Physiomics Regulatory News (PYC)

8 Sep 2005 06:00

Preliminary results statement for the 12 months ended 30 June 2005. Oxford, UK, 8 September 2005 The Board of Physiomics plc (AIM:PYC), a Europeansystems biology simulation company, today announces the financial results forthe year to 30 June 2005. Physiomics plc is a computational systems biologyservices company, developing computer simulations aimed at reducing the highcost and attrition rates of clinical trials, particularly for cancer therapies.Highlights of the period * Turnover of ‚£204,695, an increase of over 330% * ‚£750,000 before expenses raised in AIM listing * Losses after tax of ‚£381,843, reflecting one-off pre-IPO costs and higher R &D expenditure * Physiomics appointed distributor for Bayer's PK-Sim‚® * Option agreement to license two therapeutic products from Cronos Therapeutics signed * New research staff appointments & employee share scheme * UK trademark granted for Physiomics' SystemCell‚® software (virtual cell replication) Mr David Evans, Chairman of Physiomics plc, commented"I have great pleasure in introducing the first Annual Report and Accountssince Physiomics was listed on AIM in December 2004. It was only on the 25th ofAugust 2005 that I accepted the position of Chairman succeeding Dr StephenParker who took the Company through its flotation.For my part I am looking forward to working with everyone at Physiomics toensure it moves forward positively over the short, medium and long term.As I have only just joined the Company the review of the year and an update oncommercial progress is contained within the Chief Executive's review."For further information please contact: Physiomics plcMr David Evans (Chairman) Tel: 07740 084452Dr John Savin (CEO) Tel: 01865 784981 Northbank Communications Tel: 020 7886 8150Emma Palmer (financial enquiries)Fiona Brown/Rowan Minnion (media enquiries)Notes to EditorsPhysiomics plcPhysiomics plc (AIM:PYC) is a computational systems biology services companyapplying simulations of cell behaviour to drug development to reduce the highattrition rates of clinical trials. As 80-90 per cent of all clinical drugcandidates fail to reach the market, estimates show that an overall ten percent. improvement in success rates could reduce the cost of one drug'sdevelopment by as much as $242 million, from the current estimate of around$800 million.Physiomics is currently focused on optimising the design of cancer clinicaltrials as a service to major pharmaceutical companies. In addition, it hassecured an option to in-license two innovative molecules in the cancer areafrom Cronos Therapeutics. Physiomics has a major collaboration with BayerTechnology Services GmbH to develop globally clinical response predictionservices using both companies' proprietary technologies and mathematical cellmodels, including the SystemCell‚® technology developed by Physiomics. In June2005, Physiomics became a distributor of Bayer's PK-Sim‚® product forunderstanding the way pharmaceuticals are distributed round the body.Physiomics, based in Oxford, UK, was founded in 2001, and floated on AIM in2004.For further information, please visit www.physiomics-plc.comSystemCell is a registered trademark of Physiomics plcCEO's statementFinancial reviewThe period from July 2004 to June 2005 included the company's IPO on AIM inDecember 2004 and was an eventful time for the Company in which substantialprogress was made in the development and commercialisation of the Company'stechnology. The Company recorded turnover of ‚£204,695, up 330% on the previousyear (‚£61,815). There was a loss after tax of ‚£381,843 (2004: ‚£225,027); thepre-tax loss was ‚£431,917 (2004: ‚£230,027). Since the IPO in December 2004,underlying internal costs have, as planned, risen due to investment in R&D andmarketing plus the standard corporate costs associated with maintaining a stockmarket listing. The loss before tax in the second half was approximately ‚£205,000 on turnover of ‚£108,000.Management has worked hard to minimise `cash burn' and the cash balance at theyear end was ‚£294,908. As part of this cash burn, the Company invested ‚£18,500in capital expenditure, mainly in computer systems to support the R&Dprogramme. In addition, the Company has a call facility available with Billamplc and Billam AG until June 2006 for a maximum of ‚£243,000.Bayer CollaborationOn 20 July 2004, a major collaboration agreement was concluded with BayerTechnology Services GmbH. This gave Physiomics access to a very sophisticatedsoftware product and service for physiological analysis (PK-Sim‚®, a way ofsimulating the entire body) to examine the efficiency with whichpharmaceuticals are utilised by the patient's body. In addition, the twoCompanies have developed joint marketing initiatives based on Clinical ResponsePrediction to look at how a dose of a drug affects disease progression incancer. Finally, a close research and development process was initiated whichhas strengthened Physiomics' capabilities, for example, in the development ofaccurate simulation of the gene copying process which occurs as cells divide.This is critical to the simulation of the action of many anti-cancer drugs andof great importance to actual and potential customers.Marketing and Business DevelopmentUsing business development consultants, Physiomics has refined the marketingplatform for Clinical Response Prediction. This integrates Physiomics' model ofthe human cell cycle, the process by which cells, especially cancer cells, growand divide, with PK-Sim and combines it with