CATCo Regulatory News (CAT)

28 Nov 2005 07:02

Cambridge Antibody Tech Group PLC28 November 2005 05/CAT/18 FOR IMMEDIATE RELEASE 07.00 GMT, 02.00 EST Monday 28 November 2005 For Further Information Contact: Cambridge Antibody Technology Weber Shandwick Square Mile (Europe)Tel: +44 (0) 1223 471 471 Tel: +44 (0) 20 7067 0700Peter Chambre, Chief Executive Officer Kevin SmithJohn Aston, Chief Financial Officer Yvonne AlexanderRowena Gardner, Director of Corporate Communications Rachel Taylor BMC Communications/The Trout Group (USA) Tel: 001 212 477 9007 Brad Miles, ext 17 (media) Brandon Lewis, ext.15 (investors) CAMBRIDGE ANTIBODY TECHNOLOGY ANNOUNCES PRELIMINARY RESULTS FOR THE YEAR ENDED30 SEPTEMBER 2005 Cambridge, UK - Cambridge Antibody Technology (LSE: CAT; NASDAQ: CATG) todayannounces preliminary results for the year ended 30 September 2005 and an updateon business since year end. Highlights Legal action against Abbott Laboratories in respect of HUMIRA(R) royaltiessettled on acceptable terms in October 2005. Royalty agreement secures a significant and growing revenue stream from HUMIRA: HUMIRA sales of US$959 million for the first nine months of 2005. Abbott continues development of HUMIRA for a number of additional indications. Three proprietary product candidates, and one product candidate which CAT isdeveloping with Genzyme, in clinical trials: Positive preliminary results from the Phase I clinical trial of CAT-354, being developed as a potential treatment for severe asthma. Acquisition of two oncology product candidates from Genencor, CAT-3888 and CAT-8015. GC-1008 commenced a Phase I clinical trial as a potential treatment for Idiopathic Pulmonary Fibrosis (IPF). First US operation, CAT Inc, established in Palo Alto, California. Excellent progress in the major Strategic Alliance with AstraZeneca in the fieldof inflammatory disease, with six Discovery programmes now active. Ten further licensed product candidates in clinical development, funded by CATslicensees. Balance sheet remains strong with net cash and liquid resources of £175.6million as at 30 September 2005. Peter Chambre, Chief Executive Officer, commented: This has been a year ofsignificant achievement for CAT. Substantial headway has been made with thedevelopment of CAT-354 and GC-1008 and our proprietary pipeline has beenstrengthened further since the year end with the acquisition of two promisingoncology candidates from Genencor. Our major Strategic Alliance with AstraZenecacontinues to make excellent progress. Following the settlement of our long running legal action against Abbott, we arenow able to plan for the future with a higher degree of certainty than has beenthe case for the last three years. The royalty stream from HUMIRA and ourbalance sheet strength provide firm foundations for the future development ofCAT. Chairmans Statement A number of important achievements have been accomplished during the past year. I am grateful to everyone who has contributed to CAT during the year. I welcomein particular two directors to the Board. Following our Annual General Meeting(AGM) in February, Diane Mellett, General Counsel at CAT, joined the Board ofDirectors as an Executive Director. Diane joined CAT in October 1997 as VicePresident Legal Affairs and Company Secretary. She is an English lawyer and a USattorney admitted to the Illinois Bar, and has previously worked in privatepractice. In September, we appointed Dr John Brown as a new non-executivedirector. John has held a number of positions within our sector, most recentlyas Chief Executive of Acambis plc. John has widespread commercial, financial andscientific experience within the biopharmaceutical industry and is alreadymaking a significant contribution to the Board and also the Audit andRemuneration Committees. I would also like to thank two non-executive directors who will not be seekingre-election at the companys AGM in February 2006. Professor Sir Aaron Klug hasbeen a director of CAT for over 15 years, and has made a significant andvaluable contribution to the company during that time. He has also served as amember of CATs Scientific Advisory Board (SAB). His scientific contribution, hiscommitment and his belief in the company have been instrumental in keeping CATat the forefront of molecular display and drug discovery. He will continue to bea member of CATs SAB and act as a scientific advisor to the company. ProfessorUwe Bicker has served two three-year terms on CATs Board and has contributedsubstantially to CATs continuing transition. We are delighted to note that the University of Heidelberg has recentlyconferred upon him its highest honour, electing him to the honorary position ofSenator in recognition of his active work for the benefit of this prestigiousuniversity. I would like to acknowledge the contributions to the business from CATscollaborators - AstraZeneca, Genzyme and Amrad - with whom wehave formed effective and productive relationships, and also from our licensees.In addition, I would like to thank CATs SAB, which continues to play animportant role in guiding the scientific direction of our company, and mycolleagues on the Board. And last, but by no means least, I would like to thankthe staff, whose dedication and commitment to CAT has delivered a year ofachievement. Paul Nicholson Product Development Pipeline CAT is a biopharmaceutical company aiming to bring improvements to seriously illpatients lives and in this way create outstanding returns for shareholders. Thecompany seeks to develop high value products in which it has a significanteconomic interest, both independently and in collaboration with partners, byusing its capabilities and technologies in the discovery and development ofantibody medicines in selected therapeutic areas. CAT also licenses itstechnologies to enable others to develop drugs in which CAT has a financialinterest. CAT has recently (post year end) acquired two oncology candidates from Genencorand a development organisation in the US to take these programmes forward. Theacquisition of these product candidates accelerates the development of CATsproprietary pipeline and signals the intention to focus future proprietaryresearch and development activities in oncology - the area where CATbelieves the opportunities are greatest for a company of CATs technologies andcapabilities. Proprietary CAT-354 is a fully human anti-IL13 monoclonal antibody being developed by CAT,initially as a potential treatment for severe asthma. CAT commenced a Phase Iclinical trial in the UK in September 2004 to assess safety, tolerability andpharmacokinetics. The trial was a double-blind, placebo-controlled, risingsingle dose intravenous study in 34 mild asthmatic patients. In June 2005, CATannounced preliminary results which showed that CAT-354 