General News

by Sophiris Bio News Release

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SAN DIEGO &VANCOUVER, British Columbia–(BUSINESS WIRE)–Sophiris Bio Inc. (Sophiris, NASDAQ:SPHS, TSX: SHS) (the “Company” or “Sophiris”), a biopharmaceutical company developing a clinical-stage, targeted treatment for the symptoms of benign prostatic hyperplasia (BPH or enlarged prostate), today announced financial results and recent key operational highlights for the three and nine months endedSeptember 30, 2013.

Recent Key Operational Highlights

  • OnOctober 28, 2013, the Company announced that enrollment had begun and the first patients had been dosed in a Phase 3 clinical trial of PRX302 (topsalysin) as a treatment for lower urinary tract symptoms of benign prostatic hyperplasia (BPH or enlarged prostate). The Phase 3 international, multi-center trial, called the PLUS-1 study, will enroll approximately 440 patients. The randomized, double-blind and vehicle-controlled trial will assess the safety and efficacy of a single intraprostatic injection of PRX302 (0.6 µg/g prostate) for the treatment of BPH. The primary endpoint is the International Prostate Symptom Score (IPSS) total score change from baseline over 52 weeks. Secondary endpoints include Qmax (maximum urine flow) change from baseline over 52 weeks.
  • OnAugust 23, 2013, the Company announced that it had closed its initial U.S. public offering. Under the offering, the Company issued 13,000,000 common shares at a price of$5.00per share for aggregate gross proceeds of$65 million.
  • Upon the closing of the Company’s initial public offering onThe NASDAQ Stock Market,Joseph L. Turnerwas formally appointed to the Company’s Board of Directors. Mr. Turner has more than 25 years of financial management experience in the biotech and pharmaceutical industries.Mr. Turnercurrently serves on the Boards of Directors and is the chair of the audit committees of three publicly-traded pharmaceutical companies.
  • OnAugust 9, 2013, the Company’s Board of Directors approved a 52-for-1 share consolidation to increase the Company’s share price to meet the minimum share price requirements ofThe NASDAQ Stock Market.

“During the third quarter Sophiris successfully completed an initial U.S. public offering and raised the capital necessary to advance PRX302 into its first Phase 3 clinical trial for a treatment for enlarged prostate,” statedRandall Woods, President and CEO ofSophiris Bio. “Our team has quickly mobilized since completing the offering and already enrolled the first patients into the first Phase 3 trial of PRX302. Building off of the success of the previously completed Phase 2 trial, we are focused on steady execution of the PRX302 Phase 3 clinical program.”

Financial Results for the Third Quarter Ended September 30, 2013

The Company reported a net loss of$3.0 million($0.31per share) for the three months endedSeptember 30, 2013, compared to a net loss of$5.6 million($1.79per share) for the three months endedSeptember 30, 2012.

Research and development expenses

Research and development expenses were$2.1 millionfor the three months endedSeptember 30, 2013compared to$3.4 millionfor the three months endedSeptember 30, 2012. The decrease in research and development costs is attributable to the following:

  • A$0.4 milliondecrease in costs associated with the transfer and scale-up of manufacturing activities for PRX302;
  • A$0.2 milliondecrease in costs associated with certain non-clinical activities, specifically a repeat dose monkey study and a rat fertility study both completed in 2012; and
  • A$0.4 milliondecrease in the costs associated with the Company’s Phase 1/2 transrectal clinical trial.

Research and development costs included stock-based compensation charges of$0.1 millionfor the three months endedSeptember 30, 2013which was comparable to the three months endedSeptember 30, 2012.

General and administrative expenses

General and administrative expenses were$0.9 million for the three months endedSeptember 30, 2013compared to$2.0 million for the three months endedSeptember 30, 2012. This decrease is partially due to a$0.6 milliondecrease in market research costs. The remaining decrease is associated with a reduction in personnel related costs and consulting costs which were offset partially by an increase in corporate insurance and stock compensation expense. General and administrative cost included stock based compensation expense of$0.2 million for the three months ended September 30, 2013 as compared to$0.1 million for the three months ended September 30, 2012.

