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Veloxis Pharmaceuticals announces financial results for the first half 2012, anticipated financing, revised EU regulatory filing



 Veloxis Pharmaceuticals announces financial results for the first half 2012,
   anticipated financing, revised EU regulatory filing strategy and revised
outlook for 2012. Phase III activities for LCP-Tacro™ progressing according to
                                    plan.

PR Newswire

HORSHOLM, Denmark, Aug. 22, 2012

HORSHOLM, Denmark, Aug. 22, 2012 /PRNewswire/ --

Highlights:

  o Veloxis development activities for LCP-Tacro™ are proceeding in line with
    expectations.  Enrollment has been completed in the pivotal LCP-Tacro 3002
    Phase III study in de novo kidney transplant patients. The LCP-Tacro 3002
    study is designed to demonstrate non-inferiority versus standard therapy
    Prograf® and 543 patients have been randomized at approximately 90
    clinical sites around the world.  Results are expected mid-2013.
  o Veloxis STRATO Study of LCP-Tacro™ in Kidney Transplant Recipients
    Experiencing Tremors is progressing according to plan. The study is
    designed to explore whether a conversion of patients who have symptomatic
    tremor from treatment with standard immediate release twice-daily
    tacrolimus capsules to extended release once-daily LCP-Tacro™ tablets
    leads to a measurable improvement in tremor.
  o The Company has met with EMA representatives to discuss the MAA filing for
    LCP-Tacro™ and have agreed to defer filing to 2013.
  o Veloxis is announcing its intent to obtain further financing through a
    rights issue, anticipated to be launched in the fourth quarter of 2012, to
    raise gross proceeds of approximately DKK 425 million. The Company's two
    largest shareholders, Lundbeckfond Invest A/S and Novo A/S, have expressed
    their intention to support the financing.  Based on the support expressed
    by the major shareholders the Company expects that the share price of the
    offering will be no less than DKK 0.35.
  o The Company intends in late August to call an EGM for September to approve
    the proposed financing. Detailed information to shareholders will be
    included in the notice convening the EGM in late August.
  o Veloxis reported a net loss of DKK 160.6 million for the first half of
    2012 compared to a net loss of DKK 141.2 million for the same period in
    2011. Veloxis announces revised outlook for 2012.
  o For the first half of 2012, Veloxis' research and development costs
    amounted to DKK 119.5 million compared to DKK 117.2 million during the
    same period in 2011.
  o On 30 June, 2012, Veloxis had cash and cash equivalents of DKK 152.7
    million.

Outlook for 2012
Veloxis changes its 2012 outlook from previously announced DKK 220 - 250 to
DKK 240 – 270 million in operating loss due to restructuring cost incurred in
the second quarter of 2012. The Company's cash and cash equivalents position
as at 31 December, 2012 is maintained as announced in the annual report for
2011, and is expected to be in the range of DKK 40–80 million. The outlook is
without giving the effect to the planned financing anticipated during the
fourth quarter 2012.

Financial calendar for 2013

6 March, 2013:                       Release of Annual Report 2012.
17 April, 2013:                      Annual General Meeting.
15 May, 2013:                        Interim Report for the 1st Quarter – for
                                     the period 1 January to 31 March, 2013.
21 August, 2013:                     Interim Report for the 2nd Quarter – for
                                     the period 1 January to 30 June, 2013.
                                     Interim Report for the 3rd Quarter – for
13 November, 2013:                   the period 1 January to 30 September,
                                     2013.

Conference call
A conference call will be held tomorrow, 23 August, 2012 at 8:00 AM CET
(Denmark); 7:00 AM GMT (London).

To access the live conference call, please dial one of the following numbers:
+45 32 72 76 25 (Denmark)
+44 (0) 1452 555 566 (UK)
+1 631 510 7498 (USA)
Access code 21465742

Following the conference call, a recording will be available on the company's
website http://www.veloxis.com.

This company announcement does not constitute an offer to sell or the
solicitation of an offer to buy, any securities.  No offer or sale of any
securities will be made in any jurisdiction in which such offer, solicitation
or sale would be unlawful. Any securities to be offered have not been and will
not be registered under the U.S. Securities Act of 1933, as amended (the "US
Securities Act"), or any applicable securities laws of any state of the United
States, and may not be offered or sold in the United States absent such
registration or an applicable exemption from such registration requirements.
If the proposed rights issue is consummated, any preemptive rights and/or
offer shares will be offered in the United States solely to Qualified
Institutional Buyers in reliance on Rule 144A under the US Securities Act, and
outside the United States in offshore transactions in reliance on Regulation S
under the US Securities Act.

