updated 5/10/2011 4:17:33 PM ET 2011-05-10T20:17:33

TORONTO, May 10, 2011 (GLOBE NEWSWIRE) -- Transition Therapeutics Inc. ("Transition" or the "Company") (TSX:TTH) (Nasdaq:TTHI), a product-focused biopharmaceutical company developing therapeutics for disease indications with large markets, today announced its financial results for the quarter ended March 31, 2011.

Selected Highlights

During fiscal 2011 and up to the date of this press release, the Company achieved the following significant milestones:

ELND005 (AZD-103) – Alzheimer's Disease:

  • On December 27, 2010, Elan and Transition announced the mutual agreement to modify their collaboration agreement for the development and commercialization of ELND005 (AZD-103), resulting in a payment to the Company of US$9 million which was received in January, 2011. Under the terms of the modification, in lieu of the contractually required initiation of Phase III milestone payment of US$15 million, Transition has received from Elan a payment of US$9 million and will be eligible to receive a US$11 million payment upon the commencement of the next ELND005 (AZD-103) clinical trial. As per the terms of the original agreement, Transition is also eligible to receive up to an aggregate of US$93 million in additional regulatory and commercial launch related milestone payments plus tiered royalties ranging from 8% to 15% based on net sales of ELND005 (AZD-103) should the drug receive the necessary regulatory approvals for commercialization;
     
  • On August 9, 2010, Elan and Transition announced topline summary results of a Phase II study and plans for Phase III for ELND005 (AZD-103). The study did not achieve significance on co-primary outcome measures (NTB and ADCS-ADL) in mild to moderate patients. The study identified a dose with acceptable safety and tolerability. This dose demonstrated a biological effect on amyloid-beta protein in the cerebrospinal fluid and effects on clinical endpoints in an exploratory analysis. Based on the preponderance of evidence, and input from the experts in this field, the companies intend to advance ELND005 (AZD-103) into Phase III studies. 

TT-223 – Diabetes:

On September 17, 2010, Transition announced the clinical study of TT-223 in combination with a GLP-1 analogue did not meet study efficacy endpoints. Given these findings, there will be no further development of TT-223.

Pipeline Review

ELND005 (AZD-103) for Alzheimer's Disease

Transition's lead Alzheimer's disease compound ELND005 (AZD-103) is a disease modifying agent with the potential to both prevent and reduce disease progression, and improve symptoms such as cognitive function.

The recently completed Phase II study was a randomized, double-blind, placebo-controlled, safety and efficacy study of ELND005 (AZD-103) in approximately 340 patients with mild to moderate Alzheimer's disease. The study evaluated both cognitive and functional endpoints, and each patient's participation lasted approximately 18 months. Elan and Transition announced topline summary results of the Phase II study and plans for Phase III for ELND005 (AZD-103). The AD201 study did not achieve significance on co-primary outcome measures (NTB and ADCS-ACL). The study identified a dose with acceptable safety and tolerability. The dose demonstrated a biological effect on amyloid-beta protein in the cerebrospinal fluid and effects on clinical endpoints in an exploratory analysis. Based on the preponderance of evidence, and input from the experts in this field, the companies intend to advance ELND005 (AZD-103) into Phase III studies. 

TT-301 / TT-302

Transition is developing a class of small molecule compounds that cross the blood brain barrier and have been shown to have an inhibitory effect on pro-inflammatory cytokines. Animal model studies have been performed demonstrating that members of this class of compounds can have a therapeutic effect on CNS diseases including Alzheimer's disease, traumatic brain injury, intracerebral hemorrhage, and others. Transition is also investigating the use of these molecules in the treatment of peripheral diseases mediated by pro-inflammatory cytokines, such as arthritis. 

Transition's lead drug candidates in development are TT-301 and TT-302. In preclinical studies, both TT-301/302 have shown a favourable safety profile and therapeutic window for efficacy. Phase I clinical development of intravenously administered TT-301 is ongoing. The primary objectives of the trial are to evaluate the safety, tolerability and pharmacokinetics of TT-301. The data from Phase I studies are a first step in the development of TT-301 for CNS intravenous indications. In follow up studies, the Company plans to advance oral formulations of lead drug candidate TT-301/302 for inflammatory diseases such as rheumatoid arthritis. 

TT-401 / TT-402

On March 3, 2010, Transition announced that it had acquired the rights to a series of preclinical compounds from Eli Lilly and Company in the area of diabetes. Under this second licensing and collaboration agreement with Lilly, Transition received exclusive worldwide rights to develop and potentially commercialize a class of compounds that, in preclinical diabetes models showed potential to provide glycemic control and other beneficial effects including weight loss.

The unique properties of these compounds have the potential to provide important therapeutic benefits to type 2 diabetes patients and could represent the next generation of diabetes therapies to be advanced to clinical development. Transition is currently performing the necessary work to prepare these compounds for the clinic.

Financial Liquidity

The Company's cash and cash equivalents and short term investments were $26,642,664 at March 31, 2011. The Company's current cash projection indicates that the current cash resources should enable the Company to execute its core business plan and meet its projected cash requirements well beyond the next 12 months.

Financial Review

For the three-month period ended March 31, 2011, the Company recorded net loss of $3,032,230 ($0.13 loss per common share) compared to a net loss of $3,063,270 ($0.13 loss per common share) for the three-month period ended March 31, 2010.

