Aura Renew Acq Regulatory News (ARA)

28 Jun 2007 07:02

Ardana PLC28 June 2007 PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2007 Ardana plc (LSE: ARA), the emerging pharmaceutical company focused on thediscovery, development and marketing of innovative products to improve humanreproductive health, today announces its Preliminary Results for the year ended31 March 2007. Highlights Commercial- Emselex(R) (darifenacin hydrobromide) o Agreement reached with Novartis for promotion by ardana in the UK o Product launched - Invicorp(TM) o Launched in Denmark - Striant(TM) SR o Launched in the Netherlands - Teverelix Long Acting (LA) o Discussions with potential development partners ongoing; intend to complete before start of Phase III studies Pipeline development- Teverelix LA o US patent granted o Positive preliminary Phase II results in the indication of benign prostatic hyperplasia (BPH) o Positive preliminary Phase I results in the indication of endometriosis o Further Phase I results of Teverelix LA to support the indication of prostate cancer - Testosterone Cream - testosterone replacement in male hypogonadism o Positive preliminary Phase II results o Commencement of Phase III study Financial - Loss before tax for the year ended 31 March 2007 of £12.2 million (2006: £8.8 million)- Research and development costs expensed of £8.9 million (2006: £6.4 million)- Placing and Open Offer in October 2006 raised an additional £9.9 million after expenses- Cash and cash equivalents at 31 March 2007 of £16.6 million (2006: £19.1 million) People - Huw Jones appointed as Non-executive Director Recent events - ARD-07, oral Growth Hormone Secretagogue (GHS) o Orphan Drug status granted by US Food and Drug Administration (FDA) o Site initiation for pivotal registration study for diagnosis of growth hormone deficiency - Positive opinion received from the Scottish Medicines Consortium (SMC) for Emselex(R)- Chris Moyses replaces Ian Kent as Non-executive Director Dr Maureen Lindsay, CEO, commented "During the financial year we have madesignificant progress towards our objective of building a successfulpharmaceutical business in the field of reproductive health. This progressincludes the expansion of our product portfolio to include Novartis' Emselex(R),reporting good clinical results with Teverelix in all three indications andTestosterone Cream, and obtaining Orphan Drug Status for our oral GHSdiagnostic. We are particularly pleased that Testosterone Cream has recentlycommenced Phase III registration studies and sites have been initiated in apivotal registration study for GHS. This is the first Phase III study Ardanahas undertaken and represents a significant milestone for the company. We areexcited by the prospects for these and our other product candidates, and lookforward to reporting on further results during the current financial year." Enquiries For more information contact: Maureen Lindsay/Graham Lee + 44 (0) 131 226 8550Ardana Julia Phillips/John Gilbert +44 (0) 20 7831 3113Financial Dynamics Ardana plc is a pharmaceutical company focused on the discovery, development andmarketing of innovative products to improve human reproductive health, a US$25.5billion market*. Since its foundation, Ardana has built a broad and balanced portfolio to managerisk and actively pursues product and technology in-licensing and outlicensingto maintain a robust pipeline. Ardana's lead products are summarised below: • Emselex(R), a once a day treatment for the symptoms of overactive bladder syndrome, which Ardana has exclusive UK marketing and promotion rights and is being distributed in collaboration with Novartis Pharmaceuticals UK Limited; • Striant(TM) SR, a testosterone replacement therapy for men with confirmed hypogonadism, that has been launched by Ardana through its own sales force in the UK and through marketing partners in certain European countries; • Invicorp(TM), an injectable combination drug treatment for erectile dysfunction, for which Ardana has marketing and manufacturing rights in Europe, which has been launched in Denmark and is awaiting commencement of EU Mutual Recognition Procedure (MRP); • Testosterone Cream, a trans-dermal testosterone delivery system in development for the treatment of male hypogonadism, in Phase III trials; • GHS, a growth hormone secretagogue in late stage development for the diagnosis of growth hormone deficiency; and • Teverelix LA, in development for three initial indications (prostate cancer, benign prostatic hyperplasia and endometriosis). In addition, Ardana has a strong portfolio of follow-on products in development.Ardana is listed on the Official List of the London Stock Exchange. 