Quantcast

Transition Therapeutics Announces Third Quarter Fiscal 2014 Financial Results

May 13, 2014

TORONTO, May 13, 2014 /PRNewswire/ – Transition Therapeutics Inc. (“Transition” or the “Company”) (TSX: TTH; NASDAQ: TTHI), a
product-focused biopharmaceutical company developing therapeutics for
disease indications with large markets, today announced its financial
results for the three and nine month periods ended March 31, 2014.

Selected Highlights

Highlights for the Company during the nine month period ended March 31,
2014 and up to the date of this MD&A include the following:

ELND005:

        --  April 7, 2014 - Transition provided a clinical development
            update and announced the decision to focus ELND005 development
            on the completion of current Phase 2 clinical studies in
            Agitation and Aggression in Alzheimer's disease and a Phase 2a
            study in Down syndrome.  A decision was also made to
            discontinue the clinical study of bipolar subjects following a
            commercial assessment of the size and length of the bipolar
            study, and costs and timelines for its completion.  This
            decision was not based on any analysis of efficacy data and
            there were no adverse safety findings that contributed to this
            decision;

        --  February 28, 2014 - Transition announced the acquisition of an
            Irish domiciled company, the holder of all the development and
            commercialization rights of neuropsychiatric drug candidate,
            ELND005.Going forward, Transition's wholly owned subsidiary,
            Transition Therapeutics Ireland Limited, will be responsible
            for all future development and commercialization activities of
            the ELND005 drug candidate. In parallel with this acquisition,
            Perrigo Company plc "(Perrigo") has invested US$15 million and
            received 2,255,640 Transition common shares representing
            approximately a 7% ownership stake in Transition.   Perrigo
            will also be eligible to receive up to US$40 million in
            approval and commercial milestone payments and a 6.5% royalty
            on net sales of ELND005 products and sublicense fees received;

        --  December 18, 2013 - Perrigo completed its acquisition of Elan
            Pharmaceuticals and all its subsidiaries.With this acquisition,
            Perrigo acquired all the rights and obligations of Elan under
            the collaboration agreement with Waratah, a wholly-owned
            subsidiary, for the development and commercialization of
            ELND005;

        --  September 4, 2013 - Transition announced that their licensing
            partner Elan had dosed the first patient in a Phase 2a clinical
            study of ELND005 in Down syndrome;

        --  July 17, 2013 - Transition announced that the US Food and Drug
            Administration ("FDA") has granted Fast Track Designation to
            the development program for ELND005 which was submitted for the
            treatment of Neuropsychiatric Symptoms ("NPS") in Alzheimer's
            disease ("AD").The FDA concluded that the development program
            for ELND005 for the treatment of NPS in AD meets their criteria
            for Fast Track Designation.

TT401:

        --  April 7, 2014 - Transition provided a clinical development
            update and announced that a Phase 2 study of TT401 is in the
            final preparation stage with dosing expected to commence in
            calendar Q2 2014.

TT601:

        --  April 7, 2014 - Transition provided a clinical development
            update and announced that there would be no further development
            of osteoarthritis preclinical candidate, TT601.   This decision
            was made after expanded toxicology study data and regulatory
            interactions revealed the development plan would be restricted
            and timelines delayed;

        --  July 23, 2013 - Transition announced the exclusive licensing of
            worldwide rights to a novel small molecule transcriptional
            regulator ("TT601") from Lilly for the treatment of
            osteoarthritis ("OA") pain.

Corporate Developments:

        --  February 28, 2014 - In parallel with the re-acquisition of the
            ELND005 rights, Transition announced that Perrigo has invested
            US$15 million and received 2,255,640 Transition common shares
            representing approximately a 7% ownership stake in Transition;

        --  August 15, 2013 - Transition announced the closing of the
            private placement involving Jack W. Schuler, Larry N. Feinberg,
            Oracle Investment Management, certain Transition Board members,
            management and other existing shareholders of US$11 million by
            purchasing 2,625,300 units of the Company at a price of US$4.19
            per unit.

Financial Liquidity

The Company’s cash, cash equivalents and short term investments were
$52,898,449 at March 31, 2014.

