Plethora Solutions Holdings Plc Regulatory News (PLE)

29 Apr 2008 07:00

Plethora Solutions Holdings PLC29 April 2008 Embargoed Release: 07:00hrs Tuesday 29 April 2008 Plethora Solutions Holdings plc Preliminary Results for the Year Ending 31 December 2007 Plethora Solutions Holdings plc ('Plethora', AIM: PLE), the developer ofproducts for the treatment of urological disorders, today announces preliminaryresults for the year ended 31 December 2007. Highlights • Achievement of significant commercial and development milestones in 2007 • 10% growth in product sales • Licensing agreement signed for PSD502 PE in the USA with Sciele Pharma, Inc. • Progress across portfolio: o Positive Phase II data from three development products (PSD503, PSD506 and PSD597) and licensing discussions initiated o Two products (PSD502 and PSD510) entered Phase III pivotal studies o PSD508 Phase II study initiated • $28m financing from Paul Capital Healthcare post year-end Financials • Revenues increased to £5.8m (2006: £5.2m) • Development expenditure increased to £8.2m (2006: £5.4m) reflecting the forecast investment in Phase II and Phase III, all of which are scheduled to complete by the end of 2008 • Cash and short term investments at 31 December 2007 of £2.6m (2006: £3.4m) • Net decrease in cash and cash equivalents lower (£0.8m) than 2006 (£2.8m) as a result of the completion of a licensing agreement with Sciele Pharma, Inc. ($7m equity investment in Plethora at £2 per share), venture debt financing with ETV Capital S.A. and increased product sales • Non-dilutive financing post year end reporting period totalling $28m, of which $15m committed on signing o Secured against male health portfolio only o Provides capital requirements for the Company without further recourse to the market Commenting, Dr Steven Powell, CEO of Plethora, said: "Sales continue to grow through our Timm Medical subsidiary in the US and wecontinue to invest to complete our Phase III programmes for PSD502 and PSD510with an expectation that headline data will be reported before year end. Weanticipate a significant reduction in development expenditure in the second halfof this year (2008) as our clinical programmes come to an end. Development costswill reduce further in 2009 as we enter a full commercialisation phase, with ourfocus then being on acceleration of product sales in the US and increasedlicensing income following successful completion of clinical programmes in 2007and 2008. With the conclusion of the Paul Capital Healthcare financing agreement, Plethoranow has adequate financial resources to execute its development pipeline andaccelerate towards its goal of delivering a profitable urology business." A meeting for equity analysts will take place at 0930h today (29.04.08) atCollins Stewart, 9th Floor, 88 Wood St, London, EC2V 7QR. Enquiries: Plethora Solutions Tel : +44(0) 20 3077 5400Steven Powell Hansard Group Tel: +44(0) 20 7245 1100Adam Reynolds/John Bick About Plethora: Plethora is focused on the development and marketing of products for thetreatment of urological disorders. The Company has products in clinicaldevelopment for the treatment of overactive bladder, stress urinaryincontinence, interstitial cystitis, gynaecological pain, erectile dysfunctionand premature ejaculation. In January 2006, Plethora acquired Minneapolis (Mn)based Timm Medical Technologies Inc., which markets products for the treatmentof erectile dysfunction (ED) to urology clinics through a US-based specialtysales team. The Company is headquartered in the UK and is listed on the LondonStock Exchange (AIM:PLE). Further information is available at www.plethorasolutions.co.uk CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT INTRODUCTION The fulfilment of key objectives during 2007 in three core areas of our business- namely in product sales, licensing and product development - continues todrive Plethora towards our goal of becoming a sustainable urology business. Thesigning of the licensing agreement with Sciele Pharma, Inc. (Sciele) providesPlethora with a platform to begin the transition from a development-ledorganisation to a more commercially driven operation with future revenuesderived from both licensing and product sales. Our US operation, Timm Medical, has again reported revenues showing double digitgrowth with a particularly strong sales performance in the second half of theyear. The addition of new products to the sales portfolio and the retention ofco-promotion rights to PSD502 in the US represent the start of the developmentof Timm Medical towards becoming a multi-product organisation. 