MPM.L Regulatory News (MPM)

13 Jun 2007 07:02

Minster Pharmaceuticals PLC13 June 2007 For Immediate Release 13 June 2007 MINSTER PHARMACEUTICALS PLC ("Minster" or "the Company") Unaudited Preliminary Results for the year ended 31 March 2007 Minster Pharmaceuticals plc (AIM: MPM), the drug development companyspecialising in neurological and psychiatric disorders, is pleased to announceits preliminary results for the year ended 31 March 2007. Highlights: • Significant progress across all aspects of the business • Positive Phase IIa data from tonabersat in the prevention of migraine • 500-patient, potentially pivotal Phase IIb trial of tonabersat to begin autumn 2007 • Successful £17 million secondary fundraising in March 2007, bringing in key US investors including Care Capital • Post-tax loss of £2.59 million (2006: loss of £1.68 million) Paul Sharpe, Minster Pharmaceuticals' Chief Executive, said: "The current yearpromises to be another year of significant progress at Minster, underpinned by astrengthened balance sheet and supportive investors. We particularly lookforward to the enrolment of patients in our 500 patient, potentially pivotalPhase IIb trial of tonabersat in the preventive treatment of migraine, whichrepresents one of the fastest growing markets in the pharmaceutical industry." - ENDS - For further information: Minster Pharmaceuticals plc Tel: +44 (0) 1799 506623Paul Sharpe, Chief Executive OfficerRobert Aubrey, Chief Financial Officer Buchanan Communications Tel: +44 (0) 20 7466 5000Mark Court/ Rebecca Skye Dietrich Nomura Code Securities Limited Tel: +44 (0) 20 7776 1200Richard Potts / Gerard Harper CHAIRMAN'S AND CHIEF EXECUTIVE'S JOINT REVIEW Introduction The year to 31 March 2007 was a year of tremendous progress at Minster: ourclinical programmes advanced, our balance sheet was strengthened, our managementteam was deepened and our investor base broadened. This progress within theCompany was mirrored externally by an increasingly positive backdrop for ourlead compound, tonabersat in the prevention of migraine. Scientificunderstanding both of tonabersat and of migraine progressed significantly duringthe year as did awareness of the commercial opportunity of the preventivetreatment of migraine. The prevention of migraine is a new and rapidly growing market, characterised bysubstantial latent demand from migraine sufferers and medical practitioners. Thecommercial opportunity represented by this market is underlined by Topamax,Johnson & Johnson's first-generation migraine prevention product, which waslaunched in this indication only three years ago and has estimated annual salesin migraine prevention of more than $1 billion. In addition to the impact ofmigraine on individual sufferers, it is increasingly being recognised thatmigraine has a significant social and economic impact. It is estimated thatmigraine costs the US economy $12 billion a year and the European economy €27billion a year. Interest in the mechanism of action of sabcomeline, our second pipelinecompound, has increased markedly during the year with the recognition that acompound of this type may have widespread utility in the management ofschizophrenia. It is thought that the use of sabcomeline in combination withexisting schizophrenia drugs may allow a reduction in the dosage of currenttreatments, thereby reducing side effects. We believe that sabcomeline has thepotential both to manage psychotic symptoms and to address the underlyingcognitive decline that is increasingly recognised as a core symptom ofschizophrenia. We are pleased to report that progress has continued strongly into the currentyear, supported by an equity fundraising of £17 million gross completed shortlybefore the 2007 year-end. Minster's near term focus in the use of its financialand management resources is the late-stage development and commercialisation ofthe Company's current pipeline of compounds - tonabersat and sabcomeline. Themedium term strategy is to leverage the anticipated cashflows from the currentpipeline by in-licensing further compounds with the ultimate objective ofcreating a substantial and highly efficient drug development enterprise focussedon the central nervous system. Pipeline update Tonabersat Tonabersat is the most advanced compound in an exciting new class of drugscalled gap junction blockers, which have significant potential in the treatmentof migraine and other major