Sareum Regulatory News (SAR)

23 Feb 2006 07:01

Sareum Holdings PLC23 February 2006 For immediate release 23 February 2006 SAREUM HOLDINGS PLC ("Sareum" or the "Company") FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Sareum Holdings plc (AIM: SAR), the specialist structure-based drug discoveryand services business, is pleased to announce its financial results for the sixmonth period ended 31 December 2005. Business Highlights during period 1 July to 31 December 05: • Major in-house drug discovery collaboration with leading cancer centres• Crystal Bank protein structure resource launched• Four-fold increase in revenues to £361,000 plus a further £302,000 in deferred revenue; ahead of Board expectations• Four-fold reduction in cash outflow before financing• Multi-disciplinary drug discovery collaboration with Organon• New protein structure collaborations with international pharmaceutical companies. Post-period end highlights: • $5M Research collaboration with Idenix Pharmaceuticals• Exercise of £500,000 Put and Call option• Crystal Bank collaboration with UCB• Total current order book, depending on success, of £4 Million Dr Tim Mitchell, CEO of Sareum Holdings plc, said: "Sareum has enjoyed yetanother productive and successful period. The Company has enhanced its in-housedrug discovery and secured revenue-generating collaborations with a further sixinternational pharmaceutical companies. We continue to move closer to our goalof fully funding valuable cancer research programs from our sales revenues." For further information please contact: Sareum Holdings plc 01223 497700 Tim Mitchell, Chief Executive OfficerBuchanan Communications 020 7466 5000 Tim Anderson, Mary-Jane Johnson Notes for Editors About Sareum Holdings plc Sareum Holdings plc is a structure-based drug discovery business headquarteredin Cambridge, UK. Sareum Limited was formed in August 2003 to discover new drugsfor the treatment of cancer and to provide a range of drug discovery services tothe pharmaceutical industry. 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 of thestructure of the potential drugs and how they 'lock-in' to the protein permitsthe best potential drug to be discovered. Determining structure is a complextask and requires leading-edge equipment and experienced staff. Sareum'sapproach to structure determination is to produce multiple recombinant proteinsprimarily through a baculovirus expression system and to determine theirstructure using x-ray crystallography. When the structure is determined, the Company's innovative Template Screeningplatform is used to identify novel chemical starting material designed tointeract with the target protein. Sareum then uses its high-throughput medicinalchemistry platform to rapidly optimise these molecules and develop the mostpromising into potential drug candidates. Sareum provides its specialist drug discovery capabilities to partners in thepharmaceutical and biotechnology industries. The Company aims to successfullydeliver: Programmes for complete gene-to-candidate structure-based discovery;projects to accelerate or improve the productivity of specific activities; anddrug candidates for licensing at the Phase I or Phase II clinical trials stage. 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 2005 Chairman's Statement Sareum Holdings plc has enjoyed another successful trading period, building bothits in-house drug discovery and its service business with a series ofcollaborations with leading pharmaceutical research partners. The message isclear: Major international pharmaceutical companies are prepared to endorseSareum's technology platform by investing in research programmes to advancetheir own key programmes. Our in-house drug discovery was significantly enhanced by the announcement inJuly that the Company had established a joint research team with Cancer ResearchTechnology Ltd. and the Cancer Research UK Centre for Cancer Therapeutics at theInstitute of Cancer Research, to develop cancer treatments that are effectiveagainst tumours that are resistant to traditional therapeutics. The Institute ofCancer Research is one of the world's leading cancer research organisations andthus a prestigious partner for Sareum's in-house research, and thiscollaboration continues to progress on-track. We are currently working on anumber of cancer targets for our in-house programmes in addition to the jointventure activities. If all goes to plan we aim to have a candidate moleculeready to enter pre-clinical development within 12-18 months We have made better than expected progress in securing service collaborationsthat generate revenues to support our in-house research. In this period,agreements were reached with Almirall Prodesfarma, Infinity Pharmaceuticals andSchering AG. In addition to receiving research fees, success milestone paymentshave also been earned in all of these collaborations. Additionally, in December,collaborative agreements were entered into with Idenix Pharmaceuticals, Organonand Lundbeck. The collaboration with Organon represented Sareum's largestfee-for-service collaboration. It is the first programme to combine theCompany's expertise in its three key areas of protein structure determination,Template Screening and automated medicinal chemistry. The Crystal Bank protein structure resource was launched during the period. Thisprovides the Company with a source of additional revenue as well as being aneffective demonstration of Sareum's success in its core capability of proteinstructures determination. In November, we announced additions to the CrystalBank, increasing the number of therapeutically relevant proteins to 16. A numberof the collaborations referred to above are expected to provide additionalproteins to Crystal Bank. During this period, revenues of £361,000 have been recognised, representing amore than four-fold increase over the same period last year. In addition,pre-payments of £302,000 were received for collaborations signed in December,which will be recognised by the end of the current financial year. Thus thetotal contracted sales for this period are £662,000 and somewhat ahead of Boardexpectations. This