Company release
· Clinical studies continue as planned despite Covid-19 pandemic
· New CEO appointed in preparation for the next stage of company development
Highlights in January-
· On Feb 25[th],
· On Apr 8[th], the Company's Annual General Meeting elected six members to the Board of Directors, including Mats Thorén as a new member. The Board of Directors then elected
· On May 11[th], Herantis announced the appointment of a new CEO, Dr. Craig Cook, in preparation for the next stage of company development.
· On May 26[th], Herantis announced the launch of a directed share issue targeting €5 million. On May 27[th], the Company announced that it raised approximately €6.8 million as a result of the offering.
· In June, 39,600 new shares were issued as a result of share subscriptions by stock options.
· Cash flow from operations during the review period was €-4.8
· Earnings per share were €-0.65 (-0.60).
· Cash and cash equivalents on
· The Company's financial position in the last half-year period was as estimated and there have not been any exceptional events.
Key figures (consolidated)
€ thousands 1-6/2020 1-6/2019 1-12/2019
Revenue 0.0 0.0 0.0
Personnel expenses 892.5 747.1 1,403.2
Depreciation and amortization 463.9 562.2 1,046.7
Other expenses for business operations 2,746.7 1,729.2 4,930.7
Profit for the period -4,472.3 -3,318.9 -8,004.6
Cash flow from operations -4,786.9 -2,746.8 -5,958.2
1-6/2020 1-6/2019 1-12/2019
Equity ratio % 33.9 24.0 16.7
Earnings per share € -0.65 -0.60 -1.37
Number of shares at end of period 7,594,905 6,062,287 6,680,305
Average number of shares 6,851,403 5,544,814 5.844.621
€ thousands
Cash and cash equivalents 9,254.6 5,599.4 6,997.9
Equity 4,268.0 2,374.1 1,851.0
Balance sheet total 12,597.8 9,894.7 11,070.6
Formulas used to calculate key figures
Equity ratio = Equity / balance sheet total
Earnings per share = Profit for period / average number of shares
Average number of shares = Weighted average number of shares. The number of shares is weighted by the number of days each share has been outstanding during the review period.
Guidance for 2020
Herantis does not expect material revenues in 2020. The company continues to invest in its ongoing drug development programs: CDNF for the treatment of Parkinson's disease, and Lymfactin[®] for the treatment secondary lymphedema, as well as in xCDNF, the next generation, non-invasive CDNF.
Outlook for 2020
Herantis' long-term goal is to significantly increase its business through commercialization agreements for its drug candidates. While developing its assets, the company continues to discuss collaboration opportunities with potential partners for its drug development programs.
The main objectives for 2020 are to present initial results of the Phase I/II clinical study of CDNF which took place in Q1, and twelve-month follow-up results in Q3. The main objective of this first-in-human clinical study with CDNF is to demonstrate its safety in patients. For Lymfactin[®], the Company will continue preparations for a Phase III clinical study while expecting Phase II results in Q1/2021.
Covid-19 impact
As Herantis announced via press release on
Other ongoing activities of the Company include the planning and preparations for a Phase III clinical study with Lymfactin[®] and a Phase II clinical study with CDNF, as well as lead optimization of the Company's next generation, non-invasive asset, xCDNF, for the treatment of neurodegenerative diseases. These activities involve international collaborators whose ability to provide services could be impacted by the present situation. As such, there may be delays in individual subprojects.
Highlights after the reporting period:
· Dr.
Dr.
Looking back at the first half of 2020, Herantis has made significant advancements from a clinical, financial and corporate development perspective. As we enter the next chapter for the Company, our achievements from the past months will enable us to continue developing our assets, present the Company and our clinical trial data to the global biopharmaceutical industry and further establish our position as a Company breaking the boundaries of standard therapeutic approaches in two indications with high unmet medical need.
The past six months have been accompanied by positive announcements in the clinic for our lead candidates, CDNF in Parkinson's Disease and Lymfactin[®] in Lymphedema. Starting with Lymfactin[®], our program is advancing as planned, and we look forward to the Phase II read-out in the first quarter of 2021. In the meantime, arrangements for the further development of Lymfactin[®] are being put in place. Our gene therapy program has the potential to address a significant and growing unmet medical need by providing a novel treatment to patients suffering from lymphedema.
Parallel to the progress in Lymfactin[®], our CDNF program for Parkinson's Disease continues to build on the promising 6-month data announced in February, with results for the next period expected in the third quarter this year. CDNF is targeted as the first disease-modifying treatment for Parkinson's disease, where we are hoping to make a tangible difference in the treatment and in the quality of life for patients living with this debilitating condition. We are also moving forward with intensive research for the lead optimization and application of our non-invasive, next generation xCDNF, which will directly benefit from the positive progress observed in the aforementioned parent CDNF program.
