Synairgen Regulatory News (SNG)

9 Mar 2005 07:01

Synairgen plc09 March 2005 9 March 2005 Interim Results for the six months ended 31 December 2004 Synairgen plc ('Synairgen' or the 'Company'), the drug discovery company focusedon identifying the underlying causes and discovering new treatments for asthmaand chronic obstructive pulmonary disease ('COPD'), today announces its InterimResults for the six months ended 31 December 2004. Financial highlights • Successful flotation in October 2004 on the Alternative Investment Market which raised £10.0 million for the Company (£9.0 million net of expenses) • Turnover was £58k (29 weeks ended 31 December 2003: £nil) • Operating loss for the period was £390k (29 weeks ended 31 December 2003: loss of £67k) in line with management expectations • Net funds at 31 December 2004 of £9.1 million (31 December 2003: £0.6 million) Operational highlights • Collaboration signed with an undisclosed North American biotechnology company in July 2004 • Patent application for growth factor filed by University of Southampton in September 2004 and exclusively licensed to Synairgen • Executive management appointments and recruitment of scientific staff to meet partnership and proprietary programme demands • Post period-end, collaboration agreement signed with Centocor, a subsidiary of Johnson & Johnson (see separate announcement) Commenting on the results, Simon Shaw, Chairman of Synairgen, said:"Our priority, since IPO, has been to pursue our proprietary research programmesand build on our partnerships and collaborative programmes. We are making goodprogress in all areas at this early stage and look forward to acceleratingthrough 2005." -Ends- For further information, please contact: Synairgen Tel: 02380 512 800Richard Marsden Hogarth Partnership Tel: 020 7357 9477Melanie Toyne-Sewell / Georgina Briscoe CHAIRMAN'S STATEMENT INTRODUCTION This is Synairgen's first set of Interim Results following its initial publicoffering ('IPO') on the Alternative Investment Market ('AIM') on 26 October2004. As part of the IPO, Synairgen raised £9.0 million net of expenses which weintend to use on enhancing the Company's research capabilities, investing in ourcurrent proprietary programmes and developing our Biobank of disease specificsamples. Our focus is on identifying and out-licensing new pharmaceutical products forasthma and chronic obstructive pulmonary disease ('COPD'). Over the first sixmonths of the financial year, we have focused on progressing our proprietary andcollaborative programmes. Proprietary Programmes • Interferon Beta ('IFN') Following the patent filing in March 2004 describing a novel use of IFN inprotecting severe asthmatics from exacerbations induced by the common coldvirus, we have built on our research work. We have mapped out a clinical trialprogramme, culminating in a proof of concept clinical trial. A UK Clinical TrialAuthorisation application for inhaled IFNss will be made during the summer of2005. • Growth Factor In September 2004, we completed initial research and managed the filing of apatent describing a novel growth factor with potential utility in asthma. Wecontinue to research the product with a view to establishing an appropriatedevelopment path during 2005. CollaborationsSynairgen started the period under review with collaboration agreements in placewith Merck Frosst Canada & Co and Cambridge Antibody Technology Limited. In July2004, the Company entered into a third agreement with a major unnamed USbiotechnology company. Post period-end, in March 2005, Synairgen announced a newcollaboration with Centocor, Inc. (a subsidiary of Johnson & Johnson). Synairgencontinues to discuss possible collaborations with both existing collaboratorsand new potential partners. BiobankIn order to recreate the asthmatic and COPD lung in the laboratory, we arebuilding a Biobank comprising samples of tissue from volunteers who are screenedand characterised prior to donating samples. The extent of work on the Biobank -collecting and storing samples and developing further our in vitro models usingdisease-derived cells - has increased significantly as a result of the fundsraised at flotation. To underpin our projects, collaborations and Biobank, and to aid future growth,we have recruited additional personnel - both at the executive and thescientific levels, whilst retaining our "lean" operating philosophy. FINANCIAL REVIEW Flotation on AIMThe IPO raised £10 million (£9.0 million after expenses) through the issue of7,692,308 shares at a placing price of 130p. 400,000 shares were also placed onbehalf of Southampton Asset Management Ltd to meet institutional demand for theshares. The market capitalisation of the Company at the placing price amountedto £28.2 million. Profit and loss accountRevenue for the six months to 31 December 2004 was £58k (29 weeks ended 31December 2003: £nil) and was generated from three contracts, two of which willgenerate further revenue in the second half of the financial year. The operatingloss for the period was £390k (2003: