COPENHAGEN, Denmark, April 18, 2017 (GLOBE NEWSWIRE) -- Forward Pharma A/S (NASDAQ:FWP) (“we” or “Forward” or the “Company”), today reported financial results for the fourth quarter and year ended December 31, 2016. Net income for the fourth quarter December 31, 2016 was $9.6 million while net loss for the year ended December 31, 2016 was $33.3 million, or $0.20 and $(0.71) per diluted share, respectively. On a non-GAAP basis, after removing the effect of non-cash income and expense items, our fourth quarter and year ended 2016 net loss would have been $11.8 million and $40.9 million, or $(0.25) and $(0.87) per basic share, respectively. As of December 31, 2016, the Company had $138.7 million in cash, cash equivalents and marketable securities, with no debt outstanding.
“We made substantial progress in creating shareholder value from our patent portfolio, most importantly signified by the Settlement and License Agreement with Biogen. We also received a ruling in the patent interference case with Biogen and are working diligently to advance the appeal to the Federal Circuit and prepare for the opposition proceeding for our European ‘355 patent in November,” said Dr. Claus Bo Svendsen, Chief Executive Officer of Forward. “Having received the $1.25 billion non-refundable payment from Biogen, we remain in the strongest financial condition in the history of the Company, positioning us to return significant near-term value to shareholders.”
Fourth Quarter and Year Ended December 31, 2016 Financial and Operational Results
The GAAP net loss for years ended 2016 and 2015 was $33.3 million and $37.0 million, respectively. The GAAP net income for the fourth quarter of 2016 was $9.6 million compared to a net loss of $9.6 million for the fourth quarter of 2015. Net income for the fourth quarter of 2016 includes a deferred tax benefit of $21.3 million primarily related to net operating loss carryforwards that will be utilized in 2017 based on our estimate that the Company will have taxable profits in 2017.
Research and development expenses for the year ended 2016 and 2015 were $41.1 million and $33.7 million, respectively. Research and development expenses were $10.3 million for the quarter ended December 31, 2016 compared to $8.6 million for the fourth quarter of 2015. The increase in costs for the year ended 2016 compared to 2015 was primarily due to an increase in expenses to register and advance our intellectual property and higher share-based compensation. The increase in research and development expenses in the fourth quarter of 2016 versus the same period in 2015 was due to an increase in patent related costs. We estimate that research and development costs will decrease in 2017 compared to 2016 as our development efforts for FP187 will be limited to finishing the work that was in process prior to entering into the License Agreement with Biogen discussed below.
General and administrative expenses for the year ended 2016 and 2015 were $14.4 million and $15.9 million, respectively. General and administrative expenses were $5.1 million for the quarter ended December 31, 2016 compared to $3.6 million for the fourth quarter of 2015. The decrease in costs for the year ended 2016 compared to 2015 was principally due to a $1.2 million reduction in share based compensation. The increase in general and administrative expenses in the fourth quarter of 2016 versus the same period in 2015 was primarily due to professional fees. We expect our general and administrative costs will remain at current levels; however, expenses associated with protecting, defending and enforcing our patent rights that occur in the courts could increase in future periods.
Non-cash stock based compensation expense included in total operating expenses was $14.3 million for the year ended 2016 versus $13.5 million for the year ended 2015. As of December 31, 2016, the Company had $138.7 million in cash, cash equivalents and marketable securities.
Intellectual Property Update
Biogen Settlement and License Agreement Update
On January 17, 2017, Forward announced that it entered into a binding agreement with two wholly owned subsidiaries of Biogen and certain additional parties to enter into a Settlement and License Agreement (the “License Agreement”). In February 2017, Forward received a non-refundable cash fee of $1.25 billion from Biogen in connection with the License Agreement. During February and March 2017, to reduce the Company’s exposure to changes in foreign exchange rates, the Company converted the $1.25 billion into 1.17 billion Euros.
U.S. Interference Proceeding Update
On March 31, the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”) issued a decision in favor of Biogen in Patent Interference No. 106,023 regarding claims of Forward Pharma’s patent application 11/576,871 (the “’871 application”) that cover a method of treating multiple sclerosis (“MS”) using a 480 mg per day dose of dimethyl fumarate (“DMF”), the approved dose of Tecfidera®.