neurological conditions. We were delighted to report the results of a Phase IIa study of tonabersat atthe beginning of this year, marking an important step towards the pivotaltrials, registration and commercialization of the product. The trial showed thattonabersat is effective in the preventive treatment of migraine. In the trial,of 124 patients, responders were individuals who experienced a 50 per cent orgreater reduction in migraine attack frequency relative to baseline. Responderrates for month three of the study were 62 per cent in the tonabersat group and45 per cent in the placebo group. At the same time, days when "rescuemedication", such as painkillers, were needed were reduced by 60 per cent forthe tonabersat group and 34 per cent for placebo. Tonabersat was well tolerated,in contrast to other treatments for migraine prevention, which creates theopportunity for the study of higher doses in future trials. Tonabersat was also associated with improvements across a range of othermeasures in a consistent pattern strongly suggesting demonstration of genuineefficacy. This profile, if confirmed in larger definitive clinical studies,would establish tonabersat as a significant advance in the preventive treatmentof migraine. Minster's expectations for tonabersat are supported by a scientificadvisory board chaired by Professor Stephen Silberstein of Thomas JeffersonUniversity Hospital, Philadelphia, USA, and comprising leading specialists inthe field. With the guidance of this advisory board, the Company is evaluatingoptions to identify the fastest route to registration and commercialisation oftonabersat. The proceeds of our recent fundraising will be principally applied toprogressing tonabersat in a 500 patient study in the US, which is expected tocommence in autumn 2007 and to provide definitive data on efficacy with headlineresults anticipated in Q4 2008. In September 2006, we were pleased to report that GlaxoSmithKline, from whichMinster in-licensed rights to tonabersat, had extended the Company's developmentand commercialization rights to the compound to include additional indicationsincluding epilepsy, pain and other neurological conditions. Also during the year, we were pleased to enter two prestigious collaborations inthe US relating to the mechanism of action of tonabersat. A program of studiesled by Dr Michael Rogawski MD PhD, Chief of the Epilepsy Research Section at theNational Institute of Neurological Diseases and Stroke (NINDS) in Bethesda,Maryland, is looking at the mechanism by which tonabersat inhibits abnormalbrain function. NINDS is part of the US National Institutes of Health (NIH) andit is very encouraging to see the NIH taking such an active interest intonabersat. A collaboration with the University of California, Los Angeles (UCLA) is lookingat tonabersat's influence on brain function and the biochemical eventsunderlying the onset of a migraine attack. The principal investigator for thestudies is Professor Andrew Charles MD, the Director of the Headache Researchand Treatment Program at the Department of Neurology, David Geffen School ofMedicine at UCLA. Sabcomeline Our second compound, sabcomeline, a muscarinic partial agonist, is indevelopment for the management of schizophrenia to treat both psychotic symptomsand cognitive decline. We expect to make significant progress during the comingyear in advancing this product towards proof of concept. Atypical antipsychoticdrugs are effective in controlling the hallucinations and delusions associatedwith schizophrenia but cognitive decline results in sufferers' withdrawal fromsociety and long-term welfare dependency. Cognitive decline in schizophrenia hasbeen identified as a high priority by opinion leaders and government agencies inthe US, underlining the significant market opportunity available forsabcomeline, which would most likely be used in combination with existingschizophrenia therapies. It is also thought by key opinion leaders that sabcomeline in combination withexisting schizophrenia drugs may have a synergistic effect on the psychoticsymptoms of schizophrenia. A combination product might therefore allow areduction in the dosage of current treatments, which would have the considerablebenefit of reducing side effects. Financials The Company reported a post-tax loss of £2.59 million for the year to 31 March2007, compared with a post-tax loss of £1.68 million in the