MethylGene Announces First Quarter 2005 Results; Company Announces Additional Research Data from Collaborators.MONTREAL -- MethylGene Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :MYG) a biopharmaceutical company, today announced operational and financial results for the first quarter ended March 31st, 2005. MethylGene also announced research results from its collaboration with EnVivo Pharmaceuticals and results from a collaboration with Johns Hopkins Noun 1. Johns Hopkins - United States financier and philanthropist who left money to found the university and hospital that bear his name in Baltimore (1795-1873) Hopkins 2. in the area of breast cancer research. First Quarter Highlights: - Advanced clinical programs for MG98 and MGCD0103, and preclinical programs for dual action kinase inhibitors, non-oncology HDAC indications, next generation oncology HDAC inhibitors and beta- lactamase inhibitors for antibiotic resistance. - Signed an exclusive research, collaboration and license agreement with EnVivo Pharmaceuticals to exploit MethylGene's isotypic selective HDAC inhibitor technology for the treatment of neurodegenerative diseases. This agreement will result in total proceeds in 2005 of US $1.1 million, including an upfront license amount of US$500,000 and US$600,000 in contract research payments. This quarter, the Company received US$650,000 of the aforementioned US $1.1 million. - Recognized revenue of $1.9 million from its partnerships with Taiho Pharmaceutical, Merck & Co., Inc., and EnVivo Pharmaceuticals. - Announced research results with EnVivo demonstrating promising results for HDAC inhibitors in the area of neurodegeneration. - Announced research results with Johns Hopkins for work performed in breast cancer research. - Issued patent for beta-lactamase inhibitors (U.S. Patent #6,884,791) "We continue to make progress advancing both of our clinical stage products and our multiple research programs, which will yield our next generation product candidate," said Mr. Donald F. Corcoran, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of MethylGene. "Revenues from our partnerships continue to partially offset our expenditures, although we do anticipate our cash burn to rise as we continue to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale development activities for our clinical stage products." Collaboration Research Results: MethylGene's collaborator, EnVivo Pharmaceuticals Inc, announced positive preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. results for a set of MethylGene's HDAC HDAC Histone Deacetylase (biochemistry) HDAC Heavy Duty Air Cylinder inhibitorsin the area of neurodegenerative disease Neurodegenerative disease A disease in which the nervous system progressively and irreversibly deteriorates. Mentioned in: Amnesia in a presentation entitled, "Automated Screening of Drosophila Drosophila: see fruit fly. drosophila Any member of about 1,000 species in the dipteran genus Drosophila, commonly known as fruit flies but also called vinegar flies. Some species, particularly D. Neurodegenerative Disease Models Facilitates CNS See Continuous net settlement. CNS See continuous net settlement (CNS). Drug Discovery" at the SRI 7th International Conference: Neurodegeneration in Alzheimer's Disease Alzheimer's disease (ăls`hī'mərz, ôls–), degenerative disease of nerve cells in the cerebral cortex that leads to atrophy of the brain and senile dementia. ; Parkinson's Disease Parkinson's disease or Parkinsonism, degenerative brain disorder first described by the English surgeon James Parkinson in 1817. When there is no known cause, the disease usually appears after age 40 and is referred to as Parkinson's disease. & Related Disorders, in Princeton, NJ, on April 19th. In this presentation, EnVivo discussed experiments in which MethylGene's HDAC molecules were screened in EnVivo's proprietary neurodegenerative Drosophila disease model assays as well as in a variety of primary mammalian neuronal neu·ro·nal adj. Relating to a neuron. neuronal pertaining to or emanating from a neuron. neuronal abiotrophy see hereditary neuronal abiotrophy of Swedish Lapland dogs. assays. Based on this work EnVivo was able to identify and select a group of compounds that are currently being investigated for their in vivo in vivo /in vi·vo/ (ve´vo) [L.] within the living body. in vi·vo adj. Within a living organism. in vivo adv. efficacy and safety properties in transgenic trans·ge·nic adj. 1. Of, relating to, or being an organism whose genome has been altered by the transfer of a gene or genes from another species or breed: transgenic mice. 2. vertebrate vertebrate, any animal having a backbone or spinal column. Verbrates can be traced back to the Silurian period. In the adults of nearly all forms the backbone consists of a series of vertebrae. All vertebrates belong to the subphylum Vertebrata of the phylum Chordata. disease models. "EnVivo's data demonstrated that the specificity