Research and development expenses decreased by $2,162,030 or 64% from $3,371,160 for the three-month period ended March 31, 2010 to $1,209,130 for the three-month period ended March 31, 2011. The decrease was primarily due to a decrease in clinical development costs related to ELND005 (AZD-103), TT-223 clinical trials and clinical costs associated with advancing the TT-301/302, as well as a decrease in stock option expenses resulting from management's voluntary forfeiture of certain stock options during the second quarter of fiscal 2011. These decreases are partially offset by increased pre-clinical costs associated with advancing the TT-401/402 compounds.

General and administrative expenses decreased by $361,863 or 25% from $1,455,087 for the three-month period ended March 31, 2010 to $1,093,224 for the three-month period ended March 31, 2011. The decrease in general and administrative expenses is due to decreases in accounting fees as the Company's component evaluation for IFRS policy decisions are substantially completed and in stock option expense resulting from management's voluntary forfeiture of certain stock options.

About Transition

Transition is a biopharmaceutical company, developing novel therapeutics for disease indications with large markets. Transition's lead product is ELND005 (AZD-103) for the treatment of Alzheimer's disease and Transition also has an emerging pipeline of innovative preclinical and clinical drug candidates. The other drugs in the pipeline that the Company is developing are for anti-inflammatory and metabolic indications. Transition's shares are listed on the NASDAQ under the symbol "TTHI" and the Toronto Stock Exchange under the symbol "TTH". For additional information about the Company, please visit www.transitiontherapeutics.com . Extracts of the Financial Statements to Follow:

CONSOLIDATED BALANCE SHEETS
(in Canadian dollars) 
     
  March 31,

2011
June 30,

2010
  $ $
ASSETS    
Current    
Cash and cash equivalents  18,711,565 16,570,033
Short term investments  7,931,099 10,507,822
Due from Eli Lilly and Company   --  52,815
GST and other receivables 150,127 72,686
Investment tax credits receivable 391,631 206,313
Prepaid expenses and deposits 409,818 549,218
Total current assets 27,594,240 27,958,887
Property and equipment, net 429,129 605,637
Intangible assets  19,492,910 21,095,002
Total assets 47,516,279 49,659,526
 
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current    
Accounts payable and accrued liabilities 1,411,452 1,236,470
Due to Elan Pharma International Limited   -- 853,933
Total current liabilities 1,411,452 2,090,403
Deferred revenue   -- 20,719,750
Leasehold inducement 48,586 57,160
Total liabilities 1,460,038 22,867,313
     
Shareholders' equity    
Common shares  160,498,537 160,498,537
Contributed surplus 11,753,416 4,800,368
Stock options  2,726,053 7,337,480
Deficit (128,921,765) (145,844,172)
Total shareholders' equity 46,056,241 26,792,213
  47,516,279 49,659,526
   
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
 (in Canadian dollars)
         
  Nine-month

period ended

March 31,

2011
Nine-month

period ended

March 31,

2010
Three-month

period ended

March 31,

2011
Three-month

period ended

March 31,

2010
  $ $ $ $
 
REVENUES        
Licensing fees   29,671,150  3,835,485  --  2,543,221
   26,961,150  3,835,485  --  2,543,221
EXPENSES        
Research and development 5,725,169 9,994,181 1,209,130 3,371,160
General and administrative 5,085,302 4,482,640 1,093,224 1,455,087
Amortization 1,670,019 2,058,125 455,998 669,806
Impairment of intangible assets   --  1,124,945  --  --
Foreign exchange loss   343,588  1,069,735  257,454  150,569
         
Loss (gain) on disposal of property and equipment  68,854 (5,489)  68,854 177
  12,892,932 18,724,137 3,084,660 5,646,799
Income (loss) before the following: 14,068,218 (14,888,652) (3,084,660) (3,103,578)
Interest income, net 144,189 156,294 52,430 40,308
Net income (loss) and comprehensive income (loss)

for the period
14,212,407 (14,732,358) (3,032,230) (3,063,270)
 
Basic and diluted net income (loss)

per common share
0.73 (0.64) (0.13) (0.13)
 
 

Notice to Readers: Information contained in our press releases should be considered accurate only as of the date of the release and may be superseded by more recent information we have disclosed in later press releases, filings with the OSC, SEC or otherwise. Except for historical information, this press release may contain forward-looking statements, relating to expectations, plans or prospects for Transition, including conducting clinical trials. These statements are based upon the current expectations and beliefs of Transition's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include factors beyond Transition's control and the risk factors and other cautionary statements discussed in Transition's quarterly and annual filings with the Canadian commissions.

The consolidated financial statements for the three and nine-month period ended March 31, 2011 are available at www.sedar.com and www.sec.gov .

CONTACT: For further information on Transition, visit
         www.transitiontherapeutics.com, or contact:

         Dr. Tony Cruz
         Chairman & Chief Executive Officer
         Transition Therapeutics Inc.
         Phone: (416) 260-7770, x.223
         tcruz@transitiontherapeutics.com
         
         Elie Farah
         President & Chief Financial Officer
         Transition Therapeutics Inc.
         Phone: (416) 260-7770, x.203
         efarah@transitiontherapeutics.com

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