loss of £67k), in line with ourexpectations. Research and development expenditure increased from £38k to £194kas the Company built its scientific team up to eight staff and progressed awider portfolio of research projects. The increase in other administrative costsfrom £29k to £204k reflects the recruitment of additional senior managementpersonnel and the scaling up of the Company's activities. Interest receivableincreased from £4k to £83k on account of the flotation funds raised. Theretained loss was £307k (2003: loss of £63k) and the loss per share was 1.9p(2003: loss of 0.7p). Balance SheetAt 31 December 2004, net assets amounted to £9.1 million (31 December 2003: £0.6million) including cash and deposit balances of £9.1 million (2003: £0.6million). OUTLOOK Synairgen has made good early progress in the two months after its flotation andhas continued to develop the business through the first quarter of 2005. We areparticularly pleased to announce our fourth collaboration with a new partner,Centocor, since commencing operations in summer 2003. We look forward to makingfurther planned progress on our collaborations and proprietary programmesthrough the rest of this year. Simon ShawChairman Unaudited Consolidated Profit and Loss Accountfor the six months ended 31 December 2004 Proforma Proforma Proforma Six months 29 weeks 55 weeks ended ended ended 31 December 31 December 30 June 2004 2003 2004 Notes £000 £000 £000 Turnover 58 - 82Cost of sales (50) - (18) --------- --------- ------- Gross profit 8 - 64 --------- --------- ------- --------- --------- -------Administrative expenses---------------------- ------ --------- --------- -------Research and development (194) (38) (123)expenditureOther (204) (29) (107)---------------------- ------ --------- --------- -------Total (398) (67) (230) --------- --------- ------- Operating loss (390) (67) (166)Interest receivable 83 4 13 --------- --------- ------- Loss on ordinary activities beforetaxation (307) (63) (153)Tax on loss on ordinary - - -activities --------- --------- ------- Loss on ordinary activities aftertaxation and retained loss for theperiod (307) (63) (153) ========= ========= ======= Loss per ordinary shareBasic and diluted loss per share(pence) 2 (1.94)p (0.70)p (1.52)p Unaudited Consolidated Balance Sheetas at 31 December 2004 Proforma Proforma 31 December 31 December 30 June 2004 2003 2004 Notes £000 £000 £000Fixed assetsIntangible assets 7 - 4Tangible assets 135 - 145 --------- -------- --------- 142 - 149Current assetsDebtors 162 5 77Investments: short-term deposits 9,046 553 350Cash at bank and in hand 48 36 57 --------- -------- --------- 9,256 594 484Creditors: amounts falling duewithin (265) (34) (163)one year --------- -------- --------- Net current assets 8,991 560 321 --------- -------- --------- Total assets less current 9,133 560 470liabilities ========= ======== ========= Capital and reservesCalled up share capital 217 113 113Share premium account 8,893 - -Merger reserve 483 510 510Profit and loss account (460) (63) (153) --------- -------- --------- Equity shareholders' funds 3 9,133 560 470 ========= ======== ========= Unaudited Consolidated Cash Flow Statementfor the six months ended 31 December 2004 Proforma Proforma Proforma Six months 29 weeks 55 weeks ended ended ended 31 December 31 December 30 June 2004 2003 2004 Notes £000 £000 £000 Net cash outflow from operatingactivities 4 (290) (38) (78) Returns on investments andservicing of financeInterest received 16 4 13 Capital expenditure and financialinvestmentPurchase of intangible fixed (4) - (4)assetsPurchase of tangible fixed assets (5) - (147) --------- --------- ------- Net cash outflow from capitalexpenditure (9) - (151) --------- --------- ------- Net cash outflow beforemanagement of (283) (34) (216)liquid resources and financing Management of liquid resourcesIncrease in short-term deposits (8,696) (553) (350) FinancingIssues of ordinary share capital 77 1 1Share premium received on shareissues 9,923 649 649Share issue costs (1,030) (27) (27) --------- --------- ------- Cash inflow from financing 8,970 623 623 --------- --------- ------- (Decrease)/Increase in cash in 5 (9) 36 57period ========= ========= ======= Notes to the Financial Statementsfor the six months ended 31 December 2004 1. Basis of preparation Synairgen plc was incorporated on 16 September 2004. On 11 October 2004Synairgen plc acquired the entire issued share capital of Synairgen ResearchLimited by issuing 14,000,000 ordinary shares of 1p each on the basis of issuing100 shares for each ordinary share of 1p each held in Synairgen ResearchLimited. The Directors have accounted for this group reconstruction using themerger accounting principles as set out in Financial Reporting Standard 6.Accordingly proforma financial information has been prepared to show theposition as if Synairgen plc had been in existence and the parent of SynairgenResearch Limited throughout the current and prior periods. The proformainformation has been compiled by taking the results of the group