Plethora Solutions Holdings Plc Regulatory News (PLE)

PLETHORA SOLUTIONS HOLDINGS PLC

("Plethora" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

Plethora is pleased to announce its interim results for the six months ended 30 June 2015.

Highlights

Jamie Gibson, CEO of Plethora said:

"Good progress has been made during the first half of 2015 in the regulatory and commercial development of PSD502™ which continues to offer significant potential value as an effective treatment for premature ejaculation. The development program for the reduced fill can is progressing to plan and we expect our development partner(s) to commence manufacture of good manufacturing practice product batches before the end of the year. We remain firmly committed to the commercialisation of PSD502™ in the reduced fill format and anticipate the launch of the product by Recordati in the EU during the latter half of 2016. Our preparations for a new drug application to the US FDA are advancing well, as have discussions with new potential licensing partners in geographical regions not covered by our agreement with Recordati. Together these developments have further strengthened the position of the Group to deliver returns to Shareholders in the future."

- Ends -

A copy of this announcement is available to view on the Company's website at www.plethorasolutions.co.uk 

Enquiries:

About Plethora

Plethora is headquartered in the UK and its shares are listed on the London Stock Exchange (AIM: PLE LN). Further information is available at www.plethorasolutions.co.uk 

Plethora is focused on commercializing PSD502™ for the treatment of premature ejaculation with strategic marketing partners and obtaining NDA approval for PSD502™ with the FDA.

PLETHORA SOLUTIONS HOLDINGS PLC

("Plethora" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

Introduction

The Company continues to be focused on the development and commercialisation of its principal pharmaceutical product PSD502™, which is believed to have significant potential value based on the prevalence of premature ejaculation and the lack of a widely available effective treatment. The first six months of this financial year has seen the Group make further progress in three important areas:

Operations Update

During the period Plethora has continued to prepare for the initial commercial launch of the PSD502™ reduced fill can in the EU by Recordati, currently anticipated during the latter half of 2016. The key objectives are to:

By way of background, the initial development studies aimed at developing the Reduced Fill Product of PSD502™ resulted in selection of a 4.3g fill weight in the current EU Marketing Authorisation (MA) approved 17ml container closure system. However, as announced in our Final Results for the year ended 31 December 2014, when manufactured under development conditions this product generated data that did not support this fill weight and container closure system as a candidate suitable for further development.

Since then additional feasibility and development work has been initiated at Pharamserve North-West (PSNW) and also Catalent (RTP), the registered finished product manufacturer for the PSD502™EU MA. Multiple fill weights, ranging from 5g to 7.7g, and container closure system combinations in 17ml and 10ml cans are being investigated to identify the optimum fill weight/container closure system combination for further development and manufacture.

Manufacture of the feasibility batches was completed at both PSWN and Catalent in July 2015. The necessary studies and generation of data to enable selection of a fill weight/container closure system combination for further development are ongoing at both sites and are expected to be completed in October 2015.

It is anticipated that a choice of the optimum size of Reduced Fill Product for which to commence production of good manufacturing practice (GMP) batches will be made in November 2015. Once three GMP batches that meet the necessary specifications have been produced the expected timeline to the commercial launch of the Reduced Fill Product in the EU by Recordati will be known with greater certainty.

To avoid any risk of the Sunset date of the existing EMA approval of PSD502™ being invoked leading to withdrawal of marketing authorisation, it is intended for the 20-dose product to be manufactured and launched in a single EU market prior to the Sunset date of November 2016. A quotation has therefore been signed with Catalent (RTP) for the progression of up to two GMP batches of the 20 dose product. Catalent (RTP) is the registered manufacturing site for the EU MA.

Manufacture is expected to occur by Q1 2016 following completion of manufacturing site improvements at Catalent (RTP).

New Drug Application (NDA) with the US FDA

Significant progress has been made in preparation for the start of the supplementary Phase 3 clinical study required by the FDA for the completion of a new dossier for approval.

Interactions with the FDA have been frequent (once per month) for the last quarter with agreement achieved on the final form and content of the Patient Reported Outcome (PRO or PE) questionnaire or the "copyrightable" PEBEQ (Premature Ejaculation Bothersome Evaluation Questionnaire) to be used in the supplementary study.

The final testing stage of PRO development, the "quantitative stage" has now begun and the target remains steadfast for its finalization in November 2015 (FDA submission). The clinical study is anticipated to start in Q1 2016 with the final audited report expected in Q1 2017. It is therefore expected that the NDA will be filed with the US FDA in Q1 2017.

