Plethora Solutions Holdings Plc Regulatory News (PLE)

PLETHORA SOLUTIONS HOLDINGS PLC

("Plethora" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013

Plethora is pleased to announce its interim results for the six months ended 30 June 2013.

Highlights

· Refocusing of business solely on PSD502

· Successful placing raising £2.1 million together with debt restructuring

· Now responsible for regulatory and commercial development of PSD502 globally

· Strengthening of Plethora board

· A CHMP positive opinion in relation to PSD502 approval for European Union in September 2013

Ronald Openshaw, CEO of Plethora said:

"2013 has so far been an exceptional year for Plethora, We have focussed the Group's full effort on PSD502; expanded our geographic interest in the product; commenced work on the filing with the FDA in the United States and achieved a milestone in the European regulatory process. Our efforts are to ensure that PSD502 is brought to market to ease the distress of so many couples".

- Ends -

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

Enquiries:

PLETHORA SOLUTIONS HOLDINGS PLC

("Plethora" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013

Introduction

Plethora has delivered on its fundamental strategic objective for 2013 to bring PSD502, a treatment for premature ejaculation, close to launch. On 20 September 2013, the Company announced that the Committee on Health and Medicinal Products (CHMP) had issued a positive opinion recommending European Commission (EC) approval for PSD502.

In February 2013, the board took the decision to focus the Group's entire effort on the development of PSD502 and consequently took the decision to discontinue the operations of The Urology Company Limited. As a result that business was placed into administration and the Group's headcount reduced dramatically with a consequential reduction in ongoing operating costs.

EU regulatory approval of PSD502

In 2012 Plethora submitted a Marketing Authorisation Application (MAA) to the European Medicines Agency. The objective for 2013 was to pursue the approval process and work has continued throughout 2013 addressing the EMA's review of the MAA. As the year progressed, the Company announced it had met the key milestones along the review pathway.

On 20 September 2013, the Company announced that it had received notification from the CHMP that it will recommend that the European Commission (EC) approve PSD502 (known in the MAA as "Lidocaine Prilocaine Plethora") for the treatment of primary premature ejaculation in adult men.

A CHMP positive opinion is one of the final steps before Marketing Authorisation (MA) is granted by the European Commission. The CHMP's positive recommendation will be reviewed by the European Commission (EC), which has the authority to approve medicines for the European Union. Plethora anticipates a final decision from the EC shortly, as this usually occurs approximately 60 days after a CHMP recommendation.

Global rights to PSD502

Shionogi and Plethora have had a relationship relating to PSD502 since 2007, initially through Sciele Pharma Inc. In 2011, Shionogi granted to Plethora the rights for the regulatory and commercial development of PSD502 in Europe and certain other territories.

On 22 August 2013, the Company announced that it had agreed with Shionogi Inc. ("Shionogi") to expand globally the scope for Plethora to pursue the regulatory approval and commercialisation of PSD502.

Under the new agreement Plethora assumed responsibility for the regulatory and commercial development of the product throughout the world, including in territories previously excluded, specifically North America, South America, Japan, Korea, Taiwan and China. Plethora will, at its own cost, file a New Drug Application ("NDA") with the Food and Drug Administration ("FDA").

Plethora intends to submit an NDA not later than the end of the first half of 2014. Based on historical timescales, assuming approval, PSD502 could be launched in the United States in the second half of 2015.

Commercialisation of PSD502

It is the Company's objective to bring PSD502 to market through one or more marketing partnerships with larger pharmaceutical companies with the marketing expertise and resource to deliver the revenue growth and gain market share. During the early part of 2013 the Group secured the services of two additional consultants on a project basis to expand the reach and activity in this critical area. As a result the volume and activity in business development has increased substantially.

It is the Company's goal to secure partnerships for as many territories as is commercially viable as a priority. The Group has significantly increased its business development activities with the objective of securing one or more partners to market PSD502 not only in the EU but now globally. Discussions have commenced with a number of companies. The timeline for agreement and likely structure and quantum of any transaction is hard to determine at this stage. It is the Company's objective to secure a marketing partner before the end of 2013.

Financial results

During the first half of 2013 the Group recorded an operating loss of £1,165,000 (H1 2012 £1,206,000, FY 2012 £2,565,000).

