Speedel Announces Financial Results for Second Quarter 2007
First recurring revenues from SPP100 recognised and estimated at CHF 1 million
- CHF 1 million recognised as estimated revenue from sales of SPP100 (Tekturna/Rasilez) by Novartis
- At 30 June 2007 liquid assets on hand were CHF 134.8 million
- Cash-burn was CHF 27.0 million for the second quarter and CHF 41.9 million for the first half 2007
- Remaining 2005 convertible loan fully converted into equity by end July 2007
Konrad P. Wirz, Chief Financial Officer, commented: "This is the first quarter in which we have recognised recurring revenue from sales of SPP100 (Tekturna/Rasilez) by our partner Novartis. This marks a new phase in the financial health of our company. The cash-burn of CHF 41.9 million for the first six months is in line with our full year guidance of CHF 75-85 million as we continue to invest in our mature and diverse pipeline."
The company has recognised its first recurring revenues from sales of SPP100 (Tekturna/Rasilez) on an accrual basis in accordance with International Accounting Standard (IAS)18 The product was approved by the FDA in March 2007, and subsequently launched by Novartis in the US. Novartis has not reported the sales of SPP100 (Tekturna/Rasilez) and therefore according to IAS 18 Speedel management is using its best estimate of revenues earned on an accrual basis. For the period since launch up to 30 June 2007, Speedel estimates based on publicly available information, including summary data reported by Novartis with their first half results on 17 July, that it has earned revenues of CHF 1 million. This estimate is subject to revision in future earnings statements.
The company re-affirms its previous guidance that it will take a number of quarters before the market can rely on IMS Health reported prescriptions of SPP100 (Tekturna/Rasilez) to give a fair indication of SPP100 sales performance. It takes time for assessment of the performance of a newly launched product to evolve over several quarters before a consistent trend is apparent, and this is perfectly normal within the biopharmaceutical industry.
To help those who are tracking Speedel's financial progress, management reiterates what it has previously stated in public documents as the basis upon which Speedel earns revenues from Novartis: "Under Speedel's license-back arrangements for SPP100, Speedel is entitled to royalties on worldwide net sales of SPP100, and to payments equivalent to a portion of the savings resulting from reduction in the cost-of-goods below a predetermined threshold, if Novartis Pharma uses the production method developed by Speedel for the commercial supply of SPP100."
Research & Development Expenses
R&D expenses increased by CHF 5.3 million for the second quarter and by CHF 2.8 million for the first six months compared to the corresponding periods in 2006. We continue to incur closure costs for the SPP301 Phase III trial which are being both accrued and paid out in cash during each quarter of 2007. Moreover we continue to invest in our next generation renin inhibitor programmes both in clinical development and in research (SPP635 Phase IIa, SPP1148 Phase I and others).
General & Administration Expenses
G&A expenses decreased by CHF 0.6 million for the second quarter and decreased by CHF 0.2 million for the first six months compared to the corresponding periods in 2006.This difference was due principally to lower non-cash charges for the expensing of employee share options.
Finance Costs, net
Net finance costs decreased by CHF 6.1 million for the second quarter and by CHF 6.9 million for the first six months compared to the corresponding periods in 2006. This difference mainly reflects the lower amortisation costs of the CHF 55.5 million gross convertible bond issued in January 2007 compared to those of the CHF 70.0 million gross convertible loan issued in 2005. The company is also benefiting from the increased funds available for investment and improved money market rates, and therefore expects that the net financial result will be significantly improved for 2007 compared with 2006.
As of 30 June 2007, liquid assets on hand were CHF 134.8 million compared to CHF 121.1 million at 31 December 2006. These funds provide a comfortable base to finance the company's current pipeline until at least the end of 2008. This is a conservative statement as it excludes any possible sources of revenue such as from sales of SPP100 or from licensing activities.
During Q1 2007 and Q2 2007 some 25,000 shares and 15,000 shares respectively were issued for conversion by holders of the 2005 CHF 70 million loan, which matured on 31 July 2007. This conversion generated a premium of CHF 625,000 booked in equity for the first quarter and CHF 375,000 for the second quarter respectively. The remaining face value of this convertible loan at 30 June 2007 was CHF 2.4 million. During July this remaining portion of the loan was converted into 23,800 shares, and so there is no outstanding liability for this loan.
On 30 June 2007, Speedel Holding Ltd had 7,767,885 registered shares with a nominal value of CHF 2 per share which are listed on the SWX Swiss Exchange under the symbol SPPN. In addition the company had outstanding conditional share capital of 552,710 shares with a nominal value of CHF 2 per share, mainly to cover the 2007 convertible bond and the company's employee share option plan.
Historically the company has provided guidance on cash-burn excluding any revenues from sources such as sales of SPP100 or other licensing agreements. It will continue to use this definition for the remainder of 2007, to ensure like-for-like comparisons with previous years when it had no recurring revenues.
Recent news flow
- In May extensive data was presented at the American Society of Hypertension meeting showing the favourable safety and efficacy profile of SPP100 (Tekturna/Rasilez) both as monotherapy and in co-administration with other therapies
- In May the US Food and Drug Administration accepted for regulatory review the fixed dose combination of SPP100 (Tekturna/Rasilez) with the diuretic HCTZ
- In June SPP635, Speedel's next generation renin inhibitor, completed a Phase IIa proof-of-concept trial in hypertension. The compound will continue to be developed in Phase II in a special population of diabetic patients with mild-to-moderate hypertension
- In June the Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion recommending European Union approval for SPP100 (Tekturna/Rasilez).
Calendar 2007- 8
Q3 2007 14 November 07
Q4 2007 07 March 08
Annual Report 25 March 08
R&D Day 31 March 08
AGM 15 April 08
Q1 2008 15 May 08
Q2 2008 19 August 08
Q3 2008 14 November 08
Webcast Podcast and Conference Call
At 14.00 CET /13:00 London/ 08:00 EST today 15 August 2007, the company will host a webcast which can be accessed at http://www.speedel.com/section/6/subsections/8. In addition participants may join a teleconference facility using the following telephone numbers:
Switzerland: 0445 804 858
UK: 0845 302 2566
USA: 1866 595 6357
International +44 (0) 1452 586 157
Passcode for all : 11685834
Slides for the web cast will be downloadable from 10:00 CET today and the webcast will be accessible on the company's website until 14 September 2007. A podcast will also be available for the first time.