Beyond the clinic, 2020 thus far has also been a year of enhanced financial stability and corporate buildout for Herantis. In May, we concluded a fundraising round that secured €6.8 million, extending our cash runway into 2021. Additionally, our Board of Directors welcomed a new Chairman,
It is noteworthy that these achievements were met in spite of a global crisis: the Covid-19 pandemic. Fortunately, at Herantis, we have managed to minimize the impact of the pandemic on our projects. This has required ample hard work and dedication regarding contingency planning and clinical study management to ensure programs stay on track. As the newly appointed CEO, I am proud to have joined a team of such committed professionals who are capable of quickly adapting to new and unprecedented challenges.
In summary, with a solid foundation in place, the next 12-18 months promise to be an important period for the Company as we continue developing our assets and seeking to create value for investors, healthcare providers and, most importantly, patients.
REVIEW OF OPERATIONS
Herantis' drug development
In the review period, Herantis' drug development programs proceeded as planned:
· Lymfactin[®]: Phase II clinical study
· CDNF: Topline results after 6 months of treatment in the Phase I/II clinical study in Parkinson's disease suggest CDNF is safe and well-tolerated, with promising signals of biological activity.
· Non-invasive, next generation xCDNF: Optimization of the selected preclinical candidate molecules continues as planned.
CDNF for the treatment of Parkinson's disease
Herantis is developing its drug candidate, CDNF, for the treatment of Parkinson's disease (PD). PD is a slowly progressing neurodegenerative disease that cannot be cured. An estimated 7 million people worldwide have PD. Currently available treatments only alleviate the motor symptoms of the disease and their efficacy is typically reduced with disease progression. Herantis aims for significant improvements over current treatments.
CDNF is a novel neuroprotective and neurorestorative factor highly distinct from conventional neurotrophic factors, discovered by
CDNF is currently in a Phase I/II clinical trial in Parkinson's disease where all patient treatments have been completed. The clinical trial has received funding from the
Next generation, non-invasive CDNF: xCDNF
Herantis' xCDNF development program is based on peptides derived from the natural CDNF protein. The xCDNF compounds have been shown to penetrate the blood-brain barrier and retain the cell-protecting properties of CDNF, which suggests potential for a non-invasive drug candidate for the treatment of neurodegenerative diseases. Herantis announced its xCDNF development program in 2018 after acquiring related intellectual property rights from the
Lymfactin[®] for the treatment of secondary lymphedema
Injuries of the lymphatic system caused, for example, by an accident, surgery, or illness can lead to secondary lymphedema. Common symptoms include permanent swelling of the affected limb, thickening and hardening of skin, limited limb mobility, pain, and increased sensitivity to infections. Secondary lymphedema is a chronic, progressive disease that often severely impairs the patient's quality of life. Known therapies such as compression garments, special massage, and exercise may relieve the symptoms in some patients, but they do not address the cause of the disease.
Professor
Lymfactin[®] is currently being evaluated in a Phase II clinical study in which its safety and efficacy are compared to placebo in patients with breast cancer associated lymphedema. All patient treatments in the study have been completed and results are expected in Q1/2021.
If the safety and efficacy of Lymfactin[®] are established in the treatment of breast cancer associated lymphedema, the findings are expected to be applicable to the treatment of other secondary lymphedemas.
FINANCIAL REVIEW
Income from business operations, R&D expenses
The R&D expenses for the review period were €2.3 million, recorded in the income statement as an expense for the period. The R&D expenses for the review period were mainly comprised of the clinical trials of CDNF for the treatment of Parkinson's disease and Lymfactin[®] for the treatment of breast cancer associated lymphedema, and the early preclinical development of xCDNF.
The Group's R&D expenses for the corresponding period in the previous year, €1.4 million, were recorded as the review period's expenses in the income statement.
The result for the review period was €-4.5 million. The consolidated result for the comparison period was €-3.3 million.
Financing and capital expenditure
The Company's cash and cash equivalents on
In addition, the
The consolidated cash flow from operating activities in the review period was €-4.8
(-2.7) million.
Directed share issues
Herantis announced on
Herantis announced on
Balance sheet
The consolidated balance sheet total of Herantis stood at €12.6 (9.9) million on
At the end of the review period on
No R&D expenses were capitalized during the review period.
Equity
Consolidated equity on
Personnel, management, and administration
The number of personnel at the end of the review period on
During the review period, the Company's Board of Directors comprised of
Ordinary Annual General Meeting 2020
Herantis' ordinary Annual General Meeting (AGM) was held in
The AGM adopted the consolidated and parent company financial statements for the financial year 2019 and resolved to discharge the members of the Board of Directors and the Managing Director from liability. In accordance with the proposal by the Board of Directors, the AGM resolved that no dividend shall be paid for the financial period
The AGM resolved that the remuneration for the members of the Board of Directors shall be €1,500 per month except for the Chairman of the Board who shall be paid €2,500 per month, and a possibly elected Vice Chairman of the Board who shall be paid €2,000 per month. Board members are also reimbursed reasonable travel expenses related to
Six members were elected in the Board of Directors: Ingrid Atteryd Heiman,
The AGM decided that the Auditor will be paid reasonable remuneration in accordance with its invoice approved by the Company.
The firm of authorized public accountants
The Annual General Meeting resolved to establish a permanent shareholders' nomination committee and to approve the charter of the shareholders' nomination committee as proposed by the Board of Directors.