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'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 onthe therapeutic area of human reproductive health; • Actively pursuing an in-licensing and acquisition programme forproducts and technologies to maintain a robust pipeline, including near-termcommercial products and potential high value development candidates; • Retaining value in our portfolio by building a sales and marketingcapability in leading European markets, through both our own infrastructure andpartnerships; and • Maintaining a lean organisation by selective outsourcing in order toachieve flexibility. We continued our rapid progress during the financial year. In October 2006 wecompleted a Placing and Open Offer, which raised £9.9 million after expenses.The net proceeds will be used to launch and promote Emselex(R) and to invest inthe clinical development of ARD-07, Ardana's oral Growth Hormone Secretagogue(GHS), in its first indication for the diagnosis of growth hormone deficiencyand in the first therapeutic indication. We continue to expand and develop our Board to meet the challenges facing thebusiness as it grows. We are pleased to welcome two new Non-executive Directorsto Ardana. Huw Jones, who joined the Board in June 2006, brings pharmaceuticalsales and commercial expertise to the business. Huw was formerly president ofCV Therapeutics Europe Ltd, senior vice-president Northern Europe of ElanPharmaceuticals and UK marketing director for SmithKline BeechamPharmaceuticals. Huw joined each of the Board committees. Dr Chris Moyses was appointed to the Board on 27 June 2007. Chris is a Memberof the Royal College of Physicians of London, and is currently Chief MedicalOfficer of Argenta Discovery Ltd. He brings substantial clinical and technicalexperience to Ardana. Chris joins each of the Board committees. On behalf of the Company and my fellow Directors I would like to thank Ian Kent,a founder Director who after almost seven years on the Board has announced hisretirement with effect from 27 June 2007. Ian has given invaluable advice andsupport to the Company in its formative years which has been appreciated by allwho have worked with him. We wish him every success with his other ventures.Huw Jones will replace Ian Kent as Chair of the Remuneration Committee. These key appointments will bring significant benefits to Ardana, in particularas we progress our development pipeline and build further on our sales andmarketing capabilities in the UK and Europe. I believe Ardana is well-positioned to meet the challenges that it faces. Ithank the Board for their hard work this year and we look forward to continuingto deliver on our key strategic aims and generating value for our shareholders. Chief Executive's Statement During the financial year we have made significant progress across all aspectsof Ardana's business. In September 2006 we reached agreement with NovartisPharmaceuticals UK Ltd ("Novartis") for Ardana to be granted sole and exclusiverights to launch and promote Emselex(R) for the symptomatic treatment ofoveractive bladder ("OAB") in the UK for a 10 year term. Emselex(R) wassubsequently launched by Ardana in November 2006. Our compounds in clinical development are advancing to plan. We areparticularly pleased that our Testosterone Cream has recently commenced a PhaseIII registration study; this is the first Phase III study Ardana has undertakenand represents a significant milestone for the Company. Also sites have beeninitiated in the pivotal registration study for oral GHS. We are excited by theprospects for both these product candidates, and look forward to reporting onthe preliminary results during the current financial year. Our lead compound, Teverelix LA, progresses well, and we have announced positivepreliminary results from studies across all three indications; prostate cancer,benign prostatic hyperplasia (BPH) and endometriosis, during the last twelvemonths. 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 defined groups of clinicians easily addressed by a small team of salesrepresentatives. Emselex(R) Ardana has reached agreement with Novartis to be granted the sole and exclusiverights to launch and promote Emselex(R) (darifenacin hydrobromide) in the UK.Emselex(R) is an oral once-daily muscarinic M3 selective receptor antagonist (M3SRA) for the treatment of OAB. Symptoms of OAB include urinary urgency (asudden and compelling desire to pass urine, which is difficult to defer) with,or without, urge urinary incontinence (involuntary leakage accompanied orimmediately preceded by urgency), usually with urinary frequency (voiding thebladder too often), and nocturia (waking at night one or more times to void thebladder). Emselex(R) works by selectively inhibiting the M3 receptor, the primary mediatorof detrusor contraction, whilst relatively sparing the M1 and M2 receptors thatare located in various body organs, including the brain and heart. Emselex(R)has been shown to effectively reduce the number of weekly incontinence episodesby up to 77 per cent. versus baseline. Pooled data from Phase III studiesshowed that the incidence of cardiovascular adverse events for Emselex(R) waslow. Furthermore, a study in elderly healthy volunteers indicated that Emselex(R) did not significantly impair memory function. In clinical trials involving more than 10,000 subjects and patients, Emselex(R)has been shown to improve significantly all other key symptoms of OAB across arange of pivotal endpoints. These include the number of times patients had tovisit the bathroom each day, frequency of urgency, severity