Protox Therapeutics Inc. (TSX: PRX), a leader in the development of receptor targeted therapeutic fusion proteins, today released financial results for the third quarter, ended September 30, 2010.
"On the back of a $75M license agreement with Kissei in the second quarter, the announcement this quarter of a financing of up to $35M by the private equity giant, Warburg Pincus, represents a huge vote of confidence in Protox and our BPH program" said Dr Fahar Merchant, President and CEO of Protox. "We are delighted that an investor of such caliber has stepped forward to support PRX302 through to its final stages of development. In Warburg Pincus, Protox will have access to considerable sector specific expertise and a partner with an enviable track record of building shareholder value."
Q3 2010 Highlights
- The Company entered into an investment agreement with Warburg Pincus for an investment of up to $35 million. A special meeting of Protox shareholders is scheduled for November 16, 2010 to approve the investment, and the first tranche of $10 million is expected to close shortly thereafter.
- On July 13, 2010 and September 16, 2010, patents were allowed in Europe and Singapore respectively, related to the PORxin patent family entitled "Method of Treating or Preventing Benign Prostatic Hyperplasia Using Modified Pore-Forming Proteins" and on September 28, 2010, a second divisional patent was allowed in the US related to the PORxin patent family entitled "Proaerolysin Containing Protease Activation Sequences and Methods of Use for Treatment of Prostate Cancer".
Financial Results
The Company has not earned any revenue in any of its previous fiscal years, other than income from interest earned on the Company's investment balances.
The Company reported net and comprehensive loss of $1.6 million ($0.02 per share) in the three months ended September 30, 2010 ("2010-Q3") compared to a net loss of $2.2 million ($0.03 per share) for the three months ended September 30, 2009 ("2009-Q3"). On a year-to-date basis, the Company recorded a loss of $2.1 million ($0.02 per share) for the nine months ended September 30, 2010 compared to a loss of $6.3 million ($0.08 per share) for the nine months ended September 30, 2009. The decrease of $611,000 in net loss in the current quarter is due to continuing efforts to manage costs across all areas of the Company, as well as the completion of the active phase of the lead study resulting in reduced clinical activity.
Total expenses for the quarter ended September 30, 2010 decreased by $590,000 with respect to the comparative period in 2009. This was driven by a reduction in research and development expenditures with the completion of the active phase of the TRIUMPH study and efforts to manage costs across the Company. Overall, operating costs are expected to remain flat for the balance of the year as the Company continues the development of PRX302 for the treatment of benign prostatic hyperplasia ("BPH"). Protox anticipates that their business development activities will decrease in the fourth quarter as a result of securing Warburg Pincus as a funding partner.
The Company did not earn any license revenue during third quarter of 2010. However, the Company earned US$3.0 million (CAD$3.0 million) during the nine months ended September 30, 2010 as a result of the Kissei license agreement. The receipt of this revenue triggered a sub-license fee to John Hopkins University and the University of Victoria of $210,000 under the terms of their PORxin license agreement for BPH.
In the future, the Company is eligible to earn a near term milestone payment of US$5 million and an additional US$67 million in milestone payments, product supply revenues as well as drug supply fees and double digit royalties on sales of PRX302 in Japan.
Research and development expenditures were $990,000 for the third quarter of 2010, a decrease of $520,000 from $1.5 million over for the comparative quarter in 2009. Year to date expenditures for the nine months ended September 30, 2010 were $2.9 million compared to $4.4 million for the same period in fiscal 2009. The decrease in research and development expenditures for 2010-Q3 and for the nine months ended September 30, 2010 was due to the maturing of the Company's current BPH program as the active phase of the lead trial was completed during the third quarter of 2010 - the double-blinded placebo controlled TRIUMPH study - compared to three active trials in the third quarter of 2009.
For the remainder of the year, the Company expects to continue to incur costs related to the further clinical, manufacturing and regulatory activities associated with their PRX302 BPH program.
General and administrative ("G&A") costs for the third quarter of 2010 were $428,000, a decrease of 30% over the previous quarter and a modest decrease compared to the same period in 2009. On a year-to-date basis, G&A expenditures were $1.6 million for the nine months ended September 30, 2010 - the same level as the comparative period in 2009. The decrease in the G&A expenditures in the current quarter reflect the high level of activity undertaken in the previous quarter with respect to the Kissei agreement. For the remainder of the year, Protox expects the G&A expenditures to remain close to the current levels.
At September 30, 2010, the Company had cash and cash equivalents of $5.0 million, representing an increase of $3.3 million from December 31, 2009. The Company had net working capital of $4.0 million at September 30, 2010, an increase of $3.2 million from December 31, 2009.
As at November 12, 2010, the Company has 96,303,443 common shares issued and outstanding. In addition, the Company has 7,133,500 options outstanding to purchase common shares of the Company. Of the options currently outstanding, approximately 3.9 million are exercisable into an equivalent number of common shares of the Company at exercise prices ranging from $0.50 to $0.87 and with an average exercise price of $0.65.
The Company also has 6,542,023 common share purchase warrants outstanding which expire between May 2011 and March 2015 and entitle warrant holders to purchase common shares at prices ranging between $0.27 and $0.65. Furthermore, 6,367,269 of these common share purchase warrants are subject to an acceleration of the expiry date if the closing price of the underlying Common Shares is higher than $1.75 per common share for a period of 10 consecutive trading days.
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