MethylGene Inc.

MethylGene Inc.

August 02, 2012 17:15 ET

MethylGene Reports Second Quarter 2012 Financial Results and Provides an Update on its Clinical Programs

MONTREAL, CANADA--(Marketwire - Aug. 2, 2012) - MethylGene Inc. (TSX:MYG) today reported financial results for the second quarter ended June 30, 2012 and provided an update on its clinical programs.


  • As of August 1st, over one third of the patients have been enrolled in the first Phase II trial of our novel antifungal agent, MGCD290, and we expect to complete enrollment on schedule.
  • Dose escalation continues in Phase I (monotherapy and combination) trials of our Met/VEGFR kinase inhibitor for oncology, MGCD265. The safety profile remains favorable.
  • Clinical data were presented on June 4th regarding MGCD265 at the American Society of Clinical Oncology (ASCO) Annual Meeting, demonstrating that MGCD265 inhibited its biological target, Met, and continued to exhibit a favorable safety profile.
  • On June 27th, at our Annual General Meeting, the shareholders approved the nomination of Rodney Lappe, Ph.D. to the Board of Directors.
  • We finished the quarter with $22.2 million in cash and cash equivalents.

"We are very pleased with our clinical progress this past quarter," said Charles Grubsztajn, President and CEO of MethylGene. "Our Phase II trial for MGCD290 is enrolling at a robust rate, and we remain on track to report top line data from this trial around year end. We continue to enroll patients in our MGCD265 trials, with excellent tolerability at relevant drug exposure levels where we are seeing strong inhibition of the Met target."

MGCD290 Clinical Development Update

Recruitment is ongoing in our first Phase II trial of MGCD290. This trial is focused on patients with moderate to severe acute vulvovaginal candidiasis (VVC), a form of yeast infection for which there is only limited response from standard treatments.
This randomized, multicenter, double-blind and placebo-controlled trial is evaluating the effectiveness of MGCD290 in combination with fluconazole, as compared to fluconazole alone. The primary endpoint for this trial is the Therapeutic Cure at day 28, which is a composite endpoint of Clinical Cure (resolution of signs and symptoms of the infection) and Mycological Cure (an absence of yeast in culture). We expect to enroll approximately 180 patients to get 150 evaluable patients for the primary endpoint. Nineteen sites in the United States are now open for enrolment, and as of August 1, 2012 74 patients have been enrolled in the trial. Based on the current rate of enrollment, we continue to expect top line data from this trial around the end of 2012.

As recurrent VVC patients are now eligible for enrollment in our VVC trial following a protocol amendment, the Company has decided not to proceed with a separate recurrent VVC trial at this time. Preparations for another Phase II trial with MGCD290 are ongoing.

MGCD290 is a first-in-class orally available, small molecule inhibitor of the fungal enzyme, Hos2, an enzyme that regulates fungal genes. In vitro, MGCD290 in combination with fluconazole reverses fluconazole resistance (primary and acquired) in a wide range of fungal species, including Candida glabrata. In Phase I clinical trials the safety profile of MGCD290 (monotherapy and in combination with fluconazole) was favorable, with no liver or cardiovascular serious adverse events (SAEs). MGCD290 is initially being developed for use in combination with fluconazole, the most widely prescribed antifungal drug, for the treatment of fungal infections.

Data from the MGCD290 program will be presented at upcoming scientific meetings including the 52nd Annual Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) in September 2012 and IDWeek (a Joint Meeting of IDSA, SHEA, HIVMA, and PIDS) in October 2012.

MGCD265 Clinical Development Update

MGCD265 is a rationally designed, orally available Met/VEGF receptor kinase inhibitor in development for oncology indications. At the ASCO Annual Meeting in June, we presented data using plasma samples from trial patients demonstrating a dose-response relationship between increased plasma concentration of MGCD265 and inhibition of Met phosphorylation in a novel ex vivo assay system. MGCD265 continues to be well tolerated in both monotherapy and in combination trials.

In the monotherapy trials, grade 3-4 treatment-related adverse events have been infrequent and long-term stable disease has been observed in sarcomatoid bladder, papillary renal, neuroendocrine, thymic and colon cancer. In the docetaxel arm of the combination trial, objective responses have been observed in non-small cell lung cancer (NSCLC), prostate cancer and endometrial cancer. Of ten evaluable NSCLC patients in this trial, two achieved partial remission and all ten patients achieved disease control (partial remission or stable disease) at the first tumor assessment. These data compare favorably in the context of historical data (docetaxel monotherapy). In the erlotinib arm of the combination trial, prolonged stable disease has been observed in gastric, esophageal, NSCLC and chordoma. MGCD265 has been well tolerated in combination with either full dose docetaxel or erlotinib.

