Aphton (NASDAQ:APHT)
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Conference Call Today to Review Financials, Operational
Restructuring and Refocus of Priority Programs
Aphton Corporation (NASDAQ:APHT) today reported financial results
for the first quarter ended March 31, 2005. Patrick Mooney, M.D.,
Chairman and Chief Executive Officer and Jim Smith, Chief Financial
Officer of Aphton will host a conference call and live audio webcast
today at 4:30 PM EDT to discuss financial results, operational
restructuring and the latest developments in the Company's pipeline.
After closing the acquisition of Igeneon AG and after further
analysis of the results of its Phase III clinical trial of Insegia(TM)
(G17DT immunogen) in combination with chemotherapy for the treatment
of pancreatic cancer, Aphton began a consolidated review of its
research and development program with the goal of prioritizing
programs that would result in the best allocation of both financial
and human resources. As a result of such review, Aphton has
implemented a cost-reduction program intended to align expenses with
product development priorities with the goal of improving its
operating efficiencies. As such, Aphton expects that its pro-forma
burn-rate will decrease by approximately 50% for the coming year.
As part of this cost-reduction plan, Aphton intends to reduce the
number of its employees by approximately 35%, which will include the
closing of certain of its research facilities and corporate offices.
In addition to workforce reductions there will be continued effort to
consolidate key operations to Aphton's headquarters in Philadelphia,
PA. Aphton estimates that it will incur approximately $1.5 million of
costs associated with the implementation of this plan and it believes
that these steps are critical to the identification and allocation of
adequate resources to those projects that Aphton believes offer the
best opportunity to create value for its shareholders.
In addition to implementing its cost reduction plan, Aphton has
decided to discontinue allocating further financial resources towards
actively pursuing the clinical development of the anti-gastrin
immunogen Insegia as either a monotherapy or in combination with
chemotherapy for the treatment of pancreatic cancer. Although
encouraged by the results observed in patients who achieved an
antibody response in clinical trials with Insegia as both a
monotherapy and in combination with chemotherapy, upon further review
the Company believes that the costs associated with the further
development and manufacturing would exceed its current capabilities.
As a consequence Aphton will be withdrawing its monotherapy
applications for Insegia in Switzerland, Canada and Australia. Aphton
believes that the market opportunity does not warrant the additional
expense that it would incur to manufacture, market and sell Insegia in
those countries.
Aphton does intend to continue to seek strategic partners that
have the financial resources necessary to support additional clinical
studies and other research and development activities that may be
necessary to support regulatory approval of Insegia for use in
patients with gastrin-sensitive cancers, such as gastric, pancreatic
or colorectal cancer. Aphton believes that the activity demonstrated
by Insegia in numerous studies of patients with these types of cancers
should enhance the Company's ability to find an appropriate partner to
assist in developing Insegia.
Despite Aphton's decision to cease active clinical development of
Insegia, Aphton continues to strongly believe that gastrin is an
important and critical therapeutic target in gastrin-sensitive tumors.
As such, Aphton intends to devote significant financial and human
resources to accelerate the optimization of a fully-humanized
monoclonal antibody that is currently being optimized by Xoma, a
strategic partner of Aphton. In addition, Aphton will continue its
organic research and development priorities, which will include the
continued funding of the ongoing clinical trials and the other efforts
associated with IGN101 and IGN311, and the acceleration of other
important preclinical activities such as the gastrin radioligand and
other gastrin monoclonal antibody programs.
The company currently has ongoing a randomized double blind
clinical trial of IGN101 in non-small cell lung cancer. Target accrual
of approximately 760 patients has recently been reached in this trial,
three months ahead of schedule. The company expects to have final data
available from this study in 2007 with the possibility of an interim
analysis in 2006.
"The decision to cease active development of Insegia in pancreatic
cancer is difficult but, critical to the continued viability of the
organization," commented Patrick Mooney, MD, Chairman and CEO of
Aphton. "We firmly believe in gastrin as an important therapeutic
target and therefore intend to accelerate activities related to the
funding and development of both the anti-gastrin monoclonal antibody
and the gastrin radioligand program."
