DGAP-News: PAION AG REPORTS CONSOLIDATED FINANCIAL RESULTS

DGAP-News: PAION AG / Key word(s): Half Year Results PAION AG REPORTS CONSOLIDATED FINANCIAL RESULTS FOR THE FIRST HALF-YEAR 2014 06.08.2014 / 07:30 --------------------------------------------------------------------- PAION AG REPORTS CONSOLIDATED FINANCIAL RESULTS FOR THE FIRST HALF-YEAR 2014 - Licensing deals signed for Remimazolam in the MENA region and Canada - Positive Phase II results with Remimazolam in cardiac surgery - Proceeds of EUR 61.4 million from the capital increases - Liquid funds secure Phase III programmes with Remimazolam in the EU and the U.S. including filing process as well as premarketing and market access activities - Conference call (in English) today at 2:00 pm CEST (1:00 pm BST/8:00 am EDT) Aachen (Germany), 06 August 2014 - Specialty pharma company PAION AG (ISIN DE000A0B65S3; Frankfurt Stock Exchange, Prime Standard: PA8) today reports its consolidated financial results according to International Financial Reporting Standards (IFRS) for the first half-year 2014. Revenues amounted to EUR 1.5 million in the first six months of 2014 and thus were EUR 0.3 million higher than in the corresponding prior-year period. The revenues mainly comprise the upfront payment from TR-Pharm in connection with the expansion of the license agreement to include the MENA region (Middle East and North Africa). Research and development expenses increased, from EUR 2.0 million in the prior-year period to EUR 4.3 million, as a result of an increase in development activities for Remimazolam. At EUR 1.8 million, general administrative and selling expenses slightly increased compared to the prior-year period. The company incurred a net loss of EUR 3.8 million in the first half-year 2014, which is higher than the net loss of EUR 2.2 million recorded in the prior-year period. Cash and cash equivalents increased by EUR 5.4 million, mainly due to the capital increases carried out in the first quarter 2014. As of 30 June 2014, PAION's cash and cash equivalents amounted to EUR 18.7 million. Including cash and cash equivalents and the proceeds from the capital increases that were successfully completed in early July 2014 PAION has sufficient funds to conduct the planned Phase III programmes with Remimazolam in the EU and the U.S., including filing process, and to initiate premarketing and market access activities. Dr Wolfgang Söhngen, CEO of PAION commented: "We can look back at an extremely successful first half of 2014. In addition to the evaluation and release of the positive Phase II study headline data in cardiac surgery, our focus was primarily on the various capital measures and the additional licence agreements, which will secure the funding for the development programme of Remimazolam and the planned approval process. We are currently in further consultations with the authorities in preparation for the Phase III programmes in the EU and the United States. We now concentrate all our efforts on starting the phase III programme later this year - probably first in the U.S." Development and commercial activities In the first six months of 2014, PAION continued to focus on the development and out-licensing of Remimazolam. In February 2014, only five mths after the start, the company was able to announce the completion of recruitment for the Phase II clinical trial with the short-acting anaesthetic/sedative Remimazolam in the indication of general anaesthesia in patients undergoing cardiac surgery at the Leipzig Heart Centre. The study was a randomised, controlled Phase II trial to evaluate the efficacy, tolerability and pharmacokinetics of Remimazolam during general anaesthesia in patients undergoing cardiac surgery using a heart-lung machine, compared with the standard treatment of Propofol/Sevoflurane. After surgery, a follow up sedation for up to 24 hours took place in the recovery room or in the intensive care unit (ICU). A total of 90 patients were treated. The primary endpoint (efficacy) as a general anaesthetic was achieved in 98% of patients in the two Remimazolam dose groups and 96% of patients in the Propofol/Sevoflurane group. This demonstrated an excellent efficacy rate and in addition a generally very good safety profile was observed across all treatment groups. One of the key targets of this trial was to assess the cardiostability of Remimazolam during cardiac surgery when compared to Propofol/Sevoflurane, both of which are known to cause cardiac depression. During cardiac surgery, Norepinephrine is routinely used to maintain blood pressure and a variety of cardiac parameters as close as possible in the normal range and thus counteract a pronounced decrease in blood pressure. In the trial, the use of Norepinephrine was 36.7% lower in Remimazolam treated patients when compared to the Propofol/Sevoflurane group, which can be regarded as a clinically meaningful differentiation. In terms of marketing, a number of successes were achieved in the first six months of 2014 as well. In June 2014, PAION and R-Pharm, Russia, expanded the scope of their licence agreement concerning the exclusive rights for the development and commercialization of Remimazolam to include the MENA region (Middle East and North Africa). Based on this expansion of the agreement's scope, PAION received an upfront payment of EUR 1.5 million