PLANEGG-MARTINSRIED, Germany, March 27 /PRNewswire/ -- 4SC AG (Frankfurt, Prime Standard: VSC) reports today on the financial result of the financial year 2007. Revenues during the reporting period amounted to 1.376 million Euros and fell short 62.4 per cent of the revenues achieved for the same period in 2006 (3.664 million Euros). In the previous year, the "Drug Discovery and Development" segment alone contributed almost half of overall revenues with 1.683 million Euros as a result of the successful sale of the world-wide exclusive rights to the QSB substances. In 2007 4SC AG did not conclude any new licensing agreements, but focussed on increasing the value of its pipeline projects, above all its lead project for treating rheumatoid arthritis. As a result revenues in the business year 2007 originated solely from the "Collaborative Business" segment, and largely from the research collaboration with the US American company QuoNova LLC.

The result from operating activities was - 8.303 million Euros following - 5.530 million Euros in the previous year. In addition to the lower revenues, this is attributable to increased research and development costs of 6.240 million Euros (2006: 5.715 million Euros) and increased administrative costs of 2.822 million Euros (2006: 2.355 million Euros). Above all, the higher research and development costs resulted from increased external services during the course of clinical and pre-clinical studies. The period result of the reporting year was at - 8.130 million Euros (2006: - 5.540 million Euros). Undiluted and diluted earnings per share amounted to - 0.57 Euro (2006: - 0.50 Euro).

As part of the capital increases conducted in May and September 2007, 4SC AG acquired the gross figure of 20.163 million Euros, which subsequently increased the company's share capital from 11.461 million Euros at the start of the year to the current figure of 19.002 million Euros. 4SC AG's equity as of 31 December 2007 was at 19.616 million Euros (2006: 7.854 million Euros) and the equity ratio increased to 88.9 per cent (2006: 78.8 per cent). The cash and cash equivalents stood at 10.335 million Euros (2006: 2.522 million Euros). Furthermore, the company currently holds long and short-term securities not stated in the cash and cash equivalents valued at 6.858 million Euros (2006: 1.949 million Euros). Funds therefore total 17.193 million Euros (2006: 4.471 million Euros).

Pipeline is maturing

In the reporting year 2007, 4SC AG made considerable progress on its project pipeline. A clinical phase IIa study was successfully completed for the most advanced project, the drug candidate SC12267, for the treatment of rheumatoid arthritis. The results not only prove good substance tolerability and safety. Above all, the treatment in patients who had previously been treated with other medicines was clearly a success. "This is the actual success of the study. The patients who have received appropriate prior treatment represent the largest patient population in the western industrialised nations, and are therefore the most relevant target group for a subsequent therapy with SC12267," says Ulrich Dauer, CEO of 4SC AG.

The four pre-clinical development candidates also made significant progress last year. "Meanwhile, they all have the potential to start the clinical development before the end of 2008," explains Dauer. Drug candidate SC68896 for example, designed for the treatment of hematopoietic and solid tumours, is in advanced pre-clinical studies, thus nearing readiness for clinical trials. The same applies to substance SC71492 for the treatment of chronic inflammatory bowel diseases: Pre-clinical studies show a high efficacy level and good tolerability of the substance, which is a basic prerequisite for use as a long-term therapy. In the case of the drug candidate SC75741 for the treatment of viral infections, 4SC AG has proven, in conjunction with the Institute for Molecular Virology at the University of Munster, that mice infected with highly pathogenic avian flu viruses can be successfully treated with the help of SC75741. 4SC AG is currently conducting advanced pre-clinical experiments to assess the efficacy. Preparations are already underway to manufacture clinical material. Advanced pre-clinical studies are now underway in the 4iP project regarding the protein kinase blocker SC71710 jointly developed with the Freiburg-based partner ProQinase for the treatment of acute myeloid leukaemia.

Successful capital increase

"The capital increase successfully completed at the beginning of September creates a solid basis for the swift expansion of the pipeline," says Dauer. During this measure, Santo Holding, the holding company of Hexal founders Dr Thomas and Dr Andreas Strüngmann, became 4SC AG's largest shareholder. After just a few shareholders accepted the mandatory offer to purchase shares submitted at the beginning of December, Santo currently has a stake of some 32.71 per cent in the company. "We are pleased to have a strategic investor on board such as Santo Holding with long-term perspectives and extensive sector expertise," says Dauer.