This loss comprised R&D costs related to the regulatory development of PSD502 of £550,000 (H1 2012 £380,000, FY 2012 £611,000) and Administrative expenses of £615,000 (H1 2012 £529,000, FY 2012 £1,129,000). Both R&D costs and Administrative expenses were broadly in line with the board's expectations. It is expected that this level of expenditure will continue for the foreseeable future as the European approval process is completed and the US process commences. It is likely that in 2014 R&D costs may increase as the filing of the NDA is expected to be more expensive than the EU filing.

For a complete comparison in the first half of 2012 the Group also recorded a loss of £365,000 (FY 2012 £1,046,000) in relation to The Urology Co. No such amount is recorded in the Operating Loss for 2013 as that business unit is now regarded as a "Discontinued operation" in accordance with IFRS 5 - 'Non-current assets held for sale and discontinued operations'. In H1 2013 an amount of £355,000 is recorded as a gain on Discontinued operations; this being the amount by which liabilities of £497,000 exceeded the assets of £142,000 at the time of administration. It is not expected that any further cost will be incurred in relation to this operation in H2 2013 or beyond.

Total finance costs of £456,000 (H1 2012 £246,000, FY 2012 £1,308,000) were incurred. A gain of £293,000 (H1 2012 £NIL, FY 2012 £NIL) was recognised for the period, following the restructuring of the Company's debt obligations (see note 4). Total finance income of £269,000 (H1 2012 £NIL, FY 2012 £1,000) was recognised in relation to the revaluation of existing warrants.

On 18 March 2013 the Company announced a placing and debt restructuring.

The placing raised £2.124 million, before expenses, through the issue of 106,200,000 New Ordinary Shares at a price of 2p per share, which represented an 8% premium to the then prevailing market price of 1.84p.

At the same time the Company entered into agreements with its lenders in relation to a Debt Restructuring. The restructuring had the following key effects: the maturity dates of the majority of the Company's loans were reset to either 31 March 2015 or 31 December 2014; the interest rates were amended to become 14% per annum for 3 out of the 5 loans; it was agreed that interest would be rolled up to maturity; and, finally, that the loans plus accrued interest would be convertible into new ordinary shares at 2p per share, the price of the Placing announced on the same day. Further details of the debt restructuring are set out in Note 8 to the interim statement.

Over the course of 2013 the Group has reduced its creditor position and at 30 June 2013 Trade and Other Creditors were £846,000 (H1 2012 £1,110,000, FY 2012 £1,566,000).

At 30 June 2013 the Group had cash resources of £552,000 (H1 2012 £213,000, FY 2012 £31,000).

Outlook

The Group has achieved a number of very important milestones during 2013 including the de facto approval of PSD502 by the European authorities through the positive CHMP Opinion and securing the rights to exploit PSD502 on a global basis. The Group's efforts are focussed on the final EU approval, driving the US approval process forward and to securing one or more marketing partners to bring the product to market.

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 2013

Year ended 31 December 2012

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2012

Notes to the Financial Information

1. Basis of Preparation

The interim financial information is unaudited and has not been subject to review by the Company's auditors in accordance with ISRE 2410. This consolidated financial information for the six months ended 30 June 2013 has been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee interpretations that had been published by 30 June 2013 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 2012.

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 2012, 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 on 30 September 2013.

A copy of the interim results for the six months ended 30 June 2013 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 2013 the Company had £552,000 of cash and cash equivalents.

 The directors have prepared detailed cash flow forecasts for the period to 31 December 2014, which show that the Company has adequate working capital for the forecast period. These cash flow projections assume that the Group completes certain planned capital raising activities, which are as yet uncertain in terms of timing and amount.

 Consequently, the directors have concluded that it is appropriate to prepare the Company's financial statements on the going concern basis, which assumes that the Company will continue in operational existence for the foreseeable future. Nevertheless, there is material uncertainty in relation to the event set out above, which may cast significant doubt on the Company's ability to continue as a going concern. In the event that certain planned capital raising activities fail to occur as expected, the Company may be unable to realise its assets and discharge its liabilities in the normal course of business. 

