Protox Therapeutics Inc. (TSX: PRX), a leader in the development of receptor targeted fusion proteins, today released financial results for the second quarter 2010, ended June 30, 2010.
"The second quarter was very positive for Protox with the announcement of a US $75 million license agreement with Kissei Pharmaceutical, a partner with an impressive track record in the Japanese urology market," said Dr. Fahar Merchant, President and CEO of Protox. "This strategic agreement provides strong validation for our PRX302 program and non-dilutive cash, while allowing us to preserve marketing rights for PRX302 in the rest of the world."
Q2 2010 Highlights
- On April 29, 2010, the Company announced that it had entered into a US $75 million license agreement with Kissei Pharmaceutical Co., Ltd. for the development and commercialization of PRX302 in Japan for BPH, prostate cancer and other diseases of the prostate. - Two oral podium presentations were delivered at the 2010 Annual Meeting of the American Urological Association by Dr. Mostafa M. Elhilali, OC, M.D., Ph.D. Chief Co-Principal Investigator and Stephen Jarislowsky Chair of Urology at McGill University. Presentations included positive six month data from the PRX302 Phase 2b TRIUMPH clinical study, in patients with moderate to severe benign prostatic hyperplasia.
The Company has not earned any revenue in any of its previous fiscal years, other than income from interest earned on the Company's investment balances.
The Company reported net and comprehensive income of $1.1 million ($0.01 per share) in the three months ended June 30, 2010 ("2010-Q2") compared to a net loss of $1.8 million ($0.02 per share) for the three months ended June 30, 2009 ("2009-Q2"). On a year-to-date basis, the Company recorded a loss of $544,000 ($0.00 per share) for the six months ended June 30, 2010 compared to a loss of $4.1 million ($0.05 per share) for the six months ended June 30, 2009. The swing in net income (loss) of $2.9 million in the current quarter was a result of the receipt of net license revenue of $2.9 million from the Kissei agreement entered into in April 2010, less Japanese withholding taxes, as well as continued efforts to manage costs across all areas of the Company.
Total expenses for the three months ended June 30, 2010 decreased by $255,000 over the comparative quarter in 2009. This was driven by a reduction in research and development expenditures with our TRIUMPH study nearing completion and offset by an increase in business development activities to support our licensing activities.
Expenses, in particular research and development expenditures, are influenced by a number of factors including the scope of clinical development and research programs pursued; the type and size of clinical trials undertaken; the number of clinical trials that are active during a particular period of time; and the rate of patient enrollment; and are ultimately a function of decisions made to continue the development and testing of a product candidate based on supporting safety and efficacy from clinical trial results. Consequently, expenses vary from period to period. General and Administrative expenses are dependent on the personnel and infrastructure required to support the corporate, clinical and business development objectives and initiatives of the Company. Operating costs are expected to remain flat for the balance of the year as the Company continues the development of the PRX302 BPH program. In addition, we anticipate that our business development activities will continue as we pursue further regional and/or global licensing opportunities.
The Company earned US $3.0 million (CAD $3.0 million) in license revenue during 2010-Q2 and 2010-YTD as a result of the Kissei license agreement. The payment triggered a royalty payment to John Hopkins University and the University of Victoria of $210,000 under the terms of our PORxin license agreement for benign prostate hyperplasia.
In the future, the Company is eligible to earn a near term milestone payment of US $5 million and an additional US $67 million in milestone and product supply revenues as well as double digit royalties on sales of PRX302 in Japan.
Research and development expenditures were $893,000 for 2010-Q2, a decrease of $377,000 from $1.3 million for 2009-Q2. Year to date expenditures for the six months ended June 30, 2010 were $1.9 million compared to $2.9 million for the same period in fiscal 2009. The decrease in research and development expenditures for 2010-Q2 and for the six months ended June 30, 2010 was due to the maturing of the Company's current BPH program as only one trial was active during 2010-Q2 - the fully enrolled double-blinded placebo controlled TRIUMPH - compared to three active trials in 2009-Q2.
For the remainder of the year, we expect to continue to incur costs related to the further clinical, manufacturing and regulatory activities associated with our PRX302 PBH program.
General and administrative ("G&A") costs for 2010-Q2 were $605,000 - a slight increase over the previous quarter and an increase of $107,000 compared to the same period in 2009. On a year-to-date basis, G&A expenditures were $1.2 million for the six months ended June 30, 2010 and $1.1 for the comparative period in 2009. General and administrative costs will generally vary from period to period depending on the specific business development, market research and shareholder relations initiatives undertaken and related travel required at such time to support the Company's corporate objectives. The increase in the G&A expenditures in the current quarter and on a year-to-date basis reflect the high level of business development activity undertaken by the company in pursuit of regional and/or global licensing arrangements. For the remainder of the year, we expect the G&A expenditures to remain at the current levels.
At June 30, 2010, the Company had cash and cash equivalents of $6.7 million, representing an increase of $5.0 million from December 31, 2009. The Company had working capital of $5.4 million at June 30, 2010, an increase of $4.6 million from December 31, 2009.
As at August 10, the Company has 96,303,443 common shares issued and outstanding. In addition, the Company has 7,558,500 options outstanding to purchase common shares of the Company. Of the options currently outstanding, approximately 3.9 million are exercisable into an equivalent number of common shares of the Company at exercise prices ranging from $0.50 to $1.00 and with an average exercise price of $0.71.
The Company also has 6,542,023 common share purchase warrants outstanding which expire between May 2011 and March 2015 and entitle warrant holders to purchase common shares at prices ranging between $0.27 and $0.65. Furthermore, 6,367,269 of these common share purchase warrants are subject to an acceleration of the expiry date if the closing price of the underlying Common Shares is higher than $1.75 per common share for a period of 10 consecutive trading days.
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