biotie

INTERIM REPORT ON BIOTIE THERAPIES CORP. JANUARY 1 - JUNE 30, 2006

January - June 2006 in brief

· BioTie signed a marketing and distribution agreement with
Britannia Pharmaceuticals Ltd in April for nalmefene in the UK and
Ireland.
· Nalmefene UK marketing authorisation application (MAA) for
the alcohol indication is to be submitted October 2006.
· After the reporting period, BioTie North American licensing
partner Somaxon Pharmaceuticals announced positive results with
nalmefene in a pilot Phase 2 clinical trial for smoking cessation.
· The net loss in January - June stood at EUR 4.4 million (in
2005 EUR -4.4 million). Cash flow from operating activities
was EUR -3.8 million (EUR -3.6 million in 2005).
· The company?s liquid assets amounted to EUR 5.0 million as at
June 30, 2006 (EUR 11.2 million at June 30, 2005). The liquid
resources are forecasted to be sufficient to finance the company?s
operations until the end of February 2007.


Drug development projects

Nalmefene program

At the end of April, BioTie signed a marketing and distribution
agreement with Britannia Pharmaceuticals Limited, based in Surrey,
England, for nalmefene in the UK and Ireland.

Under the terms of the agreement, BioTie has granted Britannia an
exclusive license to market and distribute nalmefene as a
prescription medicine for the treatment of substance abuse
disorders and impulse control disorders in the UK and Ireland.
Britannia will purchase nalmefene finished product from BioTie and
Britannia will be responsible for its registration, sales and
marketing. The agreement provides BioTie with financial returns
typical for a product at the registration phase.

Based on scientific advice obtained from the UK Medicines and
Healthcare products Regulatory Authority ("MHRA") BioTie together
with Britannia intends to submit a Marketing Authorisation
Application (MAA) for the product's alcoholism indication to the
MHRA by October 2006, a delay from the initial estimate. This is
due to additional work needed in the technical compilation of the
dossier.

Pending approval of the MAA Britannia anticipates to launch oral
nalmefene in the UK and Ireland in 2007. Oral nalmefene is
expected to gain 10 year market exclusivity in the EU.

BioTie is currently in discussions with a number of potential
licensing and distribution partners, and expects to conclude
similar marketing and distribution agreements for other key
markets by mid 2007. Following the anticipated approval in the UK
in 2007, marketing authorisations in other EU member states will
be pursued via the mutual recognition procedure. Launches in other
EU member states for the alcoholism indication are expected in
2008.


After the reporting period in July, BioTie?s North American
licensing partner Somaxon Pharmaceuticals, Inc. announced positive
results with nalmefene in a pilot Phase 2 clinical trial for
smoking cessation. In a single center, randomized, placebo-
controlled study in which 76 smokers were enrolled, patients in
the nalmefene 40mg group demonstrated numerically higher
abstinence rates at all timepoints relative to placebo. Patients
in the nalmefene 80mg group did not consistently achieve
abstinence rates that were numerically superior to placebo. The
study was not powered to demonstrate statistical significance.

In this study, nalmefene was generally well tolerated, with an
adverse event profile similar to that observed in studies
previously conducted with nalmefene. The most commonly reported
adverse events were insomnia and nausea. The adverse events tended
to be transient in nature and largely resolved after the first
week on study drug. Elevation in liver enzymes was observed with a
similar frequency in all groups.

Somaxon is also conducting a phase 2/3 clinical study in the US in
patients suffering from pathological gambling. Patient enrollment
has been completed and study results are expected early 2007. Both
the smoking and the gambling studies are fully financed by
Somaxon.

BioTie aims next to commercialize the European and Asian rights of
nalmefene. Discussions with potential partners are ongoing.


Vascular Adhesion Protein-1 (VAP-1)

VAP-1 monoclonal antibody program

BioTie is working with the leading expert company in fully human
antibody technology to develop a product targeting VAP-1 for
chronic inflammatory diseases such as rheumatoid arthritis. Pilot
scale manufacturing for extended preclinical and clinical studies
is ongoing. Co-operation with Seikagaku Corporation proceeded as
planned.

VAP-1 SSAO small molecule inhibitor program

Preclinical evaluation of lead drug candidates and backup
molecules continued in collaboration with F. Hoffmann-La Roche
Ltd. during the reporting period. BioTie will retain all rights to
any compounds developed until a license is granted.


Recombinant heparin program

BioTie is in discussions with new potential development partners
to continue the recombinant heparin program.


