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Total revenues for the quarter were $0.4 million, and net loss was $4.2million or $0.17 per share. Cash and cash equivalents was $18.4 million as ofSeptember 30, 2008 compared to $23.2 million as of June 30, 2008, and $28.4million on December 31, 2007. The Company's net cash outflow from operationsfor the quarter and nine months ended September 30, 2008 was approximately$3.4 million and $9.4 million, respectively. The Company believes it hasadequate cash resources to support its operations into the first half of 2009based on its current development and operating plans. The Company continuesto evaluate strategic alternatives, which may include seeking strategicpartners, a merger and/or the sale of all or part of its operations andassets.
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"During the third and fourth quarters, we have made continued progresswith our lead product candidate, L-MTP-PE, in Europe where we completed apresentation to the Scientific Advisory Group on Oncology (SAG-O) of theCommittee for Medicinal Products for Human Use (CHMP), the scientificcommittee of the European Medicines Agency (EMEA) on November 6. The CHMPwill consider the responses from the SAG-O as well as the information we haveprovided in assessing the marketing authorization application for L-MTP-PE atits meeting on November 17-20. We believe our responses and, if required, ourpresentation to the CHMP will adequately address the remaining open questionsand support a positive opinion for L-MTP-PE in patients with non-metastaticosteosarcoma," said Timothy P. Walbert, president and chief executive officer,IDM Pharma.
Quarter Ended September 30, 2008
Total revenues in the quarter ended September 30, 2008 were $0.4 million,compared to total revenues of $3.1 million for the three months endedSeptember 30, 2007. Substantially all of the revenues for the three monthsended September 30, 2008 were related to completion and final close out ofactivities under a government sponsored research grant at our Frenchsubsidiary, while substantially all of the revenues during the three monthsended September 30, 2007 were derived from research and development activitiesunder our collaboration agreement with sanofi-aventis for the UVIDEM program.As a result of sanofi-aventis' decision to terminate its participation in theUVIDEM development program in December 2007, no further such revenues relatedto UVIDEM were recognized after the first quarter of 2008.
Research and development (R&D) expenses decreased to $3.1 million for thethree months ended September 30, 2008 from $6.4 million for the three monthsended September 30, 2007. The decrease was primarily due to a $2.0 millionreduction in spending related to clinical development of UVIDEM, which weplaced on hold in December 2007 following sanofi-aventis' decision todiscontinue its participation in the development program, $0.9 million inreduced spending related to regulatory filings and manufacturing of L-MTP-PE,and $0.4 million in savings due to the closing of our Paris, France facility.
Selling, marketing, general and administrative (SG&A) expenses were $2.0million and $2.7 million for the three months ended September 30, 2008 and2007, respectively. Expenses for the 2008 period were lower primarily due tosavings from the closing of our Paris facility.
Interest income for the three months ended September 30, 2008 and 2007 was$0.2 million and $0.4 million, respectively. The decrease in interest incomeduring the 2008 period was due to lower average investment balances.
Interest expense for the three months ended September 30, 2008 and 2007was $0.4 million and negative $2.7 million, respectively, substantially all ofwhich is a non-cash interest expense to record the net change in the fairvalue of warrants issued in connection with the February and June 2007financings. The increase in the fair value during the 2008 period isprimarily due to the increase in our stock price and higher estimatedvolatility, compared to a decrease in fair value of the warrants during thecorresponding period in 2007, primarily as a result of a decrease in our stockprice during that period.
For the three months ended September 30, 2008, the Company recorded aforeign exchange gain of $0.6 million compared to a loss of $0.8 million forthe three months ended September 30, 2007 in connection with the inter-companyloan between its subsidiaries. The gain in 2008 was due to the decrease inthe exchange rate between the U.S. dollar and the euro during the quarterended September 30, 2008 partially offset by a lower inter-company loanbalance, compared to an increase in the exchange rate between the U.S. dollarand euro during the quarter ended September 30, 2007.
Net loss for the quarter ended September 30, 2008 was $4.2 million, or$0.17 per basic and diluted share, compared to a net loss of $3.9 million, or$0.15 per share in the corresponding period in 2007.
