PVG.L Regulatory News (PVG)

29 Aug 2007 07:01

Ark Therapeutics Group PLC29 August 2007 Ark Therapeutics Group plc Interim Results for the First Half of 2007 Achieving some of the most significant milestones to date in gene-based medicine London, UK, 29 August 2007 - Ark Therapeutics Group plc today announces itsresults for the six months ended 30 June 2007. PERIOD HIGHLIGHTS • Positive outcome from the Data and Safety Monitoring Board review of first 130 patients in Cerepro(R) Phase III trial • Phase III Cerepro(R) study completes recruitment • Cerepro(R) moved significantly closer to becoming the first gene therapy approved in Europe with the clearance from the EMEA of historically difficult technical barriers • Positive outcome from Trinam(R) FDA end of Phase II meeting • US Recombinant DNA Advisory Committee (RAC) gives early clearance for Trinam(R) Phase III trial • Ark Therapeutics-led consortium awarded €2.5m European Commission grant for baculoviral vectors research • Positive outcome from pre-Phase III FDA and EMEA scientific advice meetings for VitorTM • Scavidin(R) demonstrates pre-clinical effectiveness in slowing tumour development and improving survival time in glioma model • Wound care portfolio strengthened with in-licensing of Kerraped(R), UK price re-imbursement secured for this first in class device (launched August 2007) • Cash, cash equivalents and money market investments of £37.5m at 30 June 2007 (£49.4m at 30 June 2006, £48.4m at 31 December 2006) POST PERIOD HIGHLIGHTS • Formal grant of key patent for stroke in Europe • First Data and Safety Monitoring Board review of fully recruited Cerepro(R) trial concludes no safety issues and recommends trial continues as planned Dr Nigel Parker, CEO of Ark, commented: "The first half of 2007 has seen Ark make substantial progress across keyelements of our business. The pioneering of the European regulatory standardsfor gene therapy during the Cerepro(R) Marketing Authorisation Applicationreview, the transitioning of our clinical leads into Phase III development andthe successful prosecution of our stroke patent can be considered as the mostsignificant achievements so far in the history of the Company. Theseachievements, together with a number of important advances in our manufacturingcapability, allow Ark to maintain its leading position in the exciting,breakthrough area of gene-based medicine. We look forward to continuing our progress in the second half of the year,giving updates on products undergoing Phase III clinical development and theprogress with our commercialisation activities." 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 Yates Notes to Editors 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 three marketeddevices, Kerraboot(R), Flaminal(R) and Kerraped(R), and three further leadpharmaceutical products in late stage clinical development: Cerepro(R), VitorTM,and Trinam(R), the Group is transitioning from an R&D company to a commercial,revenue generating business. Ark's own 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's and Chief Executive's review Broad progress with major achievements in gene-based medicine The first half of 2007 has seen Ark make some notable progress. Our three leadprogrammes have moved through key clinical milestones into Phase III developmentand whilst the EMEA confirmed that data from the ongoing Phase III study will beneeded for full approval, we are particularly pleased to report our success withCerepro(R) in pioneering the regulatory pathway and standards for approval ofgene-based medicines in Europe. A number of the achievements in the periodcould be considered as the most significant so far in the history of theCompany. Our follow-on pre-clinical portfolio has also shown encouraging datafrom in vitro and in vivo work, building on the results reported last year. Wehave also added to our wound care product portfolio and sales in that divisionhave shown good growth over the comparable period last year. We opened the year by hosting our first ever R&D day for analysts and investorsat our new laboratories in Kuopio, Finland. We are also pleased to report thatour cGMP manufacturing unit at the Kuopio site continued to operate well duringthe period and passed its first routine inspection, thereby maintaining ourunique manufacturing licence for commercial gene medicine production in Europe.A number of key process improvements and discoveries in the gene medicinemanufacturing area made by our scientists