Alfa2beta1 integrin small molecule inhibitor program

The screening and preclinical development of new alfa2beta1
integrin inhibitors continued in cooperation with the University
of Turku, Åbo Akademi University and the University of Helsinki.


Revenues

Revenue for the period 1.1.-30.6.2006 consisted of periodization
of the signing fee of the licensing agreement signed with
Seikagaku Corporation in 2003 and periodization of the signing fee
of the Nalmefene lisensing agreement signed with Somaxon
Pharmaceuticals in 2004. The revenue was in total 0.5 million
euros and consisted of periodization of existing agreements. No
new milestone or signing fees were received during the period.

Revenue for the 1.1.-30.6. in 2005 was in total 0.7 million euros
and consisted of periodization of signing fee of the licensing
agreement signed with Seikagaku Corporation in 2003, periodization
of the option fee of the Bioheparin option agreement signed with
Aventis (sanofi-aventis) in 2004 and periodization of the signing
fee of the Nalmefene lisensing agreement signed with Somaxon
Pharmaceuticals in 2004. No new milestone or signing fees were
received in 2005.


Financial results

The net loss for the reporting period was EUR 4.4 million. The
comparable loss for the previous year was EUR 4.4 million.
Research and development costs for the period amounted to EUR 3.3
million (in 2005 EUR 3.8 million). Patent costs have been booked
as expenses.

BioTie disposed the 9.9% holding in Biovian Ltd during March and
realized a gain of 7 thousand euros.

Financing

BioTie?s equity ratio was -366.0 % on June 30, 2006 (-122.0 % in
2005). Cash and cash equivalents totalled EUR 5.0 million on June
30, 2006 (EUR 11.2 million in 2005).

As a result of the revised R&D plan the liquid resources are
forecasted to be sufficient to finance the company?s operations
until the end of February 2007.


Equity

The company had at 31 December, 2005 EUR 4.1 million (31.12.2004
EUR 6.0 million) worth of non-capital R&D loans granted by Tekes.
According to the decision made by Tekes the loans may be
convertible into capital loans. The conversion of each loan
requires separate approval from Tekes. Tekes has so far approved
the conversion of four loans of 4.8 million euros to capital loan
of which 2.2 million has been converted during reporting period.
BioTie?s board made decisions in this matter on January 26, 2005,
March 30, 2005 and March 30, 2006. Depending on the development of
equity, BioTie may decide to request conversion of other loans to
capital loans also.


Investments and cash flow

The company?s investments during the reporting period amounted to
EUR 51 thousand (EUR 3 thousand in 2005). The investments mainly
comprised of equipment purchased for research and development
operations. Cash flow from operating activities was EUR -3.8
million (EUR -3.6 million in 2005).

Option scheme 2006

The Board of Directors of Biotie Therapies Corp. has approved the
option subscriptions made on the basis of the option scheme 2006,
which the Annual General Meeting of Shareholders resolved to issue
on 30 March 2006. The option rights were offered for subscription,
in deviation from the shareholders' pre-emptive subscription
right, to certain key persons of Biotie Therapies Corp. nominated
by the Board of Directors and to a wholly owned subsidiary of the
Company. All 3,000,000 option rights issued were subscribed for
and the options entitle their holders to subscribe for a maximum
of 3,000,000 new shares of Biotie Therapies Corp. in the
aggregate. Due to the subscriptions the share capital of the
company may increase by a maximum of EUR 60,000.00.


Management and Personnel

Ms. Leena Hyytiä, M.Sc.(econ) corporate controller, will assume
the role of acting chief financial officer, effective October 1,
2006 due to BioTie´current chief financial officer Mr. Jari
Saarinen will be leaving the company to pursue other interests.

During the reporting period, the company's personnel was on
average 39 (47 in 2005) and at the end of the period 36 (45 on
30.6.2005).


The ten largest shareholders of BioTie on 30 June, 2006

Number of shares % of
shares

Finnish Industry Investment Ltd 13 557 185 26.14
Finnish Fund for Research and 12 624 566 24.35
Development (Sitra)
Juha Jouhki and his controlled 3 786 286 7.30
companies
- Dreadnought Finance Oy (1 598 416)
- Jouhki Juha (1 249 970)
- Thominvest Oy (937 900)
Funds administered by BioFund 2 871 298 5.54
Management Oy:
- BioFund Ventures III Ky (2 485 715)
- BioFund Ventures I Ky (385 583)
Funds administered by Aboa Venture 844 666 1.63
Management Oy:
- Aboa Venture Ky I (492 142)
- Aboa Venture Ky II (336 747)
- Ganal Venture Ky (7 906)
- Karhu Pääomarahasto Ky (7 871)
Oy H. Kuningas & Co AB 631 564 1.22
Oksanen Markku 400 000 0.77
Tilator Oy 382 018 0.74
Lassila Markus 319 101 0.62
Kymäläinen Olli 305 454 0.59
35 722 138 68.89
Other shareholders 16 134 083 31.11
Outstanding shares 51 856 221 100
The number of the company's own 819 000
shares held by Biotie Therapies
Total 52 675 221


