Aura Renew Acq Regulatory News (ARA)

29 Jun 2006 07:02

Ardana PLC29 June 2006 Ardana: Preliminary Announcement for the year ended 31 March 2006 Edinburgh, UK, 29 June, 2006; Ardana plc (LSE: ARA) today announces itsPreliminary Results for the year ended 31 March 2006. Ardana is an emerging pharmaceutical company focused on the discovery,development and marketing of innovative products to improve human reproductivehealth, in order to address areas of considerable unmet need in this $25.5billion market*. Highlights Pipeline development - Positive results in Phase I trial of EP01572 oral Growth Hormone Secretagogue (GHS) - Positive results in Phase II trial of Teverelix LA in prostate cancer - Positive results in Phase II trial of Teverelix LA in benign prostatic hyperplasia (BPH) - Pre-Investigational New Drug (IND) application meeting with the United States Food & Drug Administration (FDA) on the development of Teverelix LA in prostate cancer - Pre-IND application meeting with the FDA on development of Teverelix LA in BPH - Agreement reached at Pre-IND meeting with the FDA on the next steps in the development of Testosterone Cream for testosterone replacement in male hypogonadism Commercial - Striant(TM) SR launched in Germany, the Nordic region and the Republic of Ireland - Discussions with potential development partners for Teverelix Long Acting (LA) ongoing Financial - Loss before tax for the year ended 31 March 2006 of £8.8 million (2005: £8.5 million) after writing off research and development costs of £6.4 million (2005: £4.0 million) - Cash and cash equivalents at 31 March 2006 of £19.1 million (2005: £29.2 million) People - Carol Ferguson appointed as Non-executive Director - Klaus Falk appointed as Vice President of Sales & Marketing - John Hawkins appointed Director of Human Resources Post Balance Sheet events - Positive results in Phase II dose ranging study of Testosterone Cream for testosterone replacement in male hypogonadism - IND opened with the FDA for Testosterone Cream - IND opened with the FDA for Teverelix LA in prostate cancer - Dr Huw Jones appointed as Non-executive Director Dr Maureen Lindsay, CEO, commented "The year has been an extremely busy one forArdana as we concentrated on developing our pipeline and building the profile ofthe Company. We have made significant progress towards our objective ofbuilding a successful pharmaceutical business in the field of reproductivehealth. Our first product, Striant(TM) SR was launched in the UK in 2004 through ourown specialist sales force, and is being rolled out elsewhere in Europe startingwith launches in Germany, the Nordic region and the Republic of Ireland in thisfinancial year. A marketing agreement for the Nordic Region has also beenagreed. A second product, Invicorp(TM), is being prepared for European MutualRecognition to enable marketing to commence, with a potential launch by the endof 2006. Our key development programmes for Teverelix and Testosterone Creamare progressing well and we are delighted with the successful outcome of thepre-IND meetings with the FDA to agree the development plans going forward forthese programmes. Discussions with a number of potential partners for thedevelopment of Teverelix LA are ongoing, which the Directors anticipateconcluding successfully before starting the relevant Phase III programmes." Enquiries For more information contact: Maureen Lindsay + 44 (0) 131 226 8550Ardana Julia Phillips/John Gilbert +44 (0) 20 7831 3113Financial Dynamics Notes for Editors Ardana plc is an emerging pharmaceutical company focused on the development andmarketing of innovative products to improve human reproductive health, a $25.5billion market*. Ardana's strategy is to manage risk by maintaining a broad and balanced productpipeline through its network of leading research institutions and through theacquisition of products and intellectual property rights. The Group's four leadproducts reflect this strategy: Striant(TM) SR, a testosterone replacementtherapy that has already been launched as a treatment for men with confirmedhypogonadism through Ardana's own specialist sales force in the UK and throughpartners in Germany, the Nordic region and the Republic of Ireland; TeverelixLA, in development for three initial indications (prostate cancer, benignprostatic hyperplasia (BPH) and endometriosis); Testosterone Cream, a dermaltestosterone delivery system to treat male hypogonadism, which will shortlyenter Phase III trials; and Invicorp(TM), a combination drug treatment for maleerectile dysfunction, for which the Company has license rights in Europe. Inaddition, Ardana has a strong portfolio of follow-on products in development,including the oral Growth Hormone Secretagogue, EP01572. Ardana has been listed on the main market of the London Stock Exchange sinceMarch 2005 when it raised £21 million before expenses. For further information please see www.ardana.co.uk *Source: Company estimates, based on independent market data Statements contained within this press release may contain forward-lookingcomments