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Transition Therapeutics Inc (2)
Symbol C : TTH
Shares Issued 26,921,302
Close 2012-09-13 C$ 1.91
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Transition Therapeutics loses $12.26-million in 2012

2012-09-13 16:08 ET - News Release

Dr. Tony Cruz reports

TRANSITION THERAPEUTICS ANNOUNCES FISCAL 2012 YEAR END FINANCIAL RESULTS

Transition Therapeutics Inc. has released its financial results for the year ended June 30, 2012.

Selected highlights

During fiscal 2012 and up to the date of this press release, the company achieved the following significant milestones.

ELND005 (AZD-103)

On Aug. 30, 2012, Transition announced that its licensing partner Elan had dosed the first patient in a phase 2 clinical study of ELND005 in bipolar disorder. The study is a placebo-controlled safety and efficacy study of oral ELND005 as an adjunctive maintenance treatment in patients with bipolar 1 disorder to delay the time to occurrence of mood episodes. As the first patient has been dosed in the study, Transition will receive a milestone payment of $11-million (U.S.) from Elan.

On May 14, 2012, Transition announced that a mini-symposium entitled, "The Emerging Clinical Profile of Oral Scyllo-inositol (ELND005) in Alzheimer's Disease: A Dual Mechanism of Action," was presented at the 12th International Stockholm/Springfield Symposium on Advances in Alzheimer Therapies.

On April 26, 2012, Transition announced that three ELND005 poster presentations were presented at the American Academy of Neurology. These presentations described responder analyses and characteristics, along with findings on the effect of ELND005 on the emergence of neuropsychiatric symptoms.

On Sept. 27, 2011, Transition announced that phase II clinical study data of ELND005 (AZD-103) in mild to moderate Alzheimer's disease has been published in the peer-reviewed journal, Neurology. The Neurology article is entitled, "A Phase II randomized trial of ELND005, scyllo-inositol, in mild-moderate Alzheimer's disease."

On July 15, 2011, Transition announced that ELND005 (AZD-103) phase II clinical trial data would be presented at the International Conference of Alzheimer's Disease (ICAD) meeting on July 18, 2011.

TT-401

On June 18, 2012, Transition announced the results of the phase I clinical study of Type 2 diabetes drug candidate, TT-401. The phase 1, double-blind, placebo-controlled randomized study enrolled 48 non-diabetic obese subjects in six cohorts evaluating six escalating subcutaneous single doses of TT-401. TT-401 demonstrated an acceptable safety and tolerability profile in non-diabetic obese subjects in the study. TT-401 exhibited the expected pharmacological effect on glucose and pharmacodynamic biomarkers at doses that were safe and tolerable. The pharmacokinetic profile, assessed over 28 days, demonstrated a half-life consistent with once-weekly dosing.

On Dec. 12, 2011, Transition announced that the first patient has been dosed in a phase I clinical study of Type 2 diabetes drug candidate, TT-401. TT-401 is a once-weekly administered peptide being studied for its potential to lower blood glucose levels in patients with Type 2 diabetes and accompanying obesity.

Corporate developments

On Nov. 22, 2011, Transition Therapeutics announced a $5-million (U.S.) private placement. Under the non-brokered private placement, Transition issued 3,703,703 common shares at a price of $1.35 (U.S.) for gross proceeds of approximately $5-million (U.S.).

Financial liquidity

The company's cash and cash equivalents, and short-term investments were $19,012,345 at June 30, 2012.

Under the terms of the amended agreement with Elan, dosing of the first patient in another clinical trial of ELND005 (AZD-103) triggers the payment of an $11-million (U.S.) milestone. The company expects to receive the $11-million (U.S.) milestone payment during the first quarter of fiscal 2013.

The company's current cash projection indicates that the current cash resources should enable the company to execute its core business plan and meet its projected cash requirements well beyond the next 12 months.

Financial review

During the year ended June 30, 2012, the company recorded a net loss of $12,269,845 (48-cent loss per common share) compared with a net loss of $5,689,613 (25-cent loss per common share) for the year ended June 30, 2011.

In fiscal 2011, the company and Elan mutually agreed to modify their collaboration agreement for the development and commercialization of ELND005 (AZD-103). Under the terms of the modification, Transition is no longer obligated to finance the development or commercialization of ELND005 (AZD-103). The recognized net revenue of $8,951,400 ($9-million (U.S.)) in fiscal 2011 represented the agreement modification payment that was received partially in lieu of the contractually required phase III milestone payments.

Revenue is nil in the year ended June 30, 2012, compared with $10,251,394 in the year ended June 30, 2011. The decrease in revenue is due to the receipt of the $9-million (U.S.) agreement modification payment received from Elan in fiscal 2011.

Research and development expenses decreased $295,250 or 3 per cent from $8,493,975 for the fiscal year ended June 30, 2011, to $8,198,725 for the fiscal year ended June 30, 2012. The decreases are primarily due to decreased clinical development costs related to ELND005 (AZD-103) and TT-301/302, decreased amortization due to the fact that the technology and patents acquired from Protana were fully amortized during the second quarter of fiscal 2011, and decreased salaries and related costs associated with head count reductions. The decrease is largely offset by an increase in preclinical and clinical development costs associated with advancing the TT-401/402 compounds.

General and administrative expenses decreased by $801,037 or 15 per cent from $5,208,317 for the fiscal year ended June 30, 2011, to $4,407,280 for the year ended June 30, 2012. The decrease in general and administrative expenses during the fiscal year ended June 30, 2012, is largely due to decreases in payroll resulting from head count reductions as well as decreases in consulting, insurance expense and facility lease costs. The decrease in general and administrative expenses is partially offset by increased professional fees as well as increased option expenses.

             CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

                                                      For the years ended June 30,
                                                                2012         2011
Revenues                                                                        
Licensing fees                                                     - $ 10,251,394
Direct costs of services                                           -    1,299,994
Gross profit                                                       -    8,951,400
Expenses                                                                        
Research and development                                 $ 8,198,725    8,493,975
Selling, general and administrative expenses               4,407,280    5,208,317
Loss on disposal of property and equipment                   125,748      116,312
                                                          12,731,753   13,818,604
Operating (loss)                                         (12,731,753)  (4,867,204)
Interest income                                              165,070      201,085
Interest expense                                                (851)        (530)
Foreign exchange gain (loss)                                 297,689     (348,133)
Change in fair value of contingent consideration payable           -     (674,831)
Net (loss) and comprehensive (loss) for the year         (12,269,845)  (5,689,613)
Basic and diluted net (loss) per common share                  (0.48)       (0.25)

We seek Safe Harbor.

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