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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16a, 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Month of August, 1999
ALTAREX CORP.
(Exact name of Registrant as specified in its charter)
CAMPUS TOWER
#300, 8625 - 112 STREET
EDMONTON, ALBERTA, CANADA T6G 1K8
(Address of principal executive offices)
Indicate by check mark whether the registrant files or
will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
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Altarex Corp. (the "Company") is hereby filing its 1999 Second Quarter
Report, which it distributed to its security holders. A copy of its 1999 Second
Quarter Report is attached hereto as Exhibit 99.1.
EXHIBITS
99.1 1999 Second Quarter Report
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99.1 1999 Second Quarter Report
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALTAREX CORP.
By: /s/ Richard E. Bagley
----------------------------------------
Name: Richard E. Bagley
Title: President and Chief
Executive Officer
Date: August 25, 1999
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EXHIBIT 99.1
1999 SECOND QUARTER REPORT
To our Shareholders:
The second quarter of 1999 was a very productive period for AltaRex and we are
pleased to report on the Company's significant progress. During the quarter the
Company raised additional capital necessary to fund its ongoing programs, signed
a potential partnership deal with a major pharmaceutical company, and continued
to make significant progress with respect to its clinical programs, all strong
indications of the underlying value of AltaRex's technology and management's
commitment to increasing shareholder value.
During the second quarter, AltaRex successfully raised C$19.6 million through
the issuance of 39.1 million common shares priced at C$0.50 per share. During a
period when successful biotechnology financing activities are rare, our offering
was over-subscribed with strong institutional and venture capital interest,
reflecting well on the prospects of the Company. The majority of the proceeds
will be used to further fund both the OvaRex(TM) and BrevaRex(TM) antibody
programs.
In mid-May, AltaRex was pleased to announce that it had granted Purdue Pharma
L.P., a 180-day option to an exclusive worldwide license to develop and
commercialize both the OvaRex(TM) and BrevaRex(TM) antibodies. If the option is
exercised and these products are successfully developed, Purdue could spend in
excess of US$100 million on development payments, future reimbursement and
milestone payments over the next three years. AltaRex would receive future low
double-digit royalty payments based on product sales. Furthermore, associates of
Purdue purchased C$5 million of AltaRex common shares included in the above
mentioned equity offering and currently own 18% of the Company's outstanding
common shares.
Purdue represents an excellent fit with AltaRex. It is a rapidly growing,
privately controlled worldwide network of pharmaceutical companies headquartered
in Norwalk, CT and is aggressively moving into the field of novel oncology
immunotherapeutics. They have an impressive track record in oncology sales,
particularly with their painkilling product OxyContin(R) tablets, which is
co-promoted with Abbott, whose U.S. sales are expected to exceed US$500 million
in 1999. Over US$1 billion of Purdue's products are sold annually worldwide.
They already have a close working relationship with Lonza Biologics, AltaRex's
manufacturing partner for the OvaRex(TM) and BrevaRex(TM) antibodies.
Additionally, Purdue has purchased the former Cytogen manufacturing facilities
and has expertise in the manufacturing of antibodies.
<PAGE> 2
Importantly, AltaRex continues to make substantial progress with its clinical
programs. As of the end of July, the Company's first potentially pivotal Phase
IIb OvaRex(TM) trial for the treatment of ovarian cancer had enrolled all 280 of
its required patients. As enrollment in this trial was approximately four months
ahead of schedule, and based on a positive safety review conducted by an
independent Data Safety and Monitoring Board along with a recommendation from
AltaRex's Clinical Advisory Board, the Company has applied to the U.S. Food and
Drug Administration (FDA) to modify this trial. If the FDA approves the proposed
protocol amendment, enrollment would be increased from 280 to 400 patients. This
modification could increase the likelihood of success of the trial by lowering
the statistical difference of OvaRex(TM) MAb versus placebo required for a
successful trial. Based on the rate of current patient accrual, trial enrollment
should be completed in December as initially scheduled.
AltaRex's other clinical trials also continue to successfully enroll patients.