2007 has also been a year of major investment in clinical development, resultingin successful completion of Phase II studies for PSD597 in interstitial cystitis(IC) and PSD503 in stress urinary incontinence (SUI). We also met a majormilestone by moving PSD502 into Phase III clinical trials in prematureejaculation (PE) and another of our products, PSD508, into a Phase II study indysmenorrhoea. PRODUCT SALES AND MARKETING Plethora markets a range of Vacuum Erection Devices (VEDs) through itssubsidiary, Timm Medical, for the treatment of erectile dysfunction (ED).Products are marketed in the USA via a recently expanded field sales forcecalling on specialist urology clinics. Their efforts are supplemented by anin-house support team interacting directly with patients and products aremarketed internationally via an extensive distributor network. Timm Medical reported increased sales for 2007 of £5.8m (2006: £5.2m). Grossmargin increased from 79% to 86% as a result of the Board's decision to transfercomponent manufacture to China in the latter part of 2006. The double digitgrowth in sales has been achieved by demonstrating the effectiveness of theproduct in treating ED patients who are either excluded from, or choose not touse, oral therapeutics for the treatment of ED and, in particular, the continueddemonstration of the safety and clinical efficacy of ErecAid(R) in patients postradical prostatectomy. Licensing Activity In May 2007, Plethora signed an exclusive agreement with Sciele Pharma, Inc., inwhich commercial rights were licensed to Sciele for PSD502 for prematureejaculation in the USA. As part of their commitment to this agreement, Scielepurchased a $7m equity stake in the company priced at £2 per share. Under theterms of the license Plethora will also receive milestone payments on theachievement of regulatory and sales milestones and royalties on sales afterproduct approval and launch. Within the license agreement with Sciele, Plethora has retained co-promotionrights that will leverage our Timm Medical sales and marketing expertise inurology. By retaining co-promotion rights in the US and negotiating non-USrights separately, Plethora aims to maximise the value of this developmentasset. Negotiations are continuing with potential partners for PSD502 for territoriesoutside of the USA. In addition, licensing discussions have now been initiatedregarding PSD597 for IC and PSD503 for SUI following the successful outcome ofPhase II clinical studies with these products. PRODUCT DEVELOPMENT Significant advances have been made across the Plethora development portfolioduring 2007 culminating in successful outcomes to Phase II studies for PSD597and PSD503. Our two most advanced projects, PSD502 and PSD510 for the treatmentof PE and ED, respectively, have now entered their final stage of developmentand we hope to have completed these studies before the end of 2008. The Group's product pipeline therefore now comprises two Phase III products andfour Phase II drugs. It is expected that all 6 products will have reached theirnext key milestones before the end of 2008. Male Sexual Dysfunction Plethora is marketing and developing products for the treatment of erectiledysfunction (ED) and the unmet medical need of premature ejaculation (PE). Thestatus of these products is summarised in Table 1 below. Table 1: Plethora Male Sexual Health Portfolio Product Indication Description Status ErecAid(R) ED Device Marketed PSD502 PE Therapeutic Phase III PSD510 ED Therapeutic Phase II/III 'Invicorp(R)' PSD502: A Topical Treatment for PE PE is the most commonly reported form of sexual dysfunction in men, with aprevalence of around 30%. There are currently no approved pharmaceuticaltreatments for PE. In February 2007, the Group filed an Investigational New Drug submission (IND)with US regulatory authorities and opened the IND with a US clinical study,which was completed successfully in July 2007. This study confirmed that PSD502was both well tolerated and has a rapid (less than 5 minutes) onset of action.The pharmacokinetic data also demonstrated that plasma levels of the drug andits metabolites were low - confirming that the risk of any systemic toxicity isnegligible. In October 2007, PSD502 reached a further key milestone with theannouncement of the start of the Phase III programme in the USA and this wasfollowed by the initiation of the European Phase III study in December 2007. Itis expected that headline data will be available towards the end of 2008 whichwould mark another major milestone for both the product and the company. Thestart of the pre-registration studies and the licensing agreement with Scielefor rights to PSD502 in the US means that this project is well on track andcontinues to be the subject of significant interest from potential, additionalcommercial partners. PSD510 (Invicorp(R)): A Non-Oral Therapeutic for the Treatment of ED Invicorp(R) (PSD510) is a non-oral treatment for ED. Completed Phase II and IIIstudies in Europe have demonstrated that, in contrast to, marketed non-oraltherapeutics where pain is a common adverse event (for over 30% of users), thereported incidence of pain associated with Invicorp(R) in clinical studies, todate, is substantially less. Invicorp(R) is already