Medicago Announces 2011 Fourth Quarter and Year-End Financial Results
QUEBEC CITY, March 29, 2012 /PRNewswire/ - Medicago Inc. (TSX: MDG), a biopharmaceutical company focused on developing highly effective and competitive vaccines based on proprietary manufacturing technologies and Virus-Like Particles (VLPs), today announced its operational and financial results for the fourth quarter and year ended December 31, 2011. The Company's financial statements and management report are available at www.sedar.com and at www.medicago.com. The Company also provided an update related to the development of a quadrivalent seasonal influenza vaccine.
"2011 was an important year for Medicago as we reported positive clinical results from both our Phase II pandemic H5N1 influenza vaccine clinical trial and Phase I seasonal influenza trial, commenced operations at our 97,000-square-foot facility in North Carolina, and raised over $65 million of equity with investments from Mitsubishi Tanabe Pharma Corporation and other healthcare-focused funds," said Andy Sheldon, President and Chief Executive Officer of Medicago. "We have already made significant progress in 2012, establishing a strategic alliance with Mitsubishi Tanabe, completing the fourth milestone related to the DARPA project, and moving ahead with our internal rabies vaccine candidate. We expect to continue to take valuable steps forward including the initiation a Phase I clinical trial for a one-dose H5N1 VLP vaccine, the completion of the remaining two DARPA milestones, initiating a US Phase IIa clinical trial for a quadrivalent seasonal flu vaccine, as well as continuing our efforts to execute additional contracts for our VLP technology."
Corporate and Financial Highlights
During the fourth quarter:
- Successfully completed of the first stage of the research collaboration, announced initially on April 6, 2011, with a top 10 global pharmaceutical company for the development of a non-influenza VLP vaccine candidate. Medicago's collaboration partner has indicated its intent to proceed to the second stage of the agreement.
- Philip Morris Investments B.V. exercised its pre-emptive right and completed private placement of $22.5 million through the issuance of an aggregate of 34,550,000 common shares of Medicago at $0.65 in two tranches.
Subsequent to the fourth quarter:
- Signed a research agreement with Cellectis plant sciences, a subsidiary of Cellectis SA (Alternext: ALCLS), under which Medicago and Cellectis will collaborate to improve therapeutic proteins expressed from tobacco leaves.
- Successfully completed initial studies towards the development of a new VLP vaccine candidate for rabies. Results with the rabies VLP vaccine demonstrated that two doses of one or four micrograms induced protective levels of neutralizing antibodies in a mouse model. Medicago expects to move ahead with GMP process development and a GLP toxicology study in 2012 and, following this, a Phase I clinical trial.
- Announced plans to invest approximately $4 million to enhance the capacity of the pilot production facility located in Quebec City, which is expected to accelerate preclinical and clinical development timelines of future product candidates.
- Received the fourth milestone payment of US$3.56 million from the Defense Advanced Research Projects Agency ("DARPA"). This is part of the potential US$21 million DARPA milestone awards to be earned by Medicago to demonstrate the scalable manufacturing of its plant-expressed VLP vaccines in the U.S.A. under a Technology Investment Agreement. Medicago has now received from DARPA US$19.8 million to date for this project, with two milestones remaining.
- Established a strategic alliance with Mitsubishi Tanabe Pharma Corporation (MTPC) through the execution of a Master Research Collaboration Agreement to develop and commercialize at least three new vaccines. MTPC will provide funding for all research and development costs. Medicago will be entitled to receive upfront and milestone payments as well as royalties for each product to be developed under this master agreement. Under this first agreement to develop a Rotavirus Like Particle (RLP) vaccine target, MTPC will have the option to license the RLP vaccine target and assume global development, regulatory and commercialization responsibilities while Medicago will be eligible to receive up to a total of $33 million in upfront and milestone payments as well as royalties on future sales of the RLP product. Medicago will receive an upfront payment of $3 million to begin the initial research on rotavirus. Additional targets under this master agreement are to be selected by Medicago and MTPC at a later date. MTPC was recently disclosed at the lead investor in the Company's September 2011 equity financing.
Update on Seasonal Influenza Vaccine Program
On February 28, 2012, the US FDA Advisory Committee on Vaccines and Related Products met and agreed to follow the World Health Organization (WHO) recommendations to change two influenza virus strains for the 2012-2013 seasonal trivalent influenza vaccine. Other health authorities are expected to adopt the WHO recommendations in due course. Specifically, the WHO recommendation includes a change in both the H3N2 A strain and the B strain. The new H3N2 A strain is the A/Victoria361/2011, previously the A/Perth/16/2009 H3N2 strain, and the new B strain is B/Wisconsin/1/2010 from the Yamagata lineage, previously the B/Brisbane/60/2008 strain from the Victoria lineage.
