SUMM.L Regulatory News (SUMM)

29 May 2007 07:02

VASTox plc29 May 2007 VASTox plc ("VASTox" or "the Company") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2007 Oxford, UK, 29 May 2007 - VASTox plc (AIM: VOX), a leading UK biotechnologycompany, today announces its preliminary results for the year ended 31 January2007. A presentation to analysts will be held today at 09.30hrs at the offices ofEvolution Securities Limited, 100 Wood Street, London EC2V 7AN. Please contactMark Swallow, Valerie Auffray or Janine Hagan on 020 7638 9571 for furtherinformation. VASTox will also hold a webcast presentation, which can be accessed at VASTox'swebsite at www.vastox.com or at www.investorcalendar.com from 14:00hrs BST. Financial Highlights • Revenues increased 95% to £1.0 million (2005/06: £0.5 million) from over 25 ongoing service contracts • R&D Investment up to £2.9 million (2005/06: £1.0 million) • Post-tax loss of £3.0 million (2005/06: £1.1 million) • Successful placing in February 2006 raised £10.4 million before expenses to progress DMD programme • Cash of £18.3 million at 31 January 2007 (2005/06: £12.6 million) Operational Highlights (during 2006/07 and post year-end) • Drug discovery and development, and pharmaceutical services capabilities enhanced through three strategic acquisitions: o DanioLabs Ltd - for £15 million satisfied by the issue of shares (March 2007) o Dextra Laboratories Ltd - for £1.5 million satisfied by the issue of shares (March 2007) o Key assets of MNL Pharma Ltd - for £240,000 (December 2006) • Drug pipeline expanded significantly through acquisition and internal development and now includes: o Two clinical phase candidates acquired in the area of neuro-disorders o Four pre-clinical candidates in neuromuscular, oncology and ophthalmic diseases o Preclinical programmes progressing in neuromuscular and infectious diseases o New discovery programmes initiated in cancer and regenerative medicine • Two long-term drug discovery and development collaboration deals signed worth over a total of £650,000 (February 2007) • Royalty deal signed for carbohydrate drug development worth $450,000 and 5% of product sales (May 2007) • Board of Directors and Senior Management strengthened with several key appointments: o Barry Price, PhD appointed as Non-executive Chairman to replace Professor Stephen Davies who steps down to Non-executive Director o Richard Storer, DPhil appointed Chief Scientific Officer o Darren Millington, ACMA appointed Chief Financial Officer o James Taylor appointed Chief Commercial Officer o Colin Wall, PhD appointed Senior Independent Non-executive Director o Andy Richards, PhD appointed Non-executive Director in March 2007 o George Elliott, CA appointed Non-executive Director in April 2007 • Summit plc proposed as new company name to reflect the ambitions and aspirations of the enlarged Company while providing an identity that has the flexibility to accommodate future growth and development within the business. Commenting on the results, Steven Lee, Chief Executive of VASTox plc, said: "This has been an excellent year of achievement and growth for VASTox, duringwhich we have made significant progress towards our primary objective ofcreating long-term value for our shareholders. Over the past 18 months, throughstrategic acquisitions and internal development, we have built the foundationsof a strong company with a broad, high-quality drug pipeline and two innovativetechnology platforms, of which we are now world leaders. We have also nearlydoubled revenues from applying these technologies to partners' programmes andhave recently been able to strike higher-value, longer-term collaborative deals,which illustrates the strides our service business has made. The enlargedCompany is now well positioned to realise the potential within the business andto generate significant and sustainable value for shareholders over the comingyears." For more information please contact: VASTox Tel: +44 (0)1235 443951Steven Lee, PhD, Chief Executive Officer Mob: +44 (0)7766 913898Darren Millington, ACMA, Chief Financial Officer Mob: +44 (0)7787 825354 Citigate Dewe Rogerson Tel: +44 (0)207 638 9571Mark Swallow / David Dible / Valerie Auffray Mob: +44 (0)7903 737703 Evolution Securities Tel: +44 (0)207 7071 4300Tim Worlledge / Bobbie Hilliam / Neil Elliot About VASTox plc VASTox is a leading UK biotechnology company that discovers and developsproprietary new drugs. The Company's internal drug development programmes areunderpinned by its advanced chemistry and drug screening (chemical genomics)technology platforms, which it also provides on a collaborative orfee-for-service basis to the pharmaceutical industry. VASTox has a broad range of drug discovery programmes in the clinical,pre-clinical and discovery stages of development, which target serious