approved in the UK, Denmarkand New Zealand. Following discussions with the US Food & Drug Administration(FDA), Plethora will initiate the final stage of the North American clinicaldevelopment programme for Invicorp(R), a Phase III programme, this year. Invicorp(R) complements the Timm Medical ED franchise and will leverage Timm'scurrent access to urologists active in ED management; particularly those men whofail treatment with oral ED drugs or are unable to utilise them because ofcontraindications. We believe that the superior adverse event profile andclinical efficacy of Invicorp(R) will enable this product to not only competefor market share, but also to attract and retain new users. Female Health Plethora's development activities in female health are focused on the treatmentof urinary incontinence and gynaecological pain. Both clinical fields encompasssubstantial patient populations and poorly met clinical need. The female healthportfolio is summarised in Table 2. Table 2: Plethora Female Health Portfolio Product Indication Description Status PSD597 Interstitial cystitis (IC) Therapeutic Phase II PSD503 Stress Urinary Incontinence Therapeutic Phase II (SUI) PSD506 Overactive Bladder (OAB) Therapeutic Phase II PSD508 Dysmenorrhoea Therapeutic Phase II PSD509 Uterine Pain Therapeutic Pre Phase II Urogynaecological Pain PSD597: A Treatment for IC PSD597 is a proprietary formulation of a marketed analgesic drug for thetreatment of interstitial cystitis and painful bladder syndrome (IC/PBS). A2006 Datamonitor report, "Interstitial Cystitis - Few Treatments, Poor Outcomes", stated that IC prevalence translated to a global patient population of 16million, with 6.4 million patients in the US alone. In September 2007, we reported a positive outcome of a PSD597 Phase II study in102 IC and PBS patients in the US and Canada. Patients who received PSD597showed clear and substantial improvements in the primary endpoint measure,Global Response Assessment (GRA). This is a patient-rated scale of improvementin bladder symptoms which is now an international standard in IC/PBS trials.Analysing the response across all GRA categories, the difference with PSD597treatment at Day 15 was significantly different from placebo (p=0.005). Thesepositive results were replicated across all secondary endpoints withimprovements reported in bladder pain, urinary frequency and urgency. The efficacy of the drug was confirmed in an extension to the study. In thisvoluntary part of the trial, patients were offered open label treatment withPSD597 for 5 days from Day 15. Notably, 86% of patients elected to receive asecond treatment. This provides direct evidence of treatment acceptability andthe lack of alternative treatment options. At Day 22, 63% of those patients whohad received PSD597 in the double-blind study phase reported moderate or markedimprovement in GRA after the second treatment. Of the patients who wererandomised to placebo, 44% now responded to active treatment. By Day 29, GRAresponse rates were still maintained at 56% and 39%, respectively, in the twogroups. The results complement those seen in an initial double-blind study phase and,together, they suggest that the benefits of PSD597 are sustained for aconsiderable period after treatment and, secondly, confirmed that clinicalbenefit can be increased with repeated PSD597 administration. Importantly, thetreatment effect appeared to be maintained for several weeks and the drug wassafe, well tolerated and devoid of systemic side effects. PSD508: A Treatment for Dysmenorrhoea In 2006, Plethora acquired exclusive licenses to two clinical-stage productcandidates and access to an underlying drug delivery technology from MetrisTherapeutics Limited. This technology facilitates local delivery, via thevaginal wall, of drug actives which have established or potential benefits inwomen's health indications. This may enable delivery of higher doses of drugthan might otherwise be achieved through oral delivery whilst minimisingsystemic exposure. PSD508 is a locally-delivered formulation of a well-characterised non-steroidalanti-inflammatory drug (NSAID) for the treatment of dysmenorrhoea; a painful,often incapacitating, menstrual cramp which afflicts more than 50% of women ofreproductive age. PSD508 entered a Phase IIb study for patients with dysmenorrhoea in December2007. The study is a double-blind, placebo-controlled, multiple-dose, crossoverproof of concept study which compares the efficacy of vaginally delivered PSD508to that of oral NSAID and placebo in relieving menstrual-related pain. Thesafety and tolerability of PSD508 will also be evaluated. Urinary Incontinence Urinary incontinence (UI) is a condition where involuntary loss of urine is asocial or hygienic problem. UI may be broadly divided into two types: StressUrinary Incontinence (SUI) and urge incontinence or overactive bladder (OAB),although "mixed" incontinence is not uncommon. PSD503: Topical Therapy for SUI Plethora developed PSD503 to provide an 'on demand' treatment for womensuffering from mild to moderate SUI. The product has a potential patientpopulation of over 20 million in North America and Western Europe. In November 2007, we reported a positive outcome for a PSD503 Phase II clinicaltrial. The preliminary analysis, in 12 patients, of the double-blind, crossover,placebo controlled study reported that PSD503 produced a 44% overall reductionin leakage (as measured from pad weight), whereas placebo was largely withouteffect (11% increase in pad weight). Improvement with PSD503, beyond that ofplacebo, was reported in 50% of the women with SUI which represents a goodresponder rate for a urological condition such as incontinence. In addition, thecardiovascular side effect profiles of placebo and PSD503 wereindistinguishable, with no evidence of blood pressure elevation in any subjectand only very low systemic plasma concentrations of phenylephrine. These data are consistent with an earlier Plethora-sponsored open-label studyconducted at the Institute of Urology in London which demonstrated that, at thisdose, PSD503 can have a positive effect on urethral resistance and overallurodynamic parameters. PSD506: An Oral Treatment for OAB Plethora is undertaking clinical development of a novel, selective, muscarinicreceptor antagonist ("antimuscarinic") PSD506 as an oral treatment for OAB andrelated symptoms in men and women. Based on preclinical and Phase I clinicalstudies undertaken by F. Hoffmann-La Roche Ltd, PSD506 may have a superior sideeffect profile, specifically, a reduced propensity to cause dry mouth thancurrently available antimuscarinics. Plethora has initiated two Phase IIclinical studies in spinal injury patients experiencing spontaneous contractionof the bladder muscles causing incontinence and in women with OAB. OUTLOOK Major achievements, in both product development and our commercial activities,in 2007 have created a platform for the next phase in the evolution of Plethora.In the current year (2008), we aim to report on the outcome of the Phase IIIprogramme for PSD502 and, if positive, this product will then move forward intoits registration phase. We also expect to continue the progress of PSD510 inpre-registration studies for ED and complete the remaining phase II studies withour other pipeline products. By the end of 2008, all of our developmentprogrammes will have reached their next value inflection point and productlicensing and product sales will dominate the activities of the company fromthen on. As we fulfil the potential of our products and projects, we will continue toseek opportunities to accelerate revenue growth and expand our commercialoperations. Sales growth is expected to continue through our US subsidiary, TimmMedical, and the convergence of our development and commercial activities,coupled with our recent financing agreement with Paul Capital Healthcare, willsee us well on our way to becoming a profitable and rapidly maturing specialtyhealthcare company. Stuart Wallis Steven PowellNon-Executive Chairman Chief Executive Officer FINANCIAL REVIEW IFRS Plethora Solutions Holdings plc's consolidated financial statements wereprepared in accordance with United Kingdom Accounting Standards (United KingdomGenerally Accepted Accounting Practice) until 31 December 2006. The date oftransition to IFRS was 1 January 2006. The comparative figures in respect of2006 have been re-stated to reflect changes in accounting policies as a resultof adoption of IFRS. Results of Operations Revenues for the year ending 31 December 2007 were £5.8m (2006: £5.2m). Thegross margin for ErecAid(R) sales improved from 79% to 86% as a result of thetransfer of manufacture of key components to China in the second half of 2006. Overall, the Group recorded a loss for the year ending 31 December 2007 of£10.5m (2006: £5.9m). The Group's research and development expenditure for theyear, which is expensed as it is incurred, increased from £5.4m in 2006 to£8.2m. This reflects increased development expenditure associated with runningmultiple Phase II studies and the entry of PSD502 into Phase III. Otheradministrative expenses increased to £7.3m from £4.8m in 2006 which reflectsinvestment in sales and marketing activities at the Timm Medical operation inthe US and increased business and corporate development activities within theGroup. Research and development expenditure includes a non-cash charge relatingto share based compensation of £210,000 (2006: £107,000) and otheradministrative expenses include a non-cash charge relating to share basedcompensation of £526,000 (2006: £225,000) SHARE ISSUE In May 2007, the Group raised $7m (£3.5m) via a placing of 1,772,505 shares at200p per share with Sciele Pharma, Inc. as part of a PSD502 licensing agreement. LIQUIDITY AND CASH RESOURCES In June 2007, the Group secured a £4m convertible loan facility with