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Exhibit 99.1
THIRD QUARTER REPORT 2000
TO OUR SHAREHOLDERS:
THIRD QUARTER 2000 HIGHLIGHTS
In the third quarter of 2000, AltaRex continued to make substantial progress on
all fronts with advances in the areas of clinical development, corporate
partnering, intellectual property, scientific discovery and financing. Our
clinical development program for OvaRex(TM) MAb is proceeding according to
schedule and was bolstered by new immunology data announced during the quarter.
Our partnering strategy has led to the completion of a second collaboration with
a foreign pharmaceutical company that is a market leader in the covered region.
Our intellectual property portfolio has been strengthened with the issuance of a
U.S. patent for OvaRex(TM)MAb. Our novel technology platform and new scientific
data have been presented at prominent scientific conferences. In addition we
strengthened our balance sheet with the successful completion of a public
offering, including an over-allotment option, for net proceeds to the Company of
approximately $8.0 million. We are pleased to highlight our results for 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 an expected 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 -- those in "watchful waiting"
following initial surgery and chemotherapy and those with recurrent disease. In
both populations, or indications, a critical need for new agents exists. There
are no treatments currently approved for "watchful waiting" patients, and those
chemotherapeutic agents that are approved for recurrent disease are associated
with significant toxicities.
In September, a new 102-patient clinical trial of OvaRex(TM) MAb was initiated.
This open-label, dose randomized study is for patients in the "watchful waiting"
indication of ovarian cancer. The main objective of the study is to directly
assess the time to disease recurrence in patients with differing treatment
schedules of OvaRex(TM)MAb following primary therapy (surgery and chemotherapy).
The trial is currently open to enrollment at selected sites in the US and
Canada.
We anticipate having sufficient data to initiate filing of a BLA with the FDA
by late 2001. The BLA filing will include the compilation of safety and efficacy
data from clinical trials involving over 500 ovarian cancer patients. Data
presented to date indicate a benign safety profile for OvaRex(TM) MAb, increases
in time to disease relapse and prolonged survival as well as immunological
activity that is consistent with the observed clinical effect.
PARTNERING STRATEGY
In July, the Company announced the initiation of a collaboration with Medison
Pharma Ltd., a market leader in Israel and the Middle East. The collaboration
includes the formation of a 50:50 joint venture and covers the
commercialization, marketing and distribution of OvaRex(TM) MAb and other
AltaRex antibodies in the above noted territories. The collaboration also
included an equity investment in AltaRex on the part of Medison Pharma and an
affiliate. The Medison Pharma collaboration is structured similarly to the
previously announced collaboration with Genesis Pharma S.A. of Greece and
represents further advancement of the Company's global commercialization plan.
Genesis Pharma and Medison Pharma are among the market leaders in their
respective
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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 structure these collaborations such that AltaRex remains
responsible for global product development and registration while our partners
assume responsibility for successful product marketing, sales and distribution,
as well as certain obligations for clinical development in the territory.
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.
PRESENTATION OF SCIENTIFIC DATA
In the third quarter of 2000, a presentation at the third biennial Ovarian
Cancer Research Symposium in Seattle highlighted a recent Company discovery of
the role of human anti-mouse antibody (HAMA) in the enhanced processing of the
antigen/antibody complex to the immune system, the result of which is a more
robust and effective immune response against the tumor associated antigens
targeted by AltaRex antibodies. The Company continues to compile a growing base
of data that indicates a correlation between OvaRex(TM)specific induction of
immune responses and clinical benefit.
INVESTOR AND PARTNERING PRESENTATIONS
The Company made several presentations at important partnering and investor
meetings such as BioJapan in Tokyo, Pharmaceutical Strategic Alliances in New
York and the Stephens Inc. Anti-Cancer Biopharmaceutical Conference in San
Francisco. Such presentations have served to increase the visibility of the
Company in those communities and advance our objectives in this area.
COMMON SHARE OFFERING
In August, the Company successfully completed the sale of 10,580,000 Common
Shares, including an over-allotment option, in a public offering at $0.85 per
Common Share, for net proceeds to the Company of approximately $8.0 million.
These proceeds are supporting the continued development program for
OvaRex(TM)MAb. We are pleased that the majority of this offering was subscribed
for by United States institutional investors, indicating an increased level of
interest from an important source of capital for the Company. We are also
pleased that this offering was complemented by commitments from existing
investors in Canada, indicating strong continued support from a base of
shareholders who know the Company well.
FINANCIAL HIGHLIGHTS (in Canadian dollars) The Company reported a reduced net
loss for the quarter of $4.3 million or $0.07 per share compared to a net loss
of $9.5 million or $0.17 per share for the third quarter of 1999. Similarly, the
net loss for the nine months ending September 30, 2000 was $12.3 million or
$0.20 per share as compared with a net loss of $19.6 million or $0.54 per share
for the nine months ending September 30, 1999. The Company's cash and short-term
investments as of September 30, 2000 totaled $10.6 million as compared with $6.0
million at June 30, 2000 and $7.2 million at December 31, 1999.