diseaseswith a high unmet medical need. These therapeutic areas include neuro-disorders(neurodegenerative and neuromuscular), anti-infectives, ophthalmic diseases,oncology and regenerative medicines. VASTox's in-house drug development capabilities combine world-class expertise inboth medicinal and carbohydrate chemistry with high-volume, high-contentscreening using its proprietary zebrafish and fruitfly technologies (chemicalgenomics). These whole organism screens have the potential to dramaticallydecrease the time and cost of drug discovery and development by delivering datathat are highly predictive of the efficacy and toxicity of potential drugcompounds in humans. The company listed on the AIM market of the London Stock Exchange in October2004 - symbol: VOX This document contains "forward-looking statements" within the meaning of theU.S. Private Securities Litigation Reform Act of 1995. Forward-lookingstatements can be identified by words such as "anticipates", "intends", "plans","seeks", "believes", "estimates", "expects" and similar references to futureperiods, or by the inclusion of forecasts or projections. Forward-looking statements are based on the Company's current expectations andassumptions regarding our business, the economy and other future conditions.Because forward-looking statements relate to the future, by their nature, theyare subject to inherent uncertainties, risks and changes in circumstances thatare difficult to predict. The Company's actual results may differ materiallyfrom those contemplated by the forward-looking statements. The Company cautionsyou therefore that you should not rely on any of these forward-lookingstatements as statements of historical fact or as guarantees or assurances offuture performance. Important factors that could cause actual results to differmaterially from those in the forward-looking statements and regional, national,global political, economic, business, competitive, market and regulatoryconditions. CHAIRMAN'S REVIEW It gives me great pleasure to report on a very busy and productive 18 months forVASTox, and a period in which we believe the Company has reached a new stage ofdevelopment and growing maturity, having advanced out of its start-up phase.This transformation has been achieved both through impressive organic growth andthrough a focused acquisition strategy during this period. Our main objective is to create shareholder value. As a leading drug discoveryand development company, the acquisitions in March 2007 of the companiesDanioLabs Ltd (Cambridge), and Dextra Laboratories Ltd (Reading) plus theearlier acquisition of key assets of MNL Pharma Ltd (Aberystwyth), provideVASTox with world leadership in zebrafish chemical genomics and carbohydratechemistry as we endeavour to deliver on this objective. The Company now has substantial assets that it aims to leverage in differentways to deliver sustainable growth and maximise shareholder value. We believethat we have made great strides in this direction to date and that ourstrengthened position now will lead to further opportunities to accelerategrowth in the future. In summary, the Company has made great advances in developing its drug pipeline,enhancing its drug discovery and development capabilities, adding expertise andexperience at board, management and scientific levels, and boosting revenuegrowth of its pharmaceutical services. A significant impact of the activities we have undertaken is the building of anexciting pipeline of clinical, preclinical and discovery stage drug candidatesacross a range of therapeutic areas with high unmet medical need. Programmes in VASTox's core areas of expertise at this stage, includeneuro-disorders and infectious diseases, and are areas where we can call onconsiderable scientific and development knowledge to add value to ourprogrammes. Currently, we have lead candidates in clinical development targetingthe symptoms of Parkinson's disease and preclinical programmes in Duchennemuscular dystrophy and Spinal muscular atrophy. The Company's differentiatingexpertise in these areas will be used to develop candidates to an optimal pointbefore licensing or partnering out. By retaining a high equity stake in thefuture value of the programme, we are also looking to generate significantlong-term returns for shareholders. Programmes outside our core areas, including cancer, ophthalmology andregenerative medicine (stem cells), represent opportunities for attractive earlydeals to realise near-term value while retaining a stake in their longer-termpotential. Our first out-licensing opportunity is likely to be with our leadanticancer candidate, VOX14400, which we are planning to enter into Phase Iclinical trials in 2008. Underpinning the development of our pipeline as well as providing increasingrevenues, are VASTox's proprietary