COPENHAGEN, Denmark, Sept. 26, 2017 (GLOBE NEWSWIRE) -- Forward Pharma A/S (NASDAQ: FWP ) (“We” or “Forward” or the “Company”), today reported financial results for the six-month period ended June 30, 2017. Net income for the six-month period ended June 30, 2017 was $941.2 million, or $1.91 per diluted share, versus net loss of $(32.0) million, or $(0.07) per share for the six-month period ended June 30, 2016.
“We are pleased to announce our results for the first half year of 2017, where major events occurred. With the recently completed capital reduction and shareholder distribution, the transformation of Forward Pharma initiated upon signing the Settlement and License Agreement with Biogen is nearing completion,” said Dr. Claus Bo Svendsen, Chief Executive Officer of Forward.
Six-month period ended June 30, 2017 Operational Results
The net income for the six-month period ended June 30, 2017 was $941.2 million compared to a net loss of $(32.0) million for the comparable period in 2016.
During the six-month period ended June 30, 2017, the Company recognized as revenue the $1.25 billion nonrecurring non-refundable fee (“Non-refundable Fee”) that was received during February 2017 in connection with the Settlement and License Agreement (“License Agreement”) entered into with two wholly owned subsidiaries of Biogen, Inc. (collectively “Biogen”).
The Company was obligated to pay Aditech Pharma AG a royalty equal to 2% of the Non-refundable Fee, or $25 million.
Research and development costs for the six-month period ended June 30, 2017 decrease to $7.0 million compared to $23.1 million for the comparable period in 2016. The decrease in research and development costs for the six-month period ended June 30, 2017 is the result of lower costs incurred in connection with patent matters, including the Interference Proceeding in the US, lower share-based compensation and the wind-down of our development efforts of FP187. Fees to patent advisors and other patent-related costs decreased from $10.1 million in the six-month period ended June 30, 2016 to $1.1 million in the six-month period ended June 30, 2017. The decrease is the result of reduced activities subsequent to the oral argument on November 30, 2016 for the Interference Proceeding and the United States Patent Trial and Appeal Board’s issuance of the decision in the Interference Proceeding in favor of Biogen on March 31, 2017. Share-based compensation decreased from $3.9 million in the six-month period ended June 30, 2016 to $2.6 million in the six-month period ended June 30, 2017. We currently expect our research and development costs will decline further during the balance of 2017 and into 2018 as we continue to wind down development activities of FP187.
General and administrative costs for the six-month period ended June 30, 2017 decreased to $4.4 million compared to $6.2 million for the comparable period in 2016. The decrease in general and administrative costs resulted from a decrease in share-based compensation offset by increased legal and accounting costs. Share-based compensation decreased from an expense of $3.4 million in the six-month period ended June 30, 2016 to a benefit of $2.2 million in the six-month period ended June 30, 2017. The favorable change was related to the benefit recognized during the six-month period ended June 30, 2017 in connection with equity awards that were forfeited as the result of employee terminations where the forfeited equity awards were initially expected to vest in full. Legal and accounting fees were $4.6 million in the six-month period ended June 30, 2017 compared to $884,000 for the comparable period in 2016. The increase in legal and accounting fees is related to the License Agreement. We expect our general and administrative costs will remain at current levels.
Income tax expense for the six-month period ended June 30, 2017 totaled $271.8 million. The tax expense for the six-month period ended June 30, 2017 resulted from the receipt of the Non-refundable Fee, partially offset by operating expenses, giving rise to pretax income of $1.2 billion. The effective tax rate for the period is 22.4%, which is slightly higher than the Danish statutory tax rate of 22.0%. The difference between the effective tax rate and the statutory tax rate is primarily derived from a higher tax rate in Germany where the Group has taxable nexus in addition to Denmark.
Non-cash share-based compensation expense included in total operating expenses was $384,000 for the six-month period ended June 30, 2017 versus $7.3 million for the same period in 2016.
Events Occurring Subsequent to June 30, 2017
On July 18, 2017, the Company announced plans to distribute a total of 917.7 million Euros to its shareholders through a capital reduction (“Capital Reduction”). The Capital Reduction and a 10 for 1 share split (“Share Split”) were approved by the Company’s shareholders on August 2, 2017. The proceeds from the Capital Reduction were distributed to shareholders during September 2017. The Capital Reduction was executed through the annulment of 80% of the ordinary shares outstanding post Share Split. Subsequent to the Share Split and the Capital Reduction, the Company has 94.4 million ordinary shares outstanding and each American Depositary Share (“ADS”) represents 2 ordinary shares.
