PVG.L Regulatory News (PVG)

7 Mar 2007 07:01

Ark Therapeutics Group PLC07 March 2007 Ark Therapeutics Group plc Preliminary results for the year ended 31 December 2006 London, UK, 7 March 2007 - Ark Therapeutics Group plc today announces itsunaudited preliminary results for the year ended 31 December 2006. HIGHLIGHTS OF THE YEAR • Cerepro(TM) MAA filing progressed to last stages of EMEA review• Trinam(R) Phase II trial completed, preliminary results positive• Initial Phase III study shows Vitor(TM) significantly slows progression of cachexia in two cancer types• Vitor(TM) US patent granted• Unique DNA-based targeting system, Scavidin(R), halts tumour progression in two cancer models• Flaminal(R) in-licensed and Drug Tariff price secured, strengthening UK devices business• UK wound care sales show 36% year on year growth and Kerraboot(R) internationalisation continues• Share placings executed raising £31.4m (post expenses)• Cash and money market investments of £48.4m at 31 December 2006 (£34.3m at 31 December 2005) POST-PERIOD EVENTS • Cerepro(TM) Data Safety Monitoring Board review positive for Phase III trial• Trinam(R) cleared to proceed to Phase III• Vitor(TM) cleared to continue Phase III development• Ark-led team receives €2.5m EU grant for baculovirus development• EPO confirmed that patent for renin-angiotensin agents in stroke allowed• First Research and Development day held Dr Nigel Parker, CEO of Ark, commented: "In 2006, Ark made very significant progress with its key products andtechnologies. The Company now has two products on the market and three in thePhase III development stage, including one in late stage regulatory review. Welook forward in 2007 to building on the achievements of the past year and, inparticular, reporting on the outcome of the filing in Europe of our lead productfor brain cancer, Cerepro(TM), as well as commencement of patient recruitment inthe Phase III studies for our other late stage products, Vitor(TM) and Trinam(R)." For further information: Ark Therapeutics Group plc Tel: + 44 (0)20 7388 7722Dr Nigel Parker, CEOMartyn Williams, CFO Financial Dynamics Tel: +44 (0)20 7831 3113David YatesAnna Keeble Notes to Editors Ark Therapeutics Group plc Ark Therapeutics Group plc is a specialist healthcare group (the "Group"),addressing high value areas of unmet medical need within vascular disease, woundcare and cancer. These are large and growing markets, where opportunities existfor effective new products to generate significant revenues. With two marketeddevices, Kerraboot(R), and Flaminal(R), and three further lead pharmaceuticalproducts in late stage clinical development: Cerepro(TM), Vitor(TM), and Trinam(R), the Group is transitioning from an R&D company to a commercial, revenue generating business. Ark's existing products are sourced from related but largely non-dependenttechnologies within the Group and have been selected to enable them to be takenthrough development within the Group's own means and to benefit from Orphan DrugStatus and/or Fast Track Designation, as appropriate. This strategy has allowedthe Group to retain greater value and greater control of clinical developmenttimelines, and to mitigate the risks of dependency on any one particularprogramme or development partner. Ark has secured patents or has patentapplications pending for all its lead products in principal pharmaceuticalmarkets. Ark has its origins in businesses established in the mid-1990s by Professor JohnMartin and Mr Stephen Barker of University College London and Professor SeppoYla-Herttuala of the AI Virtanen Institute at the University of Kuopio,Finland, all of whom play leading roles in the Company's research anddevelopment programmes. Ark's shares were first listed on the London Stock Exchange in March 2004(AKT.L). This announcement includes "forward-looking statements" which include allstatements other than statements of historical facts, including, withoutlimitation, those regarding the Group's financial position, business strategy,plans and objectives of management for future operations (including developmentplans and objectives relating to the Group's products and services), and anystatements preceded by, followed by or that include forward-looking terminologysuch as the words "targets", "believes", "estimates", "expects", "aims","intends", "will", "can", "may", "anticipates", "would", "should", "could" orsimilar expressions or the negative thereof. Such forward-looking statementsinvolve known and unknown risks, uncertainties and other important factorsbeyond the Group's