MethylGene Inc.

MethylGene Inc.

March 09, 2005 07:00 ET

MethylGene Announces Year-End 2004 Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: METHYLGENE INC.

TSX SYMBOL: MYG

MARCH 9, 2005 - 07:00 ET

MethylGene Announces Year-End 2004 Results

MONTREAL, QUEBEC--(CCNMatthews - March 9, 2005) - MethylGene Inc.
(TSX:MYG) a biopharmaceutical company, today announced operational and
financial results for the year and fourth quarter ended December 31st,
2004.



Highlights from 2004:

- Initiated a two-step randomized Phase II trial for MG98 in
combination with interferon alpha for the treatment of metastatic
renal cell cancer.
- Initiated two monotherapy, dose escalation, Phase I solid tumour
trials with its isotypic selective histone deacetylase (HDAC)
enzyme inhibitor, MGCD0103, at sites in Canada and the United
States.
- Initiated the first of two monotherapy, dose escalating, Phase I
trials for MGCD0103 in hematological tumours.
- Presented preclinical and clinical results for MG98 and MGCD0103 at
the EORTC-NCI-AACR Cancer Symposium in Geneva.
- Completed a "proof of concept" study with EnVivo Pharmaceuticals,
resulting in the signing of an exclusive research, collaboration
and license agreement in February 2005 to exploit MethylGene's
isotypic selective HDAC inhibitor technology in neurodegenerative
diseases. This agreement provides US$1.1M of license fees and
research support to MethylGene during the initial year of the
collaboration.
- Advanced preclinical programs for dual action kinase inhibitors,
non-oncology HDAC indications and next generation oncology HDAC
inhibitors.
- Raised $23 million through an initial public offering and listed on
the Toronto Stock Exchange.
- Recognized revenue of $8.5 million from partnerships, including a
US$500,000 clinical milestone payment for clinical success from
Taiho for MGCD0103.

Milestones anticipated for 2005:

- Initiate the second monotherapy, dose escalating, Phase I trial for
MGCD0103 in hematological tumours at the end of March or early
April 2005.
- Disclose additional data from its seven day continuous infusion
Phase I monotherapy trial for MG98 in solid tumours at the annual
ASCO (American Society of Clinical Oncology) meeting in Orlando,
Florida in May 2005.
- Disclose preliminary data from the ongoing Phase I HDAC trials in
conjunction with the publication of the Company's accepted HDAC
scientific abstracts in the 2005 ASCO Meeting Proceedings for May
2005.
- Initiate an MGCD0103 Phase I/II combination trial or a Phase II
trial in a specific tumour type during Q3 2005.
- Consolidate research facilities into one building, providing for
greater efficiency and productivity.
- Advance other research programs towards selection of additional
clinical candidates.
- Identify a beta-lactamase inhibitor clinical candidate with partner
Merck Inc. by the end of 2005.
- Commence the second step of the Phase II MG98 trial at the end of
2005.


"The year 2004 will be viewed as a transforming year for MethylGene,
marked by several key milestones - the advancement of our Company into
the public markets, the advancement of our first small molecule HDAC
enzyme inhibitor into multiple Phase I human clinical trials and the
advancement of MG98 into a randomized Phase II trial," said Donald F.
Corcoran, President and CEO of MethylGene. "With our established
programs, more than $41 million in cash and a culture of milestone
driven execution and prudent fiscal management, we are confident we will
continue to deliver value in 2005."

Financial Results

Total revenues, consisting primarily of contract revenues and license
fees, for the year ended December 31st, 2004 were $9.2 million compared
with $10.0 million for the year ended December 31st, 2003. The majority
of these revenues in 2004 came from the Company's agreements with Taiho
Pharmaceutical Co., Ltd.; Merck and Co., Inc.; and EnVivo
Pharmaceuticals, Inc.

