Sareum Regulatory News (SAR)

6 Feb 2007 07:01

Sareum Holdings PLC06 February 2007 For immediate release 6 February 2007 SAREUM HOLDINGS PLC ("Sareum" or "the Company") FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Sareum Holdings plc (AIM: SAR), the specialist structure-based drug discoverybusiness, is pleased to announce its financial results for the six month periodended 31 December 2006. Financial highlights during period 1 July to 31 December 2006: • Three-fold increase in revenues to £1,205,000 (2005: £361,000) plus an increase of £319,000 in deferred revenue (pre-payments to be recognised in current financial year) • Gross profit of £372,000 (2005: £115,000 loss) • 65% reduction in loss on ordinary activities (after taxation) to £208,000 (2005: £602,000) Business highlights during period 1 July to 31 December 2006: • Novel compounds discovered in cancer drug discovery collaboration with the Institute of Cancer Research and Cancer Research Technologies Ltd • Progress made on further in-house cancer discovery programmes • Collaborations signed with Roche, Genentech and PIramed plus repeat business from Almirall and Lundbeck Post-period end highlights: • Patent applications filed from in-house drug discovery collaboration with the Institute of Cancer Research and Cancer Research Technologies Ltd • Research collaboration signed with Johnson & Johnson Dr Tim Mitchell, CEO of Sareum Holdings plc, said: "Sareum has enjoyed yetanother productive and successful period. The Company has progressed itsin-house drug discovery programmes in cancer significantly and achieved furtherrevenue-generating collaborations with major international pharmaceuticalcompanies. We look forward to expanding the business and to announcing furtheradvances in our in-house cancer programs whilst meeting the market's financialexpectations." For further information please contact: Sareum Holdings plc 01223 497700Tim Mitchell, Chief Executive Officer Buchanan Communications 020 7466 5000Tim Anderson, Mary-Jane Johnson Notes for Editors About Sareum Holdings plc Sareum Holdings plc is a structure-based drug discovery business headquarteredin Cambridge, UK. The Company was formed in August 2003 to discover new drugsfor the treatment of cancer. Sareum's unique approach aims to halve the time ittakes to discover new drug candidates. A structure-based approach to drug discovery relies on knowledge of thethree-dimensional structure of the proteins that cause disease. Once thestructure is known, potential drugs are designed to 'lock-in' to the proteinwith the aim of reversing or arresting a disease's progression. Knowledge ofthe structure of the potential drugs and how they 'lock-in' to their targetprotein assists greatly in the development of high-quality drug candidates.Determining structure is a complex task and requires leading-edge equipment andexperienced staff. Sareum's approach to structure determination utilises itsproprietary protein expression platform in order to produce multiple recombinantproteins that accelerate structure determination using x-ray crystallography. Once the structure is determined, the Company's innovative fragment screeningplatform is used to identify novel chemical templates designed to interact withthe target protein. Sareum then uses its high-throughput medicinal chemistryplatform to rapidly optimise these molecules and develop the most promising intopotential drug candidates. Sareum aims to successfully deliver drug candidates for licensing to largerpharmaceutical companies at the pre-clinical or early clinical trials stage.This is funded by provision of its specialist drug discovery capabilities topartners in the pharmaceutical and biotechnology industries. Sareum joined the AIM market of the London Stock Exchange in October 2004 andtrades under the symbol SAR. For further information, please visitwww.sareum.co.uk Interim Results for the six months ended 31 December 2006 Chairman's Statement Sareum Holdings plc has enjoyed a further successful trading period, evidencingthe ability of the team to consistently focus on the business drivers that buildvalue. We have continued to make significant advances in our in-house cancerdrug discovery programmes and in our revenue-generating business where a seriesof collaborations have been signed with leading pharmaceutical researchpartners. It is now abundantly clear that the Sareum technology platform and businessmodel is able to meet the Company's objectives to generate quality anti-cancerdrug candidates, specifically targeted against solid tumours, using cashgenerated from discovery research collaborations with quality partners. Through its integrated structure-based drug discovery platform and themanagement team's 90 plus years of pharmaceutical industry experience, Sareumrepresents