NeuroSearch provides update on the Huntexil® development programme and plans a comprehensive restructuring of the company's

NeuroSearch provides update on the Huntexil® development programme and plans a comprehensive restructuring of the company's operations

9/27/2011 2:47 AM EST
NeuroSearch A/S
Company Announcement


NeuroSearch is committed to create a profitable, specialty pharmaceutical
company building on the platform that the company would achieve from a
successful development of Huntexil®.

Today, NeuroSearch provides an update on the development programme for
Huntexil® in the treatment of motor symptoms in Huntington's disease and
outlines the company's design of a confirmatory Phase III efficacy study
designated Prime-HD. In addition, the company announces a comprehensive
restructuring and controlled discontinuation of its other activities in order
to optimise financial and management resources to complete the development of
Huntexil®.

-- The Huntexil® development programme will include the Prime-HD study,
planned to enrol 630 patients and to test 45 mg and 67.5 mg
Huntexil®
both twice daily. The primary endpoint of the efficacy study will be the
Total Motor Score (TMS) and includes additional endpoints measuring overall
patient improvement. Dosing of the first patient is expected in the first
half of 2012 provided that the company has secured funding for completion
of the development programme
-- Over the course of the next two years, a planned restructuring and
controlled discontinuation
of the company's
other activities is expected to reduce the organisation to about 35
employees. This is expected to reduce fixed and employee-related costs from
about DKK 200 million per year to about DKK 50 million per year
-- The financial guidance and reporting will, going forward, distinguish
between loss from continuing operations, being primarily Huntexil® related
activities, and loss from discontinuing activities
-- The company adjusts its financial guidance from an operating loss (EBIT) of
DKK 300 million to an operating loss on continuing operations of DKK 370
million in 2011, of which DKK 130 million are primarily Huntexil®-related
costs, and the remaining DKK 240 million are one-off restructuring costs
with no cash effect. In addition, the company expects a loss on
discontinuing activities
of approximately DKK 345 million in 2011, with a cash effect of
approximately DKK 140 million in 2011 and additional DKK 70 million in 2012
-- The value of cash and cash equivalents and securities is expected to be
approximately DKK 230 million at the end of 2011

The principal objective is to take Huntexil® through the Prime-HD study which
is to confirm the significant efficacy on the TMS that was demonstrated in the
MermaiHD and HART studies. Concurrently with the study, NeuroSearch will
prepare for product registration and marketing of Huntexil®. In the longer
term, Huntexil® could form the basis of the establishment of commercial
partnerships in selected markets and inlicensing of other CNS specialty
pharmaceutical products.


Patrik Dahlen, CEO of NeuroSearch, commented on the announcement:
"We are committed to complete the development of Huntexil® and market the
product in the best possible way. In the long run, our vision is to create a
specialty pharmaceutical company building on the platform that Huntexil® will
give us. Unfortunately, this means that we will have to part with many
competent employees who are working on other projects. We much regret this
development, but it is necessary in order to realise the full potential of
Huntexil®."


Telephone conference
NeuroSearch will host a telephone conference today at 11.00 am CET (10 am UK
time, 05 am EST). CEO Patrik Dahlen, EVP & CFO René Schneider and EVP & CDO
Karin Garre will participate in the conference, which will be conducted in
English and with access via the following telephone numbers: UK and
international +44 207 509 5139, US +1 718 354 1226 and Denmark +45 3271 4767.

The conference call can also be accessed via the company's website
www.neurosearch.com. The corresponding presentation will be available at the
company's website at the time of the teleconference and a playback of the call
will also be available from the website as soon as possible after the call.


Financial guidance for 2011 and outlook for 2012
The company's financial guidance is based on the assumptions that the company
will secure funding for the completion of the entire development programme,
that the first patient in Prime-HD is dosed in the first half of 2012 and that
no partnership agreement is reached with respect to Huntexil®.

The financial guidance and reporting will, going forward, distinguish between
loss from continuing operations, being primarily activities related to
Huntexil®, and loss from discontinuing activities.

The company adjusts its financial guidance from an operating loss (EBIT) of DKK
300 million to an operating loss on continuing operations of DKK 370 million in
2011, of which DKK 130 million primarily are costs related to Huntexil®, and
the remaining DKK 240 million are one-off restructuring costs with no cash
effect. The one-off restructuring costs primarily relates to impairment of
goodwill, intangible assets and property, plant and equipment.

