PVG.L Regulatory News (PVG)

9 Mar 2006 07:02

Ark Therapeutics Group PLC09 March 2006 Ark Therapeutics Group plc Preliminary results for the year ended 31 December 2005 London, UK, 9 March 2006 - Ark Therapeutics Group plc today announces itspreliminary results for the year ended 31 December 2005. HIGHLIGHTS OF THE YEAR • CereproTM marketing approval process commenced in Europe. Submission validated and formal review underway at the EMEA • CereproTM corroborative Phase III study started and first patients enrolled • Kuopio manufacturing facility received the first ever gene-based medicine manufacturing licence allowing commercial production for European markets • Kerraboot(R) demand strengthened. Super-absorbent version introduced and out-licensing deals signed for Ireland and South Korea • Trinam(R) Phase II low dose results show tripling of haemodialysis access graft patency period • European CE-marking completed for Ox-LDL cardiovascular risk test • Multi-million pound licence signed with Boehringer Ingelheim granting them access to Ark's IP in the renin-angiotensin area • Discovery of targeted gene delivery vector technology heralds potential breakthrough in gene-based medicine • Patent granted in Europe for Trinam(R). International patent position strengthened across Ark's other lead and follow-on products • €2.2m grant awarded by Finnish government to extend gene medicine manufacturing facilities • Cash and money market investments of £34.3m at 31 December 2005 DEVELOPMENTS SINCE YEAR END • Kerraboot(R) patent granted in the United States • Phase III results confirm VitorTM significantly reduces rate of cachexia in non small cell lung and colon cancer • Scavidin(R) DNA-based drug targeting system halts tumour progression in two cancer proof-of-principle models • Kerraboot(R) out-licensing deals signed for four countries, including China Dr Nigel Parker, CEO of Ark, commented: "2005 has seen Ark make some very significant steps forward across itsportfolio. We have strengthened our leadership position in the gene-based areaof molecular medicine and we are steadily building a commercial presence inwound care. We remain 'on track' to become one of a successful new breed ofdiversified specialist healthcare companies exploiting a range of exciting andinnovative therapies." 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 is an emerging healthcare group (the "Group") now entering thecommercialisation phase, with one product introduced into hospitals and threefurther lead products in late stage clinical development. Capitalising on overten years of research in vascular biology and gene-based medicine, Ark has abalanced portfolio of proprietary healthcare products targeted at specific unmetclinical needs within vascular disease and cancer. These are large and growingmarkets, where opportunities exist for effective new products to generatesignificant revenues. Ark's products are sourced from related but largely non-dependent technologieswithin the Group and have been selected to enable Ark to take each productthrough development and to benefit from Orphan Drug Status and/or Fast TrackDesignation, as appropriate. The Group generally retains ownership of itsproduct candidates throughout clinical development. Ark has secured patents orhas patent applications pending for all its lead products in principalpharmaceutical markets and retains the right to market its lead products in thekey North American and European markets. 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 successfully listed through an initial public offering on theLondon 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's and Chief Executive's statement 2005 a most successful year with 'world first' achievements 2005 has been a year of unprecedented achievement for Ark. Substantial progresshas been made which includes the realisation of a number of milestones which are'world firsts' in the sector. Early in the year, we commenced the process with the EMEA to obtain approval tomarket our brain cancer product, CereproTM, in Europe. Following submission ofour application (MAA), we received notification that the filing documentationwas valid and the formal MAA review commenced in October. That same month, ourmanufacturing facility in Finland received a licence allowing it to produceCereproTM for commercial supply in Europe. Both of these achievements represent'world firsts' in gene-based medicine. Also in October, we commenced thecorroborative Phase III study for CereproTM. In the third quarter we werepleased to see extremely encouraging interim results from a Phase II study ofTrinam(R) where, at low dose, haemodialysis access grafts remained viable forover three times longer than the patients had previously experienced. Thesepatency results had