IFRS and Accounting principles

BioTie adopted International Financial Reporting Standards (IFRS)
starting from 1.1.2005. The interim report does not comply with
all requirements of IAS 34, Interim Financial Reporting. BioTie
has applied the same accounting principles as in the closing of
year 2005.

This interim report is unaudited.


Outlook for 2006

BioTie?s R&D spending during 2006 is expected be somewhat lower
compared to 2005. This is due to postponement of certain major
outsourcing costs from 2006 to 2007 until further financing is
secured. This decision is not expected to have significant impact
on the development timeline of the key projects. As a result of
the revised R&D plan the liquid resources are forecasted to be
sufficient to finance the company?s operations until the end of
February 2007.

BioTie?s most advanced programs are nalmefene for dependence
disorders and VAP-1 fully human monoclonal antibody for
inflammatory diseases. In the short term, the company aims at
commercializing the European and Asian rights of nalmefene and
will focus on taking the antibody program to the clinical
development phase. Company is in discussions with potential
partners for the nalmefene program.

BioTie is in discussions with potential development partners to
continue the recombinant heparin program.

The company does not expect to receive milestone payments from
agreements with Seikagaku Corporation and Somaxon Pharmaceuticals
during 2006.

BioTie is investigating different options to strengthen its
financial position.




FINANCIAL STATEMENT

1.1.- 1.1.- 1.1.-
EUR 1,000 30.06.2006 30.06.2005 31.12.2005
6 months 6 months 12 months

Revenue 498 729 1,227

Research and -3,340 -3,810 -7,149
Development expenses
General and -1,693 -1,480 -2,371
administrative expenses
Other operating income 419 443 912
Operating profit (loss) -4,116 -4,118 -7,381

Financial income 70 57 148
Financial expenses -394 -349 -722
Share of the profit of 0 0 13
associated companies
Profit (loss) before -4,440 -4,411 -7,941
taxes

Taxes 0 0 0

Net income (loss) -4,440 -4,411 -7,941
Distribution
To parent company -4,440 -4,411 -7,941
shareholders

Earnings per share -0,08 -0,10 -0.17
(EPS) basic and
diluted, EUR




BALANCE SHEET


EUR 1,000 30.06.2006 30.06.2005 31.12.2005

Assets

Non-current assets
Intangible assets 895 1,199 1,047
Property, plant and 155 289 192
equipment
Shares and equity 0 25 38
interests in associated
companies
1,050 1,513 1,277

Current assets
Current receivables 494 571 571
Financial assets at fair 4,553 8,800 6,687
value through profit or
loss
Cash and cash 429 2,354 395
equivalents
5,476 11,725 7,653

Total 6,526 13,238 8,930


EUR 1,000
Equity and liabilities

Shareholders? equity

Share capital 1,054 1,054 1,054
Share premium fund 0 5,881 5,881
Retained earnigs -20,500 -18,674 -18,576
Net income (loss) -4,440 -4,411 -7,941
Shareholders? equity -23,887 -16,150 -19,583
total

Long-term liabilities
Provisions 24 50 40
Interest-bearing 22,921 21,090 21,276
liabilities
Non-interest-bearing 4,817 5,310 5,169
liabilities
27,762 26,450 26,485

Current liabilities
Provisions 16 15 16
Interest-bearing 35 64 42
liabilities
Accounts payable and 2,599 2,859 1,971
other debts
2,651 2,938 2,029

Liabilities total 30,413 29,388 28,514

Total 6,526 13,238 8,930





Statement of Changes in Shareholders' Equity

Parent comany shareholders' equity Shareholders'
equity
total
1 000 ? Shares Share Share Own Retained
(1000 capital premium shares earnings
pcs) fund


Balance at 43,907 878 13 -15 -18,756 -17,881
1.1.2005
Net income -4,411 -4,411
(loss) for the
period
Options granted 98 98
Share issue 8,768 175 5,868 6,043
8,768 175 5,868 0 -4,313 1,731
BALANCE AT 52,675 1,054 5,881 -15 -23,069 -16,150
30.6.2005