chemical genomics and substantial chemistrycapabilities. These capabilities have been significantly enhanced in terms ofexpertise, staff, facilities and capacity following the recent acquisitions.Furthermore, they have provided us with existing business, immediate revenuestreams and access to a wider customer network. People The Company made a number of important changes to the board and seniormanagement during the year as we reviewed the skills necessary to lead a dynamicand fast-growing company. We have brought in high-quality people with a wealthof skills, particularly in drug discovery, development and commercialisation,all of which will be crucial for the Company's future growth. In addition, through the acquisitions, VASTox has rapidly expanded to employmore than 100 highly skilled scientists across four UK sites. We are also verypleased to have retained the key scientific founders of the acquired businessesand look forward to their continued contribution to the business. I would just like to take this opportunity to thank Professor Stephen Davies whostepped down as Chairman in September 2006. Steve, as founding Chairman ofVASTox, has made a significant contribution to the Company's direction andsuccess, and we are very pleased that he will continue to provide valuable inputas a Non-executive Director. I would also like to welcome to the Board, Dr Colin Wall, Dr Andrew Richards andGeorge Elliott. Colin has 40 years' of commercial experience includingsignificant board-level experience at a number of public and private companiesand was appointed as Senior Independent Non-executive Director. He replacesfounding director John Montgomery who stepped down last year with our thanks andbest wishes. Andrew joins as a Non-executive Director and will bring atremendous wealth of experience of the biotechnology sector to VASTox, whileGeorge brings us wide-ranging financial and commercial expertise in high growthtechnology companies. Financial Performance The financial performance of the Company continues to be strong - these will bediscussed in more detail in the Financial Review below, but in summary: revenuesfrom our pharmaceutical business have nearly doubled to £1.0 million comparedwith last year; investment in research has increased to £2.9 million from £1.0million last year; losses are up to £3.0 million from £1.1 million; and cash atthe end of the reporting period is £18.3 million (£12.6 million at the same timelast year). The Company continues to maintain a strong focus on financialdiscipline and expects to continue its growth and development in all areas in2007. Name Change to Summit plc Based on the progress the Company has made over the past couple of years and itslong-term development plans, we are very pleased to propose a new name for theCompany: Summit plc. We are proposing this name as it encapsulates the desireand ambitions of the Company while also providing an identity that has theflexibility to accommodate future growth and development within the business.This name change is subject to shareholder approval, which will be sought at theCompany's Annual General Meeting, to be held on 19 July 2007. Summary and Outlook Since I joined VASTox in September 2006, I have been greatly impressed with thecompany's ambitions, enthusiasm and maturity, the quality of its people, and thestrength and potential of its drug discovery and development capabilities. The transforming events that have happened over the past 18 months have putVASTox in a strong position to capitalise on this potential in the near, mid andlong term. We are looking forward with confidence to the challenges that thenext year will bring to continue the rapid growth of the business. Finally, I would like to thank all VASTox employees for their dedication andcontribution to the business and look forward to an exciting and productive yearahead. Barry Price, PhDChairman 29 May 2007 CHIEF EXECUTIVE OFFICER'S STATEMENT VASTox has made excellent progress during the past 18 months executing on itsdual strategy of discovering and developing proprietary new drugs and providingprofitable drug discovery services to the pharmaceutical industry. Following anumber of defining events that have happened during the period, the Company isnow in a strong position to maximise the benefits of its unique approach tocreate significant value for shareholders. The key events of the period include: • Progress in all proprietary programmes, including: o Duchenne muscular dystrophy: Candidate selection in May 2007; Orphan Drug designation from EMEA o Spinal muscular atrophy: compounds identified with in vivo activity o Tuberculosis: compounds identified that kill Mycobacterium tuberculosis • Excellent performance of the pharmaceutical services business with revenues nearly doubling to £1 million • The creation of a