of urgency and thenumber of incontinence episodes leading to a change in clothing or pads.Consistent with the pharmacological profile of Emselex(R), the most commonlyreported adverse events were dry mouth and constipation, but discontinuationfrom treatment due to these adverse reactions was infrequent. In 2001 the OAB market was estimated to be worth £45.5 million per annum. TheOAB market in the UK is currently estimated at £91.7 million and is estimated tobe growing at 11 per cent. per annum (source: IMS Health MAT 4/07). Emselex(R), 7.5mg and 15mg, was granted Marketing Authorisation for thetreatment of OAB in all 25 EU member states as well as Norway and Iceland inOctober 2004. Novartis is able to market Emselex(R) throughout these countries.Novartis has entered into commercial arrangements for Emselex(R) forterritories other than the UK. For instance, Emselex(R) in Germany was launchedin collaboration with Bayer Vital GmbH in December 2004, and in the US, whereEmselex(R) is known as Enablex(R), in collaboration with Procter & GamblePharmaceuticals, Inc in July 2005. Emselex(R) is a product which fits with Ardana's therapeutic focus of humanreproductive health. One of the potential groups of customers for Emselex(R) isurologists, which will also be the core customer group for Ardana's erectiledysfunction product, Invicorp. This additional marketed product in the UKleverages the current sales force, and presents an opportunity for Ardana togrow its sales and marketing infrastructure in time for the anticipated UKlaunch of Testosterone Cream and GHS as a diagnostic. Under the terms of the 10 year agreement Ardana will be responsible forlaunching Emselex(R) in the UK and thereafter for all promotional activities inthe UK including sales force promotion and production of marketing and trainingmaterials. Novartis will be responsible for the manufacture and distribution ofEmselex(R). Ardana launched Emselex(R) in the UK in November 2006. The product has receiveda positive opinion from both the National Institute for Health and ClinicalExcellence (NICE) in October 2006 and the Scottish Medicines Consortium in June2007. Striant(TM) SR An effective, unique and innovative controlled-release buccal tablet containing30 mg of testosterone indicated for testosterone replacement therapy in men withconfirmed hypogonadism, the most common hormone deficiency in men. The Striant(TM) SR tablet 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. 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 February 2006 we further extended our partnership network by signing anagreement granting Twinpharma BV exclusive rights to market Striant(TM) SR in the Netherlands. Following a positive opinion under the Mutual Recognition Procedure, Striant(TM)SR has now launched in Germany, the Republic of Ireland, the Netherlands and theNordic region. We will continue to develop our distribution capability aroundEurope with the appointment of further strategic partners. Teverelix LA A long-acting formulation of a GnRH (gonadotrophin releasing hormone) antagonistthat provides dose-dependent control of the release of sex hormones such astestosterone in men and oestrogen in women. GnRH is considered to be the masterswitch by which the body controls the production of sex hormones. The potentialbenefit of Teverelix LA is that its mode of action means that it can be used aseither an "on/off" or ''dimmer'' switch for hormone release. This is importantin those diseases where the progression of the disease is fuelled by a supply ofthe sex hormones. Thus for the malignant diseases Teverelix LA can switch offand stop the production of either testosterone or oestrogen. In the case ofbenign diseases, Teverelix LA can decrease (or "dim") the levels of the sexhormones in a dose-dependent manner, reducing sex hormone levels to the low endof the normal range, which should result in symptomatic benefit while helping toavoid a chemical castration and its related symptoms. Ardana is developingTeverelix LA initially to treat three major indications: • prostate cancer • benign prostatic hyperplasia (BPH) • 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. During August 2006 we were delighted to announce that we have been granted a USpatent covering the long acting formulation of our GnRH antagonist, Teverelix(Teverelix LA). The patent is subject to a US patent term extension, which meansthat it is not due to expire in the US until April 2023. 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. During 2006 we reported positive results from Phase II trials of Teverelix LA inthe indication of prostate cancer. We have continued this development duringthe current year and in February 2007 reported the results of a Phase I study,which provided evidence that, over an 8-week period, there were no significantdifferences between normal weight and obese subjects, in terms of both thepharmacokinetics of Teverelix LA and its effect on testosterone suppression.This study had been undertaken in response to an issue raised by the US Food andDrug Administration ("FDA") at a pre-IND (Investigational New Drug) meeting heldin 2005. Ardana has reached agreement with the FDA on the path forward for thedevelopment of Teverelix LA for the treatment of prostate cancer. The use ofTeverelix LA in the treatment of prostate cancer will be the subject of furtherPhase II clinical trials for optimisation of the dose regimen and these areeither ongoing or planned. On completion of the Phase II programme, if theresults are positive, Ardana intends to commence Phase III clinical trials,subject to the appointment of a partner, targeting an earliest product launchdate in the multi-billion dollar prostate cancer market, towards the end of2009. 