NEW YORK, Oct. 14, 2011 /PRNewswire/ -- Intellect Neurosciences, Inc. (OTCBB: ILNS), a biopharmaceutical company engaged in the discovery and development of disease-modifying therapeutic agents for the treatment of Alzheimer's and other neurological diseases today issued the following Letter to Shareholders from Dr. Daniel Chain, Chairman and CEO.
I would like to take this opportunity to update you about pertinent corporate and industry developments contemporaneous with the current filing of our quarterly financial statements with the SEC.
Of special note is our recent transaction with ViroPharma Inc., which was announced September 30, 2011. Intellect granted an exclusive license to ViroPharma regarding certain of Intellect's licensed patents and patent applications related to Intellect's clinical stage drug candidate, OX1, an extremely potent antioxidant molecule that has been demonstrated to protect nerve cells in the brain from highly oxidizing neurotoxins. ViroPharma plans to develop and commercialize OX1 as a treatment of Friedreich's Ataxia and possibly other diseases for which OX1 may qualify for orphan drug designation. Under the terms of the license agreement, Intellect received an upfront payment of $6.5 million, and will receive up to an additional $120 million based on defined events and a tiered royalty of up to a maximum of low double digits based on annual net sales. In exchange, Intellect transferred to ViroPharma all of Intellect's intellectual property rights, data and know-how, assembled over several years related to its OX1 research and development program. NYU Medical School and University of South Alabama, which own certain patents in relation to OX1, are entitled to a portion of the revenues received by Intellect from ViroPharma pursuant to an exclusive license agreement between Intellect Neurosciences and those universities.
I am particularly gratified by the interest shown in the OX1 program by ViroPharma and several other large pharmaceutical companies. I have championed and led the development of this promising compound since its exciting therapeutic potential was first discovered by scientists at NYU Medical School and University South Alabama in the late 1990s. I am confident that OX1 will be in good hands with ViroPharma, whose ample resources, drug development capabilities and marketing expertise provide the ideal environment to accelerate the development and commercialization of the compound for the ultimate benefit of patients in desperate need of treatment. In fact, Jennifer Farmer, MS, CGC, Executive Director, of the Friedreich's Ataxia Research Alliance ("FARA") wrote to me on September 30th saying, "There is lots of excitement in the FA community with this announcement today."
Intellect has entered into several previous licensing transactions with top-tier global pharmaceutical companies, in which it granted non-exclusive licenses to its ANTISENILIN® technology and intellectual property relating to antibodies and methods of treating Alzheimer's disease. Thus, in addition to the future milestone and royalty payments we may receive from ViroPharma in relation to OX1, we may receive royalty payments from other companies pending successful commercialization of certain Alzheimer's drugs that rely on the ANTISENILIN® technology .
Following the successful licensing of the OX1 technology and ANTISENILIN® patents, we are now turning our attention to other technologies, with the aim of creating additional high-value assets that will attract future revenue-generating partnerships with large pharmaceutical companies. Intellect plans to continue to build its IP and technology portfolio and develop ground-breaking treatments for Alzheimer's disease and other neurodegenerative diseases - especially focused on proteinopathies, which include Huntington's disease, Parkinson's disease, Alzheimer's disease, age-related macular degeneration, glaucoma, traumatic brain injury, cerebral amyloid angiopathy and other disorders. Our pipeline includes OX2, a neuroprotective small molecule, and neoepitope-based immunotherapy approaches, including monoclonal antibodies and vaccines targeting beta amyloid and abnormal tau proteins.
Virtual R&D Operations:
As is increasingly the norm among emerging pharmaceutical and biotechnology companies, Intellect conducts its drug discovery and development operations using specialized independent subcontractors, expert consultants and academic collaborators. Virtual R&D allows us to take on multiple discovery/ development opportunities without investing in facilities and specific capabilities that can be handled efficiently by external consultants and contractors. Our in-house team and key consultants provide the essential oversight and direction, while use of external contractors allows us to take "more shots on goal" to increase the likelihood of producing viable products in a shorter period of time. Not only does this increase our chances of achieving commercialization of new drug treatments, it gives us flexibility, including the option of terminating programs that are not able to advance to the next level and quickly shifting resources to accelerating the programs that are demonstrating the most promising results.
The small management team at Intellect belies its extraordinary productivity. From a streamlined team, Intellect has achieved the development of several drugs now in advanced clinical trials by large pharmaceutical companies, as well as an extremely valuable IP portfolio that is the envy of many, much larger pharmaceutical companies. Moreover, we have established a truly pre-eminent network among foremost industry leaders. We are especially grateful for the assistance we received from Dr. Michael Grundman with the OX1 program, which we licensed to ViroPharma.