control that could cause the actual results, performance orachievements of the Group to be materially different from future results,performance or achievements expressed or implied by such forward-lookingstatements. Such forward-looking statements are based on numerous assumptionsregarding the Group's present and future business strategies and the environmentin which the Group will operate in the future. Among the important factors thatcould cause the Group's actual results, performance or achievements to differmaterially from those in forward-looking statements include those relating toArk's funding requirements, regulatory approvals, clinical trials, reliance onthird parties, intellectual property, key personnel and other factors. Theseforward-looking statements speak only as at the date of this announcement. TheGroup expressly disclaims any obligation or undertaking to disseminate anyupdates or revisions to any forward-looking statements contained in thisannouncement to reflect any change in the Group's expectations with regardthereto or any change in events, conditions or circumstances on which any suchstatements are based. As a result of these factors, readers are cautioned not torely on any forward-looking statement. Chairman and Chief Executive's review A significant move forward for our business model In 2006 Ark made very significant progress with its key products andtechnologies. Notably, the Company achieved a number of breakthrough scientificand developmental milestones with its gene-based medicines, which aresignificant 'firsts' for the biotechnology sector. Ark's pioneeringachievements have contributed to a considerable change in overall sentimenttowards this novel and exciting area of medicine which is rapidly beingrecognised as one of the next major product platforms in pharmaceuticals. Withour strong and unique pipeline, commercial production facilities and team ofgene medicine scientists, Ark has developed and strengthened considerablythroughout 2006. As a result of our achievements, we are pleased to report that strong interestin Ark from both existing and new investors has allowed us to strengthen ourbalance sheet, raising £31.4m net of expenses during the period, and we aredelighted with the increasing breadth and quality of our shareholder base. Weclosed the period with £48.4m of cash reserves. In early Q4 we moved into a new purpose built research and manufacturingfacility in Kuopio, Finland and consolidated our various teams into one centrallocation. The research laboratories have been fitted out and the design of ournew 'state of the art' manufacturing suites is underway. We now have space toexpand more efficiently as we continue to innovate and develop exciting newDNA-based treatments and technologies. In an increasingly challenging healthcare environment our achievements this yearhave moved our business forward significantly. We have two products now on themarket (Kerraboot(R) and Flaminal(R)) and three in Phase III development,including one in late stage regulatory review. We believe our business model,which concentrates on specialist areas of high unmet clinical need, where wehave the expert knowledge and capability to develop and market our own productswithout any inherent dependency on big pharma for resources and expertise, hasestablished significant credibility as a strategy for specialist pharmaceuticalcompanies. Pipeline review Pharmaceuticals Cerepro(TM) - treatment for operable malignant brain cancer - regulatory pathwayfinally established and scientific hurdles overcome Having had our marketing approval application accepted for review by the EMEAlate in 2005, we have spent 2006 responding to the various EMEA questions andrequests and progressing that application into the last stages of review. AsCerepro(TM) is the first gene medicine to undergo formal review for Europeanmarketing approval, this review has been of particular significance as it hasclarified many hitherto undefined regulatory and manufacturing requirements forEuropean approval of this new and exciting class of medicines. Some very notable achievements were made during 2006, without which Ark couldnot have progressed its application. By Q3 our cGMP facility in Finlandsuccessfully manufactured the essential 'conformity' batches to EMEA commercialsupply specifications and we have continued to manufacture batches since then.Ark's UK headquarters satisfactorily completed a full GCP system inspection bythe MHRA under the new EU pharmaceutical regulations. The Phase II Cerepro(TM)study, which forms the