At the end of July, the Company's second potentially pivotal Phase IIb
OvaRex(TM) trial had 30 of 102 patients enrolled while the Vancouver-based
open-label Phase II trial had enrolled 12 of 14 patients. The Phase I
BrevaRex(TM) trial, for tumors expressing the MUC1 tumor associated antigen, had
enrolled 12 of a required 15 patients.
During the second half of 1999, AltaRex expects that it will complete both the
enrollment of the 400 patients required for its North American Phase IIb
OvaRex(TM) trial and the 15 patients required for its Phase I BrevaRex(TM)
trial. The Company also anticipates that it will have made considerable progress
enrolling patients in its 102 patient potentially pivotal U.S.-based Phase IIb
OveRex(TM) study and expects to be in the process of compiling preliminary data
from its Vancouver-based open label Phase II OveRex(TM) immunology study.
AltaRex was also pleased to announce the appointment of Marlene R. Booth to the
position of Vice President, Regulatory Affairs and Project Management. Areas of
responsibility include directing regulatory affairs and providing direction and
oversight in the areas of clinical development and quality assurance. Ms. Booth
brings to AltaRex twenty-three years of relevant experience gained from both the
biotechnology and pharmaceutical industries and adds significantly to the
strength of our management team.
In our first quarter report and in press releases, we reported on the initiation
of litigation between AltaRex and Biomira Inc. involving ownership of an
invention covered in one of AltaRex's patent applications and breaches by
Biomira of the License Agreement between Biomira and AltaRex. AltaRex continues
to believe that Biomira's claims are without merit and we remain committed to
pursuing all appropriate avenues to protect and defend our assets.
The option agreement with Purdue, the recent successful financing and the
recruiting of patients ahead of schedule adds to the validation of the Company's
technology and prospects. As AltaRex moves forward, we continue to focus our
efforts on the
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development of immunotherapeutic products for the treatment of cancer and to add
value to the Company. The second half of 1999 should prove to be an active and
exciting period for AltaRex and its shareholders.
Financial Highlights
Revenues for the three-month period ended June 30, 1999 were $175,000 compared
to $319,000 for the same period in 1998. For the first six months of 1999,
revenues were $369,000 compared to $579,000 for the same period in 1999. The net
decrease for both periods is mainly a result of a reduction in interest income
due to lower levels of cash and short-term investments.
The net loss for the three month period ended June 30, 1999 was $5.4 million or
$0.15 per share compared to a net loss of $2.6 million or $0.16 per share for
the same period in 1998. For the first six months of 1999, the net loss was
$10.1 million or $0.38 per share compared to a net loss of $5.1 million or $0.31
per share for the first six months of 1998. The increased net loss represents
the Company's increased investment in clinical and product development
activities and supporting efforts in product commercialization. The majority of
these costs continue to be attributable to the Company's most advanced product,
OvaRex(TM) MAb, which is being tested in two potentially pivotal Phase IIb
clinical trials.
Cash and short-term investments as at June 30, 1999 totaled $21.1 million
compared with $20.5 million as at June 30, 1998 and $12.8 million as at December
31, 1998. In the first six months of 1999, a total of $9.5 million has been used
to fund development and supporting costs of operation as noted above. Also, in
the second quarter of 1999, the Company issued 39.1 million common shares in a
public offering for gross proceeds of $19.6 million, or $17.8 million net of
related costs. As noted in the Company's first quarter report, the net proceeds
of this offering will be used to fund clinical trial and antibody costs related
to OvaRex(TM) and BrevaRex(TM) MAbs.
Regarding the Year 2000 issue, the Company is continuing according to plan its
assessment and testing of its internal systems and equipment, its evaluation of
the Year 2000 readiness of its vendors and suppliers and its development of
contingency plans for all mission critical systems and risks. The Company
expects that this project will be largely completed by the end of the third
quarter of 1999. Based on the results of our review and assessment to date, the
Company believes that it has no significant vulnerability to the Year 2000
readiness of third parties.
Additional information about AltaRex and its clinical trials can be found on its
web site at www.altarex.com or on the CenterWatch web site at
www.centerwatch.com. Additional information about ovarian cancer can be found at
www.corrineboyerfund.org and at www.ovarian.org.
