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EXHIBIT 99.1
SECOND QUARTER REPORT 2000
TO OUR SHAREHOLDERS:
SECOND QUARTER 2000 HIGHLIGHTS
In the second quarter of 2000, AltaRex continued to make advances on multiple
fronts. Our clinical development program for OvaRex(TM) MAb is progressing
according to plan. Our partnering strategy has led to the completion of two
collaborations with leading regional pharmaceutical companies, and additional
discussions with potential partners are ongoing. Our intellectual property
portfolio has been strengthened with the issuance of two patents. Our platform
technology has been presented at a number of prominent scientific conferences.
In addition, subsequent to the end of the second quarter, we strengthened our
balance sheet with the completion of a public offering for net proceeds of
approximately $7.0 million. We are pleased to highlight our results to you in
this report.
CLINICAL DEVELOPMENT PROGRAM AND REGISTRATION STRATEGY
The Company's lead product, OvaRex(TM) MAb for ovarian cancer, is entering the
final stages of development in preparation for a filing by late 2001 for
regulatory approval in the United States, and commercialization in 2002. Filing
of the Biologics License Application (BLA) will be based on Fast Track and
accelerated review provisions of the United States Food and Drug Administration
(FDA).
Fast Track status is a designation for programs that target an unmet medical
need, where there is a critical need for new therapeutic alternatives. There are
two populations of ovarian cancer patients where a critical need for new agents
exists; one population being patients in the "watchful waiting" period following
surgery and chemotherapy, where no agents are approved, and the other population
being patients with recurrent disease who have undergone additional
chemotherapy.
The Company continues to compile the necessary data regarding the safety and
efficacy of OvaRex(TM) MAb in both populations. The Company anticipates having
sufficient data to complete filing of a BLA with the FDA by late 2001.
Over 500 ovarian cancer patients have participated in clinical studies to date.
Data already presented at key scientific meetings suggest a benign safety
profile for OvaRex(TM) MAb, with an increase in time to relapse and prolonged
survival. Analysis of these studies will the reported periodically over the next
12 months.
PRESENTATION OF DATA
In the second quarter of 2000, presentations at Immmunology 2000 and the
American Society of Clinical Oncology (ASCO) Annual Meeting continue to
highlight the Company's technology platform. Importantly, these presentations
reflect the growing understanding of the significance of our technology and the
value it represents.
In May, AltaRex presented new data at Immunology 2000 (The American Association
of Immunologists and the Clinical Immunology Society Meeting) elucidating the
mechanism by which the Company believes OvaRex(TM) MAb augments the ability of
patients' immune system to attack their cancer. This new experimental data is
consistent with observations from the Company's clinical studies, and is
reflected in the Company's intellectual property.
Also in May, at the American Society of Clinical Oncology (ASCO) Annual Meeting,
Professor Mobus of the University of Ulm (Germany) reported on his long-term
follow-up of 49 recurrent ovarian cancer patients who received OvaRex(TM) MAb
during early clinical evaluation. OvaRex(TM) MAb patients demonstrated a median
survival of 18.5 months compared to an expected median survival of approximately
11.5 months in this population. Prof. Mobus' study highlighted that 6 of the 49
patients were survivors four to eight years following their initial OvaRex(TM)
MAb treatment.
A second ASCO presentation focused on safety and immunology results from the
Phase I BrevaRex(TM) MAb trial. The antibody was well tolerated and produced the
most consistent immune response at a low 2 mg dose level. In June, AltaRex
presented new data at the Future Trends in Therapeutic Antibodies conference,
further describing our progress in understanding the mechanisms of our
therapeutic antibodies and their potential clinical benefit.
INTELLECTUAL PROPERTY PORTFOLIO
The Company's intellectual property portfolio was strengthened with the issuance
of a United States patent covering an innovative technique using ultraviolet
light to modify antibodies and to enhance certain beneficial immune responses.
This composition and method patent complements the issuance during the first
quarter of the Company's first patent ("Multi-epitopic" in Australia), which
broadly covers the Company's technology platform.
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PARTNERING STRATEGY
In June and July 2000, the Company announced the signing of memoranda of
understanding to establish 50:50 joint ventures to commercialize OvaRex(TM) MAb
and other AltaRex cancer therapeutics with Genesis Pharma S.A. (in Greece,
Turkey, Cyprus and the Balkans) and with Medison Pharma Ltd. (in Israel and the
Middle East). Genesis and Medison are among the market leaders in their
respective territories and will allow the Company to fully capitalize on the
sales potential of our products in those territories.
We continue to engage other pharmaceutical and biotechnology companies in
discussions for similar collaborations for our products around the world. Our
focus will be to retain, as we have with the Genesis and Medison collaborations,
significant control and share of the profits of our products upon
commercialization.
COMMON SHARE OFFERING
Subsequent to the end of the second quarter, in August, we announced the
completion of an offering of 9,200,000 Common Shares at $0.85 per Common Share.
The estimated net proceeds of approximately $7.0 million will be focused on the
continued development program for OvaRex(TM) MAb. We are pleased that the
majority of this offering was subscribed for by U.S. institutions, indicating an
increasing level of interest from an important source of capital for the
Company. We are also pleased with the continuing support of existing Canadian
investors who know AltaRex well.
