Sareum Regulatory News (SAR)

29 Mar 2005 07:00

Sareum Holdings PLC29 March 2005 For immediate release Tuesday 29 March SAREUM HOLDINGS PLC ("Sareum" or the "Company") FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004 Sareum Holdings plc (AIM: SAR), the structure-based drug discovery and servicesbusiness, is pleased to announce its financial results for the six month periodended 31 December 2004. Business Highlights to date: • Successful flotation on AIM - October 2004• Collaborative agreement with Inpharmatica - November 2004• Collaboration with Millennium Pharmaceuticals, Inc - November 2004• Drug discovery collaboration with EiRx Therapeutics plc - December 2004• Collaboration with Cancer Research Technology Limited - December 2004• Collaboration with undisclosed UK pharmaceutical company - December 2004 Dr Tim Mitchell, CEO of Sareum Holdings plc, said: "Our debut as a publiclyquoted company has been a successful one. Since joining the AIM Market we haveannounced several drug discovery and fee-for-service collaborations. Ourbusiness development activities are expanding, we have fully equippedlaboratories in Cambridge and together with our strong cash position, I believeSareum is well positioned for a healthy year ahead." For further information please contact: Sareum Holdings plc 01223 497700Tim Mitchell, Chief Executive Officer Buchanan Communications 020 7466 5000Tim Anderson, Mark Court, 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 inflammation and to provide a range of drugdiscovery services to the pharmaceutical industry. Sareum's unique approach aimsto halve the time it takes to discover new drug candidates. Structure-based drug discovery involves the determination of a disease causingprotein's three-dimensional structure. Once the structure is known, novelchemical entities are designed to 'lock-in' to the protein with the aim ofreversing or arresting a disease's progression. Sareum's approach to structure based drug discovery is to produce multiplerecombinant proteins primarily through a baculovirus expression system;determine their structure using x-ray crystallography; and then use theCompany's computational chemistry expertise to create virtual, focused librariesof new chemical entities designed to interact with the target protein. Sareumthen uses its high-throughput medicinal chemistry platform to rapidly synthesisethese molecules and develop the most promising into potential drug candidates. Sareum offers its accelerated drug discovery capabilities on a fee basis to thepharmaceutical and biotechnology industries. Sareum intends to license out itsinternally generated drug candidates at the Phase I or Phase II clinical trialsstage. 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 2004 Chairman's Statement Sareum Holdings plc has made a confident and successful start to its firstperiod of trading. In addition to our flotation, we moved into purpose-fittedlaboratories and announced an important series of collaborations in drugdiscovery and service revenue generation. The highlight of the last six months was our admission to the AIM market onOctober 11th, successfully placing 100,000,000 ordinary shares to raise £1.75million net of expenses. We are using this money to continue funding ourin-house drug discovery activities and to provide working capital to develop ourrevenue-generating service businesses. Our in-house drug discovery capability was significantly enhanced in December bythe collaboration with EiRx Therapeutics plc. In this shared-risk agreement,Sareum will use its structure-based drug discovery expertise to rapidly discoverand develop novel cancer therapies effective against proprietary gene targetsidentified by EiRx. We aim to licence out any successful results of thiscollaboration to larger pharmaceutical companies once initial proof-of-conceptin patients has been demonstrated. Discovering and developing drug moleculesthat interact with novel therapeutic targets remains the Company's highestpriority. We have made better than expected progress in obtaining revenue-generatingservice collaborations, with the announcement of four agreements. The first ofthese, with Inpharmatica Ltd., a privately-held UK drug discovery company, is toexpress and determine the structures of a series of novel, genomics-derivednuclear hormone receptor targets. This collaboration makes full use of ourleading capabilities in high-throughput protein expression. Another agreement was with Millennium Pharmaceuticals Inc, the parent companyfrom which the Sareum team emanated. This is a very important