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Forward Pharma Reports First Quarter 2016 Financial and Operational Results

COPENHAGEN, Denmark, June 02, 2016 (GLOBE NEWSWIRE) -- Forward Pharma A/S (NASDAQ:FWP) (“We” or “Forward” or the “Company”), today reported financial results for the first quarter ended March 31, 2016. Net loss for the first quarter ended March 31, 2016 was $16.9 million, or $(0.36) per basic share versus net income of $6.0 million, or $0.13 per basic share for first quarter of 2015. On a non-GAAP basis, after removing the effect of non-cash income and expense items, our first quarter net loss for 2016 would have been $9.0 million, or $(0.19) per basic share. As of March 31, 2016, the Company had $170.8 million in cash, cash equivalents and marketable securities, with no debt outstanding.

“We continue to make consistent progress in 2016,” said Peder Andersen, Chief Executive Officer of Forward. “We believe the recent important additions to our management team and Board of Directors should further enhance our ability to achieve our upcoming clinical and intellectual property milestones.”

First Quarter ended March 31, 2016 Financial and Operational Results

The net loss for the first quarter of 2016 was $16.9 million compared to a net gain of $6.0 million for the first quarter of 2015.

Research and development costs for the three month periods ended March 31, 2016 and 2015 were $9.7 million and $4.3 million, respectively. This increase was partially related to a $3.4 million increase in costs to register and safeguard our intellectual property and includes costs to conduct the ongoing interference case at the U.S. Patent and Trademark Office (USPTO) and opposition proceedings with the European Patent Office (EPO). Share-based compensation also increased by $1.9 million in connection with equity awards granted during the period. We continue to anticipate that our rate of research and development spending will increase in future quarters as we seek to advance our clinical and pharmaceutical development programs and patent prosecution.

General and administrative costs for the three month periods ended March 31, 2016 and 2015 were $3.0 million and $4.1 million, respectively. The decrease in general and administrative expenses in the first quarter 2016 versus the prior year was largely due to a decrease in share based-compensation as well as a decrease in legal, accounting, and consulting fees during the period. We continue to expect our rate of general and administrative spending will increase in the future as we seek to expand our business, enhance our personnel and advance our intellectual property portfolio including expenditures in connection with the lawsuits against Biogen in Europe.

Non-cash stock based compensation expense included in total operating expenses was $3.6 million for the first quarter of 2016 versus $2.2 million for the first quarter of 2015.

IP Update

We continue to advance our intellectual property portfolio. The following summarizes the current status of and recent developments concerning several of our U.S. and European patents and patent applications:

  • U.S. IP: On August 19, 2015, the USPTO re-declared the interference between Forward Pharma and a subsidiary of Biogen, Inc. regarding claims to the treatment of multiple sclerosis, or MS, with a 480 mg daily dose of DMF, the active ingredient in Tecfidera®. The USPTO confirmed Forward Pharma as the senior party based on having an earlier benefit date of our U.S. Patent Application No. 11/576,871. Biogen was deemed the junior party with respect to its U.S. Patent No. 8,399,514. In August 2015, the parties filed priority statements and motions related to validity and benefit. The parties filed oppositions to motions on June 1, 2016. Upcoming milestones include:
    • August 8, 2016: Deadline to file all replies
    • November 30, 2016: Default oral argument
  • Erosion matrix: On May 11, 2016, the EPO granted our European Application EP12193798.1, which was thereby assigned patent number EP2564839. This patent contains claims directed to a pharmaceutical formulation in the form of an erosion matrix tablet having a particular composition and will expire in 2030. FP187 is an erosion matrix formulation that falls within the granted claims. The grant of the patent triggers a nine month window for opponents to oppose the patent. A separate patent in our erosion matrix patent family, EP2379063 (covering matrix formulations with a thin enteric coating), has been upheld by the Opposition Division of the EPO following a hearing on April 5, 2016. Multiple third parties, including Biogen, had opposed the patent. One or more of the opponents may appeal this decision.

Clinical Update

Our development plan for our lead drug, FP187, is focused on the relapsing-remitting multiple sclerosis (RRMS) indication. In consultation with a clinical research organization, we are continuing to prepare for a single beta interferon-controlled Phase 3 trial in RRMS. In parallel, we are evaluating alternative Phase 3 clinical strategies in RRMS, which could shorten our time to commercialization and/or reduce costs. Consistent with our previous guidance, we expect to complete these evaluations during 2016, in anticipation of beginning the Phase 3 trial in the second half of 2016.

We are currently performing additional Phase 1 studies on FP187 to evaluate its in vivo release profile as well as tolerability.

Our nonclinical development plan for our lead drug, FP187, is designed to support regulatory submissions with a complete toxicology package.

Corporate Update

Forward recently announced that Dr. Karen Smith and Dr. Duncan Moore were appointed to its Board of Directors as non-executive directors, expanding the Board to seven members. Dr. Smith is currently Global Head of Research and Development and Chief Medical Officer at Jazz Pharmaceuticals plc. and Duncan Moore, Ph.D., is a partner at healthcare firm East West Capital Partners. Dr. Moore will also serve as a member of the Audit Committee.

