AOR.L Regulatory News (AOR)

6 Sep 2007 07:01

Aortech International PLC06 September 2007 6 September 2007 AorTech International plc Results for the year ended 31 March 2007 AorTech International plc (AIM: AOR) ("AorTech" or the "Company"), thebiomaterials and medical device development company, today announces its resultsfor the year ended 31 March 2007. Operational Highlights • Partnership with St Jude Medical for cardiac pacing leads continuing well, with expansion of manufacturing capacity of Elast-Eon extrusions and mouldings in response to customer demand; • FDA approved human use of its polymer technology Elast-Eon; • Customer evaluations underway in the areas of cardiac surgery, cardiology, orthopaedics and urology: - October 2006 - non-exclusive licence and material supply agreement signedwith Allium Medical Inc in the field of non-vascular stents; - December 2006 - Exclusive material licensing and supply agreement withAvalon Laboratories, leading supplier of cardiopulmonary vascular cannulae; - December 2006 - Exclusive material licensing agreement signed withHarland Medical Systems, LLC in the field of short-term guide wire and cathetercoating applications - April 2007 - Supply and licence agreement with Cardiosolutions, Inc., forthe purchase and use of Elast-EonTM in the field of mitral valve repair • Conditional re-approval of gel-filled breast implants by FDA and three patents filed for AorTech breast implant technology; • Successful presentation of the polymer heart valve at the eminent TCTsymposium in October 2006; • Creation of a Medical Advisory Board - appointment of esteemed plasticsurgeons, V. Leroy Young, M.D., and Mark L Jewell; • Post period-end - entered a licensing and supply agreement with a global medical device company with a potential income value of up to c.US$32m for the evaluation of Elast-EonTM along with royalty payments; Financial Highlights • Group turnover £0.3m (2005/6 £1.4m inclusive of a £1.1m upfront payment from St Jude Medical); • Loss after tax £2.1m (2005/6 £0.5m loss) • At 31 March 2007, cash reserves of £1.5m (2006: £2.7m) • Post period end placing raised £5.1 million (before expenses), to fund further development plans. Jon Pither, Chairman, said: "We have made significant progress during the past two years culminating in thepost balance sheet agreement with a global medical device company. During thistime, we have achieved multinational regulatory approvals, a reputation forquality and service, thousands of human implants of our premier biostablepolymer Elast-EonTM, and significantly increased operational capacity. "The Placing will provide us with the necessary resource to carry through ourdevelopment plans, as we seek to deploy our proven technology within furtherlarge scale and life sustaining markets. The Board is confident that AorTech hasthe technology, resources, partners and commitment to fully realise thepotential of our unique Elast-EonTM polymer and thereby to build shareholdervalue over the coming years." - Ends - For further information please contact: AorTech International plcFrank Maguire, Chief Executive Tel: + 1 801 201 4336 Evolution SecuritiesBobbie Hilliam Tel: +44 20 7071 4300Chris Clarke Hogarth Partnership Limited Tel: +44 20 7357 9477Melanie Toyne-Sewell/Sarah Richardson Notes to Editors: About AorTech International plc Listed on AIM in London, AorTech International plc wholly owns AorTechBiomaterials based in Melbourne, Australia. AorTech Biomaterials was formed inJuly 1997 to develop and commercialise Elast-Eon, a highly useful and biostableco-polymer in the medical device and drug delivery fields. AorTech's Elast-Eon technology is the product of a decade of fundamentalresearch into biologically stable materials. Elast-Eon materials are patented,high silicone content, polyurethane copolymers which exhibit unparalleledbiological and mechanical performance. AorTech is firmly focused on the development and refinement of this material forthe medical community, with the aim of providing a wide range of highperformance Elast-Eon materials in a variety of application specificformulations and densities, for use in medical devices. RESULTS FOR THE YEAR ENDED 31 MARCH 2007 CHAIRMAN'S STATEMENT I am pleased to report that in the year ended 31 March 2007 the Group madehighly encouraging progress in a number of respects including the filing ofthree further patents. Moreover since the year end it has entered into alicensing and supply agreement for the evaluation of our patented polymer,Elast-EonTM, with a global medical device company. Accordingly, despitereporting an increased loss for the year, the Board believes that the Companycan look forward to a very promising period ahead. Financial Review Group turnover for the year was £276,000. This was lower than the £1.4m in theprevious year which included £1.1m from a one-off payment resulting from anagreement signed with St Jude Medical. Operating expenses for the year were£2,348,000, an increase of £481,000 over the previous year due, in the main, tothe move to new premises in Australia and up-scaling of our operational capacityto meet the expected increase in demand for Elast-EonTM polymer. The operatingexpenses included £821,000 of development expenditure (2006: £634,000) andamortisation of intangible fixed assets amounting to £148,000 (2006: £99,000).The loss after tax for the year was £2.1m (2006: £523,000) and at 31 March 2007the Group had cash reserves of £1.5m (2006: £2.7m). The greater part of this Statement focuses on the very important commercial andtechnical progress that has been and continues to be achieved. Operational Review Manufacturing and Supply of Elast-EonTM bulk material Following the granting of the regulatory approvals in the United States andEurope in 2006 for Elast-EonTM in human use, our principal operational focus for2006/07 was to create a capable and reliable manufacturing infrastructure ableto support the large scale and