We intend to appeal this decision. If Forward Pharma ultimately prevails in the interference after all appeals to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”), and the ’871 application issues with claims covering treatment for MS by orally administering 480 mg per day of DMF, we anticipate that Biogen would be obligated to pay future royalties on net sales in the U.S. of Biogen’s DMF-containing products, including Tecfidera®, indicated for treating MS that would, but for the rights granted under the License Agreement, infringe a Company patent, provided that other conditions of the License Agreement are satisfied. Among the conditions that needs to be satisfied for any royalty to be payable by Biogen to us on net sales in the U.S. is the absence of generic entry in the U.S. having a particular impact as defined by the License Agreement.
If Forward Pharma succeeds in the interference as described above and Biogen obtains an exclusive license to all intellectual property in the United States that is owned by Forward Pharma (the “U.S. Licensed Intellectual Property”) under the License Agreement and other conditions are satisfied, a royalty of 10% would be payable by Biogen on net sales in the U.S. of applicable infringing products from January 1, 2021 to December 31, 2028 (increasing to 20% from January 1, 2029) until the earlier of the expiration or invalidation of the patents owned by Forward Pharma in the U.S. Biogen’s existing perpetual, irrevocable, co-exclusive license to all of the U.S. Licensed Intellectual Property will be converted into an irrevocable exclusive license to all of the U.S. Licensed Intellectual Property if all of the terms and conditions of the License Agreement are met within the time period set forth in the License Agreement, including the absence of legal restraints and termination or expiration of any required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. If Biogen does not obtain an exclusive license, and provided that other conditions of the License Agreement are satisfied, Biogen will maintain a co-exclusive license with respect to the U.S. Licensed Intellectual Property, and the royalties payable by Biogen to Forward Pharma on its net sales in the U.S. of applicable infringing products would instead be 1% from January 1, 2023, and Forward Pharma would retain the right to commercialize in the U.S. or assign its U.S. co-exclusive rights, on one occasion only, to a single third party.
If we prevail after all appeals to the Federal Circuit, we expect our ’871 application, if ultimately issued, would be entitled to patent term adjustment extending the patent term to compensate the Company for time lost during prosecution and the interference, which the Company estimates would result in patent expiration in 2029 or later.
EU Opposition Proceeding Update
The hearing for the pending opposition proceeding against the Company’s European patent EP2801355 (“Opposition Proceeding”) is currently scheduled for November 6 and 7, 2017. If the Company obtains, as a result of the Opposition Proceeding, and any appeals therefrom, a patent with a claim covering oral treatment of MS with 480 mg per day of DMF, it would be eligible beginning on January 1, 2021 to collect a 10% royalty (increasing to 20% from January 1, 2029) until the earlier of the expiration or invalidation of the patents defined in the License Agreement, on a country-by-country basis on Biogen’s net sales outside the U.S. of DMF-containing products, including Tecfidera®, indicated for treating MS that, but for the rights granted under the License Agreement, would infringe a Company patent, provided that other conditions of the License Agreement are satisfied. Among the conditions that needs to be satisfied for any royalty to be payable by Biogen to us in a particular country is the absence of generic entry in that country having a particular impact as defined in the License Agreement.
On March 1, 2017, the Company announced plans to finish its remaining research and development efforts and to pursue an organizational realignment to reduce personnel and operating expenses. We are currently finishing the research and development work that was in process prior to the effective date of the License Agreement and thereafter plan to suspend further development of our clinical candidate, FP187, pending the outcome of the appeal to the Federal Circuit regarding the decision in the interference with Biogen, and whether or not Biogen obtains an exclusive license in the U.S. If Biogen maintains a co-exclusive license, we expect to either assign our co-exclusive license rights to a single third party on one occasion only or reinitiate development of FP187, or initiate development of another DMF-containing formulation, in anticipation of a regulatory submission to the FDA. However, if Biogen prevails in the interference and IPR brought by the Coalition for Affordable Drugs, after any appeals to the Federal Circuit, we may be prevented from commercializing our lead product candidate, FP187, for MS in the U.S. at a 480 mg per day dose.