was well tolerated atall doses and no safety concerns were identified; pharmacokinetics metexpectations. The trial results will be submitted to an appropriate scientificmeeting in due course. Based on these results, CAT is now planning to start a further clinical trial inthe first quarter of 2006. This is being planned as a repeat-dose safety studyin patients with mild/moderate asthma. The trial will study safety, tolerabilityand pharmacokinetics, and is likely to take place in the UK. Given the size of the market and complexity of the likely development plan forCAT-354, CAT has decided that the programme will benefit from having a partnerexperienced in developing drugs for major respiratory indications prior tocommencing Phase III clinical trials. Accordingly, CAT has started to assessinterest in the product candidate from a limited number of potential licensees. In November 2005, CAT announced the acquisition of CAT-3888 (formerly GCR-3888)and CAT-8015 (formerly GCR-8015) from Genencor, a subsidiary of Danisco, basedin Palo Alto, California. CAT-3888 and CAT-8015 are anti-CD22 immunotoxins. Each comprises adisulphide-linked antibody fragment (dsFv) that targets the CD22 receptor, fusedwith a specifically engineered toxin molecule (Pseudomonas exotoxin PE38) thatminimises non-targeted toxicity, potentially resulting in a highly specifictherapeutic molecule. CD22 is a cell-surface receptor expressed in a variety ofB-cell malignancies. CAT-3888 and CAT-8015 act by releasing the toxinintracellularly, after the whole immunotoxin has been internalised via the CD22receptor. CAT-3888 and CAT-8015 were discovered and initially developed by the US NationalCancer Institute (NCI), which is part of the US National Institutes of Health(NIH). Genencor licensed the candidates for haematological malignancies andentered into a co-operative research and development agreement (CRADA) with theNIH, which is now being continued by CAT. Under the original licence agreementwith the NIH, CAT has rights to a portfolio of intellectual property associatedwith the programmes and will pay future royalties to the NIH. The NCI has demonstrated significant efficacy of CAT-3888 in patients with hairycell leukaemia (HCL) in a Phase I clinical trial. The trial was carried out in46 patients and performed at the NCI. The patients suffered from one of threetypes of CD22 positive B-cell tumours: four patients with non-Hodgkins lymphoma(NHL), 11 patients with chronic lymphocytic leukaemia (CLL) and 31 patients withHCL. The results were published in the Journal of Clinical Oncology (Vol. 23 No.27 September 20, 2005) and included data from 265 cycles of treatment. Resultsshowed that CAT-3888 was active in HCL, with 19 complete remissions (61%) andsix partial responses (19%) in 31 patients. Lower, but significant, activityoccurred in CLL. The publication concluded that the drug was well tolerated andhighly effective in HCL even after one cycle of treatment. CAT-3888 is currently in a Phase II clinical trial for the treatment of HCL in25 patients. The trial started in October 2003. There are also two ongoing PhaseI clinical trials. In February 2004, a trial commenced in paediatric refractoryCD22-positive leukaemias and lymphomas in up to 54 patients. In September 2005,a Phase I study in 20 patients with CLL and NHL commenced. All the clinicaltrials are in patients who are resistant/refractory to conventional treatmentand all are being run at the NCI. CAT will support the NCIs ongoing developmentof CAT-3888 in all these indications. Data are expected to be available from allthree trials by the end of 2006. CAT-8015 is an optimised version of CAT-3888 with increased affinity for CD22,and is currently in pre-clinical development as a potential treatment for B-cellmalignancies including NHL and CLL. CAT intends to file an Investigational New Drug application (IND) for CAT-8015in various CD22 positive B-cell malignancies, including NHL and CLL, following aperiod of manufacturing development that is expected to be complete by the endof 2006. Trabio(R) (lerdelimumab) is a fully human anti-TGF beta2 monoclonal antibodydeveloped by CAT as a potential treatment for improving the outcome of glaucomasurgery. Trabio failed to demonstrate efficacy in two Phase III clinical trials(in November 2004 and March 2005). CAT has now terminated all furtherdevelopment of Trabio, subject only to continuing with its minimum obligationsin completing an ongoing US clinical trial. Collaborative a) Genzyme - TGF beta GC-1008 is a pan-specific fully human anti-TGF beta monoclonal antibody beingdeveloped by CAT and Genzyme. In October 2005, a Phase I clinical trial ofGC-1008 in idiopathic pulmonary fibrosis (IPF) commenced. The objectives of thetrial are to evaluate the safety, tolerability and pharmacokinetics of singleintravenous infusions of GC-1008 in patients with IPF. The trial, which is anopen-label, single dose, dose-escalating study will be in 25 patients in fivecentres in the US. Preliminary results are expected to be available in 2007. Subject to ongoing discussions with the US Food and Drug Administration (FDA),the companies are planning to file an IND for a Phase I clinical trial inoncology early in 2006. b) Amrad - GM-CSF CAT and Amrad have selected a lead antibody, CAM-3001. Preliminary safetystudies are ongoing and scale-up of production prior to pre-clinical developmentis underway. c) AstraZeneca - Respiratory and Inflammation Since November 2004, excellent progress has been made. CAT and AstraZeneca areworking on six Discovery projects: one pre-existing CAT Discovery programmeadopted into the Alliance and five new programmes, all of which had progressedto lead isolation stage on schedule by June 2005. Selection of the next targetsfor Alliance Discovery projects is already underway and during the next year,the companies intend to commence a further five programmes. Licensed a) Product licensees HUMIRA(R) (adalimumab) is a fully human anti-TNF alpha monoclonal antibody,isolated and optimised by CAT in collaboration with Abbott and now approved formarketing as a treatment for rheumatoid arthritis (RA) in 57 countries. In August 2005, Abbott announced that it had received approval from the EuropeanCommission to market HUMIRA as a treatment for psoriatic arthritis and early RAin Europe. In October 2005, Abbott announced that the FDA had approved HUMIRA asa first-line treatment of recent onset moderate to severe RA and for reducingthe signs and symptoms of active arthritis in patients with psoriatic arthritis. Also in October 2005, Abbott announced that it had simultaneously submitted asupplemental Biologics License Application (sBLA) with the US FDA and a Type IIVariation to the European Medicines Agency (EMEA) seeking approval to marketHUMIRA