high-quality executive management team and board of directors with experience and enthusiasm to drive the Company's future growth • Acquisitions of DanioLabs Ltd, Dextra Laboratories Ltd and the key assets of MNL Pharma Ltd to accelerate the Company's strategy and development in all areas of its business. Transforming VASTox The acquisitions VASTox has made during 2006/07 are a synergistic fit with ourexisting drug programmes, drug discovery and development expertise and,significantly, provide us with world leadership in two discovery platformtechnologies. Additionally, we benefit from an immediate, positive impact onrevenues and an expanded customer base. The addition of DanioLabs both broadens our drug discovery pipeline and createsthe largest and most sophisticated zebrafish chemical genomics platform in theWorld. Dextra and MNL Pharma both bring differentiating carbohydrate chemistryexpertise and make us world leaders in this emerging and exciting area of drugdiscovery. A key focus of the management team in the coming months is to ensure the rapidintegration of the acquired businesses such that VASTox can capitalise on theenhanced capabilities and efficiencies of the enlarged Group. As a consequence of the year's activities, we are proposing to change theCompany's name from VASTox plc to Summit plc (subject to shareholder approval atthe Company's AGM on 19 July 2007). The Board believes that a new identity isrequired to truly reflect the aspirations of the new enlarged business. VASToxas a name represented the origins of the Company but it refers to only oneaspect of our business: zebrafish toxicology services. While this technology isstill an important part of our business, we felt the Company has outgrown thisname, and has also become misleading with commercial clients. The proposed newname and identity presents not only a more mature corporate image but alsoprovides the flexibility for the Company to grow and develop, which is essentialin meeting the future needs of our business. Enhancing our Drug Pipeline As mentioned above, an important result of this recent corporate activity hasbeen to broaden and enhance the Company's drug discovery and developmentpipeline. Through progress made in our existing drug discovery programmes andthe new programmes acquired following the deals with DanioLabs and MNL Pharma,VASTox now has an exciting portfolio of clinical, preclinical and discoverystage drug candidates across a range of serious diseases with a high unmetmedical need. While our drug programmes span a range of therapeutic areas, our core focus ison discovering and developing new therapies targeting neuro-disorders andinfectious diseases. We have focused on these specific therapeutic areas as webelieve we have differentiating expertise based on our scientific knowledge inthese areas, through our key staff, scientific advisors, founders andcollaborators. It is our intention to invest in the infrastructure of theseprogrammes in order to develop them to the optimal stage prior to seekingattractive partnering opportunities. The depth of our drug pipeline combined with our approach towards partneringdeals is anticipated to improve, for our investors, the risk-reward ratiotraditionally associated with biotech companies as it is VASTox's intention toseek early and mid-stage deals in many programmes before they enter pivotal andcostly Phase III clinical trials. Core Programmes During the year, VASTox has increased its interest and expertise in the area ofneuro-disorders and now has a range of clinical and preclinical programmes inthis area. VASTox has two candidates in Phase I clinical trials for treatingneurodegenerative symptoms associated with Parkinson's disease. These wereacquired from DanioLabs. The first programme is focused on sialorrhoea(excessive saliva production) and is expected to advance into Phase II clinicaltrials by the second half of 2007. The second clinical candidate targetsseborrhoea, which results in Parkinson's patients suffering from poor skinconditions, and this programme is expected to move into Phase II clinical trialsduring the second half of 2008. VASTox also anticipates this programme to findvalue in the multi-million pound acne market. In addition, exciting progress has been made in the discovery programmetargeting the fatal neuromuscular disease, Duchenne muscular dystrophy, and inMay 2007 this led to the selection of a lead candidate, VOX C1100, to advanceinto preclinical development. Earlier investigations leading to this significantachievement have been supported through the raising of £10.45 million inFebruary 2006. Based on this progress, the European Medicines Agency ('EMEA') will grant OrphanDrug status to any clinical candidates to emerge from the programme. Thisdesignation will allow VASTox to fast-track any candidates