DGAP-News: PAION AG REPORTS FINANCIAL RESULTS FOR THE FIRST HALF-YEAR 2020
DGAP-News: PAION AG
/ Key word(s): Half Year Results
PAION AG REPORTS FINANCIAL RESULTS FOR THE FIRST HALF-YEAR 2020
- Significant progress with remimazolam with marketing approvals in the important markets U.S., Japan and China
- Successful launch of Anerem(R) (remimazolam) by licensee Mundipharma in Japan
- Patient recruitment completed in EU Phase III trial
- Remimazolam license for Southeast Asia granted to Hana Pharm
- Approval of compassionate use for remimazolam in Belgium and in Italian hospital
- Cash and cash equivalents of EUR 12.4 million as of 30 June 2020
- Conference call today at 2:00 p.m. CEST (1:00 p.m. BST/8:00 a.m. EDT)
Aachen (Germany), 12 August 2020 - The specialty pharmaceutical company PAION AG (ISIN DE000A0B65S3; Frankfurt Stock Exchange, Prime Standard: PA8) today reports its consolidated financial results according to International Financial Reporting Standards (IFRS) for the first half-year 2020.
Dr. Jim Phillips, CEO of PAION AG, commented: "With the approval of remimazolam in three major markets - the U.S., Japan and China - in the first half of the year, we are at a pivotal time in PAION's history as our product is launched and begins to generate sales revenues, with royalties of up to 25% for PAION, depending on the market. In addition, we are making good progress with remimazolam in our home territory of Europe. Despite the coronavirus pandemic, we were able to complete patient recruitment for the European Phase III study in general anesthesia and are currently analyzing the data. If all goes as planned, we expect to submit an extension to the MAA that is under review for procedural sedation next year. We look forward to providing updates on our own progress and plans and those of our partners in the coming months."
In January 2020, Cosmo Pharmaceuticals (Cosmo) sublicensed BYFAVOTM U.S. rights to Acacia Pharma (Acacia). In July 2020, after market approval of BYFAVOTM, PAION, Cosmo and Acacia agreed to assign the BYFAVOTM license agreement signed in 2016 between Cosmo and PAION to Acacia. The terms of the license agreement remain unchanged but will now be between PAION and Acacia, with Cosmo no longer being a party to the agreement.
Acacia plans to launch BYFAVOTM in the U.S. in the second half of 2020. As a prerequisite, BYFAVOTM will need to be classified by the Drug Enforcement Administration (DEA) under the so-called Controlled Substances Act. The drug classification schedule classifies drugs into groups based on risk of abuse. Midazolam, for example, is included in Schedule IV. Substances in this schedule have a lower potential for abuse relative to substances in Schedule III. PAION expects that remimazolam will receive the same classification as midazolam.
Procedural sedation: PAION submitted a Marketing Authorization Application (MAA) for procedural sedation to the European Medicines Agency (EMA) in November 2019. A decision on market approval is currently expected in the beginning of 2021 at the earliest.
General anesthesia: PAION is currently evaluating the data from a Phase III study in general anesthesia evaluating ASA III/IV (American Society of Anesthesiologists classification III to IV) patients. The randomized, single-blind, propofol-controlled, confirmatory Phase III trial was originally planned to enroll approximately 500 ASA III/IV patients undergoing planned surgery. Due to the coronavirus pandemic, patient recruitment was completed in April 2020 with 424 patients enrolled, as agreed to by the Data Monitoring Committee. The topline data are expected in the second half of 2020. Assuming approval in procedural sedation and positive results in the Phase III trial in general anesthesia, PAION plans to submit an extension of the MAA for remimazolam for general anesthesia as soon as the MAA for procedural sedation is approved. The review process for an extension application is generally faster than for an MAA.
Commercialization plans: PAION continues to conduct pre-commercialization activities. The build-up of its own distribution structure in Europe is dependent on PAION's ability to add more products to its commercial portfolio. Thus, PAION is also considering out-licensing remimazolam for commercialization in Europe.