in the period are expected tostrengthen our intellectual property portfolio for our gene-based products. In the period we were also successful in prosecuting our European patent filingcovering the use of 23 agents that affect the renin angiotensin system for usein stroke and, post period, we announced formal receipt of the grantcertificate, allowing us to implement our plans to exploit its furthercommercial potential. The first half of 2007 has thus seen the Company strengthen the key aspects ofits business. Pipeline review Cerepro(R) Early in the year we received a positive outcome from the Data and SafetyMonitoring Board ("DSMB") review of the first 130 patients entered into thePhase III study. The safety profile was found to be similar to that seen inprevious Cerepro(R) trials and the DSMB recommended that the study shouldcontinue without alteration. In April we completed enrolment of all 250patients in line with expectations. Also in that month, the EMEA concludedtheir first review of our application for early/conditional marketing approvalbased on Phase II data. Cerepro(R) cleared all the important historicaltechnical barriers of the important Chemistry and Manufacturing Controls ("CMC"), pre-clinical and environmental sections of the application and the EMEArequested we provide further evidence of efficacy from the Phase III study priorto granting an approval. Consequently post period we withdrew our conditionalapproval application from the EMEA and are preparing to file for full approvalbased on the Phase III trial outcome. The achievement of clearing the technicalbarriers indicates that gene therapy is, for the first time, an approvableplatform once clinical results are achieved. This is an enormous step forwardboth for the Company and for the biotechnology sector overall. Post period wewere delighted to report that the first DSMB review of all 250 patients in thefully recruited Phase III found that there were no safety issues and recommendedthe study should be continued with no changes to the conduct or protocol. Thisresult is in line with the study analysis plan and Company expectations. Trinam(R) Following the requested "End of Phase II" meeting with the FDA in late 2006, weannounced early in the period that the FDA had offered Special ProtocolAssessment ("SPA") to allow the product to enter Phase III development. Thedocuments allowing the SPA to commence were submitted to the FDA mid-period andthe process is now ongoing. The final Phase III trial architecture and datarequirement necessary for a marketing approval in the USA will be defined duringthe SPA. A potential major obstacle in commencing Phase III development wasovercome in the period when the US Recombinant Advisory Committee ("RAC")approved the study without the need for a public hearing. The latter againreflects the recent more positive attitude to adenoviral gene-based medicines bythe regulators. VitorTM Following meetings with both the EMEA and FDA late in 2006 the Company wasinformed it could commence Phase III development and the FDA has opened an SPAprocess to assist us in finalising the architecture for the Phase III trial.The SPA process commenced mid-period and is ongoing and the Company has openeddiscussions with clinical research organisations to plan the preliminarylogistics for the trial. Pre-clinical research In January we hosted a research and development update day for analysts andinvestors at our new facility in Kuopio. This was very well attended and anumber of analysts commented on the scope and capabilities of the facility innotes afterwards. In the period our most advanced pre-clinical candidate,Scavidin(R), showed encouraging therapeutic effects in a model of glioma, whereintravenous treatment with yttrium-90, a radiotherapeutic, given at aboutone-fifth the current dose, was targeted by Scavidin(R) to the cancer. Aslowing of disease progression and a significant improvement in mean survivaltime was found, backing up the anti-cancer effects previously found in two othercancer models. We have also made solid pre-clinical progress during the periodin the research areas of neuropilin (NP-1) and targeted vector technologies andour early scientific work continues to receive recognition for its quality andapplicability as evidenced by the European Commission grant relating tobaculovirus vectors research. Wound care division The first half of 2007 saw the sales in our wound care business growconsistently in line with early