through the clinicalstages of development, which will reduce costs and accelerate the time taken fora desperately needed drug to reach the market. Our discovery programme targeting the rare genetic neuromuscular disorder Spinalmuscular atrophy ('SMA') is also making excellent progress. SMA is the leadinggenetic cause of mortality in infants and toddlers worldwide and the Company hasidentified a number of 'hit' compounds that improve the symptoms of SMA whentested in VASTox's in-vivo- fruitfly screen designed to model the disease. Thisparticular programme demonstrates the value of our drug discovery approach asthese 'hits' were identified within 18 months of the programme starting, and alead preclinical compound is now being sought. We are also preparing to applyfor Orphan Drug designation for this programme. VASTox's excellence and expertise in neuromuscular diseases was furtherrecognised by the EU when the Company joined the TREAT-NMD network, a Europeannetwork of leading researchers, clinicians and charities focused on developingnew medicines, and which is funded by a €10 million EU grant. In the core area of infectious diseases, VASTox's first programme is targetingtuberculosis ('TB'), a resurgent disease with serious global healthimplications. Currently, the TB programme is in the early discovery phases andhas made good progress during the year with several promising compoundsidentified as being active against the bacteria that cause TB. These 'hit'compounds are now being investigated further. Other programmes Our remaining programmes are currently targeting cancer, ophthalmic diseases andregenerative medicine (stem cells), and we have three programmes at thepreclinical stage of development. One of our most advance non-core programmes, VOX14400, was initially developedby MNL Pharma and has the potential to target and treat various types of solidtumours as well as a number of other indications. We are actively seeking adevelopment partner to progress this candidate. The programmes in ophthalmic diseases are targeting glaucoma and age-relatedmacular degeneration and are in the preclinical stages of development. Bothprogrammes were acquired from DanioLabs. Pharmaceutical Services While our drug pipeline is where our long-term value lies, a core element of ourdual business model is the development of two powerful drug discovery anddevelopment technology platforms. These not only underpin our ability to developand fuel our own pipeline, but also enable us to generate revenues by providingelements of the technology platforms to partners in the pharmaceutical sectorfor their own drug discovery purposes. Our service offering is an increasingly profitable part of the Company'sbusiness, generating revenues of £1 million in 2006, nearly double the revenuesof 2005. The wider pharmaceutical industry increasingly is recognising the valueour unique capabilities bring to drug discovery programmes as we provideddiscovery services to over 25 clients during the year. This business is expected to grow significantly in 2007 owing to thestrengthening of our capabilities in all areas through the integration of theassets from the acquired companies. This will provide the enlarged Company withimmediate access to complementary expertise and high-quality facilities as wellas existing contracts and revenue streams, and access to a significantly broadercustomer base. Furthermore, these acquisitions are expected to support and accelerate ourstrategy of developing longer-term, higher-value drug discovery and developmentpartnerships with pharmaceutical companies. Indeed, in 2007 we have alreadysigned three such agreements totalling over £800,000 in upfront payments andresearch funding milestones with one of the deals including a 5% royalty fee onproduct sales. Over the course of the next 12 months, we will be working hard todevelop further relationships of this nature based on the benefits our uniquerange of capabilities can offer partners. Our Unique Drug Discovery and Development Capabilities The fundamentals of our business and of our ability to create value are based onour world-leading chemical genomics and carbohydrate technology platforms.During the year, each platform has been significantly strengthened bothorganically and through the recent acquisitions we have made. Chemical Genomics Chemical genomics refers to the analysis and understanding of the effect thatdrug-like molecules have on whole organisms. VASTox has developed an industryleading chemical genomics technology platform that makes use of two extensivelystudied organisms: zebrafish and fruitflies. This technology enables us to rapidly screen libraries of drug-like compounds toprovide information not just on potential efficacy but also on the safety oflead compounds. This capability is extremely valuable as it can