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 December 2006 we announced preliminary results of a Phase II study, in whichTeverelix LA, administered as a single subcutaneous injection, demonstratedsymptomatic improvement from as early as week two and the duration of the effectappears to be in the order of 8 weeks based upon a preliminary analysis of therelevant clinical endpoint, the International Prostate Symptom Score (IPSS). 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, which should avoid a chemical castration and its related symptoms. In anearlier Phase II study in patients with BPH, Teverelix LA demonstrated astatistically significant improvement in symptoms of BPH as measured by theIPSS. We are very encouraged by the results of our Phase II studies, which suggestthat Teverelix LA, administered by subcutaneous injection two to six times peryear, could be used not only for the improvement of symptoms but also to delaythe progression of BPH. We believe that this compound has considerable potentialin the BPH market, which is currently worth about US$4.9 billion per annum(source: Wood Mackenzie). With consensus reached with the FDA on the company'sdevelopment plan for the therapy, we anticipate that Teverelix LA in BPH couldreach the market in 2010. 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. On 7 September 2006 we announced preliminary results of a Phase I study ofTeverelix LA in healthy female subjects. Preliminary data from this Phase I,randomised, single-blind, placebo-controlled study of a single subcutaneousinjection of Teverelix LA, at one of two doses to 24 healthy female subjects,indicates that Teverelix LA can reduce oestrogen levels to a desired level atthe lower end of the normal range which should help to avoid menopausal signsand symptoms including bone loss. In this study oestrogen levels were reducedto average concentrations over a period of 8 weeks to 40.5 pg/ml and 49.0 pg/mlrespectively vs. 88.8 pg/ml for placebo. The effect of Teverelix LA on certain bone absorption markers was alsoinvestigated in the study. On the basis of the available data these markersappear unaffected by Teverelix LA. Additional data analysis is ongoing. This study provides data to support the further development of Teverelix LA inendometriosis. Treatment of this indication meets a significant unmet medicalneed, and a Phase II study is being planned. Testosterone Cream We are developing Testosterone Cream for the treatment of male hypogonadism. Itis based on our Bi-Gel technology, which is a novel trans-dermal drug deliverysystem. In September 2006 we announced preliminary results of a Phase II study inhypogonadal men. The open-label, randomised study involved 16 patients diagnosedwith male hypogonadism i.e. testosterone deficiency. A preliminary analysis ofthe data confirms that Ardana's Testosterone Cream is effective in restoringtestosterone levels to the normal range in hypogonadal men when administered asa single dose of 2.25g or 4.5g on a daily basis. Furthermore, the data suggeststhat Testosterone Cream should meet efficacy criteria set by the FDA. A Phase II long-term dose-titration study in hypogonadal men is currentlyongoing. Also a Phase I study, conducted in the US under an IND application, isongoing, investigating the effect of showering on the absorption oftestosterone. We have commenced a pivotal Phase III registration study in the US. We lookforward to reporting on preliminary results from our Phase III study during thecurrent financial year. We are very encouraged by our progress in the development of Testosterone Cream.In 2006 (source: IMS Health, MAT 4/06), the testosterone replacement market inEurope and in the US was estimated to be US$550 million, of which the US marketis the most attractive, accounting for 90% of the total sales. In the USmarket, which is growing at around 8% per annum, testosterone gels account forover 75% of sales. Other therapies for male hypogonadism include injectableformulations of testosterone, oral preparations, transdermal patches, topicalgels, subcutaneous implants and buccal tablets. Based upon the knowledge we have gained on our Bi-Gel technology, Ardana shouldbe able to not only develop additional compounds to market ourselves but alsooffer this platform to other companies and thereby generate licensing income. Accordingly, we have utilised the Bi-Gel technology to complete a pilot Phase Istudy in a female indication. 