Research & development update
LCP-Tacro™ in kidney transplant patients
Veloxis has completed one Phase III study and has commenced a second Phase III
study of LCP-Tacro™ in kidney transplant recipients as the basis for its
development programme for LCP-Tacro™ as a once-daily agent for the prophylaxis
of organ rejection in kidney transplantation. The first of these studies, the
3001 Study was a non-inferiority study performed in 326 stable kidney
transplant recipients, and was successfully completed in 2011, meeting its
primary efficacy and safety endpoints when compared to Prograf® (tacrolimus,
Astellas Pharma Inc.). The second study, Study 3002 is being undertaken in de
novo kidney transplant recipients. This study is a randomized, double-blind,
multicenter study that compares once-daily LCP-Tacro™ against twice-daily
Prograf® in de novo adult kidney transplant patients. The primary endpoint of
the study, a composite endpoint (biopsy proven acute rejection, graft failure,
loss to follow up or death), will be evaluated after a 12-month treatment
period to demonstrate the non-inferiority of LCP-Tacro™ compared to Prograf®.
Secondary endpoints will include safety, tolerability and renal function
assessments. The study completed enrollment in March 2012 of 543 subjects at
approximately 90 transplant centers, primarily in the U.S and Europe. Results
from this study are expected mid-2013. Patients will participate in a 12-month
extension period on treatment for follow-up safety assessments.

In addition to the pivotal Phase III studies, Veloxis is planning a series of
Phase IIIb/IV studies to further evaluate potential differences in clinical
profile provided by LCP-Tacro's unique PK profile. The first study initiated
is the STRATO (Switching kidney TRAnsplant patients with Tremor to LCP-tacrO)
study of LCP-Tacro™ in kidney transplant recipients experiencing drug-induced
tremors. The STRATO study is designed to explore whether a conversion of
patients who have symptomatic tremor from treatment with standard immediate
release twice-daily tacrolimus capsules to extended release once-daily
LCP-Tacro™ tablets leads to a measurable improvement in tremor.

LCP-Tacro™ Regulatory Strategy
The Company has met with EMA (European Medicines Agency) representatives to
discuss the MAA (Marketing Authorization Application) filing for LCP-Tacro™
for the prophylaxis of organ rejection and based on these discussions the
company has decided to defer filing to 2013. The revised timing will enable
the Company to submit requested manufacturing data to the EMA in the initial
MAA.  These data have now been generated.  The Company will seek EMA
rapporteur advice to discuss the optimal timing for regulatory submission
including consideration of timing the MAA submission relative to the
availability of the 3002 de novo study data. The U.S. submission to the FDA
(Food and Drug Administration) is planned for the second half of 2013. 

Financing
The Board of Directors intends to proceed with an equity financing to support
the Company through LCP-Tacro™ regulatory submissions, the estimated one-year
regulatory review periods, and initial product launch in the US.  In this
regard, the Company will propose raising gross proceeds of approximately DKK
425 million through a rights issue.  Lundbeckfond Invest A/S and Novo A/S, the
Company's two largest shareholders have each expressed their intent to
subscribe for their pro-rata amount of the financing and, beyond this, have
 expressed their intention to subscribe any unsubscribed portion.  The two
major shareholders have indicated that they will support a share price which
is no less than DKK 0.35 for the rights offering. The Company will in late
August call an EGM for September and request authorization to issue up to
approximately 1,350,000,000 new Company shares, at the discretion of the
Board.

 