accelerate theearly stages of the discovery process thereby reducing overall costs. The acquisition of DanioLabs shows the belief and commitment VASTox has inzebrafish chemical genomics and the huge potential benefits that we believe thistechnology brings to the drug discovery process. This strategic move has createdthe World's leading company in chemical genomics using this versatile and highlyrelevant organism by providing additional zebrafish screening technologies andcapacity and further novel human disease models. Chemistry Capabilities We also recognise that chemistry plays an essential role in the development ofnew pharmaceuticals. Our chemistry capabilities enable us to generate librariesof proprietary drug-like compounds for screening, to develop 'hit' compoundsinto leads and to optimise their structure and performance. We already have excellent medicinal chemistry in-house and the integration ofDextra Laboratories and MNL Pharma significantly enhances our carbohydratechemistry expertise and capabilities as VASTox emerges as the global leader inthis high-value, complex and currently under exploited area of chemistry. Management A key objective over the past 12 months for VASTox has been to create a highquality management team with development and commercial experience, contacts,and enthusiasm to drive the Company's ambitious growth plans forward. As such, VASTox made several key appointments to the executive management teamduring the year including: Dr Richard Storer, who joined the Board as ChiefScientific Officer; Darren Millington, ACMA, who was appointed to the Board asChief Financial Officer; and James Taylor who joined the Board as ChiefCommercial Officer. These appointments add considerable sector experience in theimportant areas of preclinical and clinical drug development, commercialisation,licensing and growth company finance. Summary and Outlook The past 18 months have been extremely busy and eventful for VASTox. Thisactivity has transformed the business into an exciting drug discovery anddevelopment company that offers the prospect of rapidly developing new drugs forserious diseases. Through internal growth and acquisition, VASTox has created abroad and diverse pipeline of drug candidates from discovery to clinical stagesof development, and two strong technology platforms to support and advance theseprogrammes. Furthermore, the revenue growth we have seen from our services offering and itsincreasing industry validation confirms the confidence we have in our approachto deliver value to customers and partners in the pharmaceutical sector. We anticipate a busy year in 2007/08, integrating the new components of ourbusiness, but we believe we have many of the right elements in place to begincapitalising on the combined strength of the enlarged Company to createsignificant value for our shareholders. Finally, I would like to thank the efforts of all involved with the continuedgrowth and development of VASTox and look forward to reporting further progressin the future. Steven Lee PhDChief Executive Officer 29 May 2007 FINANCIAL REVIEW Our financial results for the year ended 31 January 2007 reflect the increasinginvestment in our drug development pipeline, in particular our commitment toadvancing our Duchenne muscular dystrophy ('DMD') programme. Total R&D costshave increased to £2.9 million this year (£1.03 million in 2005/06). Asdescribed in the Chief Executive Officer's report, we were able to accelerateour DMD programme as a result of a successful fund-raising in February 2006,which raised £9.97 million after expenses. These additional funds have allowedus to recruit specialist staff and build laboratories dedicated to the DMDprogramme. Business Performance Revenues Total revenues for the year ended 31 January 2007 were £1.03 million (2005/06:£0.53 million). This 95% increase illustrates the increasing market demand forour unique chemical genomics expertise and chemistry capabilities. Gross marginsincreased to 71% (2005/06: 56%), reflecting the high-value nature of the work wedo for clients. Losses VASTox made a loss of £2.99 million for the year compared with a loss of £1.06million in the previous year. The increased loss was due to increased investmentin R&D and an increase in overhead and facility costs. Overhead costs have alsoincreased due to non-cash charges of depreciation, amortisation and FRS 20 ('Share based payment'). The FRS 20 charge requires companies to make a charge forthe fair value of share options in issue. For the year 2006/07 this charge was£0.4 million (2005/06: £0.07 million). It is the recognition of the share basedpayment charge in the 2005/06 results which led to a restatement. The basic anddiluted loss per share for the Group was 8.24p, compared with 3.39p for 2005/06. Taxation The Group continues to benefit from