which involve risks and uncertainties that may cause actual results tovary from those contained in the forward-looking statements. In some cases, youcan identify such forward-looking statements by terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or 'continue'. Predictions andforward-looking references in this press release are subject to the satisfactoryprogress of research which is, by nature, unpredictable. Forward projectionsreflect management's best estimates based on information available at the timeof issue. Chairman and Chief Executive's Statement Since Ardana's foundation in 2000, we have pursued a four-part strategy tocreate value from the business by: • Maintaining a broad and balanced portfolio to manage risk, focusing on the therapeutic area of human reproductive health; • Actively pursuing an in-licensing and acquisition programme for products and technologies to maintain a robust pipeline, including near-term commercial products and potential high value development candidates; • Retaining value by building a sales and marketing capability in leading European markets, through both our own infrastructure and partnerships; and • Maintaining a lean organisation by selective outsourcing in order to achieve flexibility. During the financial year we have made significant progress across all aspectsof Ardana's business. In addition to the UK, Striant(TM) SR has now beenlaunched in Germany, the Nordic region and the Republic of Ireland. Our secondcommercial-stage product, Invicorp(TM), an injectable treatment for erectiledysfunction, is proceeding towards an anticipated launch in the second half of2006. In clinical development, our compounds are advancing well and, inparticular, we are pleased with the positive outcomes of our Phase II trials anddiscussions held with the FDA in relation to Testosterone Cream and TeverelixLA for both prostate cancer and BPH. We are also progressing our development ofTeverelix LA for the indication of endometriosis. We are very encouraged with the outcome of the Phase I trial for EP01572, anoral Growth Hormone Secretagogue. The results show that it has the ability tostimulate growth hormone release selectively without affecting other hormonelevels and appears to be well tolerated. Plans are in progress to furtherdevelop this product which could have significant patient advantages in this$3.1 billion market (Source: Company estimates, based on independent marketdata). Ardana's strategy is to manage risk by continuing to maintain a broad andbalanced pipeline of products and product candidates through relationships withleading research institutions and the acquisition of products and intellectualproperty rights. We have already established a targeted sales force in the UKand it is our intention to establish a sales and marketing infrastructure in thefive largest European markets to support the future launch of additionalproducts, as and when commercially appropriate. This infrastructure will be inplace to support the planned launch of Teverelix LA in Europe. Having our ownsales and marketing capability will allow us to keep more value in the Group forthe benefit of our shareholders. In the interim, commercialisation will be by acombination of our own sales teams and strategic partnerships. Currently, Ardana's key customers are endocrinologists and urologists and, asthe portfolio expands, the customer profile will include other reproductivehealth specialists such as obstetricians and gynaecologists. These are small,well circumscribed groups of clinicians easily addressed by a small team ofsales representatives. Striant(TM) SR An effective, unique and innovative controlled-release buccal tablet containing30 mg of testosterone indicated for testosterone replacement therapy in men withhypogonadism, the most common hormone deficiency in men. The Striant(TM) SRtablet is applied twice daily to the gum above the front incisor tooth,providing a novel method of delivery compared with existing testosteronereplacement products. Ardana commenced UK commercial sales in June 2004 and,following a positive opinion under the Mutual Recognition Procedure, has nowlaunched in Germany, the Republic of Ireland and the Nordic region, and isplanning launches in several other European countries. Striant(TM) SR is the first-to-market buccal adhesive tablet and marketing tourologists and endocrinologists in the UK by Ardana's own sales force continuesto progress. During June 2005 we announced that Ardana had signed an agreement grantingCytochemia AG exclusive rights to market Striant(TM) SR in Germany and inOctober we announced that Cytochemia had commenced marketing the product. Ardana received initial revenues during the period and will receive futurerevenues for the supply of Striant(TM) SR to Cytochemia. The German launch ofStriant(TM) SR was announced at the 57th Congress of the German Society ofUrology meeting in Dusseldorf, which was attended by approximately 3,000urologists. Striant(TM) SR is now available on prescription in Germany which,with an estimated market