and is eligible to receive potential regulatory and commercial milestone payments of up to EUR 5.5 million and low double-digit royalties on net sales in the territory. After the completion of an exclusive option agreement with the Canadian company Pendopharm in June 2014, the final license agreement concerning the development and commercialization rights to Remimazolam in Canada was signed in early July 2014. Based on this license agreement, PAION will be eligible to receive potential regulatory and commercial milestone payments of up to CAD 5.7 million (approximately EUR 3.9 million) and significant double-digit, tiered royalties on net sales in Canada starting at 15%. Under the option agreement, Pendopharm's European affiliate, Pharmascience International Limited, had committed to invest up to EUR 4 million in shares not subscribed by PAION's shareholders, at a 10% premium to the theoretical ex-rights price of those PAION shares that were available after completion of the rights offering. Since no new shares were available after completion of the rights offering to permit an investment of EUR 4 million, PAION had the right to require Pharmascience International Limited to invest the EUR 4 million in shares of PAION in a separate private placement at a 10% premium to the then current market price. The private placement was completed on 17 July 2014 at a subscription price of EUR 3.1463, which is 25.9% above the subscription price in the rights offering. Capital increases With the consent of the Supervisory Board and/or the General Meeting, the Management Board of PAION AG resolved several capital increases, which it implemented in the course of the year. Upon completion of the most recent capital increases after the end of the reporting period in July 2014, the company's share capital increased from EUR 25,379,906.00 as of 31 December 2013 to EUR 50,618,817. The Authorised Capital 2014 correspondingly decreased to EUR 14,137,297.00 as a result of these capital measures. Type of capital Date Gross issue proceeds Issue Number of measure (EUR million) shares issued price (EUR) Private 22 July 4.00 3.1463 1,271,334 placement 2014 Rights offering 9 July 2014 46.26 2.50 18,505,305 Private 17 February 3.17 2.4553 1,290,178 placement 2014 Private 22 January 3.00 2.4079 1,245,899 placement 2014 Rights offering 13 January 5.00 1.80 2,777,777 2014 Total 61.43 25,090,493 Details on the individual transactions are described in the respective ad hoc announcements and in the Group financial report on the first half-year of 2014. In addition, 148,418 share options were exercised. To date, the total number of voting rights is 50,618,817. Guidance 2014 Development and Commercialisation Activities PAION's major goals for the rest of 2014 are the completion of the preparation of the Phase III programmes with Remimazolam in the U.S./Europe. This includes the intensive continuation of the ongoing discussions with the authorities to define the approval requirements. In addition, the focus of activities and spending is on the production development for Remimazolam in particular the production of the test medication and the validation of the production in market scale. PAION expects the development activities of its cooperation partners Ono, Yichang, Hana Pharm, R-Pharm and Pendopharm (all Remimazolam) and Acorda (GGF2) to continue. Since PAION is evolving into a specialty pharmaceutical company with a focus on anaesthesia products, it is planned to start premarketing and market access activities. This includes active participation in international congresses to position Remimazolam in the respective fields and to involve important key opinion leaders. PAION wants to evolve into a specialty pharmaceutical company with a focus on anaesthesia products. In this context, PAION seeks to retain certain marketing rights for Remimazolam for the European market in order to market Remimazolam in Europe itself or together with a partner. In case of a successful out-licensing by way of a development cooperation, PAION would expect to receive substantial payments as upfront payments or through sharing of development costs, development milestone payments, a partial or complete assumption of future development costs until market approval and royalties from market approval onwards. In case of a pure marketing cooperation after registration, PAION would expect to receive a comparably higher upfront payment and higher royalties. Cooperation partner Ono finalised a Phase II/III study with Remimazolam in anaesthesia in Japan in November 2013. The submission of the marketing authorisation application is expected in the second half of 2014. PAION benefits from the progress of development by Ono and the other cooperation partners in the form of additional development data and financially in the form of milestone payments and royalties from launch onwards. Financial Forecast In 2014 PAION could, in addition to the milestone payment already received from R-Pharm, receive further milestone payments from the existing cooperation agreements of up to EUR 1 million. Because of the investment in the development of Remimazolam the research and development expenses will be higher than in the previous year and will amount in a high single-digit million range. Costs for selling and general administration will be slightly