Licensing Opportunities

Discussions and negotiations are currently taking place with:

(i) A global pharmaceutical company for 'out licensing' the grant of rights by Plethora in respect of PSD502™ for certain countries in LATAM, Asia Pacific (including Australia) and South Africa. The parties have entered into non-binding heads of terms and have moved into discussions on the licence agreement which anticipate an up-front payment to Plethora followed by additional payments upon the achievement of certain milestones plus royalties linked to sales.

(ii) A multinational pharmaceutical company for 'out licensing' the grant of rights by Plethora in respect of PSD502™ for countries in the Middle East region. The parties have entered into non-binding heads of terms and have moved into discussions on the licence agreement which anticipate an up-front payment to Plethora followed by additional payments upon the achievement of certain milestones plus royalties linked to sales.

Negotiations continue for licensing out PSD502™ with both these pharmaceutical companies and with other strategic commercial marketing partners on normal commercial terms. However, negotiations will not complete (whether successfully or not) until either or both of Catalent (RTP) and PSNW can develop and manufacture under good manufacture practice conditions a Reduced Fill Product. Therefore it is not possible to determine with accuracy the timing of completion of such agreements and no assurance can be given that negotiations will lead to a binding licensing agreement(s) as described in (i) and/or (ii) above or at all. The Company hopes to be in a position to make further announcements relating to its out licensing activities after completion of successful GMP batches of the Reduced Fill Product.

Intellectual Property Rights

The patents and Special Protection Certificates have been transferred to the Group from Dr. Richard Henry completing the transfers of the IP to the Group in respect of PSD502™ and final payment of US$250,000 has been made to Dr. Richard Henry.

Trading Update for the Six Months to 30 June 2015

During the six months to 30 June 2015, the Group recorded a loss for the period of £0.49m (six months to 30 June 2014: loss of £1.69m, full year to 31 December 2014 : loss of £15.69m).

The total operating costs for the six months to 30 June 2015 of £2.69m (six months to 30 June 2014 £1.97m:, full year to 31 December 2014: £20.07m) included (i) R&D costs related to the regulatory development of PSD502™ of £1.49m (six months to 30 June 2014 £1.05m:, full year to 31 December 2014: £2.73m), and (ii) administrative and an exceptional expenses of £1.20m (six months to 30 June 2014: £0.92m, full year to 31 December 2014: £17.34m).

Underlying R&D costs and administrative expenses for the six months to 30 June 2015 were broadly lower than the Board's expectations, before adjustments being made to account for non-cash related share option costs. R&D costs are currently been driven by the project to establish a manufacturing line with the Company's manufacturing partners PSNW and Catalent. Manufacturing set up costs are expected to fall significantly following the year ended 31 December 2015, but the overall level of expenditure is expected to be maintained as the US FDA approval process begins to gather pace following the issue of the first good manufactured practice batches.

A net finance income of £2.2m (six months to 30 June 2014: income of £0.24m, full year to 31 December 2014: income of £0.47m) were recognised in the interim results for the six months ended 30 June 2015. This credit was generated as a result of fair valuing the Company's warrant instruments as at 30 June 2015 (£2.40m credit) offset by the interest charge and unwind of the discount applied to the Company's borrowings (£0.21m cost).

On the basis that all R&D expenditure is expensed, there were no significant balance sheet movements to comment upon during the six months to 30 June 2015. As at 30 June 2015 the Group had cash resources of £2.81m (30 June 2014: £1.06m, 31 December 2014: £5.07m).

Outlook

The Group is on track in relation to all its key performance measures as it moves along the path with its manufacturing partners to producing a commercially viable Reduced Fill Product, filing its NDA with the FDA and bringing PSD502™ to market through its strategic commercial partners.

The Group will continue to work with its manufacturing partners to complete feasibility and development work on the redesigned Reduced Fill Product. Production of GMP batches of the Reduced Fill Product is expected to commence in November 2015, with the aim of obtaining EU approval variation by 30 June 2016. This would release a further €6 million milestone receipt from the Plethora's commercial partner Recordati and enable the commercial launch of the product by Recordati in the EU during the latter half of 2016.

Negotiations with new potential licensing partners covering other geographies outside of those included in the agreement with Recordati are now at an advanced stage. The completion of these negotiations is dependent on the production of GMP batches of the Reduced Fill Product by our manufacturing partners.

In relation to the FDA approval process, the supplementary clinical trial required by the FDA for the submission of a new clinical dossier is expected to commence in Q1 2016, enabling the filing of the NDA in Q1 2017. In accordance with the protocol prescribed by the Prescription Drug User Fee Act, the FDA will be required to respond to the dossier within a 10 month timescale, which would facilitate approval in the USA by Q4 2017 and a commercial launch shortly thereafter.