size of €15.2 million per annum (Source: Companyestimates, based on independent market data), is the largest market fortestosterone replacement therapies in Europe. Cytochemia will target all 3,500urologists plus andrologists in the country. Cytochemia has considerable experience in Germany selling to the samespecialists through their targeted sales force, which has a strong track recordin the education of physicians on product usage. Cytochemia has a verycomplementary portfolio to Ardana and its product ImmuCyst(TM), which has beenon the market for 13 years, is an established agent for the treatment andprevention of superficial bladder cancer. Striant(TM) SR represents an excellentfit with Cytochemia's product portfolio and will be an important addition. As the biggest and most developed market in Europe for testosterone replacement,Germany is key for Striant(TM) SR. In partnering with Cytochemia we believe thatthe product is in good hands to ensure a successful introduction in that market. We continue to develop our distribution capability in Europe with the grantingof exclusive rights to market Striant(TM) SR in the Republic of Ireland and toPharmacuro ApS for the Nordic region. Pharmacuro, established in 2003, is a young, dynamic, pharmaceutical marketingand distribution company that provides the medical communities of Denmark,Sweden, Norway and Finland with a range of products. Pharmacuro is also anexcellent strategic partner for Ardana: its focused marketing and sales forcetargets endocrinologists and it has already established strong relationships inthe Nordic region. The market size for testosterone replacement in the Nordicregion is estimated at approximately €3 million per annum (Source: Companyestimates, based on independent market data). Pharmacuro launched Striant(TM) SR in the Nordic market in June 2006. Teverelix LA A long-acting formulation of a GnRH (gonadotrophin releasing hormone) antagonistthat binds with a receptor in the pituitary gland, to provide dose-dependentcontrol of the release of sex hormones such as testosterone in men and oestrogenin women. GnRH is considered to be the master switch by which the body controlsthe production of sex hormones. The benefit of Teverelix LA is that its mode ofaction means that it can be used as either an "on/off" or ''dimmer'' switch forhormone release. This is important in those diseases where the progression ofthe disease relies on a supply of the sex hormones. Thus for the malignantdiseases Teverelix LA can switch off and stop the production of eithertestosterone or oestrogen and for the benign diseases it can reduce (or "dim")the levels of the sex hormones in a dose dependent manner thus alleviating theeffects of the disease with minimal risk of the side-effects of castration.Ardana is developing Teverelix LA initially to treat three major indications: • prostate cancer, • benign prostatic hyperplasia (BPH); and • endometriosis. In trials conducted to date, Teverelix LA has shown to be well tolerated anddemonstrates a dose-dependent reduction of testosterone in men and oestradiol inwomen. Teverelix LA - Prostate Cancer The progression of prostate cancer is driven by male sex hormones (androgens)such as testosterone. It is widely accepted that reducing levels of thesehormones in advanced disease can help slow the growth of the cancer and prolongsurvival. The production of testosterone can be reduced either surgically, withthe removal of the testes, or through medicines that affect production oftestosterone. Previous studies have confirmed that Teverelix LA can attain andmaintain suppression of testosterone to castration levels in patients withadvanced prostate cancer. On 7 September we announced that Ardana had a pre-Investigational New Drug (IND)application meeting with the FDA to discuss the development of Teverelix LA forthe treatment of prostate cancer. The FDA has confirmed that serum testosterone levels can serve as a reliablesurrogate marker for efficacy in the treatment of prostate cancer. The meetingreached agreement on the path forward for the development of Teverelix LA forthe treatment of prostate cancer, which should allow us to meet our registrationtimelines and previously announced launch target of the end of 2009. Wesubmitted to the FDA the first study to be performed under an IND in the pursuitof this indication in March 2006. Additional Phase II dose confirming studies are ongoing, and results from thesestudies should be available by the end of H2 2006. These studies give Ardana further insight into how Teverelix LA should be usedto achieve the optimal clinical effect in the treatment of prostate cancer,which is widely acknowledged to be a multi-billion dollar market. Our targetdate for a potential product launch is by the end of 2009. Teverelix LA - Benign Prostatic Hyperplasia (BPH) BPH is a common benign disease occurring in men over the age of 50, andincreases in prevalence with age. BPH is characterised by an enlargement of theprostate gland, which results in urinary flow problems such as hesitancy, weakor