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AC Immune Reports Q2 2019 Financial Results, Business and Clinical Update
August 14, 2019



Company Outlines Roadmap to Develop Successful Therapies for Neurodegenerative Diseases Based on its Broad Anti-Tau Clinical Pipeline

LAUSANNE, Switzerland, Aug. 14, 2019 (GLOBE NEWSWIRE) -- AC Immune SA (NASDAQ: ACIU), a Swiss-based, biopharmaceutical company with a broad clinical-stage pipeline focused on neurodegenerative diseases, today announced its business and clinical plan and strategy, reported consolidated financial results for the second quarter of 2019 and its revised cash guidance. 

Prof. Andrea Pfeifer, Ph.D., CEO of AC Immune, commented: “Our business strategy is based on a three-pillar approach in the development of treatments for Alzheimer’s disease, NeuroOrphan therapeutics and diagnostics. Our Roadmap to Successful Therapies for Neurodegenerative Diseases is based on treating earlier, targeting Tau, incorporating homogeneous populations, applying precision medicine and targeting neuroinflammation.”

There is a growing body of clinical evidence that Tau drives disease progression. AC Immune has one of the broadest anti-Tau pipelines with antibodies, small molecules, vaccines and diagnostics, covering five clinical trials and partnerships with four major pharmaceutical companies.

“SupraAntigenTM and MorphomerTM, our proprietary discovery platforms are the foundation for multiple product candidates," added Dr. Pfeifer.  “The productivity of these platforms has recently demonstrated significant clinical, value-creating milestones.”

Research & Development Highlights Q2 2019 and Beyond

  • Dosing of the first subject in a Phase 1 study of ACI-3024, a first-in-class investigational oral small molecule Tau Morphomer™ inhibitor that will be studied in neurodegenerative diseases that are characterized by the presence of pathological Tau aggregates. This is the first significant advancement in AC Immune’s collaboration with Eli Lilly and Company 
  • Initiation of a Phase 1b/2a clinical trial to evaluate ACI-35.030, a clinically advanced anti-phospho-Tau designed to reduce and to prevent the spread and development of Tau pathology to treat early and moderate Alzheimer’s disease (AD)
  • Initial interim data from an ongoing Phase 1b trial of AC Immune’s ACI-24 anti-Abeta vaccine, to treat AD like symptoms in subjects with Down syndrome (DS), demonstrated strong safety and preliminary immunogenicity results
  • Hosted a Key Opinion Leader (KOL) event, where presentations underscored the significant need and opportunity for studying AD-like symptoms in DS, a high-risk and genetically homogeneous population
  • Initiation of a substudy by Genentech, a member of the Roche Group, in the ongoing Phase 2 Alzheimer’s Prevention Initiative (API) trial of AC Immune’s investigational candidate, crenezumab. The substudy, which measures Tau burden using Positron Emission Tomography (PET), aims to increase the understanding of disease progression in the preclinical stage of autosomal dominantly inherited, or familiar, AD
  • Initiation of a research partnership with leading scientists in the Perelman School of Medicine at the University of Pennsylvania (Penn) focused on studying the pathological mechanisms of TDP-43 misfolding and aggregation

Anticipated Near-Term Milestones

  • H2:2019:  Proof-of-concept data from three NeuroOrphan indications from our SupraAntigen™ platform
  • H2:2020: Read out from a Phase 2 clinical trial in prodromal/mild AD patients from the SupraAntigen™ platform
  • Multiple clinical trial readouts from collaboration partners in 2020/2021 confirming Tau antibodies as a viable approach to halting the progression of AD and other neurodegenerative conditions

Analysis of Financial Statements for the Three and Six Months Ended June 30, 2019

  • Cash Position: The Company had a total cash balance of CHF 285.7 million, comprised of CHF 205.7 million in cash and cash equivalents and CHF 80.0 million in short-term financial assets. This compares to a total cash balance of CHF 186.5 million as of December 31, 2018. The increase of CHF 99.2 million is principally due to the CHF 80 million upfront payment and USD 50 million convertible equity note related to the agreement with Lilly. Further details are available in our Statements of Cash Flows in the accompanying Form 6-K.
    The total shareholders’ equity position increased from December 31, 2018 to CHF 273.3 million from CHF 177.6 million. Further details are available in our corresponding Financial Statements filed on the accompanying Form 6-K.
  • Revenues:  Revenues for the three and six months ended June 30, 2019 totaled CHF 1.5 million and CHF 76.6 million, respectively. This represents a decrease of CHF 0.5 million and increase of CHF 73.1 million compared to the respective periods in 2018. The decrease for the three-month period relates to 2018 Biogen revenues not repeated in 2019, as this contract concluded in April. The increase for the six-month period is driven by the recognition of CHF 74.3 million from the right-of-use license and research and development activities linked to the 2018 Lilly agreement. Revenues fluctuate as a result of payments associated with our collaborations with current and potential new partners, the timing of milestone achievements and the size of each milestone payment.
  • R&D Expenditures:  R&D expenditures increased by CHF 2.2 million (+21%) and CHF 3.7 million (+18%) for the three and six months ended June 30, 2019 compared to the comparable periods in 2018, respectively. The Company largely increased its investments in AD, non-AD and new discovery programs. For AD, the Company prepared activities for its Phase 1b/2a and Phase 2 studies for ACI-35 and ACI-24 AD, respectively. For non-AD, the Company increased investment in its MorphomerTM alpha-synuclein programs and continued to advance ACI-24 DS through clinical development. Finally, in new discovery, the Company continues to focus on its neuroinflammation discovery programs.
  • G&A Expenses: For the three and six months ended June 30, 2019, G&A increased CHF 0.5 million (+17%) and CHF 1.1 million (+19%) to CHF 3.6 million and CHF 6.9 million, respectively. Increases are driven by rental, personnel and IT expenses.
  • IFRS Income/(Loss) for the period:  The Company incurred net loss and net income after taxes of CHF 16.9 million and CHF 46.7 million for the three and six months ended June 30, 2019, respectively, compared with net losses of CHF 11.1 million and CHF 22.8 million for the comparable periods in 2018.