Compassionate use: San Raffaele Hospital in Milan, Italy, one of the clinical sites for the Phase III trial for remimazolam in general anesthesia, had contacted PAION about providing remimazolam for the sedation of five intensive care unit (ICU) patients with COVID-19 due to a shortage of propofol and midazolam caused by the coronavirus pandemic. In June 2020, approval for compassionate use was granted by the local ethics committee for those patients, and PAION supplied the material free of charge. With currently significantly fewer COVID-19 patients on the ICU, an extension to additional patients is not planned for now.
In August 2020, the Belgian Federal Agency for Medicines and Health Products (FAMHP) granted approval for the compassionate use of remimazolam in Belgium. Under the program, remimazolam can be used for sedation of intensive care unit patients with COVID-19, and as a substitute for current standard of care in general anesthesia for which there are currently shortages due to the coronavirus pandemic. The use is limited to physicians who have experience with remimazolam. PAION had been contacted by the Belgian regulatory authority as to whether remimazolam could be delivered nationwide because of the current shortages of propofol and midazolam due to the coronavirus pandemic. PAION will fulfill requests from hospitals as quickly and as much as possible and will deliver the material initially free of charge.
Licensee activities in other territories
In China, licensee Yichang Humanwell received market approval for Ruima(R) (remimazolam) in procedural sedation by the Chinese National Medical Products Administration (NMPA) in July 2020 and has recently launched Ruima(R). Also in July 2020, Yichang Humanwell started a Phase III trial with remimazolam in general anesthesia in China. The Phase III study is a multicentre, single-blind randomized comparative clinical trial of efficacy and safety of remimazolam versus propofol in induction and maintenance of general anesthesia in 516 elective surgery patients.
In South Korea, licensee Hana Pharm submitted a market approval dossier in general anesthesia in December 2019. Market approval is currently expected in 2020. In January 2020, PAION and Hana Pharm extended their license agreement for remimazolam to include Southeast Asia (Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam); Hana Pharm is responsible for development and the market approval process in these territories.
In Russia, licensee R-Pharm announced the successful completion of a Phase III trial in general anesthesia in November 2018. R-Pharm is currently preparing first market approval dossiers for the licensed territories.
In Canada, PAION expects its licensee Pharmascience to use the U.S. market approval dossier as the basis for filing for market approval for remimazolam.
Supply chain activities
PAION is building up the supply chain in order to be able to regularly provide remimazolam product to the licensees as well for PAION's potential own commercialization. Activities include establishing structures and processes and obtaining all necessary pharmaceutical permits.
Results of operations, financial position and net assets
Revenues in the first half-year 2020 amounted to KEUR 3,520 (prior-year period: KEUR 7,500) and mainly resulted from milestone payments in connection with the market approval of remimazolam in Japan and the license extension for remimazolam signed with Hana Pharm in January 2020 to include six additional countries in Southeast Asia.
Research and development expenses amounted to KEUR 6,399 in the first half-year 2020 (prior-year period: KEUR 6,173) and mainly relate to the EU Phase III trial in general anesthesia for which the data analysis is currently ongoing.
General administrative and selling expenses increased by KEUR 1,289 to KEUR 3,610 in the first half-year 2020 compared to the prior-year period. General administrative expenses decreased by KEUR 105 to KEUR 1,685 while selling expenses increased by KEUR 1,394 to KEUR 1,925. The increase of selling expenses particularly relates to pre-commercial activities and the set-up of a supply chain for remimazolam.
Income taxes amounted to KEUR 740 in the first half-year 2020 (prior-year period: KEUR 1,166) and relate to tax claims for reimbursement of parts of the research and development expenses from the British tax authorities. The decrease in comparison to the prior-year period despite slightly increased research and development expenses is mainly due to a cap of the claim based on the net result of PAION UK Ltd.
The net loss for the first half-year 2020 amounted to KEUR 6,052 compared to a net income of KEUR 586 in the prior-year period. This corresponds to a decrease of the net result in the amount of KEUR 6,638 compared to the first half-year 2019 which is mainly attributable to lower revenues and higher selling expenses than in the prior-year period.
Compared to 31 December 2019, cash and cash equivalents decreased by KEUR 6,373 to KEUR 12,414 at the end of the current reporting period.
