To Our Shareholders:
2000 was a successful year for AutoImmune Inc. on several fronts. Operating as a virtual company, we dramatically lowered operating expenses and improved our balance sheet while continuing efforts to maximize shareholder value.
One area of intense focus for us was creating revenue from our intellectual property portfolio. In March, we sold the company’s patent applications covering the treatment of Alzheimer’s Disease to a subsidiary of Elan plc. This transaction produced $4 million in immediate cash, with an additional $3 million in contingent payments due over the next 3 years. In August, we signed an agreement with Rycor Technology Investments Corp. granting them an exclusive license to one of our approaches for treating multiple sclerosis. As a result, AutoImmune is receiving monthly diligence payments that increase annually until escalating royalty payments are due on cumulative sales. Rycor expects to begin late stage clinical trials on its product within the next nine to twelve months.
Teva Pharmaceutical Industries, Ltd., our licensee to patents covering the oral administration of COPAXONEÆ (glatiramer acetate), completed enrollment in a Phase III trial to demonstrate equivalent efficacy of the oral formulation and the injectable product which is approved for treatment of multiple sclerosis. The results of this study should be available near the end of this year. If successful, AutoImmune will receive a significant milestone payment upon product approval and potentially very significant royalty payments on cumulative sales.
The NIH sponsored trial of methods to prevent type 1 diabetes (DPT-1) is still ongoing. The oral insulin arm of this study using a product covered by our patents is approximately 65% enrolled. It will likely be several more years before the results of this study are known. All three of the “new-onset” diabetes trials sponsored by Eli Lilly & Company are now complete. The largest of these, in which positive interim results were reported for adult patients, has now been submitted for publication. The two smaller trials showed no benefit to the younger patient populations they enrolled.
The Company’s efforts to realize the potential for ColloralÆ as a nutraceutical were hampered early in the year by questions about the Food and Drug Administration’s position on this product given its history of having been under development as a pharmaceutical. In November, we filed a “Notice of New Dietary Ingredient” with the FDA and have subsequently received clearance to proceed with Colloral as a dietary supplement. We are now again actively seeking a marketing and distribution partner for this product.
The success of our licensing efforts is dependent on expanding and defending AutoImmune’s intellectual property. We currently have 90 issued US and foreign patents, with more than a dozen original and continuation-in-part United States patent applications and numerous foreign counterparts. In October, we successfully defended a broad patent on our basic technology in an opposition proceeding in Europe. We hope to add to this portfolio and are continuing research efforts at the Brigham and Women’s Hospital under a restructured R&D agreement.Ý
Having increased our financial reserves substantially this past year, we believe we are well positioned for the future. We look forward to the results of clinical trials yet to be reported and remain confident that mucosal tolerance will ultimately be proven of significant therapeutic value.Ý
I appreciate your continuing interest in AutoImmune and hope you share our vision for the future.
Sincerely,
Robert C. Bishop
Chairman of the Board
March 26, 2001