In addition, the company expects a loss on discontinuing activities of
approximately DKK 345 million in 2011, with a cash effect of approximately DKK
140 million in 2011 and additional DKK 70 million in 2012. Discontinuing
activities include costs and provisions for loss-making collaboration
agreements, salaries for employees under notice, lease obligations and other
items.

The restructuring is expected to reduce the company's fixed and
employee-related costs from about DKK 200 million per year to about DKK 50
million per year.

The value of cash and cash equivalents including securities is expected to be
approximately DKK 230 million at the end of 2011.

For 2012, the company provides an outlook on operating loss from continuing
operations in the range of DKK 150 to DKK 175 million. The costs relate
primarily to the Phase III programme for Huntexil®, provided it progresses
according to plan, but also include costs for continuing the Open HART study,
the compassionate use programme, development of a tablet formulation for
commercial use, preparation of product registration and marketing, further
development of seridopidine and ordopidine and costs of a significantly smaller
organisation. No additional costs on discontinuing activities are expected in
2012.

As a consequence of the restructuring, NeuroSearch will gain significant
financial flexibility, which will imply that the company will be a going
concern until the beginning of 2013 should the Prime-HD study not be initiated.

Total external costs for completion of the Huntexil® development programme,
consisting of Prime-HD and four additional studies, are estimated to be about
DKK 200 million of which the majority relates to Prime-HD. Most of the external
costs are expected to be incurred in 2012 and 2013 provided that the study is
initiated in the first half of 2012.

NeuroSearch is actively assessing different funding options, including a
partnership agreement for Huntexil® and a rights issue.


NeuroSearch designs a Phase III development programme for Huntexil®
As a candidate for the treatment of Huntington's disease, Huntexil® has been
granted Orphan Drug status in Europe and the United States, and the purpose of
the programme is to develop the first drug for the treatment of the overall
impaired motor symptoms associated with Huntington's disease.

As previously announced, NeuroSearch discussed the future development programme
for Huntexil® in Huntington's disease with the regulatory authorities in the
United States (FDA) and Europe (EMA) in 2011. An End of Phase II meeting was
held with the FDA and scientific advice was obtained in a meeting with the EMA.
Both authorities required additional Phase III data to confirm the previously
observed effect on TMS and to further support the clinical relevance of this
finding. The FDA also recommended an investigation of higher doses of
Huntexil®.

NeuroSearch has now designed the development programme for Huntexil® based on
the recommendations from both the FDA and the EMA, the results of the HART and
MermaiHD studies, and on discussions with leading experts in the field. The
Phase III study protocol will be submitted for informal protocol review to the
FDA during Q4 2011 and the feedback will determine the final details of the
Prime-HD study.

The results of the development programme will form the basis for the
application for marketing authorisation with the regulatory authorities in
regions such as the United States and Europe.

Highlights of the confirmatory Prime-HD Phase III efficacy study
The planned efficacy study is a randomised, double-blind and placebo-controlled
three-arm Phase III clinical study.

The primary objective of Prime-HD is to confirm the effectiveness of Huntexil®
measured according to the TMS. The TMS is the motor domain from the Unified
Huntington's Disease Rating Scale (UHDRS), on which a significant effect of
Huntexil® (45 mg twice daily) was seen both in the HART and MermaiHD studies.
In both studies the TMS was included as secondary and tertiary endpoint,
respectively.

To further evaluate the clinical relevance of the effect, an assessment will be
made of the patients overall function. This function is measured using the
Clinical Global Impression (CGI) scale, for which a trend towards effect of
Huntexil® (45 mg twice daily) was seen in HART. The CGI score will be based on
interviews performed by the doctor based on a defined semi-structured
interview, the so-called Clinician's Interview-Based Impression of Change
(CIBIC).

Two Huntexil® doses will be investigated: 45 mg and 67.5 mg, both twice daily.
The efficacy of the two doses measured according to the TMS and CGI will be
tested within a closed testing procedure to ensure an overall significance
level of 5%.

The study is designed to confirm the efficacy on TMS of Huntexil® administered
as a 45 mg twice-daily dose, with a power of 90%.