The Company’s cash projections indicate that the current cash resources
should enable the Company to execute its core business plan and meet
its projected cash requirements beyond the next 12 months.

Financial Review

For the three month period ended March 31, 2014, the Company recorded a
net loss of $5,067,292 ($0.17 loss per common share) compared to net
loss of $2,903,331 ($0.11 loss per common share) for the three month
period ended March 31, 2013.

For the nine month period ended March 31, 2014, the Company recorded a
net loss of $8,652,250 ($0.29 loss per common share) compared to net
income of $2,078,181 ($0.08 income per common share) for the nine month
period ended March 31, 2013.

Net loss increased $2,163,961 during the three month period ended March
31, 2014 compared to the three month period ended March 31, 2013. The
increase in net loss during this three month period is primarily due to
the settlement of a pre-existing relationship recognized in connection
with the re-acquisition of the ELND005 rights as well as increases in
research and development and general and administration expenses. The
increase in net loss has been partially offset by the change in fair
value of contingent consideration and increased foreign exchange gains.

Net loss increased $10,730,431 during the nine month period ended March
31, 2014 compared to the nine month period ended March 31, 2013. The
increase in net loss for the nine month period ended March 31, 2014 is
largely attributed to the revenue recognized during the first quarter
of fiscal 2013 resulting from the $10,815,200 (US$11 million) milestone
payment received from Elan upon the commencement of the next ELND005
clinical trial. The increase in net loss is also attributed to the
settlement of a pre-existing relationship recognized in connection with
the re-acquisition of the ELND005 rights as well as increases in
research and development and general and administration expenses. The
increase in net loss has which has been partially offset by the change
in fair value of contingent consideration and increased foreign
exchange gains.

Revenue

Revenue is nil in both the three month periods ended March 31, 2014 and
2013.

Revenue is nil in the nine month period ended March 31, 2014 compared to
$10,815,200 (US$11,000,000) for the nine month period ended March 31,
2013.

In August 2012, Elan dosed the first patient in a Phase 2 clinical study
of ELND005 in Bipolar Disorder. In light of the amendments to the Elan
agreement, the Company recognized $10,815,200 (US$11,000,000) as
revenue during the three month period ended September 30, 2012 which
represents the milestone payment received from Elan upon their
commencement of the next ELND005 clinical trial.

Research and Development

Research and development expenses increased by $2,353,755 from
$2,380,533 for the three month period ended March 31, 2013 to
$4,734,288 for the three month period ended March 31, 2014. For the
nine month period ended March 31, 2014, research and development
expenses increased $326,565 to $6,902,901 from $6,576,336 for the same
period in fiscal 2013.

The increases in research and development expenses for both the three
and nine month periods ended March 31, 2014 are primarily due to
increases in clinical development costs related to the re-acquired
rights to the drug candidate ELND005 and pre-clinical research on
TT601. The increase in research and development costs have been
partially offset by decreases in clinical development costs associated
with diabetes drug candidate TT401/TT402 as well as decreased
amortization resulting from the write off of the TT301/302 technology.

General and Administrative

General and administrative expenses increased by $261,022 from $870,857
for the three month period ended March 31, 2013 to $1,131,879 for the
three month period ended March 31, 2014. For the nine month period
ended March 31, 2014, general and administrative expenses increased
$515,759 to $3,052,958 from $2,537,199 for the same period in fiscal
2013.

The increases in general and administrative expenses for both the three
and nine month periods ended March 31, 2014 are primarily due to
increases in legal and professional fees as well as increased business
and corporate development activities.

Settlement of a Pre-existing Relationship

During the three and nine month periods ended March 31, 2014, the
Company recognized an expense of $3,101,507 as a settlement of a
pre-existing relationship relating to the collaboration agreement with
Elan. The Company did not recognize a settlement during the
comparative three and nine month periods ended March 31, 2013.

Change in Fair Value of Contingent Consideration Payable

The contingent consideration is required to be measured as a financial
liability at fair value and re-measured at each reporting date.
Accordingly, the Company has recognized a change in fair value of
contingent consideration payable of $2,781,907 during both the three
and nine month periods ended March 31, 2014. There was no change in
fair value recognized during the comparative three and nine month
periods ended March 31, 2013.

