TILS.L Regulatory News (TILS)

9 Feb 2005 07:00

ReGen Therapeutics PLC09 February 2005 REGEN THERAPEUTICS PLC Chairman's Statement and preliminary results to 31 December 2004 PRELIMINARY STATEMENT to end December 2004 In 2004 ReGen progressed on the financial, scientific and commercial fronts. FINANCIALS For the first time ReGen reported sales. These were generated through ouracquisition of Guildford Clinical Pharmacology Unit Limited (GCPUL), a ContractResearch Organisation and amounted to £99,000 for the period from 25th October,the effective date of the acquisition, to 31st December 2004. As we have previously indicated we increased our development spend in 2004 andthis rose by 40% to £457,000. We continued to keep a tight rein onadministrative costs, which increased by 16%, despite the addition of just overtwo months administration costs for GCPUL. The result was, therefore, anoperating loss 18% higher at £1.544 million. At the year end cash amounted to £771,000 and debtors amounted to £1,164,000 ofwhich £811,000 were funds due from the December 2004 placing which subsequentlyhas been received by the Company. The doubling of Creditors primarily reflectsthe acquisition of GCPUL. SCIENTIFIC AND COMMERCIAL DEVELOPMENT During the year our scientific collaborators, primarily the University of TexasMedical Branch, Galveston, Texas, USA, Roswell Park Cancer Institute, Buffalo,New York, USA and the Open University, Milton Keynes, UK have made significantscientific progress. Four major scientific announcements were made during 2004. At the 14th Alzheimer Europe Conference in May 2004 scientists presented twopapers: in one they showed that Colostrinin can prevent the aggregation of betaamyloid and reduce its toxic effect on neuroblastoma cells and in the other theyshowed that Colostrinin(TM) can block the proliferation and promote thedifferentiation of primary cells into neuronal cells. In July 2004 at the 9th International Conference on Alzheimer's Disease andRelated Disorders scientists reported that the neuroprotective effects ofColostrinin can be due, in part, to a decrease in beta amyloid-inducedapoptosis. Also in the same month, at the Federation of European Neurological Societiesmeeting it was reported that Colostrinin was able to enhance memory whencompared with control saline injections in young chicks. Finally, in October 2004 at The Society for Neuroscience meeting, the samescientists, again in the chick model, showed that pre-treatment with Colostrinincan limit the memory impairment induced by beta amyloid, a toxic proteininvolved in the pathology of Alzheimer's disease. Bovine sourced Colostrininmade by ReGen's new production process was shown to have the same activityprofile as the ovine sourced material as used in clinical studies. During our discussions in 2004 with potential pharmaceutical and nutraceuticallicensing partners, it became apparent to us that a product such asColostrinin(TM) is more commercially attractive as a nutraceutical. We thereforehave focused on producing Colostrinin(TM) as a nutraceutical product and we haveongoing discussions with a number of potential partners. Our scientific evidence, taken together with the publication of the findings ofour clinical trial RG-010 in the peer reviewed Journal of Alzheimer's Disease,gives us confidence in the activity of Colostrinin in Alzheimer's disease. Thuswe are in the process of characterizing the compounds constituent peptides, sothat we hope to have a classical small molecular weight pharmaceutical productwith a biological activity similar or exceeding original Colostrinin(TM). Infact, one of the constituent peptides, known as Colostral-Val nonapeptide, hasbeen already identified, synthesized and proved to facilitate learning andmemory in a rat model. Investors will also be aware that the IPO market in our sector was verydepressed between 2001 and 2003; despite a recovery in 2004 there is still alarge backlog of potential IPO's. There are, therefore, greater opportunitiesfor us to acquire smaller, revenue generating companies, which may not have beenthe case four to five years ago. To this end in October 2004 the Companyacquired Guildford Clinical Pharmacology Unit Limited, a Contract ResearchOrganisation based in Surrey, England. GCPUL provides a high quality service in performing clinical trials for thepharmaceutical and biotech industry, using its associations with the RoyalSurrey County Hospital and the University of Surrey. Over the past ten yearsGCPUL has established a reputation for delivering quality research to itsclients and has successfully completed studies embracing a wide spectrum oftherapeutic areas, encompassing First-Dose-to-Man through to Phase II studies. ReGen has ambitions to build GCPUL into a profit centre within the group and islooking to make further acquisitions in this area. Looking to the future development of the Company, we have established anAmerican Depositary Receipt programme in the US. This is commercially relevantas we carry out research, development and manufacturing in the US and 62% ofCentral Nervous System pharmaceutical sales are in the US, which is also themost developed nutraceutical market in the world. On the financial side, the USis by far the largest capital market, particularly for biotech, and inconsequence we believe that shareholder value will be enhanced by ReGen havingaccess to the US equity markets. 