Physiomics' SystemCell‚® softwarethrough a process known as the Clinicophore¢â€ž¢. SystemCell‚® allows Physiomics to"grow" a diverse population of virtual cancer cells to assess therapeuticoutcomes.Clinical Response Prediction is global in scope and has attracted interest frommajor companies in both Europe and the USA. It is designed as a high valueservice. Customers can access it through an initial pilot study beforeembarking on a highly customised and focussed collaboration. In essence,customers are outsourcing computational biology based on Physiomics'proprietary software and, most importantly, mathematical models of cellprocesses. Market development of this brand is continuing, with a US marketingcampaign underway.Physiomics' efforts in marketing and sales have led to it, in a separateagreement on 23 June 2005, being appointed as a distributor for PK-Sim.Marketing and sales activity started on this at the end of the financial yearand is now building up with the UK as the immediate target market. Thisdistribution agreement enables Physiomics to sell into all therapeutic areasincluding brain disorders, inflammatory disease (such as rheumatoid arthritis)and metabolic diseases (like diabetes), as well as cancer.With the potential for a variety of commercial agreements from late calendar2005 onwards, the Company is well placed to take advantage of the growinginterest in systems and computational biology to improve the success rates inclinical development. The Company looks forward to announcing further progressin this regard during the current financial period.Cronos TherapeuticsIn November 2004, Physiomics and Cronos Therapeutics announced an alliancewhereby Physiomics will use its novel in silico technology to select optimaltargets for the highly-selective GeneICE technology from Cronos Therapeutics.The alliance will co-develop the lead GeneICE constructs.The Cronos GeneICE technology is a highly gene-specific and potentially longeracting alternative to antisense and RNAi technologies, developed at ImperialCollege, London. It has been shown that GeneICE can switch off specific genesfollowing one administration. As GeneICE acts on the genes directly, it isanticipated that much lower doses may need to be administered compared toconventional therapies.Intellectual propertyLegal issues over the assignment of the patent covering SystemCell softwarewere partly resolved by the assignment to Physiomics of the UK patent prior toChristmas. A successful High Court application in April will now enable theOfficial Receiver to sign patent assignments in favour of Physiomics in respectof other European jurisdictions. Physiomics has owned the US version of thispatent since 2003. The UK trademark for SystemCell software was received in theperiod and a trademark for Clinicophore giving worldwide priority has beenapplied for.Board ChangesThe Board was extended during the year by the appointment of Dr Paul Harper inSeptember 2004 and Mr John Pool in December 2004. Mr Pool represents themajority shareholder, EiRx Pharma Ltd., and is a non-independent Director.As a post balance sheet event, regretfully the Board accepted the resignationof Dr Stephen Parker and wished him well in his new career. The Board was,however, delighted that Mr David Evans was able to join as the new Chairman. MrEvans brings extensive small listed company experience to the Board,particularly in the life science sector, and will be key to the Company'scorporate development.Staff and Share optionsTwo key new members of staff, both at Ph.D. level, were recruited in theperiod, one from a leading German mathematical biology group and the other incomputation and software from an international, US-led systems biology softwareteam. This has significantly boosted the strength and capacity of thedevelopment team.For a rapidly developing high technology business like Physiomics, staffretention and motivation are essential to long-term shareholder returns. On 24June 2005, an unapproved share option scheme was established. In addition,staff and directors were given the chance to subscribe for shares to a maximumvalue of ‚£5,000 each. This subscription was partly funded by an interest freeloan. These incentives are designed to ensure that the enthusiasm andcommitment of all employees is kept within the business and rewarded, to thebenefit of all shareholders. The terms of these schemes were established by theRemuneration Committee. In addition, a stakeholder pension scheme wasestablished and other cost-effective benefits introduced such as Death inService insurance.Prospects for 2006The Company is actively focussing its science efforts on commercially relevantpharmaceutical targets where substantive potential markets clearly exist. TheUSA is likely to be the continued focus of attention given the interest insystems approaches now apparent. The period since the IPO laid the basis for astrong development of the business and will enable us to take advantage ofappropriate commercial opportunities as they arise.Dr John SavinCEO7 September 2005Financial Statements for the Year Ended 30 June 2005Profit and Loss Account 2005 2004 ‚£ ‚£ Turnover 204,695 61,815 Other operating expenses (645,140) (298,898) Other operating income - 7,056 Operating loss (440,445) (230,027) Interest receivable 8,528 - Loss before tax (431,917) (230,027) Tax on loss on ordinary 50,074 5,000activities Loss transferred from (381,843) (225,027)reserves ¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦ ¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦ Basic and diluted loss per (0.19) (0.13)share (pence) All of the activities of the Company are classed as continuing.The Company has no recognised gains or losses other than the results for theyear as set out above.Balance Sheet for the Year Ending 30June 2005 2005 2004 ‚£ ‚£ Fixed assets Intangible assets 53,463 58,107 Tangible assets 24,924 13,557 Investments 1 1 78,388 71,665 Current assets Debtors 154,505 12,605 Cash at bank 294,908 8,687 449,413 21,292 Creditors: amounts falling due within (114,302) (447,020)one year Net current assets / (liabilities) 335,111 (425,728) Total assets less current liabilities 413,499 (354,063) Net assets/(liabilities) 413,499 (354,063) Capital and reserves Called up share capital 92,810 67,140 Share premium account 1,329,022 205,287 Profit and loss account (1,008,333) (626,490) Shareholders' funds 413,499 (354,063)Cash Flow Statement 2005 2004 ‚£ ‚£ Net cash outflow from operating (447,066) (218,305)activities Returns on investments and servicing of finance Interest received 8,528 - Net cash inflow from returns on 8,528 -investments and servicing of finance Taxation 18,777 - Capital expenditure Purchase of tangible fixed assets (18,503) (11,943) Net cash outflow from capital (18,503) (11,943)expenditure Net cash outflow before financing (438,264) (230,248) Financing Issue of shares 724,485 - Net inflow from related parties - 235,591 Net cash inflow from financing 724,485 235,591 Increase in cash 286,221 5,3431 Basis of PreparationThe preliminary announcement has been prepared in accordance with applicableaccounting standards and under the historical cost convention. The principalaccounting policies of the company have remained unchanged from those set outin the Company's 2004 annual report and financial statements.The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985.The summarised balance sheet as at 30 June 2005 and the summarised profit andloss account, summarised cash flow statement and associated notes for the yearthen ended have been extracted from the Company's 2005 statutory financialstatements upon which the auditors opinion is unqualified and does not includeany statement under section 237 of the Companies Act 1985.Those financial statements have not yet been delivered to the registrar ofcompanies.2 Reconciliation of movements in shareholders funds 2005 2004 ‚£ ‚£ Loss for the financial year (381,843) (225,027) Issue of shares 1,149,405 - Net increase / (decrease) in shareholders' funds 767,562 (225,027) Shareholders' funds at 1 July 2004 (354,063) (129,036) Shareholders' funds at 30 June 2005 413,499 (354,063)3 Net cash outflow from operating activities 2005 2004 ‚£ ‚£ Operating loss (440,445) (230,027) Depreciation 7,136 2,645 Amortisation 4,644 4,648 (Increase) / decrease in debtors (90,606) 1,129 Increase in creditors 72,205 3,300 Net cash (outflow) from operating activities (447,066) (218,305)4 Reconciliation of net cash flow to movement in net debt 2005 2004 ‚£ ‚£ Increase in cash in the year 286,221 5,343 Net cash inflow from other long-term creditors - (235,591) Change in net funds resulting from cash flows 286,221 (230,248) Other non-cash items : debt / equity conversion 404,920 - Movement in net debt in the year Net debt at 1 July 2004 (396,233) (165,985) Net cash / (debt) at 30 June 2005 294,908 (396,233) 5 Earnings per share noteThe calculation of the basic earnings per share is based on the lossattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the year. 2005 2004 Loss Weighted Loss per Loss Weighted Loss per average share average share number of number of shares shares ‚£ Pence ‚£ Pence Loss (381,843) 203,149,976 (0.19) (225,027) 167,850,900 (0.13)attributable to shareholders On 6 December 2004, the existing share capital was sub-divided and eachordinary share of 1 pence was divided into 25 ordinary shares of 0.04p. Theabove calculations show the 2004 loss per share on a comparable basis, asthough the shares had been sub-divided in 2004.The share options in issue do not have any dilutive effect.6 Tax on ordinary activitiesa) The tax credit represents: 2005 2004 ‚£ ‚£ United Kingdom Corporation tax at 30% (2004: - -30%) Research and Development tax credits: current (36,297) -year Research and Development tax credit in respect (13,777) (5,000)of prior year Total current tax (50,074) (5,000)Unrelieved tax losses of approximately ‚£425,000 (2004: ‚£280,000) remainavailable to offset against future trading profits subject to Inland Revenueapproval.b) Factors affecting the current tax chargeThe tax assessed on the loss on ordinary activities for the year is higher thanthe standard rate of corporation tax in the United Kingdom of 19% (2004: 19%). 2005 2004 ‚£ ‚£ Loss on ordinary activities before (431,917) (230,027)taxation Loss on ordinary activities multiplied (82,064) (43,705)by standard rate of corporation tax in the United Kingdom of 19%(2004:19%) Expenses not deductible for tax 1,400 1,440purposes Capital allowances for period in excess (785) (462)of depreciation Unutilised tax losses 45,052 42,727 Adjustments to tax charge in respect of (13,677) (5,000)previous periods ----------------------------- ----------------------------- Total current tax (note 6(a)) (50,074) (5,000)7 Availability of accountsThe annual report and accounts will be posted to shareholders during October2005 and will be available at www.physiomics-plc.com for at least a monthfollowing the mailing date. --ENDS- Physiomics plc Registered in England and Wales Number 4225086 Registered Office: The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA, UKENDPHYSIOMICS PLC