FINANCIAL HIGHLIGHTS (IN CANADIAN DOLLARS)
The Company reported a net loss for the quarter of $4.2 million or $0.07 per
share compared to net loss of $5.5 million or $0.15 per share for the second
quarter of 1999. The net loss for the six months ended June 30, 2000 was $8.1
million compared to a net loss of $10.1 for the six months ending June 30, 1999.
The Company's cash and short-term investments as at June 30, 2000 totaled $6.0
million compared with $10.0 million at March 31, 2000 and $7.2 million at
December 31, 1999. On August 9, 2000, the Company announced completion of the
sale of 9,200,000 Common Shares in a public offering at $0.85 per Common Share,
for net proceeds to the Company of approximately $7.0 million.
The decrease in net loss for both the three month and six month periods ending
June 30, 2000 when compared to the respective periods of 1999 reflects a
decrease in spending in both research and development activities and in general
and administrative functions of the Company as a result of operational changes
implemented in the fourth quarter of 1999. These changes focused the resources
of the Company on the development of OvaRex(TM) MAb in order to reduce net cash
burn and conserve capital. The decrease in the net loss per share also reflects
the increase in the weighted average number of Common Shares outstanding from
36,921,844 in the second quarter of 1999 to 62,058,898 in the second quarter of
2000. This is primarily the result of the successful public offering of
39,100,000 Common Shares completed in June 1999 that raised $19.5 million.
Revenues for the three months ended June 30, 2000 were $96,068 compared with
$174,664 for the same period in 1999. Revenues for the six months ended June 30,
2000 were $187,909 compared to $368,809 for the same period in 1999. The
decrease is the result of lower average levels of cash and short-term
investments in the respective periods.
Operating expenses for the three months ended June 30, 2000 totaled $4.3
million, as compared with $5.6 million for the same period in 1999, a decrease
of $1.3 million. For the six months ended June 30, 2000, operating expenses
totaled $8.3 million as compared with $10.5 million for the same period in 1999,
a decrease of $2.2 million. Research and development expenses decreased by $0.7
million for the quarter and $1.4 million year-to-date. General and
administrative expenses decreased by $0.7 million for the quarter and $0.8
million year-to-date.
/s/ Richard E. Bagley
Richard E. Bagley
President & Chief Executive Officer
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, the
need for capital, changing market conditions, completion of clinical trials,
patient enrollment rates, uncertainty of
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preclinical trial results, the establishment of new corporate alliances, the
timely development, regulatory approval and market acceptance of the Company's
products, 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.
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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,
-------------------------- ------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue ................................. $ 96,068 $ 174,664 $ 187,909 $ 368,809
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Expenses
Research and development .............. 2,947,288 3,640,997 5,382,239 6,796,583
General and administration ............ 1,326,607 1,697,256 2,870,648 3,186,719
Settlement costs ...................... -- 290,865 -- 519,046
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4,273,895 5,629,118 8,252,887 10,502,348
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Net loss for the period ................. $(4,177,827) $(5,454,454) $(8,064,978) $(10,133,539)
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Net loss per common share ............... $ (0.07) $ (0.15) $ (0.14) $ (0.38)
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Weighted average number of
common shares outstanding ............. 62,058,898 36,921,844 59,105,020 26,773,608
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CONDENSED CONSOLIDATED BALANCE SHEET
(In Canadian dollars, Unaudited)
AS AT JUNE 30,
2000 1999
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ASSETS
Cash and cash equivalents.................... $ 3,201,711 $ 8,374,179
Short-term investments........................ 2,836,137 12,714,329
Other current assets......................... 145,466 261,304
Capital assets, net .......................... 708,763 1,095,422
Other assets................................. 389,590 382,965
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$ 7,281,667 $22,828,199
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities ......................... $ 2,618,627 $ 2,440,275
Deferred lease credit and other liabilities.. 32,156 224,848
Shareholders' equity .......................... 4,630,884 20,163,076
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$ 7,281,667 $22,828,199
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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,
---------------------------- ----------------------------
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
CASH USED IN OPERATING ACTIVITIES
Net loss ........................................ $ (4,177,827) $ (5,454,454) (8,064,978) $ (10,133,539)
Add items not affecting cash:
Depreciation and amortization ............... 125,942 149,567 246,271 298,216
Amortization of deferred lease credit ....... (7,215) (32,196) (14,357) (64,496)
Net change in non-cash working capital
balances....................................... 176,204 150,566 281,500 437,656
------------ ------------ --------- ------------
(3,882,896) (5,186,517) (7,551,564) (9,462,163)
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CASH USED IN INVESTING ACTIVITIES
Purchase of capital assets.................... (15,406) (22,170) (20,140) (47,559)
Maturities and purchases of
short-term investments ................... 1,728,610 (6,317,091) 2,041,902 (8,472,597)
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1,713,204 (6,339,261) 2,021,762 (8,520,156)
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CASH PROVIDED BY FINANCING ACTIVITIES
Issue of common shares, net....................... (74,588) 17,768,252 6,433,317 17,768,252
------------ ------------ --------- ------------
Other............................................. 28,220 120,191 (30,445) 6,558
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(46,368) 17,888,443 6,402,872 17,774,810
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NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,216,060) 6,362,665 873,070 (207,509)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ......................... 5,417,771 2,011,514 2,328,641 8,581,688
------------ ------------ --------- ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD ................................ $ 3,201,711 $ 8,374,179 $ 3,201,711 $ 8,374,179
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