interrupted stream, urgency and more frequent urination, especially at night. The growth of prostatic tissue is driven by male sex hormones (androgens),primarily testosterone and its more potent metabolite dihydrotestosterone (DHT).Reducing levels of these hormones can reduce the size and growth of theprostate. In previous clinical studies, Teverelix LA has been shown to decrease serumtestosterone levels and subsequently DHT in a dose-dependent manner. Therefore,Teverelix LA can reduce serum testosterone levels to the low end of the normalrange, avoiding a chemical castration and its related symptoms. In our first Phase II study in patients with BPH, Teverelix LA demonstrated astatistically significant improvement in symptoms of BPH as measured by theInternational Prostate Symptom Score (IPSS). The FDA has confirmed thatimprovements in symptoms according to IPSS can serve as a single endpoint fortherapeutic and regulatory review. We are very encouraged by this Phase II study which provides proof-of-concept ofTeverelix LA as a potential treatment for BPH. Teverelix LA was well toleratedin this trial, without any signs of allergic reactions, and caused a rapid andprolonged improvement of the symptoms of BPH. These findings suggest thatTeverelix LA, administered by subcutaneous injection two to six times per year,could be used not only for the improvement of symptoms but also to delay theprogression of BPH. We believe that this compound has considerable potential inthe treatment of BPH which currently has a substantial pharmaceutical marketworth about $4.9 billion per annum (Source: Company estimates, based onindependent market data). On 21 September we announced that the launch of Teverelix LA in BPH could beadvanced by up to two years from earlier estimates, following a pre-INDapplication meeting with the FDA at which consensus on the company's developmentplan for the therapy was reached. We now expect that Teverelix LA in BPH couldreach the market in 2010. Another European Phase II study in patients with BPH has commenced and resultsare expected by the end of 2006. Teverelix LA - Endometriosis Endometriosis is a hormone responsive condition arising in women in which thetissue lining the uterus (the endometrium) grows outside the uterus. Theseectopic deposits are usually benign but are associated with pelvic pain, heavymenstruation and infertility. Reducing levels of female sex hormones (ie oestrogen) can cause endometrialgrowths to shrink. Our first Phase I trial completed last year showed thatTeverelix LA can decrease oestrogen in a dose-dependent manner. The first PhaseII trial to evaluate clinical proof-of-concept in patients is expected tocommence in H2 2006. Testosterone Cream Testosterone Cream is a novel transdermal testosterone delivery system based onour Bi-gel technology, which is in development for the treatment of malehypogonadism. On 31 October 2005 we announced positive results of a second Phase I study. Thestudy was in healthy female subjects to provide a control group equivalent tohypogonadal men with low serum testosterone levels. The study not only providedproof-of-concept on the delivery technology but also indicates that, using thiscream, testosterone can be effectively delivered through the skin to bringtestosterone levels to within the normal range observed in healthy males. ThesePhase I results are very encouraging. In April 2006 we announced positive results of Testosterone Cream in a Phase IIstudy in hypogonadal men. This Phase II dose-finding study provided clearevidence of the effectiveness of Ardana's Bi-gel technology for the transdermaldelivery of testosterone. We have commenced a further one month Phase II study in hypogonadal men toevaluate the steady state levels of serum testosterone and longer-termtolerability. Additionally, a Phase II dose-titration study is on track tocommence in H2 2006. We expect Testosterone Cream to have high patient acceptability. The cream isfast drying, has low alcohol content, and only requires application to a smallarea of the body. In January 2006 we reported on a pre-IND meeting with the FDA to discuss thedevelopment of Testosterone Cream. Agreement was reached on the next steps indevelopment of the product, which should allow Ardana to meet its registrationtimelines, with the product ready for launch by H1 2008. Ardana's IND with theFDA was opened in June 2006. Based upon the knowledge we have gained on our Bi-gel technology, Ardana candevelop not only additional compounds to market ourselves but also offer thisplatform to other companies and thereby generate licensing income. In 2005, the testosterone replacement market in Europe and in the US wasestimated to be approximately $527 million. The US market is by far the mostattractive with sales of $470 million, growing at 8%, of which $367 million weresales of testosterone gels (Source: Company estimates, based on independentmarket data). Other therapies for male hypogonadism include injectableformulations of testosterone, oral preparations, transdermal patches, topicalgels