Aura Renew Acq Regulatory News (ARA)

9 Oct 2007 07:01

Ardana PLC09 October 2007 Ardana: Interim Results for the six months ended 30 September 2007 Ardana plc (LSE: ARA) the pharmaceutical company focused on improving humanreproductive health, today announces its Interim Results for the six monthsended 30 September 2007. Highlights in the period • Teverelix Long Acting (LA) - Positive preliminary results of a further Phase II trial demonstrating extended duration of action in patients with prostate cancer - Licensing discussions are progressing well with several potential partners at different stages of negotiation. In addition, discussions have broadened with approaches from new parties interested in the opportunity following the recent Phase II results. • ARD-07, oral Growth Hormone Secretagogue (GHS) - Orphan Drug status granted by US Food and Drug Administration (FDA) - Commencement of pivotal registration study in the US for the diagnosis of growth hormone deficiency • Emselex(R) - Favourable assessment from the Scottish Medicines Consortium (SMC) which means that Emselex(R) is approved for use in NHS Scotland Key Financials • Total cash and cash equivalents at 30 September 2007 of £11.0 million (31 March 2007: £16.6 million) • The development programme will be managed and scheduled in line with available funds. Outlicensing deals and/or financing will be required to support the company's development programme as currently planned over the next twelve months. • Loss before tax for the six months ended 30 September 2007 of £6.9 million (six months ended 30 September 2006: £5.5 million) Post period events • Dr Maureen Lindsay steps down as CEO • Dr Huw Jones is appointed CEO with immediate effect. Please see separate press release issued on 8 October 2007 for details. Simon Best, Chairman, commented "The last six months have seen us make goodprogress across all aspects of Ardana's business. We continue to discuss withpotential partners an out-licensing deal for Teverelix LA. Concluding a dealthat will allow us to maintain the company's planned development programmesacross our range of products remains management's top priority. Our productpipeline has continued to make progress in clinical development. During thelast six months we have reached the important milestone of entering TestosteroneCream and Oral GHS into Phase III clinical development. Subject to successfulcompletion of the on-going pivotal studies, we have five potential regulatoryfilings in the US and EU in the next twenty four months." Enquiries For more information contact: Simon Best/Huw Jones + 44 (0) 131 226 8550 Ardana Julia Phillips/John Gilbert +44 (0) 20 7831 3113 Financial Dynamics(corporate and financial media relations) About Ardana Ardana plc is a pharmaceutical company focused on the discovery, development andmarketing of innovative products to improve human reproductive health, a $25.5billion market*. Since its foundation, Ardana has built a broad and balanced portfolio to managerisk and actively pursue product and technology in-licensing and out-licensingto maintain a robust pipeline. Ardana's key products are summarised below: • Teverelix LA, in development for three initial indications (prostate cancer, benign prostatic hyperplasia and endometriosis); • ARD-07 a growth hormone secretagogue in Phase III development for the diagnosis of growth hormone deficiency in adults; • Testosterone Cream, a trans dermal testosterone delivery system in development for the treatment of male hypogonadism, in Phase III trials; • InvicorpTM, an injectable combination drug treatment for erectile dysfunction, for which Ardana has marketing and manufacturing rights in Europe and has been launched in Denmark; • Emselex(R), a once a day treatment for the symptoms of overactive bladder syndrome, for which Ardana has exclusive UK marketing and promotion rights and is being distributed in collaboration with Novartis UK Limited; and • StriantTM SR, a testosterone replacement therapy that has been launched by Ardana through its own sales force in the UK and through marketing partners in certain European countries, as a treatment for men with confirmed hypogonadism. In addition, Ardana has a strong portfolio of follow-on products in development. Ardana is listed on the Main Market of the London Stock Exchange. For further information please see www.ardana.co.uk *Source: IMS Retail Drug Monitor November 2005. 