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PAION AG REPORTS ON FISCAL YEAR 2016 AND FINANCIAL RESULTS

DGAP-News: PAION AG / Key word(s): Final Results PAION AG REPORTS ON FISCAL YEAR 2016 AND FINANCIAL RESULTS 16.03.2017 / 07:30 The issuer is solely responsible for the content of this announcement. PAION AG REPORTS ON FISCAL YEAR 2016 AND FINANCIAL RESULTS

 

- Revenues and net result better than expected

- Cash position of EUR 30.1 million as of 31 December 2016

- Positive remimazolam data in pivotal U.S. Phase III study for procedural sedation during colonoscopy

- Investment and license agreement with Cosmo Pharmaceuticals for development and commercialization of remimazolam in the U.S.

- Financing for regulatory filing activities in Japan secured

- Conference call (in English) today at 2:00 pm CET (1:00 pm GMT/9:00 am EDT)

Aachen (Germany), 16 March 2017 - The specialty pharmaceutical 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 fiscal year 2016.

"The positive Phase III data from the U.S. colonoscopy study were a milestone in the history of PAION. Together with the Cosmo cooperation, these events have significantly de-risked PAION and put us in a strong position to advance remimazolam in the U.S. We now look forward to completing patient recruitment in our U.S. Phase III bronchoscopy trial in the very near future," Dr. Wolfgang Söhngen, CEO of PAION AG, commented. "The recently completed rights' offering was a very positive signal from our shareholders for their support for our chosen path in Japan. In addition, we now also have defined a path forward in Europe."

2016 activities and outlook

In 2016, PAION focused on advancing its Phase III development program of remimazolam in procedural sedation in the U.S. Remimazolam is an ultra-short-acting benzodiazepine sedative/anesthetic.

U.S.

In June 2016, PAION announced positive headline data from the remimazolam U.S. pivotal Phase III study in procedural sedation during colonoscopy. The trial enrolled 461 patients and was designed to evaluate the efficacy and safety of remimazolam compared to placebo (with midazolam 'rescue' sedation) in patients undergoing proceduralist-administered sedation for colonoscopy. The study met its primary efficacy endpoint.

In October 2016, more detailed data from the trial were presented at the 2016 American College of Gastroenterology (ACG) Annual Scientific Meeting. The highlights of the presentation by Prof. Rex at the ACG meeting in the U.S. were the significant improvements in onset and recovery times as well as restoration of cognitive function and fewer adverse events when compared to the control groups.

In addition to the above study, the U.S. development program includes a second confirmatory, prospective, double-blind, placebo-controlled, randomized, multi-center Phase III trial with an additional open label arm for midazolam in 420 patients undergoing bronchoscopies. Patient recruitment was initially moderate. However, significant resources allocated to the trial led to the targeted acceleration in patient recruitment. PAION expects to complete patient recruitment shortly.

Also as part of the U.S. development program, a safety study in ASA III/IV (American Society of Anesthesiologists classification) patients undergoing colonoscopy was conducted. This prospective, double-blind, randomized, placebo- and active controlled, multicenter, parallel group study enrolled 79 high-risk patients (i. e. ASA III/IV) undergoing a colonoscopy into a remimazolam, midazolam or placebo (including midazolam 'rescue' sedation) treatment group. In December 2016, PAION announced the successful completion of patient recruitment. Headline data are planned to be reported shortly.

Four Phase I studies were performed in the course of the U.S. Phase III development program. Based on the results of preclinical and Phase I studies and in consultation with the FDA, PAION will now start additional Phase I studies to further assess the abuse potential of remimazolam. One aspect is if remimazolam could inappropriately be used as a knock-out cocktail in combination with alcohol and another aspect is if it could be abused intranasally.

In June 2016, PAION entered into an investment agreement and a license agreement for remimazolam U.S. rights with Cosmo. Under the terms of the license agreement, Cosmo received an exclusive license for the development and commercialization of remimazolam in the U.S. and is responsible for the market authorization as well as sales and distribution of remimazolam. PAION remains responsible for and bears the cost associated with the completion of the ongoing U.S. clinical development program in procedural sedation. In addition to an upfront payment in the amount of EUR 10 million already received, PAION in return is entitled to receive further payments of up to EUR 42.5 million depending on the achievement of certain regulatory milestones in total for all of the three indications in the U.S., as well as tiered royalties upon commercialization ranging from 20% to 25% of the net sales (which may be adjusted under certain conditions but not to below 15%). Furthermore Cosmo has committed to invest an amount of EUR 10 million in PAION shares. Cosmo invested an amount of EUR 9.6 million in the course of a private placement in June 2016 and the remaining EUR 0.4 million in the course of a capital increase with subscription rights in February 2017.

