CATCo Regulatory News (CAT)

22 May 2006 07:01

Cambridge Antibody Tech Group PLC22 May 2006 06/CAT/06 FOR IMMEDIATE RELEASE 07.00 BST, 02.00 EST Monday 22 May 2006 For further information contact: Cambridge Antibody Technology Hogarth Partnership (Europe)Tel: +44 (0) 1223 471 471 Tel: +44 (0) 20 7357 9477Peter Chambre, Chief Executive Officer Chris MatthewsJohn Aston, Chief Financial Officer Melanie Toyne-SewellRowena Gardner, Director of Corporate Andrew JaquesCommunications BMC Communications/The Trout Group (USA) Tel: 001 212 477 9007 Brad Miles, ext 17 (media) Brandon Lewis, ext 15 (investors) CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC ANNOUNCES INTERIM RESULTS FOR THE SIXMONTHS ENDED 31 MARCH 2006 Cambridge, UK - Cambridge Antibody Technology Group plc (LSE: CAT; NASDAQ: CATG)today announces financial results for the six months ended 31 March 2006 and abusiness update. This follows AstraZeneca UK Limited's announcement on 15 May2006 of its firm intention to make a recommended £702 million cash offer forCAT. Product Development Pipeline HUMIRA(R) (adalimumab) is a fully human anti-TNF alpha monoclonal antibody,isolated and optimised by CAT in collaboration with Abbott and now approved formarketing as a treatment for rheumatoid arthritis (RA), early RA and psoriaticarthritis. In January 2006, Abbott announced full year 2005 sales of HUMIRA ofUS$1.4 billion, making it the first product originating from the UKbiotechnology industry to achieve blockbuster status (sales of over US$1billion). In April 2006, Abbott announced first quarter sales of HUMIRA ofUS$392 million and repeated its full year forecast of worldwide sales in 2006 ofmore than US$1.9 billion. CAT receives royalty payments based on HUMIRA sales atthe rate of 2.688%. In October 2005, Abbott submitted a regulatory application for HUMIRA as apotential treatment for ankylosing spondylitis (AS) and, in January 2006, statedthat it anticipates approval in the second half of 2006. In April 2006, Abbottreported that European regulators had granted a positive opinion recommendingapproval and that the European Commission is expected to issue a decisiongranting the marketing authorisation for HUMIRA as a treatment for AS within 60days. In December 2005, Abbott submitted a new drug application for HUMIRA to treat RAin Japan. In April 2006, Abbott commented that it expects approval in the firsthalf of 2007. Abbott continues to develop HUMIRA as a potential treatment for a number ofadditional indications: Crohns disease, psoriasis, ulcerative colitis andjuvenile RA. In April 2006, Abbott commented that it would be presenting theresults from the Phase III clinical maintenance trial for HUMIRA in Crohnsdisease at Digestive Disease Week (20-25 May 2006), and that it expects to filea supplementary BLA submission (SBLA) during 2006. Abbott also commented thatPhase III trials for psoriasis are progressing well and that it expects tosubmit in 2007 for this indication. In colitis, Abbott expects to commence PhaseII/III clinical trials during 2006. CAT Products CAT-354 is a fully human anti-IL-13 monoclonal antibody being developed by CAT,initially as a treatment for severe asthma. Following the completion in 2005 ofa Phase I clinical trial, CAT has received approval from the Medicines andHealthcare products Regulatory Agency (MHRA) to commence a repeat-dose safetystudy of CAT-354 in patients with mild/moderate asthma. The trial, which willtake place in the UK, is now expected to start in the third quarter of calendaryear 2006 and will study safety, tolerability and pharmacokinetics. The delayhas been caused by amendments to the protocol, required as a result of evolvinginterpretation of the new Clinical Trial Directive. Following the announcementby AstraZeneca UK Limited of its firm intention to make a recommended offer forCAT, partnering discussions regarding CAT-354 have been suspended. The development of CAT-3888 and CAT-8015, immunotoxins that are potentialtreatments for a number of B-cell malignancies, continues as planned. CAT-3888is currently in a Phase II trial for the treatment of hairy cell leukaemia andtwo Phase I trials - one in patients with paediatric refractoryCD22-positive leukaemias and lymphomas and one in patients with chroniclymphocytic leukaemia and non-Hodgkins lymphoma. Data are expected to beavailable from all three trials of CAT-3888 by the end of 2006. GC-1008 is a pan-specific fully human anti-TGF beta monoclonal