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MethylGene Inc.: MethylGene Reports Second Quarter 2009 Financial Results

^{Published on 2009-07-31 04:40:36, Last Modified on 2009-07-31 04:40:46 - Market Wire}
 

MONTREAL, QUEBEC--(Marketwire - July 31, 2009) - MethylGene Inc. (TSX:MYG) today announced financial results for the second quarter ended June 30, 2009.

During the quarter, the Company continued to progress its clinical programs while managing costs. The second quarter of 2009 was highlighted by continuing enrollment in the two Phase I trials evaluating MGCD265 in solid tumors, with favorable data from the trials presented in May at the American Society of Clinical Oncology's (ASCO) annual meeting. Preparation for the Phase II program for MGCD265, which is expected to commence in the third quarter of 2009, was also underway during the quarter and included continuing scale-up and product optimization efforts. In addition, MethylGene continued to enroll healthy adult volunteers into the multiple Phase I studies evaluating MGCD290 in fungal infections; and interactions continued with the U.S. Food and Drug Administration (FDA) regarding MGCD0103 with the goal of lifting the partial clinical hold.

Financial Results Reported in Canadian Dollars

Total revenues for the second quarter ended June 30, 2009 were $388,000 compared to $4.3 million for the same period last year. This reduction in revenue was primarily due to the termination of our collaboration agreement with Celgene Corporation which was partially offset by revenues from our collaboration with Otsuka Pharmaceutical Co. Ltd.

Offsetting the decline in revenue, were savings in net research and development of $4.6 million and in general and administrative expenses of $320,000, reductions of 45.5 percent and 23.2 percent respectively, compared to the second quarter of 2008. Net research and development expenditures in the second quarter of 2009 were $5.5 million compared to $10.1 million in the second quarter of 2008. This decrease relates primarily to lower expenses for MGCD0103, MGCD290 and discovery research which was partially offset by higher clinical trial expenditures for MGCD265, which included scale-up and optimization efforts for clinical supply. General and administrative expenses in the second quarter of 2009 were $1.1 million compared to $1.4 million in the same period last year due to reduction in salaries, professional fees and office expenses.

The favorable impact of the lower research and development and general and administrative expenses were partially offset by a loss in foreign exchange of $726,000 in the second quarter of 2009 versus a loss of $126,000 in the second quarter of 2008; and lower interest income which was $24,000 in the second quarter of 2009 versus $419,000 in the second quarter of 2008. As a result, the net loss for the second quarter ended June 30, 2009 was $6.9 million or ($0.19) per share compared to a net loss of $7.4 million or ($0.20) per share for the corresponding period last year.

At June 30, 2009 the Company had cash, cash equivalents and short-term investments totaling $25.9 million. The Company believes that its current cash and investments, plus expected tax credits, interest income and projected revenues from our ongoing collaborations will be sufficient to carry out its currently planned research and development activities into the third quarter of 2010. The Company continues to evaluate various options to extend its financial resources.

About MethylGene

MethylGene Inc. (TSX:MYG) is a publicly-traded, clinical stage, biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics with a focus on cancer. The Company's product candidates include: MGCD265, an oral, multi-targeted kinase inhibitor targeting the c-Met, VEGF, Ron and Tie-2 receptor tyrosine kinases that is in Phase I clinical trials for solid tumor cancers; MGCD290, a fungal Hos2 (HDAC) inhibitor being developed for use in combination with fluconazole for serious fungal infections that is also in Phase I clinical studies; and MGCD0103, an oral, isoform-selective HDAC inhibitor which has been in multiple clinical trials for solid tumors and hematological malignancies and is licensed to Taiho Pharmaceutical Co. Ltd. A fourth compound discovered using MethylGene's HDAC platform, EVP-0334 - a potential cognition enhancing agent, is in a Phase I study sponsored by EnVivo Pharmaceuticals Inc. MethylGene also has a funded collaboration with Otsuka Pharmaceutical Co. Ltd. for applications in ocular diseases using the Company's proprietary kinase inhibitor chemistry. Please visit our wwebsite at [ www.methylgene.com ]

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 MGCD0103, MGCD265 or MGCD290; the ability to scale up, formulate and manufacture sufficient GMP, clinical or commercialization quantities of MGCD0103, MGCD265 or MGCD290, 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 MGCD0103, 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, which you are urged to read, as described in MethylGene's Annual Information Form for the fiscal year ending December 31, 2008, under the heading 'risk factors and all other documents filed by the Company that can be found at [ www.sedar.com ]. 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 is under no obligation to revise such statements as a result of any event, circumstance or otherwise except in accordance with law.

MethylGene Inc.
Incorporated under the Quebec Companies Act

UNAUDITED INTERIM
BALANCE SHEETS


(In thousands of Canadian dollars)
 June 30, December 31,
 2009 2008
 $ $
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 (Restated)
ASSETS
Current
Cash and cash equivalents 9,605 5,947
Marketable securities 16,339 32,659
Research and development tax credits receivable 2,039 1,473
Accounts receivable 941 -
Unbilled revenue 778 4,435
Interest receivable 95 326
Other current assets 1,537 1,034
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Total current assets 31,334 45,874
Security deposits 325 325
Property, plant and equipment 1,616 2,131
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 33,275 48,330
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 7,613 9,192
Current portion of unearned revenue 549 549
Current portion of lease abandonment cost 190 192
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Total current liabilities 8,352 9,933
Unearned revenue 2,585 2,859
Lease abandonment cost 305 399
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Total liabilities 11,242 13,191
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Shareholders' equity
Capital stock 118,095 118,095
Contributed surplus 8,965 8,855
Deficit (105,150) (92,122)
Accumulated other comprehensive income 123 311
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Total shareholders' equity 22,033 35,139
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 33,275 48,330
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UNAUDITED INTERIM
STATEMENTS OF OPERATIONS AND DEFICIT