The Annual General Meeting resolved to authorize the Board of Directors to resolve on issues of shares as follows: under the authorization, the Board of Directors may resolve on an issue of new shares or treasury shares, and the shares may be issued in one or several tranches. Under the authorization a maximum total of 2,000,000 shares may be issued, which corresponds to approximately 29.9 percent of all of the shares in the Company. The shares may be issued against payment or gratuitously. Further, the issue of shares may be directed, provided that the Company has a weighty financial reason to do so. Under the authorization shares may be directed to the Company. The authorization shall not be used for incentive purposes. The authorization shall remain valid until the close of the next annual general meeting, however no later than
The Annual General Meeting further resolved to authorize the Board of Directors to resolve on issues of shares as follows: under the authorization, the Board of Directors may resolve on an issue of new shares or treasury shares, and the shares may be issued in one or several tranches. Under the authorization, a maximum total of 150,000 shares may be issued, which corresponds to approximately 2.25 % percent of all of the shares in the Company. The shares may be issued against payment or gratuitously. Further, the issue of shares may be directed, provided that the company has a weighty financial reason to do so. The authorization may be used for issuing shares in connection with the incentive schemes of the company. The authorization shall remain valid until the close of the next annual general meeting, however no later than
In its constitutive meeting held after the Annual General Meeting, the Board of Directors elected
Share based incentive program
Herantis has four stock option programs: Stock option program 2010, Stock option program 2014 I, Stock option program 2016 I, and Stock option program 2018 I, whereby stock options have been offered to key employees of the Company to increase their commitment toward long-term contribution to growing shareholder value. The main details of the stock option programs are listed in the table below. More detailed information is provided on the Company's web site at www.herantis.com.
Stock Maximum Per share Decision on the stock
option number of subscription option program made by
program shares¹ price
2010 31,600 € 0.00005 General Meeting
2014 I 7,200 € 0.00005 General Meeting
2016 I 48,000 € 2.92 General Meeting
9.4.2015, Board Meeting
2018 I 100,000 € 5.85 General Meeting
9.4.2015, Board Meeting
TOTAL 186,800 - -
[1] The maximum number of shares to be subscribed by stock options.
Risks and uncertainties
Herantis is a drug development company and the general risks and uncertainties present in drug development also apply to its operations. For instance, the production, stability, safety, efficacy, and regulatory aspects of drug candidates involve risks, the realization of which can render the commercialization of the drug candidate impossible or significantly delayed. One common challenge in drug development is that preclinical disease models may not accurately simulate the real disease. Promising preclinical results do therefore not guarantee that the drug candidate is efficacious in real patients.
Seeing as Herantis develops biological drugs based on novel scientific research and their mechanisms differ from known drugs, the risks and uncertainties can be considered greater than in the development of conventional drugs. Further, the company has not commercialized any drug candidates, it does not have any history of profitable operations, and it has not so far closed any commercialization agreements pursuant to its strategy.
Drug development requires significant investments. Since Herantis is a pre-revenue company it must finance its drug development programs from external sources such as grants, R&D loans, or equity investments. Factors such as delays in the Company's development programs or a weak financial market can impact the Company's ability to raise funding and continue its operations.
Even if the safety and efficacy of a drug candidate has been established in clinical studies, its commercialization involves risks such as pricing or reimbursement, organizing a sales network, competition from other emerging treatments, unexpected adverse events in long-term use, strength of the Company's patents, patent infringement claims raised against the company and other factors.
Related to the Covid-19 pandemic, currently the Company does not foresee substantial impact on its plans. However, it is possible that the company's development programs may suffer from delays if the pandemic gets worse.
Usual business risks and uncertainties are also relevant to the operations of Herantis, such as data protection risks, dependencies on subcontractors and other third parties, and the ability to recruit and keep the necessary senior team and other employees.
A thorough assessment of the risks of Herantis is presented in the English-language information memorandum published on the Company's website on
Environmental factors
Herantis is very conscious about protecting the environment. Herantis' quality instructions and practices consider the environment and, for example, encourage the use of public transportation, limit travelling to strictly necessary business needs, and endorse the use of virtual meetings where possible. Printing and waste are minimized and recycled appropriately.
Shares and shareholders
The market capitalization of
The trading volume of the Company's share in the review period was 1,146,922 shares, corresponding to approximately 15.1% of all shares in the Company. According to Herantis' shareholder register dated on
On
Events after the review period
Dr
Accounting policies
These financial statements have been prepared according to generally accepted accounting practices, local legislation, and the rules of the First North market. The figures in the financial statements are audited. The figures are individually rounded from exact figures.
Financial information 2020
This half-year report and its appendices are published in Finnish and in English on
The financial statements release
Board of Directors
Appendices:
Profit and loss statement and Balance sheet
Statement of cash flow
Statement of changes in equity
More information:
Company website: www.herantis.com
Certified Advisor:
Herantis Pharma in brief:
https://news.cision.com/herantis-pharma-oyj/r/herantis-pharma-plc-announces-half-year-financial-report-january-1--june-30--2020--unaudited-,c3179108
https://mb.cision.com/Main/18884/3179108/1296589.pdf
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