3. Segmental Reporting

The Group was organised into two main business segments: the development of new pharmaceutical products known as "Plethora Development" and the sale and marketing of pharmaceutical and healthcare products in the UK and continental Europe known as "The Urology Co". Following the closure of The Urology Company Limited, formerly one of two segments within the Group, the subsidiary has been reclassified as "Discontinued Operations" throughout this report. Unallocated costs represent shared property costs, in addition to background support services, such as finance, IT and marketing, and corporate expenses which cannot be directly attributed to either business segment. Unallocated assets and liabilities represent assets and liabilities of the corporate arm of the Group which cannot be directly allocated to any of the segments.

The Group operates from a single geographical area, namely the United Kingdom.

3. Segmental Reporting (continued)

4. Exceptional Items

Following the debt restructuring (see note 8), the Group has reclassified all its borrowings as convertible debt in line with the revised loan agreements. As a result of these changes, the Group recognised a gain of £293,000 in the Consolidated Statement of Comprehensive Income, which related to the extinguishment of the existing loans in exchange for the new loans.

5. 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 2013 and 2012 is not shown as the effect on the loss per share of share options and convertible loans is anti-dilutive on the loss.

6. Discontinued Operations

The assets and liabilities of The Urology Company Limited have been presented as discontinued operations following the Group's decision to put the company into administration on 25 February 2013.

Profit and loss of the discontinued operations.

7. Trade and other payables

8. Borrowings

(i) Convertible Loan Notes Due 2014

During 2011, the Company converted £1,655,000 (plus accrued interest of £519,000) of its £2,455,000 outstanding Convertible Loan Notes, through the issue of 86,946,731 new ordinary shares. The conversion was done at the prevailing share price of 2.5p and resulted in a reduction in the principal of Convertible Loan Notes 2012 from £2,455,000 to £800,000.

Prior to the debt restructuring the terms of the outstanding Convertible Loan Notes Due 2012 were: maturity 31 December 2012; coupon interest 13% per annum, accrued until maturity; convertible into new ordinary shares at 12.5p per share; secured by first charge over the Company's assets; repayable by the Company at any point post issuance; convertible by the Company after 31 December 2010 provided the Company's share price is 25% greater than the conversion price for the preceding 60 days prior to conversion. This facility was not repaid on maturity and was in default as at 31 December 2012.

Under IFRS £112,000 (2011: £112,000) of the Convertible Loan Notes Due 2012 was regarded as equity and was recorded in the convertible loan note reserve.

As part of the Debt Restructuring in the half year, the Company agreed with the holders of £800,000 Convertible Loan Notes, which had maturity of 31 December 2012, to extend the maturity to 31 December 2014. In addition, interest accrued on the Convertible Loan Notes to 28 February 2013 being £351,707 was paid through the issue of 17,858,342 New Ordinary Shares at 2p per share. Furthermore, the interest rate from 1 March 2013 has been increased to 14 per cent. per annum and will accrue to maturity. Finally, the conversion price of the Convertible Loan Notes has been changed to 2p per share from 12.5p per share.

Following the modification of the terms of the Convertible Loan notes, the Company recognised a gain of £99,000 on the extinguishment of the existing loan notes.  The existing loan notes are deemed to have been replaced by new convertible loan notes. The Company applied a competitive market discount rate in calculating the fair value of the loan notes in compliance with IAS 32.

The following non-IFRS disclosure shows the effect of the accounting treatment.

As at 30 June 2013 a total of £37,000 of interest had been accrued in respect of the loan notes. This amount will be paid either in cash or by conversion to equity at 2p per share at maturity (namely 31 December 2014).

(ii) CfE Loan due 2015

On 29 June 2010 the Company entered into a £1,000,000, five year secured term loan ("CfE Loan") with Capital For Enterprise Fund A L.P. ("CfE Fund"), which is managed by Maven Capital Partners. The CfE Loan was repayable by 29 June 2015. However, the Company could have, at its option, repaid part, or all, of the loan ahead of the maturity date. Prior to the debt restructuring the terms were: Interest accrued on the loan at 10% per annum. The loan agreement provided for the Company to pay a premium on repayment of the loan. This premium was fixed at either 20% of any amounts repaid in the first 3 years or 25% in years 4 or 5 or at maturity. The CfE Fund was also granted a warrant to acquire new ordinary shares in the Company at nominal value. The number of shares issuable under the warrant was the lower of 3% of the Company's fully diluted share capital, or such number of shares as equals £500,000 at the then prevailing market price. The warrant was only exercisable at an Exit Event, as defined in the loan agreement.