Financial
Highlights
                   YTD         YTD         Q2          Q2          Year
                   2012        2011        2012        2011        2011
                   DKK'000     DKK'000     DKK'000     DKK'000     DKK'000
Income Statement
Revenue            -           -           -           -           -
Research and       (119,487)   (117,212)   (56,639)    (64,951)    (222,053)
development costs
Administrative     (19,693)    (23,861)    (9,462)     (12,137)    (47,814)
expenses
Operating loss
before             (139,180)   (141,073)   (66,101)    (77,088)    (269,867)
restructuring cost
Restructuring cost (21,462)    -           (21,462)    -           -
Operating loss     (160,642)   (141,073)   (87,563)    (77,088)    (269,867)
Net financial
income /           459         158         2,051       2,008       16,048
(expenses)
Loss before tax    (160,183)   (140,915)   (85,512)    (75,080)    (253,819)
Tax for the period (448)       (300)       (130)       (300)       1,193
Net loss for the   (160,631)   (141,215)   (85,642)    (75,380)    (252,626)
period
Balance Sheet
Cash and cash      152,720     402,213     152,720     402,213     297,727
equivalents
Total assets       167,799     426,860     167,799     426,860     320,927
Share capital      45,254      452,543     45,254      452,543     452,543
Total equity       98,968      363,606     98,968      363,606     255,900
Investment in
property, plant    217         1,256       126         635         2,981
and equipment
Cash Flow
Statement
Cash flow from
operating          (142,764)   (122,017)   (62,400)    (56,621)    (234,637)
activities
Cash flow from
investing          53,607      (221,757)   24,174      77,845      (169,778)
activities
Cash flow from
financing          (2,395)     (2,832)     (1,085)     (1,426)     (5,948)
activities
Cash and cash
equivalents at     152,720     402,213     152,720     402,213     297,727
period end
Financial Ratios
Basic and diluted  (0.35)      (0.31)      (0.19)      (0.17)      (0.56)
EPS
Weighted average   452,542,480 452,542,480 452,542,480 452,542,480 452,542,480
number of shares
Average number of  55          53          55          52          52
employees (FTEs)
Assets/equity      1.70        1.17        1.70        1.17        1.25

The interim report is unaudited.

Revenue
For the first half of 2012 Veloxis had no revenue as in the same period of
2011.

Research and development costs
For the first half of 2012, Veloxis' research and development costs amounted
to DKK 119.5 million compared to DKK 117.2 million during the same period in
2011. Research and development costs are mainly attributable to the ongoing
phase III trial in LCP-Tacro™ (de novo patients, Study 3002).

Administrative expenses
For the first half of 2012, Veloxis' administrative cost amounted to DKK 19.7
million compared to DKK 23.9 million during the same period in 2011.

Restructuring cost
Restructuring cost includes salary payments to former employees in connection
with the reduction in headcount effected in May 2012 and a write-down of
laboratory equipment and laboratory improvements due to the discontinuation of
pipeline activities not related to LCP-Tacro™.

Compensation costs
For the first half of 2012, a total of DKK 3.5 million was recognized as
share-based compensation. The cost is included in R&D and G&A. The comparable
cost for 2011 was DKK 6.3 million.

In the second quarter of 2012, a total of 2,137,916 warrants have been
cancelled.

As of 30 June, 2012, there were a total of 27,638,230 warrants outstanding at
an average strike price of DKK 3.2. Members of the Board of Directors held
474,735 warrants at an average strike price of DKK 6.0. Members of the
Executive Management held 8,914,466 warrants at an average strike price of DKK
1.6, while other current and former employees held 18,249,029 warrants at an
average strike price of DKK 3.9.

Please refer to Veloxis' latest annual report for additional details on the
Company's warrant programs.

Operating loss
Veloxis' operating loss for the first half of 2012 was DKK 160.6 million
compared to DKK 141.1 million in the corresponding period of 2011.

Financial income
During the first half of 2012, the Company recognized net financial income of
DKK 0.5 million compared to net financial income of DKK 0.2 million in the
corresponding period of 2011. The gain is mainly attributable to interest and
gains on investment bonds.

Net loss
Veloxis' net loss for the first half of 2012 was DKK 160.6 million compared to
DKK 141.2 million in the corresponding period of 2011.

Cash flow
As at 30 June, 2012, the balance sheet reflects cash and cash equivalents of
DKK 152.7 million compared to DKK 297.7 million as at 31 December, 2011. This
represents a decrease of DKK 145.0 million primarily reflecting the Company's
operating activities for the period.

Balance sheet
As per 30 June, 2012, total assets were DKK 167.8 million compared to DKK
320.9 million at the end of 2011.

Shareholders' equity equalled DKK 99.0 million as of 30 June, 2012, compared
to DKK 255.9 million at the end of 2011.

As approved at the annual general meeting on 18 April 2012 the company's share
capital was decreased by nominally DKK 407,288,232 from nominally DKK
452,542,480 to nominally DKK 45,254,248, and the per share nominal value was
reduced from DKK 1.00 to DKK 0.10.