Research and Development tax credits and, asit is loss making, elects to take the cash equivalent amount. The tax credit of£0.49 million relates to a refund under the UK Research and Development taxcredit claim (2005/06: £0.16 million). Cashflow and financing Our year-end cash and short term deposits were £18.3 million (2005/06: £12.6million). The Group raised £9.97 million in cash net of expenses (2005/06: nil)through the sale of new ordinary shares. Interest received increased from £0.58million to £0.87 million, due to the increase in average funds held during theyear as well as higher interest rates. Net cash outflow during the year fromoperating activities was £3.21 million (2005/06: £1.45 million), principally dueto the increase in R&D expenditure. IFRS The accounts prepared for the year ended 31 January 2007 will be the lastproduced under UK Generally Accepted Accounting Practice ('GAAP'). In commonwith all AIM-quoted companies, VASTox will produce its results for the yearending 31 January 2008 under International Financial Reporting Standards ('IFRS'). The first financial results reported under IFRS will be presented in theGroup's unaudited interim results for the six month period ending 31 July 2007.The Group has completed an impact assessment for the translation to IFRS and hasreviewed the VASTox financial results for the areas likely to change mostsignificantly. The Group's plan to transfer from UK GAAP to IFRS is monitoredregularly by the Group's Audit Committee and reported to the Board. Post balance sheet events Following the year-end, the Group announced on 22 March 2007 the acquisition ofDanioLabs Limited and Dextra Laboratories Limited. The Group acquired the entireshare capital of both companies for £15.0 million and £1.5 million respectively,financed through the placing of 12.9 million new ordinary shares in VASTox plc. Darren Millington, ACMAChief Financial Officer 29 May 2007 Consolidated Profit and Loss AccountFor the year ended 31 January 2007 Restated 2007 2006 Note £ £Turnover 1,033,823 531,361Cost of sales (303,673) (233,444)Gross profit 730,150 297,917 Research and development (2,937,396) (1,025,683)General, management and administration (1,830,292) (1,005,366)Share based payment (403,898) (66,626)Total administrative costs (5,171,586) (2,097,675)Other operating income 80,357 -Operating loss (4,361,079) (1,799,758) Interest receivable 872,766 582,868 Loss on ordinary activities before taxation (3,488,313) (1,216,890) Tax on loss on ordinary activities 488,942 155,437 Loss on ordinary activities after taxation (2,999,371) (1,061,453) Basic and diluted loss per ordinary share 2 8.24p 3.39p All amounts relate to continuing activities. Consolidated Statement of Recognised Gains and LossesFor the year ended 31 January 2007 Restated 2007 2006 Note £ £Loss for the financial year (2,999,371) (1,061,453)Prior year adjustment (73,826) -Total gains and losses recognised since last (3,073,197) (1,061,453)financial statements Consolidated Balance SheetAt 31 January 2007 Restated 31 January 31 January Note 2007 2006 £ £Fixed assetsIntangible assets 377,668 28,016Tangible assets 2,624,054 1,261,082 3,001,722 1,289,098Current assetsStock 187,444 27,000Debtors 1,116,746 541,300Cash on short term deposits 15,079,702 11,593,626Cash at bank 3,209,392 1,039,690 19,593,284 13,201,616 Creditors: amounts falling due within one year (1,427,111) (704,833) Net current assets 18,166,173 12,496,783 Creditors: amounts falling due after more than one (597,355) (690,812)yearProvision for liabilities and charges (100,000)Net assets 20,470,540 13,095,069 Capital and reservesCalled up share capital 3,721,707 3,131,311Share premium account 22,327,396 12,946,848Other reserves (1,942,589) (1,942,589)Share based compensation 477,724 73,826Profit and loss account (4,113,698) (1,114,327)Equity shareholders' funds 3 20,470,540 13,095,069 Company Balance SheetAt 31 January 2007 Restated 31 January 31 January Note 2007 2006 £ £Fixed assetsInvestments 2,497,922 2,094,024 Current assetsDebtors - due after more than one year 24,194,798 14,225,887Debtors - due within one year 2,033 - 24,196,831 14,225,887 Net current assets 24,196,831 14,225,887 Net assets 26,694,753 16,319,911 Capital and reservesCalled up share capital 3,721,707 3,131,311Share premium account 22,327,396 12,946,848Share based compensation 477,724 73,826Profit and loss account 167,926 167,926Equity shareholders' funds 3 26,694,753 16,319,911 Reconciliation of operating loss to net cash outflow from operating activities Restated 2007 2006 £ £Operating loss (4,361,079) (1,799,758)FRS 20 charge for fair value of share options 403,898 66,626Depreciation charge 340,180 127,520Amortisation charge 36,236 7,767Increase in debtors (171,071) (246,547)Increase in stock (160,444) (27,000)Increase in creditors 706,566 