Interest expense

Interest expense, net was$0.3 millionfor the three months endedSeptember 30, 2013compared to$0.4 millionin the same period in 2012. This decrease resulted from a reduction in interest expense related to the Company’s promissory notes withOxford Finance. Interest expense related to Company’s promissory notes withOxford Financeis expected to decline over the term of the loan as the total principal outstanding on the loan is paid down.

Other income

Other income was$0.4 millionfor the three months endedSeptember 30, 2013as compared to$0.2 millionfor the three months endedSeptember 30, 2012. This change was primarily due to a$0.2 milliongain recognized for the change in the fair value of the Company’s warrant liability from the initial recognition date of the warrant liability, the date of our initial public offering, toSeptember 30, 2013. As a result of a change in the functional currency ofSophiris Bio Inc.to the U.S. dollar, the Company was required to recognize a liability for the fair value of the Company’s previously issued warrants which were issued with an exercise price denominated in Canadian dollars. The Company is required to reassess the fair value of the warrants each reporting period until the warrants expire or they are exercised. Any non-cash gain or loss on the fair value of the warrants will be recorded as a component of other income.

Financial Results for the Nine Months Ended September 30, 2013

The Company reported a net loss of$5.7 million($1.08per share) for the nine months endedSeptember 30, 2013, compared to a net loss of$15.9 million($5.25per share) for the nine months endedSeptember 30, 2012.

License revenue

During the nine months endedSeptember 30, 2013, the Company recorded as revenue a$5.0 million non-refundable milestone payment due from Kissei upon its achievement of certain development activities, as such milestone had been achieved during this period. The Company received payment of this milestone in April.

Research and development expenses

Research and development expenses were$6.1 millionin the nine months endedSeptember 30, 2013, compared to$10.2 millionin the nine months endedSeptember 30, 2012. The decrease in research and development costs is attributable to the following:

  • A$1.2 milliondecrease in the costs associated with the Company’s non-clinical activities, specifically a repeat dose monkey study and a rat fertility study both of which were completed in 2012;
  • A$2.3 milliondecrease in the costs associated with the transfer and scale-up of manufacturing activities for PRX302; and
  • A$1.3 milliondecrease in costs associated with the Company’s Phase 1/2 trial.

Offsetting these decreases is an increase of$0.8 millionfor cost associated with the Company’s first Phase 3 clinical trial. Also offsetting this decrease is a$0.4 millionsub-license royalty fee which was expensed during the nine months endedSeptember 30, 2013due toUVIC Industry Partnerships and The Johns Hopkins Universityassociated with the Company’s$5.0 million milestone payment from Kissei. Research and development expense included stock-based compensation charges of$0.1 millionfor both the nine months endedSeptember 30, 2013and the nine months endedSeptember 30, 2012.

General and administrative expenses

General and administrative expenses were$3.0 millionin the nine months endedSeptember 30, 2013, compared to$4.3 millionfor the nine months endedSeptember 30, 2012. The decrease of$1.3 million is partially due to a$0.8 milliondecrease in market research costs. The remaining decrease is associated with a reduction in personnel related costs and consulting costs which were offset partially by an increase in accounting and tax professional fees, corporate insurance and stock compensation expense. General and administrative costs included stock based compensation expense of$0.6 million for the nine months ended September 30, 2013 as compared to$0.4 million for the nine months ended September 30, 2012.

Interest expense

Interest expense was$1.1 millionin the nine months endedSeptember 30, 2013, compared to$1.5 millionin the same period in 2012. This decrease resulted from a reduction in interest expense related to the Company’s promissory notes withOxford Finance. Interest expense related to the Company’s promissory notes withOxford Financeis expected to decline over the term of the loan as the total principal outstanding on the loan is paid down.

