MethylGene Inc.
TSX : MYG

MethylGene Inc.

November 01, 2005 07:00 ET

MethylGene Announces Third Quarter 2005 Results

MONTREAL, QUEBEC--(CCNMatthews - Nov. 1, 2005) - MethylGene Inc. (TSX:MYG) a biopharmaceutical company, today announced operational and financial results for the third quarter ended September 30th, 2005.

Third Quarter Progress and Highlights:



- Completed enrolment in one Phase I, MGCD0103 monotherapy, dose
escalating trial in solid tumours and continued enrolment in three
MGCD0103 monotherapy dose escalating Phase I trials in both solid
and hematological tumours.

- Awaiting final site approval to commence the initial MGCD0103 Phase
I/II combination trial. This trial is expected to be opened for
patient enrolment in November at which point details of the trial
will be disclosed.

- Enrolment continues in the Phase II MG98 combination trial with
interferon alpha for kidney cancer. Completed enrolment for a
Phase I MG98 monotherapy trial which was previously reported at
ASCO in May 2005 in patients with refractory solid tumours.
Issuance of a U.S. patent covering the use of MG98 for the
treatment of cancer with Dacogen™ and Vidaza™, two other key
demethylating agents (US 6,953,783).

- Recognized revenue of $1.7 million from partnerships with Taiho
Pharmaceutical and EnVivo Pharmaceuticals.

- Continued progress in identifying isotypic selective HDAC
inhibitors in inflammation, CNS diseases, diabetes, and fungal
infections. For example, several HDAC inhibitors targeting
diabetes in a diabetic animal model, have shown encouraging results
when compared with a currently used anti-diabetic agent.
Optimization of these molecules is ongoing. Another HDAC inhibitor
when combined with ketaconazole has shown the ability to prolong
life in fungal-infected mice in a dose-dependant manner when
compared to treatment with ketaconazole alone.


"We are encouraged by the safety, pharmacokinetic, and pharmacodynamic properties of MGCD0103 as demonstrated in our Phase I single agent dose escalating trials. We look forward to starting the first of several Phase I/II combination trials and Phase II monotherapy trials with MGCD0103 in the near future with additional trials expected to begin in the coming quarters," said Mr. Donald F. Corcoran, President and CEO of MethylGene. "In contrast to many of our competitors, our understanding and use of our HDAC isotypic compound libraries provides us with the opportunity to investigate HDAC inhibition in non-oncology settings. Moreover, to further substantiate our specificity, we have begun to demonstrate that our HDAC inhibitors for cancer are only active in cancer models and not, for example, in a diabetes model, with the reverse also being observed. This further validates the potential value inherent in our library of HDAC inhibitors and medicinal chemistry expertise."

Financial Results

Total revenues for the third quarter ended September 30th were $1.7 million compared with $1.9 million for the third quarter of 2004. These revenues consist of contract revenues and license fees stemming from our partnerships with Taiho Pharmaceutical, Merck & Co., and EnVivo Pharmaceuticals. Total gross expenditures were $5.9 million up from $5.5 million in the third quarter of 2004. Gross research and development and general administration costs were $4.7 million and $1.1 million in the third quarter of 2005 compared to $4.0 million and $1.1 million in the third quarter of 2004, respectively. The quarter ended with $29.1 million in cash, cash equivalents, and short term investments. The Company believes that its cash position, with projected revenues from current collaborations; the projected timing of its clinical trials; and refundable investment tax credits; will be sufficient to carry out research and development activities into early 2007.



Upcoming Milestones:

- Commence additional clinical Phase I/II and Phase II trials with
MGCD0103 both as a monotherapy and in combination therapy in
various tumour types.

- Continue enrolment for MG98 Phase II combination trial with
interferon alpha.

- Goal to identify a clinical candidate for the multi-targeted kinase
inhibitor program within the next 3-9 months (H1 2006).

- Advance other research and preclinical programs towards the
identification and selection of additional clinical candidates.

- Disclose additional data for MGCD0103 clinical trials at
AACR-NCI-EORTC and ASH conferences.