423,712Net cash outflow from operating activities (3,205,714) (1,447,680) Consolidated Cash Flow StatementFor the year ended 31 January 2007 2007 2006 £ £Net cash outflow from operating activities (3,205,714) (1,447,680) Returns on investments and servicing of financeInterest received 789,814 507,652 TaxationR&D tax credit received 167,519 29,041 Capital expenditurePurchase of tangible fixed assets (1,648,152) (1,357,770)Purchase of intangible fixed assets (70,626) (15,783) (1,718,778) (1,373,553) AcquisitionsAcquisition of a business (255,131) - Cash (outflow) inflow before management of liquid resources and (4,222,290) (2,284,540)financing Management of liquid resourcesDecrease (increase) in short term deposits (3,486,076) 2,206,374 FinancingIssue of ordinary share capital (net of expenses) 9,970,944 -(Repayment) increase in debt during the year (92,876) 756,604 9,878,068 756,604 Increase in cash 2,169,702 678,438 Notes to the Accounts 1. Accounting policies Basis of preparation The accounting policies used in preparing the financial statements have beenapplied consistently throughout all periods presented with the exception of FRS20 - 'Share based payments.' The Company has adopted FRS 20 for the first timefor the year ending 31 January 2007 and therefore restated prior year results toreflect the historic impact of this charge. See 'Prior year adjustment' belowfor further details. Share-based payments In accordance with FRS 20 - 'Share based payment', share options are measured atfair value at their grant date. The fair value is calculated using theBlack-Scholes formula and charged to the income statement on a straight-linebasis over the expected vesting period. At each balance sheet date, the Grouprevises its estimate of the number of options that are expected to becomeexercisable. The share-based payment charge is recorded separately in the incomestatement. Prior year adjustment All quoted UK companies are required to implement accounting standard FRS 20 - 'Share based payment' for financial periods commencing on or after 1 January2006. This standard affects all companies that issue share options and resultsin a non-cash charge to the profit and loss statement to reflect the fair valueof issued share options. In common with the implementation of all accountingstandards, prior year results must be restated as if the accounting standard hadalways been in force. In the year ended 31 January 2007 the charge due to theimplementation of FRS 20 is £403,898, and 31 January 2006: £66,626. Thisrestatement has had no impact on net assets. The amount recognised in the consolidated statement of total recognised gainsand losses reflect the total share based payment charge from implementing FRS 20to up 31 January 2006. The investments in the Company's balance sheet have been restated by the prioryear adjustment of £73,826, this was due to the Company financing the sharebased payment charge. Statutory financial statements The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 January 2007 or 2006, but is derivedfrom those accounts. Statutory accounts for 2006 have been delivered to theRegistrar of Companies and those for 2007 will be delivered following theCompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under theCompanies Act 1985, sections 237(2) or (3). 2. Earnings per ordinary share The basic and diluted earnings per share is based on a loss of £2,999,371 forthe year ended 31 January 2007 (Restated 2006: loss of £1,061,453) and theweighted average number of shares in issue during the year of 36,420,113 shares(2006: 31,313,111 shares). 3. Reconciliation of movement in Group shareholders funds Restated 2007 2006 £ £GroupOpening shareholders' funds 13,095,069 14,089,896Shares issued during the year 590,396 -Share premium on issued shares (net of expenses) 9,380,548 -Loss for the financial year (2,999,371) (1,061,453)Share based payment 403,898 66,626Closing shareholders' funds 20,470,540 13,095,069 CompanyOpening shareholders' funds 16,246,085 16,255,916Prior year adjustment 73,826 7,200Opening shareholders' funds - restated 16,319,911 16,263,116Shares issued during the year 590,396 -Share premium on issued shares (net of expenses) 9,380,548 -Share based compensation 403,898 66,626(Loss) profit for the financial year - (9,831)Closing shareholders' funds 26,694,753 16,319,911 4. Availability of information Copies of the Report and Accounts for the year ended 31 January 2007 will beposted to shareholders shortly and thereafter may be obtained from the Company'swebsite: www.vastox.com. 5. Notice of Annual General Meeting The Annual General Meeting will be held at 9.30am on 19 July 2007 at thefollowing address: Huntsworth plc, 8th Floor, 26 Finsbury Square, London, EC2A1SF. This information is provided by RNS The company news service from the London Stock Exchange