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This quarterly report contains forward-looking statements that involve risks and
uncertainties, which may cause actual results to differ materially from the
statements made. For this purpose, any statements that are contained herein that
are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes", "anticipates",
"plans", "intends", "expects" and similar expressions are intended to identify
forward-looking statements. Such factors include, but are not limited to
changing market conditions, completion of clinical trials, patient enrollment
rates, uncertainty of preclinical trial results, the establishment of new
corporate alliances, the timely development, regulatory approval and market
acceptance of the Company's products, litigation, proprietary rights, patent
protection and other risks detailed from time-to-time in the Company's filings
with the United States Securities and Exchange Commission and Canadian
securities authorities.
/s/ Richard E. Bagley
Richard E. Bagley
President and Chief Executive Officer
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Canadian dollars, Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue ................................ $ 174,664 $ 319,432 $ 368,809 $ 579,373
----------- ----------- ------------ -----------
Research and development ............... 3,640,997 1,771,799 6,796,583 3,758,665
General and administration ............. 1,988,121 1,196,057 3,705,765 1,921,111
----------- ----------- ------------ -----------
5,629,118 2,967,856 10,502,348 5,679,776
----------- ----------- ------------ -----------
Net loss for the period ................ $(5,454,454) $(2,648,424) $(10,133,539) $(5,100,403)
=========== =========== ============ ===========
Net loss per common share .............. $ (0.15) $ (0.16) $ (0.38) $ (0.31)
=========== =========== ============ ===========
Weighted average number of
common shares outstanding ............ 36,921,844 16,502,613 26,773,608 16,495,541
=========== =========== ============ ===========
</TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
(In Canadian dollars, Unaudited)
<TABLE>
<CAPTION>
As at June 30,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Cash and short-term investments ............... $21,088,508 $20,498,261
Other current assets .......................... 261,304 424,080
Capital assets, net ........................... 1,095,422 1,800,914
Other assets .................................. 382,965 106,514
----------- -----------
$22,828,199 $22,829,769
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities ........................... $ 2,440,275 $ 1,649,870
Deferred lease credit and other liabilities ... 224,848 535,533
Shareholders' equity .......................... 20,163,076 20,644,366
----------- -----------
$22,828,199 $22,829,769
=========== ===========
</TABLE>
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Canadian dollars, Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ------------ ------------
CASH USED IN OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss .................................. $(5,454,454) $(2,648,424) $(10,133,539) $(5,100,403)
Add items not affecting cash:
Depreciation and amortization ........... 149,567 137,109 298,216 259,494
Amortization of deferred lease credit ... (32,196) (33,686) (64,496) (64,686)
Net change in non-cash working capital
balances ................................ 150,566 702,805 437,656 905,362
----------- ----------- ------------ -----------
(5,186,517) (1,842,196) (9,462,163) (4,000,233)
----------- ----------- ------------ -----------
CASH USED IN INVESTING ACTIVITIES
Purchase of capital assets ................ (22,170) (232,627) (47,559) (477,640)
----------- ----------- ------------ -----------
(22,170) (232,627) (47,559) (477,640)
----------- ----------- ------------ -----------
CASH PROVIDED BY FINANCING ACTIVITIES
Issue of common shares, net ............... 17,768,252 -- 17,768,252 36,000
Other ..................................... 120,191 (61,972) 6,558 (61,972)
----------- ----------- ------------ -----------
17,888,443 (61,972) 17,774,810 (25,972)
----------- ----------- ------------ -----------
NET INCREASE (DECREASE) IN CASH
AND SHORT-TERM INVESTMENTS .............. 12,679,756 (2,136,795) 8,265,088 (4,503,845)
CASH AND SHORT-TERM INVESTMENTS,
BEGINNING OF PERIOD ..................... 8,408,752 22,635,056 12,823,420 25,002,106
----------- ----------- ------------ -----------
CASH AND SHORT-TERM INVESTMENTS,
END OF PERIOD ........................... $21,088,508 $20,498,261 $ 21,088,508 $20,498,261
=========== =========== ============ ===========
</TABLE>