signs and the period closed with actual sales up65% on the comparable period in 2006. Flaminal(R) entered the market well andhas maintained a consistent and promising upwards sales trend. In the period wealso successfully in-licensed and obtained pricing approval in the UK forKerraped(R), the first ever off-loading shoe for diabetic foot ulcers to be madeavailable on prescription. This product has just been launched. We arecontinuing with our work to expand our wound care product portfolio and buildthe unit into a profitable business. Patent portfolio update Ark has 53 granted patents and 140 pending applications and continues to besuccessful in overcoming the various objections and oppositions in theprosecution processes. In the period, the Company has been granted six patentsin various international territories covering Trinam(R), Scavidin(R), targetedgene vector technology and other discoveries. During the period, we alsosuccessfully prosecuted the European stroke patent. Post period, we have filedapplications covering manufacturing processes which if granted would give ourgene-based products protection out to 2027. Financial review The unaudited financial information for the six months ended 30 June 2007 isprepared in accordance with the Group's accounting policies and is in accordancewith International Financial Reporting Standards ("IFRS") as adopted by theEuropean Union. Revenues of £0.25m were recorded in our wound care business in the first sixmonths of 2007 (six months ended 30 June 2006: £0.15m) reflecting the successfullaunch of Flaminal(R) at the end of 2006. The gross margin in the period wasimpacted by one-time costs as the older version of Kerraboot(R) passed itsexpiry date together with the write-off of product development costs. Research and development expenditure in the first six months of 2007 was £7.8m(six months ended 30 June 2006: £6.2m), reflecting the excellent progress withthe Cerepro(R) Phase III study, where recruitment completed during the period,together with preparatory work for the Trinam(R) and VitorTM Phase III studiesand the continuing scale-up of our cGMP manufacturing facility in Finland. Sales and marketing expenses for the period were £1.1m (six months ended 30 June2006: £0.8m). The increase of £0.3m related to initial pre-marketing activitiesfor Cerepro(R). Administrative expenses for the period were £3.5m (six months ended 30 June2006: £3.2m), with almost half the increase attributable to the share-basedcompensation charge in the period. In the six months ended 30 June 2007, the Group earned interest on its cashdeposits of £1.1m (six months ended 30 June 2006: £0.8m), reflecting the £25.5mof cash received in May 2006 from the net placing and open offer. Net cash outflow from operating activities for the period was £11.6m (six monthsended 30 June 2006: £10.5m). Cash, cash equivalents and money marketinvestments were £37.5m at 30 June 2007 (£49.4m at 30 June 2006). Summary and outlook The first half of 2007 has seen Ark make substantial progress across keyelements of our business. The pioneering of the European regulatory standardsfor gene therapy during the Cerepro(R) Marketing Authorisation Applicationreview, the transitioning of our clinical leads into Phase III development andthe successful prosecution of our stroke patent can be considered as the mostsignificant achievements so far in the history of the Company. Theseachievements, together with a number of important advances in our manufacturingcapability, allow Ark to maintain its leading position in the exciting,breakthrough area of gene-based medicine. During the second half of 2007 we will give appropriate safety updates on theCerepro(R) Phase III trial and continue it according to plan with a further DSMBreview around the end of the year. The SPA processes for both Trinam(R) andVitorTM are expected to conclude and, subject to our achieving a satisfactoryoutcome, Phase III trials will commence. We also expect to report progress onbringing further wound care products into our marketed portfolio, on thesecuring of a US re-imbursement price for Kerraboot(R) and with out-licensingnegotiations for our oxidised LDL cardiovascular risk test. We also look forwardto progressing further commercialisation of our stroke patent, as well asentering into discussions for the commercialisation of Cerepro(R) in territoriesnot core to Ark's own marketing plans and moving some of our earlier researchleads into more formal development. Dennis