Dr. Grundman, who recently joined Intellect's Clinical Advisory Board, is president and CEO of Global R&D Partners, LLC, a consulting firm that works closely with pharmaceutical and biotechnology companies to develop novel agents for the diagnosis and treatment of serious and life-threatening diseases. Dr. Grundman previously served as vice president of clinical development at Janssen Alzheimer Immunotherapy Research & Development, LLC and as vice president of clinical development at Elan Pharmaceuticals. Dr Paul E. Bendheim, who chairs Intellect's Clinical Advisory Board, also played an important role in the development of OX1, and assisted us recently in finalizing the Phase 1b report.
We continue to make progress in regards to obtaining a US patent for our ANTISENILIN® technology platform, which is the subject of our royalty-bearing license agreements with several major pharmaceutical companies. Under the terms of our license agreements, we are entitled to significant milestone payments upon issuance of a US patent on our application by the United States Patent and Trademark Office ("USPTO"). Corresponding patents have been issued in Europe, Japan, China and several other countries. We previously overcame six previous Office Actions causing the examiner in each case to withdraw his rejections of claims. Recently, an independent, world renown, Boston-based academician who is a recognized expert in therapeutic antibodies provided a written declaration in support of our latest response to an Official Action by the USPTO.
This latest development further bolsters our confidence that we will be granted a US patent, which will trigger the milestone payments and greatly increase the royalties payable to Intellect when drugs based on its technology reach the market. We expect a decision from the USPTO on our ANTISENILIN® patent applications within the next several months, including the application relating to methods of treatment and that relating to composition of matter.
We attended Oral Proceedings at the European patent office in The Hague, Netherlands in July and were disappointed by the decision taken by the Opposition Division to revoke the ANTISENILIN patents in response to opposition proceedings that were instituted against us by Elan Pharmaceuticals and Wyeth. The Oral Proceedings were attended by Counsel for Elan/Johnson & Jonhson, Wyeth and its parent Pfizer, each of which have drugs in advanced clinical trials that would be covered by the claims in our patent. The decision will be appealed and we remain confident regarding our ability to prevail at the level of the higher Appeals Board in Munich, Germany. Importantly, Intellect's patents remain in full force in key European countries pending the outcome of the appeal process, which is expected to take at least two years. Moreover, Intellect has filed divisional patent applications, which we believe will result in robust new patents in Europe that will be resistant to challenge and similarly cover the products currently in clinical development.
Financial Results for the Fiscal Year Ended June 30, 2011:
Our net income for the year ended June 30, 2011 was $2,425,113 compared to a net loss of $33,047,726 for the year ended June 30, 2010. This improvement of $35,472,839 primarily was due a decrease in interest expense of approximately $34,400,000 and a reduction in SG&A expenses of approximately $976,000. The decrease in SG&A expenses, which reduced our cash outflows, resulted from our efforts to contain costs. The reduction in interest expense did not affect our cash position because this interest expense is a non-cash charge related to the value of certain securities issued to shareholders and note holders.
Our Research and Development Costs for the year ended June 30, 2011 were $105,793 compared to $58,974 for the year ended June 30, 2010. The increase of $46,819 was due to increased R&D activities with respect to our clinical drug candidate OX1, which we subsequently licensed to ViroPharma.
Currently, there are 72,751,143 shares of common stock issued and outstanding.
Developments in Alzheimer's Research:
I had the pleasure of attending the annual Alzheimer's Association International Conference (ICAD) in Paris, France, in July. The conference drew a record-breaking number of dementia scientists to share the latest ideas, thoughts and theories in the field. Breaking studies captured global media attention as the world's leading experts explored innovative ways to further Alzheimer's research. The conference was also attended by senior executives from several major pharmaceutical companies with whom we had the opportunity to discuss Intellect's technology and pipeline.