Financial review
Veloxis reports its financial statements in Danish Kroner (DKK), which is the
functional currency of the Company and the group. Solely for the convenience
of the reader, this Interim Report contains a conversion of certain DKK
amounts into Euro (EUR) at a specified rate. These converted amounts should
not be construed as representations that the DKK amounts actually represent
such EUR amounts or could be converted into EUR at the rate indicated or at
any other rate. Unless otherwise indicated, conversion herein of financial
information into EUR has been made using the Danish Central Bank's spot rate
on 30 June, 2012, which was EUR 1.00 = DKK 7.4334.

For more information, please contact:
Bill                                   John D.                 Johnny Stilou
Polvino                                Weinberg               
President &                            EVP, Chief Commercial   EVP, Chief
CEO                                    Officer                 Financial
                                                               Officer
Mobile: +1 917 647 9107                Mobile: +1 908 302      Mobile: +45 21
                                       3389                    227 227
                                       Email: jdw@veloxis.com   Email:
Email: wjp@veloxis.com                                         jst@veloxis.com
                                                                

The forward looking statements and targets contained herein are based on the
current view and assumptions of the Executive Management and the Board of
Directors of Veloxis Pharmaceuticals A/S. Such statements involve known and
unknown risks and uncertainties that may cause actual results, performance or
events to differ materially from those anticipated herein. Veloxis
Pharmaceuticals A/S expressly disclaim any obligation or undertaking to update
or revise any forward looking statements, targets or estimates contained in
this interim report to reflect any change in events, conditions, assumptions,
or circulations on which any such statements are based unless  required by
applicable law.

About LCP‐Tacro™ and tacrolimus
Tacrolimus is a leading immunosuppression drug used for the prevention of
transplant allograft rejection after organ transplantation. LCP‐Tacro™ is
being developed as a once‐daily tablet version of tacrolimus, with improved
bioavailability, consistent pharmacokinetic performance and reduced
peak‐to‐trough variability when compared to currently approved tacrolimus
products. Transplant patients need to maintain a minimum blood level of
tacrolimus for the prevention of transplant allograft rejection, but excessive
levels may increase the risk of serious side effects such as nephrotoxicity,
tremor, diabetes, high blood pressure, and opportunistic infections.
Therefore, tacrolimus levels need to be managed carefully, and transplant
patients are typically obliged to make frequent visits to the hospital for
monitoring and dose adjustments after receiving a new organ.

About Veloxis Pharmaceuticals
Based in Horsholm, Denmark, with a subsidiary in New Jersey. Veloxis is a
speciality pharmaceutical company currently focused on the development of
LCP-Tacro™ for the prevention of organ rejection in kidney transplant
patients. Veloxis' unique, patented delivery technology, MeltDose®, can
improve absorption and bioavailability at low‐scale up costs.. Veloxis is
listed on the NASDAQ OMX Copenhagen under the trading symbol OMX: VELO.

For further information, please visit http://www.veloxis.com.

Executive Management's and the Board of Directors' Statement on the Interim
Report

The Executive Management and the Board of Directors have considered and
adopted the Interim Report of Veloxis Pharmaceuticals A/S.

The Interim Report is prepared in accordance with International Accounting
Standard No. 34 (IAS 34), "Interim Financial Reporting" and additional Danish
disclosure requirements for financial reporting of listed companies.

We consider the applied accounting policies to be appropriate and, in our
opinion, the Interim Report gives a true and fair view of the assets and
liabilities, financial position, results of the operation and cash flow of the
group for the period under review. Furthermore, in our opinion the management
review includes a fair review of the development and performance of the
business and the financial position of the group, together with a description
of the material risks and uncertainties the group faces.

Horsholm, 22 August, 2012

Executive Management
Dr. William J. Polvino                       JohnnyStilou 
President & CEO                              Executive Vice
                                             President & CFO  
Board of Directors
Kim Bjornstrup                               Thomas Dyrberg       Kurt Anker
                                                                  Nielsen
(Chairman)                                   (Deputy Chairman) 
Anders Gotzsche                              Mette Kirstine Agger Ed Penhoet

                 