About AC Immune
AC Immune SA is a Nasdaq-listed clinical-stage biopharmaceutical company, which aims to become a global leader in Precision Medicine for neurodegenerative diseases. The Company is utilizing two proprietary discovery platforms, SupraAntigenTM and MorphomerTM, to design, discover and develop small molecule and biological therapeutics as well as diagnostic products intended to diagnose, prevent and modify neurodegenerative diseases caused by misfolding proteins. The Company's pipeline features nine therapeutic and three diagnostic product candidates, with five currently in clinical trials. It has collaborations with major pharmaceutical companies including Roche/Genentech, Lilly and Janssen Pharmaceuticals Inc.

As a strategic leader in the field of neurodegenerative diseases, AC Immune has developed a five point Roadmap to Successful Therapies for Neurodegenerative Diseases that recognizes the importance of treating earlier, targeting Tau, focusing on more homogeneous populations, precision medicine and exploring neuroinflammation as a target.

For further information, please contact:

U.S. Investors
Joshua Drumm, Ph.D.
AC Immune Investor Relations
Phone: +1 646 876 5538
E-mail: joshua.drumm@acimmune.com
U.S. Media
Katie Gallagher
LaVoieHealthScience
Phone: +1 617 792 3937
E-mail: kgallagher@lavoiehealthscience.com
   
European Media
Judith Moore
AC Immune Global Communication Lead
Phone: +44 7932 053829
Email: judith.moore@acimmune.com
European Investors
Chris Maggos
LifeSci Advisors
Phone: +41 79 367 6254 
E-mail: chris@lifesciadvisors.com

Forward-looking statements 
This press release contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements other than historical fact and may include statements that address future operating, financial or business performance or AC Immune’s strategies or expectations. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. Forward-looking statements are based on management’s current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include those described under the captions “Item 3. Key Information—Risk Factors” and “Item 5. Operating and Financial Review and Prospects” in AC Immune’s Annual Report on Form 20-F and other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and AC Immune does not undertake any obligation to update them in light of new information, future developments or otherwise, except as may be required under applicable law. All forward-looking statements are qualified in their entirety by this cautionary statement.



Balance Sheets

  As of
June 30,
2019
    As of
December 31,

2018
in CHF thousands        
ASSETS        
         
Non-current assets        
Property, plant and equipment 3,594     3,324  
Right-of-use assets 1,978     -  
Long-term financial assets 304     304  
Total non-current assets 5,876     3,628  
         
Current assets        
Prepaid expenses 2,917     2,364  
Accrued income 547     3,667  
Finance receivable 98     199  
Other current receivables 1,049     236  
Short-term financial assets 80,000     30,000  
Cash and cash equivalents 205,735     156,462  
Total current assets 290,346     192,928  
Total assets 296,222     196,556  
         
SHAREHOLDERS’ EQUITY AND LIABILITIES        
         
Shareholders’ equity        
Share capital 1,436     1,351  
Share premium 346,024     298,149  
Accumulated losses (74,170 )   (121,877 )
Total shareholders’ equity 273,290     177,623  
         
Non-current liabilities        
Long-term financing obligation 256     186  
Long-term lease liabilities 1,559     -  
Long-term deferred income 1,903     -  
Net employee defined benefit liabilities 5,954     5,665  
Total non-current liabilities 9,672     5,851  
         
Current liabilities        
Trade and other payables 156     1,979  
Accrued expenses 8,414     10,420  
Short-term deferred income 3,941     351  
Short-term debt obligation 329     332  
Short-term lease liabilities 420     -  
Total current liabilities 13,260     13,082  
Total liabilities 22,932     18,933  
Total shareholders’ equity and liabilities 296,222     196,556  
           