While the whole scientific world is waiting to see the outcome of Bapineuzumab phase 3 clinical trials which are expected to conclude next year, a strong second front is starting to form in the battle against Alzheimer's disease supporting our long-held conviction that beta amyloid has a crucial partner in tau protein (See our video on http://www.youtube.com/watch?v=STmiIVCFskA). Indeed beta amyloid accumulating on the surface of nerve cells and tangles comprised of tau inside the cells are two hallmark features of the disease. Although both beta amyloid and tau have been extensively studied individually with regard to their separate modes of toxicity, more recently new light has been shed on their possible interactions and synergistic effects in Alzheimer's disease. It is important to note, however, that the recent developments regarding tau protein research which has been widely reported in the media, including in the New York Times in August, do not at all diminish the importance of beta amyloid or teach away from the amyloid cascade hypothesis which postulates that formation of beta amyloid is the critical step in driving Alzheimer's disease pathogenesis. Indeed this concept has strong support such as from the identification of pathogenic mutations in patients with Familial Alzheimer's disease that are linked to beta amyloid formation, as well as increased beta amyloid levels and a higher frequency of Alzheimer's disease in people with Down's syndrome, who over produce beta amyloid due to a genetic defect. Therefore, a crucial question is where tau is to be placed in the amyloid cascade. Is it a prime target, a mediator or a kind of bystander of beta amyloid toxicity? Although beta amyloid and tau exert toxicity through separate mechanisms, evidence from both in vitro and in vivo models suggests that beta amyloid and tau act in tandem to cause irreversible damage to nerve cells including loss of connections. Intellect Neurosciences has previously evolved its technology to address this possibility and boasts a dual target vaccine among its arsenal of drugs being developed to combat Alzheimer's disease and certain other related disorders.
Increased public awareness:
We have continued our efforts to increase public and investor awareness of Intellect Neurosciences through media outreach and other activities including speaking at conferences.
Notably, I accepted an invitation to speak at the Phacilitate CNS Leaders Forum November 7-9 in Boston in which senior corporate and development executives from major pharmaceutical companies comprise the majority of speakers. My talk is the first in a focus session which is entitled "Plotting a path forward to effective Phase II clinical trial design for neurodegenerative diseases". Following speakers during the session include Dr Susan Abu Shakra, Vice President & Program Lead, Alzheimer's Disease, Elan Corporation, Dr Charles Albright, Executive Director, Neuroscience, Bristol-Myers Squibb and Professor David Leppert, Clinical Science Leader, F. Hoffmann-La Roche Ltd. Details of the conference can be found at www.phacilitate.co.uk/pages/leaders/cns_agenda_d1_s2.html. In addition, we were approved by the 2011 Selection Committee of the Biotechnology Industry Organization (BIO), to give a 25-minute corporate presentation taking place October 25th – 26th, 2011 in San Francisco.
The announcement of the transaction with ViroPharma was widely disseminated and the news has been reported in professional magazines such as BioCentury which is widely read by industry professionals and investors.
We recently engaged JQA Partners, LLC Strategic Communications, a public relations firm with more than 15 years' service, mainly focused on healthcare, including Big Pharma and biotech. The key objectives are: (1) Position Intellect Neurosciences as a premiere drug discovery company with significant IP and deep capabilities in Alzheimer's disease and beyond; (2) Drive partnerships based on emerging pre-clinical and IP portfolio; (3) Attract investor interest in the company
Our announcement of a lucrative licensing agreement on September 30, 2011 demonstrates that we were fully justified regarding our expectations to partner OX1 pending completion of Phase 1 clinical trials and that we successfully executed on these plans (see shareholder letter of September 8, 2010). Similarly, we believe our current plans to build on our existing IP and technologies through cost-effective R&D and IP strategies will pay dividends in the future and allow us to continue with our mission to develop treatments for patients suffering from devastating neurodegenerative conditions.
We thank you for your continued support of our important mission and vision to create a world without Alzheimer's disease and other serious neurological disorders.
Daniel Chain, PhD, Chairman and Chief Executive Officer
Safe Harbor Statement Regarding Forward-Looking Statements:
The statements in this release and oral statements made by representatives of Intellect relating to matters that are not historical facts (including, without limitation, those regarding future performance or financial results, the timing or potential outcomes of research collaborations or clinical trials, any market that might develop for any of Intellect's product candidates and the sufficiency of Intellect's cash and other capital resources) are forward-looking statements that involve risks and uncertainties, including, but not limited to, the likelihood that actual performance or results could materially differ, that future research will prove successful, the likelihood that any product in the research pipeline will receive regulatory approval in the United States or abroad, or Intellect's ability to fund such efforts with or without partners. Intellect undertakes no obligation to update any of these statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. Accordingly, any forward-looking statements should be read in conjunction with the additional risks and uncertainties detailed in Intellect's filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in Intellect's Annual Report on Form 10-K (file no. 333-128226), filed on October 13, 2011.
Jules Abraham, PR Manager for Intellect Neurosciences
JQA Partners, LLC
SOURCE Intellect Neurosciences, Inc.