Forward Pharma A/S
Condensed Consolidated Statement of Profit or Loss
(in thousands, except per share amounts)
Three Months Ended
March 31st
2016 2015
Research and development$ (9,682) $ (4,320)
General and administrative (2,958) (4,069)
Total operating expenses (12,640) (8,389)
Foreign exchange (loss) gain (4,291) 14,310
Other 80 105
Net (loss) income$ (16,851) $ 6,026
Net (loss) income per ordinary share
Basic$ (0.36) $ 0.13
Diluted$ (0.36) $ 0.12
Weighted-average shares used basic 46,872 46,514
Weighted-average shares used diluted 46,872 49,007

The condensed consolidated statement of profit and loss included herein for the three months ended March 31, 2015 has been adjusted from the amounts previously reported to reverse an over accrual of tax expense of $764,000. The adjustment resulted in an increase in reported net income in the period from $5.3 million, as originally reported, to $6.0 million. The net income per share basic increased from $0.11, as originally reported, to $0.13, and net income per share diluted increased from $0.11 as originally reported, to $0.12. The adjustment had no effect on the consolidated statement of cash flows for the three months ended March 31, 2015. For more information, please see our Form 6-K for the first quarter 2016.

Forward Pharma A/S
Reconciliation of net (loss) income as reported to non-GAAP net (loss) income
(in thousands, except per share amounts)
Three Months Ended
March 31st
2016 2015
Net (loss) income as reported$ (16,851) $ 6,026
Adjustments for non-cash items:
Share-based compensation 3,571 2,169
Foreign exchange loss (gain) 4,291 (14,310)
Non-GAAP net (loss)$ (8,989) $ (6,115)
Non-GAAP net (loss) per share information:
Weighted-average shares used basic 46,872 46,514
Weighted-average shares used diluted 46,872 49,007
Non-GAAP basic per share (net) loss$ (0.19) $ (0.13)
Non-GAAP diluted per share (net) loss$ (0.19) $ (0.12)

This press release uses a non-GAAP measure of net loss that is a financial measure that is not calculated in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Company believes that the presentation of non-GAAP net loss is useful to investors because it excludes non-cash items that do not affect the Company’s liquidity and period to period changes, most of which are not within the control of the Company. Non-cash items include: (i) share-based compensation expense and (ii) non-cash foreign exchange gains or (losses). However, there are limitations in the use of non-GAAP financial measures as they exclude certain income and expenses that are recurring in nature. Furthermore, the Company's non-GAAP financial measure may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented herein should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with IFRS.

Forward Pharma A/S
Condensed Consolidated Statement of Financial Position
(in thousands)
March 31st December 31st
2016 2015
Assets
Cash, cash equivalents and available-for-sale financial assets$ 170,800 $ 176,652
Other assets 6,063 6,252
Total assets$ 176,863 $ 182,904
Equity and Liabilities
Shareholders' equity$ 170,910 $ 176,693
Liabilities 5,953 6,211
Total equity and liabilities$ 176,863 $ 182,904

Relevant Intellectual Property Sources:

USPTO Interference with Biogen: The motions are publicly available on the USPTO interference website at https://acts.uspto.gov/ifiling/PublicView.jsp, using interference number 106023.

Forward Pharma U.S. and European patent and patent applications can be found by using the following links:
USPTO: http://www.uspto.gov/
USPTO Public Pair: http://portal.uspto.gov/pair/PublicPair
EPO: https://register.epo.org/regviewer

About Forward Pharma:
Forward Pharma A/S is a Danish biopharmaceutical company developing FP187, a proprietary formulation of DMF (dimethyl fumarate) for the treatment of inflammatory and neurological indications. Since our founding in 2005, we have worked to advance unique formulations of DMF, which is an immune modulator, as a therapeutic agent to improve the health and well-being of patients with immune disorders including multiple sclerosis. FP187, our clinical candidate, is a DMF formulation in a delayed and slow release oral dose.

Our principal executive offices are located at Østergade 24A, 1st Floor, 1100 Copenhagen K, Denmark and our American Depositary Shares are publicly traded on NASDAQ Stock Market (FWP). For more information about the Company’s products and developments, please visit our web site at http://www.forward-pharma.com.

Forward Pharma A/S Media Contact:
Sharon Klahre, Director, Investor Relations
Forward Pharma USA, LLC
7 Skyline Drive
Hawthorne, NY 10532
SK@forward-pharma.com
+1 914-752-3542

The Ruth Group
Lee Roth
lroth@theruthgroup.com
+1 646-536-7014

Forward Looking Statements:
Certain statements in this press release may constitute “forward-looking statements” of the Company within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements which contain language such as “believe,” “expect,” “anticipate,” “hope,” “would” and “potential.” Forward-looking statements are predictions only which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those expressed in such statements. Many such risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking statements and include, among others, the following: the Company’s ability to obtain, maintain and defend issued patents with protective claims; the issuance and term of patents; the Company’s ability to prevail in or obtain a favorable decision in any patent interference or infringement action; the Company’s ability to recover damages in any patent infringement action; uncertainties relating to our development plans and activities, including the commencement of any clinical trial and the results, timing, cost and location thereof; risks and uncertainties related to the scope, validity and enforceability of our intellectual property rights in general and the impact on us of patents and other intellectual property rights of third parties; our ability to commercialize and generate revenue from our sole clinical candidate, FP187; clinical development, and clinical trials of FP187 may not be successful; completion of required clinical trials may take longer than we anticipate, which could result in increased costs, limit our access to funding and delay or limit our ability to obtain regulatory approval for FP187; and our evaluation of alternative Phase 3 clinical strategies in RRMS may not be successful or shorten our time to commercialization and/or reduce costs. These and other factors are identified and described in detail in certain of our filings with the United States Securities and Exchange Commission, including our Annual Report on Form 20-F for the year ended December 31, 2015.


Source: Forward Pharma US