TILS.L Regulatory News (TILS)

2 Apr 2008 09:00

ReGen Therapeutics PLC02 April 2008 For Immediate Release 2 April 2008 REGEN THERAPEUTICS PLC ("ReGen" or the "Company"; Ticker: (RGT)) Preliminary Results Chairman's Statement and preliminary results to 31 December 2007 PRELIMINARY STATEMENT to 31 December 2007 HIGHLIGHTS OF 2007 • Market launch of ColostrininTM as CogniSureTM in the professional channel in North America in October 2007 and Australasia in July 2007. • Successful completion of zolpidem trial. Results announced in August 2007 show that a 2.5mg dose of a novel sublingual formulation is non-sedating. • In two fundraisings in February and June 2007 the Company raised £2,486,875 to continue it's development programme. 2007 was a good year for ReGen in which crucially ColostrininTM (CogniSureTM)was launched in the professional market in North America in October, followingon from its original launch in Australasia in July. The USA alone accounts forabout one third of the World nutraceutical market so this was a key launch forReGen in its drive to achieve sustainable profitability. There were, however, anumber of other major achievements, which are set out in the followingparagraphs. FINANCIALS (Presented under IFRS) Turnover for the year was £311,488. This figure includes our income from initialsales of CogniSureTM (ColostrininTM) in Australia and the USA, which were£63,810. The year on year decrease in turnover of 23% resulted from the declinein the business of Guildford Clinical Pharmacology Unit Ltd. ("GCPUL"), thecontract research organisation, reflecting industry-wide trends. The company hasnow become a purely "in-house" clinical research facility. Cost of sales represented 34.7% of turnover as opposed to 51.6% the previousyear, reflecting the higher margins earned on CogniSureTM. As a result grossprofit was marginally higher than last year. Development costs were slightly down, which reflected the considerable expenseinvolved in the ColostrininTM development work the previous year, not beingrepeated in 2007. The Company still has an active research programme but theColostrininTM peptides particularly are not at a costly stage in theirdevelopment. Other administrative costs also fell slightly and this was primarily the resultof lower expenditure on salaries. The charge for impairment of intangible assetsis a non-cash item and merely reflects the write down of goodwill associatedwith the acquisition of GCPUL. Thus, after financing charges loss before tax was11% higher at £2,553,591. The two main items of expenditure, research anddevelopment costs, and other administrative costs were both slightly down yearon year. The Board will continue to control these costs tightly, and expectsexpenditure in both areas to be slightly down again in the coming year. In March 2008 following the closure of the accounting period £246,898 was raisedbefore expenses. In addition the Company obtained an equity credit facility of£2 million from Duke Holdings Corporation Limited enabling it to draw downcapital in tranches in exchange for shares in the Company, based on the averagetraded share volumes achieved. This, taken together with other options currentlybeing evaluated gives the Board confidence in our financial position. The moneyraised is being used in our development programmes. COMMERCIAL DEVELOPMENT Prior to the first ever launch of ColostrininTM in the Australasian market, DrMarian Kruzel, ReGen's Chief Scientific Officer, presented both scientific andclinical information on its utility to support healthy cognitive function at the2007 International Congress on Natural Medicine in Surfers Paradise, Queensland,Australia. The conference, which was attended by key opinion leaders andpractitioners of natural medicine from around the world, was sponsored byMetagenics Inc. of California via its Australian affiliate company Health WorldLimited. Since then ColostrininTM is marketed in Australasia through theprofessional channel by Health World Ltd. The crucial commercial development of the year was in October 2007 whenColostrininTM was launched as CogniSureTM in the professional channel in theNorth American market by Metagenics Inc., our licensee. This was a keydevelopment for ReGen as the USA alone accounts for around one third of theWorld nutraceutical market. Metagenics Inc., which is headquartered in San Clemente, California, is aleading developer, manufacturer and marketer of nutraceuticals, dedicated toresearch and evaluating the effects of natural ingredients on generic expressionand protein activity. Metagenics states that it serves over 30,000 healthcarepractitioners in North America. ReGen produces bulk ColostrininTM in South Dakota. Currently its productioncapacity is two million units per annum and a further extension of itsmanufacturing capability to ten million units per annum is possible and withinthe financial resources of the Company (a unit is thirty days supply). ReGenmakes a profit of about $5 per unit, which includes manufacturing profit androyalties. In March 2008 ReGen announced a licensing deal with Golgi PharmaceuticalsLimited for distribution of the product in Cyprus. ReGen is currently discussinglicensing arrangements with potential partners in other markets particularlyJapan and Europe. In 2007 sales of ColostrininTM for ReGen were £63,810. Currently this year ReGenhas already received orders worth $168,000, excluding royalties, and this doesnot