About Transition

Transition is a product-focused biopharmaceutical company, developing
novel therapeutics for disease indications with large markets. The
Company’s lead CNS drug candidate is ELND005 for the treatment of
Alzheimer’s disease and Down syndrome. Transition’s lead metabolic
drug candidate is TT401 for the treatment of type 2 diabetes and
accompanying obesity.

The Company’s shares are listed on the NASDAQ under the symbol “TTHI”
and the Toronto Stock Exchange under the symbol “TTH”. For additional
information about the Company, please visit www.transitiontherapeutics.com. Extracts of the Financial Statements to Follow:

CONSOLIDATED BALANCE SHEETS

(Unaudited)


    In Canadian Dollars                 March 31, 2014   June 30, 2013  

    Assets                                                              

    Current assets                                                      

    Cash                                    48,834,630      23,067,937  

    Short term investments                   4,063,819       5,057,702  

    Other receivables                           33,366          35,792  

    Investment tax credits receivable          176,515         180,652  

    Prepaid expenses and deposits              119,608         359,164  

                                            53,227,938      28,701,247  

    Non-current assets                                                  

    Property and equipment                     144,370         168,034  

    Intangible assets                        8,158,464       8,938,674  

    Total assets                            61,530,772      37,807,955  

    Liabilities                                                         

    Current liabilities                                                 

    Trade and other payables                 4,243,321         874,149  

    Current portion of contingent                    -       2,321,373
    consideration payable

                                             4,243,321       3,195,522  

    Non-current liabilities                                             

    Contingent considerations payable        4,070,610       1,434,958  

    Leasehold inducement                        14,290          22,863  

                                             8,328,221       4,653,343  

    Equity attributable to owners of
    the Company

    Share capital                          191,644,874     165,367,524  

    Warrants                                 2,025,839               -  

    Contributed surplus                     14,768,221      14,768,002  

    Share-based payment reserve              2,748,783       2,352,002  

    Deficit                              (157,985,166)   (149,332,916)  

                                            53,202,551      33,154,612  

    Total liabilities and equity            61,530,772      37,807,955  

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

For the nine and three month periods ended March 31, 2014 and 2013

(Unaudited)


                      Nine month    Nine month   Three month   Three month
                     period ended     period       period      period ended
                      March 31,       ended         ended       March 31,
    In Canadian          2014       March 31,     March 31,        2013
    Dollars                            2013         2014

    Revenues                                                               

    Licensing fees              -   10,815,200             -              -

    Expenses                                                               

    Research and        6,902,901    6,576,336     4,734,288      2,380,533
    development

    Selling,            3,052,958    2,537,199     1,131,879        870,857
    general and
    administrative
    expenses

    Change in fair    (2,781,907)            -   (2,781,907)              -
    value of
    contingent
    consideration
    payable

    Settlement of       3,101,507            -     3,101,507              -
    a pre-existing
    relationship

    Operating        (10,275,459)    1,701,665   (6,185,767)    (3,251,390)
    income (loss)

    Interest              163,869      107,448        61,001         38,959
    income

    Foreign             1,467,310      269,068     1,065,444        309,100
    exchange gain

    Loss on               (7,970)            -       (7,970)              -
    disposal of
    capital assets

    Net income        (8,652,250)    2,078,181   (5,067,292)    (2,903,331)
    (loss) and
    comprehensive
    income (loss)
    for the period

    Basic and              (0.29)         0.08        (0.17)         (0.11)
    diluted net
    income (loss)
    per common
    share

Notice to Readers: Information contained in our press releases should be
considered accurate only as of the date of the release and may be
superseded by more recent information we have disclosed in later press
releases, filings with the OSC, SEC or otherwise. Except for historical
information, this press release may contain forward-looking statements,
relating to expectations, plans or prospects for Transition, including
conducting clinical trials. These statements are based upon the current
expectations and beliefs of Transition’s management and are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements. These risks and uncertainties include factors beyond
Transition’s control and the risk factors and other cautionary
statements discussed in Transition’s quarterly and annual filings with
the Canadian commissions.

SOURCE Transition Therapeutics Inc.


Source: PR Newswire



comments powered by Disqus