Dr. Mooney continued, "We intend to seek alternative funding for
further development of Insegia in gastrin sensitive cancers however,
the consolidation of operations and discontinuation of certain
activities is necessary so that we can better focus on the near-term
opportunities available in our broad and deep pipeline. We are very
excited about the possibility of having numerous product-candidates in
the clinic in 2006 lead by IGN101 and IGN311 and two additional
Investigational New Drug application (IND) for the gastrin monoclonal
and radioligand products."
Financial Strength
Cash, cash equivalents, and short-term investments totaled
$41.8 million as of March 31, 2005, compared to $43.4 million at the
end of the 4th quarter of 2004 and compared to $62.2 million as of
March 31, 2004. In the 1st quarter ended March 31, 2005, Aphton's net
loss applicable to common shareholders was $40.7 million, or
$(1.02) per share, compared to a loss of $6.2 million, or
$(0.20) per share for the same period in 2004.
In the 1st quarter, total operating costs and expenses increased
from $5.6 million in 2004 to $40.2 million in 2005. The increase in
the 1st quarter was due primarily to an increase in general and
administrative expenses due to the acquisition of Igeneon and an
increase in professional fees, premiums for our director and officer
insurance policies and an increase in salary and benefits of our
administrative personnel and the write off of acquired in process
research and development expenses associated with the Igeneon
acquisition in the amount of approximately $33 million. The higher
cash burn rate in this quarter was a result of the reduction in
current liabilities (before impact of Igeneon acquisition) of
approximately $2.9 million. Included in the reduction of current
liabilities were payments to Aventis and other vendors related to
manufacturing costs obligations and professional fees and costs
associated with the acquisition of Igeneon.
Conference Call and Webcast
Aphton Corporation will host a conference call and live audio
webcast today, Wednesday, May 11, 2005 to discuss today's press
release. Patrick Mooney, M.D., Chairman and Chief Executive Officer of
Aphton, and Jim Smith, Chief Financial Officer, will host the call and
webcast at 4:30 PM EST.
The conference call can be accessed live as follows:
U.S./Canada: Dial (800) 946-0720, reference Aphton
International: Dial (719) 457-2646, reference Aphton
An audio webcast will also be available on Company's website at:
http://www.aphton.com and will be archived for 14 days.
Audio replay will be available approximately two hours after the
completion of the call, and will be archived for 14 days. Access
numbers for replay are:
U.S./Canada: (800) 203-1112
International: (719) 457-0820; conference ID number is 8719412.
About Aphton
Aphton Corporation, headquartered in Philadelphia, Pennsylvania is
a clinical stage biopharmaceutical company focused on developing
targeted immunotherapies for cancer. Aphton's products seek to empower
the boy's own immune system to fight disease. Through the acquisition
of Igeneon AG in March 2005 Aphton acquired additional late-stage
products, IGN101, a cancer vaccine designed to induce an immune
response against EpCAM positive tumor cells, and IGN311, a fully
humanized antibody against the Lewis Y antigen. Aphton is currently
seeking partners that will support the further development of Insegia
(G17DT immunogen), its immunogen targeting the hormone gastrin. Aphton
has strategic alliances with sanofi-aventis for the development and
commercialization of Insegia related to cancers of the
gastrointestinal system and other cancers in North America and Europe;
Daiichi Pure Chemicals for the development, manufacturing and
commercialization of gastrin-related diagnostic kits; and Xoma for
treating gastrointestinal and other gastrin-sensitive cancers using
anti-gastrin monoclonal and other antibodies. For more information
about Aphton or its programs please visit Aphton's website at
http://www.aphton.com.