improved even further by the end of the year. We have made good progress with our commercial activities. During the year weexecuted a multi-million pound deal with Boehringer Ingelheim granting themaccess to our intellectual property in the renin-angiotensin area. In the UK,sales of Kerraboot(R), our novel device for lower leg ulcers, showed steadygrowth during the first half of the year. In the second half, followingconsultation with customers, we developed a super-absorbent version to make itmore suitable for use in the community. Although some softening of sales wasobserved during the period of product change in the last quarter, UK sales inthe second half of the year were 24% higher than in the first half. We havebeen pleased to see, during 2005, an increasing number of independent healthcareprofessionals publishing case histories illustrating clinical success with theproduct. Since the introduction of the super-absorbent boot, sales have grownat a notably faster rate than seen previously. We also concluded out-licensingdeals for Ireland and South Korea and since the year end we have announced threeother international out-licensing deals covering four countries, includingChina. In line with our longer term objective of building a stand-alone business in thewound care area, we also made solid progress in identifying additional productsfor our sales force to sell alongside Kerraboot(R). In the last quarter, we announced CE-marking of our oxidised LDL antibody testkit, which is a more reliable predictor of the likelihood of myocardialinfarction than currently-marketed tests. As it is outside our main area ofbusiness, we have decided not to market the product ourselves and have commencedthe process of out-licensing it to a suitable commercialisation partner. Our research teams have continued to make innovative discoveries to drive ourpre-clinical science programmes and in the third quarter we reported theexciting breakthrough of our site-specific integrating vector technology 'clip'which targets a therapeutic gene to one specific site located in the ribosomalDNA. This discovery has the potential to move gene therapy into a new era byminimising the problems of unwanted side effects which are a complication ofearlier gene therapy vectors. Post period we also announced excitingpre-clinical proof-of-principle results with our novel gene-based targetingsystem, Scavidin(R), where tumour growth was halted using Yttrium and paclitaxelin doses up to ten times lower than those conventionally used to treat cancer. Throughout the year we have further strengthened our intellectual propertyposition with patent grants for Trinam(R), Scavidin(R), CereproTM and VitorTM ina number of countries. We finished the year with cash and money market investments of £34.3m. Overall,we have been very pleased with the progress and milestone achievements acrossthe business during 2005 and we believe 2006 will be another exciting year forArk. We look forward to continuing to report strong progress. Product and pipeline review Pharmaceuticals CereproTM - for brain cancer Early in 2005 we filed with the EMEA for approval of CereproTM as an OrphanMedicinal Product, for consideration under the exceptional circumstances route,and in April the two Rapporteur countries required under that process wereappointed by the EMEA. In response to EMEA comments, we transferred finishedproduct filling and packaging capability to our own manufacturing facility inFinland and subsequently put in place quality control processes to comply withthe new European manufacturing legislation that had been introduced in themiddle of the year. In October our Kuopio facility received the first everlicence for commercial production of a gene medicine for European market supply.That same month the EMEA accepted the CereproTM filing as valid and formalreview of the dossier commenced, making CereproTM the first gene-based medicinein the world (excluding China) to have its MAA accepted for review. During 2005 we completed the logistics for a Phase III corroborative study ofCereproTM and in October the study opened with the first patient enrolledshortly before the end of the year. The progress made with CereproTM to date hasbeen outstanding and, although the timing of certain future milestones isdependent on the MAA review process, we will be updating you on regulatory andtrial progress during 2006. VitorTM - for cancer cachexia (muscle wasting) We made significant progress with VitorTM, our product for cachexia in cancer,with the completion of enrolment into the Phase III study and confirmation bythe UK Medicines and Healthcare Products Regulatory Agency that the newdecentralised process is the appropriate European regulatory approval route forVitorTM. The rapid development approach