before thegroup reconstruction and adjusting for the capital structure of the new group. The Interim Report was approved by the Board of Directors on 8 March 2005. Thefinancial information for the six months ended 31 December 2004 is unaudited,but has been reviewed in accordance with Auditing Practices Board guidance byBDO Stoy Hayward LLP, whose report is included on page 9. The financial information for the period to 30 June 2004 contained in thisInterim Report does not constitute statutory accounts of either Synairgen plc orSynairgen Research Limited within the meaning of Section 240(5) of the CompaniesAct 1985. The financial information for the 55 weeks ended 30 June 2004 isderived, on the basis described in detail above, from the financial statementsof Synairgen Research Limited for the period 10 June 2003 (date ofincorporation) to 30 June 2004 which will be filed with the Registrar ofCompanies. The auditors have reported on the financial statements of SynairgenResearch Limited for the period to 30 June 2004; their report was unqualifiedand did not contain statements under the Companies Act 1985, s 237(2) or (3). 2. Loss per ordinary share Six months 29 weeks 55 weeks ended ended ended 31 December 31 December 30 June 2004 2003 2004 Loss on ordinary activities aftertaxation (£000) (307) (63) (153)Weighted average number of ordinaryshares in issue 15,817,960 8,953,777 10,075,980 The loss attributable to ordinary shareholders and weighted average number ofordinary shares for the purpose of calculating the diluted earnings per ordinaryshare are identical to those used for basic earnings per share. This is becausethe exercise of share options would have the effect of reducing the loss perordinary share and is therefore not dilutive under the terms of FinancialReporting Standard 14. The comparative figures are proforma based on the numberof shares that would have been in issue had the capital structure of the newparent company always been in place. 3. Reconciliation of movements in shareholders' funds Share capital Share premium Merger reserve Profit and loss Shareholders' account account funds £000 £000 £000 £000 £000 At 10 - - - - -June2003Issue ofordinaryshares 113 - 510 - 623Loss forthe - - - (63) (63)period ------- ------- ------- ------- --------- At 31December 113 - 510 (63) 5602003Loss forthe - - - (90) (90)period ------- ------- ------- ------- --------- At 30June 113 - 510 (153) 4702004Issue ofordinaryshares 104 9,923 (27) - 10,000Shareissue - (1,030) - - (1,030)costsLoss forthe - - - (307) (307)period ------- ------- ------- ------- --------- At 31December 217 8,893 483 (460) 9,1332004 ======= ======= ======= ======= ========= The issue of 140,000 1p ordinary shares by Synairgen Research Limited prior toits acquisition by Synairgen plc has been restated to reflect the 100 for 1share for share exchange which was effected in October 2004. In accordance withthe principles of merger accounting the difference between the nominal value ofthe shares issued in the share exchange and sum of the amounts standing to theissued share capital and share premium accounts has been taken to a mergerreserve. 4. Reconciliation of operating loss to net cash outflow from operatingactivities Six months 29 weeks 55 weeks ended ended ended 31 December 31 December 30 June 2004 2003 2004 £000 £000 £000 Operating loss (390) (67) (166)Depreciation & amortisation 16 - 2Increase in debtors (18) (5) (77)Increase in creditors 102 34 163 --------- -------- --------- Net cash outflow from operatingactivities (290) (38) (78) ========= ======== ========= 5. Reconciliation of net cash flow to movement in net funds Six months 29 weeks 55 weeks ended ended ended 31 December 31 December 30 June 2004 2003 2004 £000 £000 £000 (Decrease)/Increase in cash in period (9) 36 57Increase in short-term deposits 8,696 553 350 ---------- --------- -------- Change in net funds resulting from cashflows and movement in net funds 8,687 589 407Net funds at start of period 407 - - ---------- --------- -------- Net funds at end of period 9,094 589 407 ========== ========= ======== Independent Review Report to Synairgen plc IntroductionWe have been instructed by the company to review the financial information forthe six months ended 31 December 2004 on pages 3 to 8. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation.Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibility forthis report to any other person or for any other purpose and we hereby expresslydisclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts.Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom by auditorsof fully listed companies. A review consists principally of making enquiries ofgroup management and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly we do not express an audit opinion on the financialinformation. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2004. BDO Stoy Hayward LLPChartered AccountantsSouthampton 8 March 2005 This information is provided by RNS The company news service from the London Stock Exchange