main clinical evidence in the MAA submission, wassubjected to a full GCP inspection as part of the review process and the reportnoted that the results give an accurate description of the trial and sourcedata, and that the endpoint data are reliable from a GCP perspective. Ourfinancial and strategic plans for Cerepro(TM) remain unchanged. Recruitment into the 250 patient Phase III/IV corroborative study commenced inearnest at the beginning of 2006 and has proceeded according to plan, allayingexternal concerns that patients would be reluctant to participate in a genemedicine trial. At the time of this report going to print 210 patients hadbeen entered into the study and surgeons have found the product acceptable toadminister. We were delighted to announce immediately post period that the Dataand Safety Monitoring Board ("DSMB") had reviewed the first 133 patients enteredinto the study and had reported the adverse events seen were consistent withthose of the earlier studies. The DSMB has unanimously recommended that theCompany continue the study without modification. Throughout 2006, the regulatory, manufacturing and clinical trial progress hasmaterially strengthened Cerepro(TM) and it remains on track to become the firstcommercially available gene-based medicine outside China. Trinam(R) - treatment to prevent haemodialysis access surgery complications Following encouraging early stage clinical results in late 2005, we weredelighted to announce the completion of the US-based Phase II ascending-dosesafety study in kidney dialysis patients who have undergone vascular accessgraft surgery. Preliminary results of the full study showed that Trinam(R) has agood safety profile with no adverse events being reported beyond thoseconsistent with the operative procedure. Ark's patented local delivery device(EG001), which delivers Trinam(R) gene-based medicine to the desired site, hasproved highly effective in limiting systemic distribution around the body. Noquantifiable levels were detected systemically in any patients treated with thedrug. Additionally the efficacy data, which was a secondary end point in thistrial, were extremely encouraging. Whereas controls were showing an averageblocking time of four months, the treatment groups were remaining open forbetween two and four times longer. This is highly clinically significant forthese patients, meaning that instead of having up to three operations per year,only one would be necessary. Finally in December 2006 the Company held the key 'End of Phase II' meeting withthe FDA to discuss the Phase II results and the possibility of conducting aPhase III study. We were very pleased to report in early January 2007 that theFDA had determined that the data was good enough to allow us to proceed to PhaseIII. They also confirmed that this study alone would be acceptable as the basisfor approval, that our manufacturing was acceptable and that they were willingto offer Special Protocol Assessment to finalise Trinam(R)'s clinicaldevelopment. The 2006 progress has confirmed our view that Trinam(R) is a very importantproduct for both patients and the Company. Vitor(TM) - treatment for cancer cachexia At the start of the year we reported full results of the initial Phase IIIclinical study of Vitor(TM) in cancer cachexia, the first human study of thetherapeutic agent in this disease. Treatment with Vitor(TM) significantly (p = 0.028) slowed the rate of cachexia in two of the cancers studied (non-small cell lung and colon cancer). In the smaller group of pancreatic cancer patients, who exhibit a different pathological progression of cachexia, the rate of weight loss slowed with Vitor(TM) treatment and, whilst the magnitude of effect approached that observed in the other two cancers, the effect on this third cancer was not statistically significant. The study reports were finalised and validated during 2006 and late in the year we met with the EMEA and the FDA to discuss finalising the architecture of a further Phase III study. Key points to emerge from the meetings were that the existing data aresufficient to allow Ark to optimise the study design and architecture and tocommence Phase III clinical development. The next Phase III study is planned asa multi-centre, randomised, placebo controlled trial in up to 250 cancerpatients with cachexia. The study architecture will be finalised during theFDA's Special Protocol Assessment, which is anticipated to last about threemonths, with commencement of the study in the USA and Europe expected in thesecond half of 2007. EG005 - treatment