for VitorTM, which Ark was able topursue through its agreement with Tanabe of Japan, meant that this study was a 'first time to man' study for cachexia. The results released in January 2006were very encouraging, showing that the product significantly (p=0.028) reducedthe rate of cachexia in two of the cancers studied (non small cell lung andcolon cancer). Whilst statistical significance was not reached in pancreaticcancer, a therapeutic effect was observed from week four of the study onwards.The data from this study will prove invaluable in discussing the way forwardwith the regulators and we look forward to commencing a final pivotal study oncethe appropriate trial architecture has been agreed. Trinam(R) - haemodialysis access in kidney failure patients 2005 has also been an exceptional year for Trinam(R), commencing with the patentgrant by the European Patent Office, giving protection in member states until2017. As we anticipated, recruitment into the Phase II ascending dose studygathered pace and we completed the low dose arm in July. Shortly after that,the FDA accepted the six patients as sufficient for the low dose stage and theDrug Safety Monitoring Board gave approval for us to move to the higher(expected therapeutic) dose. The first results from the Phase II low dosepatients were presented at the October American College of Surgeons meeting inSan Francisco, where the paper was judged to be of "exceptional merit".Designed primarily as a safety study, with efficacy as a secondary endpoint, wewere delighted to report that the safety profile gave no cause for concern andthe important serum monitoring, checking for biodistribution of the gene andadenoviral vector, was clear. Furthermore, the efficacy results wereexceptional, with post-Trinam(R) grafts in kidney failure patients, whoseprevious vascular access procedures (grafts and fistulas) had blocked on averagein 4.5 months, staying open on average 14.5 months by October. At the end of2005 two patients had withdrawn from the study (for reasons unrelated to thetherapy), but all remaining patients still had open and functioning grafts, asis the case at the date of this statement. Consequently the efficacy resultsfrom the treatment continue to improve. The magnitude of clinical improvement seen so far in the Phase II study has ledus to re-appraise the value of this product in our portfolio. If these resultsare confirmed in the remainder of the development programme, we believe thatTrinam(R) could have the potential to achieve annual peak sales of £500m(Source: Company estimates, based on independent market data). EG005 for HIV-associated lipodystrophy We reported preliminary results from the Phase II study of EG005 forHIV-associated lipodystrophy, a blinded, placebo controlled 'first time to man'study in 50 patients. After three months, four aspects of the patients'disease, including the physician's overall assessment of lipodystrophy, wereshowing encouraging trends. However, we do not intend to make further decisionson the product's future development until the results of the one-year extensionphase have been analysed and this is expected in Q2 2006. At the close of thefirst stage, 72% of patients elected to continue on active treatment for theone-year extension study. Ox-LDL diagnostic test During 2005 we obtained the necessary stability data to complete the developmentof this novel cardiovascular risk test, which enabled us to obtain EuropeanCE-marking in October. Diagnostic testing is outside the areas where Ark wishesto launch products itself, so we have commenced the process of out-licensing ofthe product to a diagnostic company. Devices Kerraboot(R) During the first six months of 2005 prescriptions written in the UK forKerraboot(R) rose steadily and we consistently increased our market sharequarter on quarter. In parallel with this progress, we announced two Kerraboot(R) out-licensing deals in the period: BellPharma Ltd for Ireland and BL&H CoLtd for South Korea. In the second half of the year we began the process ofre-shaping the sales force and, in response to feedback from communityhealthcare professionals, we accelerated the production of an improved,super-absorbent version of the product, giving greater flexibility of use,widening the range of ulcers that nurses can treat and extending the period ofuse for heavily exudating wounds. Despite a marked softening of sales in theperiod around the introduction of the new high-absorbency version and the salesforce reorganisation, UK sales in the second half of the year showed a 24%increase over the first half. The upward trend has continued into 2006 and inthe period since the launch of the new version (6 December 2005 to end February2006) prescriptions written for the product are 48% higher than for theequivalent