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Sophiris Bio Reports Fourth Quarter and Full Year 2013 Financial Results and Key Operational Highlights

SAN DIEGO & VANCOUVER, British Columbia--(BUSINESS WIRE)--Sophiris Bio Inc. (NASDAQ: SPHS) (the “Company” or “Sophiris”), a biopharmaceutical company developing a clinical-stage, targeted treatment for the symptoms of benign prostatic hyperplasia (BPH) or enlarged prostate, today announced financial results and recent key operational highlights for the three months and full year ended December 31, 2013.

“2013 was an important year for positioning Sophiris to access the capital required to further the clinical development of PRX302 as a treatment for the symptoms of BPH”

Key Operational Highlights

  • On October 28, 2013, the Company announced that enrollment had begun and the first patients had been dosed in a Phase 3 clinical trial of PRX302 (topsalysin) as a treatment for lower urinary tract symptoms of BPH. The Phase 3 international, multi-center trial, called the PLUS 1 study, will enroll approximately 440 patients. The randomized, double-blind and vehicle-controlled trial will assess the safety and efficacy of a single intraprostatic treatment of PRX302 (0.6 µg/g prostate). The primary endpoint is the International Prostate Symptom Score (IPSS) total score change from baseline over 52 weeks. Secondary endpoints include Qmax (maximum urine flow rate) change from baseline over 52 weeks.
  • On July 16, 2013, the Company received a formal waiver from the Food and Drug Administration that the Company will not be required to complete a separate thorough QT study as part of our clinical development plan.
  • On August 23, 2013, the Company announced that it had closed its initial U.S. public offering. Under the offering, the Company issued 13,000,000 common shares at a price of $5.00 per share for aggregate gross proceeds of $65 million. Following the U.S. public offering, the Company decided to voluntarily delist from the Toronto Stock Exchange, which was effective in November 2013.
  • During the first quarter of 2013, the Company recognized revenue of $5.0 million associated with a non-refundable milestone payment due upon the achievement of certain development activities due in connection with its licensing agreement for PRX302 with Kissei Pharmaceutical Co., Ltd. The Company received payment for this milestone in April 2013.

“2013 was an important year for positioning Sophiris to access the capital required to further the clinical development of PRX302 as a treatment for the symptoms of BPH,” stated Randall Woods, president and CEO of Sophiris Bio. “After raising $65 million in an initial U.S. public offering in August 2013, we quickly executed on our plan for creating shareholder value by initiating our first Phase 3 clinical trial of PRX302. We believe that we are on-track to complete enrollment in the second half of 2014.”

Financial Results

At December 31, 2013, Sophiris had cash, cash equivalents and securities available-for-sale of $48.1 million and working capital of $41.3 million. The Company expects that current cash, cash equivalents and securities available-for-sale as of December 31, 2013 will be sufficient to fund operations for at least the next 12 months.

For the Fourth Quarter Ended December 31, 2013

The Company reported a net loss of $5.4 million ($0.34 per share) for the three months ended December 31, 2013 compared to a net loss of $5.3 million ($1.69 per share) for the three months ended December 31, 2012.

Research and development expenses

Research and development expenses were $4.1 million for the three months ended December 31, 2013 compared to $3.3 million for the three months ended December 31, 2012. The increase in research and development costs was attributable to an increase in the costs associated with the Company’s first Phase 3 clinical trial and an increase in personnel costs.

General and administrative expenses

General and administrative expenses were $1.5 million for the three months ended December 31, 2013 compared to $1.3 million for the three months ended December 31, 2012. This increase was due to an increase in personnel costs, an increase in stock-compensation expense and an increase in directors and officers liability insurance. These increases were offset by decreases in accounting and tax professional fees.

Interest income (expense), net

Interest expense, net was $0.2 million for the three months ended December 31, 2013 compared to $0.4 million in the same period in 2012. This decrease was due to a reduction in interest expense related to the Company’s promissory notes with Oxford Finance.

Gain on revaluation of warrant liability

Gain on revaluation of warrant liability was $0.5 million for the three months ended December 31, 2013. The Company recognized a $0.5 million non-cash gain for the change in the fair value of the Company’s warrant liability.

Other income (expense), net

Other expense, net was $49,000 for the three months ended December 31, 2013 compared to $0.2 million for the three months ended December 31, 2012. These amounts primarily relate to foreign exchange losses from foreign currency transactions.

For the Year Ended December 31, 2013

The Company reported a net loss of $11.1 million ($1.39 per share) for the year ended December 31, 2013 compared to a net loss of $21.2 million ($6.94 per share) for the year ended December 31, 2012.