Total expenditures for 2004 were $20.2 million compared to $15.3 million
for 2003. Gross research and development expenses were $17.0 million for
2004, an increase of $3.3 million or 24.0% versus 2003, as the Company
continued to invest in its research programs and clinical trial
programs. General and Administrative expenses for 2004 were $4.6
million, up from $3.6 million for the prior year, primarily due to the
impact of non-cash, stock compensation expenses resulting from expensing
stock options.

Net loss for the year ended December 31st, 2004 was $11.0 million or
($0.58) per share compared with a net loss of $5.5 million or ($0.33)
per share for the year ended December 31st, 2003.

Total revenues for the fourth quarter ended December 31st, 2004 were
$2.1 million compared to $7.1 million for the same period last year. The
Company received substantially higher contract revenues and licensing
fees specifically in the fourth quarter of 2003 due the timing of
various partnering agreements. Total expenditures for the fourth quarter
ended December 31st, 2004 were $6.1 million compared to $5.3 million for
the same period in 2003. Net loss for the fourth quarter ended December
31st, 2004 was $4.0 million or ($0.19) per share compared to a net
profit of $1.7 million or $0.10 per share for the corresponding period
last year.

As at December 31st, 2004 the Company had cash, cash equivalents and
short-term investments totaling $41.1 million compared to $30.0 million
at December 31, 2003. The Company believes that its current resources
will be sufficient to carry out its research and development activities
into early 2007.

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, MG98,
partnered with MGI Pharma for North America and MGCD0103, partnered with
Taiho Pharmaceutical for certain Asian countries, are currently in
clinical trials.

MG98 has entered a randomized two-step Phase II combination trial with
interferon alpha in metastatic renal cell cancer. MGCD0103 is currently
in Phase I dose-escalation monotherapy trials against solid tumours and
hematological malignancies. In collaboration with Merck, MethylGene is
developing small molecule beta-lactamase inhibitors to overcome
antibiotic resistance. MethylGene has a portfolio of preclinical
programs for its kinase and histone deacetylase (HDAC) inhibitors for
both oncology and non-oncology indications, and is exploiting its core
HDAC expertise for the treatment of neurodegenerative diseases with
EnVivo Pharmaceuticals. 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
prospectus dated June 18, 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.

Please see the summary financial statements below.



MethylGene Inc.
Incorporated under the Quebec Companies Act


BALANCE SHEETS


As at December 31

2004 2003
$ $
---------------------------------------------------------------------

ASSETS
Current
Cash and cash equivalents 2,046 2,664
Short-term investments 41,416,717 30,812,249
Research and development tax credits
receivable 690,000 3,760,000
Technology Partnership Canada receivable 125,158 35,384
Accounts receivable 389,338 652,796
Other current assets 1,280,937 1,046,606
---------------------------------------------------------------------
Total current assets 43,904,196 36,309,699
Property, plant and equipment 3,710,392 4,202,369
Intangible assets 1,887,109 1,890,951
---------------------------------------------------------------------
49,501,697 42,403,019
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 258,388 825,522
Accounts payable and accrued liabilities 2,817,614 2,604,257
Current portion of unearned revenue 1,722,475 2,935,040
Current portion of long-term debt - 13,160
Current portion on obligations under
capital leases 20,229 19,318
---------------------------------------------------------------------
Total current liabilities 4,818,706 6,397,297
Unearned revenue 2,163,832 4,079,809
Obligations under capital leases 6,527 26,756
---------------------------------------------------------------------
Total liabilities 6,989,065 10,503,862
---------------------------------------------------------------------

Shareholders' equity
Capital stock 74,354,535 54,079,575
Contributed surplus 4,529,999 3,195,272
Deficit (36,371,902) (25,375,690)
---------------------------------------------------------------------
Total shareholders' equity 42,512,632 31,899,157
---------------------------------------------------------------------
49,501,697 42,403,019
---------------------------------------------------------------------
---------------------------------------------------------------------



MethylGene Inc.