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 erectiledysfunction. Marketing authorisation for Invicorp(TM) has been granted in Denmark and in December 2006 we announced that Invicorp(TM) has been launched in that country. We are awaiting the initiation of the European Mutual RecognitionProcedure and hope to launch in other European markets during this financialyear. Oral GHS We are very pleased to have commenced a pivotal registration study of our oralformulation of GHS for the diagnosis of growth hormone deficiency in adults.Earlier clinical development has indicated that oral GHS may potentially beuseful as a treatment for growth hormone deficiency disorders and metaboliccomplications associated with critical illness. GHS 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 GHSstimulates GH release in a selective manner without affecting the stimulation ofother hormones and suggest it is well tolerated. As well as being developed as a diagnostic for GH deficiency, potentialapplications for GHS include the diagnosis and treatment of growth hormonedeficiency disorders (especially in children), and frailty in the elderly aswell as metabolic complications associated with critical illness such ascachexia (wasting) in cancer and AIDS, trauma, uremia, and lipodystrophy. Thegrowth hormone market currently is worth about US$3.1 billion per annumworldwide (source: Wood Mackenzie) and as the majority of products areinjectables we believe that GHS could offer an attractive alternative forpatients. 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. Followingdelays caused by additional regulatory requirements in one country we expect theresults from this trial to be available during the current financial year. Commercial opportunities Our business development team, alongside expanding our portfolio in the field ofreproductive medicine, looks to create value by out-licensing other compounds weown which are not core to our strategy. Operationally our strategy is 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 commercial products Emselex(R) and Striant(TM) SR, to be followed byInvicorp(TM) and Testosterone Cream, so that we can build a solid relationshipwith our customers, develop our understanding of the market and demonstrateArdana's commitment to the area in advance of the launch of Teverelix LA. Weare rapidly expanding our partnerships in research, regulatory and manufacturingall of whom are directed by our team of experienced managers. Management team As our business develops and expands we are gradually building an experiencedteam to manage our increasingly complex operations. To this end we have strengthened our management team with the appointment of DrLaurence Skillern (previously at Pfizer) as our new Vice President, ClinicalDevelopment, and Guthrie Sloss (previously at Aventis) as our Vice President,Manufacturing. Both Laurence and Guthrie bring with them extensivepharmaceutical, technical and regulatory experience which will be invaluable toArdana, as we progress our development pipeline and build further on our salesand marketing capabilities in the UK and Europe. Outlook We are very pleased with the progress across our product portfolio and areexcited by the prospects afforded by our Testosterone Cream and oral GHS productcandidates which have recently commenced Phase III trials. Our lead compoundTeverelix LA, continues to progress well across all three indications; prostatecancer, BPH and endometriosis. The clinical development and launch of TeverelixLA for prostate cancer is on track in this multi-billion dollar market, and theopportunities this product brings are very exciting for ourselves and potentialpartners. Ardana is in discussions with potential partners to collaborate on the futuredevelopment and commercialisation of Teverelix LA. We expect to have agreementsin place before the start of the first Phase III trials, and concluding thesediscussions is management's top priority. We believe it is important to retain value in the business for our shareholdersby developing our own sales force. With two products potentially ready forlaunch in the US within the next two financial years we are considering Ardana'sstrategic options to maximise the value of our portfolio in the US. Furthermore, assuming clinical development and regulatory approvals progress asplanned, the broad and balanced pipeline we are building means that we have thepotential for one product launch each year for the next five years. Through all the activities I have outlined we aim to maximise the value in ourportfolio. Anticipated newsflow in next twelve months • Partnership collaborations for Teverelix LA and other products• 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• Invicorp(TM) mutual recognition• Launch of Invicorp(TM) in the UK and Germany• Data from Phase III trial of Testosterone Cream• Regulatory submission of Testosterone Cream• Data from registration study of oral GHS as a diagnostic• Regulatory submission of oral GHS as a diagnostic Financial Review Summary Ardana is an early-stage pharmaceutical company investing in the development ofits product portfolio and marketing infrastructure. We continue to manage our