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Forward Pharma Reports Financial and Operational Results from the First Six Months of 2018
COPENHAGEN, Denmark, Sept. 19, 2018 (GLOBE NEWSWIRE) -- Forward Pharma A/S (NASDAQ:FWP) (“We”, “Forward” or the “Company” and together with its subsidiaries, the “Group”), today reported consolidated financial results for the six-month period ended June 30, 2018. Net loss for the six-month period ended June 30, 2018 was $(5.3) million, or $(0.06) per diluted share, versus net income of $941.2 million, or $1.67 per diluted share for the six-month period ended June 30, 2017.
“We are pleased to announce our results for the first half year of 2018. The results reflect the effect of our strategic and organisational transformation initiated upon signing the Settlement and License Agreement with Biogen. Forward Pharma is narrowly focused on the appeals of the initial decisions in both the U.S. patent interference and the ‘355 patent opposition in Europe,” said Dr. Claus Bo Svendsen, Chief Executive Officer of Forward.
Six-month period ended June 30, 2018 operational results
During the six-month period ended June 30, 2017, the Company recognized as revenue the $1.25 billion nonrecurring non-refundable fee (“Non-refundable Fee”) that was received during February 2017 in connection with the Settlement and License Agreement (“License Agreement”) entered into with two wholly owned subsidiaries of Biogen, Inc. (collectively “Biogen”). During the six-month period ended June 30, 2018, the Group did not earn any revenues under the License Agreement nor from other sources. Accordingly, there were no revenues recognized during the six-month period ended June 30, 2018.
The terms of the agreement between Aditech Pharma AG (“Aditech”) and the Company, including the addendum to the agreement executed in January 2017, provided for Aditech to receive a one-time payment of $25 million, equal to 2% of the Non-refundable Fee. During the six-month period ended June 30, 2018, there were no amounts due Aditech.
Research and development costs for the six-month periods ended June 30, 2018 and 2017 were $1.8 million and $7.0 million, respectively. The decrease in research and development costs for the six-month period ended June 30, 2018 of $5.2 million is the result of lower costs incurred in connection with the U.S. patent interference (“Interference Proceeding”) and the EP2801355 patent (“‘355 Patent”) opposition in Europe (“Opposition Proceeding”), lower share-based compensation and the wind-down of our development efforts of FP187 ®.
General and administrative costs for the six-month periods ended June 30, 2018 and 2017 were $5.8 million and $4.4 million, respectively. The increase in general and administrative costs in the six-month period ended June 30, 2018 of $1.4 million resulted from an increase in share-based compensation, which was partially offset by a decrease in legal and accounting costs.
During the six-month period ended June 30, 2018, the Group recognized a foreign exchange gain of $1.9 million. The $1.9 million non-cash foreign exchange gain resulted primarily from the strengthening of the U.S. dollar compared to the Danish Krone (“DKK”) during the period. During the six-month period ended June 30, 2017, the Group recognized a foreign exchange gain of $1.0 million. The $1.0 million foreign exchange gain resulted primarily from the Company benefiting from favorable exchange rates when the proceeds of the Non-refundable Fee were converted from U.S. dollars to Euros.
Other income (expense) primarily includes interest income on U.S. dollar cash deposits net of bank fees (“negative interest”) on EUR and DKK cash deposits. The favorable change during the six-month period ended June 30, 2018 is the result of reduced cash holdings of Euros subsequent to the capital reduction of EUR 917.7 million (“Capital Reduction”) that occurred in September 2017 and increased interest income on U.S. dollar cash deposits resulting from higher rates.
The tax benefit recognized during the six-month period ended June 30, 2018 of $204,000 results in part from an adjustment relating to the prior year of $161,000 and the balance from changes in deferred tax balances during the period. Income tax expense for the six-month period ended June 30, 2017 resulted from the receipt of the Non-refundable Fee, partially offset by operating expense, giving rise to pretax income of $1.2 billion. The effective tax rate for the six-month period ended June 30, 2017 was 22.4%, which is slightly higher than the Danish statutory tax rate of 22.0%. The difference between the effective tax rate and the statutory tax rate is primarily derived from a higher tax rate in Germany, where the Group has taxable nexus in addition to Denmark.