and subcutaneous implants. We have also completed a pilot Phase I study in women for female androgenreplacement. Invicorp(TM) We acquired the marketing rights for Invicorp(TM) in June 2004 from Senetek plcfor the European market. It is an injectable treatment for erectile dysfunction.Marketing authorisation for Invicorp(TM) has been granted in Denmark and weintend to initiate European Mutual Recognition proceedings and launch in 2006. Oral GHS We have been conducting early stage clinical development on an oral formulationof a Growth Hormone Secretagogue (EP01572), which is potentially useful as atreatment for growth hormone deficiency disorders and metabolic complicationsassociated with critical illness. EP01572 is a novel synthetic compound that is orally active and stimulates thesecretion of growth hormone (GH) from the patient's pituitary gland for thetreatment of growth hormone disorders. Phase I trial results show that EP01572stimulates GH release in a selective manner without affecting the stimulation ofother hormones and suggests it is well tolerated. Potential applications for EP01572 include the diagnosis and treatment of growthhormone deficiency disorders (especially in children), and frailty in theelderly as well as metabolic complications associated with critical illness suchas cachexia in cancer and AIDS, cancer, trauma, uremia, and lipodystrophy. The growth hormone market is worth about $3.1 billion per annum worldwide(Source: Company estimates, based on independent market data) and as themajority of products are injectables we believe that EP01572 could offer anattractive alternative for patients. Terbutaline Vaginal Gel Phase II trials on Terbutaline formulated as a bio-adhesive vaginal gel for useas a treatment for infertility linked to endometriosis are ongoing. Due todelays caused by additional regulatory requirements in one country we expect theresults from this trial to be available later in 2006. Commercial opportunities Our business development team, alongside expanding our portfolio in the field ofreproductive medicine, continues to look to create value by out-licensing othercompounds we own which are not core to our strategy. Operationally we continue to maximise value and manage risk in the businessthrough our flexible and low cost business model. We are building our sales andmarketing capability across Europe as strategically and financially appropriatewith our lead commercial product Striant(TM) SR, to be followed by Invicorp(TM)and Testosterone Cream, so that we can build a solid relationship with ourcustomers, develop our understanding of the market and demonstrate Ardana'scommitment to the area in advance of the launch of Teverelix LA. We are rapidlyexpanding our partnerships in research, regulatory and manufacturing all of whomare directed by our in house team of experienced managers. Our intention is to ensure that Teverelix LA, Testosterone Cream and GHS areoptimally developed and marketed worldwide. To this end Ardana plans to partnerthe development and commercialisation of these products. Board and management team We continue to expand and develop our Board and management team. We are pleased to welcome Huw Jones, Klaus Falk and John Hawkins to Ardana,bringing considerable pharmaceutical and commercial expertise to the business.Huw Jones, who joins Ardana as Non-executive Director, was formerly president ofCV Therapeutics Europe Ltd, senior vice-president Northern Europe of ElanPharmaceuticals and UK marketing director for SmithKline BeechamPharmaceuticals. We welcome Klaus Falk into the role of Vice-President, Sales &Marketing. Klaus has over 20 years of experience in the pharmaceutical industrycovering general management, sales and marketing and investor relations. Asvice-president (Europe) of Merck KGaA he was involved in the successful launchof the oncology product, Erbitux(TM). John Hawkins is appointed as Director ofHuman Resources has and brings over 19 years experience in Human Resources withorganisations such as Royal Bank of Scotland plc. Prior to his appointment, Johnworked with Ardana as a consultant. These appointments will bring significant benefits to Ardana, in particular aswe build further on our sales and marketing capabilities in the UK and Europe. Outlook We are very pleased with the progress across our product portfolio and arehighly encouraged by the feedback we have received from the FDA for Teverelix LAin the treatment of both prostate cancer and BPH and also for TestosteroneCream. The clinical development and launch of Teverelix LA for prostate canceris on track according to our original schedule in this multi-billion dollarmarket, and the opportunity to bring forward the launch date for BPH is veryexciting for ourselves and potential partners. We look forward to announcingfurther progress with our development programmes including the development ofthe third Teverelix LA indication of endometriosis. Ardana is in discussions with potential partners to collaborate on the futuredevelopment and commercialisation of Teverelix