period in the previous year. Over the last year it has beenextremely encouraging to see an increasing number of independent case historiespublished reporting the clinical effectiveness of Kerraboot(R) and the productis now being more widely adopted by NHS primary care trust formularies. We have recently signed further Kerraboot(R) distribution agreements for thefollowing four countries: China (Sino Tau International Company Limited),Denmark (Nord-Plast Danmark ApS) and The Netherlands and Luxembourg (BiologiQ).Discussions regarding licensing agreements with a number of other companies aremaking good progress. With sales in the UK strengthening and the recent grant ofthe US patent, we are increasingly optimistic about the potential for Kerraboot(R) worldwide. Other devices In line with our corporate strategy to establish a stand-alone business in woundcare, we have begun the process of extending the range of products to bemarketed through our sales force in the UK, both through in-licensing andthrough our own in-house research. Discussions continue on several new productscomplementary to Kerraboot(R). We expect to report later in the year onprogress, with two further devices being developed in-house. Pre-clinical pipeline Progress has continued with both of our Scavidin(R) and baculovirus vectortechnologies. We recently announced therapeutic proof of principle results intwo cancer models using Scavidin(R) with yttrium and paclitaxel, achievingefficacy at up to one-tenth the equivalent human dose. We have also beendelighted with the progress made with our Neuropilin 1 antagonist programme.Neuropilin 1 is a receptor of increasing interest, which has been recently shownto play an important role in mediating the growth and migration of cancer cells.We expect to complete the initial pre-clinical development of a lead Neuropilin1 antagonist molecule by the end of 2006. In August we announced the discovery of technology for a targeted integratingvector which we believe heralds a breakthrough in gene medicine. This newtechnology inserts the therapeutic gene into a specific, predetermined site inthe ribosomal DNA. The discovery offers the potential for greatly enhancedsafety and efficacy in the development of gene-based medicines. Manufacturing and new facilities During 2005, we established the full CereproTM production line at our GMPfacility in Kuopio and have undertaken process validations, production and QCtesting, in accordance with the ongoing requirements of both the EMEA andFinnish National Agency for Medicines (NAM). At NAM's request, we successfullytransferred finished product filling and packaging (previously contracted to acertified third party) to Kuopio so that the whole CereproTM production processis now in-house. In October, following formal inspection, our facility wascertified to produce commercial supplies of adenoviral gene-based medicine forthe European markets. This is the first facility in the world to receive such alicence. After a detailed review, we committed to expand our Finnish operations in orderto have the capability to undertake commercial scale production and processdevelopment of the full range of DNA based medicines being developed by theCompany. In May, we signed an agreement under favourable terms with the Tekniabusiness park in Kuopio for the building and lease of a 3,000m2 facility, due tobe operational by the end of 2007. This will house manufacturing as well asbringing all related research onto a single site. In November the FinnishGovernment awarded the Group a grant of €2.2m towards the cost of the facility.This is believed to be the largest grant ever made to a biotechnology company inFinland. Board and management strengthened In July, Dr Bruce Carter joined the main Board as a Non-Executive Director andMember of the Remuneration Committee. Bruce is a very experienced internationalbiotechnology executive, bringing to our deliberations significant biotechmanagement experience, particularly in the USA. Bruce is President and CEO ofZymoGenetics Inc (NASDAQ) and prior to that was a member of the Board of NovoNordisk, where he was responsible for research and development. We aredelighted he made the decision to join us. We were also very pleased to announce two new appointments to the OperatingBoard. Dr David Eckland joined in May from Takeda as Director of Research andDevelopment. David took over the responsibility for this area replacing Dr AlanBoyd who moved to a part-time role, focusing on regulatory approvals. InSeptember we appointed Robert Shaw to the Operating Board as Head of TechnicalServices and QP, located in Finland. Both are first class additions to ourstrengthening team. Staff Once again, our staff in London and Finland have worked exceptionally hardthroughout the