include stocking in Cyprus. For the record ColostrininTM is now launched inthe United States, Canada and Australasia. SCIENTIFIC DEVELOPMENT The primary focus of R&D in 2007 was the need to support the commercialisationof ColostrininTM as a nutraceutical product and our continuing efforts to definethe utility of zolpidem in the rehabilitation of brain trauma. Several peerreviewed publications and highly visible presentations (particularly the one inAustralia already referred to supporting the launch of ColostrininTM) have beenmade during the year. ColostrininTM and derived peptides In 2007 ReGen made significant progress in understanding both the diversity ofColostrinin'sTM mode of action and its potential utility in various age relateddisorders. The development of a new assay has commercial benefits, in its speed andsimplicity, as well as its scientific use. Consistent with the previous findings that ColostrininTM inhibits theaggregation of beta amyloid, a simple potency assay had been developed andpublished in the peer reviewed Journal of Neuroscience Methods (2007;160(2):264-8). The assay is particularly attractive since thioflavin, a capture agent,fluoresces only when bound to toxic amyloid fibrils, not the non-toxic monomers.In addition the reaction is completed within one minute and thioflavin does notinterfere with aggregation of amyloid fibrils. It is hoped that in the nearfuture this assay can be used to quickly quantify the potency of ColostrininTMbefore final formulation into tablets. Using this assay, it was also shown thatColostrininTM not only prevents the aggregation of beta amyloid, but it can alsosolubilize existing toxic fibrils in a dose and time-dependent fashion. The implication of reactive oxygen species (ROS) in inflammatory andneurodegenerative diseases is now well documented. Therefore the ability ofColostrininTM to reduce oxidative stress, which has been further confirmed bythe University of Texas Medical Branch (UTMB) scientists in both in vitro and invivo studies using senescence accelerated mice (SAMP) is very important (SAMPmice are inbred mice predisposed to premature ageing). The in vitro results havebeen published in the peer reviewed journal Neuropeptides (2007;41(2):93-101).This showed that ColostrininTM significantly slowed the ageing of culturedmurine diploid fibroblast cells and increased their lifespan. This was shown tobe associated with a decrease in the intracellular levels of reactive oxygenspecies, which may be due to senescence-associated mitochondrial dysfunction.These data suggest that ColostrininTM may delay the development of cellularageing at the level of the mitochondia. These findings were confirmed in asubsequent in vivo study published in Neurodegenerative Diseases (207;4:264),which showed that ColostrininTM given in drinking water increased the lifespan,motor and neurological performance of SAMP mice. Of considerable importance for the longer term future of the ColostrininTMpeptides for the treatment of Alzheimer's disease and for the use ofColostrininTM itself as a treatment for 'healthy brain function' was theacceptance of a review article entitled: "ColostrininTM - An Oxidative StressModulator for Prevention and Treatment of Age-Related Disorders" in the Journalof Alzheimer's Disease (JAD) co-authored by Boldogh I. and Kruzel M. JAD is themajor Journal for the audience in age-related disorders. This is about to bepublished. A second publication in 2008, in the International Archives ofAllergy and Immunology entitled: "The Non-Allergenic ColostrininTM PreventsResponses to Common Allergens" was co-authored by Boldogh I, Choudhury BK,Aguilera-Aguirre L, Bacsi A and Kruzel M and was published online in March 2008. ColostrininTM Pharmaceutical Peptides With regard to the peptide programme, we reported in December 2007 on thepreliminary findings of a microarray analysis to determine how gene expressionprofiles were altered following treatment of cells with ColostrininTM. This workhas produced a number of interesting leads, three of which we are now followingup. Two of the peptides favourably modulate genes associated with Alzheimer'sdisease and another a gene associated with obesity. These leads, either as synthetic peptides or peptide mimetics, are beingdeveloped to address the pharmaceutical market. A classical pharmaceuticalpre-clinical candidate is possible in 2009. Despite sales of around $11.8billion in 2006 (source Espicom) the neurodegenerative markets do not havesatisfactory treatments. A new product with efficacy and a good safety profilewould be extremely attractive both on medical and health economics grounds. Withregard to obesity there is considerable concern surrounding the leading productXenical (orlistat), but even this product has sales of about $1billion perannum, so once again a safe and effective product could be a major revenuegenerator. Veterinary ColostrininTM Also in December 2007 ReGen announced that preliminary results of a study ofColostrininTM in the treatment of dementia in ageing dogs looked encouraging.The dosing phase of the study had been completed and a preliminary report basedon 22/23 subjects showed that ColostrininTM was well tolerated and that '40% ofowners felt that there had been signs of improvement' throughout the trial.These findings and a similar study in cats were confirmed in an announcement on11 February 2008. Nicholas Mills, Principal Investigator to the