Net income -3,530 -3,530
(loss) for the
period
Options granted 98 98
0 0 0 0 -3,433 -3,433
BALANCE AT 52,675 1,054 5,881 -15 -26,502 -19,583
31.12.2005

Net income -4,440 -4,440
(loss) for the
period
Options granted 137 137
Transfer from -5,881 5,881         0
share perium
fund
0 0 -5,881 0 1,577 -4,304

BALANCE AT 52,675 1,054 0 -15 -24,925 -23,887
30.6.2006




CASH FLOW STATEMENT

1.1.- 1.1.- 1.1.-
30.06.2006 30.06.2005 31.12.2005
EUR 1,000 6 months 6 months 12 months

Cash flow from operating
activities
Net income (loss) -4,440 -4,411 -7,941
Adjustments:
Non-cash transactions 377 400 755
Addition/disposal due to -28 -25 -58
revaluation of financial
assets at fair value
through profit or loss
Interest expenses and 394 349 722
other
financial expenses
Interest income -14 -6 -148
Change in working
capital:
Change in trade and 80 642 716
other
receivables
Change in trade -173 -595 -1,976
creditors
and other liabilities
Change in mandatory -15 42 33
provisions
Interests paid -16 -21 -28
Interests received 42 31 88
Cash flow from operating -3,794 -3,594 -7,837
activities

Cash flow from investing
activities
Change in financial
assets at fair value
through profit or loss
Additions 0 -5,000 -5,000
Disposals 2,200 500 2,626
Investments to tangible -51 -3 -9
assets
Sale of associated 45 0 0
companies
Net cash used in 2,194 -4,503 -2,383
investing activities

Cash flow from financing
activities
Payments from share 0 6,043 6,043
issue
Proceeds from borrowings 1,644 1,638 1,890
Repayment of lease -10 -13 -101
commitments
Net cash from financing 1,634 7,668 7,833
activities

Increase (+) or decrease 34 -429 -2,388
(-) in cash and cash
equivalents
Cash and cash 395 2,783 2,783
equivalents at the
beginning of the period
Cash and cash 429 2,354 395
equivalents at the end
of the period


KEY FIGURES

1.1.- 1.1.- 1.1.-
30.06.2006 30.06.2005 31.12.2005
EUR 1,000 6 months 6 months 12 months
Business development

Revenues 498 729 1,227
Personnel on average 39 47 47
Personnel at the end of 36 45 45
period
Research and development 3,340 3,810 7,149
costs

Capital expenditure 51 3 9

Profitability

Operating profit (loss) -4,116 -4,118 -7,381
as percentage of -825.9 -564.8 -601.3
revenues, %
Profit (loss) before -4,440 -4,411 -7,941
taxes
as percentage of -891.0 -604.9 -647.0
revenues, %

Balance sheet

Cash and cash 4.983 11,154 7,082
equivalents
Shareholders equity -23,887 -16,150 -19,583
Balance sheet total 6,526 13,238 8,930

Financial ratios

Return on equity, % - - -
Return on capital -2,012.2 -260.1 -426.7
employed, %
Equity ratio, % -366.0 -122.0 -219.3
Gearing, % -75.2 -61.9 -72.7

Per share data

Earnings per share -0.08 -0.10 -0.17
(EPS), EUR
Shareholders´equity per -0.45 -0.31 -0.37
share, EUR
Divided per share, EUR
Pay-out ratio, %
Effective dividend
yield, %
P/E-ratio
Share price
Lowest share price, EUR 0.49 0.72 0.49
Highest share price,EUR 0.91 1.06 1.06
Average share price,EUR 0.63 0.85 0.75
30.6./31.12. share price,EUR 0.70 0.78 0.53

Market capitalization, 36.9 41.1 27.9
MEUR
Trading of shares
Number of shares traded 8,489,883 4,864,911 9,003,598
As percentage of all 16.1 9.2 17.1
Adjusted weighted 52,675,221 43,956,121 48,689,328
average
number of shares during
the period,
Adjusted number of 52,675,221 52,675,221 52,675,221
shares at the end of the
period


Contingent liabilities
1000 EUR 30.06.2006 30.06.2005 31.12.2005


Lease commitments 106 259 177


Biotie Therapies Corp.

Board of Directors


For further information, please contact:

Timo Veromaa, President and CEO, Biotie Therapies Corp.
tel. +358 2 274 8901, e-mail: timo.veromaa@biotie.com

www.biotie.com

Distribution: Helsinki Stock Exchange
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