LA. Currently there are a numberof opportunities in terms of indications and territories which will allow Ardanato maximise shareholder value. This range of opportunities, combined with therecent emergence of new potential partners, has meant that the Company wishes totake more time to explore all the options. We expect to have agreements in placebefore the start of the first Phase III trials. Operationally we continue to manage risk in the business by looking forsignificant co-development partners for our products, through our flexible andlow cost business model and by developing a mix of products in our pipeline. Weintend to actively pursue product and technology in-licensing and acquisitionopportunities, and look to create value by out-licensing other compounds we ownwhich are not core to our strategy. Through these activities we aim to maximisethe value in our portfolio. Anticipated newsflow in next twelve months • Results from Phase II trial of Terbutaline • Launch Invicorp(TM) in Europe • Results from Phase II trial of Testosterone Cream • Commence Phase III trial of Testosterone Cream • Data from Phase II trial of Teverelix LA in the indication of BPH • Data from Phase II trial of Teverelix LA in the indication of prostate cancer • Phase III data and regulatory submission of Testosterone Cream • Data from Phase II trial of Teverelix LA in the indication of endometriosis • Partnership collaborations for Teverelix LA and other products Financial Review Summary Ardana is an early-stage pharmaceutical company investing in the development ofits product portfolio and marketing infrastructure. As such, the Group expectsto continue to incur operating losses for a number of years. The Group'sprincipal source of finance has been the issue of new share capital toshareholders. We intend to expand the sources of finance to include revenuesfrom out-licensing to third parties of products in development and furtherin-licensing of marketed products to increase product revenue. We continue to manage our development spend in a controlled and consistent wayand deliver results from our pipeline in accordance with expectations. Thisyear we have managed to increase our spending in research and development by 60%without significantly increasing our overall loss for the period. The financials statements are the first under which the Group is required toadopt International Financial Reporting Standards (IFRS). The Company financialstatements have also been prepared under IFRS. All comparatives have beenrestated to comply with the requirements of IFRS. A reconciled balance sheet at1 April 2004 and 31 March 2005 and an IFRS reconciliation of the Group's resultsfor the year ended 31 March 2005 were published in the Group's interim reviewfor the six month ended 30 September 2005. Operating results Of the total revenues for the year ended 31 March 2006 Striant(TM) SR productsales were £384,000 (2005: £60,000) in territories where launched. Sales ofservices for the year ended 31 March 2006 were £106,000 (2005: £75,000). Ardana made an operating loss of £10.0 million in the year compared to a loss of£9.0 million in 2005. This increase was due principally to increasing researchand development activity as our pipeline progresses. Research and developmentcosts this year represent 60% of our operating expenses compared to 43% in 2005. Other operating costs have decreased primarily due to the one off nature ofexpenses incurred in 2005 such as the launch costs for Striant(TM) SR in the UK,restructuring costs and IPO expenses. The income statement shows a taxation credit of £0.6 million (2005: £0.5million). This relates to research and development tax relief in respect ofqualifying expenditure incurred. Liquidity and capital resources On 31 March 2006 Ardana had cash and cash equivalents of £19.1 million (2005:£29.2 million). Net cash used by operating activities in the year was £11.4million (2005: £9.9 million) due principally to the operating loss incurredduring the year. Net cash from investing activities was £1.2 million (2005: £0.5 million). TheGroup invests funds which are surplus to short-term operational requirements infixed rate deposits placed with major clearing banks for up to twelve months.Changes in returns from investing activities reflect differences in average cashbalances and interest received on invested funds. Net assets at 31 March 2006were £17.4 million (2005: £25.4 million). This reduction is due to thecontinued investment in our product pipeline as described in the Chairman andChief Executive's Statement. Foreign currency risk Ardana translates transactions in foreign currencies at the rates applying onthe invoice date and retranslates foreign currency assets and liabilities at therate applying on the balance sheet date. Ardana's policy is to minimise foreigncurrency exposure on the balance sheet by naturally balancing foreign currencyassets and liabilities wherever possible. The Group does not use derivativefinancial instruments for speculative, hedging or any other purpose. Loss per share Loss