Forward Pharma A/S (Nasdaq:FWP) (“We” or “Forward” or the
“Company”), today reported financial results for the year ended
December 31, 2017. Net income for the year ended December 31, 2017
was $917.1 million, or $2.30 per diluted share, versus net loss of
$(33.3) million, or $(0.06) per share for the year ended December
31, 2016. As of December 31, 2017, the Company had $109.6 million
in cash and cash equivalents, with no debt outstanding.
“We are pleased to announce our full-year results for 2017. We
are an entirely different company than a year ago. The Settlement
and License Agreement with Biogen has given us a renewed focus and
sufficient capital to execute on our strategy bringing additional
value to our shareholders beyond the large shareholder distribution
that was completed in 2017,” said Dr. Claus Bo Svendsen, Chief
Executive Officer of Forward.
Year Ended December 31, 2017 Financial and Operational
Results
During the year ended December 31, 2017, the Company recognized
as revenue the $1.25 billion nonrecurring non-refundable fee that
was received during February 2017 in connection with the
Settlement and License Agreement (“License Agreement”) entered into
with two wholly owned subsidiaries of Biogen, Inc. (collectively
“Biogen”). Prior to entering into the License Agreement, the
Company did not have contracts with customers and, accordingly,
there was no revenue recognized during the year ended December 31,
2016 or since the Company was founded in 2005.
Share Split and Shareholder Distribution
On August 2, 2017, the Company’s shareholders approved 10 for 1
share split and a capital reduction of 917.7 million EUR, or $1.1
billion (the “Capital Reduction”). The Capital Reduction was
effected by a distribution to shareholders in September 2017 (the
“Shareholder Distribution”). The Capital Reduction was executed
through the annulment of 80% of the ordinary shares outstanding
post Share Split. Following the Share Split and the Capital
Reduction, each ADS was modified to represent two ordinary shares
with a nominal value of 0.01 DKK.
In November 2017, the shareholders of the Company approved an
amendment to the Company’s articles of association, which modified
the terms of certain outstanding options and warrants granted by
the Company to mitigate the dilution to such awards caused by the
Shareholder Distribution. In November 2017, a similar amendment was
approved by the board of directors of the Company in respect of
certain deferred share awards granted by the Company (the amended
options, warrants and deferred shares are collectively referred to
as the “Awards” and the amendments of the Awards are collectively
referred to as the “Amendment”). The overall effect of the
Amendment provided for cash payments to Award holders of 36.2
million EUR ($43.4 million based on the December 31, 2017 exchange
rate) and a reduction in the number of outstanding Awards by 28.8
million. As a result of the Amendment, the Company recognized
compensation expense of $11.7 million and a reduction to
shareholder equity of $32.2 million.
Cost to Aditech Pharma AG agreement for the years ended
December 31, 2017 and 2016
The terms of the agreement between Aditech Pharma AG (“Aditech”)
and the Company, including the addendum to the agreement executed
in January 2017, provided for Aditech to receive a payment
equal to 2% of the Non-refundable Fee, or $25 million, during the
year ended December 31, 2017. During the year ended December 31,
2016, there were no amounts due Aditech.
Research and development costs for the years ended
December 31, 2017 and 2016
Research and development costs for the years ended December 31,
2017 and 2016 were $20.5 million and $41.1 million,
respectively. The decrease in research and development costs for
the year ended December 31, 2017 of $20.6 million is the result of
lower costs incurred in connection with the Patent Interference No.
106,023 (“Interference Proceeding”) between the U.S. Patent
Application No. 11/567,871 associated with the Company and U.S.