year to achieve what we have summarised in this statement. Ark issuccessfully pioneering leading edge biotechnology and novel products, in manycases as 'world firsts'. The Board is well aware that this success is onlybeing achieved as a result of the expertise and tremendous dedication of ouremployees and we thank them all for their ongoing efforts and contributions. Prospects During 2006 we expect to achieve further significant product milestones. Inparticular, we will update shareholders on recruitment progress for the CereproTM Phase III corroborative study, as well as providing news on progress with theMAA submission. Results of the Trinam(R) Phase II study are expected mid-yearand we plan to commence the pivotal study for VitorTM towards the end of 2006. Commercially, we anticipate that revenues from Kerraboot(R) will continue togrow from increasing UK sales and the start of international sales. We alsoplan to conclude further Kerraboot(R) international out-licensing deals,including for the important US market. Furthermore, we expect to add a numberof other products to our sales portfolio to build our devices business. We will continue to exploit our intellectual property as further patents aregranted, and plan to secure an out-licensing agreement for our Ox-LDL diagnostictest. As regards our pre-clinical portfolio, we expect to deliver the resultsof further pre-clinical proof of principle studies for Scavidin(R) in othercancer models and the in vitro-vivo proof-of-principle studies for Neuropilin 1in cancer. Much has been achieved in a very successful 2005 and we have once again setourselves some tough milestones for this coming year. With so many importantdevelopments in prospect, we believe our spread-risk portfolio approach givesinvestors a breadth of value-enhancing possibilities, enabling us all to lookforward with excitement to Ark's future as a specialist healthcare company. Dennis Turner, Chairman Nigel Parker, Chief Executive Officer9 March 2006 Financial Review Overview We report a loss for the year ended 31 December 2005 of £15.1m (2004: £11.9m).The Group's losses have increased in the year principally as a result of thesignificant progress made in the clinical development process with its leadproducts, together with increased investment in the Group's advanced biologicsmanufacturing facility. During the year the Company recognised its firstsignificant revenues, totalling £2.3m, of which £2.0m related to the licensingagreement with Boehringer Ingelheim and £0.3m to Kerraboot(R) revenue. Arkexpects to incur continued losses for the immediate future as it invests in thelater phases of clinical development for its lead products. Cash and money market investments at 31 December 2005 totalled £34.3m (2004:£47.3m), a level of funding which is expected to enable the Group to progresswith its lead products through the next key milestones in their development andsupport the marketing of the Kerraboot(R) in the UK and overseas. These financial statements are the first under which the Group is required toadopt International Financial Reporting Standards (IFRS). All comparatives havebeen restated to comply with the requirements of IFRS. A reconciled balancesheet at 1 January 2004 and 31 December 2004, and an IFRS reconciliation of theGroup's results for the year ended 31 December 2004 can be found in our 2005interim report on our website at www.arktherapeutics.com. Results of Operations Years ended 31 December 2005 and 2004 Revenue Revenue of £2.3m was recorded in 2005 (2004: £0.2m), £2.0m of which wasmilestone receipts due under the licensing agreement with Boehringer Ingelheim(2004: £nil). Sales in the UK of Kerraboot(R) were £0.3m (2004: £0.2m). Itis expected for 2006 that the primary sources of revenues will continue to beproduct sales and out-licence deals for Kerraboot(R), potential sales from otherwound-care products and Boehringer Ingelheim milestone receipts. In futureyears an increasing proportion of revenues is expected to come from the productsnow in late stage clinical development, together with further out-licensingreceipts. 