Biotie Announces Restructuring Plan; Future Focus Exclusively on Clinical Development; Conference Call Today
Biotie announced today that it will implement a restructuring plan to focus its business exclusively on clinical development and will transfer all operations to its headquarters in Finland. The restructuring would result in significant personnel and cost reductions. These initiatives are designed to leverage the company's development expertise and focus resources on the clinical assets that the company believes will best enhance shareholder value.
As part of the restructuring process, Biotie will spin-off its site in Radebeul, Germany in an MBO transaction and will take a minority interest in the spin-off company, biocrea GmbH. Thomas Kronbach, Biotie's Chief Scientific Officer, will leave Biotie to become Managing Director of the new entity, into which all employees and all pre-clinical assets of Biotie Therapies GmbH (Biotie's subsidiary in Radebeul, Germany) will be transferred.
Biotie will provide initial funding in the amount of up to EUR 4.8 million over the next 12 months to start off the new business, but it is anticipated that biocrea will attract and mainly rely on independent funding sources in the future. While Biotie will retain its German subsidiary Biotie Therapies GmbH, there will be no business operations or employees in its German site going forward.
Workforce reduction measures would also impact Biotie's activities in its headquarters in Turku, Finland. The company would maintain all competencies necessary to support clinical development and business operations in order to progress its current clinical pipeline and continue licensing and business development activities. Effective today, Biotie will start a company-wide regulated co-determination process with employees in Finland regarding a potential reduction of headcount by up to 15 employees. Following the spin-off in Germany and execution of planned restructuring measures in Finland, Biotie expects its total number of employees going forward would be approximately 22, all based at its headquarters in Turku, Finland.
Biotie's collaboration with Lundbeck for the development and commercialization of nalmefene for alcohol dependence is unaffected by the restructuring. Furthermore, the company will focus its development activities around ronomilast, its oral, once daily PDE4 inhibitor and BTT-1023, its fully human monoclonal antibody targeting VAP-1. Both products have successfully completed multiple phase I trials and preparatory activities towards phase II trials are underway for these two programs.
Timo Veromaa, President and CEO of Biotie stated: "We are confident that the steps we would be taking today would allow us to focus on our core competencies and to efficiently advance our existing clinical pipeline. The resulting streamlined organization and corporate structure would enable us to build a stronger clinical pipeline and additionally consider other strategic options to deliver longer-term sustainable growth going forward. We look forward to the upcoming results from the ongoing phase III trials of nalmefene in alcohol dependence and remain enthusiastic about the differentiated profile of our oral PDE-4 inhibitor, ronomilast, and by the broad potential of our VAP-1 antibody for the treatment of inflammatory disorders".
The restructuring measures, including the intended spin-off of the German site will be initiated immediately but completion of these measures and timing of one-off charges related to these is subject to local regulations. Biotie will record one-off costs of EUR 2.9 million in Q3 2010 in relation to the discontinued operations in Germany, mainly due to write-offs of certain intangible assets and goodwill. The restructuring plan, including the equity investment into biocrea GmbH will lead to additional cash outflows of approximately EUR 2.5-3 million in Q4 2010. Further cash outflows of approx EUR 2-2.5 million will take place in future periods in connection with the restructuring plan.
Cost savings that will result from the restructuring are expected to be at least EUR 4 million annually from 2011 onwards. The measures in connection to the restructuring plan will accelerate cash outflows in 2010 and the company expects to end the year with EUR 3.5-4.5 million in liquid assets, net of any additional cash inflows. Biotie will need to secure its working capital in the near term future in order to execute its intended product development activities. Income generated from commercial agreements relating to Biotie's clinical programs may significantly improve the company's financial position, but no reliable forecast on any potential income from such commercial agreements can be provided. Biotie may therefore need to secure additional financing through the issue of shares, either by exercising its existing standby equity distribution agreement with Yorkville or through share issues to other parties.
Thomas Taapken, CFO of Biotie commented: "Realigning our business to focus exclusively on clinical development should give us greater strategic and financial flexibility going forward and we believe that we would be better positioned to secure additional funding in the future. By narrowing our focus we could fully concentrate our resources on our clinical pipeline and would in addition seek additional strategic options to deliver longer-term sustainable growth going forward"
Conference call and webcast: Biotie's management will discuss the restructuring on its third quarter 2010 financial results conference call today, 29 October 2010 at 3 p.m. Finnish, 2 p.m. CET, 8 a.m. New York.
Callers may access the conference directly at the following telephone numbers: US: +1 212 444 0894, UK: +44 (0)20 7138 0825 and Finland: +358 (0)9 2319 4344 access code 4085851. Lines are to be reserved ten minutes before the start of conference call. The event can also be viewed as a live webcast at www.biotie.com<http://www.biotie.com/>. An on demand version of the conference will be published on Biotie´s website later during the day. In case you need additional information or assistance, please contact: Virve Nurmi, IR Manager Biotie Therapies, Tel.+358 2 2748 911
Turku, 29 October 2010
Biotie Therapies Corp.
Timo Veromaa President and CEO
For further information, please contact:
Virve Nurmi, Investor Relations Manager tel. +358 2 274 8911, e-mail: email@example.com
ABOUT BIOTIE THERAPIES
Biotie is a specialized drug development company focused on central nervous system and inflammatory diseases. It has several innovative small molecule and biological drug candidates at different stages of clinical development. Biotie's products address diseases with high unmet medical need and significant market potential, including addiction and a broad range of inflammatory conditions such as rheumatoid arthritis and chronic obstructive pulmonary disease (COPD). The most advanced product, nalmefene for alcohol dependence, is currently in phase III clinical development by licensing partner H. Lundbeck A/S.
Biotie is based in Turku, Finland and its shares are listed on NASDAQ OMX Helsinki Ltd.
Posted: October 2010