|[August 28, 2014]
QRxPharma: ASX Preliminary Final Report - 2014 Financial Year
SYDNEY --(Business Wire)--
This Preliminary final report should be read in conjunction with the 30
June 2014 Annual Report signed on 27 August 2014 together with ASX
announcements issued after this date.
Additional Appendix 4E
disclosure requirements can be found in the directors' report and the 30
June 2014 financial statements and accompanying notes.
Appendix 4E Preliminary Final Report
ABN 16 102 254 151
1. Reporting Period
Report for the financial year ended 30 June 2014.
corresponding period is the financial year ended 30 June 2013.
2. Results for announcement to the market
Revenue from ordinary activities (item 2.1)
Net loss from ordinary activities after tax attributable to members (item
Net loss for the period attributable to members (item 2.3)
Brief explanation of any of the figures reported above necessary
to enable the figures to be understood (item 2.6)
On 20 December 2011, the Company signed a binding Letter of Intent
(LOI) with Actavis Inc. (Actavis) to commercialise immediate
release Moxduo in the US. The LOI was secured by a non-refundable,
non-creditable up front signing fee of $5.9 million (US$6
million). The fee revenue was recognised from the date of the
signing of the LOI to the anticipated FDA approval date
representing an approximation of the time relating to the
submission of the filing with the FDA and associated processes.
The Group had recognised $5.3 million as revenue up to 30 June
2013 and the remaining $0.6 million (2013: $3.5 million) during
this financial year.
On 9 October 2012, the Company signed a license agreement with
Paladin Labs Inc. (Paladin) to commercialise immediate release
Moxduo in Canada. The license agreement was secured by a one-time,
non-refundable, non-creditable upfront fee in the amount of
$485,000 (US$500,000). No fee revenue was recognised (2013: $0.5
million) during this financial year.
Net loss from ordinary activities
The net loss of $13.3 million (2013: net loss $10.1 million) from
ordinary activities resulted from the Group's continuing efforts
to secure approval for immediate release Moxduo®, a
Dual Opioid®, for the treatment of moderate to severe
acute pain. This included efforts to obtain approval from the
United States Food and Drug Administration (FDA) of a New Drug
Application (NDA) in the United States (US), and activities
associated with the preparation of the regulatory filings in
Europe, Australia and Canada.
The net loss includes the following key items:
Research and development expenditure of $6.0 million (2013: $8.3
million) which includes $3.7 million (2013: $4.4 million) for
clinical and regulatory activities associated with the
progression of the NDA for immediate release Moxduo with the
FDA, including preparation for the FDA Advisory Committee
together with advancing the regulatory filings in Europe,
Australia and Canada; with a decrease in spend on product and
manufacturing process development to $1.2 million (2013: $2.9
Employee benefits expense of $5.4 million (2013: $4.2 million),
which comprises salaries and wages expense of $3.7 million
(2013: $2.8 million) and non cash share based payments expense
of $1.7 million (2013: $1.4 million). The increase in salaries
and wages expenses year on year includes; recognition of a
provision for termination entitlements of $0.5 million for the
former CEO and Managing Director, Dr John Holaday as per the
conditions of his employment agreement; an adverse movement in
the exchange rate between USD and AUD, as salaries and wages are
predominately incurred in the US; inflationary adjustment to
base salaries; $0.1 million in retention bonuses (2013: $nil
As at 30 June 2014, the Group holds cash and cash equivalents of
$10.5 million (2013: $12 million). On 4 July 2014 an amount of
$3.62 million covering potential employee liabilities was set
aside in an escrow account. In addition, the Company had been
carrying as a liability excess annual leave entitlements and in
early July 2014 the Company paid down $0.43 million of this
The Group announced on 14 August 2014 that it is halting all
further development work on the Moxduo portfolio of products, its
prime product pipeline. The Group has commenced implementing a
reduction in its overhead structure, minimising non-essential
expenditure and retaining only a small core team tasked with
exploring all strategic alternatives for the Group and its assets,
with a clear view to maximising residual value for its
Dividends (items 2.4 - 2.5)
It is not proposed to a pay a dividend.