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 organisations withinEurope and North America under the close supervision of senior project managersemployed by the Group. Research and development expenditure in 2005 was £13.9m(2004: £9.1m), reflecting the increased level of late stage clinical trialactivity and the continued investment in the biologics manufacturing facility inFinland. Clinical development costs Major studies during the year included the commencement of the Phase III studyfor CereproTM, the dose-ascending Phase II study for Trinam(R), and both a PhaseIII and a bioequivalence study for VitorTM. It is anticipated that 2006 willsee the continuation of the CereproTM Phase III study and the commencement ofactivity in relation to both the Trinam(R) Phase III study and the pivotal PhaseIII study for VitorTM. Manufacturing development costs Manufacturing development expenditure increased as, following the certificationof the Kuopio facility for Phase III clinical trial and commercial production,clinical batches for CereproTM were produced and further staff were recruited asthe Company began to prepare for commercial production. Research Costs Research costs rose by £0.5 million due to a continuing investment in theCompany's highly promising pre-clinical pipeline. Sales & marketing expenses Selling, marketing and distribution costs for the period were £1.3m (2004:£1.3m). These costs related largely to sales force expenses and marketingactivities for Kerraboot(R) in the UK (2004 costs included one-off launchactivities). Administrative expenses Administrative expenses for the period were £5.7m (2004 restated: £4.8m). Theincrease in expenses was a direct result of the growth in the business withparticular investment in commercial development, IT infrastructure andadditional London office space. Investment income Net interest receivable comprises the interest income generated from cashinvested in term and overnight deposits. In the year ended 31 December 2005 theGroup earned investment income of £1.9m (2004: £2.0m) on cash deposits. Thedecrease results from the usage of cash during 2005. Taxation There were no corporation tax charges for the year under review due to theincidence of tax losses. The R&D tax credit receivable for the year ended 31December 2005 was £1.6m (2004: £1.2m), reflecting the increased investment inresearch and development in the year. Liquidity and capital resources The net cash outflow from operating activities for the year was £14.0m (2004:£14.1m). Ark's net cash outflow from capital expenditure was £0.8m (2004:£0.4m). The capital expenditure was incurred principally for upgrading theGroup's biologics manufacturing facilities in Kuopio, Finland. The Company'sinvestment in expanded manufacturing facilities in Kuopio will give rise toadditional capital expenditure during 2006 and 2007. Ark's net cash inflow from financing activities was £0.6m (2004: £50.7m)primarily through the exercising of share options (the 2004 figure included£50.4m proceeds net of expenses raised by the IPO). Interest received from termand overnight deposits was £1.4m (2004: £1.9m). 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 2005 (unaudited) Year Year ended ended 31 December 31 December 2005 2004 (restated*) £'s £'sRevenue 2,346,928 154,353Cost of sales (101,800) (45,401) ______ ______ Gross profit 2,245,128 108,952Research and development expenses (13,941,303) (9,147,324) ______ ______ (11,696,175) (9,038,372) ______ ______ Selling, marketing and distribution costs (1,273,122) (1,305,970) ______ ______ Other administrative expenses (5,181,539) (4,387,917)Share-based compensation (504,600) (435,866) ______ ______Administrative expenses (5,686,139) (4,823,783) ______ ______ Other income 33,507 96,199 Operating loss (18,621,929) (15,071,926) ______ ______ Investment income 1,893,382 1,959,891Finance costs (46,521) (5,036) ______ ______ Loss on ordinary activities before taxation (16,775,068) (13,117,071)Taxation 1,640,253 1,211,436 ______ ______ Loss on ordinary activities after taxation, being retained loss for the year (15,134,815) (11,905,635) ______ ______ Loss per share (0.12) (0.10) All results relate wholly to continuing activities. * under IFRS - see note 1 Consolidated balance sheet (unaudited) As at As at 31 December 31 December 2005 2004 (restated*) £'s £'sNon-current assetsGoodwill 1,306,091 1,306,091Other intangible assets 74,787 51,868Property, plant and equipment 1,327,322 1,009,102 2,708,200 2,367,061 ______ ______ Current assetsInventories 251,366 331,010Trade and other receivables 2,802,837 2,576,572Money market investments 28,000,000 -Cash and cash equivalents 6,290,227 47,256,285 ______ ______ 37,344,430 50,163,867 ______ ______ TOTAL ASSETS 40,052,630 52,530,928 ______ ______ Non-current liabilitiesLoans 433,185 493,060 Current liabilitiesTrade and other payables 5,167,537 3,569,861Loans 46,301 47,612 ______ ______ 5,213,838 3,617,473 ______ ______ TOTAL LIABILITIES 5,647,023 4,110,533 ______ ______ EquityShare capital 1,274,931 1,263,337Share premium 50,032,370 49,430,703Merger reserve 36,988,989 36,988,989Foreign currency translation reserve (21,028) (23,194)Share-based compensation 969,864 465,264Retained loss (54,839,519) (39,704,704) ______ ______Shareholders' funds 34,405,607 48,420,395 ______ ______ TOTAL LIABILITIES AND EQUITY 40,052,630 52,530,928 ______ ______ * under IFRS - see note 1 Consolidated cash flow statement (unaudited) Year ended Year 