research and development spend and overhead costs in acontrolled and consistent way to deliver results from our pipeline in accordancewith expectations. In this regard we have increased our spending on researchand development by 40% over the previous year to continue the Teverelixprogramme and also to support the start of the phase III development inTestosterone Cream and GHS diagnostic. The latter is in line with the programmeoutlined in our October fundraising. We are also tightly managing our otheroperating expenses, which have only increased by 7.5% despite our investment inadditional sales representatives and marketing expense for the launch of Emselex(R) Operating results Total revenues from product sales for the year ended 31 March 2007 were £240,000(2006: £384,000) being predominantly sales of Striant(TM) SR. Product revenuesfrom our European partners are, and will be, periodic bulk contractual salesinto the relevant territories and so will not allow a consistent comparison yearon year. Sales of services represent revenue from sales and marketingactivities which for the year ended 31 March 2007 were £17,000 (2006: £106,000). Ardana made an operating loss of £13.0 million in the year compared to a loss of£10.0 million in 2006. This increase was due principally to our investment inresearch and development activity as our pipeline progresses. Research anddevelopment costs this year represent 67% of our operating expenses compared to60% in 2006. Other operating costs have increased by 7.5% primarily due to theincrease in sales and marketing expense for the launch of Emselex(R) this year. The income statement shows a taxation credit of £0.8 million (2006: £0.6million). This relates to research and development tax credit on qualifyingexpenditure incurred. Liquidity and capital resources On 31 March 2007 Ardana had cash and cash equivalents of £16.6 million (2006:£19.1 million). Net cash used by operating activities in the year was £13.1million (2006: £11.4 million) due principally to the operating loss incurredduring the year. Net cash from investing activities, being revenue from the investment ofavailable cash funds, was £0.2 million (2006: £1.2 million). The decline in2007 follows cash outflows for the purchase of product rights and lower incomereceived from declining average cash deposits and investments. The product rights have been capitalised within intangible assets and are beingamortised over ten years. The Group invests funds which are surplus to short-term operational requirementsin fixed rate deposits placed with major clearing banks for up to twelve months.Changes in returns from investing activities reflect differences in averagecash balances and interest received on invested funds. Net cash from financing activities was £10.4 million (2006: Nil) predominantlyreflecting the Placing and Open Offer in October 2006 which raised £9.9 millionafter expenses. Net assets at 31 March 2007 were £16.5 million (2006: £17.4 million). Thisreduction is due to the continued development cost for our product pipeline asdescribed in the Chief 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. Our 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 (basic and diluted) in 2007 is 18.9p (2006: 14.7p). Financial outlook Ardana will continue to invest in its primary product development programmes forTeverelix LA, GHS and Testosterone Cream and roll out the sale and distributionof Striant(TM) SR and Invicorp(TM) across European-licensed territories. The Group expects that research and development costs will exceed the revenue derived from the sale of products and services for the near future. The Group's principal source of finance has been the issue of new share capital to shareholders. We intend to expand the sources of finance to include revenues from out-licensing to third parties of products in development and further in-licensing of marketed products to increase product revenue. The Group intends to actively pursue in-license opportunities to increase thenumber of marketed products to improve our product contribution to the business.The focus of activity for our business development team will be to out-licenseproducts within our portfolio to partners who will help to develop and marketthe products as well as share in their costs and risk. We would expect thatout-license deals will contribute significantly to cash flows after anyin-licensing costs in future years. Consolidated income statementFor the year ended 31 March 2007 Notes 2007 2006 £'000 £'000Revenue: continuing operations Product revenue 240 384 Revenue from sales of services 17 106 _____ _____ Total revenue 2 257 490 _____ _____ Operating expenses Cost of product sales (69) (142) Research and development (8,889) (6,359) Other operating expenses (4,324) (4,021) _____ _____ Total operating expenses (13,282) (10,522) Operating loss: continuing operations (13,025) (10,032) Gain on sale of available-for-sale investment - 229 Interest received 817 1,002 _____ _____ Loss on ordinary activities before taxation (12,208) (8,801)Taxation 5 837 633 _____ _____ Loss for the financial year (11,371) (8,168) _____ _____ Basic and diluted loss per share 3 (18.9p) (14.7p) Consolidated balance sheetAs at 31 March 2007 Notes 2007 2006 £'000 £'000Non-current assets Intangible assets 585 - Property, plant and equipment 14 15 _____ _____ 599 15 _____ _____ Current assets Inventories 298 76 Trade and other receivables 738 459 Research and development tax credits receivable 837 1,160 Cash and cash equivalents 16,576 19,051 _____ _____ 18,449 20,746 _____ _____ Total assets 19,048 20,761 _____ _____ Current liabilities Trade and other payables (2,510) (3,360) _____ _____ Total liabilities (2,510) (3,360) _____ _____ Net assets 2 16,538 17,401 _____ _____ Equity Share capital 655 556 Other equity 375 240 Share premium account 37,135 26,949 Merger reserve 34,451 34,451 Own shares (13) (95) Retained earnings (56,065) (44,700) _____ _____Total equity 16,538 17,401 _____ _____ Consolidated statement of changes in equityYear ended 31 March 2007 Share Other Share Merger Own Retained Total capital equity premium reserve shares earnings £'000 £'000 £'000 £'000 £'000 £'000 £'000 Opening balances 556 240 26,949 34,451 (95) (44,700) 17,4011 April 2006 _____ _____ _____ _____ _____ _____ _____ Recognised directly inequityIssue of shares 96 - 10,927 - - - 11,023Cost of share issue - - (1,068) - - - (1,068)Equity share options 3 - 327 - - - 330exercisedMovement in own shares - - - - 82 - 82Gain on sale of EBT - - - - - 6 6sharesShare-based payment - 135 - - - - 135 _____ _____ _____ _____ _____ _____ _____ Net change directly in 99 135 10,186 - 82 6 10,508equity _____ _____ _____ _____ _____ _____ _____ Loss for the year - - - - - (11,371) (11,371) _____ _____ _____ _____ _____ _____ _____ Total movements 99 135 10,186 - 82 (11,365) (863) _____ _____ _____ _____ _____ _____ _____ Equity at the end of 655 375 37,135 34,451 (13) (56,065) 16,538the year _____ _____ _____ _____ _____ _____ _____ Consolidated cash flow statementFor the year ended 31 March 2007 Notes 2007 2006 £'000 £'000 Cash flows from operating activities Cash used by operations 4 (14,212) (11,775) Corporation tax received 1,160 418 _____ _____ Net cash used by operating activities (13,052) (11,357) Investing activities Purchase of product rights (600) - Interest received 817 1,002 Realised gain on sale of available-for-sale investment - 229 Purchase of property, plant and equipment (13) (11) _____ _____ Net cash from investing activities 204 1,220 Financing activities Issue of shares 11,023 - Cost of share issue (1,068) - Equity share options exercised 330 - Sale of own shares 88 6 _____ _____ Net cash from financing activities 10,373 6 _____ _____ Net decrease in cash and cash equivalents (2,475) (10,131) Cash and cash equivalents at beginning of year 19,051 29,182 _____ _____ Cash and cash equivalents at end of year 16,576 19,051 _____ _____ Notes to the financial information 1. Presentation of financial statements The financial information set out above does not constitute Ardana's statutoryaccounts for the years ended 31 March 2007 or 2006 but is derived from theseaccounts. Statutory accounts for 2006 have been delivered to the Registrar ofCompanies for England and Wales and those for 2007 will be delivered followingthe annual general meeting. The auditors have reported on those accounts; theirreports were unqualified and did not contain statements under s237(2) or (3)Companies Act 1985. Whilst 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 statements thatcomply with IFRS in July 2007. The financial information set out in this preliminary statement includescomparative figures that have been prepared on the same basis. 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 2007 2006 £'000 £'000UK 131 207Rest of Europe 126 283 _____ _____ 257 490 _____ _____ The following table provides an analysis of the carrying amount of segmentassets: Total assets by geographical market 2007 2006 £'000 £'000UK 16,538 17,401Rest of Europe - - _____ _____ 16,538 17,401 _____ _____ 3. Loss per share Basic and diluted loss per share is calculated by dividing the loss for thefinancial period after taxation by the weighted average number of ordinaryshares in issue during the period. The basic loss per share is calculated as follows: 2007 2006Loss after taxation (£'000) (11,371) (8,168)Weighted average number of ordinary shares in issue 60,158,787 55,562,806 _____ _____Basic and diluted loss per share (18.9p) (14.7p) _____ _____ 4. Cash used by operations 2007 2006 £'000 £'000Operating loss (13,025) (10,032)Depreciation 14 29Amortisation of intangible assets 15 -(Increase)/ decrease in inventories (222) 31Increase in trade and other receivables (279) (96)Decrease in trade and other payables (850) (1,854)Share-based payments 135 147 _____ _____Cash used by operations (14,212) (11,775) _____ _____ 5. Taxation 2007 2006 £'000 £'000UK corporation tax credit 837 669Adjustment in respect of prior years - (36) _____ _____Total tax credit for the year 837 633 _____ _____ 6. Approval by the Directors This announcement was approved by the Directors on 27 June 2007. This information is provided by RNS The company news service from the London Stock Exchange