Enrollment of patients continues in the MGCD265 monotherapy and combination trials. The development plan for MGCD265 includes expansion cohorts in select tumor types once the recommended Phase II dose is defined and data from the expansion cohorts will be used to guide randomized Phase II trials.

Data from the MGCD265 program will be presented at upcoming medical meetings including the European Society for Medical Oncology (ESMO) Congress in September 2012.

Second Quarter 2012 Financial Results Reported in Canadian Dollars

The Company's financial statements for the period ended June 30, 2012 have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB).

The Company reported no revenues in the second quarter ended June 30, 2012, versus $1.3 million for the second quarter of 2011. The decline in revenues was due to the completion of the research component of the agreement with Otsuka Pharmaceutical Co. Ltd. in June of 2011, and we had recognized all remaining deferred revenues under the Otsuka and Taiho Pharmaceutical Co. Ltd. agreements in 2011.

Research and development expenditures, net of investment tax credits, for the second quarter of 2012 were $3.7 million versus $1.8 million in the second quarter of 2011. This increase was primarily due to increased clinical development activity for both the MGCD290 and MGCD265 programs.

General and administrative expenses in the second quarter of 2012 were $1.1 million, no change versus the second quarter of 2011.

Financial income of $59,000, relating primarily to interest income, in the second quarter of 2012 was $25,000 lower compared to the second quarter of 2011 due to lower cash balances in the second quarter of 2012 versus the prior year. The Company recorded a foreign exchange gain of $11,000 in the second quarter of 2012 compared to a gain of $27,000 in the second quarter of 2011.

The net loss and comprehensive loss for the second quarter ended June 30, 2012 was $4.7 million, or ($0.01) per share, compared to a net loss and comprehensive loss of $1.5 million, or ($0.005) per share, for the same period last year. The increased loss per share relates to the higher net loss and comprehensive loss for the quarter.

Cash, cash equivalents, marketable securities and restricted cash totaled $22.2 million as at June 30, 2012 compared to $29.6 million on December 31, 2011. The Company believes it has sufficient financial resources to carry forward its current clinical development and operating plans into the fourth quarter of 2013.

About MethylGene

MethylGene Inc. (TSX:MYG) is a small molecule drug development company that is advancing two novel therapeutics for cancer and infectious disease in human clinical trials. The Company's lead product candidates are: MGCD290, an oral antifungal agent targeting the fungal Hos2 enzyme that is currently in Phase II trials for vulvovaginal candidiasis, and MGCD265, an oral Met/VEGF receptor kinase inhibitor that is in Phase I/II clinical trials for solid tumor cancers. MethylGene owns all rights to its lead product candidates, and has partnerships with Otsuka Pharmaceutical Co. Ltd., Taiho Pharmaceutical Co. Ltd., and EnVivo Pharmaceuticals, Inc. for its other pipeline programs.

Certain statements contained in this news release, other than statements of fact that are independently verifiable at the date hereof, may constitute forward-looking statements. Such statements, based as they are on the current expectations of management of MethylGene, inherently involve numerous risks and uncertainties, known and unknown, many of which are beyond MethylGene's control. These risks and uncertainties could cause future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Such results, performance or achievements include, but are not limited to, the timing and effects of regulatory action; the continuation of collaborations; the results of clinical trials; the timing of enrollment or completion of clinical trials; the success, efficacy or safety of MGCD265, MGCD290 or our other programs; the ability to scale up, formulate and manufacture sufficient GMP, clinical or commercialization quantities of MGCD265, MGCD290 or our other products, and the relative success or the lack of success in developing and gaining regulatory approval and/or market acceptance for any compound or new product including MGCD265 or MGCD290. Such risks include, but are not limited to, the impact of general economic conditions, economic conditions in the pharmaceutical industry, changes in the regulatory environment in the jurisdictions in which MethylGene does business, stock market volatility, fluctuations in costs, expectations with respect to our intellectual property position and our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others, changes in the competitive landscape including changes in the standard of care for the various indications in which MethylGene is involved, and changes to the competitive environment due to consolidation, as well as other risks, as described in MethylGene's Annual Information Form under the heading "Risk Factors" which you are urged to read, and all other documents filed by the Company that can be found at Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements. The reader should not place undue reliance on the forward-looking statements included in this presentation. These statements speak only as an update on the date they are made and MethylGene expressly disclaims any duty, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in MethylGene's expectations with regard thereto of any change in events, conditions or circumstances on which any such statements are based except in accordance with law.