New opportunities are also opening up for 4SC AG through partnerships with other companies in the Santo portfolio. An example of this is the recently announced research cooperation with the Wuppertal-based company AiCuris, a spin-off from Bayer HealthCare AG. AiCuris, which specialises in the development of new active agents for the treatment of viral and bacterial infections, which is to be provided with medicinal chemistry capacity by 4SC AG in return for research funding, with long-term plans for closer collaboration on anti-infective drug candidates.

Outlook

Upon conclusion of phase IIa clinical trials for the lead project SC12267 for the treatment of rheumatoid arthritis, 4SC AG is seeking a licensing partner among pharmaceutical companies to further develop the substance. At present several pharmaceutical companies are reviewing the substance's potential as part of scientific due diligence, explains Dauer. Advanced discussions have already been held with several interested parties. The fact that the lead compound shows good potential in other indications such as multiple sclerosis and chronic inflammatory bowel diseases is not the only aspect in 4SC AG's favour.

According to current planning, at least two of the four advanced pre-clinical projects should move into clinical studies in the course of this financial year, as soon as sufficient quantities of the substances will be produced as required and the formal studies regarding their safety will be concluded successfully. These projects also see 4SC AG participating in regular discussions with potential partners with a view to generating early sales through co-development and licensing partnerships and tapping the candidates' potential more quickly.

The advanced maturity of the project pipeline, and the company's efforts to push ahead with the different projects in parallel, gives rise to increasing development costs. In view of this, the company again expects a negative period results in the financial year 2008 and possibly extended losses too. Nevertheless, given the current projects and ongoing discussions with potential new customers, 4SC AG expects to generate relevant net sales from collaborations in the "Collaborative Business" segment. In the "Drug Discovery and Development" segment, 4SC AG is counting, in particular, on a licensing partnership for the lead project SC12267, and in this context expects to benefit from a substantial share in net sales. However, according to management, it nevertheless remains difficult to predict the extent to which earnings from licensing will be able to offset rising development costs.

"Overall, our company is well placed to achieve its strategic, commercial and scientific goals," says Dauer. The company has enough room to manoeuvre, and sufficient options, to continue negotiations on licensing agreements or technological collaboration without being subject to time pressure and in the meantime will be able to continue increasing the value of the company.

You can view the 4SC AG Annual Report at http://www.4sc.com.

About 4SC:

4SC AG (ISIN DE0005753818) has been listed in the Prime Standard of Frankfurt Stock Exchange since 15 December 2005. Founded in 1997 and now with a staff of 69, the company develops novel drug candidates for inflammatory diseases, cancer and infectious diseases using a cheminformatics based technology platform. Traditional high throughput screening of therapeutic agents has been transferred from the lab to the computer. Thus, the company offers substantial cost and time advantages as well as increased success rates in drug development. 4SC AG utilises its technology platform, which is protected by patent, to create a sustainable project pipeline of active agents to be developed up to the early clinical phases ("proof of concept") and subsequently licensed to the pharmaceutical industry in return for advance and milestone payments as well as royalties. There are currently six projects in the pipeline and a so-called ideas' pool with further development candidates. The first project for the treatment of rheumatoid arthritis has already successfully completed clinical phase IIa. Four other product candidates are in pre-clinical development and another project is in the research stage. In addition, the company is implementing its technology platform in partnerships with pharmaceutical and biotechnology companies, and is already generating initial revenues.

Legal Note

This document may contain projections or estimates relating to plans and objectives relating to our future operations, products, or services; future financial results; or assumptions underlying or relating to any such statements; each of which constitutes a forward-looking statement subject to risks and uncertainties, many of which are beyond our control. Actual results could differ materially, depending on a number of factors.

For more information please contact: 4SC AG Bettina von Klitzing Manager Public Relations & Investor Relations Tel: +49-89-700-763 - 0 E-Mail: Bettina.von.Klitzing@4sc.com

For more information please contact: 4SC AG, Bettina von Klitzing, Manager Public Relations & Investor Relations, Tel: +49-89-700-763 - 0, E-Mail: Bettina.von.Klitzing@4sc.com