The decrease in equity of KEUR 2,999 compared to 31 December 2019 mainly results from the net loss of the first half-year 2020 on the one hand and the issue of a total of 1,530,327 new shares on the other hand, thereof 1,525,327 from the conversion of a part of the convertible notes issued in the prior year. As of 30 June 2020, the equity ratio was 56.3% (31 December 2019: 59.1%).
Risks and opportunities
PAION's focus for the remainder of 2020 is on the analysis of the European Phase III study data in general anesthesia, market approval processes in Europe and other regions, the build-up of the supply chain and commercial manufacture of remimazolam, as well as the market preparation and launch of remimazolam in various territories.
Research and development expenses are expected to amount to between approximately EUR 10 million and approximately EUR 12 million, depending on the progress of development. General administrative and selling expenses are expected to amount to between approximately EUR 7 million and approximately EUR 9 million depending on the progress of the build-up of the supply chain and the volume of pre-commercial activities. Income from tax credits on parts of the research and development expenses from British tax authorities is expected in an amount of approximately EUR 1 million to approximately EUR 1.5 million. The previously expected amount of up to approximately EUR 0.5 million was mainly based on a change in calculation and capping rules already enacted for which implementation was postponed by one year at short notice during the reporting period. Net result is expected to amount to between approximately EUR 0.5 million and approximately EUR 4 million in 2020.
This outlook assumes that PAION and licensee activities progress as expected. In case of delays, in particular essential cost blocks and/or partly revenues would shift into 2021 or subsequent periods. Plans are also based on the current status of discussions with regulatory authorities. Additional unexpected requirements by regulatory authorities could lead to higher costs than planned and to delays in approvals and revenues based thereon. Also, potential effects of the coronavirus pandemic on PAION's business and the business of its partners could lead to delays and a shift of revenues and/or costs, although currently, no material effect of the pandemic on the results of operations, net assets and financial position of the PAION group is expected.
Based on current planning, cash and cash equivalents at hand secure a liquidity runway at least into the second half of 2021.
Additional funds could be required for a potential own commercialization of remimazolam in selected European markets, the execution of the multi-year pediatric development plan as well as for potential portfolio extensions. The total magnitude of potentially required funds will be dependent on PAION's decision on building up an own distribution and what an actual setup would look like, as well as on the magnitude and timing of incoming milestone and royalty payments from licensees. A final decision on building up an own distribution has not been made yet. The financing agreement of up to EUR 20 million concluded with the European Investment Bank (EIB) in 2019 and milestone and royalty payments expected in the next years could partially or completely cover a potential financing requirement depending on the decision on an own commercialization. The first tranche of EUR 5 million from the financing agreement with the EIB, which is already available, has not been drawn down yet. Availability of the further two tranches is dependent on certain conditions as e.g. the achievement of operational milestones. The loan can be drawn until mid-2021. A further utilization of the financing agreement on convertible notes with Yorkville in addition to the first tranche issued in September 2019 and entirely converted into new PAION shares until 8 July 2020 is not planned. The magnitude of royalties from licensees will depend on the success of commercialization in the U.S., Japan and the other territories and on remimazolam's price level and pace of market penetration. However, this can only be evaluated with sufficient certainty after the launch phase.
Key Consolidated Financial Figures, IFRS
The full half-year financial report will be available as of 12 August 2020 on PAION's website at https://www.paion.com/medien-und-investoren/investorcenter/finanzberichte/.
Conference call and webcast
To access the call, please dial:
* Germany +49 (0) 30 3001 90612,
* UK +44 (0) 20 3003 2666 and
* U.S. +1 212 999 6659
* Other countries: please use the UK number
When prompted, please provide the password "PAION". The conference call will be supplemented by a webcast presentation which can be accessed during the call at the following link: http://view-w.tv/819-1574-23002/en.
In Europe, PAION is seeking approval of remimazolam for general anesthesia and for procedural sedation. PAION submitted a Marketing Authorization Application (MAA) for procedural sedation in November 2019. The topline data of a Phase III trial in general anesthesia are expected in the second half of 2020.
PAION's mission is to be a leading specialty pharmaceutical company in the fields of anesthesia and critical care by bringing novel products to market to benefit patients, doctors & other stakeholders in healthcare.
PAION is headquartered in Aachen (Germany) with an additional site in Cambridge (United Kingdom).
12.08.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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