3. Statement of comprehensive income - Refer to the attached
Annual financial report
4. Balance sheet - Refer to the attached Annual financial report
5. Statement of cash flows - Refer to the attached Annual
6. Statement of changes in equity - Refer to the attached Annual
7. Dividends - It is not proposed to pay a dividend (item 7 ).
8. Net Tangible Assets per Security (item 9)
Net tangible assets per ordinary share
9. The Group did not acquire or lose control over any entities during
the period. (2013: none)
10. The Group had no associates or joint venture entities.
11. Commentary on the results (item 12 & 14)
QRxPharma has been developing proprietary Dual Opioid formulations for
treating patients with moderate to severe acute or chronic pain.
This patented Dual Opioid product combines morphine and oxycodone to
potentially offer physicians broader treatment options than traditional
opioids, a large and growing market hindered by older therapies with
debilitating side effects. Worldwide sales for all opioids are US$14
billion and growing at 6%. The Company's Dual Opioids are first in class
and at present there are no combination opioid - opioid products
available commercially anywhere in the world.
The Company's proprietary Dual Opioid portfolio includes three
complementary products to address various pain management needs:
immediate release Moxduo, an oral capsule for the treatment of
moderate to severe acute pain;
Moxduo CR, a controlled-release oral tablet for chronic pain; and
Moxduo IV, an intravenous formulation for hospital use.
As detailed in the Regulatory section below the Company announced on 14
August 2014 that it is halting all further development work on the
Moxduo portfolio of products.
QRxPharma has also developed a proprietary abuse deterrence technology,
referred to as Stealth BeadletsTM, which was
developed for the controlled release Moxduo formulation for the
treatment of chronic pain. Stealth Beadlets may be incorporated into
almost any potentially abused drug (e.g. opioids, amphetamines,
sedatives, etc.) that are sold in solid dosage forms (e.g. tablet,
capsule, sachet); they provide significant resistance against the
extraction of active ingredients if crushed, solubilized or heated. The
Company has a non-exclusive Collaboration Agreement with Aesica
Formulation Development Limited (Aesica) to promote QRxPharma's Stealth
Beadlets technology for inclusion in their clients; existing
formulations of controlled drugs.
The near term commercial opportunity for the Group rested with the
regulatory approval of immediate release Moxduo in the US. Having been
denied in June 2012 a first cycle approval by the FDA of its NDA, the
Company continued to progress towards an approval during the financial
year culminating in the following key regulatory events:
August 2013: the FDA issued QRxPharma a second Complete Response
Letter (CRL) regarding the Company's Moxduo NDA. In June 2013 the
Company found that for 17% of the 375 patients enrolled in its Study
022, the timing of the electronically collected oxygen desaturation
information at one trial site, did not accurately reflect the local
time zone or changes relating to daylight savings time. For these
patients, this resulted in a displacement of electronic oxygen
desaturation data relative to nurse-reported events by 1 or 2 hours
out of the 48-hour study. This CRL allowed the Company time to
complete the audit of all 30 million oxygen desaturation data points
confirming data integrity, and to submit further information required
for the FDA to fully consider the respiratory safety advantages of
Moxduo from Study 022.
November 2013: resubsmission of a NDA to the FDA which included a
comprehensive analysis of Study 022.
December 2013: the FDA accepted the refiled NDA for review and set 25
May 2014 as the Prescription Drug User Fee Act (PDUFA) date for action
on the Company's resubmitted NDA.
March 2014: the FDA set 22 April 2014 as the date for the FDA
Anesthetic and Analgesic Drug Products Advisory Committee meeting to
consider the Company's resubmitted NDA for approvability of Moxduo in
the management of acute pain.