| Forward Pharma A/S | ||||||||||||
| Condensed Consolidated Statement of Profit or Loss | ||||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Six-Month Period Ended | ||||||||||||
| June 30, | ||||||||||||
| 2017 | 2016 | |||||||||||
| Revenue from settlement and license agreement | $1,250,000 | |||||||||||
| Royalty cost Aditech Pharma AG | (25,000) | |||||||||||
| Research and development | (6,993) | $(23,142) | ||||||||||
| General and administrative | (4,413) | (6,153) | ||||||||||
| Total operating income (loss) | 1,213,594 | (29,295) | ||||||||||
| Other | (584) | (2,705) | ||||||||||
| Income (loss) before taxes | 1,213,010 | (32,000) | ||||||||||
| Income tax expense | (271,774) | - | ||||||||||
| $941,236 | $(32,000) | |||||||||||
| Net income (loss) | ||||||||||||
| Net income (loss) per share, basic (1) | $2.00 | $(0.07) | ||||||||||
| Net income (loss) per share, diluted (1) | $1.91 | $(0.07) | ||||||||||
| Weighted average shares used to compute net income (loss) per share basic (1) | 471,647 | 469,020 | ||||||||||
| Weighted average shares used to compute net income (loss) per share diluted (1) | 491,674 | 469,020 | ||||||||||
(1) The shareholders of the Company approved a 10 for 1 share split on August 2, 2017 (“Share Split”). All share and per share information contained herein has been adjusted to reflect the Share Split as if it had occurred at the beginning of the earliest period presented. Accordingly, share and per share information previously reported for the six-month period ended June 30, 2016 has been revised to reflect the Share Split.
| Forward Pharma A/S | |||||||||||||||
| Condensed Consolidated Statement of Financial Position | |||||||||||||||
| (in thousands) | |||||||||||||||
| June 30, | December 31, | ||||||||||||||
| 2017 | 2016 | ||||||||||||||
| Assets | |||||||||||||||
| Cash, cash equivalents and investments | $1,440,441 | $138,723 | |||||||||||||
| Other assets | 1,393 | 24,420 | |||||||||||||
| Total assets | $1,441,834 | $163,143 | |||||||||||||
| Equity and Liabilities | |||||||||||||||
| Shareholders' equity | $1,174,295 | $155,802 | |||||||||||||
| Liabilities | 267,539 | 7,341 | |||||||||||||
| Total equity and liabilities | $1,441,834 | $163,143 | |||||||||||||
About Forward Pharma: Forward Pharma A/S is a Danish biopharmaceutical company that commenced development in 2005 of FP187, a proprietary formulation of DMF for the treatment of inflammatory and neurological indications. The Company owns a significant intellectual property (IP) portfolio related to DMF formulations. The Company granted to Biogen an irrevocable license to all of its IP through the recent Settlement and License Agreement and received from Biogen a non-refundable cash fee of $1.25 billion in February 2017, with the return of EUR 917.7 million to shareholders through a capital reduction in September 2017. The Company has the opportunity to receive royalties from Biogen on sales of Tecfidera ® or other DMF products for MS, dependent on, among other things, successfully appealing the U.S. interference and a favorable outcome in Europe with respect to the EP2801355 opposition proceeding.
The principal executive offices are located at Østergade 24A, 1 st Floor, 1100 Copenhagen K, Denmark and our American Depositary Shares are publicly traded on NASDAQ Stock Market (FWP). For more information about the Company, please visit our web site at http://www.forward-pharma.com .
Forward Pharma A/S Investor Relations Contact: Forward Pharma A/S Dr. Claus Bo Svendsen, Chief Executive Officer Investor Relations investors@forward-pharma.com
The Trout Group John Graziano jgraziano@troutgroup.com +1 (646) 378 2942
Forward Looking Statements: Certain statements in this press release may constitute “forward-looking statements” of Forward Pharma A/S within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements which contain language such as “believe”, “expect”, “anticipate”, “estimate”, “would”, “may”, “plan” and “potential”. Forward-looking statements are predictions only, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those expressed in such statements. Many such risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking statements and include, among others, risks related to the following: the satisfaction of certain conditions, and the accuracy of certain representations of the Company, in the Settlement and License Agreement entered into with subsidiaries of Biogen Inc. and certain other parties thereto; our ability to obtain, maintain, enforce and defend issued patents with royalty-bearing claims; our ability to prevail in the interference proceeding after all appeals and obtain issuance of the ’871 application; our ability to prevail in or obtain a favorable decision in the ‘355 European opposition proceedings, after all appeals; the expected timing for key activities and an ultimate ruling in such legal proceedings; the issuance and term of our patents; future sales of Tecfidera ® , including impact on such sales from competition, generic challenges, regulatory involvement and pricing pressures; the scope, validity and enforceability of our intellectual property rights in general and the impact on us of patents and other intellectual property rights of third parties; and our ability to generate revenue from product sales in the U.S. directly or through an assignee of our U.S. co-exclusive license rights in the event Biogen does not obtain an exclusive license from us in the U.S. Certain of these and other risk factors are identified and described in detail in certain of our filings with the United States Securities and Exchange Commission, including our Annual Report on Form 20-F for the year ended December 31, 2016. We are providing this information as of the date of this release and do not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.