ETV CapitalS.A. The secured facility has a 39 month term and was drawn down fully at close. Net cash outflow from operating activities for 2007 was £8.9m (2006: £5.1m),however, net decrease in cash and cash equivalents for the Group was reduced to£0.8m (2006: £2.8m) following successful conclusion of financing and licensingactivities to strengthen the Group's cash requirements. The Group's cash resources consist of cash balances together with amounts heldon short term deposit and totalled £2.6m at 31 December 2007 (2006: £3.4m). Post the reporting period, the Group entered into a revenue interest financingagreement with Paul Capital Healthcare. Through this agreement, Plethora willreceive up to $28m in cash with $15m paid at signature and a further $10 millionupon first commercial sale of PSD502 in the USA, subject to certain conditions.In addition, under certain pre-agreed conditions, Plethora will have the optionto have Paul Capital Healthcare invest an amount of $3m by way of equitysubscription in 2008. Brad HoyChief Financial Officer GROUP INCOME STATEMENTFor the year ended 31 December 2007 Note 2007 2006 £'000 £'000 Revenue 3 5,766 5,158Cost of sales (789) (1,071) Gross profit 4,977 4,087 Administrative expenses- research and development expenses (8,196) (5,402)- amortisation of intangibles (464) (418)- selling and marketing (4,078) (3,191)- other administrative expenses (3,217) (1,568) (15,955) (10,579) Operating loss 3 (10,978) (6,492) Finance costs (484) (83)Finance income 220 336 Loss for the year before taxation (11,242) (6,239) Tax credit 764 344 Loss for the year 3 (10,478) (5,895) Attributable to equity shareholders (10,478) (5,895) Total and continuing loss per ordinary shareBasic loss per share 4 (38.4p) (23.3p)Diluted loss per share 4 (38.4p) (23.3p) GROUP STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2007 Share based Profit Share Share Other Translation payment and loss capital premium reserves reserve reserve account Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2006 222 8,813 4,908 - 232 (8,425) 5,750Exchange movement on translation of foreign entities - - - (113) - - (113) Net losses recognised directly - - - (113) - - (113)in equityLoss for the year - - - - - (5,895) (5,895) Total recognised expense for the year - - - (113) - (5,895) (6,008)Issue of new shares 36 7,754 - - - - 7,790Cost of issue of new shares - (495) - - - - (495)Employee share based - - - - 332 - 332compensation Balance at 31 December 2006 258 16,072 4,908 (113) 564 (14,320) 7,369Exchange movement on translation of foreign entities - - - (13) - - (13) Net losses recognised directly in equity - - - (13) - - (13)Loss for the period - - - - - (10,478) (10,478) Total recognised expense for the year - - - (13) - (10,478) (10,491)Issue of new shares 22 4,123 - - - - 4,145Cost of issue of new shares - (92) - - - - (92)Employee share based - - - - 736 - 736compensation Balance at 31 December 2007 280 20,103 4,908 (126) 1,300 (24,798) 1,667 GROUP BALANCE SHEETAt 31 December 2007 2007 2006 £'000 £'000AssetsNon currentGoodwill 1,463 1,463Other intangible assets 4,192 4,656Property, plant and equipment 231 199Deferred tax 213 353Long term other receivables 24 35 6,123 6,706 CurrentInventory 308 186Trade and other receivables 1,303 733Corporation tax 632 400Cash and cash equivalents 2,595 3,439 4,838 4,758 Total assets 10,961 11,464 LiabilitiesCurrentTrade and other payables 3,458 2,027Borrowings 1,951 - 5,409 2,027 Non-currentBorrowings 2,627 671Deferred tax 1,258 1,397 3,885 2,068 Total liabilities 9,294 4,095 Net assets 1,667 7,369 EquityShare capital 280 258Share premium 20,103 16,072Other reserves 4,908 4,908Translation reserve (126) (113)Share based payment reserve 1,300 564Retained loss (24,798) (14,320) Total equity 1,667 7,369 GROUP CASH FLOW STATEMENTFor the year ended 31 December 2007 2007 2006 £'000 £'000Cash flows from operating activitiesLoss after taxation (10,478) (5,895)Finance income (220) (336)Finance costs 484 83Adjustment for foreign exchange (1) (9)Employee equity settled share options 736 332Depreciation of plant and equipment 96 69Amortisation 464 418Change in inventories (122) 84Change in trade and other receivables (559) (160)Change in trade and other payables 1,411 671Taxation credit per income statement (764) (344) Cash utilised from operations (8,953) (5,087)Interest paid (433) (2)Income taxes paid - (117)Income taxes received 533 - Net cash outflows from operating activities (8,853) (5,206) Cash flows from investing activitiesPurchases of property, plant and equipment (128) (142)Acquisition of subsidiary undertaking - (5,009)Cash acquired on acquisition - 23Interest received 211 265 Net cash from / (used in) investing activities 83 (4,863) Cash flows from financing activitiesProceeds from issue of shares 4,145 7,790Proceeds from receipt of borrowings 3,873 -Share issue costs (92) (495) Net cash from financing activities 7,926 7,295 Net