Financial
Highlights
Quarterly
Numbers in DKK
               Q2          Q1           Q4          Q3          Q2          Q1
               2012        2012         2011        2011        2011        2011
               DKK'000     DKK'000      DKK'000     DKK'000     DKK'000     DKK'000
Income
Statement
Revenue        -           -            -           -           -           -
Research and
development    (56,639)    (62,848)     (61,763)    (43,079)    (64,951)    (52,261)
costs
Administrative (9,462)     (10,231)     (11,385)    (12,568)    (12,137)    (11,724)
expenses
Operating loss
before         (66,101)    (73,079)     (73,148)    (55,647)    (77,088)    (63,985)
restructuring
cost
Restructuring  (21,462)    -            -           -           -           -
cost
Operating loss (87,563)    (73,079)     (73,148)    (55,647)    (77,088)    (63,985)
Net financial
income /       2,051       (1,592)      4,528       11,363      2,008       (1,850)
(expenses)
Loss before    (85,512)    (74,671)     (68,620)    (44,284)    (75,080)    (65,835)
tax
Tax for the    (130)       (318)        373         1,120       (300)       -
period
Net loss for   (85,642)    (74,989)     (68,247)    (43,164)    (75,380)    (65,835)
the period
Balance Sheet
Cash and cash  152,720     213,786      297,727     348,252     402,213     462,319
equivalents
Total assets   167,799     235,187      320,927     370,865     426,860     490,578
Share capital  45,254      452,543      452,543     452,543     452,543     452,543
Total equity   98,968      182,545      255,900     322,516     363,606     436,200
Investment in
property,      126         91           1,123       602         635         621
plant and
equipment
Cash Flow
Statement
Cash flow from
operating      (62,400)    (80,364)     (52,139)    (60,481)    (56,621)    (65,396)
activities
Cash flow from
investing      24,174      29,433       26,101      25,878      77,845      (299,602)
activities
Cash flow from
financing      (1,085)     (1,310)      (1,670)     (1,445)     (1,426)     (1,407)
activities
Cash and cash
equivalents at 152,720     213,786      297,727     348,252     402,213     462,319
period end
Financial
Ratios
Basic and      (0.19)      (0.17)       (0.15)      (0.10)      (0.17)      (0.15)
diluted EPS
Weighted
average number 452,542,480 452,542,480  452,542,480 452,542,480 452,542,480 452,542,480
of shares
Average number
of employees   55          55           51          51          52          54
(FTEs)
Assets/equity  1.70        1.29         1.25        1.15        1.17        1.12

Financial
Highlights
Quarterly
Numbers in EUR
               Q2          Q1           Q4          Q3          Q2          Q1
               2012        2012         2011        2011        2011        2011
               EUR'000     EUR'000      EUR'000     EUR'000     EUR'000     EUR'000
Income
Statement
Revenue        -           -            -           -           -           -
Research and
development    (7,620)     (8,455)      (8,309)     (5,795)     (8,738)     (7,031)
costs
Administrative (1,273)     (1,376)      (1,531)     (1,691)     (1,632)     (1,577)
expenses
Operating loss
before         (8,893)     (9,831)      (9,840)     (7,486)     (10,370)    (8,608)
restructuring
cost
Restructuring  (2,887)     -            -           -           -           -
cost
Operating loss (11,780)    (9,831)      (9,840)     (7,486)     (10,370)    (8,608)
Net financial
income /       276         (214)        609         1,529       270         (249)
(expenses)
Loss before    (11,504)    (10,045)     (9,231)     (5,957)     (10,100)    (8,857)
tax
Tax for the    (17)        (43)         50          150         (41)        -
period
Net loss for   (11,521)    (10,088)     (9,181)     (5,807)     (10,141)    (8,857)
the period
Balance Sheet
Cash and cash  20,545      28,760       40,053      46,850      54,109      62,195
equivalents
Total assets   22,574      31,639       43,174      49,892      57,425      65,996
Share capital  6,088       60,880       60,880      60,880      60,880      60,880
Total equity   13,314      24,557       34,426      43,387      48,915      58,681
Investment in
property,      17          12           151         81          85          84
plant and
equipment
Cash Flow
Statement
Cash flow from
operating      (8,395)     (10,811)     (7,014)     (8,136)     (7,617)     (8,798)
activities
Cash flow from
investing      3,252       3,960        3,511       3,481       10,472      (40,305)
activities
Cash flow from
financing      (146)       (176)        (225)       (194)       (192)       (189)
activities
Cash and cash
equivalents at 20,545      28,760       40,053      46,850      54,109      62,195
period end
Financial
Ratios
Basic and      (0.03)      (0.02)       (0.02)      (0.01)      (0.02)      (0.02)
diluted EPS
Weighted
average number 452,542,480 452,542,480  452,542,480 452,542,480 452,542,480 452,542,480
of shares
Average number
of employees   55          55           51          51          52          54
(FTEs)
Assets/equity  1.70        1.29         1.25        1.15        1.17        1.12