for HIV lipodystrophy EG005 is an oral therapy for the treatment of the fat metabolism disorder,lipodystrophy, in HIV-positive patients. In 2006 we completed early clinicaldevelopment to assess its effect on a range of end points relevant to thispoorly understood disease. The results we have reported showed that the productdid have a positive effect on a range of blood markers for the disease but therewere no clear patterns of results in the morphological disease markers.Consequently we will not be pursuing this programme further until additionalwork has been completed by our scientists to understand particular aspects ofthe disease more fully. Devices Our UK wound care sales in 2006 were 36% higher than in 2005, as a result of asteady increase in Kerraboot(R) sales and the launch of Flaminal(R) in the lastquarter. Kerraboot(R) - a novel device for management of leg and foot ulcers Late in 2005 we increased the absorbency of the Kerraboot(R), our novel devicefor diabetic foot ulcers, and in 2006 we introduced opaque ("white") and extralarge versions. 2006 showed a steady growth in UK sales, ending the year 21%above 2005. Whilst we still have a lot to achieve in building UK sales, theperiod on period growth has occurred at a time when the UK healthcare market isbecoming increasingly challenging. The influence of inclusion in NHS regional(primary care trust) formularies in determining prescribing is increasinglycritical. Approval for use has now been achieved in over 15% of UK NHS Trusts inEngland and Wales, and in Scotland Kerraboot(R) has recently been approved foruse under the Scottish National Procurement Contract. During 2006, the Company has worked with international distributors of Kerraboot(R) to achieve regulatory and pricing approvals, the first of which have nowcome through in Turkey and Australia. We are now expecting regulatory andpricing approvals in other territories during H1 2007, a little slower thanoriginally anticipated due to differing regulatory requirements in the variousjurisdictions. Late in 2006 we announced a deal with Healthcare Logistics, Inc.for a pilot programme to introduce Kerraboot(R) into the United States market,focusing on the East Coast. We continue to receive positive clinical and healtheconomic outcome reports wherever the product is trialled internationally. Flaminal(R) - a topical anti-microbial gel During 2006, we in-licensed and achieved NHS price reimbursement for Flaminal(R), a novel enzyme-based topical anti-infective product for wound healing. Themarket for this product class in the UK is around £30m and has grown over 50% inthe last two years. With Flaminal(R) offering a healing rate benefit of up tothree times those published for existing products, and notably beingparticularly effective against methicillin-resistant Staphylococcus aureus("MRSA"), we believe the sales potential of Flaminal(R) in the UK issignificant. Sold by our existing sales force, this product was launched inOctober and, despite initial NHS supply chain difficulties, the early sales andmarket feedback have been very encouraging. We have identified further interesting in-licensing targets in the wound caredevices area which we expect to help us build a profitable devices business inline with our corporate objectives. Overall it is clear that 2006 has been an extremely difficult period for the UKhealthcare market. During the second half of the year NHS cost containment hasdriven the move to outsourced logistics for NHS supplies and this, coupled withacute funding problems amongst NHS Trusts and the consolidation of Trusts, hascaused further and ongoing disruption in the market overall. Short term, we arefocusing our efforts to ensure formulary approvals are achieved and maintainedthrough this period of NHS change. Whilst the healthcare sales environment inthe UK will undoubtedly remain tough for the foreseeable future, thecost-benefit features of both Kerraboot(R) and Flaminal(R) should be afavourable catalyst in developing sales, although achieving rapid growth willremain challenging in the near term. The range of products we are assemblingall show clear clinical and health economic benefits and these are the productfeatures that will effectively drive sales as the market stabilises. Pre-clinical and research In the first quarter we were very pleased to report that Scavidin(R), our novelgene-based drug-targeting system, achieved control of tumour growth with boththe chemotherapy paclitaxel and the radiotherapy yttrium in two pre-clinicalcancer models. This was achieved at dose levels