Future Financial Results
Although we have previously released financial results on a quarterly basis, consistent with our plan to reduce expenses, we intend to release future financial results semi-annually, with our next report following the end of our second quarter.
|Forward Pharma A/S|
|Condensed Consolidated Statement of Profit or Loss|
|(in thousands, except per share amounts)|
|Twelve Months Ended||Three Months Ended|
|December 31st||December 31st|
|Research and development||$||(41,052||)||$||(33,727||)||$||(10,252||)||$||(8,623||)|
|General and administrative||(14,382||)||(15,852||)||(5,053||)||(3,592||)|
|Total operating expenses||(55,434||)||(49,579||)||(15,305||)||(12,215||)|
|Foreign exchange gain||598||11,933||3,897||2,328|
|Net (loss) before taxes||(54,539||)||(37,340||)||(11,355||)||(9,917||)|
|Current income tax benefit (expense)||(79||)||336||(283||)||336|
|Deferred income tax benefit||21,282||-||21,282||-|
|Net (loss) income||$||(33,336||)||$||(37,004||)||$||9,644||$||(9,581||)|
|Net (loss) income per share|
|Weighted average shares used to compute net (loss) income per share|
|Forward Pharma A/S|
|Reconciliation of net (loss) income as reported to non-generally accepted accounting principles ("GAAP") net (loss)|
|(in thousands, except per share amounts)|
|Twelve Months Ended||Three Months Ended|
|December 31st||December 31st|
|Net (loss) income as reported||$||(33,336||)||$||(37,004||)||$||9,644||$||(9,581||)|
|Adjustments for non-cash items:|
|Foreign exchange gain||(598||)||(11,933||)||(3,897||)||(2,328||)|
|Deferred tax benefit||(21,282||)||-||(21,282||)||-|
|Non-GAAP net (loss)||$||(40,928||)||$||(35,396||)||$||(11,836||)||$||(8,403||)|
|Non-GAAP net (loss) per share|
|Basic and diluted||$||(0.87||)||$||(0.76||)||$||(0.25||)||$||(0.18||)|
|Weighted average shares used to compute Non-GAAP net (loss) per share|
|Basic and diluted||47,013||46,749||47,144||46,872|
|This press release uses a non-GAAP measure of net loss that is a financial measure that is not calculated in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IASB"). The Company believes that the presentation of non-GAAP net loss is useful to investors because it excludes certain non-cash items that do not affect the Company’s liquidity and foreign exchange swings, most of which are not within the control of the Company. Non-cash items include: (i) share-based compensation expense, (ii) non-cash foreign exchange gains or (losses) and (iii) deferred tax benefits. However, there are limitations in the use of non-GAAP financial measures as they exclude certain income and expenses. Furthermore, the Company's non-GAAP financial measure may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented herein should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with IFRS.|
|Forward Pharma A/S|
|Condensed Consolidated Statement of Financial Position|
|Cash, cash equivalents and marketable securities||$||138,723||$||176,652|
|Equity and Liabilities|
|Total equity and liabilities||$||163,143||$||182,904|
Relevant Intellectual Property Sources:
USPTO interference with Biogen: The related documents 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 patents and patent applications can be found by using the following links:
USPTO Public PAIR: http://portal.uspto.gov/pair/PublicPair
About Forward Pharma:
Forward Pharma A/S is a Danish biopharmaceutical company that commenced development in 2005 of FP187, a proprietary formulation of DMF for the treatment of inflammatory and neurological indications. The Company owns a significant intellectual property (IP) portfolio related to DMF formulations. The Company granted to Biogen an irrevocable license to all of its IP through the recent License Agreement and received from Biogen a non-refundable cash fee of $1.25 billion in February 2017. The Company has the opportunity to receive royalties from Biogen on sales of Tecfidera® or other DMF products for MS, dependent on, among other things, the anticipated appeal of the U.S. interference and the EP2801355 opposition outcome in Europe.
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, 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
The Ruth Group
Forward Looking Statements:
Certain statements in this press release may constitute “forward-looking statements” of Forward Pharma A/S (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”, “may”, 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, risks related to the following: the satisfaction of certain conditions, and the accuracy of certain representations of the Company, in the License Agreement entered into with subsidiaries of Biogen Inc. and certain other parties thereto; our ability to obtain, maintain, enforce and defend issued patents with royalty-bearing claims; our ability to successfully appeal the interference decision to the Federal Circuit; our ability to prevail in or obtain a favorable decision in the Opposition Proceeding, after all appeals; the issuance and term of our patents; future sales of Tecfidera®, including impact on such sales from competition, generic challenges, regulatory involvement and pricing pressures; 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; the timing, amount (if any) and tax consequences of any distribution to shareholders; and our ability to generate revenue from product sales in the U.S. directly or through an assignee of our U.S. co-exclusive license rights in the event Biogen does not obtain an exclusive license from us in the U.S. Certain of these and other risk 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, 2016. We are providing this information as of the date of this release and do not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.
Source:Forward Pharma A/S