Patent No. 8,399,514 held by a subsidiary of Biogen, lower
share-based compensation and the winding down of our development
efforts of FP187®. The decrease was offset by $13.0 million of
additional compensation expense recognized during the year ended
December 31, 2017 in connection with the Amendment of Awards as
discussed above. Fees to patent advisors and other patent-related
costs decreased from $16.3 million in the year ended December 31,
2016 to $2.7 million in the year ended December 31, 2017. Fees
to patent advisors and other patent-related costs include the cost
to conduct the Interference Proceeding. The decrease is the result
of reduced activities subsequent to the oral argument on
November 30, 2016 for the Interference Proceeding and the
United States Patent Trial and Appeal Board’s (the “PTAB”) issuance
of the decision in the Interference Proceeding in favor of Biogen
on March 31, 2017. Share-based compensation decreased from
$8.0 million in the year ended December 31, 2016 to $4.9 million in
the year ended December 31, 2017 in connection with the vesting of
equity awards issued during the years ended December 31, 2016
and 2015 that included graded vesting provisions resulting in
expense recognition that decreases in the latter years of vesting
combined with the favorable effect related to the benefit
recognized during the year ended December 31, 2017 in connection
with equity awards that were forfeited as the result of employee
terminations where the forfeited equity awards were initially
expected to vest in full. The balance of the decrease in research
and development cost during the year ended December 31, 2017 is the
result of winding down FP187® development costs including all
preclinical, clinical and contract manufacturing efforts that were
in process prior to the effective date of the License Agreement. We
currently expect our research and development costs will continue
to decline in 2018. However, if we decide to reinitiate development
of FP187® or another DMF-containing formulation (collectively, a
“DMF Formulation”) for sale in the U.S., our research and
development expenses will likely increase. At this time, we cannot
estimate whether or when we will reinitiate development of a DMF
Formulation and, if reinitiated, the level of expenditure that will
be required to fully develop and commercialize a DMF Formulation
(whether on our own or through any assignee of our U.S.
co-exclusive license rights).
General and administrative costs for the years ended
December 31, 2017 and 2016
General and administrative costs for the years ended December
31, 2017 and 2016 were $17.1 million and $14.4 million,
respectively. The increase in general and administrative costs in
the year ended December 31, 2017 of $2.7 million resulted from
increased legal and accounting costs, compensation expense and
costs related to the restructuring of the Company’s operations. A
decrease in share-based compensation offset these increases. Legal
and accounting fees were $6.9 million in the year ended December
31, 2017 compared to $4.4 million in the year ended December 31,
2016. The increase in legal and accounting fees is related to the
License Agreement and the restructuring of the Company’s
operations. During the year ended December 31, 2017, the Company
recognized $4.1 million of additional compensation expense in
connection with the Amendment of Awards and $759,000 in connection
with the formation FWP Fonden, and the sale of FWP IP ApS.
Share-based compensation decreased from $6.3 million in the year
ended December 31, 2016 to $2.2 million in the year ended December
31, 2017. The favorable change was related to the benefit
recognized during the year ended December 31, 2017 in connection
with equity awards that were forfeited as the result of employee
terminations where the forfeited equity awards were initially
expected to vest in full. We expect our general and administrative
costs will remain at current levels; however, considering the high
level of uncertainty associated with the Interference Proceeding
and the opposition proceeding regarding the EP2801355 patent with
several opponents including Biogen, including any appeals, it is
possible that unforeseen events could occur that could have a
material effect on our estimated expenditures.
Update on Intellectual Property Proceedings
On March 31, 2017, the PTAB issued a decision in the
Interference Proceeding in favor of Biogen. The PTAB ruled that the
claims of the '871 application are not patentable due to a lack of
adequate written description. The Company has appealed the decision
to the Federal Circuit, where the appeal will be heard at an oral
hearing on June 4, 2018. The appeal is expected to be decided in
the second half of 2018. If the Company prevails in this appeal, we
expect the Federal Circuit to remand the case to the PTAB, in order
for the PTAB to resolve both parties' other outstanding motions,
including Biogen's priority motion.