life-sustaining nature of our licensees' medicaldevice products. I am pleased to report that our new Melbourne technology andmanufacturing facility has achieved very positive results during the year,including 100% on-time delivery to customers, 100% quality certification andacceptance of delivered product and an overall reduction in the baseline costsfrom the previous year. This has been achieved in a period when we expanded ourmanufacturing capacity by 67%, which we believe is sufficient to satisfy ourcustomers' growing polymer volume requirements through to the end of 2008. Elast-EonTM Component Manufacturing In response to our customers' requests for Elast-EonTM extrusions and mouldings,we have taken steps to improve our capability in the area of medical-gradeextrusion. AorTech will benefit directly from the revenue associated with tubingcomponent orders, and indirectly by accelerating the customer evaluation processand, therefore, the achievement of higher-value late stage development milestonepayments that are characteristic of our material licence agreements. We are very encouraged by the results to date and expect that Elast-EonTMextrusion components will comprise a significant and increasing proportion ofour polymer business revenues going forward. Market and Customers The major revenue potential and increased value return for the Group is expectedto arise from joint venture projects and licensing agreements with major medicaldevice companies. In addition, we estimate the market for our supply of bulkElast-EonTM polymer to be approximately US$100m and growing at a rate of 6-10%per annum. We believe that our customers have recognised Elast-EonTM as a topquality silicone-urethane material for soft, long-term, high fatigue,blood-contacting implants. During the year, the technology focus has been towards developing softermaterials which compete more directly with medical grade silicone, and we haveexpanded our patent portfolio by a number of new submissions and approvals. Wehave concentrated, in particular, on collaboration with major biomaterialsresearch institutes and universities. As a result of this work we have achievedgreater profile for Elast-EonTM, different aspects of which were presented atfour separate conferences and also featured in three journal publications. During the year there were a number of customer evaluations carried out across arange of applications for Elast-EonTM. In addition to the work already underwayin the areas of cardiac surgery, cardiology, orthopaedics and urology, we haveinvested and will invest further in other potential applications includingneurostimulation, pulmonary, drug delivery, women's health, ventricular assistand non-coronary stent-based drug delivery, all of which are being developedwithin customer partnerships. Technology Developments Polymer Heart Valve During the past year, our heart valve technology has been evaluated in thein-house laboratories of major medical device companies who could become ourpartners in the future. This strategy is to enable us to demonstrate and verifythe durability and performance characteristics of our heart valve product. We believe that good progress is being made towards the commercialisation of theCompany's heart valve products within a co-development or partnership structure,and that these products have the potential to contribute significantly to ourfuture revenues when regulatory and clinical milestones are achieved. Breast Implants The conditional re-approval of the gel-filled breast implant by the US FDA inNovember 2006 has had a substantial, immediate and long-term impact on breastimplant technology and the related market dynamics. In the short term, the leading suppliers of these products are placing a strongfocus on the re-introduction of such implants into the US. They have devotedsignificant resources to manufacturing processes, surgeon training and patientawareness programmes and the establishment of a clinical monitoring functioncapable of supporting the conditions upon which US FDA approved thesesilicone-gel implants. In the longer term, and because of the re-approval of thesilicone-gel device, the market is seeking the next-generation product which webelieve AorTech is well positioned to provide. During the past year, we have continued to refine our breast implant shell andfiller materials, and to carefully examine these materials in relation to theguidelines published by FDA. We believe that the way forward for this technologyis to secure a co-development deal with a suitable partner and we remainoptimistic of achieving this. During the last year, we have filed three patentscovering the use of our materials and newly invented processes in the fields ofgel technology, in-situ cure and the development of a minimally invasive breastimplant. In addition to the breast implant and heart valve projects, the Group hascommenced new projects in the areas of urology, vascular grafts and non-coronarystent-based drug delivery. I look forward to reporting on progress with theseprojects in the coming year. Summary We have made very significant progress during the past two years in particular,having achieved multinational regulatory approvals, a reputation for quality andservice, thousands of human implants of our premier biostable polymer,Elast-EonTM, and significantly increased operational capacity. Your Board believes that the recent announcement of a partnership deal for oneof our major development programmes which, subject to AorTech fulfillingspecific milestone targets, could realise income of up to approximately US$32min the years ahead together with future royalty payments, and thereforevalidates our strategy to generate shareholder value through licensing andsupply of an innovative, world-class polymer. Much credit for this progress goesto our Australian team based in their new Melbourne facility. Since the year end, we have raised £5.1m by way of a placing of 1,000,000 newOrdinary