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The decrease in net loss for both the three month and nine month periods ended
September 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. This is largely a result of
operational changes implemented to focus the resources of the Company on the
development of OvaRex(TM)MAb, thereby reducing net cash burn and conserving
capital. The decrease in the net loss per share also reflects the increase in
the weighted average number of Common Shares outstanding. This is primarily the
result of the following issuances of Common Shares:
- - 5,687,546 Common Shares as a result of a $6.0 million Special Warrant
Offering in February 2000,
- - 10,580,000 Common Shares in a $9.0 million public offering in August 2000,
- - 149,050 Common Shares in connection with collaborations with Genesis Pharma
S.A. and Medison Pharma Ltd. in August 2000 and
- - 2,008,749 Common Shares from the exercises of options and warrants in the
first quarter of 2000.
Revenues for the three months ended September 30, 2000 were $120,110 compared
with $203,748 for the same period in 1999. Revenues for the nine months ended
September 30, 2000 were $308,019 compared to $572,557 for the nine months ended
September 30, 1999. This decrease results from the completion of a grant in 1999
and a reduction in interest income as a result of lower levels of cash and
short-term investments for the respective periods.
Operating expenses for the three months ended September 30, 2000 totaled $4.4
million, a decrease of $5.3 million from the three month period ended September
30, 1999. For the nine months ended September 30, 2000 operating expenses
totaled $12.6 million, a decrease of $7.6 million from the comparable period in
1999. Operating expenses for the three and nine month periods ended September
30, 1999 included $4.5 million and $5.0 million of costs, respectively, related
to the settlement of litigation with Biomira, Inc. Research and development
expenses decreased by $0.12 million for the quarter and $1.5 million for the
first nine months of the year as the Company focused its resources on the
development of OvaRex(TM)MAb and temporarily suspended its development of other
products in the pipeline. General and administrative expenses decreased by $0.7
million for the quarter and $1.0 for the first nine months of the year, also
reflecting initiatives to reduce net cash burn and conserve capital.
/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 pre-clinical 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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[ALTAREX LOGO]
"CHANGING THE COURSE OF CANCER THERAPY"
2000
THIRD
QUARTER
REPORT
CONTACT: EDWARD M. FITZGERALD
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
ALTAREX CORP.
610 LINCOLN STREET
WALTHAM, MA 02451
PHONE: 781-672-0138 FAX: 781-672-0142
TOLL FREE: 888-801-6665
WWW.ALTAREX.COM
INFO@ALTAREX.COM
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Canadian dollars, Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
Revenue ................................ $ 120,110 $ 203,748 $ 308,019 $ 572,557
------------ ------------ ------------ ------------
Expenses
Research and development .......... 3,036,053 3,159,905 8,435,587 9,956,488
General and administration ........ 1,321,533 2,028,784 4,196,370 5,215,503
Settlement costs .................. -- 4,496,666 -- 5,015,712
------------ ------------ ------------ ------------
4,357,586 9,685,355 12,631,957 20,187,703
Net loss for the period ................ $ (4,258,960) $ (9,481,607) $(12,323,938) $(19,615,146)
============ ============ ============ ============
Net loss per common share .............. $ (0.07) $ (0.17) $ (0.20) $ (0.54)
============ ============ ============ ============
Weighted average number of
common shares outstanding ......... 63,308,908 55,612,613 62,480,262 36,596,679
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CONDENSED CONSOLIDATED BALANCE SHEET
(In Canadian dollars, Unaudited)
As at September 30,
2000 1999
---- ----
ASSETS
Cash and cash equivalents .......................... $ 3,619,850 $ 3,090,930
Short-term investments ............................. 6,948,718 8,345,315
Other current assets ............................... 189,699 183,811
Capital assets, net ................................ 579,372 1,060,128
Other assets ....................................... 621,019 267,335
----------- -----------
$11,958,658 $12,947,519
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities ................................ $ 3,339,984 $ 2,128,587
Deferred lease credit and other liabilities ........ 8,013 197,954
Shareholders' equity ............................... 8,610,661 10,620,977
----------- -----------
$11,958,658 $12,947,518
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Canadian dollars, Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
CASH USED IN OPERATING ACTIVITIES
Net loss .................................... $ (4,258,960) $ (9,481,607) $(12,323,938) $(19,615,146)
------------ ------------ ------------ ------------
Add items not affecting cash:
Depreciation and amortization .......... 118,208 133,043 364,479 431,259
Amortization of deferred lease credit .. (3,979) (7,232) (18,336) (71,728)
Writedown of Leashold Improvements &
Deferred Lease Credit
Net change in non-cash working
capital balances ....................... 358,929 (206,199) 640,429 231,457
------------ ------------ ------------ ------------
(3,785,802) (9,561,995) (11,337,366) (19,024,158)
------------ ------------ ------------ ------------
CASH USED IN INVESTING ACTIVITIES
Purchase of capital assets .................. (13,639) (97,742) (33,779) (145,301)
Maturities and purchases of
short-term investments ................. (4,112,581) 4,369,014 (2,070,679) (4,103,583)
------------ ------------ ------------ ------------
(4,126,220) 4,271,272 (2,104,458) (4,248,884)
------------ ------------ ------------ ------------
CASH PROVIDED BY FINANCING ACTIVITIES
Issue of common shares, net ................. 8,283,326 (60,492) 14,716,643 17,707,760
Other ....................................... 46,835 67,965 16,390 74,523
------------ ------------ ------------ ------------
8,330,161 7,473 14,733,033 17,782,283
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ................... 418,139 (5,283,249) 1,291,209 (5,490,758)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD .................... 3,201,711 8,374,179 2,328,641 8,581,688
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD .......................... $ 3,619,850 $ 3,090,930 $ 3,619,850 $ 3,090,930
============ ============ ============ ============