[In thousands of Canadian dollars]
As at
June 30,
December 31,
Cash and cash equivalents 8,197 10,050
Marketable securities 13,335 18,878
Restricted cash and marketable securities 300 300
Accounts and other receivables 102 174
Other current assets 1,276 1,574
Total current assets 23,210 30,976
Security deposits 70 55
Restricted cash and marketable securities 355 355
Property, plant and equipment, net 206 223
Total assets 23,841 31,609
Trade payables and accrued liabilities 3,446 3,812
Current portion of other liability 34 -
Total current liabilities 3,480 3,812
Other liability 36 28
Total liabilities 3,516 3,840
Shareholders' equity
Share capital 145,685 145,685
Warrants 6,041 6,041
Contributed surplus 16,827 16,188
Deficit (148,228 ) (140,145 )
Total shareholders' equity 20,325 27,769
Total liabilities and shareholders' equity 23,841 31,609


[In thousands of Canadian dollars except for share and per share amounts]
For the three month period ended June 30, For the six month period ended June 30,
2012 2011 2012 2011
Research collaborations and contract revenues - 391 2 791
License and up-front fees - 883 - 1,766
Total revenue - 1,274 2 2,557
Research and development, net 3,689 1,794 5,897 3,619
General and administrative 1,094 1,063 2,315 2,088
Foreign exchange gain (11 ) (27 ) (11 ) (16 )
Financial income (59 ) (84 ) (128 ) (91 )
Total expenses 4,713 2,746 8,073 5,600
Loss before income taxes (4,713 ) (1,472 ) (8,071 ) (3,043 )
Income tax expense 12 - 12 -
Net loss and comprehensive loss for the period (4,725 ) (1,472 ) (8,083 ) (3,043 )
Basic and diluted loss per share (0.01 ) (0.005 ) (0.03 ) (0.02 )
Weighted average number of common shares 317,913,336 308,765,157 317,913,336 175,333,158


[In thousands of Canadian dollars]

Share capital Warrants Contributed surplus Deficit Total shareholders' equity
Balance as at January 1, 2011 119,189 - 15,289 (130,418 ) 4,060
Net loss and comprehensive loss for the period - - - (3,043 ) (3,043 )
Stock option compensation expense - - 64 - 64
Costs of reorganization - - (12 ) - (12 )
Issuance of common shares, net of costs 26,476 - - - 26,476
Issuance of warrants, net of costs - 6,036 - - 6,036
Balance as at June 30, 2011 145,665 6,036 15,341 (133,461 ) 33,581
Balance as at January 1, 2012 145,685 6,041 16,188 (140,145 ) 27,769
Net loss and comprehensive loss for the period - - - (8,083 ) (8,083 )
Stock option compensation expense - - 655 - 655
Costs of reorganization - - (16 ) - (16 )
Balance as at June 30, 2012 145,685 6,041 16,827 (148,228 ) 20,325


[In thousands of Canadian dollars]
Six months ended
June 30,
2012 2011
Operating activities
Net loss (8,083 ) (3,043 )
Non-cash adjustments reconciling net loss to operating cash flows
Depreciation of property, plant and equipment 69 135
Write-off of property, plant and equipment - 59
Gain on disposal of property, plant and equipment - (23 )
Reversal of provision for lease resiliation - (51 )
Stock option compensation expense 655 64
License and up-front fees - (1,504 )
Interest income (146 ) -
Lease incentive 42 -
(7,463 ) (4,363 )
Net changes in non-cash working capital balances relating to operations (52 ) (748 )
Interest received 202 (42 )
Cash flows related to operating activities (7,313 ) (5,153 )
Investing activities
Purchase of property, plant and equipment (52 ) (3 )
Purchases of marketable securities (13,524 ) (28,926 )
Security deposit (15 ) -
Restricted cash - 424
Disposal and maturities of marketable securities 19,067 995
Proceeds from disposal of property, plant and equipment - 69
Cash flows related to investing activities 5,476 (27,441 )
Financing activities
Issuance of common shares - 28,088
Issuance of warrants - 6,404
Share issue costs - (1,980 )
Cost of reorganization (16 ) (12 )
Cash flows related to financing activities (16 ) 32,500
Decrease in cash and cash equivalents (1,853 ) (94 )
Cash and cash equivalents, beginning of period 10,050 7,361
Cash and cash equivalents, end of period 8,197 7,267

Contact Information