In 2017, PAION continues to allocate significant resources to achieve the planned completion of the Phase III program in the U.S., especially on patient enrollment in the Phase III bronchoscopy study and the subsequent evaluation of the study data. In addition, PAION is working on the data analysis of the remimazolam safety trial in ASA III/IV colonoscopy patients completed in December 2016. The development program is being completed by further smaller (preclinical and Phase I) studies. Regular interactions with the FDA in this regard are being maintained in order to ensure that all data relevant for the regulatory authority have been collected. This will be followed by an integrated "overall" analysis of all clinical studies with remimazolam. Subject to the successful completion of the clinical development program, including the finalization of all analyses and reports, filing for approval in the U.S. could take place subsequently after preparation of a market approval dossier. Before filing, usually a pre-NDA meeting with the U.S. regulatory authority FDA is held, which is currently planned to take place in the end of 2017. The necessary coordination and preparatory work are currently being conducted with Cosmo, U.S. key opinion leaders and regulatory experts. Filing for market approval will then take place under Cosmo's responsibility depending on the outcome of the pre-NDA meeting. Conditional on successful study results and dependent on interactions with the FDA, PAION and Cosmo currently expect filing for approval mid of 2018.

The handover of U.S. activities to Cosmo Pharmaceuticals has rendered a subsidiary in the U.S. unnecessary. PAION, Inc. will therefore be dissolved in the course of 2017 and Greg Papaz is no longer employee of PAION, Inc.

EU

In February 2016, PAION discontinued a confirmatory EU Phase III study with remimazolam in patients undergoing major cardiac surgery. Due to the complex study design, the trial faced recruitment challenges. PAION then evaluated how best to resume the clinical development of remimazolam in the EU. Based on its findings, PAION determined that a study design analogous to the successfully completed Phase III program in general anesthesia in Japan would be the best path forward in the EU. Such a Phase III study would thus be conducted with procedures in general surgery.

In consultation with key opinion leaders in general anesthesia, a Phase I study will be conducted in 2017 to determine the number of patients required for a EU Phase III study in general anesthesia.

To conduct a Phase III program in the EU, PAION currently expects funding needs of approximately EUR 20 million to EUR 25 million up until filing, subject to further discussions with regulatory authorities. Secured funding, the conduct of the preparatory Phase I study and the necessary scientific consultations with the relevant European regulatory authority EMA to specify the new European Phase III program are a prerequisite for a study start in 2018.

Japan

In January 2016, PAION held a pre-NDA meeting with the Japanese Pharmaceuticals and Medical Devices Agency (PMDA). The PMDA stated that they considered the non-clinical and clinical data package for remimazolam to be complete for filing for the indication "induction and maintenance of general anesthesia" in Japan. The PMDA previously had confirmed that both the raw materials produced by PAION in Europe, as well as the finished formulation of remimazolam, fulfilled the requirements for filing in Japan.

Based on this positive pre-NDA meeting and the financing in February 2017, PAION will now start to prepare a market approval dossier for remimazolam in Japan. The preparation includes, among other things, the necessary validation of commercial-scale production for the Japanese market. The required approval dossier will be prepared by an experienced contract research organization (CRO) in close consultation with PAION. Such a dossier could serve as a reference dossier in certain other markets. This would significantly reduce the necessary additional investment for partners in the respective markets depending on the specific regulatory environment.

These activities are important prerequisites to advance ongoing discussions with potential licensees. PAION seeks to partner in the Japanese market during or after dossier preparation. Subject to further coordination with the regulatory authority, filing for market approval in Japan is expected by mid-2018.

China

In September 2016, Yichang Humanwell, PAION's remimazolam license partner for China, announced that patient recruitment for its first Phase I study started in October 2015 in general anesthesia had completed. Yichang Humanwell has started a second Phase I study with continuous infusion to prepare a study in general anesthesia. Moreover, a Phase II study in procedural sedation is in preparation.