a unique offering. The Company provides protein structures and noveldrug leads to some of the most prestigious pharmaceutical and biotech partnersin the world. Sareum does this with significantly increased speed, deliveringsolid IP results with great efficiency and flexibility for collaborators. Inreturn Sareum receives fees for service with which it advances its own drugdiscovery programmes in the field of cancer. Our in-house drug discovery programme was enhanced by the announcement in Augustthat the Company had achieved substantial progress in its joint research programwith Cancer Research Technology Ltd. and the Cancer Research UK Centre forCancer Therapeutics at the Institute of Cancer Research with the development ofnovel compound series that showed efficacy in cancer cell models. This hasresulted in a number of patent application filings of these compounds and theiruse in the treatment of cancer. Consequently, we are expecting to be able tonominate a compound to enter pre-clinical development in the next twelve months. The Institute of Cancer Research is one of the world's leading cancer researchorganisations and thus a prestigious partner for Sareum's in-house research. Inaddition, we continue to work on a number of other quality cancer targets in ourin-house programmes in addition to the joint venture activities. Further patentapplications are expected to be made in the near future. We have continued to make good progress in securing profitable servicecollaborations that generate revenues to support our in-house research. In thisperiod, an agreement was reached with Roche, an initial one-year multi-targetcollaboration was entered into with Genentech and a potential 18-monthmulti-disciplinary drug discovery collaboration started with PIramed. Inaddition, repeat business was secured from Almirall and Lundbeck. Our existingcollaborations continue to progress well, and success milestone payments havebeen received from our multi-disciplinary drug discovery collaborations withOrganon and Idenix. These successes demonstrate the standard of excellence fromour growing, expert research team ensures that we both deliver challengingmilestones, and build a steady stream of new business from some of the largestand most respected names in this sector. The overall increase in activity on in-house programmes and fee for serviceactivities resulted in the need to create additional capacity and resource. Weare currently upgrading our operations in Cambridge to accommodate additionalequipment, to create new facilities and to make space for additional staff. Theplacing of £312,000 in October was made to augment the cash available from ourown activities, to fund this investment. The cash position was furtherunderpinned by a placing of £400,000 announced in January. During this period, revenues of £1,205,000 have been recognised, over one thirdof which (£423,000) came from success milestone payments., This represented amore than three-fold increase in revenue over the same period last year, and isonly 18% less than the revenues reported for the full 2005/06 year. Inaddition, pre-payments of £401,000 were received in December which will berecognised in the current financial year, an increase of £319,000 compared withJune 2006. Thus the total contracted sales for this period are £1,514,000 and inline with Board expectations. We ended the half year with net current assets of£996,000, an increase of over £1 Million including £767,000 cash in bank. The announcement in January 2007 of a research collaboration with Johnson andJohnson Pharmaceutical R&D adds a further major global pharmaceutical company toSareum growing list of blue chip collaborators. The Company's order bookcurrently stands at £4 Million achievable over the next 18 months, assumingsuccessful delivery of milestones. A focus on meeting (or exceeding) customer expectations to maximise the revenuepotential of each contract combined with careful management of costs hasresulted in a loss on ordinary activities (after taxation) of £208,000. This isapproximately one third of that for the same period last year. The Company'sshort term cash position is expected to improve further in H2 as the revenuesfrom existing contracts and the additional revenues from the contracts signed inthis period flow through. Sareum has demonstrated that it is able to advance its in-house research bydeveloping programmes to plan whilst at the same time investing in strategicalliances to develop candidate drug molecules. In addition, there has been amore than three-fold increase in its revenue generating activities and a healthycash position. This is a creditable performance and one that reflects theprofessionalism and commitment of the entire Sareum team to excellence and togenerating shareholder value. Sareum