Shares which will provide us with the necessary resource to carrythrough our development plans. Finally I take this opportunity to thank all of our staff for their continuedcommitment to the Company and to our shareholders for their continued supportover the past twelve months. Your Board is confident that AorTech has thetechnology, resources, partners and resolve to fully realise the potential ofour unique Elast-EonTM polymer and thereby to build shareholder value over thecoming years. Jon Pither Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2007 Notes 2007 2006 £000 £000 Turnover 2 276 1,425Continuing operations Cost of Sales (158) (223) Gross Profit 118 1,202 Net operating expenses (2,348) (1,867)---------------------------------------------- ------ --------- ---------Net operating expenses include:Development expenditure (821) (634)Amortisation of intangible fixed assets (96) (99)--------------------------------------------- ------ --------- --------- Group operating loss (2,230) (665) Interest receivable 109 142 Loss on ordinary activities before taxation (2,121) (523)Taxation - - Loss for the financial year (2,121) (523) Loss per ordinary shareBasic and diluted 3 (55.67p) (13.74p) There is no difference between the losses stated above and their historicalcost equivalent.All results are derived from continuingoperations. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2007 2007 2006 £000 £000 Loss for the financial year (2,121) (523)Currency translation differences arising on (25) (23)consolidation Total losses recognised since last annual (2,146) (546)report CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2007 Notes 2007 2006 £000 £000Fixed assetsIntangible assets 1,262 1,360Tangible assets 472 240 1,734 1,600 Current assetsStocks 89 140Debtors: amounts falling due within one year 374 1,304Cash at bank 1,480 2,716 1,943 4,160 Creditors: amounts falling due within one (520) (508)year Net current assets 1,423 3,652 Total assets less current liabilities 3,157 5,252 Creditors: amounts falling due after more (195) (144)than one year Net assets 2,962 5,108 Capital and reservesCalled up share capital 9,526 9,525Other reserve (2,003) (2,003)Profit & Loss account (4,561) (2,415)Equity shareholders' funds 2,962 5,108 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2007 Notes 2007 2006 £000 £000Net cash outflow from operating activities 4 (904) (1,189) Returns on investment and servicing of financeInterest received 109 142 TaxationResearch and development tax credits received - (99) Capital expenditure and financial investmentPurchase of tangible fixed assets (420) (119) Net cash outflow from capital expenditure and (420) (119)financial investment Cash outflow before management of liquid resources (1,215) (1,265)and financing Management of liquid resourcesCash released from short term deposit 1,592 1,658 Increase in cash in year 377 393 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007 1 PRINCIPAL ACCOUNTING POLICIES The financial statements have been prepared in accordance with applicable UnitedKingdom Accounting Standards, up to and including Financial Reporting Standard('FRS') 28. A summary of the more important Group accounting policies, whichhave been applied consistently, is set out below. The principal accountingpolicies represent the most appropriate in accordance with FRS 18. The summary accounts set out above do not constitute statutory accounts asdefined by Section 240 of the UK Companies Act 1985. The summarised consolidatedbalance sheet at 31 March 2007, the summarised consolidated profit and lossaccount and the summarised consolidated cash flow statement for the year thenended have been extracted from the group's statutory accounts for the year to 31March 2007 upon which the auditors' opinion is unqualified. The statutoryaccounts for the year ended 31 March 2007 were approved by the Directors on6 September 2007, but have not yet been delivered to the Registrar of Companies. 2 SEGMENTAL ANALYSIS BY CLASS OF BUSINESS AND GEOGRAPHICAL AREA a) Class of business - The Group operates one class of business b) Geographical area- The analysis by geographical area of the Group'sturnover, loss before tax and net assets is set out below:Turnover 2007 2006 sales by sales by sales by sales by destination origin destination origin £000 £000 £000 £000Geographical segmentUnited Kingdom 8 - 36 -Rest of Europe - - - -Rest of World 268 276 1,389 1,425 276 276 1,425 1,425 3 LOSS PER ORDINARY SHARE The basic loss per ordinary share is calculated on the loss of the Group of£2,121,321 (2006: loss of £523,348) and on 3,810,278 (2006: 3,810,278) equityshares, being the weighted average number of shares deemed to be in issue. Theexercise of share options would not have been dilutive and accordingly the basicand diluted loss per share are the same. 4 RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING ACTIVITIES 2007 2006 £000 £000Group operating loss (2,230) (665)Amortisation of intangible fixed assets 133 99Depreciation of tangible fixed assets 96 72Loss on sale of fixed assets 53 -Decrease / (Increase) in stocks 51 (71)Decrease / (Increase) in debtors 930 (1,027)Increase in creditors 63 403Net cash outflow from operating activities (904) (1,189) 5 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the tenth Annual General Meeting of AorTechInternational plc will be held at the offices of The Hogarth Partnership, 2ndFloor Upstream, No.1 London Bridge, London SE1 9BG on 2 October 2007 at 10:00am. 6 POSTING AND AVAILABILITY OF ACCOUNTS The annual report and accounts for the year ended 31 March 2007 will be sent bypost to all registered shareholders on 6 September 2006. Additional copies willbe available for a month thereafter from the Company's Surbiton office.Alternatively, the document may be viewed on, or downloaded from, the Company'swebsite: www.aortech.com. This information is provided by RNS The company news service from the London Stock Exchange