previous year.Research and development expenditure increased to £1.22 million (2006: £0.72m),reflecting the increased momentum of clinical trials. The Company intends to continue to manage the development of its pipeline on anoutsourced basis, allowing rigorous control of costs and overheads. At the balance sheet date of 31 March 2007, the Group had net cash of £16.49million (2006: £1.77m). Our balance sheet was strengthened by a £17 milliongross fundraising in March 2007, which has given the Company the resources toaccelerate the development of its pipeline. The fundraising brought newinstitutional shareholders in the UK to our register along with significant newUS investors in Care Capital and Rho Capital. People We were delighted to welcome Dr Jerry Karabelas, a partner of Care Capital, toour Board as a Non-Executive Director at the time of our recent fundraising. Hisinternational experience of drug development and marketing, and his extensiveknowledge of the US market, will be particularly valuable to the Company. Wewere also delighted that Dr Peter Blower, previously a technical advisor to theCompany, has joined Minster in the executive position of Chief TechnicalOfficer. His expertise in drug discovery, development and strategic marketingwill also be of great value to the Company. We would also like to thank Minster's staff, and the Company's network ofscientific and professional advisers, for their dedicated work throughout theyear - their contribution was critical to the Company's development. We are alsovery grateful for the valuable support from new and existing investors. Outlook The current year promises to be another year of significant progress at Minster,underpinned by a strengthened balance sheet and supportive investors. Weparticularly look forward to the enrolment of patients in our 500 patient,potentially pivotal Phase IIb trial of tonabersat in the preventive treatment ofmigraine, which represents one of the fastest growing markets in thepharmaceutical industry. John Russell, Chairman Paul Sharpe, Chief Executive Officer 13 June 2007 Consolidated Profit and Loss AccountYear ending 31 March 2007 Note 2007 2006 £ £Turnover - -Research and development expenses 2 (1,222,170) (720,880) Administrative expenses 2Amortisation 619,888 619,463Non recurring professional fees 237,024 -Other expenses 711,626 567,490 (1,568,538) (1,186,953) Operating loss 2 (2,790,708) (1,907,833)Interest receivable 6 47,676 100,819 Loss on ordinary activitiesbefore taxation (2,743,032) (1,807,014)Taxation credit on the results for the 7 152,880 125,752year Loss on ordinary activitiesafter taxation 16 (2,590,152) (1,681,262) Loss per share 20Basic per 5p share £0.081 £0.055Fully diluted per 5p share £0.055 £0.035 All the activities of the Group are classed as continuing. Statement of total recognised gains and lossesThere were no recognised gains or losses other than the loss for thefinancial year. Consolidated Balance SheetAt 31 March 2007 Note 2007 2006 £ £Fixed assetsIntangible asset 8 11,100,700 11,720,588Tangible assets 9 2,336 2,058 11,103,036 11,722,646 Current assetsDebtors 11 347,478 313,196Bank and cash 16,492,022 1,766,726 16,839,500 2,079,922Creditors: amounts falling duewithin one year 12 (360,232) (214,830) Net current assets 16,479,268 1,865,092 Total assets less current 27,582,304 13,587,738liabilitiesCreditors: amounts falling due afterone year 13 (90,000) (90,000) Provisions for liabilities 14 (15,854) - Net assets 27,476,450 13,497,738 Capital and reservesShare capital 15 2,918,978 1,563,286Share premium 16 26,007,337 10,797,155Capital reserve 16 4,837,500 4,837,500Special reserve 16 - 54,572Profit and loss account 16 (6,287,365) (3,754,775) Shareholders' funds 17 27,476,450 13,497,738 Company Balance SheetAt 31 March 2007 Note 2007 2006 £ £Fixed assetInvestment in subsidiary 10 12,097,500 12,097,500 Current assetsDebtors 11 19,220,932 3,144,822 19,220,932 3,144,822Creditors: amounts falling duewithin one year 12 (28,354) (38,561) Net current assets 19,192,578 3,106,261 Total assets less current 31,290,078 15,203,761liabilitiesCreditors: amounts falling dueafter one year 13 (90,000) (90,000) Provisions for liabilities 14 (15,854) Net assets 31,184,224 15,113,761 Capital and reservesShare capital 15 2,918,978 1,563,286Share premium 16 26,007,337 10,797,155Capital reserve 16 4,837,500 4,837,500Special reserve 16 - 54,572Profit and loss account 