antibody beingdeveloped by CAT and Genzyme. In the Phase I clinical trial of GC-1008 inidiopathic pulmonary fibrosis (IPF), patient recruitment is ongoing. Theobjectives of the trial are to evaluate the safety, tolerability andpharmacokinetics of single intravenous infusions of GC-1008 in patients withIPF. Preliminary results of this trial are expected to be available in 2007. An IND has been granted for GC-1008 in oncology. The Phase I trial is expectedto commence in patients with renal cell carcinoma or malignant melanoma at theend of the second quarter of calendar year 2006. The study, which will be a doseescalation study, will take place at four centres in the US. Data are expectedto be available in 2008. CAM-3001 is a fully human anti-GMCSF receptor antibody, being developed by CATand Zenyth as a potential treatment for RA. It is currently in pre-clinicaldevelopment and the companies expect to file a Clinical Trial Application (CTA)for a Phase I clinical trial in the first half of calendar year 2007. The strategic alliance with AstraZeneca has continued its excellent progress. Licensed Products ABT-874 is a fully human anti-IL-12 monoclonal antibody, isolated and optimisedby CAT in collaboration with Abbott and licensed to Abbott. Abbott continues todevelop ABT-874 as a potential treatment for autoimmune diseases and, in January2006, Abbott stated that it was encouraged by the early data for the class ofmolecule in both psoriasis and Crohns disease. Also in January 2006, Abbottstated that it anticipates publishing data from a Phase II study in multiplesclerosis later in the year. LymphoStat-B(TM) (belimumab) is a fully human anti-BLyS monoclonal antibody,licensed by CAT to Human Genome Sciences, Inc (HGSI). HGSI is developingLymphoStat-B as a potential treatment for systemic lupus erythematosus (SLE),for which HGSI has a Fast Track designation from the US Food and DrugAdministration (FDA), and RA. In January 2006, HGSI stated that, with itscollaborator GlaxoSmithKline, it expects to initiate Phase III development ofLymphoStat-B in SLE in 2006. HGS-ETR1 (mapatumumab) is a fully human anti-TRAIL Receptor-1 monoclonalantibody licensed by CAT to HGSI. HGSI is developing HGS-ETR1 as a potentialtreatment for multiple cancer indications. In January 2006, HGSI reported thatit plans to initiate Phase II development of HGS-ETR1 in combination withchemotherapy in hematopoietic cancers. HGS-ETR2 is a fully human anti-TRAIL Receptor-2 monoclonal antibody licensed byCAT to HGSI. In January 2006, HGSI stated that the results of recently completedPhase I clinical trials warrant additional Phase II trials. It also stated thatit plans to reach go/no go decisions in 2006 regarding Phase II development ofHGS-ETR2 as a single agent and/or in combination with chemotherapy. ABthrax(TM) is a fully human monoclonal antibody licensed by CAT to HGSI.ABthrax was isolated and developed by HGSI from antibody libraries licensed fromCAT and HGSI is developing it as a potential treatment for anthrax disease. InJanuary 2006, HGSI stated that it is working to achieve an order from the USGovernment to supply ABthrax for the US Strategic National Stockpile. Financial Reporting A review of the financial results for the six months ended 31 March 2006 is setout below. For financial periods commencing on or after 1 October 2005, CAT isproducing its financial results in accordance with the recognition andmeasurement principles of International Financial Reporting Standards (IFRS) asendorsed by the European Union and, accordingly, has restated the comparativefigures for the six months ended 31 March 2005, previously produced inaccordance with UK GAAP. The comparative figures in brackets are the restatedfigures for the corresponding period in the prior financial year (see note 2 tothe financial information). Results for the year ended 30 September 2005 havealso been prepared in accordance with IFRS, and are included within thisstatement. These are as previously presented in the 2005 Annual Report, exceptfor a subsequent amendment to revenue and direct costs (no impact on cash oroperating loss) as detailed in note 3. Financial Results CAT made a profit after taxation for the six months ended 31 March 2006 of £4.6million (2005: loss of £16.5 million). Net cash used by operations was £13.0million in the six months ended 31 March 2006 (2005: net cash provided £9.6million) including the one off outflow arising from the settlement with Abbottof £15.3 million (2005: nil). Net cash and liquid resources at 31 March 2006amounted to £161.7 million (30 September 2005: £175.6 million). Revenue in the period was £27.7 million (2005: £9.8 million) plus the US$255million (£144.7 million) received from Abbott in October 2005 and paid outimmediately to CATs licensors as part of the litigation settlement with Abbottin respect of HUMIRA (see note 3). The remaining royalty income consists ofroyalties received on sales of HUMIRA for the three months to 31 December 2005(£6.9 million) and accrued royalties for the three months to 31 March 2006 (£6.0million), plus the first two of five annual payments of US$9.375 million (£10.9million), (the first received from Abbott in January 2006, the second due inJanuary 2007, conditional only on there having been sales of HUMIRA in the 2006calendar year, under the terms of the settlement agreement). Licence fees of£2.6 million (2005: £2.5 million) were recognised as revenue in the periodhaving been released from deferred income brought forward at 30 September 2005.Clinical milestone payments of £0.3 million (2005: £0.5 million) were receivedduring the quarter. Other revenues of £1.1 million (2005: £0.3 million) werereceived during the quarter, primarily consisting of a payment received fromMorphoSys under the terms of the December 2002 Framework Agreement. In April2006, Chugai extended its licence of CATs libraries for a further year; CATreceived $1.0 million in licence fees in May 2006. No revenue was recognised inthe period regarding this extension payment. Direct costs comprise primarily the US$255 million payment referred to above andUS$4 million (£2.3 million) for the payments made or due to CATs licensors outof the two amounts of US$9.375 million recognised as revenue in the period (seenote 4). Operating costs for the period amounted to £24.2 million (2005: £27.3 million).Research and development expenses were £17.6 million for the six months ended 31March 2006 (2005: £17.3 million). External development costs for the six monthperiod were £5.3 million (2005: £6.0 million). General and administration expenses decreased to £6.5 million for the six monthsended 31 March 2006 (2005: £10.0 million). Litigation expenses decreased from£3.1 million from the six months ended 31 March 2005 to £0.1 million in the sixmonths ended 31 March 2006, with the settlement of the litigation with Abbott inOctober 2005. Included in general and administration expenses for the six monthsended 31 March 2006 is a foreign exchange credit of £0.4 million arising fromthe retranslation of US dollar deposits held, a charge of £0.7 million arose inthe comparative period. CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLCResults for the SIX MONTHS ended 31 MARCH 2006 This financial information has been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as endorsed by the European Union.Preliminary results for the year ended 30 September 2005 were prepared andpresented in accordance with IFRS in the 2005 Annual Report. Results for the sixmonths ended 31 March 2005 have been restated for the first time in accordancewith IFRS, having previously been presented under UK GAAP. See notes 1, 2 and 3for further details. CONSOLIDATED INCOME STATEMENT(unaudited) Six Three Three Six Year months months months months Ended ended 31 ended ended 31 ended 31 30 March 31 March December March 2005 September 2006 2006 2005 2005 £000 £000 £000 £000 £000 Revenue (note 7) 27,729 13,723 14,006 9,845 49,242Royalty buy out, settlement with 144,722 - 144,722 - -Abbott (note 3)Total revenue 172,451 13,723 158,728 9,845 49,242 Direct costs (2,529) (1,367) (1,162) (2,035) (10,503) Royalty buy out, settlement (144,722) - (144,722) - -with Abbott (note 3)Total direct costs (147,251) (1,367) (145,884) (2,035) (10,503)Gross profit 25,200 12,356 12,844 7,810 38,739 Research and development expenses (17,631) (8,695) (8,936) (17,349) (37,017)General and administration (6,527) (3,830) (2,697) (10,000) (12,375)expensesOperating profit/(loss) 1,042 (169) 1,211 (19,539) (10,653) Profit on sale of available for - - - - 1,461sale investmentsInvestment income 3,563 1,687 1,876 3,034 7,507Finance costs (10) (3) (7) (27) (233)Profit/(loss) before tax 4,595 1,515 3,080 (16,532) (1,918)Taxation - - - - (1,047)Profit/(loss) for the period 4,595 1,515 3,080 (16,532) (2,965)attributable to equity holders ofthe parent Profit/(loss) per share - basic 8.7p 2.9p 5.9p (35.1)p (6.0)p(pence) (note 