of our inhibitors may result in less toxic molecules with a higher therapeutic index," stated Dr. Jeffrey Besterman, Senior VP of R&D of MethylGene. "The next step will be to further investigate these molecules in EnVivo's neurodegenerative models to further determine their safety and efficacy in vivo." MethylGene also published research results, in collaboration with Johns Hopkins Bloomberg School of Public Health The Johns Hopkins Bloomberg School of Public Health is part of Johns Hopkins University in Baltimore, Maryland, U.S. It was the first institution of its kind in the world. Founded in 1916 by William H. Welch and John D. , that histone deacetylase Histone deacetylases (HDAC) (EC number 3.5.1) are a class of enzymes that remove acetyl groups from an ε-N-acetyl lysine amino acid on a histone. Its action is opposite to that of histone acetyltransferase. (HDAC) and DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. methyltranferase (DNMT DNMT DNA Methyl Transferase DNMT do not move this DNMT Definitely Not My Type ) inhibitors modulate To insert a data signal into a carrier wave or direct current. See modulation. histone methylation Histone methylation is the modification of certain amino acids in a histone protein by the addition of one, two, or three methyl groups. Function This modification alters the properties of the nucleosome and affects its interactions with other proteins. to allow for the reactivation reactivation to become active after a period of quiescence or, as in bacterial and viral infections, latency. cross reactivation of estrogen receptor estrogen receptor A protein of a superfamily of nuclear receptors for small hydrophilic ligands–eg, steroid hormones, thyroid hormone, vitamin D, retinoids; the presence of ERs in breast CA generally is associated with a better prognosis, as they respond to genes. Estrogen receptor genes are found to be silenced, or turned off, in human breast cancer cells cells once believed to be peculiar to cancers, but now know to be epithelial cells differing in no respect from those found elsewhere in the body, and distinguished only by peculiarity of location and grouping. See also: Cancer and thus the reactivation of these genes using HDAC and DNMT inhibitors may provide insight in developing drug targets to treat breast cancer. More details can be found in Molecular Endocrinology (2005) March 3; (Electronically published ahead of print). As a further update of our preclinical efforts, the second generation HDAC inhibitor A HDAC inhibitor (HDI) is a class of drug which interferes with the function of histone deacetylase. HDAC inhibitors are being studied as a treatment for cancer[1] and neurodegenerative diseases. program is progressing as planned with Taiho. The Company is in the process of evaluating a subset of next generation molecules with the goal to identify an additional clinical candidate for cancer in the next 9 to 12 months. In the beta-lactamase inhibitor A beta-lactamase inhibitor is a drug given in conjunction with a beta-lactam antibiotic. Although the inhibitor does not usually have significant antibiotic activity on its own,[1] program, MethylGene and Merck continue to advance research. The research collaboration component of the Exclusive License and Research Collaboration Agreement will be completed in June 2005 after which a subset of optimized lead candidates may be further developed under the continuing exclusive license agreement by Merck, with the goal to identify a clinical candidate by year end. Finally, the Company continues to optimize its lead dual kinase kinase /ki·nase/ (ki´nas) 1. a subclass of the transferases, comprising the enzymes that catalyze the transfer of a high-energy group from a donor (usually ATP) to an acceptor. 2. inhibitor molecules and expects to choose a clinical candidate in the next 9 to 15 months. Milestones Anticipated for the Balance of 2005: - Initiate the second monotherapy, dose escalating, Phase I trial for MGCD0103, an isotypic selective HDAC inhibitor, in hematological tumors in Q2 2005. - Disclose additional data from the seven day continuous infusion Phase I monotherapy trial for MG98 in solid tumors at the annual ASCO (American Society of Clinical Oncology) meeting in Orlando, Florida in May 2005. - Disclose preliminary data from the ongoing Phase I HDAC trials in conjunction with the publication of the Company's accepted HDAC scientific abstracts in the 2005 ASCO Meeting Proceedings for May 2005. - Commence the initial MGCD0103 Phase I/II combination trial or a Phase II monotherapy trial in a specific tumor type during Q3, 2005 and complete enrollment in the three ongoing Phase I trials. - Identify the optimal schedule from the first step of the Phase II MG98 combination trial with interferon alpha in metastatic renal cell cancer by the end of 2005 or early 2006. - Consolidate research facilities into one building, providing for greater efficiency and productivity. - Advance