as a treatment for ankylosing spondylitis, an inflammatory disease of thespine and spinal joints. Abbott continues to develop HUMIRA as a potential treatment for a number ofadditional indications and has stated that it expects to file applications forRA in Japan and, possibly, for Juvenile RA in 2005. Phase III clinical trials in chronic plaque psoriasis commenced at the end of2004 and Abbott has stated that it expects to submit a regulatory applicationfor this indication in 2006 or early 2007. In October 2005, Abbott announced new data in Crohns disease from a Phase IIIextension study. It showed that of the 55 patients who initially achievedremission in the Phase III study who were maintained on HUMIRA, approximatelythree quarters were still in remission at one year. Of those not initially inremission, 43% who stayed on HUMIRA therapy had achieved remission by one year.Abbott has stated that it intends to file a BLA for Crohns disease in 2006. Abbott reported worldwide sales of HUMIRA of US$852 million in 2004 and sales ofUS$959 million for the first nine months of 2005. Abbott has forecast revenuesfrom HUMIRA of more than US$1.3 billion in 2005. ABT-874 is a fully human anti-IL12 monoclonal antibody, isolated and optimisedby CAT in collaboration with Abbott, and licensed to Abbott. Abbott isdeveloping ABT-874 as a potential treatment for Crohns disease, psoriasis andmultiple sclerosis. A Phase II clinical trial continues in multiple sclerosis. LymphoStat-B(TM) is a fully human anti-BLyS monoclonal antibody, licensed by CATto Human Genome Sciences, Inc (HGSI). HGSI is developing LymphoStat-B as apotential treatment for systemic lupus erythematosus (SLE) for which HGSI has aFast Track designation from the US FDA, and RA. In July 2005, HGSI announcedthat GlaxoSmithKline (GSK) had exercised its option to develop and commercialiseLymphoStat-B jointly with HGSI. In April 2005, HGSI announced positive Phase II results of LymphoStat-B in a283-patient trial in RA and, in November 2005, the results were presented at the69th Annual Meeting of the American College of Rheumatology/Association ofRheumatology Health Professionals (ACR/ARHP) in San Diego. The results show thatLymphoStat-B met the primary efficacy and safety endpoints, and demonstrate thatit is safe and well tolerated, biologically active and reduces RA activity at alevel of statistical significance. In October 2005, HGSI announced the results of a Phase II trial of LymphoStat-Bin 449 patients with SLE: LymphoStat-B was shown to be safe and well-toleratedand, although the drug did not meet the overall primary efficacy endpoints,showed signs of statistically significant clinical effect in seropositivepatients representing 75% of patient population in the study. Based on theresults, HGSI stated that it now has a path forward to Phase III forLymphoStat-B in SLE and planning is underway. HGS-ETR1 (mapatumumab) is a fully human anti-TRAIL Receptor-1 monoclonalantibody licensed by CAT to HGSI. HGSI is developing HGS-ETR1 as a potentialtreatment for multiple cancer indications. In August 2005, HGSI announced thatGSK had exercised its option to develop and commercialise HGS-ETR1 jointly withHGSI. Three Phase II clinical trials of HGS-ETR1 have been initiated: in NHL,non-small cell lung cancer (NSCLC) and colorectal cancer. In June 2005, HGSI announced interim results from an ongoing Phase II trial ofHGSI-ETR1 in patients with advanced NHL, which demonstrated that it is welltolerated and shows signs of clinical activity. Partial responses were observedin some patients. HGSI expects that full data from the study will be presentedin December 2005 at the 47th Annual Meeting of the American Society ofHematology. In July 2005, HGSI announced that the results of a Phase II clinical trial ofHGS-ETR1 demonstrated that HGS-ETR1 was well tolerated and could be administeredsafely and repetitively in patients with advanced NSCLC. Stable disease wasobserved a number of patients and the results support continued evaluation ofHGS-ETR1 in NSCLC patients in combination with chemotherapeutic agents. In November 2005, at the European Cancer Conference (ECCO 13) in Paris, HGSIannounced results of a Phase II clinical trial of HGS-ETR1 in patients withadvanced colorectal cancer. In the open-label study in 38 patients conducted inGermany, HGS-ETR1 was found to be well-tolerated and could be administeredsafely and repetitively to patients with advanced colorectal cancer. The resultssupport the continued evaluation of HGS-ETR1 in combination with chemotherapyfor the treatment of colorectal cancer. Additionally, two Phase Ib open-label, dose escalation clinical studies arecurrently underway to evaluate the safety and tolerability of HGS-ETR1 incombination with chemotherapeutic agents in the treatment of patients withadvanced solid malignancies. The first is being conducted in the US and thesecond in The Netherlands. Interim results of both studies were presented inNovember 2005 at the AACR-NCI-EORTC International Conference on MolecularTherapeutics in Philadelphia. The results to date demonstrate that HGS-ETR1 incombination with chemotherapy was well tolerated and could be administeredsafely and repetitively at the doses and schedules evaluated. Partial responsewas observed in a number of patients in each of the studies. These resultssupport further evaluation of HGS-ETR1 in combination with chemotherapy Phase IItrials. HGS-ETR2 is a fully human anti-TRAIL Receptor-2 monoclonal antibody licensed byCAT to HSGI and being developed by HGSI as a potential treatment for cancer. In January 2005, HGSI reported plans to initiate Phase II clinical trials ofHGS-ETR2. At the AACR-NCI-EORTC conference in Philadelphia, HGSI presentedresults from two Phase I clinical trials that demonstrate that HGS-ETR2 is welltolerated and can be administered safely and repetitively in patients withadvanced solid tumours. Stable disease was observed in a number of patients ineach of the studies. These data support further evaluation of HGS-ETR2 in PhaseII trials. MYO-029 is a fully human monoclonal antibody that neutralises the effects ofGDF-8 (a protein which is associated with reduced skeletal muscle mass). Theantibody was discovered by CAT in collaboration with Wyeth and is licensed toWyeth, which is studying it as a potential therapy for muscle-wasting diseasessuch as muscular dystrophy. In February 2005, Wyeth announced a Phase I/IIclinical trial in adult patients with muscular dystrophy (MD). The trial, whichwill take place in 12 clinical sites, is a prospective, randomised, placebo-controlled study in 108 patients, including equal numbers of patients withfacioscapulohumeral MD (FSHD), Becker MD (BMD) and limb-girdle MD (LGMD).Results of the study are expected to be available in late 