On January 29, 2018, the Opposition Division of the European
Patent Office concluded the oral proceedings concerning the ‘355
patent and issued an initial decision in the Opposition
Proceedings. The Opposition Division revoked the ‘355 patent after
considering third-party oppositions from several opponents. On
March 22, 2018, the Opposition Division issued its written decision
with detailed reasons for the decision, and following review of
these, the Company plans to appeal the Opposition Division’s
decision to the Technical Board of Appeal, with an expected
duration of the appeal process of an additional two to three years.
The Company has until June 2, 2018 to submit its notice of appeal,
and the deadline for submitting the detailed grounds of appeal is
August 2, 2018. If the Company prevails in such appeal, we expect
the Technical Board of Appeal to remand the case to the Opposition
Division, in order for the Opposition Division to resolve the
remaining elements of the original opposition.
|
Forward Pharma A/S |
Condensed Consolidated Statement of Profit or
Loss* |
(USD in thousands, except per share
amounts) |
|
|
|
|
|
Year Ended |
|
December 31, |
|
2017 |
|
2016 |
Revenue from settlement
and license agreement |
$ |
1,250,000 |
|
|
|
- |
|
Royalty cost Aditech
Pharma AG |
|
(25,000 |
) |
|
|
- |
|
Research and
development |
|
(20,496 |
) |
|
|
(41,052 |
) |
General and
administrative |
|
(17,107 |
) |
|
|
(14,382 |
) |
Total
operating income (loss) |
|
1,187,397 |
|
|
|
(55,434 |
) |
|
|
|
|
Other |
|
(2,909 |
) |
|
|
895 |
|
Income
(loss) before taxes |
|
1,184,488 |
|
|
|
(54,539 |
) |
|
|
|
|
Income tax (expense)
benefit |
|
(267,395 |
) |
|
|
21,203 |
|
Net
income (loss) |
$ |
917,093 |
|
|
$ |
(33,336 |
) |
|
|
|
|
Net income (loss) per
share, basic (1) |
$ |
2.41 |
|
|
$ |
(0.06 |
) |
Net income (loss) per
share, diluted (1) |
$ |
2.30 |
|
|
$ |
(0.06 |
) |
|
|
|
|
Weighted average shares
used to compute net income (loss) per share basic (1) |
|
380,133 |
|
|
|
540,650 |
|
|
|
|
|
Weighted average shares
used to compute net income (loss) per share diluted (1) |
|
398,943 |
|
|
|
540,650 |
|
(1) |
During August 2017, the Company’s shareholders approved a 10
for 1 share split, or Share Split. All share and per share
information disclosed above has been adjusted to reflect the Share
Split as if it had occurred at the beginning of the earliest period
presented. In addition, there was a capital reduction that was
effected by the annulment of 80% of the ordinary shares outstanding
and was deemed, for financial reporting purposes, to have been at a
15% premium or 15% Premium. For purposes of computing the per share
amounts only, the 15% Premium has been accounted for in a manner
similar to the Share Split and reflected in the above per share
amounts as if it had occurred at the beginning of the earliest
period presented. The combined effect of the Share Split and the
15% Premium is as if a 11.5 for 1 share split had occurred at the
beginning of the earliest period presented. Accordingly, share and
per share information previously reported will be different from
the information reported herein. Following the Share Split, the
nominal value of an ordinary share of the Company is 0.01 DKK. |
|
|
* |
The condensed consolidated information included herein has
been derived from, and should be read in conjunction with, the
Company’s audited consolidated financial statements included in the
Company’s 2017 Annual Report on Form 20-F filed with the United
States Securities and Exchange Commission on April 30, 2018. |
|
Forward Pharma A/S |
Condensed Consolidated Statement of Financial
Position* |
(USD in thousands) |
|
|
|
|
|
December 31, |
|
|
2017 |
|
2016 |
Assets |
|
|
|
Cash, cash equivalents
and investments |
$ |
109,554 |
|
$ |
138,723 |
Other assets |
|
1,454 |
|
|
24,420 |
Total
assets |
$ |
111,008 |
|
$ |
163,143 |
|
|
|
|
Equity and
Liabilities |
|
|
|
Shareholders'
equity |
$ |
89,680 |
|
$ |
155,802 |
Liabilities |
|
21,328 |
|
|
7,341 |
Total
equity and liabilities |
$ |
111,008 |
|
$ |
163,143 |
* |
The condensed consolidated information included herein has
been derived from, and should be read in conjunction with, the
Company’s audited consolidated financial statements included in the
Company’s 2017 Annual Report on Form 20-F filed with the United