16 (2,579,591) (2,138,752) Shareholders' funds 17 31,184,224 15,113,761 Consolidated Cash Flow StatementYear ending 31 March 2007 Note 2007 2006 £ £Reconciliation of operating loss to net cashoutflowfrom operating activitiesOperating loss (2,790,708) (1,907,833)Professional fees settled by issue of ordinary - -sharesProfessional fees written off against share premium (1,034,125) -Depreciation charges 1,295 872Amortisation of goodwill 619,888 619,463Charges to profit and loss account in respect ofthegranting of warrants below market value - -Potential national insurance liability on warrantsandshare options granted in schemes not subject toHM Revenue & Customs approval (14,668) 13,335Charge in respect of cost to the company of shareoptions granted to employees 33,512 -Change in debtors (23,711) 57,959Change in creditors 145,402 92,271 Net cash outflow from operating activities (3,063,115) (1,123,933) Cash flow statementNet cash outflow from operating activities (3,063,115) (1,123,933)Returns on investments 18 47,676 100,819Acquisition of fixed assets 9 (1,573) (1,870)Taxation 142,308 - (2,874,704) (1,024,984)Financing 18 17,600,000 - Increase/(decrease) in cash 14,725,296 (1,024,984) Reconciliation of net cashflowto movement in net debtIncrease/(decrease) in liquid resources 14,725,296 (1,024,984) Change in net debt 14,725,296 (1,024,984)Net funds at 1 April 2006 1,766,726 2,791,710 Net funds at 31 March 2007 16,492,022 1,766,726 Notes to the financial statements 1. Accounting Policies The group financial statements have been prepared under the historical costconvention and in accordance with applicable accounting standards. Basis of consolidation The financial statements consolidate the financial statements of MinsterPharmaceuticals plc and its subsidiary. Tangible fixed assets and depreciation Tangible fixed assets are included at cost, net of depreciation and anyprovision for impairment. Depreciation has been provided on the straight-linebasis on all tangible fixed assets in order to write off the assets over theirestimated useful lives, which are: Computer equipment 3 years Other office equipment 4 years Intangible fixed assets and goodwill Goodwill arising on consolidation, representing the excess of the fair value ofthe consideration given over the fair value of the net assets acquired, iscapitalised as an intangible fixed asset and amortised on a straight line basisover its estimated useful economic life, which is estimated to be 20 years. Thecarrying value of goodwill is subject to an impairment test at the end of thefirst full year following acquisition and in any other periods if events orchanges in circumstances indicate that the carrying value may not ultimately berecoverable. Fixed asset investments Investments in subsidiaries are stated at cost, less provision for permanentimpairment. Deferred taxation Full provision is made for deferred taxation arising from timing differencesbetween the recognition of gains and losses in the financial statements andtheir recognition for tax purposes. Deferred tax assets are recognised to theextent that it is more likely than not that they will be recovered. Research and development Research and development costs are charged to the profit and loss account in theyear in which they occur. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the dateof the transaction. Monetary assets and liabilities denominated in foreigncurrencies are translated at the rate of exchange ruling at the balance sheetdate. All differences are taken to the profit and loss account. Pensions Pension contributions to a group stakeholder pension plan in respect of certainDirectors and employees are charged to profit and loss account as incurred. Operating leases Rentals applicable to operating leases, where substantially all the benefits andrisks of ownership remain with the lessor, are charged to profit and lossaccount as incurred. Share based incentives Incentives in the form of share options are provided to certain Directors andemployees and are measured at fair value at the date of grant. The fair value ofthe services is charged as an expense on a straight line basis over the periodduring which the services are provided after making allowance for the proportionof options expected to be exercised. The fair value of the options granted iscomputed using the Black Scholes model taking into account the particularcircumstances of the Group. 