decrease in cash and cash equivalents (844) (2,774) Cash and cash equivalents at beginning of period 3,439 6,213 Cash and cash equivalents at end of period 2,595 3,439 1 BASIS OF PREPARATION These consolidated financial statements have been prepared under the historicalcost convention and in accordance with applicable International FinancialReporting Standards as adopted by the European Union and IFRS as issued by theInternational Accounting Standards Board. Plethora Solutions Holdings plc's consolidated financial statements wereprepared in accordance with United Kingdom Accounting Standards (United KingdomGenerally Accepted Accounting Practice) until 31 December 2006. The date oftransition to IFRS was 1 January 2006. The comparative figures in respect of2006 have been restated to reflect changes in accounting policies as a result ofadoption of IFRS. The disclosures required by IFRS 1 concerning the transitionfrom UK GAAP to IFRS were summarised in the interim statement for the periodended 30 June 2007. Notably, the acquisition of Timm Medical Technologies, Inc. occurred during thetransition period to IFRS. The acquisition has been considered in line withIFRS 3 on transition to IFRS. All assets and liabilities acquired as part ofthe transaction, including intangible assets (patents, trademarks and anticompete contracts), have been valued at fair value. All purchase considerationhas been recorded at fair value. The main change caused from the movement toIFRS from UK GAAP is the recognition of intangible assets of £5,074,000 onacquisition with a corresponding reduction in the value of goodwill recognisedunder UK GAAP. A deferred tax provision of £1,522,000 was recognised onacquisition based on the fair value of intangible assets acquired, with acorresponding entry to goodwill on consolidation. 2 ACCOUNTING POLICIES Overall considerations The significant accounting policies that have been used in the preparation ofthese consolidated financial statements were summarised in the interim statementfor the period ended 30 June 2007. The consolidated financial statements have been prepared using the measurementbases specified by IFRS for each type of asset, liabilities, income and expense. The accounting estimates and assumptions are consistent with the Group's latestapproved budget forecast where applicable. Judgements are based on theinformation available at each balance sheet date. All estimates are based onthe best information available to management. Going concern The Group has prepared forecasts that demonstrate that it is a going concern.The forecasts include the funding recently received of $25 million from therevenue interest financing agreement with Paul Capital Healthcare and futurelicensing transactions. If the future licensing transactions are notforthcoming, the Group would either utilise available alternate funding orcurtail certain research and development activities. Accordingly, the Group hassufficient cash resources to allow it to continue in business for a period of atleast twelve months from the date of approval of these financial statements. Significant accounting estimates and judgements Certain estimates and judgements need to be made by the directors of the Groupwhich affect the results and position of the Group as reported in the financialstatements. Estimates and judgements are required for example as at thereporting date not all liabilities have been settled and certain assets/liabilities are recorded at fair value which requires a number of estimates andassumptions to be made. The major area for estimation within the financial statements is as follows: • valuation of the carrying value of intangible assets. The directors have reviewed the acquisition of Timm Medical Technologies, Inc.,which led to the recognition of intangible assets, in detail and takenprofessional advice to arrive at the fair value of intangible assets acquired,namely trademarks and patents. The major areas for judgements within the financial statements are as follows: • useful economic life of the intangible assets recognised on consolidation • the treatment of research costs• the recognition of a tax receivable for research and development tax refunds• the recognition of a deferred tax asset relating to utilisable tax losses in the Group's USA subsidiary Timm Medical Technologies, Inc. The useful economic life over which the acquired intangible assets are amortisedrepresents the directors' judgement of the period over which these trademarksand patents will provide benefit to the Group. The research costs of the Group are incurred for the development and sale ofdrugs and medical devices for the diagnosis, treatment and management ofurological disorders. At the time the costs are incurred, the directors haveconcluded that there is insufficient evidence to support the capitalisation ofthese costs. It is unclear whether the products will achieve medical and safetyapproval