Sareum Regulatory News (SAR)

19 Sep 2005 07:00

Sareum Holdings PLC19 September 2005 For immediate release 19 September 2005 SAREUM HOLDINGS PLC ("Sareum" or the "Company") RESULTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2005 Sareum Holdings plc (AIM: SAR), the specialist structure-based drug discoveryand services business, is pleased to announce its results for the twelve monthperiod ended 30 June 2005. • Financial highlights: - Successful flotation on AIM, raising £1.75M net - Revenues of £332,335 (2004: £21,050) - Cash position over £100,000 better than budget • Business highlights: - First in-house drug discovery collaboration announced - Four revenue generating collaborations announced - World-wide business development established • Post year end highlights: - Additional in-house drug discovery collaboration signed - Continued success in generating new business - "Crystal Bank" protein structure resource launched Dr Paul Harper, Chairman of Sareum Holdings plc, said: "Sareum has enjoyed aproductive and successful first year. The Company and its management has madegreat progress and has matched the strategy and budget set out to date. TheBoard envisages strong growth in both research activities and the generation ofrevenues for the year ahead. The Board and the entire Sareum team remains dedicated to generating shareholdervalue. The Sareum directors continue to work to develop the Company'sstructure-based drug discovery and services business and remain confident aboutits future prospects." 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 Results for the twelve months ended 31 June 2005 Chairman's Statement Sareum Holdings plc has enjoyed a successful first full financial year oftrading. The Company's primary purpose is the discovery of novel drugs for thetreatment of cancer and in addition provides a range of specialist drugdiscovery services to the pharmaceutical industry to generate the revenuesrequired to support our research programmes. The Company listed on the AIMMarket of the London Stock Exchange in October 2004 and raised £1.75 million(net of expenses). Sareum has, this year, relocated its business topurpose-fitted state-of the-art laboratories in Cambridge and has built a teamof highly skilled scientists. Sareum has created a unique approach to drug discovery that is capable ofreducing by up to half the time it takes to discover drug candidates forpre-clinical and clinical trials. The Company now has the combination ofresources and skills in structural biology, computational chemistry andhigh-throughput chemical synthesis required to deliver on our business plan. The Company has made good progress in its in-house drug discovery programme, thenumber of available therapeutic targets being enhanced through collaboration. Inaddition, we have signed a number of revenue generating deals with European andUS drug discovery companies. Our in-house drug discovery capability has flourished during the year. InDecember 2004 Sareum entered into its first such agreement with EiRxTherapeutics plc, a drug discovery company developing targeted therapies forcancer. This collaboration has made substantial progress to date. In thisshared-risk agreement, Sareum is using its structure-based drug discoveryexpertise to rapidly discover and develop novel cancer therapies effectiveagainst gene targets identified by EiRx. Sareum aims to licence out successfulcandidate drugs to larger pharmaceutical companies once initial proof-of-concepthas been demonstrated. Discovering and developing drug molecules that interactwith novel therapeutic targets remains the Company's highest priority. Sareum made good progress in obtaining revenue-generating servicecollaborations, with the announcement of four agreements. Our first contractswere signed soon after flotation. The first of these, with Inpharmatica Ltd., aprivately-held UK drug discovery company, was to express and determine thestructures of a series of novel, genomics-derived nuclear hormone receptortargets making full use of our leading capabilities in high-throughput proteinexpression. A contract was signed with Millennium Pharmaceuticals Inc, the parent companyfrom which the Sareum team emanated. This was important since it providedpositive validation of Sareum's capabilities by the company in which much of ourtechnology platform was originally developed. We also announced a fee-for-service agreement with Cancer Research TechnologyLtd in December 2004 which was extended in April 2005 for a further six months. A fee-for-service agreement was also announced in December 2004 with a quoted UKpharmaceutical company to provide protein structure determination services thatwill support the client's