Other income

Other income was$5,000for the nine months endedSeptember 30, 2013, compared to$0.1 millionfor the nine months endedSeptember 30, 2012. Included as a component of other income during the nine months endedSeptember 30, 2013was a$0.2 milliongain associated with the change in the fair value of the Company’s warrant liability. This gain was offset almost entirely by foreign currency exchange losses.

Income tax expense

The milestone payment from Kissei was subject to a ten percent Japanese withholding tax. As a result the Company recorded an income tax expense of$0.5 millionfor the nine months endedSeptember 30, 2013. The Company will be eligible to utilize the withholding tax to offset future taxes due inJapan, if any. Given the uncertainty around the Company’s ability to generate future taxable income, the Company has expensed the withholding tax during the nine months endedSeptember 30, 2013.

For complete financial results, please see the Company’s website at www.sophiris.com.

About Sophiris

Sophiris Bio Inc.is a biopharmaceutical company developing a clinical-stage, targeted treatment for the symptoms of benign prostatic hyperplasia (BPH or enlarged prostate), which it believes is an unsatisfied market with significant market potential. Sophiris’ lead candidate for BPH, PRX302, is designed to be as efficacious as pharmaceuticals, less invasive than the surgical interventions, and without the sexual side effects seen with existing treatments. Sophiris initiated its first Phase 3 clinical trial of PRX302 in October 2013. For more information, please visit www.sophiris.com.

Certain statements included in this press release may be considered forward-looking, including the quote of our President and CEO and any expectations relating to our Phase 3 trial of PRX302 or our capital requirements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Sophiris’ current beliefs as well as assumptions made by and information currently available to Sophiris and relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, clinical trial enrollment and results,market acceptance and future commitments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Sophiris in its public securities filings; actual events may differ materially from current expectations. Sophiris disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

         
Sophiris Bio Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(unaudited)

         
    September 30,
2013
  December 31,
2012
         
Assets        
Current assets:        
Cash and cash equivalents   $ 54,739     $ 9,721  
Other receivables   30     71  
Deferred financing costs       937  
Prepaid expenses   3,212     593  
Total current assets   57,981     11,322  
         
Property and equipment, net   102     163  
Other long-term assets   19     44  
             
Total assets   $ 58,102     $ 11,529  
         
Liabilities and stockholders’ equity        
Current liabilities:        
Accounts payable   $ 1,600     $ 1,774  
Accrued expenses   1,233     2,839  
Current portion of promissory notes   6,724     5,895  
Total current liabilities   9,557     10,508  
         
Long-term promissory notes, less current portion   1,693     6,126  
Warrant liability   1,376      
         
Total liabilities   12,626     16,634  
         
Commitments and contingencies        
         
Stockholders’ equity (deficit):        
Common stock, unlimited authorized shares, no par value; 16,149,871 and 3,149,871 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively   111,218     54,215  
Common share purchase warrants       6,045  
Contributed surplus   13,567     8,379  
Accumulated other comprehensive (loss) gain   99     (46 )
Deficit accumulated during development stage   (79,408 )   (73,698 )
Total stockholders’ equity (deficit)   45,476     (5,105 )
Total liabilities and stockholders’ equity (deficit)   $ 58,102     $ 11,529  
                 
Sophiris Bio Inc.

Condensed Consolidated Statement of Operations and Comprehensive Loss

(in thousands, expect share and per share amounts)

(unaudited)

             
   

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

Cumulative period
from January 11,
2002 (date of
inception) to
September 30,
2013

    2013     2012     2013     2012    
Revenues:                    
                               
License revenue   $     $     $ 5,000     $     $ 8,000  
                     
Operating expenses:                    
Research and development   2,117     3,411     6,143     10,193     55,788  
General and administrative   883     1,980     3,009     4,342     27,487  
Total operating expenses   3,000     5,391     9,152     14,535     83,275  
                     
Other income (expense):                    
Interest income (expense), net   (313 )   (445 )   (1,064 )   (1,450 )   (2,977 )
Other income (expense), net   361     206     5     122     (341 )
Total other income (expense)   48     (239 )   (1,059 )   (1,328 )   (3,318 )
                           