and yield income in excess of costs incurred to date. As such, thecosts are not capitalised. Within the United Kingdom, a tax credit is claimed for research costs incurredin the year. The Group financial statements do not include a receivable forthese research tax credit until the claim has been agreed with the local taxauthorities. A deferred tax asset is recognised within the Group financial statements forprior year trading losses incurred by Timm Medical Technologies Inc. Given theprofits achieved in the current and previous years by the Company, and thoseforecast, the directors have concluded that a deferred tax asset should berecognised based on losses that can be relieved over the next 3 years. Detailsof the value of the deferred tax asset is given within the notes to thefinancial statements. 3 SEGMENTAL REPORTING The Group's revenue and loss on ordinary activities after tax were all derivedfrom the principal activities of development and sale of products for thediagnosis, treatment and management of urological disorders. These activitiescan be segmented by research and development and sale of products which matchthe Group's geographic segments, the UK and the USA. All of the Group's revenuehas been derived from external customers. These activities may be analysed as follows: UK/ USA/ Sale of products Total Research and development £'000 £'000 £'000 Year to 31 December 2007Revenue 13 5,753 5,766Operating (loss)/ profit (11,365) 387 (10,978)Finance charge net (205) (59) (264)Tax credit 644 120 764 ________________ _________________ _____________Net (loss)/ profit for the (10,926) 448 (10,478)year ________________ _________________ _____________Year to 31 December 2006Revenue 12 5,146 5,158Operating (loss)/profit (6,997) 505 (6,492)Finance income net 248 5 253Tax credit/(charge) 400 (56) 344 ________________ _________________ _____________Net (loss)/ profit for the (6,349) 454 (5,895)year ________________ _________________ _____________31 December 2007Segment assetsConsolidated total assets 1,038 9,923 10,961 ________________ _________________ _____________Segment liabilitiesConsolidated total 7,371 1,923 9,294liabilities ________________ _________________ _____________Depreciation 34 59 96Amortisation - 464 464 ________________ _________________ _____________31 December 2006Segment assetsConsolidated total assets 2,065 9,399 11,464 ________________ _________________ _____________Segment liabilitiesConsolidated total 2,216 1,879 4,095liabilities ________________ _________________ _____________Depreciation 38 31 69Amortisation - 418 418 ________________ _________________ _____________ 4 LOSS PER SHARE The calculation of the basic and diluted loss per share is based on the loss onordinary activities after tax and on the weighted average number of ordinaryshares in issue during the year. The impact of the share options and convertibledebt are anti dilutive. The loss and weighted average number of shares used inthe calculations are set out below: Weighted average Loss Loss number of per share £'000 shares Pence Year ended 31 December 2007 (10,478) 27,232,275 (38.4) Year ended 31 December 2006 (5,895) 25,279,300 (23.3) 5 POST BALANCE SHEET EVENT Since the year end the Group has entered into a $25 million revenue interestfinancing agreement with healthcare investor Paul Capital Healthcare with anoption for an additional $3 million equity investment, concerning its prematureejaculation and erectile dysfunction treatments. In return for the investment,Paul Capital has received an interest in the revenues generated from Plethora'smale health portfolio. An initial payment of $15 million will provide working capital to underwritePhase III programmes in premature ejaculation and erectile dysfunction as wellas strengthening the Plethora balance sheet to facilitate potential product andcorporate transactions. A further $10 million will be payable upon firstcommercial sale of PSD502, Plethora's development-stage product for thetreatment of premature ejaculation, in the United States, subject to certainconditions. In addition, under certain pre-agreed conditions, Plethora will have the optionto have Paul Capital Healthcare invest an amount of $3 million by way of equitysubscription in 2008. 6 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The group income statement, group statement of changes in equity, the groupbalance sheet, the group cash flow statement and the associated notes for theyear then ended have been extracted from the Group's financial statements.Those financial statements have not yet been delivered to the Registrar. 7 REPORT AND ACCOUNTS The Group's annual report and financial statements will be posted toshareholders shortly. Further copies will be available on request from theCompany's Registered Office: Fourth Floor, 233 High Holborn, London, WC1V 7DN. This information is provided by RNS The company news service from the London Stock Exchange