- Continue to seek partnering and business/financial opportunities.


About MethylGene

MethylGene is a publicly traded biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics in cancer and infectious disease. Two cancer product candidates are currently in clinical trials: MGCD0103, partnered with Taiho Pharmaceutical for certain Asian countries, and MG98, partnered with MGI Pharma for North America.

MGCD0103 is currently in Phase I dose-escalation monotherapy trials against solid tumours and hematological malignancies. MG98 has entered a randomized two-step Phase II combination trial with interferon alpha in metastatic renal cell cancer. MethylGene has an exclusive license agreement with Merck & Co. for the development and commercialization of small molecule beta-lactamase inhibitors to overcome antibiotic resistance. MethylGene has a portfolio of preclinical programs for its multi-targeted kinase and histone deacetylase (HDAC) inhibitors for both oncology and non-oncology indications, and continues to seek partnering opportunities in these areas. Please visit MethylGene's website at www.methylgene.com.

Except for historical information, this news release may contain forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties,(which can be found in the Company's Annual Information Form dated December 31, 2004, and can be found on www.sedar.com) which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.



MethylGene Inc.
Incorporated under the Quebec Companies Act

INTERIM BALANCE SHEETS

As at Unaudited
September 30, December 31,
2005 2004
$ $
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ASSETS
Current
Cash and cash equivalents 5,901,340 2,046
Short-term investments 23,241,809 41,416,717
Research and development tax credits
receivable 1,686,000 690,000
Technology Partnership Canada receivable 12,516 125,158
Accounts receivable 611,704 389,338
Other current assets 1,254,232 1,280,937
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Total current assets 32,707,601 43,904,196
Property, plant and equipment 4,480,193 3,710,392
Intangible assets 2,015,853 1,887,109
---------------------------------------------------------------------
39,203,647 49,501,697
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness - 258,388
Accounts payable and accrued liabilities 3,193,144 2,817,614
Current portion of unearned revenue 511,824 1,722,475
Current portion of lease abandonment cost 147,731 -
Current portion of obligations under capital
leases 11,509 20,229
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Total current liabilities 3,864,208 4,818,706
Unearned revenue 2,292,488 2,163,832
Lease abandonment cost 249,181 -
Obligations under capital leases - 6,527
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Total liabilities 6,405,877 6,989,065
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Shareholders' equity
Capital stock 74,370,551 74,354,535
Contributed surplus 5,196,133 4,529,999
Deficit (46,768,914) (36,371,902)
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Total shareholders' equity 32,797,770 42,512,632
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39,203,647 49,501,697
---------------------------------------------------------------------
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MethylGene Inc.

INTERIM STATEMENTS OF OPERATIONS AND DEFICIT

For the periods ended Unaudited

Three-month period Nine-month period
ended September 30, ended September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
$ $ $ $
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REVENUES
Contract revenues
and license fees 1,691,256 1,860,319 5,621,193 6,583,848
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EXPENSES
Research and
development 4,695,250 4,038,754 13,521,843 12,272,851
Government
assistance (353,400) (948,749) (1,038,075) (1,859,815)
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Net research and
development 4,341,850 3,090,005 12,483,768 10,413,036
General and
administrative 1,097,747 1,109,011 3,548,559 3,335,116
Interest income (211,456) (234,835) (684,036) (537,538)
Lease abandonment
cost - - 441,781 -
Amortization of
property, plant
and equipment 12,877 12,176 35,884 38,777
Bank charges and
interest 5,101 3,828 13,194 22,466
Foreign exchange
loss 341,865 596,671 179,055 220,613
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5,587,984 4,576,856 16,018,205 13,492,470
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Net loss before
income taxes (3,896,728) (2,716,537) (10,397,012) (6,908,622)
Income taxes - - - 68,170
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Net loss for the
period (3,896,728) (2,716,537) (10,397,012) (6,976,792)

Deficit,
beginning of
period (42,872,186) (29,635,945) (36,371,902) (25,375,690)
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Deficit, end of
period (46,768,914) (32,352,482) (46,768,914) (32,352,482)
---------------------------------------------------------------------
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Basic and diluted
loss per share (0.18) (0.13) (0.48) (0.39)
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Weighted average
number of common
shares and
common share
equivalents 21,736,289 21,469,249 21,734,540 18,076,321
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MethylGene Inc.