2006. ABthrax(TM) is a fully human monoclonal antibody licensed by CAT to HGSI.ABthraxTM was isolated and developed by HGSI from antibody libraries licensedfrom CAT and HGSI is developing it as a potential treatment for anthrax disease.In October 2005, HGSI announced that it had been awarded a two-phase contract tosupply ABthrax, a human monoclonal antibody developed for use in the treatmentof anthrax disease, to the US Government. Under the first phase of the contract,HGSI will supply ten grams ABthrax to the US Department of Health and HumanServices (HHS) for comparative in vitro and in vivo testing. Under the secondphase of the contract, under the Project BioShield Act of 2004, the USGovernment has the option to place an order within one year for up to 100,000doses of ABthrax for the Strategic National Stockpile, for use in the treatmentof anthrax disease. The HHS comparative testing results, along with HGSIs ownpre-clinical and clinical study results, will form the basis of the USGovernments decision process for exercising its option for additional productfor the Strategic National Stockpile. b) Patent licensees CAT and Dyax have cross-licensing agreements. In January 2005, Dyax announcedthat two fully human monoclonal antibodies from Dyaxs proprietary phage displaylibraries, IMC-11F8 and IMC-1121B, entered Phase I clinical development atImClone Systems. In June 2005, CAT and BioInvent entered into a licence agreement under which CATgranted BioInvent and its partners the rights to use its Phage Displaytechnology patents to enable BioInvent to develop antibody products from itsn-CoDeR antibody libraries. As part of the agreement, BioInvent withdrew itsopposition to CATs patents filed at the European Patent Office in Munich. CAThas received an initial licence fee from BioInvent and will receive milestonepayments and royalties on any successful antibody therapeutics that BioInventand its partners develop using CATs Phage Display technology. One productcandidate, BI-201, a human antibody that binds the TAT toxoid protein, is inPhase I/IIa clinical testing as a potential treatment for HIV infection.BioInvent expects to begin Phase II clinical trials in 2006. In August 2005, CAT granted Symphogen a patent licence to use CATs Phage Displaytechnology for research purposes and to develop and commercialise a number oftherapeutic and diagnostic human monoclonal antibody products. Symphogen made anupfront payment for the licence and exercised its first product option todevelop and commercialise its lead product Sym001. Symphogen paid a productlicence fee and will make future milestone and royalty payments to CAT upon thesuccessful development of Sym001. In September 2003, CAT granted Micromet a patent licence for the development andcommercialisation of Micromets human therapeutic antibody candidate MT201(adecatumumab), specific for the epithelial tumour target Ep-CAM. In December2004, Micromet and Serono signed an exclusive collaboration and licenceagreement for the development and commercialisation of MT201, which is currentlybeing tested in two multi-centre Phase II clinical trials. CAT receivesmilestone and royalty payments on human antibody-based products developedagainst the Ep-CAM target by Micromet and its partners. The first milestonepayment would be due on filing for product approval. CAT believes that approximately 25 discovery and pre-clinical programmes areunderway at licensees with fully human antibodies derived from CATstechnologies. Financial Review The following review is based on the Groups consolidated financial statementswhich are prepared under UK Generally Accepted Accounting Principles (GAAP). Results of operations: Years ended 30 September 2005 and 2004 Turnover, consisting of royalties, licence fees, milestone payments, contractresearch fees and other, increased from £15.9 million in the 2004 financial year(2004) to £194.0 million in the 2005 financial year (2005). In November 2003, CAT announced that it had commenced legal proceedings againstAbbott in the High Court in London regarding the royalty rate payable on salesof HUMIRA under a licence agreement between the parties. In October 2005, CATannounced it had reached an agreement with Abbott regarding royalties payable toCAT under this licence agreement. Abbott will pay CAT royalties at 2.688% on sales of HUMIRA from 1 January 2005.CAT will retain all of these royalties. CAT will retain all royalties received from Abbott in respect of sales of HUMIRAup to 31 December 2004, net of approximately £7.6 million which will be paid toits licensors, Medical Research Council, Scripps Institute and Stratagene. Abbott paid CAT the sum of US$255 million, which CAT paid to its licensors inlieu of their entitlement to royalties arising on sales of HUMIRA from 1 January2005 onwards. This was both received from Abbott and paid to CATs licensors inOctober 2005. CAT refunded to Abbott approximately £9.2 million for royalties paid in respectof sales of HUMIRA from 1 January 2005 through to 30 June 2005. Abbott will pay CAT five annual payments of US$9.375 million commencing January2006, contingent on the continued sale of HUMIRA. From each of these payments,CAT will pay US$2 million to its licensors. The settlement was an extension of the litigation and has therefore beenaccounted for as an adjusting post balance sheet event, that is, as though ithad occurred as at 30 September 2005. The settlement accounts for thesignificant increase in revenue, namely royalties, in 2005 as compared with2004. Prior to settlement being reached, the royalty arrears received from Abbott inJanuary 2005, pursuant to the High Court Judgement, and the royalties receivedin March 2005 in excess of two per cent argued by Abbott, were not recognised asrevenue. These receipts were held in other creditors on the balance sheetpending resolution of the appeal. These amounts have been released to revenue inCATs results for the full year as a result of the settlement. Of the royaltypayment received from Abbott in September 2005 (in respect of sales of HUMIRAfor the six months to 30 June 2005), the £9.2 million due back to Abbott hasbeen recognised in other creditors. The remainder, equating to 2.688% of sales,has been recognised as revenue. Royalty income for 2005 comprises the following, all in respect of HUMIRA: 2005 2005 2005 Excluding Settlement with Abbott Total Settlement £000 £000 with Abbott £000 Sales: 6 months to 31 Dec 04 5,167 8,114 13,281 - at 2%, adjusted to 5-6% Sales: 6 months to 30 Jun 05 6,529 2,346 8,875 - at 2%, adjusted to 2.688% Accrued royalty on sales 3 4,041 1,390 5,431 months to 30 Sep 05 - at 2%, adjusted to 2.688% Release of back dated - 12,934 12,934 royalties for sales to 30 Jun 2004 - excess of 5-6% over 2% Royalty buy out (due to CATs - 144,722 144,722 licensors) Total 15,737 169,506 185,243 As reflected above, royalties due on sales of HUMIRA have been accounted for onan accruals basis for the first time, resulting in an accrual of income for thefinal quarter of the 2005 financial year. This means that the results of 2005reflect five quarters of royalty income. Royalties recognised during the 2004 financial year relate to HUMIRA. Abbottannounced that it had received US FDA approval to market HUMIRA in the US inDecember 2002 and, that it had received approval to market HUMIRA in the EUduring September 2003. Sales of HUMIRA commenced in January 2003. The threeroyalty payments received during the 2004 financial year, and recognised asrevenue, represent Abbotts calculation of the 2% royalties due on HUMIRA salesin the period from January 2003 to 30 June 2004. Licence fees increased from £4.6 million to £5.2 million in 2005. A full yearsrevenue was recognised under the Genzyme library licence for the first timeduring 2005 which, with the new licence granted to NovImmune, accounts for themajority of the increase between 2005 and 2004. Clinical milestone payments were £1.1 million in 2005 (2004: £1.1 million). In2004, a milestone payment was received from Wyeth with the initiation of a PhaseI clinical trial for MYO-029. Fifty percent of the value of this royalty paymentis creditable against any future royalties payable by Wyeth and therefore onlyhalf the value was recognised as revenue in the year. A clinical milestonepayment was received from Abbott during the 2003 financial year following US FDAapproval of HUMIRA. The milestone was not recognised as revenue during the 2003financial year as it was creditable against royalties receivable from Abbott.Three fifths of this milestone were released as revenue during the 2004financial year, the remainder was released as revenue in 2005. In addition, in2005 two clinical milestones were received from Dyax. Technical milestonepayments decreased from £1.6 million in 2004 to £1.1 million in 2005. Technicalmilestone payments were received from Amgen in both financial years. Unlessotherwise stated, the above milestone receipts have been recognised in full asrevenue under the Groups accounting policy. CAT receives a percentage of certain revenues generated by MorphoSys under theterms of the Agreement signed in December 2002 and a percentage of certainrevenues generated by Dyax under the terms of a licensing agreement. Themajority of the increase in Other Revenues between 2004 and 2005, arose as aresult of an increase in such revenues received from MorphoSys and Dyax. CATs direct costs are typically payments made to third parties as a proportionof certain CAT revenues. The majority of direct costs for the 2005 and 2004financial years comprised royalties payable to the Medical Research Council(MRC) and other licensors, primarily arising from the payments received fromAbbott regarding sales of HUMIRA. The amounts due to CATs licensors on royaltiesreceived from Abbott regarding sales of HUMIRA, were dependent on the outcome ofthe legal proceedings between CAT and Abbott. Prior to the resolution of thelitigation proceedings with Abbott, royalties due to CATs licensors wereprovided for at the mid-point of the expected possible outcomes. Subsequent tothe Settlement Agreement reached with Abbott, final amounts due to CATslicensors have been agreed between the parties and provided for in CATs fullyear results for 2005, resulting in the adjustments shown below. As part of thesettlement agreement reached with Abbott, Abbott paid CAT US$255 million, whichCAT paid to its licensors in lieu of their entitlement to royalties arising onsales of HUMIRA from 1 January 2005 onwards. This one off payment due to CATslicensors has been recorded in direct costs in 2005 and accounts for thesignificant increase in direct costs between 2004 and 2005. 2005 2005 2005 Excluding Settlement Settlement Total with Abbott with Abbott £000 £000 £000 Direct costs On royalty in respect of sales six months to 31 Dec 2004 - at 2,035 - 2,035 0.75% On royalty in respect of sales six months to 30 Jun 2005 - 0.75% 2,560 (2,560) - adjusted to 0% On accrued royalty in respect of sales three months to 30 Sep 2005 1,515 (1,515) - - at 0.75% adjusted to 0% Payments on account made to MRC on sales of HUMIRA to 31 Dec 2004 - 2,302 2,302 Payments made to licensors pursuant to settlement (Oct 2005) - 7,606 7,606 Excess of amounts accrued (0.75%) over amounts paid to licensors (0.5%) - (1,584) (1,584) (prior to payments on account referred to above) Royalty buy out - 144,722 144,722 Other (non HUMIRA) 144 - 144 Total 6,254 148,971 155,225 In the 2004 financial year, direct costs included an amount payable to the MRCarising following CATs settlement of all pending litigation with MorphoSys. Research and development expenses decreased to £39.2 million in 2005 from £44.1million in 2004. External development costs fell by £7.0 million between 2004and 2005 due primarily, to lower spend on the Trabio programme which wasterminated in March 2005. Consumable costs increased with the high levels ofactivity on the AstraZeneca programmes. There was an increase in theamortisation charge between 2004 and 2005 due to an impairment provision of £2.9million made in 2005 against an intangible asset. General and administration expenses fell from £11.0 million in 2004 to £8.8million in 2005. Litigation expenses of £3.9 million were incurred during 2005,£2.5 million in 2004. The increase year on year in litigation expenses is due tothe legal proceedings commenced by CAT against Abbott in the High Court inLondon. CAT received £2.5 million towards its legal costs from Abbott in January2005, pursuant to the High Court Judgment. In October 2005, CAT received anadditional £1.73 million towards its legal costs. Following resolution of thelitigation process, the total received from Abbott, of £4.6 million, has beencredited against litigation within general and administration expenses in CATsfull year results for 2005, resulting in a net credit in 2005 of £0.7 million.General and administration staff costs increased between 2004 and 2005,reflecting reallocations of staff from research. General and administrationexpenses for 2005 include a foreign exchange translation credit of £0.4 million(2004: charge of £1.1 million) arising from the conversion from US Dollars toSterling of CATs trading balances with its US subsidiary, Aptein, due to theappreciation of the US Dollar compared with sterling over the period. Interest income increased between 2004 and 2005 due to the increase in CATs cashand liquid resources during the period (2005: £175.6 million; 2004: £93.7million) as a result of the £75 million subscription monies received fromAstraZeneca in December 2004, and