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. RESPONSIBILITY STATEMENT We confirm that to the best of our knowledge: a. the condensed set of financial statements has been prepared in accordance with IAS 34; b. the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and c. the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosures of related party transactions and changes therein). By order of the Board Chief Executive Officer 9 October 2007 INTERIM MANAGEMENT STATEMENT Introduction I am pleased to report that the last six months have seen us make good progressacross all aspects of Ardana's business. Concluding an out-licensing deal forTeverelix LA remains management's top priority, and we are at different stagesof negotiation with several potential partners. In addition, following therecent publication of the positive Phase II data on prostate cancer thediscussions have broadened with approaches from other new parties interested inthe opportunity. In the meantime, the development programmes will be managedand scheduled in line with available funds. Outlicensing deals and/or financingwill be required to support the company's planned development activities asoutlined below over the next twelve months. Clinical development has progressed satisfactorily across our product pipeline.During the last six months we have commenced our first Phase III studies forTestosterone Cream and Oral GHS. Subject to successful completion of theseon-going pivotal studies, we have five potential regulatory filings in the USand EU in the next twenty four months. Product Pipeline Teverelix LA - Overview Ardana is developing the long acting formulation of its Gonadotrophin ReleasingHormone (GnRH) antagonist, Teverelix LA, to treat three indications; prostatecancer, benign prostatic hyperplasia (BPH) and endometriosis. We continue todiscuss with potential partners an out-licensing deal for Teverelix LA. Teverelix LA - Prostate Cancer During September 2007 we announced positive preliminary results from a furtherPhase II study in patients with prostate cancer, demonstrating a new doseregimen extended to 8 weeks from 4 weeks. 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 stage disease can help slow the growth of the cancer andprolong survival. The production of testosterone can be reduced surgically bythe removal of the testes, or through medicines that affect the production oftestosterone. Previous Phase II studies have confirmed that Teverelix LA canattain and maintain suppression of testosterone to castration level for at least4 weeks in patients with prostate cancer. The preliminary data from this newstudy has demonstrated a dosage regimen that can extend this duration of actionto at least 8 weeks. Our other Phase II study evaluating a 4-weekly repeat doseregimen is on-going but preliminary data is anticipated Q1 2008. Teverelix LA - Benign Prostatic Hyperplasia (BPH) The Phase II studies of Teverelix LA in the indication of BPH are completed andthe analyses are on-going. Teverelix LA - Endometriosis Teverelix LA is currently in Phase I development in the indication ofendometriosis. Data from Phase I studies indicate that Teverelix LA can reduce oestrogen levelsto a desired level at the lower end of the normal range which should help toavoid menopausal signs and symptoms including bone loss. These studies providedata to support the further development of Teverelix LA in endometriosis, acondition with an unmet medical need. A pre-IND meeting has been arranged withthe FDA for 7th November 2007 and a Phase II study in the US is currentlyplanned for 2008. ARD-07, oral Growth Hormone Secretagogue ARD-07 (Oral GHS) is an oral formulation of a growth hormone secretagogue (GHS).This is a novel small molecule size peptidomimetic agent (a compound that mimicsthe biological action of a peptide). Based on clinical results to date webelieve that Oral GHS can stimulate growth hormone secretion from the pituitarygland directly and/or indirectly via stimulation of growth hormone releasingpeptide (GHRP) from the hypothalamus. Ardana is developing Oral GHS for the diagnosis of growth hormone deficiency(GHD) in adults. The pivotal registration study is ongoing. Recruitment ofpatients has been continuing according to plan however the availability of theclosely matched subjects defined for the trial, a specific requirement for adiagnostic agent, is proving very challenging. We have been opening upadditional centres to speed up the recruitment of the matched controls. Ifdevelopment activity is maintained as planned, management expect that the NDAfor registration of Oral GHS in the US would be likely to be in the first halfof 2008. Ardana believes that GHS' oral formulation will give clinicians a simpler andmore effective test for GHD. During May 2007 we announced that the FDA hasgranted Orphan Drug status for Oral GHS as a diagnostic for growth hormonedeficiency in adults. We are delighted with this grant, which confers a numberof advantages such as eligibility to apply to the FDA for grants towardsclinical development and the waiving of the User Registration Fee ofapproximately $900,000. Furthermore, as well as being developed as a diagnostic for GHD, potentialapplications for Oral GHS include the diagnosis and treatment of GHD disordersand frailty of the elderly, as well as metabolic complications associated withcritical illness, such as cachexia, trauma, uremia and lipodystrophy. Thecurrent worldwide market for growth hormone products is approximately US$3.1billion, and forecast to grow to US$3.87 billion by 2010, (Wood MackenzieProduct View, April 2006). The market is currently served by injectablerecombinant human growth hormone. We