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Interim Cash Flow Statement

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2015

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2014

Notes to the Financial Information

1. Basis of Preparation

This consolidated financial information for the six months ended 30 June 2015 has been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee interpretations that had been published by 30 June 2015 and endorsed by the European Union ("EU"). The accounting policies adopted are consistent with those of the financial statements for the year ended 31 December 2014.

The financial information set out in the interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2014, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006. The interim report was approved by the Board after market close on 27 August 2015.

A copy of the interim results for the six months ended 30 June 2015 will be available on the Company's website at www.plethorasolutions.co.uk.

2. Going Concern

In considering the appropriate basis of the interim financial information the Directors are required to consider whether the Company can continue in operational existence for the foreseeable future.

 At 30 June 2015 the Company had £2,809,000 of cash and cash equivalents.

Given the current stage in the development of PSD502™, the Group did not generate any revenues during the period and had a cash balance of £2.8 million at 30 June 2015.

The Directors have prepared detailed cash flow forecasts through to the end of 2015 that show that the Group has adequate working capital to meet its immediate needs. However, the board has formed a reasonable expectation of being able to count on the support of its stakeholders and the investment community should any further financing be required to complete the process of commercialising PSD502™.

Consequently, the Directors have concluded that it is appropriate to prepare the Group's financial statements on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future. Nevertheless, there are uncertainties in relation to the timing of the approval of the new Reduced Fill Product, the timing and extent of upfront milestone receipts relating to other territories, the costs associated in setting up GMP production lines in the EU and USA and the costs associated with the NDA application with the FDA. Consequently, there is material uncertainty as to whether the Group's current cash reserves will be sufficient to enable the Group to discharge its liabilities in the normal course of business, including meeting its development objectives, and if not whether further shareholder support could be relied upon to meet any shortfall. This may cast significant doubt on the Group's ability to continue as a going concern which may lead to it being unable to realise its assets and discharge its liabilities in the normal course of business.

3. Exceptional Items

In September 2014, the Company entered into termination and release agreements with each of Shionogi and Paul Capital and a patent assignment agreement with the original patent holder in relation to residual royalty interests in PSD502™, such that Plethora owns the entire economic benefit of all future revenue streams generated from the 'out licensing' of PSD502™ in the future on a global basis. The total consideration of the Agreements was $25 million (£15.3 million) has been expensed in the financial statements and has been classified as an exceptional item.

4. Loss per Share

Diluted loss per share takes into account the dilutive effect of share options to the extent they are in the money and convertible loan notes. The dilutive effect on the loss per share in 2015 and 2014 is not shown as the effect on the loss per share of share options and convertible loans is anti-dilutive on the loss.

5. Trade and other payables

6. Borrowings

The future contractual payments of principal for convertible loan notes and third party borrowings are as follows:

During 2015, the Company received notice from its debt holders to convert £1,629,595 of £1,969,595 debt in issue. Interest on the loan notes was accrued in accordance with the restructuring agreement of 18 March 2013 and an amount of £1,216,124 had accrued and was converted to new Ordinary Shares. Following this notice, 142,285,957 new Ordinary Shares were issued as payment for interest accrued totalling £1,216,124 and £1,629,595 nominal value of the convertible debt taking the total enlarged capital to 823,297,686 Ordinary Shares.

Jim Mellon agreed with the Company to defer £340,000 of his entitlement under the Loan Notes into a new convertible loan note that will accrue a yield of 5% per annum payable quarterly in arrears in cash and to be repaid on 31 March 2020. Upon redemption the loan may, at the option of the bearer, be converted into new Ordinary Shares at a price of 2p per share. Under IAS32 Financial Instruments, the Company is required to recognise a gain of £13,000 being the gain on extinguishment of the existing Mellon bridge loans in exchange for the new loan in a revised loan agreement. This charge has no impact on cash flow, or, after the gain in reserves, on shareholders' funds. 

All security granted under the Loan Notes have been released by Maven, Jim Mellon and Galloway.

7. Share Capital

During 2015, the Company announced that under Debt Restructuring Agreement entered into on 18 March 2013, it had received notice from Maven Capital Partners (UK) LLP as a manager of the Capital for Enterprise Fund A LP, Jim Mellon and Galloway Limited to convert their convertible loan notes of £569,595, £210,000 and £850,000 respectively into ordinary shares of 1p each at a price of 2p per share.

Following this notice, 142,285,957 new Ordinary Shares were issued as payment for accrued interest of £1,216,124 and convertible loan notes of £1,629,595 taking the total enlarged capital to 823,297,686 Ordinary Shares.