brings the total amount earned by the Company, from itsservice activities since flotation in October 2004, to almost £1 Million. Withthe announcement in February 2006 of a second research collaboration with IdenixPharmaceuticals, inc. that has a value of up to US$ 5 Million, the Company'sorder book currently stands at £4 Million, depending on successful delivery. A focus on meeting (or exceeding) customer expectations to maximise the revenuepotential of each contract combined with careful management of costs hasresulted in a cash outflow before financing of £408,000. This is less than aquarter of that in the same period last year. The Company's short term cashposition is expected to improve substantially in H2 as the revenues fromexisting contracts and the additional revenues from the contracts signed inDecember flow through. This position was further underpinned by the £0.5Million put and call option exercised by Billam AG in February 2006. Sareum has demonstrated that it is able to considerably advance its in-houseresearch by developing programmes to plan whilst at the same time investing instrategic alliances to develop candidate drug molecules, increasing its revenuegenerating activities by more than fourfold. This is a creditable performanceand one that reflects the professionalism and commitment of the entire Sareumteam to excellence and to generating shareholder value. Dr Paul Harper Chairman Sareum Holdings plc Sareum Holdings plc Unaudited Consolidated Profit & Loss Accountfor the half year ended 31 December 2005 Unaudited Unaudited Audited Half Year to Half Year to Year ended 31 Dec 05 31 Dec 04 30 Jun 05 £'000 £'000 £'000 Turnover 361 82 332 Cost of sales (476) (342) (799) Gross loss (115) (260) (467) Administrative expenses (555) (358) (912) Operating loss (670) (618) (1,379) Interest receivable and similar income 3 12 29 Interest payable and similar charges (7) (7) (14) Loss on ordinary activities before taxation (674) (613) (1,364) Tax on loss on ordinary activities 72 - 120 Loss on ordinary activities after taxation (602) (613) (1,244) Loss per share (pence) Basic and diluted 0.2p 0.2p 0.4p Sareum Holdings plc Unaudited Consolidated Balance Sheetas at 31 December 2005 Unaudited Unaudited Audited 31 Dec 05 31 Dec 04 30 Jun 05 £'000 £'000 £'000Fixed assets Intangible assets 20 26 24 Tangible assets 857 813 964 877 839 988Current assets Debtors 469 192 363 Cash at bank and in hand 153 1,242 441 622 1,434 804 Creditors: amounts falling due within one year (403) (171) (320) deferred income (302) (26) (59) Net current assets (83) 1,237 425 Total assets less current liabilities 794 2,076 1,413 Creditors: amounts falling due after more than one year (77) (126) (93) Net assets 717 1,950 1,320 Capital and reserves Called up share capital 87 87 87 Share premium account 2,594 2,594 2,594 Merger reserve 0 0 0 Profit and loss account (1,964) (731) (1,361) Equity shareholders' funds 717 1,950 1,320 Sareum Holdings plcUnaudited Consolidated Cash Flow Statementfor the half year ended 31 December 2005 Unaudited Unaudited Audited Half year to Half year to Year to 31 Dec 05 31 Dec 04 30 Jun 05 £'000 £'000 £'000 Net cash outflow from operating activities (395) (1,285) (1,553)Returns on investments and servicing of finance (4) 5 15Capital Expenditure (9) (410) (881)Cash flow before financing (408) (1,690) (2,419)Financing 120 2,932 2,719Increase/(Decrease) in cash (288) 1,242 300 Reconciliation of operating loss to net cash outflow from operating activities Unaudited Unaudited Audited Half year to Half year to Year to 31 Dec 05 31 Dec 04 30 Jun 05 £'000 £'000 £'000 Operating loss (670) (618) (1,379)Depreciation and amortisation 120 59 159(Increase) in debtors (155) (100) (150)Increase/(Decrease) in creditors 310 (626) (184)Net cash outflow from operations (395) (1,285) (1,554) Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited Half year to Half year to Year to 31 Dec 05 31 Dec 04 30 Jun 05 £'000 £'000 £'000 Increase/(Decrease) in cash (288) 1,242 300Cash inflow/(outflow) from financing 54 (730) (298)Change in net funds resulting from cash flows (234) 512 2Conversion of convertible loan - 450 -Net funds at period start 143 141 141Net funds at period end (91) 1,103 143 Analysis of changes in net funds 1 Jul 05 Cash flow 31 Dec 05 £'000 £'000 £'000 Cash in hand and at bank 441 (288) 153Debt: due within one year (28) - (28) due after one year (93) 14 (79) finance lease agreements (177) 40 (137)Net funds 143 (234) (91) SAREUM HOLDINGS PLC NOTES TO THE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 1. FINANCIAL INFORMATION The results for the six months ended 31 December 2005 are unaudited and do notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The 30 June 2005 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 are detailed in the Company's 30 June 2005 Annual Report and Accounts. 3. TAXATION No liability arises for corporation tax for the period ended 31 December 2005. Research and Development tax credits are estimated to be £72,200 for the period. 4. DIVIDENDS The directors do not propose the payment of a dividend in respect of the six months ended 31 December 2005. 5. LOSS PER SHARE Basic and diluted loss per share 0.2p (2004: 0.2p) The basic loss per ordinary share is based on the Group's loss for the six months of £602,000 (2004: £613,000) divided by the weighted average number of shares in issue. The weighted average number of shares in issue during the period was 347,750,000 (2004: 246,500,932). 6. DEFERRED INCOME Deferred income has increased substantially during the half year. Deferred income arises when sales invoices have been issued to clients but the work covered by the invoices has not been completed at the end of the accounting period. Deferred income will be credited to turnover once the invoiced work is complete. 7. WORKING CAPITAL Under the arrangements put in place when the Company floated on AIM the Company has access to an additional £0.5 million of funds under a "put and call" option, which is exercisable on or before 28th February 2006. This information is provided by RNS The company news service from the London Stock Exchange