (110.5) million. * CCS increased its sales by 13% to SEK 39.8 (35.1) million, while also increasing operating profit to SEK 8.3 (4.7) million, an increase of 75% compared with the corresponding period last year. * ACO Hud moves its manufacturing of pharmaceuticals and skin care products to CCS. * Strong financial position following the now completed new share issue. Research capacity reinforced by integration of Medivir UK On 27 March 2000, Medivir closed an agreement with Peptide Therapeutics Group plc in relation to acquisition of Peptide's drug development operations, now denoted Medivir UK. During the period April-June, work has proceeded with integration of the two research organisations with the goal of creating a common structure with a strong project focus. Cambridge-based Medivir UK has several patent-pending technologies, which complement Medivir's pharmaceutical research extremely well. Over and above its proprietary technology platforms, Medivir UK brings with it a portfolio of high quality preclinical research projects. With this acquisition, Medivir establishes itself as an even more powerful European pharmaceutical company with 125 researchers (50 of them externally engaged through university collaborations) and a well balanced project portolio. Phase II results for MIV-606 The Phase II clinical study with MIV-606 in relation to the treatment of shingles (varicella) have been completed. The study showed that MIV-606 has good efficacy and is at least as efficacious as acyclovir, the pharmaceutical currently most used, notwithstanding a significantly lower dose. The good results are wholly in line with Medivir's expectations. The study further confirmed that MIV-606 has a good safety profile. The study also suggests that there is a dose/effect relationship between the dose of MIV-606 and the duration of post-herpetic neuralgia (the difficult to treat chronic pain). Larger Phase III studies are now planned to confirm these encouraging results. The now completed Phase II study provides Medivir with high quality documentation as a prelude to the coming Phase III clinical trials. Phase II studies for ME-609 herpes cream proceeding as planned Medivir's collaboration with AstraZeneca on a new patent-pending treatment principle for cold sores and genital herpes passed Phase I with good results. The Phase II study with herpes cream ME-609 is underway in collaboration with international cetnres in North America. Over 400 patients are included in the Phase II study which is expected to be completed during Q3 as planned. MIV-310 against multiresistant HIV Medivir has decided to reinstate the clinical development of MIV-310 (alovudine, previously called FLT) and will seek approval to run Phase II clinical trials. These trials are expected to commence during 2000. MIV-310 passed Phase I and II during the years 1991-92 as a treatment for AIDS patients. At that time multiresistant HIV had not evolved, and as no superiority over the antiviral AZT could be established, the project was terminated. Since then, however, multiresistant HIV has arisen and in newly performed laboratory trials MIV-310 has shown a very good activity against HIV which has become resistant to the antivirals currently on the market. At the moment, around 30 per cent of HIV patients do not respond to treatment with current antivirals, largely due to HIV becoming multiresistant. Medivir will be able to use the data obtained in the earlier Phase I and Phase II clinical trials in relation to product safety. However a new Phase II study is required to establish the efficacy of MIV-310 in patients with multiresistant HIV. Phase I results for MIV-150 Chiron and Medivir commenced Phase I clinical trials with MIV-150 during 1999. These first trials, conducted in the UK, showed an acceptable safety profile for the compound. Additional formulation development to enhance bioavailability and associated studies will be conducted prior to initiating Phase II clinical trials. Phase II studies are now expected to commence in 2001. Strong sales trend for CCS continues CCS' substantially increased sales continued into the second quarter. Sales of skin care cream Karbasal, which was launched during summer 1999, are developing particularly well. This product has been designated as reference product by Swedish pharmacies and has been recommended by the majority of Swedish pharmaceutical boards. The improvements in profit margin reflect that the activities commenced last year in rationalising production flow and improving purchasing procedures are now showing their full potential. During the second quarter, marketing activities have intensified and these are expected to expand even further during Q3, which will influence profit margin development. An agreement was signed during Q2 with the Swedish pharmaceuticals company ACO Hud in relation to transfer of their pharmaceutical and skin care product manufacture to CCS' production facility in Borlänge. The first stage of the agreement extends 31 December 2003, during which production volume is expected to amount to around 2.5 million units per year. The Medivir Group's income and expenses The Group's net turnover amounted to SEK 54 720 (110 502) thousand and operating expenses amounted to SEK -93 942 (-85 554) thousand. These expenses include amortised goodwill of SEK -1 057 (-846) thousand. Net financial items increased to SEK 5 223 (2 317) thousand. Profit after financial items was SEK -33 894 (28 470) thousand and profit per share was SEK -4.54 (4.30). Net turnover for Medivir AB was SEK 13 939 (74 589) thousand. This decrease reflects the USD 8 million, which Medivir received during the first half year of 1999 as license income for HIV antiviral MIV-150. Operating expenses decreased to SEK -51 010 (-52 671) and operating profit amounted to SEK -37 071 (22 185) thousand. Profit after financial items was SEK -32 184 (24 415). Net turnover for Medivir UK during the period April-June was SEK 0 thousand. Operating profit during this period amounted to SEK -9 878 thousand and profit after financial items was SEK -9 871 thousand. Net turnover for CCS AB for the period increased to SEK 39 800 (35 083) thousand. Operating profit amounted to SEK 8 302 (4 745) and profit after financial items increased to SEK 8 579 (4 800) thousand. Of CCS' total debiting, contract manufacture contributes SEK 25 (26%) and export sales contribute SEK 20 (23%). A significant component of the sales increase reflects the successful launch of skin care cream Karbasal and the improvements in profit margin arising from rationalised production and improved purchasing agreements. Net turnover for CCS UK was SEK 2 544 (1 631) thousand and the operating profit amounted to SEK 367 (28) thousand. Profit after financial items was SEK 369 (30) thousand. Financial position The Group's liquid assets including short-term placements amounted to SEK 400 563 thousand (SEK 147 625 thousand as at 31 December 1999). There were no interest bearing liabilities at 30 June 2000 or 31 December 1999. Shareholders' equity increased to SEK 542 453 thousand (SEK 238 478 thousand as at 31 December 1999), due to the new share issue during the period (SEK 296 million), a new share option programme (SEK 0.6 million), a directed non-cash share issue in relation to acquisition of Medivir UK (SEK 27.5 million) and conversion of part of the 1996 Medivir option programme (SEK 14.4 million). The Group's equity ratio amounted to 92.3 per cent, compared with 85.7 per cent as at 31 December 1999. Investments The Group's gross investments in fixed tangible assets during the period amounted to SEK 15 222 (4 456) thousand. The investments principally relate to completion of the premises for combinatorial chemistry and high throughput screening (HTS) and associated research equipment in Medivir AB. Forecast The forecast issued in the 1999 year-end financial statement is superceded by the Medivir UK acquisition, whereby total research expenses will increase by an additional SEK 35-45 million. Moving the start of Phase II for MIV-150 to next year also leads to rescheduling of the associated milestone payment and a further negative impact on this year's figures. The net financial items improves by around SEK 9 million as a result of the new share issue. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/07/06/20000706BIT00530/bit0001.doc The full report http://www.bit.se/bitonline/2000/07/06/20000706BIT00530/bit0002.pdf The full report