believe our compound has the potential tobe the first oral product in this market. It is expected that market entry ofOral GHS as a diagnostic would provide Ardana with a strong platform from whichto develop Oral GHS as a therapeutic agent. Testosterone Cream Testosterone Cream is a transdermal testosterone delivery system based on ourBi-Gel technology, which is in development for the treatment of malehypogonadism. A pivotal Phase III registration study in the US is ongoing. Patientrecruitment is slower than expected due to a combination of higherscreen-failure rate than anticipated compounded and prolongation of the time tostabilize on treatment. We are finding that a high proportion of potentialpatients currently on treatment have normal testosterone levels even afterwashout, making them ineligible for the study. However, we are working with theinvestigational sites to maximize all efforts on recruiting suitable subjects,including treatment naive patients. If development activity is maintained asplanned and the current rate of screening failure remains the same, we wouldexpect that the application for registration of Testosterone Cream would belikely to be in H2 2008. Further Phase II studies to support registration are ongoing. Management believes that Testosterone Cream has the potential to offer a numberof advantages over existing gel-based testosterone products; including moreefficient delivery, reduced alcohol content and overall more patient-friendly,lotion-like consistency. We continue to be optimistic about the marketpotential for our novel Testosterone Cream both in the US and Europe. InvicorpTM InvicorpTM is an injectable treatment for erectile dysfunction. MarketingAuthorisations for InvicorpTM have been granted in Denmark and Ardana launchedthere during December 2006. The product is also supplied on a named patientbasis, under a Specials licence in the UK. The European Mutual Recognition Procedure (MRP) to obtain marketingauthorisations in other European territories is expected to commence shortly,with Denmark acting as the Reference Member State. Management believes that the potential competitive advantages (e.g. less painassociated with the injection) over existing alprostadil-based products meansthat InvicorpTM should be able to establish a significant market position. Marketed Products Emselex(R) Ardana launched Emselex(R) (darifenacin hydrobromide) in October 2006 in the UKand it is marketed in collaboration with Novartis Pharmaceuticals UK Limited ("Novartis"). During June 2007 we announced positive advice from the Scottish MedicinesConsortium (SMC) about Emselex. The OAB market is currently estimated to beapproximately £90 million per annum, of which Scotland contributes £10.5 million(source: IMS Health). Emselex(R) is an oral once-daily muscarinic M3 selective receptor antagonist (M3SRA) for the treatment of overactive bladder ("OAB"). Symptoms of OAB includeurinary urgency (a sudden and compelling desire to pass urine) with, or without,urge urinary incontinence (involuntary leakage accompanied or immediatelypreceded by urgency), usually with urinary frequency (voiding the bladder toooften), and nocturia (waking at night one or more times to void the bladder). Emselex(R) has shown favourable efficacy, a low incidence of cardiovascularadverse events and in elderly healthy volunteers did not significantly impairmemory function. We believe that Emselex(R) offers health professionals aneffective and well tolerated new treatment option for patients who experienceoveractive bladder symptoms. The SMC opinion, along with other formulary acceptance, has contributed toincreasing growth in Emselex(R) revenue. StriantTM SR StriantTM SR is a mucoadhesive buccal (gum surface) testosterone replacementtherapy for confirmed male hypogonadism. StriantTM SR is marketed to urologistsand endocrinologists in the UK by Ardana's own sales force and in Germany, theNordic Region and the Republic of Ireland by our partners. We will continue todevelop our distribution capability around Europe with the appointment offurther strategic partners. Financial review The unaudited financial information for the six months ended 30 September 2007is prepared in accordance with the group's accounting policies based onInternational Financial Reporting Standards (IFRSs) as adopted by the EuropeanUnion. On 30 September 2007, Ardana had cash and cash equivalents of £11.0 million (31March 2007: £16.6 million). Net cash used by operating activities in the sixmonths ended 30 September 2007 was £5.9 million (six months ended 30 September2006: £5.8 million) due principally to the investment in research anddevelopment during the period. Total product sales of StriantTM SR for the six months ended 30 September 2007were £56,000 (six months ended 30 September 2006: £130,000). Like for like salesof StriantTM SR in the UK and Republic of Ireland have increased. Overall salesare down due to the timing of bulk sales to European partners, which are notevenly spaced across periods. Total revenue from sale of services