Nine Months Ended September 30, 2008
Total revenues were $2.9 million in the nine months ended September 30,2008, compared $9.1 million for the nine months ended September 30, 2007.Substantially all of the revenues for both periods were derived from researchand development activities under our collaboration agreement with sanofi-aventis for the UVIDEM program. During the nine months ended September 30,2008, we also had $0.4 million in revenues related to completion and finalclose out of activities under a government sponsored research grant at ourFrench subsidiary. As a result of sanofi-aventis' decision to terminate itsparticipation in the UVIDEM development program in December 2007, no furthersuch revenues related to UVIDEM were recognized after the first quarter of2008.
Research and development (R&D) expenses decreased to $10.2 million for thenine months ended September 30, 2008 from $17.1 million for the nine monthsended September 30, 2007. The decrease was primarily due to a $5.0 millionreduction in spending related to clinical development of UVIDEM after weplaced development on hold in December 2007, $1.6 million in savings resultingfrom lower headcount and closing of the Company's Paris facilities, and a $0.2million reduction in spending related to regulatory filings and manufacturingof L-MTP-PE.
Selling, marketing, general and administrative (SG&A) expenses were $7.0million and $9.7 million for the nine months ended September 30, 2008 and2007, respectively. The expenses in 2007 included $0.5 million in fees paidto an investment advisor in relation to the $12.9 million private equityfinancing completed in February 2007, $0.8 million in severance benefits forthe Company's former CEO and $0.5 million in increased spending on finance-related consultants compared to the 2008 period. Expenses for 2008 were alsolower due to $0.7 million in savings from the closing of the Paris, Francefacility.
Restructuring expenses were $3.7 million for the nine months endedSeptember 30, 2008, which included $3.1 million of severance benefits and $0.6million of shutdown costs related to the closing of our facility in Paris,France.
Contract settlement income was $5.7 million in the nine months endedSeptember 30, 2008, and was related to amounts received from sanofi-aventis inconnection with the termination of its participation in the UVIDEM developmentprogram in December 2007. The settlement was classified as a reduction ofexpense in the Company's statement of operations.
Interest income for the nine months ended September 30, 2008 and 2007 was$0.6 million and $0.8 million, respectively. Higher interest income in 2007was the result of higher cash investment balances due to the February and June2007 financings.
Interest expense for the nine months ended September 30, 2008 and 2007 was$4.6 million and negative $2.8 million, respectively, substantially all ofwhich is a non-cash interest expense to record the net change in the fairvalue of warrants issued in connection with the February and June 2007financings. The increase in the fair value during the 2008 period isprimarily due to the increase in our stock price and higher estimatedvolatility, compared to a decrease in fair value of the warrants during thecorresponding period in 2007, primarily as a result of a decrease in our stockprice during that period.
For the nine months ended September 30, 2008, the Company recorded aforeign exchange loss in connection with the inter-company loan between itssubsidiaries of $0.2 million, compared to a foreign exchange loss of $1.3million for the nine months ended September 30, 2007. The larger loss in 2007was primarily due to an increase in the exchange rate between the U.S. dollarand the euro during the 2007 period, along with a higher inter-company loanbalance. In 2008, the exchange rate initially increased during the firstquarter, but decreased thereafter, resulting in a smaller net foreign exchangeloss for the nine month period.
Net loss for the nine months ended September 30, 2008 was $16.7 million,or $0.66 per basic and diluted share, compared to a net loss of $15.7 million,or $0.80 per share in the corresponding period in 2007.
Update on L-MTP-PE Regulatory Status
In January 2008, the Company announced that, following presentation ofdata at an oral explanation hearing before the Committee for Medical Productsfor Human Use (CHMP), the scientific committee of the EMEA, the CHMPdetermined in a non-binding opinion that L-MTP-PE suggested a possibleclinical benefit in terms of survival and granted the Company a clock-stop, ortime extension. The clock-stop allowed IDM Pharma additional time to respondto remaining questions regarding the Marketing Authorization Application(MAA). At that time, the CHMP requested clarification of the existing data inorder to gain assurance about the quality of the data before drawing any finalconclusions from the data presented. In addition, the Company was required toaddress a number of remaining questions relating to chemistry, manufacturingand controls (CMC).
In April 2008, the European regulatory authorities conducted an inspectionof the Children's Oncology Group (COG) to assess the quality of the overallsurvival data from the 2006 confirmatory database included in the Company'sapplications for regulatory approval, and to review Good Clinical Practice(GCP) compliance of the COG in terms of patient randomization andstratification, overall survival data collection, and study monitoring. TheCompany supported the COG in this effort.