 

Income statement and statement of comprehensive income

Income Statement   Consolidated
(DKK'000)          YTD         YTD         Q2          Q2          Year
                   2012        2011        2012        2011        2011
Revenue            -           -           -           -           -
Research and       (119,487)   (117,212)   (56,639)    (64,951)    (222,053)
development costs
Administrative     (19,693)    (23,861)    (9,462)     (12,137)    (47,814)
expenses
Operating loss
before             (139,180)   (141,073)   (66,101)    (77,088)    (269,867)
restructuring cost
Restructuring cost (21,462)    -           (21,462)    -           -
Operating loss     (160,642)   (141,073)   (87,563)    (77,088)    (269,867)
Financial income   5,226       10,253      3,649       8,608       33,238
Financial expenses (4,767)     (10,095)    (1,598)     (6,600)     (17,190)
Loss before tax    (160,183)   (140,915)   (85,512)    (75,080)    (253,819)
Tax for the period (448)       (300)       (130)       (300)       1,193
Net loss for the   (160,631)   (141,215)   (85,642)    (75,380)    (252,626)
period
Basic and diluted  (0.35)      (0.31)      (0.19)      (0.17)      (0.56)
EPS
Weighted average   452,542,480 452,542,480 452,542,480 452,542,480 452,542,480
number of shares
Statements of
comprehensive      Consolidated
income
(DKK'000)          YTD         YTD         Q2          Q2          Year
                   2012        2011        2012        2011        2011
Net loss for the   (160,631)   (141,215)   (85,642)    (75,380)    (252,626)
period
  Other
comprehensive
income:
  Currency
translation        248         307         173         37          (163)
differences
  Other
comprehensive      248         307         173         37          (163)
income for the
period
Total
comprehensive      (160,383)   (140,908)   (85,469)    (75,343)    (252,789)
income for the
period

 

 

Balance sheet
Assets                                    Consolidated
(DKK'000)                      30 June    30 June       31 Dec.
                               2012       2011          2011
Patent rights and software     2,469      2,120         2,563
Intangible assets              2,469      2,120         2,563
Property, plant and equipment  4,236      10,131        8,967
Leasehold improvements         200        4,937         3,880
Property, plant and equipment  4,436      15,068        12,847
Non-current assets             6,905      17,188        15,410
Other receivables              5,057      6,204         5,480
Prepayments                    3,117      1,255         2,310
Receivables                    8,174      7,459         7,790
Investment bonds               112,973    221,939       166,797
Cash                           39,747     180,274       130,930
Cash and cash equivalents      152,720    402,213       297,727
Current assets                 160,894    409,672       305,517
Assets                         167,799    426,860       320,927
Balance sheet
Equity & Liabilities                      Consolidated
(DKK'000)                      30 June    30 June       31 Dec.
                               2012       2011          2011
Share capital                  45,254     452,543       452,543
Special reserve                407,289    -             -
Translation reserves           2,179      2,401         1,931
Retained earnings/loss         (355,754)  (91,338)      (198,574)
Equity                         98,968     363,606       255,900
Finance lease                  1,718      5,932         3,715
Non-current liabilities        1,718      5,932         3,715
Finance lease                  4,214      5,510         4,612
Trade payables                 19,614     21,244        28,263
Other payables                 43,285     30,568        28,437
Current liabilities            67,113     57,322        61,312
Liabilities                    68,831     63,254        65,027
Equity and liabilities         167,799    426,860       320,927

 