Turner, Chairman Nigel Parker, Chief Executive Officer29 August 2007 Consolidated income statementFor the six months ended 30 June 2007 (unaudited) Six months ended Six months ended Year 30 June 30 June ended 2007 2006 31 December £'000 £'000 2006 Note £'000Revenue 245 148 344Cost of sales (224) (61) (147) ______ ______ ______ Gross profit 21 87 197Research and development expenses (7,797) (6,181) (12,845)Selling, marketing and distribution costs (1,081) (836) (1,842) Other administrative expenses (2,894) (2,749) (5,413)Share-based compensation (589) (477) (1,071) ______ ______ ______Administrative expenses (3,483) (3,226) (6,484) ______ ______ ______ Other income 16 17 33 Operating loss (12,324) (10,139) (20,941) Investment income 1,075 753 1,867Finance costs (12) (12) (23) ______ ______ ______ Loss on ordinary activities before taxation (11,261) (9,398) (19,097)Taxation 1,047 700 1,584 ______ ______ ______ Loss on ordinary activities after taxation, beingretained loss for the period (10,214) (8,698) (17,513) ______ ______ ______ Loss per share (basic and diluted) 2 6.2p 6.5p 11.9p All results relate wholly to continuingactivities. Consolidated balance sheetAs at 30 June 2007 (unaudited) 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Non-current assetsGoodwill 1,306 1,306 1,306Other intangible assets 263 268 329Property, plant and equipment 2,351 1,437 2,034 ______ ______ ______ 3,920 3,011 3,669 ______ ______ ______Current assetsInventories 475 138 470Trade and other receivables 1,329 1,400 1,470Research and development tax credits receivable 2,557 2,284 1,499Money market investments 27,000 45,180 40,000Cash and cash equivalents 10,515 4,253 8,433 ______ ______ ______ 41,876 53,255 51,872 ______ ______ ______ TOTAL ASSETS 45,796 56,266 55,541 ______ ______ ______ Non-current liabilitiesObligations under finance leases 37 - 43Loans 316 411 338 ______ ______ ______ 353 411 381 ______ ______ ______Current liabilitiesTrade and other payables 5,257 4,112 5,539Current tax liabilities - - 14Obligations under finance leases 10 - 10Loans 86 46 86 ______ ______ ______ 5,353 4,158 5,649 ______ ______ ______ TOTAL LIABILITIES 5,706 4,569 6,030 ______ ______ ______EquityShare capital 1,662 1,594 1,659Share premium 81,397 75,226 81,196Merger reserve 36,989 36,989 36,989Foreign currency translation reserve (24) (21) (22)Share-based compensation 2,633 1,447 2,042Retained loss (82,567) (63,538) (72,353) TOTAL EQUITY 40,090 51,697 49,511 ______ ______ ______ TOTAL LIABILITIES AND EQUITY 45,796 56,266 55,541 ______ ______ ______ Consolidated statement of changes in equity(unaudited) Share capital Share premium Merger reserve Foreign currency translation reserve £'000 £'000 £'000 £'000 Balance as at 31 December 2005 1,275 50,032 36,989 (21) Share-based compensation - - - -Loss for the period - - - -Issue of share capital 318 26,775 - -Equity share options issued 1 4 - -Share issue expenses - (1,585) - - ______ ______ ______ ______ Balance as at 30 June 2006 1,594 75,226 36,989 (21)Exchange differences on translating - - - (1)foreign operations recognised directlyin equityShare-based compensation - - - -Loss for the period - - - -Issue of share capital 63 6,088 - -Equity share options issued 2 94 - -Share issue expenses - (212) - - ______ ______ ______ ______ Balance as at 31 December 2006 1,659 81,196 36,989 (22) Exchange differences on translating - - - (2)foreign operations recognised directlyin equityShare-based compensation - - - -Loss for the period - - - -Equity share options issued 3 201 - - ______ ______ ______ ______ Balance as at 30 June 2007 1,662 81,397 989 (24) ______ ______ ______ ______ (continued from table above) Share-based Retained loss Total compensation £'000 £'000 £'000 Balance as at 31 December 2005 970 (54,840) 34,405 Share-based compensation 477 - 477Loss for the period - (8,698) (8,698)Issue of share capital - - 27,093Equity share options issued - - 5Share issue expenses - - (1,585) ______ ______ ______ Balance as at 30 June 2006 1,447 (63,538) 51,697Exchange differences on translating foreign - - (1)operations recognised directly in equityShare-based compensation 595 - 595Loss for the period - (8,815) (8,815)Issue of share capital - - 6,151Equity share options issued - - 96Share issue expenses - - (212) ______ ______ ______ Balance as at 31 December 2006 2,042 (72,353) 49,511 Exchange differences on translating foreign - - (2)operations recognised directly in equityShare-based compensation 591 - 