Update on Intellectual Property Proceedings
On March 31, 2017, the PTAB issued a decision in the Interference Proceeding in favour of Biogen. The Patent Trademark and Appeal Board (“PTAB”) ruled that the claims of the U.S. patent application 11/576,871 (“'871 Application”) are not patentable due to a lack of adequate written description. The Company has appealed the decision to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”), where the appeal was heard at an oral hearing on June 4, 2018. The appeal is expected to be decided before the end of the year. If the Company prevails in this appeal, we expect the Federal Circuit to remand the case to the PTAB, in order for the PTAB to resolve both parties' other outstanding motions, including Biogen's priority motion.
On January 29, 2018, the Opposition Division of the European Patent Office (“EPO”) concluded oral proceedings concerning the ‘355 Patent. The Opposition Division revoked the ‘355 Patent after considering third-party oppositions from several opponents. On March 22, 2018, the Opposition Division issued its detailed reasons for the decision. On May 7, 2018, the Company appealed the Opposition Division’s decision to the Technical Board of Appeal (“TBA”) of the EPO and filed its detailed grounds of appeal on August 1, 2018. The appeal process has an expected duration of an additional two to three years. By initiating the appeal, the revocation will only become effective if and when confirmed by the TBA. If the Company prevails in such appeal, we expect the TBA to remand the case to the Opposition Division, for the Opposition Division to resolve the remaining elements of the original opposition.
Forward has filed with the U.S. Securities and Exchange Commission on Form 6-K unaudited financial statements for the six months ended June 30, 2018. Investors are encouraged to read this filing for more complete information about the results of operations for this period, as well as other important information about Forward.
|Forward Pharma A/S|
|Unaudited Condensed Consolidated Statement of Profit or Loss|
|(in thousands, except per share amounts)|
|Six-Month Period Ended|
|Revenue from the License Agreement||$1,250,000|
|Cost of Aditech agreement||(25,000)|
|Research and development||$(1,843)||(6,993)|
|General and administrative||(5,803)||(4,413)|
|Total operating (loss) income||(7,646)||1,213,594|
|Foreign exchange gain||1,859||1,011|
|(Loss) income before taxes||(5,474)||1,213,010|
|Income tax benefit (expense)||204||(271,774)|
|Net (loss) income|
|Net (loss) income per share, basic (1)||$(0.06)||$1.74|
|Net (loss) income per share, diluted (1)||$(0.06)||$1.67|
|Weighted average number of shares used to compute net (loss) income per share basic (1)||94,407||542,394|
|Weighted average number of shares used to compute net (loss) income per share diluted (1)||94,407||562,421|
|(1||)||During August 2017, the Company’s shareholders approved a 10 for 1 share split (“Share Split”). All share and per share information disclosed above has been adjusted to reflect the Share Split as if it had occurred at the beginning of the earliest period presented. In addition, there was a Capital Reduction in September 2017 that was effected by the annulment of 80% of the ordinary shares outstanding and was deemed, for financial reporting purposes, to have been at a 15% premium (“15% Premium”). For purposes of computing the per share amounts only, the 15% Premium has been accounted for in a manner similar to the Share Split and reflected in the above per share amounts as if it had occurred at the beginning of the earliest period presented. The combined effect of the Share Split and the 15% Premium is as if a 11.5 for 1 share split had occurred at the beginning of the earliest period presented. Subsequent to the Share Split and the Capital Reduction, each American Depositary Receipt (“ADS”) represents two ordinary shares and each ordinary share has a nominal value of DKK 0.01.|
Forward Pharma A/S
|Unaudited Condensed Consolidated Statement of Financial Position|
|Cash and cash equivalents||$89,261||$109,554|
|Equity and Liabilities:|
|Total equity and liabilities||$90,465||$111,008|
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 granted to Biogen an irrevocable license to all of its IP through the Settlement and License Agreement and received from Biogen a non-refundable cash fee of $1.25 billion in February 2017, with the return of EUR 917.7 million to shareholders through a Capital Reduction in September 2017. The Company has the opportunity to receive royalties from Biogen on net sales of Tecfidera® or other DMF products for MS, dependent on, among other things, successfully appealing the U.S. interference and a favorable outcome in Europe with respect to the '355 Patent Opposition Proceedings, including any appeal thereto.
The principal executive offices are located at Østergade 24A, 1st Floor, 1100 Copenhagen K, Denmark and our American Depositary Shares are publicly traded on the Nasdaq Stock Market (FWP). For more information about the Company, please visit our website at http://www.forward-pharma.com.
Forward Pharma A/S Investor Relations Contact:
Forward Pharma A/S
Claus Bo Svendsen, MD, PhD
Chief Executive Officer
+1 (646) 378 2942
Forward Pharma A/S