up to ten times less than thosecurrently given. The effectiveness of most systemic anti-cancer treatments islimited by side effects at existing doses and to be able to change positivelythe efficacy/side effects balance in this way makes Scavidin(R) a veryinteresting and potentially valuable platform. We have continued to make goodprogress with the Scavidin(R) programme during the year and expect to reportfurther proof of concept pre-clinical results in the near future. Our Neuropilin-1 small molecule antagonist programme has identified twointeresting early leads (one small peptide and one small molecule) which havebeen shown in in vitro models to inhibit the growth and spread of cancer cells.Depending on regulatory agency advice, we could take at least one of these twoprogrammes into human studies in the next 18 months. At the research level, ourtargeted integrating vector 'clip' technology is becoming increasingly excitingand considerable progress is also being made with the anti-angiogenic VEGFreceptor antagonists which we believe may have high utility in degenerativediseases in the eye. For these earlier stage projects, our scientists continueto operate under our highly cost effective academic/industry co-operation model. Finally, in early January 2007 we held a very successful Research andDevelopment day in Finland which was well attended by analysts and a number ofshareholders who have reported enthusiastically on our R & D capabilities andexpertise. Subsequently we announced that a team led by Ark gene scientists hadsuccessfully secured a grant of €2.5 million to undertake pioneering work in theuse of insect-derived baculovirus to further the development of gene-basedmedicine. In summary, the progress in our pre-clinical programmes indicates the emergenceof a valuable pipeline of follow-on products. Manufacturing and new facility Manufacture of Cerepro(TM) for commercial purposes commenced early in 2006 in our existing cGMP production facility in Kuopio. The production of virus-based gene medicines to commercial specifications is one of the most complex manufacturing processes in the industry. In the year we completed seven successful production runs conforming to EMEA-agreed batch release criteria, confirming our ability to supply finished product for commercial use. We also successfully performed a series of specific critical production line process validations to comply with EMEA requirements for Cerepro(TM). Construction of our new laboratories and manufacturing facility in Kuopio wascompleted in Q3, and the research laboratories were opened in October. Theyprovide a first class purpose-built working environment with scope for growth.We are now working on the design of the internal layout and equipmentinstallations of the new manufacturing facility and believe that in the processwe will be able to capitalise on the rapid advances in science in this area. Patents During 2006 we made considerable progress with our patent portfolio, announcingthe grant in the US of the Vitor(TM) cachexia and Kerraboot(R) patents, and thegrant in Europe of the Cerepro(TM) patent. Furthermore, post period, we have been successful in prosecuting the patentapplication relating to our intellectual property concerning the use of agentsaffecting the renin-angiotensin system for the prevention and treatment ofstroke. This was a key milestone event for both us and Boehringer Ingelheim,with whom we had previously signed a licensing agreement. We are nowconsidering the further commercial licensing potential of the patent. Summary and outlook 2006 has been one of the most demanding years in the history of the Company,with management successfully achieving a range of critical milestones andclinical results. These have removed many perceived scientific risks in thebusiness as well as allaying any residual concerns regarding the attitudes ofthe regulators towards gene-based medicine. The successes have enabled both theCerepro(TM) MAA filing to move through critical stages in the European reviewprocess, and Trinam(R) and Vitor(TM) to further their Phase III development. Inaddition, as discussed above, our main pre-clinical programmes have all shownsolid progress through the next stages of programme development and we havestrengthened our patent portfolio considerably. We look forward in 2007 to building on the achievements of the past year andreporting both on the outcome of the Cerepro(TM) MAA filing and the completion of recruitment to the Phase III/IV study. Furthermore, we expect to announcecompletion of the Special