Sosei takes Q1 hit but says group is prepared for bounceback
Sosei, whose much enhanced UK R & D operations are in Cambridge, has taken a financial hit in Q1 of 2020 but insists it has the structure in place to facilitate a strong bounceback as the year unfolds.
It blames the absence of upfront payments from new business development deals and no major milestone payments from existing collaborations for the impact on revenues and profits in the three months to March 31.
But it remains upbeat, saying the timing of new business development deals and progress related to existing programs can vary considerably from quarter to quarter and it expects to achieve new upfronts and milestone payments later in the fiscal year.
The prior corresponding period, of course, was buoyed by the inclusion of a one-off $15 million major milestone payment from AstraZeneca.
Sosei says cash R & D expenses were strongly managed in Q1 and totalled $5.1m – a fall of $3.4 million year-on-year. This primarily related to the company’s strategic decision to prioritise specific projects as a result of the COVID-19 outbreak.
Cash G & A expenses totalled $4m, a $1m decline year-on-year and was primarily related to a reduction in the company’s UK National Insurance liability linked to share-based payments as a result of the reduction in the share price over the quarter.
Cash profit totalled $0.1m – a huge drop from the previous year’s Q1 haul of $13m due to the decrease in revenue.
It all meant a net loss of $6.9m compared to a profit of $9.2m this time last year.
Sosei says it remains well capitalised with $150m cash at March 31. The cash balance increased by around $8.8m as a result of milestones received from Pfizer in addition to UK tax refunds.
The company stressed that it had now completed its strategy refocus and UK R & D organisation realignment; the strengthened focus is on the execution of the next stage of growth strategy which “aims to leverage our world-class platform, discovery and early development capabilities to advance and extend our portfolio of partnered programs.”
Shinichi Tamura, chairman, president and CEO of Sosei Heptares, said: “Our operating environment has changed dramatically in recent months as a result of the SARS-CoV-2 pandemic.
“I am very pleased to report that the company has responded extremely well to these changes by rapidly implementing practises to keep our staff, and other parties with whom we interact, safe and prevent any further spread of the virus; this is our main priority.
“The measures we have put in place have also ensured a high level of business continuity and enabled us to work on revenue-generating collaborations and other areas of key importance to our business.
“I am impressed with and extremely grateful to our staff for the level of dedication and commitment they have shown, which has allowed them to deliver outstanding results and scientific achievements in these unprecedented circumstances.”