Following its June and September 2008 meetings, the CHMP requested theCompany to provide additional data analyses from the Phase 3 L-MTP-PE trialwhile at the same time determining that the COG Phase 3 trial is compliantwith GCP and that the database from this pivotal study can be reliably used inthe evaluation process of the MAA. The Company also received feedback fromthe CHMP that there are no major objections remaining related to CMC.
While the Company satisfactorily addressed issues related to the positivebenefit/risk assessment reached at the oral explanation meeting with the CHMPin January 2008, the CHMP invited the Company to present to its ScientificAdvisory Group on Oncology (SAG-O), which meeting was held on November 6, 2008and potentially to present to the CHMP at its monthly meeting November 17-20to address remaining open issues arising from the assessment by the Rapporteurand Co-Rapporteur appointed by the CHMP to assess scientific matters relatedto L-MTP-PE. The open questions relate primarily to the data analysis in theMAA and include mechanism of action, subgroup analyses, drug-druginteractions, patient censoring and adverse events. The SAG-O is regularlyconvened at the request of the CHMP to provide independent advice onscientific and technical matters relating to oncology products underevaluation by the CHMP, or on any other scientific issue relevant to CHMP'sreview of oncology products. The Company now believes that it will receive afinal opinion from the CHMP in November of 2008 and a final decision from theEuropean Commission in the first quarter of 2009.
The Company believes its responses to the questions posed to the SAG-O, aswell as its written responses and, if required, the presentation to the CHMPat its November meeting will adequately address the remaining open questionson the MAA and support a positive opinion for L-MTP-PE in patients with non-metastatic osteosarcoma. However, if the Company receives a negative opinionfrom the CHMP, it will have to determine which options are available to it atthat time, which may include seeking a reexamination of the negative opinionby CHMP or withdrawing the MAA in Europe. In addition, the Company wouldconsider implementing significant cost-cutting measures, including a possibleworkforce reduction and the termination of L-MTP-PE development activities.The Company would also continue to assess strategic alternatives, including apossible merger or acquisition transaction, a reorganization involving in-licensing or acquisition of products, or the termination of the Company'soperations as a going concern.
As previously announced, in the United States the Company continues towork with the COG as well as external experts and advisors to gather patientfollow up data from the Phase 3 clinical trial of L-MTP-PE and to respond toother questions in the non-approvable letter the Company received from theU.S. Food and Drug Administration (FDA). The Company now expects to file anamended NDA to address issues raised by the FDA by the end of the firstquarter of 2009 as it focuses its resources in the near term on the securing apositive opinion for L-MTP-PE in the EU.
L-MTP-PE was granted orphan drug status in the United States in 2001 andin Europe in 2004. In Europe, the MAA was filed in November 2006 and in theUnited States, the NDA was submitted to FDA in October 2006 and was acceptedfor review in December 2006.
About IDM Pharma
IDM Pharma is focused on the development of innovative cancer productsthat either destroy cancer cells by activating the immune system or preventtumor recurrence by triggering a specific adaptive immune response. IDMPharma is dedicated to maximizing the full therapeutic and commercialpotential of each of its innovative products to address the needs of patientsand the physicians who treat these patients.
For more information about the company and its products, visithttp://www.idm-pharma.com.