Partner activities in other regions

All license partners have activities ongoing to support future filings in their respective territories with a focus on regulatory interactions.

Results of operations, net assets and financial position for 2016

Revenues amounted to EUR 4.3 million in the reporting period, an increase of EUR 4.2 million compared to the previous year. The majority (EUR 4.3 million) related to recognition of a portion of the EUR 10 million upfront payment from the license agreement with Cosmo. Revenue recognition of the received upfront payment is dependent on the progress of certain development components.

Research and development costs amounted to EUR 23.4 million, a decrease of EUR 6.0 million compared to the prior year. While expenses related to Phase III development increased due to successful acceleration measures for the U.S. bronchoscopy study, overall lower R&D expenses were mainly attributable to reduced costs for Phase I studies, production development and preparations for the U.S. market approval dossier.

General administrative and selling costs amounted to EUR 5.1 million, a decrease of EUR 0.6 million compared to the previous year. Administrative costs increased by EUR 0.4 million to KEUR 3.8 million, while selling costs decreased by EUR 1.0 million to EUR 1.3 million. The increase in administrative costs was mainly due to preparations for potential capital measures in 2016, which were ultimately not conducted in light of the agreements entered into with Cosmo. Selling costs mainly included costs related to the initiation and preparation of license agreements in the reporting period, while higher selling costs in the previous year primarily resulted from market research, pre-marketing and market access activities.

Other income (expenses) of EUR -0.8 million decreased by EUR 1.8 million compared to the previous year and mainly included foreign exchange losses.

Income taxes mainly include tax claims for reimbursement of a portion of research and development costs from the British tax authorities. Due to decreased development costs for remimazolam in 2016, those tax claims were lower compared to the prior year (EUR 5.0 million in 2016 compared to EUR 5.8 million in 2015).

Net loss of EUR 20.1 million was below the range of EUR 24.5 million to EUR 27.5 million projected for fiscal year 2016. This was mainly due to the revenues recognized in connection with the license agreement entered into with Cosmo in June 2016 which was not part of the company's guidance.

Cash and cash equivalents decreased by EUR 2.6 million to EUR 30.1 million as of 31 December 2016 compared to EUR 32.7 million as of 31 December 2015.

Cash flow from operating activities primarily results from the net loss of EUR 20.1 million and the upfront payment of EUR 10 million received from Cosmo.

Cash flow from financing activities stems mainly from the private placement conducted with Cosmo in June 2016 with gross proceeds of EUR 9.6 million and cost of funds of EUR 0.5 million incurred in this regard.

Outlook

PAION's major goals for 2017 are the continuation of the ongoing clinical development program in the U.S. and the handover of the completed work to Cosmo. In addition, PAION will continue to work on production development for remimazolam. The company also will commence work on a filing dossier for the Japanese market in general anesthesia. In preparation for the EU Phase III development program in general anesthesia, a Phase I study is being initiated and further discussions with regulatory authorities are planned. PAION expects its regional partners to continue their remimazolam development activities.

In 2017, PAION expects revenues of approximately EUR 5.8 million, mainly related to recognition of the remainder of the upfront payment of EUR 10 million received from Cosmo in connection with the U.S. license agreement for remimazolam in July 2016, of which EUR 4.3 million were already realized as revenues in the reporting period. Depending on the progress of certain development components, the remaining EUR 5.7 million of the upfront payment are expected to be recognized as revenues in fiscal year 2017. No further license agreements or milestone payments from existing license agreements are included in the financial planning for fiscal year 2017 which is the basis for the financial outlook.

Due to ongoing investment in the development of remimazolam, PAION expects research and development expenses to be between approximately EUR 18 million and EUR 20 million for 2017, depending on the progress of development. Income from tax credits on portions of research and development expenses from British tax authorities is expected to be between approximately EUR 3.5 million and EUR 4 million. General administrative and selling expenses are expected to amount to approximately EUR 3.5 million to EUR 4 million. Net loss is expected to be between approximately EUR 12 million and EUR 14 million, a decrease compared to the reporting period (EUR 20.1 million).

This outlook assumes that development activities for remimazolam in the U.S. will progress as expected. Otherwise, costs would shift into 2018. Expense forecasts are also based on the current status of discussions with the FDA. Costs could be higher than planned and lead to a delay in approval should the FDA impose additional requirements prior to filing for market approval.