INTERIM STATEMENTS OF CASH FLOWS

For the periods ended Unaudited

Three-month period Nine-month period
ended September 30, ended September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
$ $ $ $
---------------------------------------------------------------------

OPERATING
ACTIVITIES
Net loss for the
period (3,896,728) (2,716,537) (10,397,012) (6,976,792)
Item not affecting
cash:
Amortization of
property, plant
and equipment 303,001 276,113 858,659 841,181
Amortization of
intangible assets 31,382 32,492 91,040 88,026
Unrealized
foreign exchange
(gain) losses (10,689) 219,035 (450) 395,517
Write-down of
patents 181 8,370 181 165,803
Loss (gain) on
disposal of
property, plant
and equipment (120) (949) (542) (949)
Warrants related
to license fees 1,350 - 3,448 -
Non-cash
compensation
expense 146,178 138,153 612,584 1,082,021
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(3,425,445) (2,043,323) (8,832,092) (4,405,193)
Changes in
non-cash working
capital balances
relating to
operations 146,394 1,027,101 (1,761,054) 2,781,492
Changes in
long-term portion
of unearned
revenues (129,306) (44,315) 173,403 (1,802,091)
Changes in
long-term portion
of lease
abandonment cost (34,290) - 249,181 -
---------------------------------------------------------------------
Cash flows related
to operating
activities (3,442,647) (1,060,537) (10,170,562) (3,425,792)
---------------------------------------------------------------------

INVESTING
ACTIVITIES
Acquisitions of
property, plant
and equipment (91,744) (131,316) (1,628,988) (791,283)
Acquisitions of
intangible assets (104,262) (103,929) (219,965) (315,170)
Purchases of
short-term
investments (15,670,450) (31,459,639) (45,554,051) (94,770,879)
Proceeds from
maturities of
short-term
investments 15,356,940 15,197,001 63,729,409 82,310,901
Proceeds from
disposition of
property, plant
and equipment 120 1,350 1,070 1,350
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Cash flows
related to
investing
activities (509,396) (16,496,533) 16,327,475 (13,565,081)
---------------------------------------------------------------------

FINANCING
ACTIVITIES
Issuance of
common shares - 1,618,780 16,016 23,011,480
Redemption of
common shares - - - (28)
Share issue costs - (559,979) - (2,624,873)
Repayment of
obligation under
capital leases (5,156) (4,864) (15,247) (14,383)
Repayment of
long-term debt - (3,289) - (9,870)
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Cash flows
related to
financing
activities (5,156) 1,050,648 769 20,362,326
---------------------------------------------------------------------

Increase
(decrease) in
cash, cash
equivalents and
bank
indebtedness (3,957,199) (16,506,422) 6,157,682 3,371,453
Cash, cash
equivalents and
bank
indebtedness,
beginning of
period 9,858,539 19,055,017 (256,342) (822,858)
---------------------------------------------------------------------
Cash and cash
equivalents, end
of period 5,901,340 2,548,595 5,901,340 2,548,595
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash
equivalents
consist of:
Cash 1,284,533 702,595 1,284,533 702,595
Cash equivalents 4,616,807 1,846,000 4,616,807 1,846,000
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Supplemental
information
Interest paid 240 728 1,071 12,295
Income tax paid - - - 68,170
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Contact Information

  • MethylGene Inc.
    Donald F. Corcoran
    President & CEO
    (514) 337-3333 ext. 224
    (514) 337-0550 (FAX)
    corcorand@methylgene.com
    or
    MethylGene Inc.
    Andrea Gilpin
    Director, IR & Project Mgmt
    (514) 337-3333 ext. 416
    (514) 337-0550 (FAX)
    gilpina@methylgene.com