Ore Pharmaceutical Holdings reports financial results and provides operational updates for third quarter 2009

Nov 13 2009

Ore Pharmaceutical Holdings Inc. (NASDAQ:ORXE) today reported financial results and provided an operational update for the third quarter ended September 30, 2009.

Highlights

During the third quarter of 2009, Ore Pharmaceutical Holdings Inc. (“Ore Holdings” or “Ore”) completed its transition into a pharmaceutical asset management company. The Company’s strategy is focused on acquiring interests in pharmaceutical assets whose value, Ore believes, it can significantly enhance through targeted development, with the goal of then monetizing these assets through sale or out-licensing transactions. Ore anticipates that it will fund these programs through designing, raising and investing alternative financing vehicles as a regular part of its ongoing activities as a company. Progress during the third quarter and since includes:

• Continued tight control of cash and expenses. Due to ongoing cost reductions, the collection of a note receivable and sale of an equity investment in the third quarter, the Company’s cash and marketable securities balance at the end of the third quarter was $7 million, which is $2.3 million higher than at the end of the second quarter. As a result of these aggressive cost controls and cash generation efforts, the Company now anticipates that it has sufficient financial resources to be able to fund operations into the first quarter of 2011;
• Received shareholder approval in October for, and completed, a reorganization whereby Ore Pharmaceuticals Inc. became a wholly owned subsidiary of a new company, Ore Holdings, with Ore Holdings becoming the new publicly traded, NASDAQ listed company with the symbol “ORXE”. This reorganization was undertaken primarily in order to better protect for shareholders the value of Ore’s approximately $324 million in gross net operating loss carryforwards;
• Continued on track to initiate a Phase Ib/IIa trial for ORE1001 in ulcerative colitis in the fourth quarter of 2009; and
• Established a research agreement with the Armed Forces Radiobiology Research Institute and the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. to evaluate ORE1001 as a potential countermeasure agent in treating radiation injury.

Portfolio Update

During the third quarter, the Company continued to advance its lead drug candidate, ORE1001. Ore is currently developing ORE1001 under its incubation program, in which the Company may conduct initial development on certain drug assets in order to determine the best investment pathway forward. Pathways may include monetizing the asset through partnership or out-licensing, or funding further development through one of the alternative financing vehicles that are central to Ore’s business strategy.

Ore is in the process of initiating a Phase Ib/IIa clinical trial for ORE1001 in ulcerative colitis – one of the two main disorders comprising Inflammatory Bowel Disease (“IBD”). This trial is designed as a randomized, double blind, placebo controlled trial of 50 patients with ulcerative colitis and is intended to assess the safety, tolerability and therapeutic activity of ORE1001 when administered by mouth as capsules. Ore selected ulcerative colitis as the initial indication for ORE1001 on the basis of multiple preclinical studies, although Ore believes that ORE1001 may also have efficacy in Crohn’s disease, the other major category of IBD. Ore currently anticipates that this trial will be completed in the third quarter of 2010.

In addition, during the third quarter Ore entered into a research agreement with the Armed Forces Radiobiology Research Institute (AFRRI) and the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. for ORE1001. Under the terms of this agreement, AFRRI will assess the utility of ORE1001 in preventing or treating adverse effects from exposure to ionizing radiation as part of their screening project funded by a National Institute of Allergy and Infectious Diseases (NIAID)-AFRRI interagency agreement.

The AFRRI agreement provides Ore with a means to evaluate ORE1001 as a potential countermeasure agent in treating radiation injury. ORE1001 has demonstrated beneficial effects in several animal models of gastrointestinal disease, including a model of radiation injury. Severe gastrointestinal injury can occur after exposure to ionizing radiation, such as from a nuclear accident or attack. AFRRI will perform testing in their established program investigating radiation effects and will share the data with Ore.

In traditional drug development progression, a drug candidate undergoes extensive efficacy testing in clinical trials. A drug intended as a radiation countermeasure, however, must rely solely on animal data as evidence for efficacy. Therefore, as long as the safety profile of the drug can be established, the path to approval of the drug can be greatly accelerated relative to the traditional route that requires demonstration of efficacy in humans. Ore believes that ORE1001, a small molecule inhibitor of the ACE2 enzyme, has characteristics that could facilitate rapid development, including an efficient manufacturing route, oral administration via capsules, and good tolerability results in both preclinical toxicology studies and Phase 1 clinical trials.

Under the AFRRI agreement, Ore will retain all commercial rights to ORE1001. Pending results of the collaboration with AFRRI, Ore may choose to examine the utility of ORE1001 as a supportive treatment in connection with radiation therapy for certain cancers in addition to its ongoing incubation for IBD.

AFRRI, a part of the Uniformed Services University of the Health Sciences and located at the National Navy Medical Center, is a leader in studying the short and long-term effects of ionizing radiation injury. AFRRI has been actively involved in developing pharmaceutical agents that can be used to protect or mitigate injury resulting from exposure to different types of radiation.

The Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. provides innovative services to meet the unique needs of military medicine.

Liquidity

As of September 30, 2009, the Company had $7.0 million in cash, cash equivalents and marketable securities available-for-sale, compared to $10.8 million as of December 31, 2008. The Company currently anticipates that its existing cash, cash equivalents and marketable securities available-for-sale, combined with anticipated payments on its remaining note receivable, will be sufficient to fund its operations into the first quarter of 2011.

Results of Operations

The Company recorded no revenue for the third quarter of 2009.

When compared to the prior year, third quarter 2009 Research and Development expenses decreased $1.8 million primarily as a result of lower employee and facility-related costs due to significant workforce reductions.

Compared to the prior year, Selling, General and Administrative expenses decreased $1.6 million primarily as a result of lower employee costs due to significant workforce reductions and reduced professional fees relating to strategic planning.

For the third quarter of 2009, the Company’s net loss was $0.6 million, or $0.11 per share, compared to a net loss of $7.4 million, or $1.36 per share, for the third quarter of 2008.

For the first nine months of 2009, the Company’s net loss was $6.3 million, or $1.15 per share, compared to a net loss of $19.1 million, or $3.33 per share, for the first nine months of 2008.