backdated royalties received from Abbott inJanuary 2005. Taxation: CAT has accounted for significant revenues in the 2005 financial yeararising from the settlement reached with Abbott. As a result, CAT Limited hasinsufficient current year taxable losses to be offset against the taxable profitgenerated in CAT Group plc. Therefore, a tax charge of £1.0 million has arisenin the 2005 financial year. If CAT Limited makes a trading loss in the 2006financial year, a significant proportion of this tax charge is potentiallyrecoverable. Liquidity and capital resources Net cash inflow before management of liquid resources and financing was £6.2million for 2005 as compared with an outflow of £27.9 million in 2004. As at 30September 2005, CAT had cash and liquid resources of £175.6 million (£93.7million at 30 September 2004). During 2005 and 2004, CATs net cash used by operating activities was £0.2million and £31.1 million respectively, in each case resulting principally fromoperating losses, offset by depreciation, amortisation and other non-cashmovements. In both 2004 and 2005, operating losses were also offset by increasesin creditors. In 2004 this was primarily due to the increase in deferred incomeresulting from new licence agreements. In 2005, the significant increase increditors arose from the settlement agreement reached with Abbott in October2005. Creditors in 2005 included an amount of £9.2 million due back to Abbottunder the terms of the Settlement Agreement, regarding the royalty payment forsales of HUMIRA in the six months to 30 June 2005. Creditors in 2005, alsoincluded amounts of £7.6 million due to CATs licensors regarding sales of HUMIRAto 31 December 2004. In October 2005, these amounts were paid to Abbott and thelicensors respectively. CATs capital expenditure is primarily for laboratory equipment, laboratoryfacilities and related information technology equipment. Capital expenditureincreased from £1.0 million in 2004 to £2.0 million in 2005 as a result ofincreased spend on laboratory equipment. CAT sold some of its shares inMorphoSys during 2005 resulting in a cash inflow of £2.1 million during theyear. CATs net cash inflows from financing activities primarily resulted from theissue of ordinary shares. In the 2004 financial year Genzyme increased itsequity stake in CAT through a subscription of 2.5 million shares with a value of£13.3 million, being the second of two tranches, the first tranche occurred inthe 2003 financial year. In the 2005 financial year, CAT received £75 millionfrom AstraZeneca for 10,217,983 CAT shares. CAT stated in November 2004 that it expected net cash outflow for 2005 beforefinancing to be of the order of £32 million. In May 2005, CAT stated that,pursuant to the payments received from Abbott as a result of the High Courtjudgement in CATs favour, this would now equate to a net cash inflow beforefinancing of the order of £2 million for 2005. The actual result of £6.2 millionnet cash inflow before management of liquid resources and financing reflectslower levels of expenditure than anticipated, most notably in externaldevelopment, plus a favourable effect from currency rate movement. Financial outlook for 2006 Further royalty income from Abbott in respect of HUMIRA is expected in the 2006financial year. Royalties will be credited at the rate of 2.688% on HUMIRA salesfrom October 2005 to September 2006. Cash royalty receipts are in March andSeptember, representing royalties for the preceding calendar half year. Inaddition, Abbott will make a payment of US$9.375 million in January 2006, US$2million of which is payable to CATs licensors. Recurring revenues, representing release of deferred income from licensingarrangements entered into prior to 30 September 2005 are expected to be of theorder of £5 million for 2006 (this is a non-cash item). Additional revenues mayarise from technical and clinical milestone receipts and any further licensingarrangements. External development costs are expected to show an increase over2005, with higher spend on the collaborative programme with Genzyme and onCAT-354, plus spending on CAT-3888 and CAT-8015. The establishment of CAT Inc. will also give rise to additional costs in theperiod. Also, capital expenditure is expected to be higher than in 2005. The settlement with Abbott gave rise to a one-off net cash outflow of £15.3million in the early part of this financial year. It is expected that CATs CashSpend* for 2006, assuming current exchange rates, will be of the order of £20million plus the outflow of £15.3 million referred to above. *Cash Spend represents, under IFRS, net cash used in operating activities pluscapital expenditure. International Accounting Standards The Group will be required to adopt International Financial Reporting Standardsand International Accounting Standards for the financial year ending 30September 2006 onwards. A reconciled opening balance sheet for the year ended 30September 2004, and an IFRS reconciliation of the Groups results for the yearended 30 September 2005 will be included in the Groups 2005 Annual Report. CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended Year ended Year ended 30 Sep 2005 30 Sep 2005 30 Sep 2004 Convenience translation (i) (i) US$000 £000 £000 Turnover 341,765 193,964 15,925 Direct costs (273,506) (155,225) (3,023) Gross profit 68,259 38,739 12,902 Research and development expenses (69,018) (39,170) (44,125) General and administration expenses (15,566) (8,834) (10,969) Operating loss (16,325) (9,265) (42,192) Profit on sale of fixed asset 2,574 1,461 - investments Interest receivable (net) 12,817 7,274 4,130 Loss on ordinary activities before (934) (530) (38,062) taxation Tax on loss on ordinary activities (1,845) (1,047) (64) Loss for the financial period (2,779) (1,577) (38,126) Loss per share - basic and diluted 3.2p 93.3p (pence) (i) Includes settlement with Abbott - see notes to the financial information for effect of settlement Consolidated Statement of Total Recognised Gains and Losses Year ended Year ended Year ended 30 Sep 2005 30 Sep 2005 30 Sep 2004 Convenience translation US$000 £000 £000 Loss for the financial period (2,779) (1,577) (38,126) (Loss)/gain on foreign exchange (728) (413) 1,099 translation Total recognised losses relating to the (3,507) (1,990) (37,027) period The losses for all periods arise from continuing operations. This financial information has been prepared in accordance with UK GAAP. The dollar translations are solely for the convenience of the reader. CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 CONSOLIDATED BALANCE SHEET As at As at As at 30 Sep 2005 30 Sep 2005 30 Sep 2004 Convenience translation US$000 £000 £000 Fixed assets Intangible assets 4,548 2,581 5,832 Tangible assets 20,626 11,706 12,362 Investments 