collaboration forus. As well as the revenues generated, it provides a positive validation of ourcapabilities by the company in which much of our platform was developed. We also announced fee-for-service agreements with Cancer Research TechnologiesLtd and another unnamed pharmaceutical company. The latter collaboration hasprogressed extremely well, and we are expecting to achieve success milestonesahead of schedule. We are actively expanding our business development activities worldwide. Inaddition to strengthening the in-house business development team, we haveappointed a consultant to assist our efforts in Europe and the USA, as well asengaging representatives in Japan, where the Sareum team are well-known. We moved into our fully equipped laboratories south of Cambridge in Septemberand have therefore been fully operational for only four months of the six monthsof this period. We have established a highly experienced Scientific AdvisoryBoard chaired by Professor Dave Tapolczay and including Professor Rod Hubbardand Dr Harry Finch. We have also successfully recruited the research staffrequired to deliver our plan. During this period, revenues of £82,000 have been recognised from fee-generatingresearch services. This figure is close to our own internal budget forecast andreflects the fact that work on these collaborations were initiated close to theend of this period. Most of the revenues from these collaborations willtherefore be recognised in the next trading period. The loss for the period was£613,000 With a healthy pipeline, Sareum expects to exceed its own internal revenueforecast for this year. Careful management of costs has resulted in a cash burnsome 29% below the forecast level. This has resulted in losses that were 36%below the levels budgeted and consequently, a stronger than expected cashposition. Cash at bank and in hand amounted to £1,242,000 at 31 December 2004.This creditable performance reflects the commitment of the Board and the entireSareum team to generate solid shareholder value and bodes well for the future. Dr Paul Harper Chairman Sareum Holdings plc Sareum Holdings plc Unaudited Consolidated Profit & Loss Account for the half year ended31 December 2004 Note Half Year to 31 Dec 2004 Unaudited £'000 Turnover 82 Cost of sales (342) Gross loss (260) Administrative expenses (358) Operating loss (618) Interest receivable and similar income 12Interest payable and similar charges (7) Loss on ordinary activities before taxation (613) Tax on loss on ordinary activities - Loss on ordinary activities after taxation (613) Loss per share (pence) Basic and diluted 4 0.2p Sareum Holdings plcUnaudited Consolidated Balance Sheet as at 31 December 2004 31 December 2004 Unaudited Note £'000 Fixed assets Tangible assets 813 Intangible assets 1,014 1,827 Current assets Debtors 192 Cash at bank and in hand 1,242 1,434 Creditors: amounts falling due within one year (197) Net current assets 1,237 Total assets less current liabilities 3,064 Creditors: amounts falling due after more than one year (126) Net assets 2,938 Capital and reserves Called up share capital 5 87 Share premium account 2,594 Fair value reserve 7 870 Profit and loss account (613) Equity shareholders' funds 6 2,938 Sareum Holdings plcUnaudited Consolidated Cash Flow Statement for the half year ended31 December 2004 Half year to 31 December 2004 Unaudited £'000 Net cash outflow from operating activities (1,285) Returns on investments and servicing of financeInterest received 12Interest paid (7) Net cash inflow from returns on investments and servicing of 5finance Capital expenditurePurchase of tangible fixed assets (410) Net cash outflow from capital expenditure (410) AcquisitionsNet cash from purchase of subsidiary undertaking 142 Net cash inflow from acquisitions 142 FinancingIssue of equity share capital 2,450Less: share issue expenditure (249)Convertible loan proceeds 450Receipt from borrowings 150Repayment of borrowings (11) Net cash inflow from financing 2,790 Increase in cash 1,242 Reconciliation of operating loss to net cash outflow from operating activities Half year to 31 December 2004 Unaudited £'000 Operating loss (618) Depreciation and amortisation 59 Increase in debtors (100) Decrease in creditors (626) Net cash outflow from operations (1,285) Reconciliation of net cash flow to movement in net funds 31 December 2004 Unaudited £'000 Increase in cash 1,242 Cash inflow from financing (589) Change in net funds resulting from cash flows 653 Conversion of convertible loan 450 Net funds at 31 December 2004 1,103 Analysis of changes in net