Immupharma Regulatory News (IMM)

1 May 2007 07:02

Immupharma PLC01 May 2007 For Immediate Release 1 May 2007 IMMUPHARMA PLC PRELIMINARY RESULTS for the period ended 31st December 2006 ImmuPharma plc (LSE:IMM), the specialist pharmaceutical discovery anddevelopment company is pleased to announce its preliminary results for theperiod ended 31st December 2006. Key Highlights: • Successful completion of Phase II trial of our lead compound IPP-201101, for the treatment of Lupus. • Positive discussions held with FDA and plans for a PhaseII/III multicentre study in the US and Europe. • Cash reserves strengthened with a further €7m funds raised. Dimitri Dimitriou, Chief Executive Officer, said: "During our first year as a public company we have enjoyed strong share priceperformance and continued success in the development of our key asset, compoundIPP-201101, for the treatment of Lupus. The focus for the year ahead will be onthe next phase of trials for IPP-201101, and to advance our analgesic andantibiotic compounds and to engage in continuing out-licensing dialogue withlarge biotech and pharmaceutical companies worldwide." For further information please contact: Immupharma plc:Richard Warr, Chairman: Telephone +44 20 7152 4080Dimitri Dimitriou, Chief Executive Officer: +44 20 7152 4080 Buchanan Communications:Lisa Baderoon/ Rebecca Skye Dietrich +44 20 7466 5000 IMMUPHARMA PLC The consolidated results for ImmuPharma plc (the "Company") and its subsidiaries(collectively the "Group") cover the period 1st April 2006 to 31st December2006. During the period, the accounting reference date of the Company waschanged from 31st March to 31st December, in order that all companies within theGroup had co-terminous year-ends. REPORT FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER We are delighted to report on the company's achievements during the period underreview and are proud to have delivered on our key milestones ahead of time. Byall measures, 2006 has been a record year in our corporate history. During ourfirst year as a public company we have enjoyed strong share price performanceand continued success in the development of our key asset. Following the successful completion of phase I clinical trials in healthyvolunteers, where our lead drug candidate for the treatment of Lupus(IPP-201101) showed an attractive safety profile, we have successfully completeda phase II study in patients suffering from Lupus. Most importantly, this studyshowed statistically significant clinical improvement in the overall symptoms ofthe patients. During our phase II study we held discussions with the Food and DrugAdministration in the United States relating to the development activitiesrequired for the approval of our Lupus drug candidate IPP-201101. As a result ofthe feedback from the FDA, we have initiated the work for a phase II/IIImulticentre study to take place in the US and Europe. Analysts estimate thatIPP-201101 for the treatment of Lupus has blockbuster sales potential. We believe that ImmuPharma has an attractive business model. Our focus is oninnovative drugs for niche therapeutic areas with large sales potential butimportantly without the need for a large sales force. This is characterised byrelatively low cost of development and shorter timelines than the norm. Ourprogress so far with IPP-201101 for the treatment of Lupus is confirmation thatthis can be achieved. We are particularly pleased to report on the milestone funding for the companyin December 2006. In excess of €7 million was raised from prestigiousinstitutions including Jupiter, ING Bank and Martin Currie. This hasstrengthened our cash reserves and provided the funds to begin the phase II/IIItrial for our Lupus drug candidate. During 2006, we have held licensingdiscussions with big pharma and biotech companies which are ongoing. Finally, we have strengthened our management team with three industryexecutives. Dr Franco Di Muzio and Dr Ajay Agrawal have joined our Board asNon-Executive Directors. Dr Di Muzio was appointed in February and has 40 yearsexperience in companies including Bristol-Myers Squibb, Glaxo Wellcome and AlzaCorporation. Dr Ajay Agrawal was appointed in April and has over 20 years ofexperience in the biotech and pharmaceutical industry. He was co-founder ofpolyMASC pharmaceuticals plc and has worked with Genovac GmBH (Germany), Qiagen(Germany), PHT Pharma (Italy), Karo Bio (Sweden), Aldevron (USA) and JubilantBiosys. Ms Tracy Weimar joined as Vice-President of Operations and has also beenappointed Company Secretary. She was most recently at GlaxoSmithKline asDirector of Worldwide Business Development which involved numerous corporatelicensing transactions. With an experienced management team and a strong financial position, ImmuPharmais well placed to deliver value from our lead drug candidates and promisingpipeline. On behalf of the Board we should like to thank all our shareholders for theircontinued support. FINANCIAL REVIEW The Group continues to adopt International Financial Reporting Standards (IFRS)as its primary accounting basis. It is important to note that one of these standards, IFRS2, relating toshare-based payments, has had a significant impact on the results for the Groupfor this nine month period. The Group loss before tax would have been £1.2m,consisting of cash and accrued expenditure on the normal running of the companyand research costs, but has increased to £1.9m as a result of charging themajority of the assessed 'fair value' to the recipients of the share optionsagreed at the time the parent company was floated (16th February 2006),including a provision for employers' National Insurance. It should be stressed that this charge of £0.7m does not represent additionalcash expenditure, and is purely a notional amount stipulated by IFRS2 (andcalculated using a statistical model) - which is debited to the Income Statementand credited to equity - as a measure of the dilution suffered by shareholders,and hence benefit received by the recipients, as a result of granting theoptions. A further £0.1m is due to be charged in next year's accounts under IFRS2, beingthe remainder of the fair value charge. Results Including the IFRS2 charge noted above, the loss of the Group for the periodbefore taxation was £1.9m (prior period loss £2.5m). Basic and diluted loss pershare was 2.72p (prior period 4.16p). No dividend is proposed. The fact that losses have continued to be made is, at this point of the Group'sdevelopment, to be expected, since there is minimal revenue and businessactivity is still concerned with clinical trial expenditure and maintaining theinfrastructure of the Group. In the previous period, the loss of £2.5m included an exceptional item of£970,000, being mainly a write-off of goodwill resulting from the treatment ofthe acquisition of the ImmuPharma business as being a 'reverse takeover' underthe Financial Reporting rules. It represented the difference between the marketvalue of the acquirer company's shares in issue at the date of the acquisitionand its underlying net asset value (principally cash) at that time. TheDirectors believed that this 'premium to cash' was justified at the time inorder to enable the acquisition and subsequent fund-raising and that it wasappropriate to write it off. Operating Loss The Operating loss of £1.97m (£1.26m excluding the notional IFRS2 charge notedabove) represents principally the employment cost and overheads of maintainingthe Group together with expenditure on research carried out by Contract ResearchOrganisations. The timing and extent of the research and development programmecontinues to be well controlled - and below original expectations forecast atthe time of float. Net Funds At 31st December 2006, the Group had Cash and cash equivalents of £6,460,000(31st March 2006 £2,693,000). Cash levels have benefited from additional funds raised in December 2006 whenequity and debt of €7m was raised. These additional funds have enabled the Groupto contemplate the final phases of the Lupus drug development with confidence,and at the same time to make progress with development of the other main drugcandidates. OUTLOOK The focus for the year ahead will be on the next phase of trials for our Lupuscompound IPP-201101; to make further progress advancing our analgesic andantibiotic compounds, and to engage in dialogue with other pharmaceuticalcompanies. With a strong team in place to execute these objectives, we believe we are wellpositioned to take the Group forward. CONSOLIDATED INCOME STATEMENTFOR THE PERIOD ENDED 31 DECEMBER 2006 1 April 13 January Notes 2006 to 2005 31 December to 31 March 2006 2006 £ £Continuing operationsRevenue 1 44,818 25,409Research and development expenses (568,139) (679,091)Administrative expenses (1,447,998) (880,074) Operating loss 2 (1,971,319) (1,533,756) Exceptional costs arising from - (970,524)reverse acquisitionFinance costs (7,739) (8,045)Investment revenues 64,307 28,759 Loss before taxation (1,914,751) (2,483,566) Tax 54,713 788 Loss for the period (1,860,038) (2,482,778) (Loss) per ordinary share Basic and diluted 3 (2.72)p (4.16)p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEFOR THE PERIOD ENDED 31 DECEMBER 2006 1 April 13 January 2006 to 2005 31 December to 31 March 2006 2006 £ £ Exchange differences on translation of (4,143) 8foreign operations(Loss) for the financial period (1,860,038) (2,482,778) Total recognised income and expense for (1,864,181) (2,482,770)the period Attributable to:Equity holders of the parent company (1,864,181) (2,482,770) CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 31 December 31 March 2006 2006 Note £ £ Non-current assetsProperty, plant and equipment 11,503 12,020Intangible assets - goodwill - -Intangible assets - other 748,878 765,004 Total non-current assets 760,381 777,024 Current assetsTrade and other receivables 103,801 157,572Cash and cash equivalents 6,459,918 2,692,900 Total current assets 6,563,719 2,850,472 Current liabilitiesFinancial liabilities - borrowings 192,987 277,898Trade and other payables 747,615 845,618Provisions 94,218 - Total current liabilities 1,034,820 1,123,516 Net current assets 5,528,899 1,726,956 Non-current liabilitiesFinancial liabilities - borrowings 403,634 - Net assets 5,885,646 2,503,980 EQUITYOrdinary shares 7,277,615 6,813,815Share premium 3,558,340 1,607,990Merger reserve 106,148 106,148Other reserves (713,641) (3,541,195)Retained earnings (4,342,816) (2,482,778) Total equity 4 5,885,646 2,503,980 CONSOLIDATED CASH FLOW STATEMENTFOR THE PERIOD ENDED 31 DECEMBER 2006 31 December 31 March 2006 2006 £ £ Cash flows from operatingactivitiesCash flows used in operations (1,236,598) (871,552)Interest paid (7,739) (8,045) Net cash used in operating (1,244,337) (879,597)activities Investing activitiesPurchase of property, plant and (2,389) (17,130)equipmentAcquisition of intangibles assets - (337,274)Cash on reverse acquisition - 975,961Cash on acquisition of subsidiaries - 17,773Reverse acquisition expense - (59,561)Subsidiary acquisition expense - (2,342)Interest received 64,307 28,759Tax received - 788 Net cash generated from investing 61,918 606,974activities Financing activitiesNet proceeds from share issues - ImmuPharma - 1,397,976(UK) LimitedNet proceeds from share issue - Company 2,609,150 1,569,802Increase in bank overdraft 2,556 12New loans 384,754 -Loan repayments (68,586) (2,267)Equity shares to be issued 2,021,563 - Net cash generated from financing 4,949,437 2,965,523activities Net increase in cash and cash 3,767,018 2,692,900equivalents Cash and cash equivalents at 2,692,900 -beginning of period Cash and cash equivalents at end of 6,459,918 2,692,900period NOTES 1. The financial information set out in this announcement does notcomprise the Group's statutory accounts for the period ended 31 December 2006. The financial information for the period ended 31 March 2006 is derived from thestatutory accounts for the period which have been delivered to the Registrar ofCompanies. The auditors reported on those accounts; their report was unqualifiedand did not contain a statement under either Section 237 (2) or Section 237 (3)of the Companies Act 1985. The statutory accounts for the period ended 31 December 2006 will be finalisedon the basis of the financial information presented by the Directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the Company's Annual General Meeting. The accounting policies are consistent with those applied in the preparation ofthe statutory audited accounts for the period ended 31 December 2006 which havebeen prepared in accordance with International Financial Reporting Standards('IFRS'). The financial information is for the period from 1 April 2006 to 31 December2006 and the comparatives are for the period from 13 January 2005 to 31 March2006. The comparatives were prepared using reverse acquisition accounting andtherefore represent a continuation of the financial statements of ImmuPharma(UK) Limited, the legal subsidiary acquired. The Group's financial statements incorporate the financial statements ofImmuPharma plc, ImmuPharma (UK) Limited and other entities controlled by thecompany ('the subsidiaries') comprising ImmuPharma AG and ImmuPharma (France)SA. Control is achieved where the company has the power to govern the financialand operating policies of an investee entity so as to obtain benefits from itsactivities. The Group has applied the requirements of IFRS2 share based payments for thefirst time during the current period. The Group issues equity-settled sharebased payments to certain employees. These are measured at fair value at thedate of grant. The fair value determined at the grant date is expensed on astraight line basis over the vesting period, based on the Group's estimate ofshares that will eventually vest and adjusted for the effect of non market-basedvesting conditions. Fair value is measured by use of the Binomial model. Theexpected life used in the model has been adjusted, based on management's bestestimate, for the effects of non-transferability, exercise restrictions andbehavioural considerations. 2 OPERATING LOSS Period ended Period ended 31 December 31 March 2006 2006 £ £ Operating loss is stated after charging/ (crediting): Foreign exchange gains (25,167) - Research and development costs - current period expenditure 568,139 679,091 Share based payments charge 615,134 - Employers National Insurance provision in 94,218 - respect of share based payments charge Depreciation of property, plant and equipment - owned 2,906 10,081 Amortisation of intangible assets - patents 16,126 5,140 Impairment of goodwill - 970,524 Services provided by Company auditors: - Audit services 55,538 15,000 - Other services (split between): - The auditing of accounts of associates of the company pursuant to legislation - 10,000 - Other services relating to taxation 12,584 5,000 - Services relating to recruitment and 13,630 - remuneration - All other services 29,871 17,025 - Audit services provided by other auditors 11,860 9,000 * Included within the 'Audit services' figure of £55,538 is £14,413 relating tothe period ended 31 March 2006. Included within the 'All other services' figureof £29,871 is £19,425 relating to the period ended 31 March 2006. 3 EARNINGS PER SHARE Period Period ended ended 31 31 March December 2006 2006 £ £ Earnings Earnings for the purposes of basic earnings per share being net loss attributable to equity shareholders (1,860,038) (2,482,778) Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 68,388,353 59,663,827 Basic and diluted loss per share (2.72)p (4.16)p The Group has granted share options and warrants in respect of equity shares to be issued, the details of which are disclosed in Notes 20 and 21 of the full set of accounts. As a result of the net loss for the period, there is no dilutive effect of these options and warrants. 4 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Share Merger Other Retained Total capital premium reserve reserves* Earnings equity £ £ £ £ £ £ At incorporation - - - - - - Exchange differences on translating foreign operations - - - 8 - 8 Loss for the period ended 31 March 2006 - - - - (2,482,778) (2,482,778) Total recognised income and expense for the period - - - 8 (2,482,778) (2,482,770) Equity share capital of the Company prior to reverse acquisition 420,000 557,003 - - - 977,003 Reverse acquisition of the Company 5,875,000 - - (3,541,203) - 2,333,797 New issue of equity share capital 518,815 1,686,148 - - - 2,204,963 Less: expenses of new share issue - (635,161) - - - (635,161) Acquisition of subsidiaries - - 106,148 - - 106,148 At 1 April 2006 6,813,815 1,607,990 106,148 (3,541,195) (2,482,778) 2,503,980 Exchange differences on translating foreign operations - - - (4,143) - (4,143) Loss for the period ended 31 December 2006 - - - - (1,860,038) (1,860,038) Total recognised income and expense for the period - - - (4,143) (1,860,038) (1,864,181) Equity shares to be issued - - - 2,021,563 - 2,021,563 Share based payments - (195,000) - 810,134 615,134 New issue of equity share capital 463,800 2,305,200 - - - 2,769,000 Less: expenses of new share issue - (159,850) - - - (159,850) At 31 December 2006 7,277,615 3,558,340 106,148 (713,641) (4,342,816) 5,885,646 * Other reserves as at 31 December 2006 comprises a reverse acquisition reserve £(3,541,203), a translation reserve £(4,135) and equity shares to be issued of £2,831,697. 5. DIRECTORS' REPORT AND ACCOUNTS Copies of the report and accounts will be posted to shareholders in early May2007. This information is provided by RNS The company news service from the London Stock Exchange