Net loss before income taxes     (2,952 )     (5,630 )   (5,211 )   (15,863 )     (78,593 )
                     
Income tax expense           (500 )       (815 )
                               
Net loss   $ (2,952 )   $ (5,630 )   $ (5,711 )   $ (15,863 )   $ (79,408 )
                     
Basic and diluted loss per share  

$

(0.31 )

 

$

(1.79 )   $ (1.08 )   $ (5.25 )    
Weighted average number of outstanding shares — basic and diluted   9,509     3,150     5,293     3,021      
Other comprehensive income (loss) Currency translation adjustment   (154 )   211     146     108     99  
Total comprehensive loss   $ (3,106 )   $ (5,419 )   $ (5,565 )   $ (15,755 )   $ (79,309 )
                                         
Sophiris Bio Inc.

Condensed Consolidated Statement of Cash Flows

(in thousands)

(unaudited)

           
    Nine Months Ended

September 30,

   

Cumulative Period
From January 11,
2002 (date of
inception) to
September 30, 2013

    2013     2012      
Cash flows used in operating activities              
Net loss for the period   $ (5,711   ) $ (15,863 )     $ (79,408 )
Adjustments to reconcile net loss to net cash used by operating activities:              
Stock-based compensation   715     488       5,052  
Accretion of debt discount   299     391       1,029  
Depreciation of property and equipment   63     61       586  
Amortization of intangible assets       149       1,205  
Amortization of promissory note issuance costs   86     119       310  
Impairment loss       176       176  
Change in fair value warrant liability   (195 )         (195 )
Foreign exchange (gain) loss   216     (109 )     (1,453 )
Loss on disposal of assets             25  
Other             182  
Changes in operating assets and liabilities:              
Other receivables   36     142       21  
Prepaid expenses   (2,680 )   81       (3,483 )
Deferred financing costs             (936 )
Other long-term assets   6     (15 )     (38 )
Accounts payable and accrued expenses   (1,657 )   (637

)

 

  2,675  
Net cash used in operating activities   (8,822 )   (15,017 )     (74,252 )
               
Cash flows used in investing activities              
Purchases of property and equipment   (3 )   (26 )     (725 )
Proceeds from the disposal of property and equipment             11  
Acquisition of intangible assets             (1,372 )
Maturity of marketable securities             1,112  
Purchases of marketable securities             (1,112 )
Net cash flows used in investing activities   (3 )   (26 )     (2,086 )
               
Cash flows from financing activities              
Issuance of common shares from private placement, net of issuance cost       8,285       50,179  
Issuance of common shares from public offering, net of issuance cost   57,816           60,844  
Issuance of preferred shares, net of issuance cost             465  
Cash acquired on reverse acquisition             818  
Issuance of common shares on exercise of warrants             8,702  
Issuance of common shares on exercise of stock options             514  
Cash received from the issuance of promissory notes             15,000  
Principal payments on notes payable   (3,903 )   (1,801 )     (7,092 )
Increase in lease obligations             120  
Capital lease payments             (120 )
Deferred financing costs              
Other             4  
Net cash provided by financing activities   53,913     6,484       129,433  
Effect of exchange rate changes on cash and cash equivalents   (70 )   375       1,644  
Net increase (decrease) in cash and cash equivalents   45,018     (8,184 )     54,739  
Cash and cash equivalents at beginning of period   9,721     23,410        
Cash and cash equivalents at end of period   $ 54,739     $ 15,226       $ 54,739  

 

Company Contact:
Sophiris Bio Inc.
Peter Slover, Chief Financial Officer
858-777-1760
or
Corporate Communications and Investor Relations:
Canale Communications
Jason Spark, 619-849-6005
jason@canalecomm.com
or
Equicom Group
Michael Moore, 619-467-7067
mmoore@tmxequicom.com

Source:Sophiris Bio Inc.