funds Conversion of At 31 Cash convertible December flow loan 2004 £'000 £'000 £'000 Cash in hand and at bank 1,242 - 1,242 Loan (139) - (139) Convertible loan (450) 450 - 653 450 1,103 SAREUM HOLDINGS PLC NOTES TO THE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004 1. FINANCIAL INFORMATION The results for the six months ended 31 December 2004 are unaudited and do notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. They have been drawn up using the following accounting policies and principals: Basis of Accounting The financial statements have been prepared under historical cost convention andin accordance with applicable accounting standards. Basis of Consolidation The financial statements consolidate those of the company and of its subsidiaryundertakings drawn up to 31 December 2004. Acquisitions of subsidiaries aredealt with by the acquisition method of accounting. Revenue Recognition The revenue shown in the profit and loss account relates to amounts invoicedduring the period in respect of the provision of research and developmentservices and the hire of equipment. The revenue recognised represents the workcompleted within the period. Research and Development Research and development expenditure is written off in the period in which it isincurred. Goodwill Goodwill arising on consolidation, representing the excess of the fair value ofthe consideration given over the fair value of the identifiable net assetsacquired, is capitalised and is amortised on a straight line basis over itsestimated useful economic life of 10 years. Fixed Assets All fixed assets are initially recorded at cost. Depreciation Depreciation is calculated so as to write off the cost of an asset, less itsestimated residual value, over the useful economic life of that asset asfollows: Computer equipment - 3 years straight line basisLaboratory equipment - 4 years straight line basisFixtures and fittings - 4 years straight line basisLeasehold improvements - the life of the lease Amortisation of intangibles Amortisation is calculated so as to write off the cost of an asset, less itsestimated residual value, over the useful economic life of that asset asfollows: Intellectual property - 5 years straight line basis 2. TAXATION No liability arises for corporation tax for the period ended 31 December 2004.No account has yet been taken of Research and Development tax credits. 3. DIVIDENDS The directors do not propose the payment of a dividend in respect of the sixmonths ended 31 December 2004. 4. LOSS PER SHARE Basic and diluted loss per share 0.2p The basic loss per ordinary share is based on the Group's loss for the sixmonths of £613,000 divided by the weighted average number of shares in issue.The weighted average number of shares in issue during the period was246,500,932. 5. SHARE CAPITAL The issued capital at 31 December 2004 was 347,750,000 ordinary shares of 0.025peach. On 5 July 2004 the authorised share capital of the Company was increased to£10,000,000 by the creation of 900,000,000 ordinary shares of 1p. On 16September 2004, each 1p share was subdivided into 40 shares of 0.025p each. On 5 July 2004 the company issued 3,000,000 ordinary 1p shares at par and577,498 1p shares at 30p per share. On 16 September 2004 these shares weresubdivided into 143,099,920 ordinary shares of 0.025p. On 20 September 2004,36,892,080 ordinary shares of 0.025p were issued at 0.75p per share. On 20September 2004, £450,000 loan notes were converted at 0.75p per share into60,000,000 ordinary shares of 0.025p each. On 11 October 2004 100,000,000 ordinary shares of 0.025p were issued at 2p pershare on the AIM float and a further 7,750,000 ordinary shares were issued at 2pper share. 6. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS £'000Loss for the period (613)Issue of shares 3,085Issue costs (404)Fair value of shares issued 870Shareholders' funds at 31 December 2004 2,938 SAREUM HOLDINGS PLC NOTES TO THE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004 (CONTINUED) 7. ACQUISITION ACCOUNTING On 5 July 2004 3,000,000 ordinary shares of 1p were issued to acquire the totalissued share capital of Sareum Limited. The fair value of the shares issued was£900,000 and the fair value of the net liabilities acquired was £88,000resulting in goodwill of £988,000 and a fair value reserve of £870,000. FOR FURTHER INFORMATION PLEASE CONTACT SAREUM HOLDINGS PLCTim Mitchell, Chief Executive Officer Tel: 01223 497700 BUCHANAN COMMUNICATIONSMary-Jane Johnson Tel: 0207 466 5000 This information is provided by RNS The company news service from the London Stock Exchange