Cash flow statements

Cash Flow Statement            Consolidated
(DKK'000)                      YTD       YTD       Q2       Q2       Year
                               2012      2011      2012     2011     2011
Operating loss                 (160,642) (141,073) (87,563) (77,088) (269,867)
Share-based payment            3,451     6,276     1,891    2,750    10,451
Depreciation and amortization  8,728     3,793     7,488    1,894    7,320
Changes in working capital     5,544     7,422     15,670   14,071   13,094
Cash flow from operating       (142,919) (123,582) (62,514) (58,373) (239,002)
activities before interest
Interest received              962       3,344     480      2,298    5,418
Interest paid                  (359)     (1,479)   (237)    (246)    (2,246)
Corporate tax paid             (448)     (300)     (129)    (300)    1,193
Cash flow from operating       (142,764) (122,017) (62,400) (56,621) (234,637)
activities
Purchase of property, plant    (217)     (1,256)   (126)    (635)    (2,981)
and equipment
Investments in bonds           (11,935)  (377,668) (8,174)  (1,637)  (406,128)
Sale of bonds                  65,759    155,729   32,474   78,737   239,331
Cash transfer to restricted    -         1,438     -        1,380    -
security deposit
Cash flow from investing       53,607    (221,757) 24,174   77,845   (169,778)
activities
Installments on bank           (2,395)   (2,832)   (1,085)  (1,426)  (5,948)
borrowings and finance lease
Cash flow from financing       (2,395)   (2,832)   (1,085)  (1,426)  (5,948)
activities
Increase/(decrease) in cash    (91,552)  (346,606) (39,311) 19,798   (410,363)
Cash at beginning of period    130,930   530,081   76,513   161,902  531,519
Exchange gains/(losses) on     369       (3,201)   2,545    (1,426)  9,774
cash
Cash at end of period          39,747    180,274   39,747   180,274  130,930
Cash and cash equivalents at
end of period comprise:
Investment bonds               112,973   221,939   112,973  221,939  166,797
Deposit on demand and cash     39,747    180,274   39,747   180,274  130,930
                               152,720   402,213   152,720  402,213  297,727

 

Statement of changes in equity

Consolidated
Equity
              Number of    Share     Share    Special  Translation Retained  Total
              Shares       Capital   Premium  Reserves Reserves    Earnings
                           DKK'000   DKK'000  DKK'000  DKK'000     DKK'000   DKK'000
Equity as of
1 January     452,542,480  452,543   43,601   -        2,094       -         498,238
2011
Total
comprehensive                                          307         (141,215) (140,908)
income
Share-based                                                        6,276     6,276
payment
Transfer of
retained                             (43,601)                      43,601    -
earnings
Equity as of  452,542,480  452,543   -        -        2,401       (91,338)  363,606
30 June 2011
Total
comprehensive                                          (470)       (111,411) (111,881)
income
Share-based                                                        4,175     4,175
payment
Equity as of
31 December   452,542,480  452,543   -        -        1,931       (198,574) 255,900
2011
Total
comprehensive                                          248         (160,631) (160,383)
income
Reduction of               (407,289)          407,289                        -
share capital
Share-based                                                        3,451     3,451
payment
Equity as of  452,542,480  45,254    -        407,289  2,179       (355,754) 98,968
30 June 2012

Notes

1.      Accounting policies
The interim report is prepared in compliance with International Accounting
Standard No. 34 (IAS 34), "Interim Financial Reporting" and in accordance with
the NASDAQ OMX Copenhagen's financial reporting requirements for listed
companies.

There have been no changes in accounting policies used for the interim report
compared to the accounting policies used in the preparation of Veloxis
Pharmaceuticals' annual report for 2011.

The income statement presents expenses by function and a new subtotal
"Operating loss before restructuring costs" which exclude restructuring costs.
This subtotal is considered relevant in understanding the financial
performance and outlook for 2012 of the group.

2.      Accounting estimates
Impairment tests
In accordance with IAS 36, property, plant and equipment are tested for
impairment if there are indications of impairment. Due to the restructuring of
the organisation announced on 23 May 2012 Management has performed an
impairment test of the book value of property, plant and equipment primarily
consisting of leasehold improvements and laboratory equipment.  According to
Veloxis' accounting policies regarding impairment tests a write-down is made
to the highest value of an estimated sales price or calculated net present
value. Leasehold improvements and certain laboratory equipment will no longer
be deployed by Veloxis due to the restructuring. It has been assessed that the
value in use and the estimated sales price amount to DKK 0 million. The book
value of laboratory equipment still being used by Veloxis as part of the
LCP-Tacro Phase III study is considered by management not to be impaired.

On basis of the impairment test a write-down was made on 30 June 2012 of DKK
6.1 million (30 June 2011: DKK 0 million).

SOURCE Veloxis Pharmaceuticals

Website: http://www.veloxis.com
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