Protocol Assistance process with the FDA for Trinam(R)and commencement of recruitment in the Phase III studies for both Vitor(TM) andTrinam(R), as well as progress in our other commercial and research activities. Ark's manufacturing, clinical and regulatory progress in the year hascontributed to the increasingly positive sentiment towards gene-based medicine.We believe that the validation of our expertise in this area has strengthenedour reputation and the outlook for the business in the future. The credit for this process goes to the management and staff at Ark, who havecontinued to show extraordinary commitment to the demanding programmes and tasksthat constitute and support our ongoing research and development. We and theBoard are very grateful for their dedication, expertise and effectiveness. Dennis Turner, Chairman Nigel Parker, Chief Executive Officer 7 March 2007 Financial review Overview We report a loss for the year ended 31 December 2006 of £17.5m (2005: £15.1m).The Group's losses have increased in the year as a result of the significantprogress made in the clinical development process with its lead products,together with increased investment in the Group's advanced biologicsmanufacturing facility as well as the timing of milestone receipts under thelicensing agreement with Boehringer Ingelheim. Cash and money market investments at 31 December 2006 totalled £48.4m (2005:£34.3m). Results of Operations Years ended 31 December 2006 and 2005 Revenue Revenue of £0.3m was recorded in 2006 (2005: £2.3m). In 2005 £2.0m of milestonereceipts due under the licensing agreement with Boehringer Ingelheim were earnedand further receipts under this agreement are linked to milestones that areexpected to be achieved in 2007. Sales in the UK of Kerraboot(R) were £0.3m(2005: £0.3m). It is expected for 2007 that the primary sources of revenueswill continue to be product sales for Kerraboot(R) and Flaminal(R), distributionagreements for Kerraboot(R), potential sales from other wound care products andBoehringer Ingelheim milestone receipts. In future years an increasingproportion of revenues is expected to come from the products now in late stageclinical development, together with further out-licensing receipts. Research and development expenses Ark conducts research at its facilities in Kuopio, Finland, at UniversityCollege London and through a specialist chemistry sub-contractor. Clinicalstudies are generally carried out by approved clinical research organisationswithin Europe and North America under the close supervision of senior projectmanagers employed by the Group. Research and development expenditure in 2006was £12.8m (2005: £13.9m), the reduction in spending on the Vitor(TM) programmefollowing completion of the initial Phase III study in 2005 masking thecontinued investment in the biologics manufacturing facility in Finland and inthe other lead and follow-on programmes. Clinical development costs Major studies during the year included the continuation of the Phase III studyfor Cerepro(TM), and the completion of the dose-ascending Phase II study forTrinam(R). It is anticipated that 2007 will see the continuation of the Cerepro(TM) Phase III study and the commencement of both the Trinam(R) Phase III study and the next Phase III study for Vitor(TM). Manufacturing development costs Manufacturing development expenditure increased as clinical batches for Cerepro(TM) were produced and further staff were recruited as the Company began to prepare for commercial production. The increase in expenses in the year wasalso due to the initial investment in back-up commercial manufacturingfacilities with a third party. Research costs Research costs rose by £0.5m due to a continuing investment in the Company'shighly promising pre-clinical pipeline. Sales and marketing expenses Selling, marketing and distribution costs for the period were £1.8m (2005:£1.3m). These costs related largely to sales force expenses and marketingactivities for Kerraboot(R) in the UK, with additional costs in 2006 relating tothe launch of Flaminal(R) and also to initial pre-marketing activities forCerepro(TM). Other administrative expenses Other administrative expenses for the period were £5.4m (2005: £5.2m). Theseadministrative expenses consist primarily of remuneration for employees inexecutive and operational functions (including finance, commercial development,legal, IT and facilities), facilities costs, professional fees for legal, taxand audit services, and fees for non-executive directors. Share-based compensation Share-based compensation