License revenue

During the year ended December 31, 2013, the Company recorded as revenue a $5.0 million non-refundable milestone payment due from Kissei upon its achievement of certain development activities.

Research and development expenses

Research and development expenses were $10.3 million in the year ended December 31, 2013 compared to $13.5 million in the year ended December 31, 2012. The decrease in research and development costs was attributable to a decrease in the costs associated with the Company’s non-clinical activities, specifically a repeat dose monkey study and a rat fertility study both of which were completed in 2012, a decrease in the costs associated with the transfer and scale-up of manufacturing activities for PRX302, and a decrease in costs associated with the Company’s completed Phase 1/2 transrectal clinical trial. Offsetting these decreases was an increase in costs associated with the Company’s first Phase 3 clinical trial.

General and administrative expenses

General and administrative expenses were $4.5 million in the year ended December 31, 2013 compared to $5.7 million for the year ended December 31, 2012. The decrease was primarily due to a decrease in market research costs.

Interest income (expense), net

Interest expense, net was $1.3 million in the year ended December 31, 2013, compared to $1.9 million in the same period in 2012. This decrease was due to a reduction in interest expense related to the Company’s promissory notes with Oxford Finance.

Gain on revaluation of warrant liability

Gain on revaluation of warrant liability was $0.7 million as of December 31, 2013. The non-cash gain was associated with the change in the fair value of the Company’s warrant liability.

Other income (expense), net

Other expense, net was $0.2 million for the year ended December 31, 2013 compared to $0.1 million for the year ended December 31, 2012. These amounts primarily relate to foreign exchange losses from foreign currency transactions.

Income tax expense

The milestone payment from Kissei was subject to a 10 percent Japanese withholding tax. As a result the Company recorded an income tax expense of $0.5 million for the year ended December 31, 2013.

For complete financial results, please see the Company’s website at www.sophiris.com.

About Sophiris

Sophiris Bio Inc. is a biopharmaceutical company developing a clinical-stage, targeted treatment for the symptoms of BPH, which it believes is an unsatisfied market with significant market potential. Sophiris’ lead candidate for BPH, PRX302, is designed to be as efficacious as pharmaceuticals, less invasive than the surgical interventions, and without the sexual side effects seen with existing treatments. Sophiris initiated its first Phase 3 clinical trial of PRX302 in October 2013. For more information, please visit www.sophiris.com.

Certain statements included in this press release may be considered forward-looking, including the quote of our President and CEO and any expectations relating to our Phase 3 trial of PRX302 or our capital requirements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Sophiris’ current beliefs as well as assumptions made by and information currently available to Sophiris and relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, clinical trial enrollment and results, market acceptance and future commitments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Sophiris in its public securities filings; actual events may differ materially from current expectations. Sophiris disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Sophiris Bio Inc.

(A Development Stage Company)

Consolidated Balance Sheets

(in thousands, except share amounts)

(unaudited)

 
      December 31,
2013   2012
 
Assets:
Current assets:
Cash and cash equivalents

$

14,839

$

9,721

Securities available-for-sale 33,310
Other receivables 48 71
Deferred financing costs 937
Prepaid expenses   3,598     593  
Total current assets 51,795 11,322
 
Property and equipment, net 78 163
Other long-term assets   19     44  
 
Total assets

$

51,892

 

$

11,529

 
 
Liabilities and shareholders’ equity (deficit):
Current liabilities:
Accounts payable

$

1,470

$

1,774

Accrued expenses 2,181 2,839
Current portion of promissory notes   6,877     5,895  
Total current liabilities 10,528 10,508
 
Long-term promissory notes, less current portion 6,126
Warrant liability 883
Stock-based compensation liability   202      
 
Total liabilities 11,613 16,634
 
Commitments and contingencies
 
Shareholders’ equity (deficit):

Common shares, unlimited authorized shares, no par value; 16,149,871 and 3,149,871
shares issued and outstanding at December 31, 2013 and 2012, respectively

111,204 54,215
Common share purchase warrants 6,045
Contributed surplus 13,824 8,379
Accumulated other comprehensive (loss) gain 98 (46 )
Deficit accumulated during development stage   (84,847 )   (73,698 )
Total shareholders’ equity (deficit)   40,279     (5,105 )
Total liabilities and shareholders’ equity (deficit)

$

51,892

 

$

11,529

 
 
 

Sophiris Bio Inc.