Statements of Income/(Loss)

  For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
  2019     2018     2019     2018  
                       
  (in CHF thousands except for per share data)
Revenue        
Contract revenue 1,511     2,028     76,553     3,486  
Total revenue 1,511     2,028     76,553     3,486  
         
Operating expenses        
Research & development expenses (12,700 )   (10,533 )   (24,293 )   (20,604 )
General & administrative expenses (3,585 )   (3,065 )   (6,879 )   (5,770 )
Total operating expenses (16,285 )   (13,598 )   (31,172 )   (26,374 )
Operating income/(loss) (14,774 )   (11,570 )   45,381     (22,888 )
         
Finance income / (expense), net (1,732 )   447     (1,812 )   165  
Change in fair value of conversion feature 36         4,542      
Interest income 75     2     164     3  
Interest expense (504 )   (22 )   (1,601 )   (35 )
Finance result, net. (2,125 )   427     1,293     133  
Income/(loss) before tax (16,899 )   (11,143 )   46,674     (22,755 )
Income tax expense              
Income/(loss) for the period (16,899 )   (11,143 )   46,674     (22,755 )
         
Income/(loss) per share (EPS):        
Basic income/(loss) for the period attributable to equity holders (0.24 )   (0.19 )   0.67     (0.40 )
Diluted income/(loss) for the period attributable to equity holders (0.24 )   (0.19 )   0.67     (0.40 )
                       

Statements of Comprehensive Income/(Loss)

  For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
  2019     2018     2019   2018  
                     
  (in CHF thousands)
Income/(loss) for the period (16,899 )   (11,143 )   46,674   (22,755 )
Other comprehensive income/(loss) not to be reclassified to income or loss in subsequent periods (net of tax):                  
Re-measurement losses on defined benefit plans            
Total comprehensive income/(loss), net of tax (16,899 )   (11,143 )   46,674   (22,755 )
                     
                     


Reconciliation of Income/(Loss) to Adjusted Income/(Loss) and
Earnings/(Loss) Per Share to Adjusted Earnings/(Loss) Per Share

  For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
  2019     2018     2019     2018  
                       
  (in CHF thousands except for share and per share data)
Income/(Loss) (16,899 )   (11,143 )   46,674     (22,755 )
Adjustments:        
Non-cash share-based payments (a) 561     712     1,146     1,314  
Foreign currency losses (b) 513     (397 )   558     (195 )
Effective interest expense (c) 364         1,355      
Change in fair value of conversion feature (d) (36 )       (4,542 )    
Adjusted Income/(Loss) (15,497 )   (10,828 )   45,191     (21,636 )
         
Earnings/(Loss) per share – basic (0.24 )   (0.19 )   0.67     (0.40 )
Earnings/(Loss) per share – diluted (0.24 )   (0.19 )   0.67     (0.40 )
Adjustment to earnings/(loss) per share – basic 0.02     0.00     (0.02 )   0.02  
Adjustment to earnings/(loss) per share – diluted 0.02     0.00     (0.02 )   0.02  
Adjusted earnings/(loss) per share – basic (0.22 )   (0.19 )   0.65     (0.38 )
Adjusted earnings/(loss) per share – diluted. (0.22 )   (0.19 )   0.65     (0.38 )
Weighted-average number of shares used to compute Adjusted earnings/(loss) per share – basic 70,764,091     57,423,650     69,351,363     57,395,987  
Weighted-average number of shares used to compute Adjusted earnings/(loss) per share – diluted 70,764,091     57,423,650     69,845,858     57,395,987  

 

(a)  Reflects non-cash expenses associated with share-based compensation for equity awards issued to Directors, Management and employees of the Company. This expense reflects the awards’ fair value recognized for the portion of the equity award which is vesting over the period.

(b)  Reflects foreign currency remeasurement gains and losses for the period, predominantly impacted by the change in the exchange rate between the US Dollar and the Swiss Franc.

(c)  Effective interest expense for the period relates to the accretion of the Company’s convertible loan in accordance with the effective interest method.

(d)  Change in fair value of conversion feature that is bifurcated from the convertible loan host debt with Lilly.

For the three and six months ended June 30, 2019, adjustments decreased net loss and net income by CHF 1.4 million and CHF 1.5 million compared with decreases to the net losses by CHF 0.3 million and CHF 1.1 million for the comparable periods in 2018, respectively. The Company recorded CHF 0.6 million and CHF 1.1 million for the three and six months, respectively, for share-based compensation expenses. There were foreign currency remeasurement losses of CHF 0.5 million and 0.6 million, respectively, predominantly related to foreign currency fluctuations. The Company recorded CHF 0.4 million and CHF 1.4 million for amortization of effective interest for the three and six months ended June 30, 2019, respectively. Finally, the Company recognized less than a CHF 0.1 million and a CHF 4.5 million gain for the change in fair value of the liability related to the conversion feature.

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Source: AC Immune SA