COPENHAGEN, Denmark, April 04, 2019 (GLOBE NEWSWIRE) -- Forward Pharma A/S (FWP) (“We,” “Forward” or the “Company” and, together with its subsidiaries, the “Group”), today reported consolidated financial results for the year ended December 31, 2018. Our net loss for the year ended December 31, 2018 was $(8.7) million, or $(0.09) per diluted share, versus net income of $917.1 million, or $2.30 per diluted share for the year ended December 31, 2017. Our research, development, general and administrative costs decreased from $37.6 million for the year ended December 31, 2017 to $12.3 million for the year ended December 31, 2018.
“In 2017, we set in motion a series of steps that reduced personnel and costs to align our organization around our intellectual property-based opportunities. The financial results reported today reflect the successful implementation of the reorganization as our operating expenses are significantly lower than historic levels. While we remain disappointed with the recent Federal Circuit decision regarding our U.S. patent interference proceeding, we are financially and structurally well positioned to focus our attention on the European patent opposition proceeding,” said Dr. Claus Bo Svendsen, Chief Executive Officer of Forward.
Operating Results for the Year Ended December 31, 2018
During the year ended December 31, 2017, we 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 year ended December 31, 2018, the Group did not earn any revenues under the License Agreement or from other sources. Accordingly, there were no revenues recognized during the year ended December 31, 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, in 2017. During the year ended December 31, 2018, there were no amounts due to Aditech.
Research and development costs for the years ended December 31, 2018 and 2017 were $2.7 million and $20.5 million, respectively. The decrease in research and development costs for the year ended December 31, 2018 is the result of lower costs incurred in connection with the EP2801355 patent (“‘355 Patent”) opposition in Europe (“Opposition Proceeding”), lower share-based compensation and the wind-down of our development efforts of dimethyl fumarate (DMF)-containing formulations.
General and administrative costs for the years ended December 31, 2018 and 2017 were $9.5 million and $17.1 million, respectively. The decrease in general and administrative costs in the year ended December 31, 2018 resulted primarily from a decrease in legal and accounting costs, lower patent advisory fees incurred in connection with the appeal of decision in the U.S. patent interference proceeding, the absence in 2018 of nonrecurring costs incurred in connection with the reorganization completed in 2017 and an overall reduction in overhead costs.
During the year ended December 31, 2018, the Group recognized a foreign exchange gain of $2.7 million, which resulted primarily from the strengthening of the USD compared to the DKK during the year. During the year ended December 31, 2017, the Company recognized a foreign exchange loss of $241,000, which resulted primarily from the negative effect of the weakening of the USD to the DKK during the year.
The tax benefit recognized for the year ended December 31, 2018 of $204,000 results in an effective tax rate of 2.3%, which is lower than the Danish statutory tax rate of 22.0%. The lower effective tax rate in 2018 is primarily the result of unrecognized deferred tax assets that do not meet the recognition criteria and a changed estimate related to the 2017 tax provision. The income tax expense recognized for the year ended December 31, 2017 of $267.4 million resulted in an effective tax rate of 22.6% which is slightly higher than the Danish statutory tax rate stated above. The slightly higher effective tax rate in 2017 was primarily caused by a higher tax rate in Germany, where the Group has taxable nexus in addition to Denmark, and certain nondeductible items.
Financial Position as of December 31, 2018
As of December 31, 2018, we have $82.5 million in cash and cash equivalents and our working capital is $82.2 million. We believe we have sufficient liquidity to allow us to meet our planned operating activities in the normal course of business beyond the year ending December 31, 2019. Unforeseen events could negatively affect our ability to fund planned operations in the future.
Update on Intellectual Property Proceedings
On January 29, 2018, the Opposition Division of the European Patent Office (“EPO”) concluded the 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 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.