will continue to build on this positionvia expansion of its facilities and advancement of its exciting in-houseanti-cancer drug pipeline. Dr Paul HarperChairmanSareum Holdings plc Sareum Holdings plc Unaudited Consolidated Profit & Loss Account for the half year ended 31 December 2006 Unaudited Unaudited Audited Half Year to Half Year to Year ended 31 Dec 06 31 Dec 05 30 Jun 06 £'000 £'000 £'000 Turnover 1,205 361 1,476 Cost of sales (833) (476) (1,080) Gross profit (loss) 372 (115) 396 Administrative expenses (671) (555) (1,146) Operating loss (299) (670) (750) Interest receivable and similar income 5 3 10 Interest payable and similar charges (5) (7) (12) Loss on ordinary activities before taxation (299) (674) (752) Tax on loss on ordinary activities 91 72 128 Loss on ordinary activities after taxation (208) (602) (624) Loss per share (pence) Basic and diluted 0.05p 0.17p 0.18p Sareum Holdings plc Unaudited Consolidated Balance Sheet as at 31 December 2006 Unaudited Unaudited Audited 31 Dec 06 31 Dec 05 30 Jun 06 £'000 £'000 £'000 Fixed assets Intangible assets 14 20 18 Tangible assets 720 857 792 734 877 810 Current assets Debtors 997 469 437 Cash at bank and in hand 767 153 528 1,764 622 965 Creditors: amounts falling due within one year (367) (403) (435) deferred income (401) (302) (82) Net current assets 996 (83) 448 Total assets less current liabilities 1730 794 1,258 Creditors: amounts falling due after more than one year (45) (77) (63) Net assets 1,685 717 1,195 Capital and reserves Called up share capital 112 87 93 Share premium account 3,767 2,594 3,088 Merger reserve 0 0 0 Profit and loss account (2,194) (1,964) (1,986) Equity shareholders' funds 1,685 717 1,195 Sareum Holdings plc Unaudited Consolidated Cash Flow Statement for the half year ended 31 December 2006 Unaudited Unaudited Audited Half year to Half year to Year to 31 Dec 06 31 Dec 05 30 Jun 06 £'000 £'000 £'000Net cash outflow from operating activities (415) (467) (363)Returns on investments and servicing of finance - (4) (2)Taxation 128 120 120Capital Expenditure (54) (9) (66)Cash flow before financing (341) (408) (311)Financing - share issue 698 0 500Financing - loans and leases (118) 120 (102)Increase (decrease) in cash 239 (288) 87 Reconciliation of operating loss to net cash outflow from operating activities Unaudited Unaudited Audited Half year to Half year to Year to 31 Dec 06 31 Dec 05 30 Jun 06 £'000 £'000 £'000Operating profit (loss) (299) (670) (750)Depreciation and amortisation 129 120 244Increase in debtors (597) (275) (67)Increase in creditors 352 310 210Net cash outflow from operations (415) (515) (363) Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited Half year to Half year to Year to 31 Dec 06 31 Dec 05 30 Jun 06 £'000 £'000 £'000Increase/(Decrease) in cash 239 (288) 87Cash inflow from financing 119 54 102Change in net funds resulting from cash flows 358 (234) 189Net funds at period start 332 143 143Net funds at period end 690 (91) 332 Analysis of changes in net funds 1 Jul 06 Cash flow 31 Dec 06 £'000 £'000 £'000Cash in hand and at bank 528 239 767Debt: due within one year (30) (2) (32) Due after one year (63) 18 (45)Finance lease agreements (103) 103 -Net funds 332 358 690 SAREUM HOLDINGS PLC NOTES TO THE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 1. FINANCIAL INFORMATION The results for the six months ended 31 December 2006 are unaudited and do notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The 30 June 2006 Annual Report and Accounts are available fromSareum's web site, www.sareum.co.uk. 2. BASIS OF ACCOUNTING They have been drawn up using the same accounting policies and principles as aredetailed in the Company's 30 June 2006 Annual Report and Accounts. 3. TAXATION No liability arises for corporation tax for the period ended 31 December 2006.Research and Development tax credits receivable as cash are estimated to be£91,100 for the period. 4. DIVIDENDS The directors do not propose the payment of a dividend in respect of the sixmonths ended 31 December 2006. 5. LOSS PER SHARE Basic and diluted loss per share 0.05p (2005: 0.17p) The basic loss per ordinary share is based on the Group's loss for the sixmonths of £208,000 (2005: £602,000) divided by the weighted average number ofshares in issue. The weighted average number of shares in issue during theperiod was 388,662,000 (2005: 347,750,000). 6. DEFERRED INCOME Deferred income has increased substantially during the half year. Deferredincome arises when sales invoices have been issued to clients but the workcovered by the invoices has not been completed at the end of the accountingperiod. Deferred income will be credited to turnover once the invoiced work iscomplete. This information is provided by RNS The company news service from the London Stock Exchange