April 2014: the FDA Advisory Committee voted on 22 April to recommend
against approval of Moxduo. The Advisory Committee found the Company
did not provide sufficient evidence to warrant approval of Moxduo at
May 2014: the FDA issued a further CRL regarding the Moxduo NDA. The
Agency endorsed the vote of the Advisory Committee and indicated
clinical information demonstrating a clinically meaningful benefit
over oxycodone and morphine alone, either by efficacy, or safety, in
an appropriate patient population, is needed.
July 2014: an End of Review (EOR) meeting was held with the FDA on 9
July 2014 to discuss the feasibility and requirements for approving
Moxduo. The meeting was granted by the FDA after issuance of the May
CRL. In advance of the meeting, QRxPharma outlined several questions
to discuss with FDA to ensure the Company receives clear direction for
the Moxduo program. The questions addressed the overall approach for
registration of Moxduo, potential study design and the number of
August 2014: the Company announced on 14 August 2014 that it is
halting all further development work on the Moxduo portfolio of
products. Following the EOR meeting with the agency the management
team conducted a detailed review of the Moxduo technology with
particular emphasis on the EOR meeting with the FDA and made a
recommendation to the Board to halt all further development of the
Moxduo IR, CR and IV programs. The Board agreed with, and accepted
The Company believes that the Moxduo program will require a repeat Phase
2 clinical study, followed by one or more pivotal Phase 3 clinical
studies. The FDA has advised that agreement on a Special Protocol
Assessment (SPA) would be unlikely for these studies and given specific
issues related to the design of these clinical studies, such as a
primary endpoint of 90% SpO2 and flexible dosing, both which
have been strongly encouraged by FDA, the likelihood of success is now
in considerable doubt. The Company estimates the time and cost for such
a development program to be significant and is not commercially
justified given the limited residual patent life.
QRxPharma has entered into strategic agreements with Actavis Inc.,
Paladin Labs Inc., Aspen Group and Teva Pharmaceuticals for the
commercialisation of immediate release Moxduo in the US, Canada,
Australia (including New Zealand and Oceania), South Africa and Israel.
With the decision to halt all further development work on the Moxduo
portfolio of products, the Company is in discussion with these parties
with respect to these licenses.
In July 2013 the Company signed a Collaboration Agreement with Aesica
Formulation Development Limited (Aesica) for the world-wide promotion
of the Company's proprietary Stealth Beadlets abuse deterrent
technology. Aesica supplies pharmaceutical contract development and
manufacturing services globally and operates six manufacturing sites
across the UK, Germany and Italy. Under the Collaboration Agreement
Aesica will enter into fee-for-service contracts with such third
parties for the development of the new Abuse Deterrent Formulations
(ADF) of specific drugs of interest, whilst QRxPharma will negotiate
license terms directly with each party.
The Company has continued to strengthen its intellectual property
portfolio during the financial year. Whilst no new patents have been
issued during the current financial year the Company continued to
progress a number of provisional filings that form part of a portfolio
of Company patents that if issued will extend the duration of protection
for Moxduo in various formulations up until 2029.
12. Status of audit (items 15 to 17)
This report has been prepared in accordance with Australian Accounting
Standards, Interpretations and other authoritative pronouncements issued
by the Australian Accounting Standards Board and the Corporations Act
2001. QRxPharma Limited is a for-profit entity for the purpose of
preparing the financial statements.
This preliminary financial report is based on financial statements and
notes which have been audited and are not subject to any qualifications
or disputes. The attached financial statements have been prepared on a
going concern basis. This matter has been considered by the Group's
auditors Deloitte (News - Alert) Touche Tohmatsu and the financial statements are
subject to an Emphasis of Matter as noted in the Independent auditors'
report to the members of QRxPharma Limited on pages 64 to 65 of the 2014
The Board currently constitutes the audit committee.
Chris J Campbell
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