Safe Harbor
This press release includes forward-looking statements, including
statements about: (1) Aphton's ability to best allocate its resources
in connection with prioritizing its programs; (2) Aphton's ability to
implement a cost reduction plan that would improve its operating
efficiencies and its estimates regarding the costs of implementing its
plan; (3) Aphton's expectation that it can reduce its burn rate by
approximately 50% for the coming year; (4) Aphton's intention to
reduce the number of its employees by approximately 35% and to close
certain research facilities and corporate offices; (5) Aphton's
intention to consolidate key operations in its corporate headquarters;
(6) Aphton's intent to withdraw its applications for the use of
Insegia as a monotherapy in patients with pancreatic cancer in
Australia, Switzerland and Canada; (8) Aphton's expectation belief
that it could have up to 5 product-candidates in the clinic in 2006;
(9) Aphton's intent to continue to seek partners and its belief that
the activity demonstrated by Insegia will enhance Aphton's ability to
find a viable partner to financially support the further development
of Insegia; (10) Aphton's intent to devote significant financial and
human resources to accelerate the development of a humanized
monoclonal antibody currently being optimized by Xoma, LLC; (11)
Aphton's belief in gastrin as a viable target in treating cancer; (12)
Aphton's intent to continue funding of ongoing clinical trials and the
other efforts associated with IGN 101 and IGN 311 and the development
of both anti-gastrin monoclonal antibody and the gastrin radioligand
program; and (13) Aphton's expectation regarding the purpose and
effectiveness of - humanized monoclonal antibodies, IGN101 and IGN311.
These forward-looking statements may be affected by the risks and
uncertainties inherent in the drug development process and in Aphton's
and Igeneon's business. This information is qualified in its entirety
by cautionary statements and risk factor disclosure contained in
Aphton's Securities and Exchange Commission filings, including
Aphton's report on Form 10-K filed with the Commission on March 16,
2005. Aphton wishes to caution readers that certain important factors
may have affected and could in the future affect Aphton's beliefs and
expectations and could cause the actual results to differ materially
from those expressed in any forward-looking statement made by or on
behalf of Aphton. These risk factors include, but are not limited to,
(1) Aphton's ability to identify and realize anticipated cost
efficiencies and to reduce the combined cash burn rate; (2) Aphton's
ability to fund the further development of its research and
development;, (3) Aphton's ability to effectively prioritize its
research and development programs and allocate adequate resources to
projects (4) unexpected expenses or repayments of indebtedness that
may negatively impact Aphton's ability to reduce its burn rat and/or
fund its research and development or clinical programs; (5) Aphton's
ability to identify a partner willing to fund the continued
development of Insegia; (6) Aphton's ability to successfully identify
and consummate opportunities to broaden and progress its research and
development pipeline; (7) scientific developments regarding
immunotherapies; (8) Aphton's ability to successfully integrate
Igeneon's operations and product portfolio with Aphton's operations
and product portfolio; and (9) the actual design, results and timing
of preclinical and clinical studies for both companies' products and
product candidates.
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*T
Aphton Corporation
Selected Condensed Financial Data
(In thousands, except per share data)
Unaudited
Three Months Ended
March 31,
------------------------------
2005 2004
--------------- --------------
Revenues $ - $ -
Total revenues
Costs and expenses:
General and administrative 2,382 812
Research and development 4,818 4,791
Acquired in-process research and
development 32,992 -
--------------- --------------
Total cost and expenses 40,192 5,603
Dividend and interest income 275 25
Interest expense including amortized
discount (723) (641)
Unrealized losses from investments (31) (2)
--------------- --------------
Net loss applicable to common
shareholders ($40,671) ($6,222)
=============== ==============
Dividends imputed on warrants
--------------- --------------
Basic and diluted loss per common share $(1.02) $(0.20)
=============== ==============
Weighted average shares outstanding 39,808 31,890
=============== ==============
March 31, December 31,
------------------------------
2005 2004
--------------- --------------
Cash and current investments $41,799 $43,414
Total assets 51,907 52,635
Total stockholders' equity 7,704 20,990
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