6)Profit per share - 8.6p 2.8p 5.8p n/a n/adiluted (pence) (note 6) The profit/losses for all periods arise from continuing operations. CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLCRESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006 CONSOLIDATED BALANCE SHEET (unaudited) As at 31 As at 31 As at 30 March 2006 March 2005 September 2005 £000 £000 £000 Fixed assetsIntangible assets 10,340 5,307 2,581Property, plant and equipment 12,403 12,166 11,706Available for sale investments 12,322 11,301 9,729 35,065 28,774 24,016Current assetsTrade and other receivables 18,708 7,715 14,566Short term investments 78,952 98,953 100,037Cash and cash equivalents 83,259 79,811 76,378 180,919 186,479 190,981 Total assets 215,984 215,253 214,997 LiabilitiesCurrent liabilitiesObligations under finance leases (246) (390) (405)Overdraft (551) (579) (803)Trade and other payables (7,080) (34,749) (22,335)Current taxation (1,047) - (1,047)Deferred income (5,385) (5,451) (4,977) (14,309) (41,169) (29,567) Non-current liabilitiesObligations under finance leases - (246) (40)Deferred income (17,754) (19,956) (18,575)Deferred taxation (2,956) (2,457) (2,178) (20,710) (22,659) (20,793) Total liabilities (35,019) (63,828) (50,360) Net assets 180,965 151,425 164,637 EquityCalled-up share capital 5,310 5,161 5,164Share premium account 310,883 301,716 301,804Other reserves 24,250 22,188 21,742Retained losses (159,478) (177,640) (164,073)Total equity shareholders funds 180,965 151,425 164,637 CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLCRESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006 STATEMENT OF CHANGES IN EQUITY(unaudited) Share Share Other Profit and capital premium reserves loss reserve £000 £000 £000 £000 Balance at 1 October 2005 5,164 301,804 21,742 (164,073)New shares issued 146 9,079 - -Available for sale investments (unrealised - - 1,814 -gain)Share option charge - - 1,029 -Foreign exchange - - (335) -Retained profit for the period - - - 4,595Balance at 31 March 2006 5,310 310,883 24,250 (159,478) CONSOLIDATED CASH FLOW STATEMENT(unaudited) Six months Six months Year ended 31 ended 31 ended 30 March 2006 March 2005 September 2005 £000 £000 £000 Net cash (used)/provided by operating (13,003) 9,617 6,062activities Net cash from/(used in) investing 11,101 (31,869) (31,892)activities (1,902) (22,252) (25,830) Net cash from financing activities 9,026 75,753 75,653 Increase in cash and cash equivalents 7,124 53,501 49,823(net of overdraft) Cash and cash equivalents at beginningof year (net of overdraft) 75,575 25,737 25,737 Effect of foreign exchange rate 6 (21) 10changes Effects of fair value movements 3 15 5 Cash and cash equivalents at end ofperiod (net of overdraft) 82,708 79,232 75,575 Notes to the financial information 1. Accounting policies For financial periods commencing on or after 1 October 2005, CAT is producingits financial results in accordance with IFRS as endorsed by the European Unionand, accordingly, has restated the comparative figures for the six months ended31 March 2005, previously produced in accordance with UK GAAP. Preliminaryresults were prepared in accordance with IFRS for the year ended 30 September2005 and presented in the 2005 Annual Report. Except for the subsequentadjustment, detailed in note 3 below, the results for the 2005 financial yearhave been presented in this financial statement on the same basis. See note 2below for further details of the impact of the restatement of the comparativefigures. This financial information has been prepared in accordance with the IFRSpolicies expected to be in place in 2006 as set out in the Annual Report for theyear ended 30 September 2005. During the year ending 30 September 2006, CATadopted IAS 32 (International Accounting Standard) and IAS 39 and there were nomaterial adjustments as a result of that adoption. The Annual Report for theyear ended 30 September 2005 sets out the UK GAAP accounting policies togetherwith the relevant IFRS differences. 