Study design:


-- Primary endpoint: Total Motor Score, TMS
-- Other endpoints in order of priority:

-- General clinical improvement measured by the CGI using CIBIC as the
preceding interview
-- Activities of everyday life using the Alzheimer's Disease Cooperative
Study- Activities of Daily Living (ADCS-ADL) scale
-- Other non-motor scales from UHDRS (e.g. cognitive skills and function)

-- Prime-HD is planned to enrol 630 patients in three equal-sized treatment
arms (placebo, 45 mg or 67.5 mg Huntexil®, both twice daily)
-- Patients will be recruited in Europe and the United States and possibly
also in South America and Australia
-- Treatment duration will be 26 weeks
-- Patient eligibility criteria will be similar to those in the HART and
MermaiHD studies
-- The six-months randomised phase will be followed by a 4 weeks' wash out
period and then followed by a 6-months' open-label extension, in order to
collect long-term (12 months) safety data

NeuroSearch expects to initiate patient dosing in Prime-HD in the first half of
2012 provided that the company has secured funding for completion of the entire
development programme.

Patient enrolment is expected to take about 12 months. The study design is
outlined below (please see the enclosed PDF file).

Additional Huntexil® clinical studies
The scheduled development programme includes four complementary studies, of
which the first was recently initiated, to support the registration
applications. The studies can be completed independently of the Prime-HD study
and comprise:


-- Multiple Ascending Dose (MAD) study.
This study, in which the first subject was recently dosed, aims to assess
the safety and tolerability of Huntexil® at increasing doses and to, for
example, provide the basis for the selection of the supra-therapeutical
dose in a TQT heart study. Enrolling up to 36 healthy volunteers, the MAD
study is expected to be completed by Q1 2012. Interim analyses of the data
will be prepared before each dose escalation and for the use in the other
studies, including the Prime-HD study
-- TQT heart study.
Mandatory study to assess the effect of Huntexil® on the heart's conductive
properties (electrocardiogram). The study will be conducted in healthy
volunteers
-- Abuse potential study.
As Huntexil® is a compound acting on the cental nervous system, it will be
evaluated for abuse potential. A clinical abuse potential study will be
conducted in subjects classified as recreational drug abusers
-- Bioequivalence study.
A study to evaluate the bio-equivalence between Huntexil® in capsules, used
for testing in clinical development and a tablet formulation, to be
developed and used at launch

Restructuring and discontinuation of research and development activities
Simultaneously with the initiation of the pivotal development programme for
Huntexil®, NeuroSearch is planning to carry out a comprehensive restructuring
and controlled discontinuation of the company's other activities in order to
optimise financial and management resources primarily for the development of
Huntexil®.

The restructuring of NeuroSearch will have the following implications:

-- The employee headcount will be reduced to a size necessary to primarily
continue the development of Huntexil®. The headcount at NeuroSearch is
expected to be reduced from the current number of just under 200 to about
100 employees during the second quarter of 2012, to about 50 employees at
the end of the third quarter of 2012 and to about 35 employees when the
restructuring is fully and finally implemented in mid-2013
-- NeuroSearch will seek buyers for all drug candidates with the exception of
Huntexil®, ordopidine and seridopidine
-- In the months ahead, NeuroSearch will explore the possibilities for the
company's research activities to continue under new ownership

The employees affected are expected to be given notice at the end of October
2011 with notices of termination that will allow the company to continue to
meet its obligations towards Lilly and Janssen.

NeuroSearch will initiate negotiations with the employee representatives in
accordance with applicable rules and legislation and will ensure that all
involved employees are given the best possible support.


Thomas Hofman-Bang Patrik Dahlen
Chairman of the Board CEO


Contact persons
Patrik Dahlen, CEO, telephone: +45 4460 8214 or +45 2629 7296
René Schneider, EVP & CFO, telephone: +45 4460 8700 or +45 2911 2097


About NeuroSearch
NeuroSearch A/S is a European-based biopharmaceutical company listed on NASDAQ
OMX Copenhagen A/S (NEUR) and specialising in central nervous system (CNS)
disorders. The vision is to develop NeuroSearch into a profitable specialty
pharmaceutical company. The strategy is primarily to complete the development
and subsequently to market Huntexil®, a unique drug in Phase III for the
treatment of the motor symptoms of Huntington's disease.

This announcement has been prepared in Danish and English. In case of
inconsistencies between the two versions, the Danish text shall prevail.

 

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