research against diseases of the central nervoussystem. This collaboration represented a significant new deal for Sareum and inJune 2005 Sareum received the success milestone payment. In May 2005 Sareum announced a major improvement in its research capability. Wewere the first UK company to install a new generation of X-ray equipment forvisualising protein structures in 3-D. This instrument significantly improvesSareum's ability to determine protein structure which is a key part of itsunique drug discovery platform. Acquisition of this state-of-the-art technologydemonstrates Sareum's continuing commitment to be on the leading-edge of drugdiscovery. Progress to date has matched the strategy and budget for the year. All theindicators for the next fiscal period point to strong positive growth in bothresearch activities and the generation of revenues to support the research. Financials During this period revenues amounted to £332,335, with approx. 75% of thisfigure being earned in the second half of the year, reflecting the continuingincrease in business development activity throughout the year. Losses for theperiod were £1,243,758, representing a loss per share of 0.42p. Careful controlof spending resulted in a cash position of £441,435 that was approx. £100,000better than budget. On 4 March 2005 the Board of Sareum confirmed that it was in discussions with aparty regarding an offer being made for the Company. On 25 April, Sareumannounced that these discussions had been terminated. Outlook Sareum has enjoyed a productive and successful year. This good progress andsolid performance reflects the dedication of the Board and the entire Sareumteam to shareholder value. The Directors continue to work to develop theCompany's structure-based drug discovery programmes and services business andremain confident about future prospects. 19 September 2005Dr Paul HarperChairman Sareum Holdings plc Chief Executive's Review Strategy and Business Model Sareum's strategy is to support in-house research into novel cancer therapies bygenerating revenues through the provision of specialist drug discovery servicesto the pharmaceutical industry. Our business model comprises two main components: - Investment in proprietary research into novel cancer therapeutics to generate drug candidates for partnering with pharmaceutical companies at the early clinical or pre-clinical trials stage. We are collaborating with leading cancer research companies, enabling us to share the risks involved in drug discovery and to access the specialist biology capabilities available from our chosen partners. We entered our first in-house drug discovery collaboration with EiRx Therapeutics plc in December 2004 and subsequently announced a major collaboration with the Institute of Cancer Research and Cancer Research Technology. During the next period we will continue to apply our unique and innovative structure-based approaches in these programmes to rapidly optimise the lead compounds currently under investigation. We expect to file drug patent applications during the coming year. - Generation of revenues through the provision of specialist drug discovery services to pharmaceutical company customers. During this period we signed collaborations with Inpharmatica Ltd., Millennium Pharmaceuticals Inc., Cancer Research Technology Ltd. and a quoted UK pharmaceutical company. Subsequently, we entered into a collaboration with Almirall Prodesfarma S.A. We recently announced "Crystal Bank", a collection of therapeutically relevant proteins that we are using to accelerate the discovery of potential drug candidates. Crystal Bank demonstrates our ability to successfully solve the structures of important target proteins in drug discovery. It is also providing a significant source of new revenues. We have been successful in signing revenue generating collaborations with companies in Europe and the USA. Our unique technology platforms and experienced scientific staff, combined with our integrated chemistry and biology capabilities have enabled us to meet and often exceed our customers' expectations. As well as leading to repeat business, this track record provides solid evidence of our capabilities. This in turn has enhanced our ability to sign new collaborations and extend our customer base. We will continue to build on this promising business development record. In addition to our ongoing activities in Europe and the USA we are now active in Japan, a major market for outsourced pharmaceutical research. Objectives for the coming year We look forward to successfully building on the solid foundation created in ourfirst trading year. Our primary objective is to advance our in-house drug discovery pipeline