2. Restatement of the comparative figures Preliminary results prepared in accordance with IFRS for the year ended 30September 2005 were presented in the 2005 Annual Report with details of the keyreconciling items. The results contained in this statement for the year ended 30September 2005 are the same as those previously presented except for theadjustment detailed below in note 3. The net effect of presenting the comparative figures for the six months ended 31March 2005 under IFRS rather than previously reported UK GAAP is to increase theloss after tax reported from £16.3 million to £16.5 million principally due tothe IFRS 2 share option charge for the period (£0.8 million) partially offset bya foreign exchange credit regarding the translation of overseas operations (£0.5million). Net assets increased from £145.6 million to £151.4 million principallydue to the recognition of an unrealised holding gain arising from recordingavailable for sale investments at fair value as opposed to cost, as previouslyrecorded under UK GAAP. The net effect of the restatement on the cashflow isnil, all changes are reclassifications for disclosure purposes. Further details of the revised accounting policies adopted in accordance withIFRS and of the key reconciling items for the year ended 30 September 2005 arecontained within the 2005 Annual Report. 3. Results for year ended 30 September 2005 The results for the six months ended 31 March 2006 have been prepared under IFRSas endorsed by the European Union. These results include as revenue and as adirect cost the US$255m received from Abbott in October 2005 and paid outimmediately to CATs licensors as a part of the litigation settlement with Abbottin respect of HUMIRA. Previously this receipt and subsequent payment wereaccounted for in the same manner as the remainder of the litigation settlementwith Abbott, as an adjusting post balance sheet event, and therefore included inrevenue and direct costs in both the 2005 UK GAAP financial statements and thepreliminary IFRS reconciliations. The 2005 Annual Report was finalised on 28November 2005 and reported on by CATs auditors, Deloitte & Touche LLP(Deloitte). The 2005 Annual Report also contains the preliminary reconciliationsto IFRS, which were also reported on by Deloitte. Since that time, there has been continuing debate within the accountingprofession as to the interpretation of IFRS and in particular its relationshipwith US GAAP and, to a lesser extent, UK GAAP. As a consequence of this debateand after reporting on the preliminary IFRS reconciliation contained in the 2005Annual Report, Deloitte have subsequently altered their view on theinterpretation and application of IFRS to the payments of US$255 millionreceived and made by CAT in October 2005 as a part of the litigation settlementwith Abbott. Deloittes revised interpretation and application of IFRS to thesepayments, contrary to the treatment endorsed in the preliminary IFRSreconciliation contained in the 2005 Annual Report, is that they should betreated as a non-adjusting post balance sheet event. Under this revised interpretation and application of IFRS the payments receivedfrom Abbott and made by CAT to its licensors should not be included as 2005revenues and direct costs but should be treated as revenue and direct costs inthe 2006 financial year. Accordingly, these amounts will be included and treatedas revenue and as a direct cost in CATs 2006 financial statements prepared underIFRS. It should be emphasised that this is a technical accounting adjustment,reflecting one element of the Abbott settlement as a non-adjusting rather thanan adjusting post balance sheet event, and there are no implications for cashflow or operating loss. 4. Settlement with Abbott In November 2003, CAT announced that it had commenced legal proceedings againstAbbott in the High Court in London regarding the royalty rate payable on salesof HUMIRA under a licence agreement between the parties. In October 2005, CATannounced it had reached an agreement with Abbott regarding royalties payable toCAT under this licence agreement: Abbott would pay CAT royalties at 2.688% on sales of HUMIRA from 1 January 2005.CAT would retain all of these royalties. CAT would retain all royalties received from Abbott in respect of sales ofHUMIRA up to 31 December 2004, net of approximately £7.6 million which was paidto its licensors, Medical Research Council, Scripps Institute and Stratagene. Abbott paid CAT the sum of US$255 million, which CAT paid to its licensors inlieu of their entitlement to royalties arising on sales of HUMIRA from 1 January2005 onwards. This was both received from Abbott and paid to CATs licensors inOctober 2005. CAT refunded to Abbott approximately £9.2 million for royalties paid in respectof sales of HUMIRA from 1 January 2005 through to 30 June 2005. Abbott would pay CAT five annual payments of US$9.375 million commencing January2006, contingent on the continued sale of HUMIRA. From each of these payments,CAT would pay US$2 million to its licensors. 