for the six months ended 30 September 2007were £91,000 (six months ended 30 September 2006: nil). Research and development expenditure for the six months ended 30 September 2007was £4.9 million (six months ended 30 September 2006: £4.1 million). Thisincrease in costs reflects the additional clinical activity undertaken acrossthe portfolio during this period outlined above. Operating loss for the sixmonths ended 30 September 2007 was £7.2 million (six months ended 30 September2006: £5.8 million), which is driven by increased sales and marketing activityrelated to the promotion of EmselexTM. Risks and uncertainties There are a number of potential risks and uncertainties which could have amaterial impact on the Group's performance over the remaining six months of thefinancial year and could cause actual results to differ materially from expectedand historical results. Industry Risk The nature of pharmaceutical development is such that drug candidates may not besuccessful due to an inability to demonstrate in a timely manner the necessarysafety and efficacy in a clinical setting to the satisfaction of appropriateregulatory bodies. The Group may be unable to attract, by itself or frompartners, the funding necessary to meet the high cost of developing its productsthrough to successful commercialisation. Financial Risk Ardana is currently a loss making business which is not sustained by productrevenues alone. For the remainder of the year and the foreseeable future, asArdana continues to invest in its development pipeline, the Group will requireexternal funds such as income from a range of potential collaboration deals and/or further financing. The ability of the Group to generate such externalfinancing, and thereby to maintain its development activities at their currentlyplanned levels and timelines, is discussed below. Outlook Ardana is in discussions with potential partners to collaborate on the futuredevelopment and commercialisation of Teverelix LA, and concluding thesediscussions is management's top priority. On the strength of interest shown to date by external parties in the product,and taking into account the stage of current discussions, management firmlybelieves that completing a deal is achievable. However, the timing and value ofany deal is uncertain and Ardana's existing cash resources are unlikely to besufficient to fund all of the company's development activities for the nexttwelve months as currently planned. Therefore, until such a deal is concluded,the Directors will manage the Group's resources prudently and where appropriatereschedule its activities in line with available funds. We look forward with confidence to building on the achievements of the first sixmonths and to our new CEO Dr Huw Jones reporting on our plans forcommercialisation, outlicensing and development of our products. INDEPENDENT REVIEW REPORT TO ARDANA PLC We have been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30September 2007 which comprises the income statement, the balance sheet, thecash flow statement, the statement of changes in equity, and related notes 1 to8. We have read the other information contained in the half-yearly financialreport and considered whether it contains any apparent misstatements or materialinconsistencies with the information in the condensed set of financialstatements. This report is made solely to the company in accordance with InternationalStandard on Review Engagements 2410 issued by the Auditing Practices Board. Ourwork has been undertaken so that we might state to the company those matters weare required to state to them in an independent review report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company, for our review work, for thisreport, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. As disclosed in note 3, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting," as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the accompanying interim financial information is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. Deloitte & Touche LLP Chartered Accountants and Registered Auditor 9 October 2007 Edinburgh, United Kingdom Condensed consolidated income statement 6 months ended 30 September 2007 Notes 6 months ended 30 6 months ended 30 Year ended 31 September September March 2007 2006 2007 £'000 £'000 £'000 Revenue: continuing operationsProduct revenue 66 130 240Revenue from sale of services 91 - 17 _____ ____ ____Total revenue 4 157 130 257 Operating expensesCost of product sales (16) (34) (69)Research and development (4,870) (4,094) (8,889)Other operating expenses (2,478) (1,829) (4,324) ____ ____ ____Total operating expenses (7,364) (5,957) (13,282) ____ ____ ____Operating loss: continuing operations 7 (7,207) (5,827) (13,025) Interest receivable 352 358 817 ____ ____ ____Loss on ordinary activities beforetaxation (6,855) (5,469) (12,208) Taxation 469 291 837 ____ ____ ____Loss for the financial year (6,386) (5,178) (11,371) ____ ____ ____ Basic and diluted loss per share 6 (9.7p) (9.3p) (18.9p) ____ ____ ____ Condensed consolidated