(A Development Stage Company)

Consolidated Statement of Operations and Comprehensive Loss

(in thousands, expect per share amounts)

(unaudited)

 
     

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

Cumulative
period
from
January
11, 2002
(date of
inception) to
December
31,

2013   2012 2013   2012 2013
Revenues:
 
License revenue

$

$

$

5,000

$

$

8,000

 
Operating expenses:
Research and development 4,136 3,329 10,279 13,523 59,924
General and administrative   1,502     1,343     4,511     5,685     28,989  
Total operating expenses   5,638     4,672     14,790     19,208     88,913  
 
Other income (expense):
Interest income (expense), net (244 ) (430 ) (1,308 ) (1,880 ) (3,221 )
Gain on revaluation of warrant liability 493 689

689

Other income (expense), net   (49 )   (228 )   (240 )   (106 )   (587 )
Total other income (expense)   200     (658 )   (859 )   (1,986 )   (3,119 )
 
Net loss before income taxes (5,438 ) (5,330 ) (10,649 ) (21,194 ) (84,032 )
 
Income tax expense           (500 )       (815 )
 
Net loss

$

(5,438

)

$

(5,330

)

$

(11,149

)

  (21,194 )

$

(84,847

)

 
Basic and diluted loss per share

$

(0.34

)

$

(1.69

)

$

(1.39

)

$

(6.94

)

Weighted average number of outstanding shares – basic and diluted 16,150 3,150 8,029 3,054

Other comprehensive income (loss)

Foreign currency translation adjustment

23 145 131 99
Unrealized loss on securities available-for sale   (1 )       (1 )       (1 )
Total comprehensive loss

$

(5,439

)

$

(5,307

)

$

(11,005

)

$

(21,063

)

$

(84,749

)

 

Sophiris Bio Inc.

(A Development Stage Company)

Consolidated Statement of Cash Flows

(in thousands)

(unaudited)

 
      Year Ended

December 31,

 

Cumulative Period
From January 11,
2002 (date of
inception) to
December 31,

2013   2012 2013
Cash flows used in operating activities
Net loss for the period $ (11,149 ) $ (21,194 ) $ (84,847 )
Adjustments to reconcile net loss to net cash used by operating activities:
Stock-based compensation 1,174 676 5,511
Accretion of debt discount 380 509 1,110
Depreciation of property and equipment 84 82 607
Amortization of intangible assets 149 1,205
Amortization of promissory note issuance costs 108 155 331
Amortization of discount on available-for-sale securities 9 9
Impairment loss 176 176
Change in fair value warrant liability (689 ) (689 )
Foreign exchange transaction (gain) loss 229 (148 ) (1,438 )
Loss on disposal of assets 2 1 27
Other 182
Changes in operating assets and liabilities:
Other receivables 23 172 9
Prepaid expenses (3,112 ) (162 ) (3,916 )
Other long-term assets 25 (15 ) (19 )
Accounts payable (305 ) (1,006 ) 984
Accrued expenses 15   1,769   2,333  
Net cash used in operating activities (13,206 ) (18,836 ) (78,425 )
 
Cash flows used in investing activities
Purchases of property and equipment (3 ) (26 ) (725 )
Proceeds from the disposal of property and equipment 1 13
Acquisition of intangible assets (1,372 )
Maturity of marketable securities 1,112
Purchases of securities available-for-sale (33,320 )   (34,433 )
Net cash used in investing activities (33,322 ) (26 ) (35,405 )
 
Cash flows from financing activities
Issuance of common shares from private placement, net of issuance cost 8,285 50,179
Issuance of common shares from public offering, net of issuance cost 57,253 (211 ) 60,070
Issuance of preferred shares, net of issuance cost 465
Cash acquired on reverse acquisition 818
Issuance of common shares on exercise of warrants 8,702
Issuance of common shares on exercise of stock options 514
Cash received from the issuance of promissory notes 15,000
Principal payments on notes payable (5,524 ) (3,190 ) (8,714 )
Increase in lease obligations 120
Capital lease payments (120 )
Other     4  
Net cash provided by financing activities 51,729   4,884   127,038  
Effect of exchange rate changes on cash and cash equivalents (83 ) 289   1,631  
Net increase (decrease) in cash and cash equivalents 5,118 (13,689 ) 14,839
Cash and cash equivalents at beginning of period 9,721   23,410    
Cash and cash equivalents at end of period $ 14,839   $ 9,721   $ 14,839  

Contacts

Sophiris Bio Inc.
Peter Slover, 858-777-1760
Chief Financial Officer
or
Canale Communications
Jason Spark, 619-849-6005
Corporate Communications and IR
jason@canalecomm.com
or
Equicom Group
Michael Moore, 858-886-7813
Investor Relations
mmoore@tmxequicom.com

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NASDAQ:SPHS

ISIN: CA83578Q2099