5. Convenience translation The consolidated financial statements are presented in Sterling. The followingtable provides a US Dollar convenience translation of certain elements of theconsolidated financial statements as of and for the period ended 31 March 2006.The Dollar amounts are presented solely for the convenience of the reader andhave been calculated using an exchange rate of £1:US$1.73978, the closing rateas of 31 March 2006. No representation is made that the amounts could have beenor could be converted into US Dollars at this or any other rates. Six months Six months ended 31 ended 31 March March 2006 2006 Convenience translation $000 £000 Revenue (excluding Royalty buy out) 48,242 27,729Gross profit 43,842 25,200Research and development expenses (30,674) (17,631)General and administration expenses (11,356) (6,527)Operating profit 1,812 1,042Profit after tax 7,994 4,595 Fixed assets 61,005 35,065Current assets 314,759 180,919Total assets 375,764 215,984Current liabilities (24,895) (14,309)Non-current liabilities (36,030) (20,710)Total liabilities (60,925) (35,019)Net assets 314,839 180,965 Net cash used by operating (22,622) (13,003)activitiesNet cash from investing activities 19,313 11,101 (3,309) (1,902)Net cash from financing activities 15,703 9,026Increase in cash and cash 12,394 7,124equivalents (net of overdraft)Cash and cash equivalents at 131,484 75,575beginning of year (net of overdraft)Effect of foreign exchange rate 10 6changesEffect of fair value movements 5 3Cash and cash equivalents at end of 143,893 82,708 period (net of overdraft) 6. Profit/(loss) per share Basic net profit/loss per share is calculated by dividing net profit/loss forthe period by the weighted average number of ordinary shares outstanding duringthe period. The computation of diluted net profit/loss per share reflects thepotential dilution that could occur if dilutive securities and other contractsto issue ordinary shares were exercised or converted into ordinary shares orresulted in the issue of ordinary shares that then shared in the net profit/lossof the Group. The loss per ordinary share and diluted loss per share are equal because shareoptions are only included in the calculation of diluted earnings per share iftheir issue would decrease the net profit per share or increase the net loss pershare. The calculation is based on information in the table shown below. Six months Six months Year ended 31 ended 31 ended 30 March March September 2006 2005 2005 Profit/(loss) for the period 4,595 (16,532) (2,965)attributable to equity holders of the parent (£000)Weighted average number of shares 52,732,901 47,128,201 49,381,476Weighted average number of dilutive 626,586 n/a n/a options The Company had ordinary shares in issue of 53,100,128 and a total of 2,296,218ordinary shares under option as of 31 March 2006. 7. Revenue Six months Six months Six months Year ended 31 ended 31 ended 31 ended 30 March March March September 2006 2006 2005 2005 Convenience translation US$000 £000 £000 £000Royalties (excluding buy out) 41,362 23,774 5,166 40,521Licence fees 4,522 2,599 2,505 5,168Technical milestones - - 1,099 1,099Clinical milestones 492 283 518 1,118Contract research fees 33 19 223 356Other 1,834 1,054 334 980 48,243 27,729 9,845 49,242Royalty buy out 251,783 144,722 - -Total 300,026 172,451 9,845 49,242 8. Reconciliation of profit/(loss) from operations to net cash from operatingactivities Six months Six months Six months Year ended ended 31 ended 31 ended 30 31 March March March September 2006 2006 2005 2005 Convenience translation US$000 £000 £000 £000 Operating profit/(loss) 1,813 1,042 (19,539) (10,653)Depreciation charge 2,300 1,322 1,347 2,693Amortisation of intangible fixed assets 325 187 525 3,251Profit/(loss) on disposal of fixed assets 21 12 - (2)Fair value movements on cash and cash equivalents and short term investments 150 86 5 (75)Foreign exchange movements (54) (31) (535) 24Share-based payments 1,790 1,029 847 1,742Operating cashflow before movements in 6,345 3,647 (17,350) (3,020)working capitalIncrease in debtors (8,017) (4,608) (2,720) (8,871)Decrease in deferred income (718) (413) (403) (2,258)(Decrease)/increase in creditors (26,898) (15,460) 27,620 13,988(excluding deferred income)Cash used in operations (29,288) (16,834) 7,147 (161)Interest paid (344) (198) (29) (49)Interest received 7,010 4,029 2,499 