higher than in the previous year. The budgeted expenses will lead to a significant high single-digit to low double-digit million loss in 2014. As of 30 June 2014, the PAION Group had cash and cash equivalents of EUR 18.7 million. With the cash and cash equivalents together with the proceeds received from the capital increase conducted in the beginning of July 2014 PAION has sufficient funds to conduct the planned Phase III programmes with Remimazolam in the EU and the U.S., including filing process, and to initiate premarketing an market access activities. Furthermore, PAION expects to receive further milestone payments from the existing cooperation agreements in case of successful development of Remimazolam or the filing for and receipt of market approval for Remimazolam in Japan and other regions. These milestone payments as well as future upfront payments, milestone payments or cost reimbursements would strengthen the cash position but could also be completely or partly used to fund the development of the company. ### Key consolidated financial figures, IFRS (all figures in EUR thousand unless noted otherwise) Q2 2014 Q2 2013 H1 2014 H1 2013 Revenues 1,517 5 1,521 1,222 Research and development expenses -2,696 -1,130 -4,298 -2,028 General administrative and selling expenses -1,003 -880 -1,882 -1,823 Profit/loss for the period -1,629 -1,537 -3,836 -2,190 Earnings per share in EUR for the period (basic) -0.05 -0.06 -0.13 -0.09 Earnings per share in EUR for the period (diluted) -0.05 -0.06 -0.13 -0.09 H1 2014 H1 2013 Cash flow from operating activities -5,300 -875 Cash flow from investing activities -15 0 Cash flow from financing activities 10,696 -7,163 Change in cash and cash equivalents 5,412 -8,174 Average number of employees in the Group 14 13 30 June 31 Dec. 2014 2013 Intangible assets 3,499 3,494 Cash and cash equivalents 18,704 13,292 Equity 20,561 13,329 Non-current liabilities 22 28 Current liabilities 4,056 4,659 Total assets 24,639 18,016 The full half-yearly report of PAION will be available as of 06 August 2014 on our corporate website at http://www.paion.com/en/berichte-2014. Conference call and webcast In addition to the publication of the results, the Management Board of PAION will host a public conference call (conducted in English) on Wednesday, 06 August 2014 at 2 p.m. CEST (1 p.m. BST, 8 a.m. EDT) to present the financial results of H1 2014, highlight the most important events and provide a pipeline and strategy update and financial outlook. To access the call, participants from Germany may dial +49 69 20 17 44 210, from the UK +44 207 153 9154 and from the US +1 877 423 0830 (other countries: please choose from D/UK/US numbers). When prompted, please enter the PIN 764387#. To allow for smooth processing we suggest that you dial in ten minutes before the beginning of the call. The conference call will be supplemented by a webcast presentation which can be accessed during the call under the following link: http://www.anywhereconference.com?UserAudioMo...amp;Confer ence=137352995&PIN=443932. To connect, please just click on the link or enter 137352995 in the field "Weblogin" and 443932 in the field "PIN Code" on http://www.anywhereconference.com. The dial-in details for the conference call and the webcast link will also available on our website http://www.paion.com on the date of the call. The conference call will be recorded. Details on how to access the replay will be posted on the same webpage after the call. About PAION PAION AG is a listed specialty pharma company headquartered in Aachen, Germany with a second site in Cambridge, UK. The company has a successful track record in developing hospital-based treatments for which there is substantial unmet medical need. PAION's strategy is to extend its business model from a pure development company to a specialty pharmaceutical company with a focus on anaesthesia products. The company's future marketing activities are to be based on Remimazolam. Contact Ralf Penner Director Investor Relations / Public Relations PAION AG Martinstrasse 10-12 52062 Aachen - Germany Phone +49 241 4453-152 E-mail r.penner@paion.com www.paion.com Disclaimer: This release contains certain forward-looking statements concerning the future business of PAION AG. These forward-looking statements contained herein are based on the current expectations, estimates and projections of PAION AG's management as of the date of this release. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors. Should actual conditions differ from the Company's assumptions, actual results and actions may differ materially from any future results and developments expressed or implied by such forward-looking statements. Considering the risks, uncertainties and other factors involved, recipients should not rely unreasonably upon these forward-looking statements. PAION AG has no obligation to periodically update any such forward-looking statements to reflect future events or developments. --------------------------------------------------------------------- 06.08.2014 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: PAION AG Martinstr. 10-12 52062 Aachen Germany Phone: +49 (0)241-4453-0 Fax: +49 (0)241-4453-100 E-mail: info@paion.com Internet: www.paion.com ISIN: DE000A0B65S3 WKN: A0B65S Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 280842 06.08.2014