States Securities and Exchange Commission on April 30, 2018. |
About Forward Pharma: Forward Pharma A/S
is a Danish biopharmaceutical company that commenced development in
2005 of FP187®, a proprietary formulation of DMF for the treatment
of inflammatory and neurological indications. The Company granted
to Biogen an irrevocable license to all of its IP through the
recent Settlement and License Agreement and received from Biogen a
non-refundable cash fee of $1.25 billion in February 2017, with the
return of EUR 917.7 million to shareholders through a capital
reduction in September 2017. The Company has the opportunity to
receive royalties from Biogen on sales of Tecfidera® or other DMF
products for MS, dependent on, among other things, successfully
appealing the U.S. interference and a favorable outcome in Europe
with respect to the EP2801355 Opposition Proceedings, including any
appeal thereto.
Publicly available information from the European Patent Office
can be located at the European Patent Register at
https://register.epo.org/regviewer.
Publicly available information from the U.S. Court of Appeals
for the Federal Circuit can be located at
https://ecf.cafc.uscourts.gov/.
The principal executive offices are located at Østergade 24A,
1st Floor, 1100 Copenhagen K, Denmark and our American
Depositary Shares are publicly traded on Nasdaq Stock
Market (FWP). For more information about the Company,
please visit our website at http://www.forward-pharma.com.
Forward Pharma A/S Investor Relations
Contact:
Forward Pharma A/S Dr. Claus Bo Svendsen, Chief Executive
Officer Investor Relationsinvestors@forward-pharma.com
The Trout Group John Grazianojgraziano@troutgroup.com +1
(646) 378 2942
Forward Looking Statements: Certain statements
in this press release may constitute “forward-looking statements”
of Forward Pharma A/S within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include,
but are not limited to, statements which contain language such as
“believe,” “expect,” “anticipate,” “estimate,” “would,” “may,”
“plan,” and “potential.” Forward-looking statements are predictions
only, which involve known and unknown risks, uncertainties and
other factors that may cause actual results to be materially
different from those expressed in such statements. Many such risks,
uncertainties and other factors are taken into account as part of
our assumptions underlying these forward-looking statements and
include, among others, risks related to the following: the
satisfaction of certain conditions, and the accuracy of certain
representations of the Company, in the Settlement and License
Agreement entered into with subsidiaries of Biogen Inc. and certain
other parties thereto; our ability to obtain, maintain, enforce and
defend issued patents with royalty-bearing claims; our ability to
prevail in the interference proceedings after all appeals and
obtain issuance of the ’871 application; our ability to prevail in
or obtain a favorable decision in the ‘355 patent European
Opposition Proceedings, after all appeals; the expected timing for
key activities and an ultimate ruling in such legal proceedings;
the issuance and term of our patents; future sales of Tecfidera®,
including impact on such sales from competition, generic
challenges, regulatory involvement and pricing pressures; the
scope, validity and enforceability of our intellectual property
rights in general and the impact on us of patents and other
intellectual property rights of third parties; our ability to
generate revenue from product sales in the U.S. directly or through
an assignee of our U.S. co-exclusive license rights in the event
Biogen does not obtain an exclusive license from us in the U.S.;
and the sufficiency of the company's cash resources. Certain of
these and other risk factors are identified and described in detail
in certain of our filings with the United States Securities and
Exchange Commission, including our Annual Report on Form 20-F for
the year ended December 31, 2017. We are providing this information
as of the date of this release and do not undertake any obligation
to update any forward-looking statements contained in this press
release as a result of new information, future events or
otherwise.
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