2005 I said in 2004 that we would be a very different company by the year-end. Thishas proven to be true as we broaden our base to include nutraceuticals andcontract research. The key objective of our Group, however, remains thedevelopment of a pharmaceutical for the treatment of Alzheimer's disease and Ilook forward to being able to report further progress on this next year. TheCompany as a whole is much more broadly based than it was a year ago and weintend to continue diversifying to provide shareholders with a more broadlybased investment. Percy W LomaxExecutive Chairman 9th February 2005 REGEN THERAPEUTICS PLC Consolidated profit and loss account for the year ended 31 December 2004 2002 2004 2003 £ £ (Unaudited) (Audited) Turnover 98,794 -Acquisitions Cost of sales 44,665 -Acquisitions ____________ ____________ Gross Profit 54,129 - Administrative costs Development costs 456,566 325,636 Other - Continuing 994,783 905,619 - Acquisitions 68,663 - Goodwill amortisation 77,748 74,490 ____________ ____________ (1,597,760) (1,305,745) ____________ ____________ Operating loss (1,543,631) (1,305,745) Interest receivable 46,126 10,391Amounts written off current asset investments - (688,106)Interest payable (4,723) (8,098) ____________ ____________Loss on ordinary activities before taxation (1,502,228) (1,991,558) Taxation on loss from ordinary activities 114,202 30,000 ____________ ____________ Loss on ordinary activities after taxation (1,388,026) (1,961,558) ____________ ____________ ============ ============ Basic and diluted loss per share (0.49)p (0.98)p REGEN THERAPEUTICS PLC Consolidated balance sheet at 31 December 2004 2004 2004 2003 2003 £ £ £ £ (Unaudited) (Unaudited) (Audited) (Audited) Fixed assetsIntangible assets 2,190,130 1,825,445Tangible assets 18,498 4,357 ____________ ____________ 2,208,628 1,829,802 Current assets Stocks 500 -Debtors 1,163,549 484,002Cash at bank and in hand 771,185 996,215 ____________ ____________ 1,935,234 1,480,217 Creditors: amounts fallingdue within one year 600,892 281,769 ____________ ____________ Net current assets 1,334,342 1,198,448 ____________ ____________ Total assets less currentliabilities 3,542,970 3,028,250 ____________ ____________ ============ ============ Capital and reservesCalled up share capital 5,639,868 5,559,733Share premium 9,173,181 7,592,878Other reserves 242,308 -Profit and loss account (11,512,563) (10,124,537) ____________ ____________ Equity shareholders' funds 3,542,794 3,028,074Non-equity minority interests 176 176 ____________ ____________ 3,542,970 3,028,250 ____________ ____________ ============ ============ REGEN THERAPEUTICS PLC Consolidated cash flow statement for the year ended 31 December 2004 2004 2004 2003 2003 £ £ £ £ (Unaudited) (Unaudited) (Audited) (Audited) Net cash outflow fromoperating activities (1,789,071) (1,609,927) Returns on investmentsand servicing of financeInterest received 46,126 10,391Interest paid (4,723) (8,098) ____________ ____________ 41,403 2,293 Taxation - 83,533Capital expenditure and financial investmentPayments to acquiretangible fixed assets (4,346) (92)Payments to acquireintangible fixed assets (66,234) (49,719) ____________ ____________ (70,580) (49,811)Acquisitions and disposals Purchase of a business:Acquisition expenses (44,880) -Cash acquired (115,234) - ____________ (160,114) - ____________ ____________ Net cash outflow beforemanagement of liquid resources and financing (1,978,362) (1,573,912) Management of liquidresourcesDecrease/(increase) inshort term deposits 206,058 (941,221)Sales of short-terminvestments - 597,500 ____________ ____________ 206,058 (343,721) FinancingProceeds of shares issuedfor cash 1,748,000 2,095,350Expenses paid on shareissue (95,254) (60,287) ____________ ____________ 1,652,746 2,035,063 ____________ ____________ Increase/(decrease) in cash (119,558) 117,430 ____________ ____________ ============ ============ ReGen Therapeutics Plc Notes forming part of the financial statements for the year ended 31 December2004 1 Accounts The financial information contained in this announcement