At the same FDA Advisory meeting, there were discussions related to the consideration of the development of quadrivalent seasonal influenza vaccines. While no final recommendation was made, there was agreement that moving to a quadrivalent seasonal influenza vaccine, which would include two B influenza strains instead of one, would be a preferable approach given the difficulty in selecting the appropriate B strain each year. In particular, the two B strains mentioned above were seen in similar proportions in different countries and are antigenetically different.
Consistent with Medicago's goal to deliver state-of-the-art vaccines, the Company has now decided to include the two new strains as recommended by the WHO and to move from a trivalent to a quadrivalent seasonal vaccine formulation containing the two B influenza strains of the Yamagata and Victoria lineages. The Company believes that this will ensure the development of the most relevant and effective seasonal flu vaccine candidate for the Phase IIa clinical trial. As a result, the Company will now begin initial production of these VLP vaccine strains, and additional preclinical studies and formulation work will be required. Therefore, we now expect interim results of the US Phase IIa quadrivalent seasonal influenza vaccine clinical trial in the first quarter of 2013.
The decision by the Company to work towards a quadrivalent vaccine included careful consideration related to the outlook for the seasonal influenza vaccine market. Current manufacturers are working towards the approval and sale of quadrivalent vaccines and, one company in particular, has recently obtained FDA approval for a quadrivalent vaccine. By expanding Medicago's development to include a fourth strain at this time, the we expect the Company to save time and costs in the future, and create more interest for potential partners.
Expected upcoming milestones include:
- Initiation of a Phase I clinical trial for a one-dose H5N1 VLP vaccine with a new adjuvant in the second quarter of 2012, in partnership with the Infectious Disease Research Institute (IDRI), with interim data expected in the second half of this year
- Completion of the final two milestones related to the DARPA Technology Investment Agreement.
- Results of US Phase IIa clinical trial with quadrivalent seasonal vaccine in the first quarter of 2013
- Potential contracts (government, pharmaceutical companies)
- Addition of new pipeline candidates
The Company's audited consolidated financial statements as at December 31, 2011 and for the year then ended have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board. Additionally, the Company's consolidated statement of financial position as at January 1, 2010 and the comparative consolidated financial statements for 2010 have been adjusted to reflect our adoption of IFRS on a retrospective basis, effective on January 1, 2010 (the "Transition Date"). Consequently, all comparative financial information presented in this MD&A reflects the consistent, retrospective application of IFRS.
The consolidated loss for the year ended December 31, 2011, was $20,992,000 or $0.12 per basic and diluted share. This compares to a loss of $16,484,000 or $0.13 per basic and diluted share, respectively, for the twelve-month period ended December 31, 2010. Operating expenses were $21,382,000 in 2011 compared to $17,667,000 in 2010. The increase in operating expense of $3,715,000 for 2011 is mainly explained by the increase in R&D expenses related to the Phase II study of the H5N1 pandemic influenza VLP vaccine and the Phase I study for the seasonal VLP vaccine that were completed in 2011, and US expenses related to the DARPA project that started in August 2010.
Fourth quarter results
The consolidated loss for the three-month period ended December 31, 2011, was $6,651,000 or $0.04 per basic and diluted share. This compares to a loss of $4,604,000 or $0.04 per basic and diluted share for the three-month period ended December 31, 2010. Operating expenses were $6,779,000 in the three-month period ended December 31, 2011 compared to $5,754,000 in 2010. The increase in operating expense of $1.025,000 for 2011 is mainly explained by the increase in depreciation of property, plant and equipment related to assets in the US acquired in 2011 for the DARPA project that started in August 2010.
Cash and short-term investments were $40.4 million as at December 31, 2011, an increase of $31.9 million from December 31, 2010.
As at March 29, 2012, there were 246,670,302 common shares issued and outstanding as well as 10,010,426 stock options outstanding. Warrants outstanding and Unit options outstanding as at March 29, 2012 are in the aggregate of 27,644,236.
Medicago is a clinical-stage biopharmaceutical company developing novel vaccines and therapeutic proteins to address a broad range of infectious diseases worldwide. The Company is committed to providing highly effective and competitive vaccines and therapeutic proteins based on its proprietary VLP and manufacturing technologies. Medicago is a worldwide leader in the development of VLP vaccines using a transient expression system which produces recombinant vaccine antigens in plants. This technology has potential to offer more potent vaccines with speed and cost advantages over competitive technologies, enabling the development of a vaccine for testing in approximately one month after the identification and reception of genetic sequences from a pandemic strain. This production time frame has the potential to allow vaccination of the population before the first wave of a pandemic, and supply large volumes of vaccine antigens to the world market. Medicago also intends to expand development into other areas such as biosimilars and biodefense products where the benefits of our technologies can make a significant difference. Additional information about Medicago is available at www.medicago.com.
Forward Looking Statements
This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with Medicago's business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", and similar expressions to the extent they relate to Medicago or its management. The forward-looking statements are not historical facts, but reflect Medicago's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risk Factors and Uncertainties" in Medicago's Annual Information Form filed on March 29, 2012 with the regulatory authorities. Medicago assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.
SOURCE Medicago Inc.