other research programs towards selection of an additional clinical candidate. Financial Results Total revenues for the first quarter ended March 31st, 2005 were $1.9 million compared with $1.4 million for the first quarter ended March 31st, 2004.These revenues consisted of contract revenues and license fees stemming from the Company's agreements with Taiho Pharmaceutical Co., Ltd.; Merck & Co., Inc.; and EnVivo Pharmaceuticals, Inc. Total expenditures for the first quarter of 2005 were $4.7 million compared to $4.4 million for the first quarter of 2004. Gross research and development expenses were $4.2 million for Q1, 2005 compared to $4.2 million for Q1, 2004. General and Administrative expenses for Q1, 2005 were $1.1 million, up from $1.0 million for Q1, 2004, primarily due to increased expenses associated with being a public company. The Company recognized government assistance, primarily in the form of tax credits, of approximately $391,000 in Q1, 2005 compared to $480,000 in Q1, 2004. Interest income increased to approximately $238,000 in Q1, 2005 compared to $125,000 in Q1, 2004, due to higher average cash balances and higher average interest rates. Net loss for the first quarter ended March 31st, 2005 was $2.8 million or ($0.13) per share compared with a net loss of $3.0 million or ($0.18) per share for the first quarter ended March 31st, 2004. As at March 31st, 2005 the Company had cash, cash equivalents and short-term investments totaling $37.8 million compared to $41.1 million at December 31st, 2004.The Company believes that its current resources will be sufficient to carry out its research and development activities into early fiscal 2007. About MethylGene MethylGene is a publicly traded biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics in cancer and infectious disease Infectious disease A pathological condition spread among biological species. Infectious diseases, although varied in their effects, are always associated with viruses, bacteria, fungi, protozoa, multicellular parasites and aberrant proteins known as prions. . Two cancer product candidates, MG98, partnered with MGI MGI Mouse Genome Informatics MGI Modular Gateway Interface MGI McKinsey Global Institute MGI Military Geographic Information MGI Marine Geological Institute MGI Policy on the Management of Government Information (Canada) Pharma for North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and MGCD MGCD Maximum Gapless Coverage Distance 0103, partnered with Taiho Pharmaceutical for certain Asian countries Noun 1. Asian country - any one of the nations occupying the Asian continent Asian nation country, land, state - the territory occupied by a nation; "he returned to the land of his birth"; "he visited several European countries" , are currently in clinical trials. MG98 has entered a randomized ran·dom·ize tr.v. ran·dom·ized, ran·dom·iz·ing, ran·dom·iz·es To make random in arrangement, especially in order to control the variables in an experiment. two-step Phase II combination trial with interferon alpha Interferon alpha Potent immune-defense protein; used as an anti-cancer drug. Mentioned in: Waldenström's Macroglobulinemia in metastatic Metastatic The term used to describe a secondary cancer, or one that has spread from one area of the body to another. Mentioned in: Coagulation Disorders metastatic pertaining to or of the nature of a metastasis. renal cell cancer. MGCD0103 is currently in Phase I dose-escalation monotherapy monotherapy /mono·ther·a·py/ (-ther´ah-pe) treatment of a condition by means of a single drug. mon·o·ther·a·py n. Treatment of a disorder with a single drug. trials against solid tumors and hematological malignancies Although hematological malignancies are a form of cancer, they are generally treated by specialists in hematology, although in many hospitals oncology specialists also manage these diseases. . In collaboration with Merck, MethylGene is developing small molecule beta-lactamase inhibitors to overcome antibiotic resistance antibiotic resistance, n the ability of certain strains of microorganisms to develop resistance to antibiotics. antibiotic resistance . MethylGene has a portfolio of preclinical programs for its kinase and histone deacetylase (HDAC) inhibitors for both oncology and non-oncology indications, and is exploiting its core HDAC expertise for the treatment of neurodegenerative diseases neurodegenerative diseases diseases characterized by neurodegeneration. Lesions are microscopic only but in chronic disease with massive involvement there may be grossly visible atrophy of affected nervous tissue. with EnVivo Pharmaceuticals. Please visit MethylGene's website at www.methylgene.com. Except for historical information, this news release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, (which can be found in the Company's prospectus dated June 18, 2004 and can be found on www.sedar.com) which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.