(In thousands of Canadian dollars,
except for share and per share amounts)


 Three-month periods Six-month periods
 ended June 30, ended June 30,
--------------------------------------------------------------------------
 2009 2008 2009 2008
 $ $ $ $
--------------------------------------------------------------------------
 (Restated) (Restated)
REVENUES
Research collaborations and 
 contract revenues 251 3,192 1,778 6,391
License and up-front fees 137 1,088 275 2,117
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 388 4,280 2,053 8,508
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EXPENSES
Research and development 5,756 10,492 13,162 19,308
Government assistance (270) (419) (566) (783)
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Net current research and 
 development 5,486 10,073 12,596 18,525
General and administrative 1,058 1,378 2,338 3,059
Interest income (24) (419) (155) (1,012)
Amortization and write-off 
 of property, plant and 
 equipment 4 4 10 8
Gain on sale of property, 
 plant and equipment (10) - (6) -
Write-off of intangible assets
Lease abandonment cost
Corporate and other 
 transaction costs 71 503 118 503
Bank charges and interest 7 9 15 19
Foreign exchange loss (gain) 726 126 81 (44)
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 7,318 11,674 14,997 21,058
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Loss for the period before 
 income tax (6,930) (7,394) (12,944) (12,550)
Future income tax (recovery) 
 expense (13) - 84 -
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Net loss for the period (6,917) (7,394) (13,028) (12,550)
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Deficit, beginning of period, 
 as previously reported (98,233) (86,427) (90,175) (81,196)
Change in accounting policy - (1,932) (1,947) (2,007)
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Deficit, beginning of period, 
 as adjusted (98,233) (88,359) (92,122) (83,203)
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Deficit, end of period (105,150) (95,753) (105,150) (95,753)
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Basic and diluted loss 
 per share (0.19) (0.20) (0.36) (0.34)
Weighted average number 
 of common shares 36,682,398 36,682,398 36,682,398 36,682,398
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UNAUDITED INTERIM
STATEMENTS OF COMPREHENSIVE LOSS


(In thousands of Canadian dollars)


 Three-month periods Six-month periods
 ended June 30, ended June 30,
--------------------------------------------------------------------------
 2009 2008 2009 2008
 $ $ $ $
--------------------------------------------------------------------------
 (Restated) (Restated)

Net loss for the period (6,917) (7,394) (13,028) (12,550)
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Other comprehensive loss
Change in unrealized gains 
 on cash equivalents and 
 marketable securities, 
 net of income tax expense 
 of $52 for the three-month 
 period ended June 30, 2009 
 and $81 for the six-month 
 period ended June 30, 2009 
 (2008 - nil) 117 161 181 292

Reclassification adjustment 
 to net loss of realized 
 (gains) losses on cash 
 equivalents and marketable 
 securities, net of income 
 tax recovery of $39 for the 
 three-month period ended 
 June 30, 2009 and $165 for 
 the six-monthperiod ended 
 June 30, 2009 (2008-nil) (88) (171) (369) (107)
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 29 (10) (188) 185
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Comprehensive loss for 
 the period (6,888) (7,404) (13,216) (12,365)
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MethylGene Inc.

UNAUDITED INTERIM
STATEMENTS OF CASH FLOWS


(In thousands of Canadian dollars)

 Three-month periods Six-month periods
 ended June 30, ended June 30,
--------------------------------------------------------------------------
 2009 2008 2009 2008
 $ $ $ $
--------------------------------------------------------------------------
 (Restated) (Restated)

OPERATING ACTIVITIES
Net loss for the period (6,917) (7,394) (13,028) (12,550)
Items not affecting cash:
 Amortization of property, 
 plant and equipment 252 298 517 612
 Write-off of property, 
 plant and equipment - - 2 -
 Gain on sale of property, 
 plant and equipment (10) - (6) -
 Future income tax (recovery) 
 expense (13) - 84 -
 Stock-based compensation 
 expense 40 92 110 254
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 (6,648) (7,004) (12,321) (11,684)
Net change in non-cash working 
 capital balances related to 
 operations 1,114 1,907 203 (442)
Change in long-term portion of 
 unearned revenue (137) (1,087) (274) (314)
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Cash flows related to operating 
 activities (5,671) (6,184) (12,392) (12,440)
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INVESTING ACTIVITIES
Acquisitions of property, 
 plant and equipment (9) - (9) (153)
Purchases of marketable 
 securities (13,539) (17,681) (24,078) (43,683)
Proceeds from maturities of 
 marketable securities 9,087 27,499 39,942 79,513
Proceeds from disposition of 
 property, plant and equipment 10 - 11 -
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Cash flows related to 
 investing activities (4,451) 9,818 15,866 35,677
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Foreign exchange on cash 
 equivalents held in foreign 
 currency 74 11 184 152
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Increase (decrease) in cash 
 and cash equivalents, 
 during the period (10,048) 3,645 3,658 23,389
Cash and cash equivalents, 
 beginning of period 19,653 22,952 5,947 3,208
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Cash and cash equivalents, 
 end of period 9,605 26,597 9,605 26,597
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Cash and cash equivalents 
 consist of:
Cash 2 2,136 2 2,136
Cash equivalents 9,603 24,461 9,603 24,461
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 9,605 26,597 9,605 26,597
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