Based on current plans, PAION believes that cash and cash equivalents of EUR 30.1 million as of 31 December 2016 will be sufficient for PAION to complete all remaining development activities in the U.S.

Thereafter, PAION expects to receive further payments from Cosmo subject to the achievement of certain regulatory milestones in the U.S., and, once remimazolam is approved, royalties on net sales. In the EU, PAION is currently planning to continue the clinical development program for remimazolam. For completion of the development program in the EU until filing for approval, additional funding of approximately EUR 20 million to EUR 25 million will be required, subject to further discussions with regulatory authorities.

Without consideration of potential milestone payments and without consideration of potential costs incurred by the targeted continuation of the Phase III development program in the EU, cash and cash equivalents including expected tax credits from the British tax authorities secure a cash reach at least until the end of 2018.

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Key consolidated financial figures, IFRS

 

(all figures in KEUR unless otherwise noted)	2016	2015
Revenues	4,262	72
Research and development costs	-23,408	-29,385
General administrative and selling costs	-5,129	-5,729
Net result	-20,118	-28,212
Earnings per share in EUR for the period (basic)	-0.38	-0.56
Earnings per share in EUR for the period (diluted)	-0.38	-0.56
Cash flows from operating activities	-11,586	-26,287
Cash flows from investing activities	-192	-33
Cash flows from financing activities	9,212	22
Intangible assets	2,688	3,362
Cash and cash equivalents	30,111	32,680
Equity	24,943	35,562
Non-current liabilities	0	6
Current liabilities	13,040	7,900
Balance sheet total	37,983	43,468
Average number of group employees	36	29

 

The full annual financial report will be available as from 16 March 2017 on our corporate website: http://www.paion.com/media-and-investors/investorcenter/financial-repo ....

Conference call and webcast

In addition to the publication of the results, the Management Board of PAION AG will host a public conference call (conducted in English) on 16 March 2017 at 2 p.m. CET (1 p.m. GMT, 9 a.m. EDT) to present the 2016 financial results, highlight key events and provide a pipeline and strategy update and financial outlook.

To access the call, participants may dial from

* Germany [phone],

* UK [phone] and

* U.S. [phone]

* Other countries: please use the UK number

When prompted, you will be asked to give the password "PAION". The conference call will be supplemented by a webcast presentation, which can be accessed during the call using the following link: https://paion-events.webex.com/paion-events/j.php?MTID=m75f26e5aa252ba ...

 

About PAION

PAION AG is a publicly listed specialty pharmaceutical company developing and aiming to commercialize innovative drugs to be used in out-patient and hospital-based sedation, anesthesia and critical care services. PAION's lead compound is remimazolam, an intravenous, ultra-short-acting and controllable benzodiazepine sedative/anesthetic drug candidate. Currently, remimazolam is in active Phase III clinical development for use in procedural sedation in the U.S., where PAION is focusing all its business and financial resources on successfully completing its ongoing clinical development program in procedural sedation. Outside the U.S., PAION has so far focused on the development of remimazolam in the indication general anesthesia. Development of remimazolam in the indication intensive care unit (ICU) sedation is also part of the longer term life-cycle plan for remimazolam.


PAION is headquartered in Aachen (Germany) with further sites in Cambridge (United Kingdom) and New Jersey (U.S.).

PAION's vision is to become an acknowledged "PAIONeer" in sedation and anesthesia.

Contact

Ralf Penner

Director Investor Relations / Public Relations

PAION AG

Martinstrasse 10-12

52062 Aachen - Germany

Phone [phone]

E-mail [e-mail]

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.

Contact:

PAION Contact

Ralf Penner

Director Investor Relations / Public Relations

PAION AG

Martinstrasse 10-12

52062 Aachen - Germany

Phone: [phone]

E-mail: [e-mail]

www.paion.com

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16.03.2017 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.

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Language:	English
Company:	PAION AG
	Martinstr. 10-12
	52062 Aachen
	Germany
Phone:	[phone]
Fax:	[phone]
E-mail:	[e-mail]
Internet:	www.paion.com
ISIN:	DE000A0B65S3
WKN:	A0B65S
Listed:	Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange

End of News	DGAP News Service

554411  16.03.2017