MethylGene Inc.
Incorporated under the Quebec Companies Act
BALANCE SHEETS
As at Unaudited
March 31, December 31,
2005 2004
$ $
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ASSETS
Current
Cash and cash equivalents 11,928,380 2,046
Short-term investments 25,908,833 41,416,717
Research and development
tax credits receivable 1,075,000 690,000
Technology Partnership Canada receivable 125,158 125,158
Accounts receivable (note 4) 400,373 389,338
Other current assets 1,267,180 1,280,937
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Total current assets 40,704,924 43,904,196
Property, plant and equipment 3,821,780 3,710,392
Intangible assets 1,939,554 1,887,109
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46,466,258 49,501,697
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness - 258,388
Accounts payable and accrued liabilities 2,731,037 2,817,614
Current portion of unearned revenue 1,187,162 1,722,475
Current portion on obligations
under capital leases 18,669 20,229
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Total current liabilities 3,936,868 4,818,706
Unearned revenue 2,548,399 2,163,832
Obligations under capital leases 3,078 6,527
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Total liabilities 6,488,345 6,989,065
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Shareholders' equity
Capital stock 74,360,970 74,354,535
Contributed surplus 4,811,723 4,529,999
Deficit (39,194,780) (36,371,902)
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Total shareholders' equity 39,977,913 42,512,632
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46,466,258 49,501,697
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MethylGene Inc.
STATEMENTS OF OPERATIONS AND DEFICIT
For the periods ended Unaudited
Three-month period ended
March 31,
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2005 2004
$ $
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REVENUES
Contract revenues and
license fees (notes 4 and 5) 1,873,692 1,438,536
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EXPENSES
Research and development 4,220,990 4,155,090
Government assistance (391,000) (480,800)
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Net research and development 3,829,990 3,674,290
General and administrative 1,133,275 1,019,711
Interest income (237,819) (124,685)
Amortization of property, plant and equipment 11,298 13,180
Bank charges and interest 4,050 13,706
Foreign exchange gain (44,224) (150,716)
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4,696,570 4,445,486
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Net loss for the period (2,822,878) (3,006,950)
Deficit, beginning of period (36,371,902) (25,375,690)
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Deficit, end of period (39,194,780) (28,382,640)
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Basic and diluted loss per share (0.13) (0.18)
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Weighted average number common of shares
21,731,486 16,306,620
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MethylGene Inc.
STATEMENTS OF CASH FLOWS
For the periods ended Unaudited
Three-month period ended
March 31,
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2005 2004
$ $
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OPERATING ACTIVITIES
Net loss for the period (2,822,878) (3,006,950)
Item not affecting cash:
Amortization of property,
plant and equipment 272,136 275,288
Amortization of intangible assets 29,475 27,368
Unrealized foreign exchange losses 111,782 18,559
Warrants related to license fees 763 -
Non-cash compensation expense 228,175 445,054
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(2,180,547) (2,240,681)
Changes in non-cash working capital
balances relating to operations (998,814) (135,451)
Changes in long-term portion
of unearned revenue 431,999 (975,640)
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Cash flows related to operating activities (2,747,362) (3,351,772)
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INVESTING ACTIVITIES
Acquisitions of property,
plant and equipment, net of
government assistance (383,524) (310,120)
Acquisitions of intangible assets (81,920) (12,166)
Purchases of short-term investments (19,398,210) (22,663,130)
Proceeds from maturities
of short-term investments 34,794,312 27,572,507
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Cash flows related to investing activities 14,930,658 4,587,091
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FINANCING ACTIVITIES
Issuance of common shares 6,435 -
Repayment of obligation under capital leases (5,009) (4,725)
Repayment of long-term debt - (3,291)
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Cash flows related to financing activities 1,426 (8,016)
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Increase in cash, cash equivalents
and bank indebtedness 12,184,722 1,227,303
Cash, cash equivalents and
bank indebtedness, beginning of period (256,342) (822,858)
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Cash, cash equivalents,
and bank indebtedness,
end of period 11,928,380 404,445
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Cash, cash equivalents,
and bank indebtedness consist of:
Cash 1,159,879 424,041
Cash equivalents 10,768,501 -
Bank indebtedness - (19,596)
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Supplemental information
Interest paid 627 10,919
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