todeliver drug candidates positioned to attract lucrative partnering deals withpharmaceutical companies. We will continue to advance these programmes, filingdrug patent applications during the coming year, and developing drug candidatesfor pre-clinical studies in 2007/8. Given the time-frame to achieve pre-clinical status from our current programmes,we intend to obtain an interest in a cancer research program that issignificantly nearer to the clinic, either by in-licence, collaboration oracquisition. To generate the revenues to support our current drug discovery pipeline, we willcontinue to advance our worldwide business development pipeline. We aim toexpand our current customer base, secure repeat business from our existingclients and secure larger collaborations with major pharmaceutical companies. Welook forward to announcing successful results from these developingrelationships. 19 September 2005Dr Tim MitchellCEO Sareum Holdings plc Consolidated profit and loss accountFor the period ended 30 June 2005 2005 2004 £ £ £ £Turnover 332,335 21,050 Cost of sales 798,599 34,747Gross loss (466,264) (13,697) Administrative expenses 912,350 104,240Operating loss (1,378,614) (117,937) Interest receivable 28,846 36Interest payable (13,786) - 15,060 36Loss on ordinary activities before (1,363,554) (117,901)taxation Tax on loss on ordinary activities (119,796) -Loss on ordinary activities after (1,243,758) (117,901)taxation Basic and diluted earnings per share (0.0042) (0.7378) The loss on ordinary activities before taxation arises from the Group'soperations all of which are continuing. There are no recognised gains or losses other than as stated in the profit andloss account. During the period the Company acquired a subsidiary company, Sareum Limited. Theprofit and loss account has been prepared using merger accounting principles andis presented as if the Group had been in existence throughout both the currentand prior periods. Further information is given in the notes on accountingpolicies. As required by the Companies Act 1985 this profit and loss account also coversthe first statutory accounting period of Sareum Holdings plc from its date ofincorporation on 7 June 2004 to 30 June 2005. This includes the results for themerged group solely from the date of the merger. Consolidated balance sheetAs at 30 June 2005 2005 2004 £ £ £ £Fixed assets Intangible assets 23,498 29,497Tangible fixed assets 964,455 458,452 987,953 487,949Current assets Debtors 362,191 92,617Cash at bank 441,435 141,628 803,626 234,245Creditors: amounts falling due 378,762 810,068within one yearNet current assets 424,864 (575,823)Total assets less current 1,412,817 (87,874)liabilitiesCreditors: amounts falling due after 93,154 -more than one yearNet assets 1,319,663 (87,874) Capital and reserves Called up share capital 86,937 30,000Share premium account 2,594,358 27Merger reserve 27 0Profit and loss account (1,361,659) (117,901)Equity shareholders' funds 1,319,663 (87,874) Company balance sheetAs at 30 June 2005 2005 £ £Fixed assetsInvestment in subsidiary 30,000Current assetsDebtor - subsidiary 2,549,971Cash at bank 0Net current assets 2,549,971Net assets 2,579,971 Capital and reservesCalled up share capital 86,937Share premium account 2,594,358Profit and loss account (101,324)Equity shareholders' funds 2,579,971 Consolidated cash flow statementFor the period ended 30 June 2005 2005 2004 £ £Net cash (outflow)/inflow from operating activities (1,553,557) (5,022) Returns on investment and servicing of finance 15,060 36Capital expenditure (880,983) (8,416)Cash flow before financing (2,419,480) (13,402) Financing 2,719,287 155,030Increase in cash 299,807 141,628 NOTES TO THE FINANCIAL STATEMENTS 1 General The financial information set out above does not constitute statutory accountswithin the meaning of s.240 of the Companies Act 1985. 2 Basis of accounting The financial statements have been prepared under the historical cost conventionand in accordance with applicable UK accounting standards. 3 Earnings per share The basic and diluted earnings per share is calculated on the loss after tax of£1,243,758 and a weighted average number of shares of 295,115,883 Thecalculation of diluted earnings per share takes account of share options whichhave vested. The 2004 comparative figure is based on the loss per share of29.51p reported by the Company's operating subsidiary, Sareum Limited in theiraccounts for the period 12 August 2003 to 30 June 2004. As this was based on 1pshares an adjustment has been made, by dividing by 40, to provide a moremeaningful comparison based on notional 0.0025p shares. This information is provided by RNS The company news service from the London Stock Exchange