On March 25, 2019, we received notice from Biogen of their exercise of the option to purchase the intellectual property in the U.S. associated with the Company pursuant to the License Agreement. We and Biogen have consummated the assignment of the U.S. intellectual property to Biogen upon the execution of assignment agreements and the payment of a nominal amount by Biogen to FWP IP ApS, and Biogen has assumed ownership and responsibility for the assigned U.S. intellectual property. In addition, we are no longer able to develop or commercialize any therapy for the treatment of any human disease or condition using DMF, including FP187®.
Investors are encouraged to read Forward’s Annual Report on Form 20-F that was filed today with the U.S. Securities and Exchange Commission. Forward’s Annual Report includes important information about the Group that is not disclosed herein including, but not limited to, risk factors and our audited financial statements as of December 31, 2018 and 2017 and for each of the years ended December 31, 2018, 2017 and 2016.
|Forward Pharma A/S|
|Condensed Consolidated Statement of Profit or Loss|
|(in thousands, except per share amounts)|
|Revenue from the License Agreement||$||-||$1,250,000|
|Cost of Aditech agreement||-||(25,000)|
|Research and development||(2,748)||(20,496)|
|General and administrative||(9,535)||(17,107)|
|Total operating (loss) income (1)||(12,283)||1,187,397|
|Foreign exchange gain (loss)||2,713||(241)|
|(Loss) income before taxes||(8,926)||1,184,488|
|Income tax benefit (expense)||204||(267,395)|
|Net (loss) income||$(8,722)||$917,093|
|Net (loss) income per share, basic (2)||$(0.09)||$2.41|
|Net (loss) income per share, diluted (2)||$(0.09)||$2.30|
|Weighted average number of shares used to compute net (loss) income per share basic (2)||94,671||380,133|
|Weighted average number of shares used to compute net (loss) income per share diluted (2)||94,671||398,943|
(1) Non-cash share-based compensation included in operating expenses totaled $6.2 million for the year ended December 31, 2018 and $7.1 million for the year ended December 31, 2017.
(2) In 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 Share represents two ordinary shares and each ordinary share has a nominal value of DKK 0.01.
|Forward Pharma A/S|
|Condensed Consolidated Statement of Financial Position|
|December 31,||December 31,|
|Cash and cash equivalents||$82,542||$109,554|
|Equity and Liabilities:|
|Total equity and liabilities||$83,332||$111,008|
About Forward Pharma:
Forward Pharma A/S is a Danish biopharmaceutical company that commenced development in 2005 of 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 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 Biogen’s net sales of Tecfidera® or other DMF products for multiple sclerosis outside the U.S., dependent on, among other things, a favorable outcome in Europe with respect to the ‘355 Patent Opposition Proceeding, 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
Forward Looking Statements:
Certain statements in this press release may constitute “forward-looking statements” of Forward Pharma A/S within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements which contain language such as “believe,” “expect,” “anticipate,” “estimate,” “would,” “may,” “plan,” and “potential.” Forward-looking statements are predictions only, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those expressed in such statements. Many such risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking statements and include, among others, risks related to the following: the satisfaction of certain conditions, and the accuracy of certain representations of the Company, in the Settlement and License Agreement entered into with subsidiaries of Biogen Inc. and certain other parties thereto; our ability to obtain, maintain, enforce and defend issued patents with royalty-bearing claims; our ability to prevail in or obtain a favorable decision in the ‘355 patent European Opposition Proceeding, after all appeals; the expected timing for key activities and an ultimate ruling in such legal proceedings; the issuance and term of our patents; future sales of Tecfidera®, including impact on such sales from competition, generic challenges, regulatory involvement and pricing pressures; the scope, validity and enforceability of our intellectual property rights in general and the impact on us of patents and other intellectual property rights of third parties; and the sufficiency of the Company's cash resources. Certain of these and other risk factors are identified and described in detail in certain of our filings with the United States Securities and Exchange Commission, including our Annual Report on Form 20-F for the year ended December 31, 2018. We are providing this information as of the date of this release and do not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.