STATEMENTS OF OPERATIONS AND DEFICIT


For the years ended December 31


2004 2003
$ $
---------------------------------------------------------------------

REVENUES
Contract revenues and license fees 8,469,639 9,136,414
Interest income 764,748 862,904
---------------------------------------------------------------------
9,234,387 9,999,318
---------------------------------------------------------------------

EXPENSES
Research and development 17,038,391 13,739,039
Government assistance (2,279,349) (3,231,629)
---------------------------------------------------------------------
Net research and development 14,759,042 10,507,410
Administrative 4,649,381 3,555,003
Amortization of property, plant and
equipment 54,727 46,231
Bank charges and interest 34,750 21,386
Foreign exchange loss 664,529 1,214,943
---------------------------------------------------------------------
20,162,429 15,344,973
---------------------------------------------------------------------
Loss before income taxes (10,928,042) (5,345,655)
Income taxes 68,170 129,242
---------------------------------------------------------------------
Net loss for the year (10,996,212) (5,474,897)

Deficit, beginning of year (25,375,690) (19,900,793)
---------------------------------------------------------------------
Deficit, end of year (36,371,902) (25,375,690)
---------------------------------------------------------------------
---------------------------------------------------------------------

Basic and diluted loss per share (0.58) (0.33)
---------------------------------------------------------------------

Weighted average number of common shares 18,994,914 16,522,620
---------------------------------------------------------------------



MethylGene Inc.

STATEMENTS OF CASH FLOWS


For the years ended December 31


2004 2003
$ $
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss for the year (10,996,212) (5,474,897)
Item not affecting cash:
Amortization of property, plant and
equipment 1,412,129 971,526
Amortization of intangible assets 119,288 100,644
Unrealized foreign exchange losses 434,966 609,183
Write-off of patents 310,705 15,086
Loss (gain) on disposal of property, plant
and equipment (949) 6,944
Non-cash compensation expense 1,334,727 -
---------------------------------------------------------------------
(7,385,346) (3,771,514)
Changes in non-cash working capital balances
relating to operations 2,010,145 2,674,627
Changes in long-term portion of unearned
revenues (1,915,977) 3,037,714
---------------------------------------------------------------------
Cash flows related to operating activities (7,291,178) 1,940,827
---------------------------------------------------------------------

INVESTING ACTIVITIES
Acquisitions of property, plant and
equipment, net of government assistance (920,553) (816,574)
Acquisitions of intangible assets (426,151) (394,749)
Purchases of short-term investments (125,623,788) (113,514,348)
Proceeds from maturities of short-term
investments 114,584,354 110,780,391
Proceeds from disposition of property,
plant and equipment 1,350 12,827
Cash flows related to investing
activities (12,384,788) (3,932,453)

FINANCING ACTIVITIES
Issuance of common shares 23,011,480 1,820,450
Redemption of common shares (28) -
Share issue costs (2,736,492) -
Repayment of obligations under capital
leases (19,318) (12,958)
Repayment of long-term debt (13,160) (23,854)
---------------------------------------------------------------------
Cash flows related to financing activities 20,242,482 1,783,638

Increase (decrease) in cash, cash
equivalents and bank indebtedness 566,516 (207,988)
Cash, cash equivalents and bank
indebtedness, beginning of year (822,858) (614,870)
---------------------------------------------------------------------
Cash, cash equivalents and bank indebtedness,
end of year (256,342) (822,858)
---------------------------------------------------------------------
---------------------------------------------------------------------

Supplemental information
Interest paid 12,800 4,697
Income tax paid 68,170 129,242
---------------------------------------------------------------------


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    MethylGene Inc.
    Donald F. Corcoran
    President & CEO
    (514) 337-3333 ext. 224
    (514) 337-0550 (FAX)
    corcorand@methylgene.com
    or
    The Equicom Group
    James Smith
    Investor and Media Inquiries
    (416) 815-0700 ext.229
    (416) 815-0080 (FAX)
    jsmith@equicomgroup.com