balance sheet At 30 September 2007 Notes 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000Non-current assetsIntangible assets 5 554 600 585Property, plant and equipment 19 9 14 ____ ________ ____ 573 609 599Current assetsInventories 54 40 298Trade and other receivables 652 926 738Research and development tax credits 469 960 837receivableCash and cash equivalents 10,984 13,737 16,576 ____ ____ ____ 12,159 15,663 18,449 ____ ____ ____Total assets 12,732 16,272 19,048 ____ ____ ____Current liabilitiesTrade and other payables (2,466) (3,811) (2,510) ____ ____ ____Total liabilities (2,466) (3,811) (2,510) ____ ____ ____Net assets 10,266 12,461 16,538 ____ ____ ____ EquityShare capital 655 557 655Other equity 489 290 375Share premium account 37,135 27,048 37,135Merger reserve 34,451 34,451 34,451Own shares (13) (13) (13)Retained earnings (62,451) (49,872) (56,065) ____ ____ ____Total equity 10,266 12,461 16,538 ____ ____ ____ Condensed consolidated cash flow statement 6 months ended 30 September 2007 Notes 6 months ended 6 months Year 30 September ended 30 September ended 31 March 2007 2006 2007 £'000 £'000 £'000 Cash flows from operating activitiesCash used by operations 7 (6,771) (6,258) (14,212)Corporation tax received 837 491 1,160 ____ ____ ____Net cash used by operating activities (5,934) (5,767) (13,052) ____ ____ ____Investing activitiesInterest received 352 344 817Purchases of property, plant and equipment (10) (3) (13)Purchase of product rights - - (600) ____ ____ ____Net cash from investing activities 342 341 204 ____ ____ ____Financing activitiesIssue of shares - 30 11,023Cost of share issue - - (1,068)Equity share options exercised - - 330Sale of own shares - 82 88 ____ ____ ____Net cash from financing activities - 112 10,373 ____ ____ ____ Net decrease in cash and cash equivalents (5,592) (5,314) (2,475) Cash and cash equivalents at beginning of period 16,576 19,051 19,051 ____ ____ ____Cash and cash equivalents at end of period 10,984 13,737 16,576 ____ ____ ____ Condensed consolidated statement of changes in equity 6 months ended 30 September 2007 Share Other Share premium Merger Own Retained Total capital equity reserve shares earnings £'000 £'000 £'000 £'000 £'000 £'000 £'000 Opening balances 1 April 2007 655 375 37,135 34,451 (13) (56,065) 16,538 _____ _____ _____ _____ _____ _____ _____Recognised directly inequityShare-based payment - 114 - - - - 114 _____ _____ _____ _____ _____ _____ _____Net change directly in - 114 - - - - 114equity _____ _____ _____ _____ _____ _____ _____Loss for the period - - - - - (6,386) (6,386) _____ _____ _____ _____ _____ _____ _____Total movements - 114 - - - (6,386) (6,272) _____ _____ _____ _____ _____ _____ _____Equity at the end of the 655 489 37,135 34,451 (13) (62,451) 10,266period _____ _____ _____ _____ _____ _____ _____ Condensed consolidated statement of changes in equity 6 months ended 30 September 2006 Share Other Share Merger Own Retained Total capital equity premium reserve shares earnings £'000 £'000 £'000 £'000 £'000 £'000 £'000 Opening balances 1 April 2006 556 240 26,949 34,451 (95) (44,700) 17,401 _____ _____ _____ _____ _____ _____ _____Recognised directly inequityIssue of shares 1 - 99 - - - 100Movement in own shares - - - - 82 - 82Gain on sale of EBT shares - - - - - 6 6Share-based payment - 50 - - - - 50 _____ _____ _____ _____ _____ _____ _____Net change directly in 1 50 99 - 82 6 238equity _____ _____ _____ _____ _____ _____ _____Loss for the period - - - - - (5,178) (5,178) _____ _____ _____ _____ _____ _____ _____Total movements 1 50 99 - 82 (5,172) (4,940) _____ _____ _____ _____ _____ _____ _____Equity at the end of the 557 290 27,048 34,451 (13) (49,872) 12,461period _____ _____ _____ _____ _____ _____ _____ Condensed consolidated statement of changes in equity 12 months 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 1 April 2006 556 240 26,949 34,451 (95) (44,700) 17,401 _____ _____ _____ _____ _____ _____ _____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 shares - - - - - 6 6Share-based payment - 135 - - - - 135 _____ _____ _____ _____ _____ _____ _____Net change directly inequity 99 135 10,186 - 82 6 10,508 _____ _____ _____ _____ _____ _____ _____Loss for the period - - - - - (11,371) (11,371) _____ _____ _____ _____ _____ _____ _____Total movements 99 135 10,186 - 82 (11,365) (863) _____ _____ _____ _____ _____ _____ _____Equity at the end of theperiod 655 375 37,135 34,451 (13) (56,065) 16,538 _____ _____ _____ _____ _____ _____ _____ Notes to the condensed consolidated financial information 6 months ended 30 September 2007 1. General information The comparative financial information for the year ended 31 March 2007 does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. A copy of the statutory accounts for that year has been delivered to theRegistrar of Companies. The auditors' report on those accounts was notqualified and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. 