6,272Net cash (used in)/provided by operating (22,622) (13,003) 9,617 6,062 activities 9. Analysis of cash flows Six months Six months Six months Year ended 31 ended 31 ended 31 ended 30 March March March September 2006 2006 2005 2005 Convenience translation US$000 £000 £000 £000 Net investment in short term investments 36,528 20,996 (31,006) (32,000)Purchases of property, plant and equipment (3,445) (1,980) (863) (1,998)Purchases of intangible assets (13,824) (7,946) - -Proceeds on disposal of property, plantand equipment 54 31 - 2Proceeds from the sale of fixed asset - - - 2,104investmentsNet cash from/(used in) investing 19,313 11,101 (31,869) (31,892)activitiesIssue of ordinary share capital 16,049 9,225 75,937 76,028Capital elements of finance lease rental (346) (199) (184) (375)paymentsNet cash from financing activities 15,703 9,026 75,753 75,653 10. Analysis and reconciliation of net funds 1 October Fair value Exchange 31 March movements movement 2006 2005 Cash flow £000 £000 £000 £000 £000 Cash and cash equivalents 76,378 6,872 3 6 83,259Overdrafts (803) 252 - - (551) 75,575 7,124 3 6 82,708Short term investments 100,037 (20,996) (89) - 78,952Net cash and liquid resources 175,612 (13,872) (86) 6 161,660Finance leases (445) 199 - - (246)Net funds 175,167 (13,673) (86) 6 161,414 11. Financial Statements The preceding information, comprising the Consolidated Income Statement,Consolidated Balance Sheet, Consolidated Cash Flow Statement and associatednotes, does not constitute the Companys statutory financial statements for theyear ended 30 September 2005 within the meaning of section 240 of the CompaniesAct 1985. Results for the periods ending 31 March 2006 and 31 March 2005 havenot been audited. The results for the year ended 30 September 2005 as set outabove have been prepared in accordance with IFRS. They are based on thestatutory financial statements for the year ended 30 September 2005 preparedunder UK GAAP amended by adjustments arising from the implementation of IFRS.The statutory financial statements, upon which the auditors reported withoutqualification, have been filed with the Registrar of Companies. The Annual Report, containing financial statements, for the year ended 30September 2005 is available from CATs registered office: Cambridge Antibody Technology Group plcMilstein BuildingGranta ParkCambridgeCB1 6GH, UKTel: +44 (0) 1223 471471 INDEPENDENT REVIEW REPORT TO CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 31 March 2006 which comprises the income statement, thebalance sheet, the statement of changes in equity, the cash flow statement andrelated notes 1 to 11. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. International Financial Reporting Standards As disclosed in note 1, the next annual financial statements of the group willbe prepared in accordance with International Financial Reporting Standards asadopted for use in the EU. Accordingly, the interim report has been prepared inaccordance with the recognition and measurement criteria of IFRS and thedisclosure requirements of the Listing Rules. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2006. Deloitte & Touche LLPChartered AccountantsCambridge22 May 2006 Application of the Safe Harbor of the Private Securities Litigation Reform Actof 1995: This press release contains statements about Cambridge AntibodyTechnology Group plc (CAT) that are forward looking statements. All statementsother than statements of historical facts included in this press release may beforward looking statements within the meaning of Section 21E of the SecuritiesExchange Act of 1934. These forward looking statements are based on numerousassumptions regarding the companys present and future business strategies andthe environment in which the company will operate in the future. Certain factorsthat could cause the companys actual results, performance or achievements todiffer materially from those in the forward looking statements include: marketconditions, CATs ability to enter into and maintain collaborative arrangements,success of product candidates in clinical trials, regulatory developments andcompetition. We caution investors not to place undue reliance on the forwardlooking statements contained in this press release. These statements speak only as of the date of this press release, and we undertake noobligation to update or revise the statements. This information is provided by RNS The company news service from the London Stock Exchange