per share in 2006 is 14.7p (2005: 20.7p). Financial outlook Ardana will continue to invest in its primary product development programmes forTeverelix LA, Invicorp(TM) and Testosterone Cream and roll out the sale anddistribution of Striant(TM) SR across European-licensed territories. We intend toactively pursue in-license opportunities to increase the number of marketedproducts to improve our product contribution to the business. The focus ofactivity for our business development team will be to out-license productswithin our portfolio to partners who will help to develop and market theproducts as well as share in the costs and risk. We would expect thatout-license deals will contribute significantly to cash flows after anyin-licensing costs in future years and prior to the more expensive Phase IIIstudies. Consolidated income statementFor the year ended 31 March 2006 Notes 2006 2005* £'000 £'000Revenue: continuing operations Product revenue 384 60 Revenue from sales of services 106 75 ______ ______ Total revenue 2 490 135 ______ ______ Operating expenses Cost of product sales (142) (11) Research and development (6,359) (3,977) Other operating expenses (4,021) (5,163) ______ ______ Total operating expenses (10,522) (9,151) Operating loss: continuing operations (10,032) (9,016) Gain on sale of available-for-sale investment 229 - Interest received 1,002 523 ______ ______ Loss on ordinary activities before taxation (8,801) (8,493)Taxation 5 633 479 ______ ______ Loss on ordinary activities after taxation (8,168) (8,014)attributable to equity holders ______ ______ Basic loss per share 3 (14.7p) (20.7p) During the year ended 31 March 2005, the Group carried out a corporaterestructuring including the incorporation of a new holding company. The incomestatement for the year ended 31 March 2005 has been prepared using mergeraccounting and the financial information is presented on a proforma basis as ifthe new holding company had been in existence and had been the parent of allgroup subsidiaries thoughout the entire comparative period. Consolidated balance sheetAs at 31 March 2006 Notes 2006 2005* £'000 £'000Non-current assets Property, plant and equipment 15 33 _____ _____ Current assets Inventories 76 107 Trade and other receivables 1,619 1,308 Cash and cash equivalents 19,051 29,182 _____ _____ 20,746 30,597 Total assets 20,761 30,630 Current liabilities Trade and other payables (3,360) (3,841) Non-current liabilities Trade and other payables - (1,373) _____ _____ Total liabilities (3,360) (5,214) _____ _____ Net assets 2 17,401 25,416 _____ _____ Equity Share capital 556 556 Other equity 240 93 Share premium account 26,949 26,949 Merger reserve 34,451 34,451 Own shares (95) (101) Retained earnings (44,700) (36,532) _____ _____Total equity 17,401 25,416 _____ _____ During the year ended 31 March 2005, the Group carried out a corporaterestructuring including the incorporation of a new holding company. The balancesheet as at 31 March 2005 has been prepared using merger accounting and thefinancial information is presented on a proforma basis as if the new holdingcompany had been in existence and had been the parent of all group subsidiariesthoughout the comparative period. Consolidated statement of changes in equityYear ended 31 March 2006 Share Other Share Merger Retained Own capital equity premium reserve earnings shares Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Opening balances 556 93 26,949 34,451 (36,532) (101) 25,416(01/04/2005) _____ _____ _____ _____ _____ _____ _____ Recognised directly inequityMovement in own shares - - - - - 6 6Share-based payment - 147 - - - - 147 _____ _____ _____ _____ _____ _____ _____ Net change directly in - 147 - - - 6 153equity _____ _____ _____ _____ _____ _____ _____ Loss for the year - - - - (8,168) - (8,168) _____ _____ _____ _____ _____ _____ _____ Total movements - 147 - - (8,168) 6 (8,015) _____ _____ _____ _____ _____ _____ _____ Equity at the end of 556 240 26,949 34,451 (44,700) (95) 17,401the year _____ _____ _____ _____ _____ _____ _____ Consolidated cash flow statement For the year ended 31 March 2006 Notes 2006 2005* £'000 £'000 Cash flows from operating activities Cash used by operations 4 (11,775) (10,305) Corporation tax received 418 384 Net cash used by operating activities (11,357) (9,921) Investing activities Interest received 1,002 523 Realised gain on sale of available-for-sale investment 229 - Proceeds on disposal of property, plant and equipment - 8 Purchase of property, plant and equipment (11) (36) _____ _____ Net cash from investing activities 1,220 495 Financing activities Issue of shares - 27,349 Purchase of own shares 6 105 _____ _____ Net cash from financing activities 6 27,454 _____ _____ Net (decrease)/increase in cash and cash equivalents (10,131) 18,028 Cash and cash equivalents at beginning of year 29,182 11,154 Cash and cash equivalents at end of year 19,051 29,182 _____ _____ * During the year ended 31 March 2005, the Group carried out a corporaterestructuring including the incorporation of a new holding company. The