2. Operating loss 2007 2006 £ £The operating loss is stated after charging: Depreciation of owned fixed assets 1,295 872 Amortisation of goodwill on consolidation 619,888 619,463 Research and development 1,222,170 720,880 Auditors' remuneration - audit 10,000 8,000 Auditors' remuneration - other services 38,620 3,000 Directors' remuneration 313,000 267,368 Non-recurring professional fees 237,024 - Operating lease rentals 14,259 8,921 Auditors' fees for the Company were £6,000 (2006 £4,500). The accounts do not include the individual profit and loss account for theCompany. The Company made a loss before and after taxation of £464,889 (2006£172,530). 6. Interest receivable 2007 2006 £ £On refund of corporation tax 174On bank deposits 47,502 100,819 47,676 100,819 7. Taxation No UK Corporation Tax is payable on the results for the year due to losses. Thesubsidiary will be claiming an enhanced research and development tax allowanceand will request a tax repayment in accordance with the regulations up to thelimit allowed under the Finance Act 2000. 8. Intangible Fixed Assets - goodwill arising on consolidation Group 2007 £Cost 1 April 2006 12,397,754Addition during the year - Cost 31 March 2007 12,397,754 Amortisation 1 April 2006 677,166Amortisation for the year 619,888 Amortisation 31 March 2007 1,297,054 Net book value 31 March 2007 11,100,700 Net book value 31 March 2006 11,720,588 9. Tangible Fixed Assets - computers and office equipment Group 2007 £Cost 1 April 2006 4,064Additions 1,573 Cost 31 March 2007 5,637 Depreciation 1 April 2006 2,006Charge for the year 1,295 Depreciation 31 March 2007 3,301 Net book value 31 March 2007 2,336 Net book value 31 March 2006 2,058 The tangible fixed assets were all held by the subsidiary. The Company held no fixed assets at any point in the year. 11. Debtors Group Company Group Company 2007 2007 2006 2006 £ £ £ £Amounts owed by groupundertaking - 19,214,932 - 3,144,458Prepayments and otherdebtors 131,641 6,000 141,368 -VAT 58,354 - 24,916 364Corporation tax 157,483 - 146,912 - 347,478 19,220,932 313,196 3,144,822 Amounts due after more than one year included in: Group Company Group Company 2007 2007 2006 2006 £ £ £ £Prepayments and other debtors 93,188 - 114,488 - 12. Creditors: amounts falling due within one year Group Company Group Company 2007 2007 2006 2006 £ £ £ £Trade creditors 131,084 - 157,381 -Taxes and social security costs 22,506 1,478 12,779 1,478Other creditors - - - -Accruals 206,642 26,876 44,670 37,083 360,232 28,354 214,830 38,561 13. Creditors: amounts falling due in more than one year 2007 2006 £ £Unsecured convertible loan notes 90,000 90,000 On 6 April 2004, £355,000 of unsecured, zero coupon, seven year convertible loannotes were issued. Since the year end, the outstanding balance has beenconverted to 521,739 ordinary shares of 5p each. 14. Provisions for liabilities 2007 2006 £ £National insurance provisiontransferred from Special Reserve(note 16) 15,854 - The provision comprises national insurance that potentially arises on exerciseof certain of the options granted over shares in the company. 15. Share capital 2007 2006Authorised:Ordinary shares of 5p each Number 100,000,000Ordinary shares of 0.1p each Number 3,500,000,000 Value £5,000,000 £3,500,000 2007 2006Allotted, called up and fully paid:Ordinary shares of 5p each Number 58,379,573Ordinary shares of 0.1p each Number 1,563,286,348 Value £2,918,978 £1,563,286 The company made two issues of shares during the year: On 16 November 2006 the Company issued 48,000,000 ordinary shares of 0.1p eachat 1.25p per share, raising £600,000 before expenses. The company also issuedwarrants over 24 million ordinary shares of 0.1p each exercisable at 1.25p by 30November 2011. On 26 March 2007 the shareholders approved an increase in theauthorised share capital to £5,000,000 and a 50:1 consolidation, thus changingthe authorised share capital to 100,000,000 ordinary shares of 5p each. On 27 March 2007 the Company issued 26,153,846 ordinary shares of 5p each at 65pper share, raising approximately £17,000,000 before expenses. The Company alsoissued warrants over 6,538,457 ordinary shares at a price of 65p per share,exercisable by 1 March 2012. At 31 March 2007 the following potential issues of ordinary shares of 5p eachwere outstanding: (i) A further 12,900,000 shares are issuable at 37.5p per share as secondaryconsideration to the