2. Basis of preparation Going concern Ardana is currently a loss making business which is not sustained by productrevenues alone. For the foreseeable future and over the next year, as Ardanacontinues to invest in its development pipeline, the company's activities willrequire external funds such as income from collaboration deals, and/or furtherfinancing. The interim financial information has been prepared on a going concern basiswhich assumes that the company will continue in operational existence for theforeseeable future. As at 30 September 2007 Ardana had cash resources of £11.0million. The Directors have reviewed the working capital requirements of theGroup over the next twelve months. The Group's working capital requirements aresensitive to future events such as collaboration deals, which typically resultin upfront and milestone cash receipts. Ardana is in discussions with potentialpartners to collaborate on the future development and commercialisation ofTeverelix LA and other products in its portfolio. Management believes thatcompleting a deal on Teverelix LA is achievable, but the timing and value of anydeal is uncertain. Until such a deal is concluded the Directors will manage theGroup's resources prudently and where appropriate reschedule its activities inline with available funds. The directors continue to consider other options forfunding the business. 3. Accounting policies The condensed set of financial statements has been prepared using accountingpolicies consistent with International Financial Reporting Standards (IFRS) andin accordance with IAS 34 'Interim Financial Reporting'. The same accounting policies, presentation and methods of computation arefollowed in the condensed set of financial statements as applied in the Group'slatest annual audited financial statements. Change in accounting policies In the current financial year, the Group will adopt International FinancialReporting Standard 7 'Financial Instruments: Disclosures' (IFRS7) for the firsttime. As IFRS7 is a disclosure standard, there is no impact of that change inaccounting policy on the half-yearly financial report. Full details of thechange will be disclosed in our annual report for the year ended 31 March 2008. 4. 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. A key part of the Company's strategy is to realise the value ofits intellectual property portfolio through co-development and outlicensingopportunities which may generate significant revenue in the future, however, atpresent this does not represent a separate segment for reporting. Secondary reporting market - 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 6 months ended 6 months ended 30 Year 30 September September ended 31 March 2007 2006 2007 £'000 £'000 £'000 UK 153 51 131Rest of Europe 4 79 126 ____ ____ ____ 157 130 257 ____ ____ ____ The following table is an analysis of the carrying amount of segment assets. Total assets by geographical market 6 months ended 6 months ended 30 Year 30 September September ended 31 March 2007 2006 2007 £'000 £'000 £'000 UK 10,266 12,461 16,538Rest of Europe - - - ____ ____ ____ 10,266 12,461 16,538 ____ ____ ____ 5. Intangible assets Product rights and other intangible assets acquired are initially recorded atcost and amortised over their useful life on a straight line basis from the dateof the commercial launch. In the year ended 31 March 2007 £0.6 million wascapitalised in relation to the acquired product rights for Emselex(R) in the UK. 6. 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 year. The basic loss per share is calculated as follows:- 6 months ended 6 months ended 30 Year 30 September September ended 31 March 2007 2006 2007 £'000 £'000 £'000 Loss after taxation (£'000) (6,386) (5,178) (11,371)Weighted average number of ordinary shares in issue 65,511,729 55,570,020 60,158,787 ____ ____ ____Basic loss per share (9.7p) (9.3p) (18.9p) ____ ____ ____ IAS requires presentation of diluted earnings per share when a company could becalled upon to issue shares that would decrease net profit or increase net lossper share. For a loss making company with outstanding share options, net lossper share would only be increased by the exercise of out-of-money options.Since it seems inappropriate to assume that option holders would exerciseout-of-money options, no adjustment has been made to diluted loss per share forout-of-money share options. 7. Cash used by operations 6 months ended 6 months ended 30 Year 30 September September ended 31 March 2007 2006 2007 £'000 £'000 £'000 Operating loss (7,207) (5,827) (13,025)Depreciation 5 9 14Amortisation of intangible assets 31 - 15Decrease in inventories 244 36 (222)Increase in trade and other receivables 86 (383) (279)Decrease in trade and other payables (44) (149) (850)Share-based payments 114 50 135Gain on sale of EBT shares - 6 - ____ ____ ____Cash used by operations (6,771) (6,258) (14,212) ____ ____ ____ 8. Related party transactions There have been no related party transactions entered into by the Group duringthe first six months of the current financial year. This information is provided by RNS The company news service from the London Stock Exchange