cashflow statement for the year ended 31 March 2005 has been prepared using mergeraccounting and the financial information is presented on a proforma basis as ifthe new holding company had been in existence and had been the parent of allgroup subsidiaries thoughout the entire comparative period. Notes to the financial information 1. Basis of Preparation of Financial Information The financial information set out in the announcement does not constitute theCompany's statutory financial statements for the years ended 31 March 2006 or2005. The financial information for the year ended 31 March 2005 is derivedfrom the statutory financial statements for that year which have been deliveredto the Registrar of Companies and which have been restated under IFRS. Theauditors reported on those financial statements; their report was unqualifiedand did not contain a statement under s. 237 (2) or (3) Companies Act 1985. Thefinancial information for the year ended 31 March 2006 is derived from thestatutory financial statements for that year which have been approved by theBoard of Directors but which have not, at the date of this preliminaryannouncement, been delivered to the Registrar of Companies. The auditorsreported on these financial statements, their report was unqualified and did notcontain a statement under s. 237 (2) or (3) Companies Act 1985. The financialstatements for the year ended 31 March 2006 will be delivered to the Registrarof Companies following the Company's Annual General Meeting. While the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards(IFRSs), this announcement does not itself contain sufficient information tocomply with IFRSs. The Company expects to publish full financial statementsthat comply with IFRSs in July 2006. The Company's accounting policies under IFRS were disclosed in the interimreport for the 6 months ended 30 September 2005. The financial informationherein has been prepared in accordance with those accounting policies. The company's financial statements for the year ended 31 March 2006 are thefirst financial statements to be prepared in accordance with IFRS. Thedisclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS,including a reconciled opening balance sheet as at 1 April 2004 and comparativebalance sheet as at 31 March 2005, and an IFRS reconciliation of the Group'sresults for the year ended 31 March 2005, are included in the statutoryfinancial statements of the Company for the year ended 31 March 2006. Thisinformation was included in the Company's interim report for the 6 months ended30 September 2005. There were no significant differences between the results,position and cash flows of the Group under UK GAAP and IFRS. 2. Business and geographical segments Primary reporting format - business segments The Directors consider that the primary reporting format is by business segment.The Group discovers, develops and markets a range of pharmaceutical products.The Directors consider that there is only one business segment, beingpharmaceuticals. Revenue and the carrying value of assets in respect ofmarketing are less than 10% in the current year and so have not been disclosedseparately. This may change as the business develops through the sale orlicensing of intellectual property or other development rights and services. Secondary reporting format - geographical segments The Group's operations are located in the UK, with commercialisation anddevelopment activities being carried out in the UK and the rest of Europe. The following table provides an analysis of the Group's revenue by geographicalmarket: Revenue from external customers by geographical market 2006 2005 £'000 £'000 UK 207 60Rest of Europe 283 75 _____ _____ 490 135 _____ _____ The following table provides an analysis of the carrying amount of segmentassets: Total assets by geographical market 2006 2005 £'000 £'000 UK 17,401 25,416Rest of Europe - - _____ _____ 17,401 25,416 _____ _____ 3. Loss per share Basic loss per share is calculated by dividing the loss for the financial periodafter taxation by the weighted average number of ordinary shares in issue duringthe period. The basic loss per share is calculated as follows: 2006 2005Loss after taxation (£'000) (8,168) (8,014)Weighted average number of ordinary shares in issue 55,562,806 38,717,240 ______ ______Basic loss per share (14.7p) (20.7p) ______ ______ 4. Net cash used by operations 2006 2005 £'000 £'000Operating loss (10,032) (9,016)Depreciation 29 29Decrease/(increase) in inventories 31 (107)Increase in trade and other receivables (96) (184)Decrease in trade and other payables (1,854) (1,095)Share-based payments 147 68 _____ _____Net cash used by operations (11,775) (10,305) _____ _____ 5. Taxation 2006 2005 £'000 £'000UK corporation tax credit 669 492Adjustment in respect of prior years (36) (13) _____ _____Total tax credit for the year 633 479 _____ _____ 6. Approval by the Directors This announcement was approved by the Directors on 28 June 2006. This information is provided by RNS The company news service from the London Stock Exchange