Forward-Looking Statements
This press release includes forward-looking statements that reflectmanagement's current views of future events including statements regarding thetimeframe in which the Company's cash will be sufficient to meet plannedoperations, the Company's plans to address the remaining questions withrespect to the MAA, the belief that the Company's responses to the questionsposed to the SAG-O, as well as its written responses and, if applicable, thepresentation it will make to the CHMP at its November meeting will adequatelyaddress the open questions on the MAA and support approval of L-MTP-PE from anoverall clinical benefit/risk standpoint, the expected timing of a finalopinion from the CHMP and of a final regulatory decision regarding the MAA inthe European Union, and the possible options the Company may pursue if itreceives a negative opinion from the CHMP, as well as the Company's plans tocollect, analyze and submit additional Phase 3 data in an amended NDA for L-MTP-PE, including the expected timing for such amended NDA, and to respond toother matters raised by the FDA and plans to evaluate strategic alternatives.Actual results may differ materially from the forward-looking statements dueto a number of important factors, including, but not limited to, whether theCompany will be able to respond to the remaining issues with regard to the MAAto the satisfaction of the CHMP, whether the CHMP will ask the Company forfurther information to address remaining or additional issues with regard tothe MAA, which would delay the timing of a final opinion from the CHMP,whether the final opinion of the CHMP will be consistent with the non-bindingopinion of the CHMP, whether CHMP will issue a negative opinion which wouldcause the Company to immediately impair and take a net charge related to L-MTP-PE, which would result in a substantially lower value of the assets thanreflected in the Company's unaudited condensed consolidated financialstatements for the quarter ended September 30, 2008, whether the EuropeanCommission will follow the final opinion of the CHMP once issued, whether thetiming for the final opinion of the CHMP and the regulatory decision in Europewill occur as expected by the Company, the timing of filing an amended NDAwith the FDA, how a negative opinion from the CHMP would affect the filing ofan amended NDA with the FDA, the possibility that additional data from thePhase 3 clinical trial of L-MTP-PE and other information in any amendment tothe NDA for L-MTP-PE submitted by the Company may not provide adequate supportfor regulatory approval of L-MTP-PE in the United States within the timeframeexpected by the Company, if at all, whether the Company will be able tomanufacture and commercialize L-MTP-PE even if it is approved by regulatoryauthorities, whether the Company will be able to complete any potentialstrategic transaction on terms acceptable to the Company's stockholders, how anegative opinion from the CHMP or the volatile economic environment willaffect the Company's efforts to complete a strategic transaction, and whetherthe cash resources of the Company will be sufficient to fund operations asplanned. These and other risks affecting the Company and its drug developmentprograms, intellectual property rights, personnel and business are more fullydiscussed in the Company's Quarterly Report on Form 10-Q filed with the SECfor the quarter ended September 30, 2008 and other periodic reports filed withthe SEC. The Company expressly disclaims any intent or obligation to updatethese forward-looking statements, except as required by law.IDM PHARMA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three months ended Nine months ended September 30, September 30, 2008 2007 2008 2007 Revenues: Related party revenue $- $3,113,000 $2,401,000 $8,994,000 Research grants and contract revenue 392,000 - 444,000 55,000 License fees, milestones and other revenues 5,000 10,000 12,000 30,000 Total revenues $397,000 $3,123,000 $2,857,000 $9,079,000 Costs and expenses: Research and development 3,061,000 6,429,000 10,199,000 17,127,000 Selling and marketing 209,000 246,000 445,000 448,000 General and administrative 1,779,000 2,477,000 6,593,000 9,216,000 Restructuring expense (31,000) - 3,732,000 - Contract settlement income from related party - - (5,652,000) - Total costs and expenses 5,018,000 9,152,000 15,317,000 26,791,000 Loss from operations (4,621,000) (6,029,000) (12,460,000) (17,712,000) Interest income 174,000 422,000 624,000 758,000 Interest expense related to warrants (368,000) 2,719,000 (4,638,000) 2,825,000 Other expenses, net - (23,000) - (23,000) Foreign exchange gain (loss) 639,000 (837,000) (181,000) (1,299,000) Loss before income tax (4,176,000) (3,748,000) (16,655,000) (15,451,000) Income tax expense (49,000) (117,000) (94,000) (217,000) Net loss $(4,225,000) $(3,865,000) $(16,749,000) $(15,668,000) Weighted average number of shares outstanding 25,245,400 25,146,206 25,203,060 19,703,272 Basic and diluted loss per share $(0.17) $(0.15) $(0.66) $(0.80) Comprehensive loss: Net loss $(4,225,000) $(3,865,000) $(16,749,000) $(15,668,000) Other comprehensive (loss) gain (1,912,000) 1,094,000 (518,000) 1,638,000 $(6,137,000) $(2,771,000) $(17,267,000) $(14,030,000) IDM PHARMA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) September 30, December 31, 2008 2007 ASSETS Current assets: Cash and cash equivalents $18,382,000 $28,382,000 Other current assets 834,000 4,786,000 Total current assets 19,216,000 33,168,000 Property and equipment, net 337,000 513,000 Patents, trademarks and other licenses, net 2,862,000 2,734,000 Goodwill 2,812,000 2,812,000 Other long-term assets 479,000 832,000 Total Assets $25,706,000 $40,059,000 LIABILITIES AND STOCKHOLDERS' EQUITY Common stock warrants $ 5,087,000 $450,000 Other current liabilities 8,820,000 11,712,000 Other liabilities 1,220,000 1,874,000 Stockholders' equity 10,579,000 26,023,000 Total liabilities and stockholders' equity $25,706,000 $40,059,000
SOURCE IDM Pharma, Inc.