charges for the period were £1.1m (2005: £0.5m). Theincrease is a result of the charge from new options granted during 2006. Investment income The Company invests its surplus cash in bank deposits of up to one yearaccording to the terms of the Investment Policy set out by the Board. Netinterest receivable comprises the interest income generated from cash investedin term and overnight deposits. In the year ended 31 December 2006 the Groupearned investment income of £1.9m (2005: £1.9m) on cash deposits. Althoughaverage interest rates in 2006 were higher than in 2005, investment income wasunchanged as a result of lower cash balances in the early part of 2006 prior toreceipt of the net proceeds of the placing and open offer in May. Taxation There were no UK corporation tax charges for the year under review due to theincidence of tax losses. We continue the policy of surrendering tax losses forcash by making research and development tax claims to the tax authorities andanticipate a tax credit receivable of £1.6m in respect of the year ended 31December 2006 (2005: £1.6m), reflecting the continued investment in research anddevelopment in the year. Balance sheet Total net assets (defined as total assets less total liabilities) have risenfrom £34.4m at 31 December 2005 to £49.5m at 31 December 2006, principally as aresult of the increase in money market investments following the share placingsin 2006. Investing activities The net cash outflow from operating activities for the year was £17.4m (2005:£14.1m). Ark's net cash outflow from capital expenditure was £1.9m (2005:£0.8m). The capital expenditure was principally the investment in upgrading theGroup's biologics manufacturing facilities in Kuopio, Finland. The Company'sinvestment in expanded manufacturing facilities in Kuopio is expected to giverise to additional capital expenditure during 2007 and 2008. Ark's net cash inflow from financing activities was £31.7m (2005: £0.5m)primarily through the proceeds from the successful placing and open offer ofshares in May 2006 (£25.5m net of expenses) and the investor placing in December2006 (£5.9m net of expenses). Interest received from term and overnightdeposits was £1.8m (2005: £1.4m). The Board has implemented an Investment Policy governing the investment of theCompany's cash resources, under which the primary objective is to invest in lowrisk cash or cash equivalent investments to safeguard the principal, ensuringthat these resources remain available to fund the Company's operations whilestill seeking to maximise returns. Consolidated income statementfor the year ended 31 December 2006 (unaudited) Year Year ended ended 31 December 31 December 2006 2005 £'000 £'000 Revenue 344 2,347Cost of sales (147) (102) ______ ______ Gross profit 197 2,245Research and development expenses (12,845) (13,941)Selling, marketing and distribution costs (1,842) (1,273) Other administrative expenses (5,413) (5,182)Share-based compensation (1,071) (505) ______ ______Administrative expenses (6,484) (5,687) ______ ______ Other income 33 34 ______ ______ Operating loss (20,941) (18,622) Investment income 1,867 1,893Finance costs (23) (47) ______ ______ Loss on ordinary activities before taxation (19,097) (16,776)Taxation 1,584 1,641 ______ ______ Loss on ordinary activities after taxation, being retained loss for the year (17,513) (15,135) ______ ______ Loss per share (basic and diluted) 12 pence 12 pence All results relate wholly to continuing activities. Consolidated balance sheetas at 31 December 2006 (unaudited) 31 December 31 December 2006 2005 £'000 £'000Non-current assetsGoodwill 1,306 1,306Other intangible assets 329 75Property, plant and equipment 2,034 1,327Investments in subsidiaries - - ______ ______ 3,669 2,708 ______ ______Current assetsInventories 470 251Trade and other receivables 1,470 1,255Research and development tax credits receivable 1,499 1,548Money market investments 40,000 28,000Cash and cash equivalents 8,433 6,290 ______ ______ 51,872 37,344 ______ ______ TOTAL ASSETS 55,541 40,052 ______ ______ Non-current liabilitiesObligations under finance leases 43 -Loans 338 433 ______ ______ 381 433Current liabilitiesTrade and other payables 5,539 5,168Current tax liabilities 14 -Obligations under finance leases 10 -Loans 86 46 ______ ______ 5,649 5,214 ______ ______ TOTAL LIABILITIES 6,030 5,647 ______ ______ EquityShare capital 1,659 1,275Share premium 81,196 50,032Merger reserve 36,989 36,989Foreign currency translation reserve (22) (21)Share-based compensation 2,042 970Retained (loss)/profit (72,353) (54,840) ______ ______TOTAL EQUITY 49,511 34,405 ______ ______ TOTAL LIABILITIES AND EQUITY 55,541 40,052 ______ ______ Consolidated cash flow statementfor the year ended 31 December 2006 (unaudited) Year ended Year ended 31 December 31 December 2006 2005 £'000 £'000 Operating loss (20,941) (18,622) Depreciation and amortisation 993 447(Increase) / decrease in receivables (132) 4(Increase) / decrease in inventories (219) 80Increase in payables 162 1,569Share-based compensation 1,071 505Income taxes paid (1) - Net cash outflow from operations (19,067) (16,017)Research and development tax credit received 1,648 1,953 ______ ______Net cash outflow from operating activities (17,419) (14,064) ______ ______ Investing activitiesInterest received 1,784 1,350Purchases of money market investments (12,000) (28,000)Purchases of property, plant and equipment (1,223) (746)Purchases of intangible assets (692) (45)Proceeds on sale of property, plant and equipment - 2 ______ ______Net cash used in investing activities (12,131) (27,439) ______ ______ Financing activitiesRepayments of borrowings (48) (61)Proceeds on issue of shares 31,753 613Finance costs (19) (17) ______ ______Net cash generated from financing activities 31,686 535 ______ ______ Net increase/(decrease) in cash and cash equivalents 2,136 (40,968)Cash and cash equivalents at beginning of year 6,290 47,256Effect of exchange rate changes 7 2 ______ ______Cash and cash equivalents at end of year 8,433 6,290 ______ ______ Condensed statement of changes in equity (unaudited) Year ended Year ended 31 December 31 December 2006 2005 £'000 £'000 Equity at 1 January 34,405 48,420Exchange differences on translating foreign operations recognised directly in equity (1) 2Share-based compensation 1,072 505Loss for the year (17,513) (15,135)Equity share options exercised 100 438Share issue 33,244 -Share issue expenses (1,796) -Adjustment of share issue expenses - 175 ______ ______ Equity at 31 December 49,511 34,405 ______ ______ Selected notes to the financial information (unaudited) 1 Presentation of financial statements The financial information set out in this unaudited preliminary statement doesnot comprise Ark's statutory accounts within the meaning of section 240(5) ofthe Companies Act 1985. The statutory accounts of Ark Therapeutics plc for theyear ended 31 December 2006, currently unaudited and to be published in duecourse, will be finalised on the basis of the financial information presented bythe Directors in this unaudited preliminary statement and will be delivered tothe Registrar of Companies for England and Wales in due course and will also besent to shareholders. Whilst the financial information included in this unaudited preliminaryannouncement has been computed in accordance with International FinancialReporting Standards (IFRSs), this announcement does not itself containsufficient information to comply with IFRSs. The Company expects to publish fullfinancial statements that comply with IFRSs in March 2007. The financial information set out in this unaudited preliminary statementincludes comparative figures that have been prepared on the same basis. TheAuditors have reported on the financial statements for the year ended 31December 2005 which were prepared under IFRSs. Their report was unqualified anddid not contain any statements under s237(2) or (3) Companies Act 1985. This preliminary statement was approved by the Board on 6 March 2007. 2 Revenue An analysis of the Group's revenue is as follows: Year ended Year ended 31 December 31 December 2006 2005 £'000 £'000Continuing operationsSales of goods 344 260Revenue from out-licensing deals - 2,087 ______ ______ 344 2,347 Investment income 1,867 1,893 ______ ______ 2,211 4,240 ______ ______ 3 Loss per share IAS requires presentation of diluted earnings per share when a company could becalled upon to issue shares that would decrease net profit or increase net lossper share. For a loss making company with outstanding share options, net lossper share would only be increased by the exercise of out-of-money options. Sinceit seems inappropriate to assume that option holders would exercise out-of-moneyoptions, no adjustment has been made to diluted loss per share for out-of-moneyshare options. The calculation of basic and diluted loss per ordinary share is based on theloss of £17,513,000 (2005: £15,135,000) and on 147,291,176 ordinary shares(2005: 127,168,920) being the weighted average number of ordinary shares inissue. This information is provided by RNS The company news service from the London Stock Exchange