Isotechnika Pharma releases fourth quarter financial results; reviews operational and scientific highlights for 2009

Isotechnika Pharma Inc. has released its financial results for the fourth quarter and year ended December 31, 2009 and provided a review of the Company's operational and scientific highlights for 2009 and to the current date:

2009 Scientific and Operating Updates - Completed the Plan of Arrangement with Paladin Labs Inc. ("Paladin") which created a strategic partnership for the future commercialization of voclosporin in Canada, Mexico, Central and South America, Israel and South Africa. This arrangement provided Isotechnika Pharma with gross proceeds of $7 million upon completion and $4.35 million in supported R&D funding over 12 months commencing June 18, 2009. - Partner Lux Biosciences, Inc. ("Lux") announced positive results from their LUMINATE Phase 2/3 clinical trial program showing that voclosporin had a clinically significant effect on ocular inflammation and a safety profile consistent with its expected use in non-infectious uveitis involving the posterior segment of the eye. - Reported positive 12 month follow up data from the Phase 2b PROMISE trial evaluating voclosporin in de novo kidney transplant patients. As a dose ranging study, the Phase 2b trial was successful in meeting the primary endpoint demonstrating non-inferiority in biopsy proven acute rejection (BPAR) episodes as compared to tacrolimus control in all three dose groups at six months and also demonstrated an improved safety profile versus tacrolimus. - Reported positive Phase 3 ESSENCE trial data evaluating voclosporin in moderate to severe psoriasis patients. ESSENCE successfully met the primary endpoint of superiority to placebo in the proportion of patients achieving a score of "clear" or "almost clear" in the Static Physician's Global Assessment (SPGA) at 12 weeks of treatment. The full data set was presented at the Canadian Dermatology Association 84th Annual Conference held in Vancouver, B.C., July 1 - 5, 2009. - Discovered a portfolio of non-immunosuppressive cyclosporine analogue molecules (NICAMs) with potent cyclophilin inhibition without binding to calcineurin. Cyclophilin inhibition has garnered considerable attention as a novel therapy in the treatment of a wide range of diseases including hepatitis C, stroke, and chronic neurological disorders such as Parkinson's, Lou Gehrig's, and Alzheimer's. - Partner Lux commenced and completed a First-in-Man (Phase 1) study with LX214, a proprietary topical ophthalmic solution containing voclosporin as the active ingredient. Results from this open-label pilot efficacy study of the company's potential best-in-class therapy for dry eye indicated that randomized, double-masked, placebo- controlled data from 30 healthy volunteers showed LX214 to be well tolerated at the two doses (0.02% and 0.2%) studied, with safety and tolerability measurements indistinguishable from placebo. - Repaid $13 million USD loan issued by Oxford Finance Corporation and Silicon Valley Bank. Subsequent Scientific and Operating Updates - Partner, Lux, filed a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) and a Market Authorization Application (MAA) with the European Medicines Agency (EMA) for voclosporin, under the proposed brand name, LUVENIQ(TM). Voclosporin is proposed for the treatment of non-infectious uveitis involving the posterior segment of the eye, a leading cause of vision loss and long-term disability and the fourth leading cause of legal blindness in the industrialized world. If the submissions are approved in the U.S. and Europe, the Company will receive milestone payments of $7.04 million USD and $3.52 million USD, respectively, from Lux. Isotechnika Pharma will also receive royalty payments on sales of voclosporin for uveitis. - Isotechnika Labs, has amended its agreement with Paladin Labs concerning its remaining stake in the revenue stream from the Isodiagnostika business sold to Paladin on June 18, 2009. Under the agreement, Isotechnika Labs was entitled to receive a revenue stream equivalent to 88 percent of the net profits of Isodiagnostika through to June 18, 2016. This amendment resulted in a one time up front payment of $1.65 million with an additional amount up to $350,000 payable by January 31, 2011, based on Isodiagnostika sales in 2010. - The Company announced that it received a research and development contribution from the National Research Council of Canada Industrial Research Assistance Program for its NICAM platform. - The Company appointed Mr. Doug Goss as Chairman of the Board. He replaces Mr. Jonathan Goodman who has resigned effective today due to recently announced business transactions at Paladin. Mr. Goodman stated, "In Paladin's efforts to expand internationally, over the last 3 weeks, Paladin has acquired interests in two companies, SpePharm in Amsterdam and Pharmaplan in South Africa. As part of those transactions, I am to become a Board member of both companies and simply don't have the bandwidth to continue in my role at Isotechnika. Paladin remains Isotechnika's largest shareholder and I have full confidence in my replacement, Doug Goss, who has a stellar reputation in the legal community coupled with a great business mind." "After 4 years of being corporate secretary, I am pleased to become Chairman of the Board", stated Mr. Goss. "The Company remains focused on unlocking shareholder value through commercialization of voclosporin for uveitis through our partner Lux while seeking a development partner for voclosporin in transplantation."

Financial results

For the fourth quarter ended December 31, 2009, the Company reported a significantly reduced consolidated net loss of $1.55 million or $0.01 per Common Share, as compared to a consolidated net loss of $4.84 million or $0.05 per Common Share for the same period in 2008. For the year ended December 31, 2009, the Company reduced its net consolidated loss to $7.96 million or $0.07 per Common Share, as compared to a consolidated net loss of $19.33 million or $0.18 per Common Share in 2008.

The reduction in the loss for the year ended December 31, 2009 when compared to 2008 was primarily due to a reduction of $5.91 million in research and development expenses, reduced corporate, administration and marketing expenses of $1.74 million and recording a net gain from the plan of arrangement with Paladin of $2.3 million.

Revenue decreased to $4.24 million for the year ended December 31, 2009, compared to $4.72 million for the year ended December 31, 2008. Revenue in 2009 was comprised of $500,000 of diagnostic royalty income, $1.08 million for product sales from the diagnostic division, $321,000 of contract services and product sales from the therapeutic division, $999,000 of research and development revenues and $1.34 million for licensing revenue. This compares to 2008, where revenue was comprised of $1.94 million for product sales from the diagnostic division, $2.2 million of contract services and product sales from the therapeutic division and $582,000 for licensing fees.

Net research and development expenses were $8.01 million for the year ended December 31, 2009, compared to $13.93 million for the year ended December 31, 2008. The decreased research and development expenses reflect decreased clinical trial activity as both the voclosporin Phase 2b kidney transplant and Phase 3 European/Canadian psoriasis trials were completed in 2009.

Corporate, administration and marketing expenses decreased to $3.78 million for the year ended December 31, 2009, compared to $5.52 million for the year ended December 31, 2008. The decrease reflected a general reduction in all corporate, administration and marketing costs which included reduced personnel numbers, reduced executive and director compensation and lower consulting fees incurred in 2009.

The Company, as at December 31, 2009, had $4.80 million in cash and cash equivalents. At December 31, 2009, other financial assets and liabilities were composed of accounts receivable of $770,000 and accounts payable and accrued liabilities of $2.14 million. Subsequent to the year end, the Company received gross proceeds of $1.65 million from Paladin resulting from the amendment of the terms of the research and development agreement. In addition the Company will receive monthly research and development payments of $329,000 from Paladin to June 30, 2010. The Company believes it has sufficient cash resources to continue its current planned operations until at least the fourth quarter of 2010. The Company will need to raise additional cash in the future.

The audited financial statements and the Management's Discussion and Analysis for the year ended December 31, 2009, are accessible on Isotechnika's Web site at www.isotechnika.com or on SEDAR at www.sedar.com.

Source:

ISOTECHNIKA PHARMA INC.

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