does not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2003 has been extracted from the statutory financial statements for that year, which have been filed with the Registrar of Companies. The audit report on those financial statements was unqualified and did not contain any statement under section 237 (2) or (3) of the Companies Act 1985. It did contain however an explanatory paragraph dealing with a fundamental uncertainty relating to going concern. The financial information for the year ended 31 December 2004 has been extracted from the draft statutory financial statements for that year upon which the auditors have yet to report. The auditors have indicated that their final audit report will contain an explanatory paragraph dealing with the fundamental uncertainty referred to in the next paragraph. 2 Going concern The directors have reviewed and amended the Company's plans for utilising its existing resources and believe that the funds available together with any potential licensing deal will be sufficient for the group's purposes for the next 12 months. On this basis the Directors consider it appropriate to prepare the financial statements on the going concern basis. If a licensing deal, further fundraising or ongoing drug development programme are not successful then adjustments may be necessary to write down assets to their recoverable amounts, reclassify fixed assets and long term liabilities as current and provide for additional liabilities. 3 Accounting policies The accounting policies used to prepare the financial information contained in this statement are consistent with those set out in the statutory financial statements for the year ended 31 December 2003. All accounting policies are in accordance with applicable accounting standards. 4 Intangible fixed assets Costs amounting to £66,234 relating to patent rights have been capitalised in the year in accordance with the Group's stated accounting policy. 5 Share Capital On 12 February 2004 the company issued 18,181,818 ordinary shares of 0.1p each at a premium of 2.65p per share. On 25 October 2004, the company issued 7,692,308 ordinary shares of 0.1p each at a premium of 3.15p per share in exchange for 1000 £1 ordinary shares the entire share capital of Guildford Clinical Pharmacology Unit Limited. In accordance with Section 131 of the Companies Act 1985 this premium has not been recorded as share premium. However, it has been included in other reserves. On 21 December 2004, the company issued 54,260,870 ordinary shares of 0.1p each at a premium of 2.2p per share. The issued shares rank pari passu with existing shares. 6 Loss per share The basic loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial year. The weighted average number of equity shares in issue are 280,747,760 and the loss is £1,388,026 (2003 - 200,799,291 shares and the loss £1,961,558). The effect of all potential ordinary shares is anti-dilutive. 7 Reconciliation of movements in equity shareholders' funds 2004 2003 £ £ (Unaudited) (Audited) Loss for the financial year (1,388,026) (1,961,558)New share issue 80,135 903,663Premium on new share issue net of issue costs 1,822,611 1,881,400 ____________ ____________ Increase/(decrease) to equity shareholders' funds 514,720 (823,505) Opening equity shareholders' funds 3,028,074 2,204,569 ____________ ____________ Closing equity shareholders' funds 3,542,794 3,028,074 ____________ ____________ 8 Reconciliation of operating loss to net cash outflow from operating activities 2004 2003 £ £ (Unaudited) (Audited) Operating loss (1,543,631) (1,305,745)Amortisation 92,460 86,060Depreciation 4,947 19,822(Increase) in stocks (500) -(Increase) in debtors (550,882) (392,323)Increase/(decrease) in creditors 228,537 (17,741) ____________ ____________ Net cash outflow from operating activities (1,789,071) (1,609,927) ____________ ____________ ============ ============ 9 Reconciliation of net cash flow to movement in net funds 2004 2003 £ £ (Unaudited) (Audited) (Decrease)/increase in cash in the year (119,558) 117,430(Decrease)/increase in liquid resources (206,058) 405,615 __________ __________ Movement in net funds in the year (325,616) 523,045 Net funds at start of year 996,215 473,170 __________ __________ Net funds at end of year 670,599 996,215 __________ __________ ========== ========== The annual report and financial statements for the year ended 31 December 2004will be sent to all shareholders in due course and copies will be available fromthe company's business address at Suite 406, Langham House, 29-30 MargaretStreet, London, W1W 8SA. Further information:Andrew MarshallMarshall Robinson RoeTel: 020 7960 6007 This information is provided by RNS The company news service from the London Stock Exchange