4,051 2,299 2,942 29,225 16,586 21,136 Current assets Debtors - due within one year 23,621 13,406 4,460 Debtors - due after one year 2,044 1,160 - Short term investments 275,563 156,392 93,061 Cash at bank and in hand 35,735 20,281 2,678 336,963 191,239 100,199 Creditors Amounts falling due within one year (52,515) (29,804) (15,603) Net current assets 284,448 161,435 84,596 Total assets less current liabilities 313,673 178,021 105,732 Creditors Amounts falling due after more than one year (32,800) (18,615) (20,650) Net assets 280,873 159,406 85,082 Capital and reserves Called-up share capital 9,099 5,164 4,111 Share premium account 531,779 301,804 226,829 Other reserve 23,709 13,456 13,456 Profit and loss account (283,714) (161,018) (159,314) Shareholders funds - all equity 280,873 159,406 85,082 This financial information has been prepared in accordance with UK GAAP. The dollar translations are solely for the convenience of the reader. CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 CONSOLIDATED CASH FLOW STATEMENT Year ended Year ended Year ended 30 Sep 2005 30 Sep 2005 30 Sep 2004 Convenience translation US$000 £000 £000 Net cash outflow from operations (283) (161) (31,067) Returns on investments and servicing of finance Interest received 11,051 6,272 4,295 Interest element of finance leases (86) (49) (78) 10,965 6,223 4,217 Taxation - - (64) Capital expenditure and financial investment Purchase of tangible fixed assets (3,520) (1,998) (1,032) Sale of tangible fixed assets 4 2 6 Sale of fixed asset investments 3,707 2,104 - 191 108 (1,026) Net cash inflow/(outflow) before management of liquid resources and financing 10,873 6,170 (27,940) Management of liquid resources (111,924) (63,521) 15,357 Financing Issue of ordinary share capital 133,961 76,028 14,223 Capital elements of finance lease rental (661) (375) (348) payments 133,300 75,653 13,875 Increase in cash 32,249 18,302 1,292 This financial information has been prepared in accordance with UK GAAP. The dollar translations are solely for the convenience of the reader. Notes to the financial information Accounting policies This financial information has been prepared in accordance with the policies setout in the statutory financial statements for the year ended 30 September 2005. Convenience translation The consolidated financial statements are presented in Sterling. Theconsolidated financial statements as of and for the year ended 30 September 2005are also presented in US Dollars as a convenience translation. The Dollaramounts are presented solely for the convenience of the reader and have beencalculated using an exchange rate of £1:US$1.762, the closing rate as of 30September 2005. No representation is made that the amounts could have been orcould be converted into US Dollars at this or any other rates. Loss per share FRS 14 requires presentation of diluted EPS when a company could be called uponto issue shares that would decrease net profit or increase net loss per share.For a loss making company with outstanding share options, net loss per sharewould only be increased by the exercise of out-of-the-money options. Since itseems inappropriate to assume that option holders would act irrationally, noadjustment has been made to diluted EPS for out-of-the-money share options,diluted EPS equals basic EPS. The calculation is based on information in thetable below. Year ended Year ended 30 Sep 2005 30 Sep 2004 Losses (£000) 1,577 38,126 Weighted average number of shares 49,381,476 40,866,684 The Company had ordinary shares in issue of 51,639,868 and a total of 2,133,856 ordinary shares under option as of 30 September 2005. Abbott settlement 2005 2005 2005 Excluding Settlement with Total settlement with Abbott Abbott £000 £000 £000 Turnover 24,458 169,506 193,964 Direct costs (6,254) (148,971) (155,225) Gross profit 18,204 20,535 38,739 Research and development expenses (39,170) - (39,170) General and administration expenses (13,386) 4,552 (8,834) Operating loss (34,352) 25,087 (9,265) Profit on sale of fixed asset investments 1,461 - 1,461 Interest receivable (net) 6,430 844 7,274 Loss on ordinary activities before taxation (26,461) 25,931 (530) Tax on loss on ordinary activities (1,047) Loss for the financial period (1,577) Refer to the financial text for details of the Abbott Settlement and the accounting treatment thereof. Turnover Year Year Year ended ended ended 30 Sep 2005 30 Sep 2005 30 Sep 2004 Convenience translation US $000 £000 £000 Royalties 326,398 185,243 6,328 Licence fees 9,106 5,168 4,601 Technical milestones 1,936 1,099 1,610 Clinical milestones 1,970 1,118 1,091 Contract research fees 627 356 1,829 Other 1,728 980 466 Total 341,765 193,964 15,925 Deferred income £000 Balance brought forward at 1 October 2004 25,810 Cash receipts 2,106 Held in debtors 1,750 Released to revenue (5,885) Other (229) Deferred income at 30 September 2005 23,552 Reconciliation of operating loss to operating cash outflow Year ended Year ended Year ended 30 Sep 2005 30 Sep 2005 30 Sep 2004 Convenience translation US$000 £000 £000 Operating loss (16,325) (9,265) (42,192) Depreciation charge 4,745 2,693 2,826 Amortisation of intangible fixed assets 5,728 3,251 1,051 Profit on disposal of fixed assets (4) (2) (3) Write down of fixed asset investment - - 215 EIP charge 504 286 144 Increase in debtors (15,631) (8,871) (24) (Decrease)/increase in deferred income (3,979) (2,258) 4,086 Increase in creditors (excluding deferred 24,679 14,005 2,830 income) Operating cash outflow (283) (161) (31,067) Analysis and reconciliation of net funds 1 October Cash Exchange 30 30 2004 flow movement September September 2005 2005 Convenience translation £000 £000 £000 £000 US$000 Cash at bank and in hand 2,678 17,593 10 20,281 35,735 Overdrafts (1,512) 709 (803) (1,415) 18,302 10 Liquid resources 92,559 63,521 - 156,080 275,013 Net cash and liquid 93,725 81,823 10 175,558 309,333 resources Finance leases (820) 375 - (445) (784) Net funds 92,905 82,198 10 175,113 308,549 Liquid resources shown above is included within short term investments on the Balance Sheet, which also includes a part of the investment in MorphoSys shares. Reconciliation of movements in group shareholders funds Year ended Year ended 30 September 30 September 2005 2004 £000 £000 Loss for the financial period (1,577) (38,126) Other recognised gains and losses relating to the period (413) 1,099 (1,990) (37,027) New shares issued (net of expenses) 76,028 14,223 Executive Incentive Plan 286 144 Net increase/(decrease) in shareholders funds 74,324 (22,660) Opening shareholders funds 85,082 107,742 Closing shareholders funds 159,406 85,082 Financial Statements The preceding information, comprising the Consolidated Profit and Loss Account,Consolidated Statement of Total Recognised Gains and