former shareholders of the subsidiary Minster ResearchLimited, on the acceptance by the Company of an arm's length written offer tolicense any part of the intellectual property rights owned by or licensed byMinster Research Limited, subject to such licence complying with certainconditions including conditions relating to the identity of the licensee and tothe economic value attributable to such licence . (ii) 521,739 shares are issuable on conversion of the outstanding unsecuredconvertible loan notes (see note 13) (iii) 20,000 shares issuable under a warrant which are exercisable at 17.25p per5p share before 6 April 2009. (iv) Options over 5p ordinary shares granted are as follows: Granted February 2005: 600,000 shares at 175p per share 400,000 shares at 37.5p per share These options can be exercised before 25 February 2015. Granted May 2005: 102,000 shares at 70p per share These options can be exercised before 10 May 2015. Granted March 2007: 880,000 shares at 65p per share 320,000 shares at 73.75p per share These options can be exercised before 26 March 2012. 16. Share premium and reservesThe Group Share Profit premium Capital Special and loss account reserve reserve account £ £ £ £At 1 April 2006 10,797,155 4,837,500 54,572 (3,754,775)Retained loss for the year - - - (2,590,152)Premium on issue of shares 16,244,308Share issue expenses (1,034,126)Adjustment to special reserve - - (14,668) -Equity settled share based - - 33,512payments (see note 5)Transfer of equity settled (24,050) 24,050share based paymentsTransfer of national insurance (15,854)reserve to provisions At 31 March 2007 26,007,337 4,837,500 - (6,287,365) The Company Share Profit premium Capital Special and loss account reserve reserve account £ £ £ £At 1 April 2006 10,797,155 4,837,500 54,572 (2,138,752)Retained loss for the year - - - (464,889)Premium on issue of shares 16,244,308Share issue expenses (1,034,126)Adjustment to special reserve - - (14,668) -Transfer of equity settled (24,050) 24,050share based paymentsTransfer of national insurance (15,854)reserve to provisions At 31 March 2007 26,007,337 4,837,500 - (2,579,591) Details of the capital reserve are given in note 15(i) above. The special reserve arose as a result of the granting of a warrant to a directorin 2004 at below market value on the date of grant, together with employer'snational insurance payable on the exercise of certain share options. Followingthe introduction of FRS20, the value of the discount on the warrant has beentransferred to the profit and loss account and the national insurance reservehas been transferred to provisions. 17. Equity shareholders' fundsGroup 2007 2006 £ £At 1 April 2006 13,497,738 15,165,665Share capital subscribed, includingpremium, net of expenses of issue 16,565,874 -Adjustment re share options and national 17,658 -insurance provisionSpecial reserve (14,668) 13,335 30,066,602 15,179,000Net loss for the year (2,590,152) (1,681,262) At 31 March 2007 27,476,450 13,497,738 Company 2007 2006 £ £At 1 April 2006 15,113,761 15,272,956Share capital subscribed, includingpremium, net of expenses of issue 16,565,874 -Adjustment re national insurance provision (15,854)Special reserve (14,668) 13,335 31,649,113 15,286,291Net loss for the year (464,889) (172,530) At 31 March 2007 31,184,224 15,113,761 18. Cash flows 2007 2006 £ £Returns on investmentsInterest received 47,676 100,819 47,676 100,819 FinancingIssues of share capital for cash 17,600,000 - 17,600,000 - 20. Loss per shareThe calculation of loss per share is based on the following information: 2007 2006 Loss attributable to shareholders £2,590,152 £1,681,262Weighted average number of shares of 5p (basic) 31,981,698 31,265,727Weighted average number of shares of 5p (diluted) 46,810,292 45,795,493 The number of shares and earnings per share for 2006 have been restated toreflect the 1:50 consolidation which took place on 26 March 2007. The calculation of the loss per share is based on the loss after taxation andthe weighted average of the ordinary shares in issue during the year. For the diluted loss per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Group has share options, warrants convertible loan notes and sharesto be issued as secondary consideration in respect of the subsidiary acquiredduring the previous year as potentially dilutive This information is provided by RNS The company news service from the London Stock Exchange