The CfE Loan, which was repayable on 30 June 2015, will now be repayable on 31 March 2015 as part of the Debt Restructuring agreements. As with the Convertible Loan Notes, interest accrued to 28 February 2013, being £128,384 was paid through the issue of 6,419,190 New Ordinary Shares. The interest rate from 1 March 2013 to Maturity has been reset to 14% per annum and will accrue to maturity. The CfE loan carries a redemption premium of 25%. It has been agreed that the loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. As part of the arrangements regarding the CfE Loan, CfE Fund was granted a warrant to subscribe, at a price of 1p per Ordinary Share, for Ordinary Shares representing up to 3% of the fully diluted ordinary share capital of the Company. This warrant was subject to certain restrictions which have been modified as part of the Debt Restructuring. The warrant was subject to a cap (Ordinary Shares having a market value at the date of subscription of £500,000) - this cap has been removed; the expiry date of the warrant has been extended to 31 March 2023; and the warrant is now exercisable at any time at the discretion of CfE Fund having previously only been exercisable by reference to an Exit Event.

The Company recognised a loss of £67,000 on the extinguishment of CfE Loan in connection with our debt restructuring. The Company applied a discount rate in calculating the fair value of the Loan and deemed 85% of the existing loan to be extinguished by the inclusion of the conversion option. The resultant loss is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.

The following non-IFRS disclosure shows the effect of the accounting treatment.

(iii) Galloway Loan due 2015

On 20 October 2011, the Company entered into a £850,000 secured term loan ("Galloway Loan") with Galloway Limited, a company in which Jim Mellon has an interest. The Galloway Loan was repayable on 30 June 2015. However, the Company could, at its option, repay part, or all, of the loan ahead of the maturity date. Interest accrued on the loan at 10% per annum. The loan agreement provided for the Company to pay a fixed redemption premium of 25%. Galloway Limited had also been granted a warrant to acquire new ordinary shares in the Company at nominal value. The number of shares issuable under the warrant is the lower of 5% of the Company's fully diluted share capital, or such number of shares as equals £1,500,000 at the then prevailing market price. The warrant was only exercisable at an Exit Event, as defined in the loan agreement.

It was agreed as part of the Debt Restructuring that maturity on the Galloway Loan facility of £850,000 will be 31 March 2015. In addition, the interest accrued on the loan to 28 February 2013, being £78,014 was paid through the issue of 3,900,685 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will be reset at 14% per annum and will accrue to maturity. The Galloway Loan carries a redemption premium of 25%. It has been agreed that the Galloway Loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. As part of the arrangements regarding the Galloway Loan, Galloway was granted a warrant to subscribe, at a price of 1.25p per Ordinary Share, for Ordinary Shares representing up to 5% of the fully diluted ordinary share capital of the Company. This warrant was subject to certain restrictions which have been modified as part of the Debt Restructuring. The warrant was subject to a cap (Ordinary Shares having a market value at the date of subscription of £1,500,000) - this cap has been removed; the expiry date of the warrant has been extended to 31 March 2023; and the warrant is now exercisable at any time at the discretion of Galloway having previously only been exercisable by reference to an Exit Event.

The Company recognised a loss of £68,000 on the extinguishment of the Galloway Loan in connection with the debt restructuring. The Company applied a discount rate in calculating the fair value of the Loan and deemed 95% of the existing loan to be extinguished by the inclusion of the conversion option. The resultant loss is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.

The following non-IFRS disclosure shows the effect of the accounting treatment.

(iv) Mellon Bridge Loans

During 2012, Jim Mellon provided additional working capital by way of two bridging loans of £350,000 and £200,000 on 20 September 2012 and 11 December 2012 respectively.