591Loss for the period - (10,214) (10,214)Equity share options issued - - 204 ______ ______ ______ Balance as at 30 June 2007 2,633 (82,567) 40,090 ______ ______ ______ Consolidated cash flow statementFor the six months ended 30 June 2007 (unaudited) Six months ended Six months ended Year 30 June 30 June ended 2007 2006 31 December £'000 £'000 2006 Note £'000 Net cash outflow from operating activities 3 (11,601) (10,450) (17,419) Investing activitiesInterest received 1,251 802 1,784Proceeds from/(purchases of) money market 13,000 (17,180) (12,000)investmentsPurchases of property, plant and equipment (646) (369) (1,223)Purchases of intangible assets (40) (317) (692) ______ ______ ______ Net cash generated from/(used in) investing 13,565 (17,064) (12,131)activities Financing activitiesRepayment of borrowings (28) (22) (48)Proceeds on issue of shares (net of expenses) 4 25,512 31,753Finance costs (10) (11) (19)Grants received 152 - - ______ ______ ______ Net cash generated from financing activities 118 25,479 31,686 Net increase/(decrease) in cash and cash 2,082 (2,035) 2,136equivalentsCash and cash equivalents at beginning of period 8,433 6,290 6,290Effect of exchange rate changes - (2) 7 ______ ______ ______ Cash and cash equivalents at end of period 10,515 4,253 8,433 ______ ______ ______ Notes to the financial information 1 Basis of preparation This interim financial information was approved by the Board on 22August 2007 and does not constitute statutory financial information within themeaning of Section 240 of the Companies Act 1985. A copy of the statutoryaccounts for the year ended 31 December 2006 has been delivered to the Registrarof Companies. The auditors' report on those accounts was not qualified and didnot contain statements under Section 237(2) or (3) of the Companies Act 1985. This interim financial information has been prepared using theaccounting policies set out in the Group's 2006 statutory accounts. Results for the six-month periods ended 30 June 2006 and 30 June 2007have not been audited. Copies of the interim results for the six months ended 30 June 2007are being sent to all shareholders. A copy can also be found on the Company'swebsite at www.arktherapeutics.com. 2 Loss per share International Accounting Standards require presentation of dilutedearnings per share when a company could be called upon to issue shares thatwould decrease net profit or increase net loss per share. For a loss makingcompany with outstanding share options, net loss per share would only beincreased by the exercise of out-of-money options. Since it seems inappropriateto assume that option holders would exercise out-of-money options, no adjustmenthas been made to diluted loss per share for out-of-money share options. The calculation of basic and diluted loss per ordinary share is basedon the loss of £10,214,000 for the six months ended 30 June 2007 (six monthsended 30 June 2006: £8,698,000; year ended 31 December 2006: £17,513,000) and on165,917,412 ordinary shares (June 2006: 133,836,891; December 2006: 147,291,176)being the weighted average number of ordinary shares in issue. 3 Reconciliation of operating loss to net cash outflow from operatingactivities Six months ended Six months ended Year 30 June 30 June ended 2007 2006 31 December £'000 £'000 2006 £'000Operating loss (12,324) (10,139) (20,941) Depreciation and amortisation 435 517 993Deferred income (16) (17) (33)Share-based compensation 589 477 1,071 ______ ______ ______ Operating cash flows before movements in working (11,316) (9,162) (18,910)capital Increase in receivables (35) (194) (132)(Increase)/decrease in inventories (5) 113 (219)(Decrease)/increase in payables (220) (1,171) 195 ______ ______ ______ Cash used by operations (11,576) (10,414) (19,066) Research and development tax credit (overpaid)/received - (36) 1,648Income taxes paid (25) - (1) ______ ______ ______Net cash outflow from operating activities (11,601) (10,450) (17,419) ______ ______ ______ Independent review report to Ark Therapeutics Group plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 which comprises the consolidated incomestatement, the consolidated balance sheet, the consolidated statement of changesin equity, the consolidated cash flow statement and related notes 1 to 3. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Deloitte & Touche LLPChartered AccountantsCambridge, UK 29 August 2007 This information is provided by RNS The company news service from the London Stock Exchange