Losses, ConsolidatedBalance Sheet, Consolidated Cash Flow Statement and associated notes, does notconstitute the Companys statutory financial statements for the years ended 30September 2005 and 2004 within the meaning of section 240 of the Companies Act1985, but is derived from those financial statements. Statutory financialstatements for the year ended 30 September 2004 have been delivered to theRegistrar of Companies and those for the year ended 30 September 2005 will bedelivered to the Registrar of Companies after the Companys Annual GeneralMeeting. The auditors have reported on those financial statements: theirreports were unqualified and did not contain any statements under s237(2) or (3)Companies Act 1985. The annual report and financial statements for the year ended 30 September 2005will be posted to shareholders by 31 December 2005 and will be available shortlythereafter from our registered office: Cambridge Antibody Technology Group plcMilstein BuildingGranta ParkCambridgeCB1 6GH, UKTel: +44 (0) 1223 471471 This preliminary announcement was approved by the board on 28 November 2005. Quarterly financial information Three months Three months Three months Three months ended 30 Sep ended 30 Jun ended 31 Mar ended 31 Dec 2005 2005 2005 2004 £000 £000 £000 £000 Consolidated profit and loss account: Turnover 181,828 2,291 7,130 2,715 Direct costs (153,047) (143) (2,035) - Gross profit 28,781 2,148 5,095 2,715 Research and development (11,765) (9,322) (8,907) (9,176) expenses General and administration 1,741 (1,500) (2,650) (6,425) expenses Operating profit/(loss) 18,757 (8,674) (6,462) (12,886) Profit on sale of fixed asset - 1,461 - - investments Interest receivable (net) 2,333 1,934 1,835 1,172 Profit/(loss) on ordinary 21,090 (5,279) (4,627) (11,714) activities before taxation Taxation on profit/(loss) on (1,047) - - - ordinary activities Profit/(loss) for the financial 20,043 (5,279) (4,627) (11,714) period Consolidated cash flow statement Net cash inflow/(outflow) from 1,793 (9,101) 17,374 (10,227) operations Returns on investments and servicing of finance Interest received 2,135 1,638 1,672 827 Interest paid (9) (11) (14) (15) 2,126 1,627 1,658 812 Taxation - - - - Capital expenditure and financial investment Purchase of tangible fixed (410) (725) (597) (266) assets Sale of tangible fixed assets 2 - - - Sale of fixed asset investment - 2,104 - - (408) 1,379 (597) (266) Net cash inflow/(outflow) 3,511 (6,095) 18,435 (9,681) before management of liquid resources and financing Management of liquid resources 13,776 (6,619) (8,372) (62,306) Financing Issue of ordinary share 57 34 555 75,382 capital Capital elements of finance (96) (95) (93) (91) lease rental payments (39) (61) 462 75,291 Increase/(decrease) in cash 17,248 (12,775) 10,525 3,304 Notes to Editors: Business: CAT is a biopharmaceutical company, aiming to bring improvements to seriouslyill patients lives and thereby create outstanding returns for shareholders. CATseeks to develop products independently and in collaboration with partners,using its capabilities and technologies in the discovery and development of newand innovative antibody medicines in selected therapeutic areas. CAT also seeksto licence its technologies to enable others to develop new medicines. Products: HUMIRA(R), licensed to Abbott, is the first CAT-derived antibody to be approvedfor marketing. It was isolated and optimised in collaboration with Abbott andhas been approved for marketing as a treatment for rheumatoid arthritis (RA) in57 countries, and for psoriatic arthritis and early RA in some Europeancountries and the US. There are six further CAT-derived antibodies licensed to partners at variousstages of clinical development: ABT-874 (Abbott), LymphoStat-B(TM), HGS-ETR1,HGS-ETR2, ABthrax(TM) (all Human Genome Sciences (HGSI)) and MYO-029 (Wyeth).CAT has also licensed its proprietary technologies and patents to severalcompanies. CATs licensees include Amgen, Chugai, Dyax, Genzyme, HGSI, Merck &Co, Micromet, Pfizer and Wyeth, and three antibody drug candidates are inclinical development at patent licensees. There are three further human therapeutic product candidates in clinicaldevelopment: CAT-354 and CAT-3888, proprietary CAT products, and GC-1008, incollaboration with Genzyme. Collaborations: CAT has a broad collaboration with Genzyme for the development andcommercialisation of antibodies directed against TGF beta, a family of proteinsassociated with fibrosis and scarring, and with potential application in thetreatment of some cancers. CAT has a major strategic alliance with AstraZeneca to discover and develophuman antibody therapeutics, principally in inflammatory disorders. Thisprovides CAT with the opportunity to build a substantial pipeline of antibodytherapeutics with a significant pharmaceutical partner. CAT has a co-development collaboration with Amrad against GM-CSF Receptor, apotential drug target in the development of RA. Science: CAT has an advanced proprietary technology for rapidly isolating humanmonoclonal antibodies using Phage Display and Ribosome Display systems. CAT hasextensive phage antibody libraries, currently incorporating more than 100billion distinct antibodies, which form the basis for the Companys strategy todevelop a portfolio of antibody-based drugs. Business Background: CAT is based near Cambridge, UK, with a new site in Palo Alto, USA. CATcurrently employs around 290 people. CAT is listed on the London Stock Exchange (CAT) and on NASDAQ (CATG). More information can be found at www.cambridgeantibody.com Application of the Safe Harbor of the Private Securities Litigation Reform Actof 1995: This press release contains statements about Cambridge AntibodyTechnology Group plc (CAT) that are forward looking statements. All statementsother than statements of historical facts included in this press release may beforward looking statements within the meaning of Section 21E of the SecuritiesExchange Act of 1934. These forward looking statements are based on numerousassumptions regarding the companys present and future business strategies andthe environment in which the company will operate in the future. Certain factorsthat could cause the companys actual results, performance or achievements todiffer materially from those in the forward looking statements include: marketconditions, CATs ability to enter into and maintain collaborative arrangements,success of product candidates in clinical trials, regulatory developments andcompetition. We caution investors not to place undue reliance on the forwardlooking statements contained in this press release. These statements speak onlyas of the date of this press release, and we undertake no obligation to updateor revise the statements. 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