Mellon Bridge Loan 1

On 20 September 2012, the Company secured a £350,000 bridge loan from Jim Mellon for the purpose of providing working capital for the Group and funding for the regulatory submission of PSD 502 dossier to EMA. This was repayable on 20 days notice and has an interest rate of 10 per cent per annum. This facility also carries a redemption premium of 75%.

As part of the Debt Restructuring, it was agreed that the maturity on this loan will become 31 March 2015. In addition, the interest accrued on the loan to 28 February 2013, being £15,342 was paid through the issue of 767,123 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will remain unchanged at 10% per annum and will accrue to maturity. The Mellon Bridge Loan I carries a redemption premium of 75% which remains unchanged. It has been agreed that the loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. If this loan is repaid at maturity this will, with the accrued interest and the redemption premium, give rise to a repayment of £667,877 and consequently if converted will give rise to the issue of 33,393,836 New Ordinary Shares.

The Company recognised a gain of £295,000 on the extinguishment of the Loan in connection with the debt restructuring. In calculating the fair value of the Loan, the Company applied a discount rate taking into account that the facility carries 10% interest and a higher than usual 75% redemption premium. The resultant gain is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.

The following non-IFRS disclosure shows the effect of the accounting treatment.

Mellon Bridge Loan 2: 

On 11 December 2012, the Company secured a further £200,000 bridge loan from Mr Mellon for provision of working capital. Interest accrued on this facility at 10% per annum and has applicable redemption premium of 33% per annum. This facility is convertible to ordinary shares at 5p per share at the Company's option within the first year and at the lender's option after the first anniversary of the loan. The conversion option was fair valued at £25,000.

It was agreed as part of the Debt Restructuring that this loan together with the interest accrued and the applicable 33% redemption premium on the loan will be rolled up to 31 March 2015 and may be payable, at the option of Jim Mellon, in New Ordinary Shares at 2p per share.

The Company recognised a gain of £34,000 on the extinguishment of the Loan in connection with the debt restructuring. In calculating the fair value of the Loan, the Company applied a discount rate taking into account that the facility carries 10% interest and 33% redemption premium. The resultant gain is included within the Exceptional item - debt restructuring on the face of the Consolidated Statement of Comprehensive Income.

The following non-IFRS disclosure shows the effect of the accounting treatment.

Further Mellon Bridge Loan

In addition, Jim Mellon made available to the Company a further £200,000 bridge loan which was repaid immediately upon the completion of the April 2013 Placing.

9. Share Capital

On 18 March 2013, the Company raised £2.124 million, before expenses, through the Placing of 106,200,000 New Ordinary Shares at a price of 2p per share.

At the same time, the Company issued of 28,672,341 New Ordinary Shares at 2p per share as part of the Debt Restructuring for interest accrued to 28 February 2013 on its borrowings (see note 8) being:

· 17,585,342 New Ordinary Shares at 2p per share for £351,707 of interest accrued on the Convertible Loan Notes to 28 February 2013.

· 6,419,190 New Ordinary Shares at 2p per share for £128,384 of interest accrued on the Capital for Enterprise Loan to 28 February 2013.

· 3,900,685 New Ordinary Shares at 2p per share for £78,014 of interest accrued to 28 February 2013 on the Galloway loan facility of £850,000.

· 767,123 New Ordinary Shares at 2p per share for £15,342 of interest accrued to 28 February 2013 on the Mellon Bridge Loan 1 of £350,000.

In addition to the above, the Company issued 2,205,000 New Ordinary Shares at 2p per share to certain directors in lieu of historic salary payments.

10. Post balance sheet events

Board changes

On 12 September 2013, Plethora Solutions Holdings PLC announced that it had strengthened the board with the appointment of Dr Greg Bailey and Mike Collis as non-executive directors with immediate effect.

Expansion of global rights to PSD502

On 22 August 2013, the Company announced that it has agreed with Shionogi Inc. ("Shionogi") to expand globally the scope for Plethora to pursue the regulatory approval and commercialisation of PSD502.

European approval of PSD502

On 20 September 2013, the Company announced that it had received notification from the Committee on Health and Medicinal Products (CHMP) that it will recommend that the European Commission (EC) approve PSD502 (known in the MAA as "Lidocaine Prilocaine Plethora") for the treatment of primary premature ejaculation in adult men.