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ESSA Pharma reports financial results for first quarter

ESSA Pharma has reported financial results for the three months ended 31 December 2015.

Amounts, unless specified otherwise, are expressed in United States dollars and in accordance with International Financial Reporting Standards ("IFRS").

First Quarter Highlights and Corporate Update

Enrollment of First Patient in Phase 1/2 Clinical Trial

In November 2015 , the Company opened its first clinical trial sites and enrolled the first patient in the Phase 1/2 clinical study of EPI-506. In its Phase 1/2 clinical trial, ESSA intends to investigate the safety, tolerability, maximum tolerated-dose, pharmacokinetics, and efficacy of EPI-506 in patients with metastatic castrate resistant prostate cancer who have failed abiraterone or enzalutamide therapy or both.

Private Placement

On January 14, 2016 , the Company completed a private placement (the "2016 Financing") of 4,545,452 units of the Company at $3.30 per unit for aggregate gross proceeds of approximately $15,000,000 .

Each unit consisted of one common share of the Company (a "Common Share"), one seven-year cash and cashless exercise warrant and one-half of one two-year cash exercise warrant (such warrants, together, the "2016 Warrants"). Each of the 2016 Warrants has an exercise price of $3.30 .

The financing was led by Clarus Lifesciences III, L.P. ("Clarus"), a new investor in the Company, with participation from Deerfield Management Company and other existing shareholders (the "2016 Financing Participants"). The Company intends to use the net proceeds from the 2016 Financing for general corporate purposes, including funding research and development, preclinical and clinical expenses, and corporate costs.

In connection with the 2016 Financing, the Company filed a prospectus supplement (the "Prospectus Supplement") to the Company’s existing base shelf prospectus with the securities regulatory authorities in British Columbia , Alberta , and Ontario and the United States Securities and Exchange Commission (the "SEC").

The Prospectus Supplement covers resales by the 2016 Financing Participants, from time to time, of up to 4,545,452 Common Shares and up to 6,818,178 Common Shares issuable on the exercise of the 2016 Warrants.

In addition, upon closing of the 2016 Financing, Richard Glickman , Marianne Sadar , Raymond Andersen and Bob Rieder , who in the aggregate controlled approximately 9,482,800 Common Shares constituting 41.9% of the issued and outstanding Common Shares on a non-diluted basis as at the date thereof, entered into a voting agreement (the "Voting Agreement") with Clarus providing that such shareholders will vote against certain change of control transactions, unless Clarus consents otherwise, and support Clarus’ nominees to the board of directors of the Company. Under the Voting Agreement, the applicable shareholders will be prohibited from transferring 50% of the Common Shares held by them on the effective date, with limited exceptions.

The provisions of the Voting Agreement relating to change of control transactions and non-transferability of Common Shares will expire, at the latest, upon the six-month anniversary of the public release of the results of the completed Phase 2 portion of the Phase 1/ 2 clinical trial of EPI-506 by the Company or the public release of the results of the completed Phase 2 portion of an alternative program that is approved by the board of directors and the provisions relating to the Clarus nominees will continue for so long as Clarus is entitled to nominate directors to the Company’s board of directors.

Additional details with respect to the 2016 Financing can be found in the material change report of the Company dated January 15, 2016 .

Senior Leadership Changes

On January 7, 2016 , Dr. David Parkinson was appointed as the Company’s President and Chief Executive Officer.

David Parkinson has significant experience in the development of novel approaches to cancer therapy. He has served as Vice President, Global Clinical Oncology for Novartis, and as Vice President, Oncology Development at Amgen. During his tenures at Amgen and Novartis, Dr. Parkinson was responsible for clinical development activities leading to a series of successful global drug registrations for important cancer therapeutics, including Gleevec, Femara, Zometa, Kepivance, and Vectibix. In addition, Dr. Parkinson has also served as the Sr. Vice President, Oncology Research and Development at Biogen Idec and as the CEO of the diagnostics company Nodality. Most recently he has been serving as a venture partner at New Enterprise Associates, Inc. (NEA).

Dr. Parkinson replaces Mr. Robert Rieder who announced his departure from the Company and resignation from the Board of Directors.

On January 14, 2016 , effective on the closing of the Private Placement, Scott Requadt , Managing Director of Clarus Ventures, LLC, was appointed to the board of directors of the Company.

Summary Results

ESSA recorded a net loss of $4.0 million ( $0.18 per Common Share) for the three months ended December 31, 2015 , compared to a net loss of $1.3 million ( $0.08 per Common Share) for the three months ended December 31, 2014 .

Research and Development ("R&D") expenditures for the period were $3.2 million compared to $0.6 million for 2014. R&D expenditures for the three months ended December 31, 2014 were $1.9 million before recognition of recoveries from a grant from the Cancer Prevention and Research Institute of Texas of $1.3 million .

The increase in R&D expenditures is primarily due to manufacturing and clinical costs incurred as the Company transitions into the clinical development stage with respect to clinical candidate EPI-506. In the three months ended December 31, 2015 , the Company commenced enrolling patients into its Phase 1/2 clinical trial. The composition of costs in R&D has therefore evolved to include additional staff salaries and away from preclinical and Investigational New Drug ("IND") application work in the prior period. The Company has received approval from the U.S. Food and Drug Administration for its IND application and a ‘no objection letter’ from the Health Protection Branch of Health Canada for its Clinical Trial Authorization application.

General and administration expenditures for the three months ended December 31, 2015 were $1.2 million compared to $0.7 million for the comparative period.

The increase was primarily due to increased activity as a public corporate entity as the Company became a reporting issuer December 23, 2014 . Since December 31, 2014 , the Company has grown substantially to support the pursuit of the development of EPI-506.

Liquidity and Outstanding Share Capital

Working capital as at December 31, 2015 was $0.6 million . Shortly after period end, the Company closed the 2016 Financing, which will provide funding to execute the Company’s Phase 1 portion of the Phase 1/2 clinical trial.

The Phase 1 portion is anticipated to complete in the second half of calendar 2016. Management continues to consider sources of additional financing which would assure continuation of the Company’s operations and research programs.

As of December 31, 2015 , the Company had 22,630,047 Common Shares issued and outstanding, 3,493,519 Common Shares issuable upon the exercise of outstanding stock options at a weighted-average exercise price of CAD$1.94 per share, and 281,363 Common Shares issuable upon the exercise of outstanding warrants at a weighted-average exercise price of CAD$3.65 per share.

As of the date of this release, the Company has 27,409,223 Common Shares issued and outstanding following the 2016 Financing, a further 3,833,519 Common Shares issuable upon the exercise of outstanding stock options at a weighted-average exercise price of CAD$2.71 per share, and 7,099,541 Common Shares issuable upon the exercise of outstanding warrants at a weighted-average exercise price of CAD$4.55 per share.