31 December ended 2005 31 December 2004 (restated*) £'s £'s Net cash outflow from operating activities (14,064,778) (14,087,940)Investing activities (27,455,521) 1,495,902Financing activities 552,075 50,692,541 ______ ______ (Decrease)/increase in cash and cash equivalents (40,968,224) 38,100,503 Cash and cash equivalents at beginning of year 47,256,285 9,157,565 Effect of exchange rate changes 2,166 (1,783) ______ ______ Cash and cash equivalents at end of year 6,290,227 47,256,285 ______ ______ * under IFRS - see note 1 Selected notes to the financial information 1. Presentation of financial information Information in this preliminary announcement does not constitute statutoryaccounts of the Group within the meaning of Section 240 of the Companies Act1985. The Statutory accounts for the year ended 31 December 2005 will befinalised on the basis of the financial information presented by the Directorsin this unaudited preliminary announcement and will be delivered to theRegistrar of Companies for England and Wales in due course and will also be sentto shareholders. Statutory accounts for the year ended 31 December 2004, whichwere prepared under accounting practices generally accepted in the UK, have beenfiled with the Registrar of Companies. The auditors' report on those accountswas unqualified and did not contain any statement under Section 237 (2) or (3)of the Companies Act 1985. The disclosures required by IFRS 1 concerning the transition from UK GAAP toIFRS, including a reconciled opening balance sheet as at 1 January 2004 andcomparative balance sheet as at 31 December 2004, and an IFRS reconciliation ofthe Group's results for the year ended 31 December 2004, will be included in thestatutory accounts of the Company for the year ended 31 December 2005. Thereconciling items from UK GAAP to IFRS included adjustments relating toshare-based compensation and goodwill amortisation, as a result of which netassets increased by £1,253,844 and the loss for the year decreased by £913,480. 2. Condensed statement of changes in equity Year ended Year 31 December ended 2005 31 December 2004 (restated*) £'s £'s Shareholders' funds at 1 January 48,420,395 9,205,658Exchange differences on translating foreign operations recognised directly 2,166 (1,783)in equityShare-based compensation 504,600 435,866Loss for the year (15,134,815) (11,905,635)Issue of share capital 437,993 55,335,772Share issue expenses - (4,649,483)Adjustment of share issue expenses 175,268 - ______ ______ Shareholders' funds at 31 December 34,405,607 48,420,395 ______ ______ * under IFRS - see note 1 3. Revenue An analysis of the Group's revenue is as follows: Year Year ended ended 31 December 31 December 2005 2004 (restated*) £'s £'sContinuing operationsSales of goods 260,205 154,353Revenue from out-licensing deals 2,086,723 - ______ ______ 2,346,928 154,353 ______ ______ * under IFRS - see note 1 4. 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. Including a retrospective adjustment for the bonus share issue (as per theconsolidated statement of changes in equity for the year ended 31 December2005), the calculation of basic and diluted loss per ordinary share is based onthe loss of £15,134,815 (2004: £11,905,635) and on 127,168,920 ordinary shares(2004: 119,019,359) being the weighted average number of ordinary shares inissue. 5. Net cash outflow from operating activities Year Year ended ended 31 December 31 December 2005 2004 (restated*) £'s £'s Operating loss (18,621,929) (15,071,926)Depreciation 447,343 270,553Decrease/(increase) in receivables 3,873 (379,379)Decrease/(increase) in inventories 79,644 (321,810)Increase in payables 1,568,205 978,756Share-based compensation 504,600 435,866 ______ ______Net cash outflow from operations (16,018,264) (14,087,940)Research and development tax credit received 1,953,486 - ______ ______Net cash outflow from operating activities (14,064,778) (14,087,940) ______ ______ * under IFRS - see note 1 6. Analysis of cash flows for investing activities and financing Year Year ended ended 31 December 31 December 2005 2004 (restated*) £'s £'sInvesting activitiesInterest received 1,350,011 1,936,634Finance costs (17,050) -Purchases of money market investments (28,000,000) -Purchases of property, plant and equipment (745,554) (388,864)Purchases of computer software (44,927) (51,868)Proceeds of sale on property, plant and equipment 1,999 - ______ ______Net cash (outflow)/inflow from investing activities (27,455,521) 1,495,902 ______ ______ FinancingIssue of shares 613,261 50,686,289Repayment of loans (61,186) (72,603)New loans - 78,855 ______ ______Net cash inflow from financing 552,075 50,692,541 ______ ______ * under IFRS - see note 1 This information is provided by RNS The company news service from the London Stock Exchange