study, said,"These results clearly show that ColostrininTM can significantly reduce thesymptoms of cognitive dysfunction in aged cats and dogs". Zolpidem In August 2007 the Company announced the successful completion of its Phase IItrial in South Africa where it established that a 2.5mg dosage of a newsublingual formulation of zolpidem is non-sedating. The Company is currentlyplanning a further trial in the UK to establish an effective and non-sedatingmultiple dose regimen to allow practical treatment for extended periods. The Company has a scientific background programme attempting to understand themode of action of zolpidem in brain trauma. We should also stress that a very large amount of media interest was generatedby the zolpidem discovery. Two TV programmes were screened on zolpidem during2007. The first one in March on the Discovery Channel was an excellent programmeand gave full prominence to ReGen. The second in October on BBC was lessscientific, but generated more audience interest. Both of these programmesraised our profile. SUMMARY The launch of ColostrininTM in the World's largest nutraceutical market is a keyachievement. Additionally, the product was launched in Australasia. Majorscientific progress was made in the development of the ColostrininTM peptide andzolpidem projects. ReGen is getting to a stage now where the nutraceuticalproduct can take the Company into sustainable profitability and the developmentof its science programme in 2008 could lead to major licensing deals. Percy W LomaxExecutive Chairman Further information: Percy LomaxReGen Therapeutics PlcTel: 020 7153 4920 Roland Cornish/Felicity GeidtBeaumont Cornish LimitedTel: 020 7628 3396 Nick Bealer/David ScottAlexander David Securities LimitedTel: 020 7448 9800 REGEN THERAPEUTICS PLC Consolidated income statement for the year ended 31 December 2007 2007 2006 £ £ (Unaudited) (Audited) Revenue 311,488 404,918 Cost of sales 107,985 208,789 ________ ________ Gross Profit 203,503 196,129 Research and development costs 802,303 825,888Other administrative costs 1,654,185 1,672,486Impairment of intangible assets 348,562 19,546 ________ ________ Administrative expenses 2,805,050 2,517,920 ________ ________ Operating loss (2,601,547) (2,321,791) Finance income 56,537 36,003Finance costs (8,581) (8,675) ________ ________ Loss before taxation (2,553,591) (2,294,463) Taxation 168,517 118,406 ________ ________ Loss after taxation (2,385,074) (2,176,057) ________ ________ Basic and diluted loss per Note 6 (25.71)p (0.37)pshare All amounts relate to continuing activities REGEN THERAPEUTICS PLC Consolidated Statement Of Changes In Equityfor the year ended 31 December 2007 Share Share Other Retained Total Capital Premium Reserves Earnings £ £ £ £ £Audited At 1 January2006 5,797,689 10,437,948 242,308 (13,653,279) 2,824,666 Net income - - - - -recogniseddirectly inequity Loss for theyear - - - (2,176,057) (2,176,057) _________ _________ _________ ________ _________ Totalrecognisedincome andexpense forthe year - - - (2,176,057) (2,176,057) Issue ofshare 194,562 1,553,888 23,437 - 1,771,887capital Recognitionofshare based - - - 7,348 7,348payments _________ _________ _________ _________ _________ Balance at 31December 2006 5,992,251 11,991,836 265,745 (15,821,988) 2,427,844 Unaudited Net income - - - - -recogniseddirectly inequity Loss for theyear - - - (2,385,074) (2,385,074) _________ _________ _________ _________ _________ Totalrecognisedincome andexpense forthe year - - - (2,385,074) (2,385,074) Issue ofshare 331,584 1,977,558 - - 2,309,142capital Recognitionofshare based - - - 88,184 88,184payments _________ _________ _________ _________ _________ Balance at 31December 2007 6,323,835 13,969,394 265,745 (18,118,878) 2,440,096 _________ _________ _________ _________ _________ REGEN THERAPEUTICS PLC Consolidated balance sheet at 31 December 2007 2007 2007 2006 2006 £ £ £ £ (Unaudited) (Unaudited) (Audited) (Audited) Non current assetsProperty, plant andequipment 2,674 26,317Intangible assets 1,946,559 2,260,400 ________ ________ 1,949,233 2,286,717Current assetsInventories 6,649 20,131Trade and otherreceivables 212,779 229,518Tax receivable 145,833 115,464Cash and cash equivalents 587,837 508,045 ________ __________Total current assets 953,098 873,158 ________ ________ Total assets 2,902,331 3,159,875 ________ ________LiabilitiesCurrent liabilitiesTrade and other payables 311,636 559,591Loans and borrowings 50,599 72,440 ________ ________Total current liabilities 362,235 632,031 Non current liabilitiesProvisions 100,000 100,000 ________ ________ Total liabilities 462,235 732,031 ________ ________ Total net assets 2,440,096 2,427,844 ________ ________ EquityShare capital Note 5 6,323,835 5,992,251Share premium 13,969,394 11,991,836Other reserves 265,745 265,745Retained earnings (18,118,878) (15,821,988) ________ ________ Total equity 2,440,096 2,427,844 ________ ________ REGEN THERAPEUTICS PLC Consolidated cash flow statement for the year ended 31 December 2007 2007 2007 2006 2006 £ £ £ £ (Unaudited) (Unaudited) (Audited) (Audited) Loss before taxfor the (2,553,591) (2,294,463)financial year Impairment of 348,562 19,546goodwill Amortisation ofintangible 34,910 125,252assets Depreciation ofproperty, 24,353 7,588plant andequipment Share option 88,184 7,348charge Interest 8,581 8,675charged Interest (56,537) (36,003)credited Taxation 138,148 84,872received ________ ________Operating cashflowsbeforemovements in (1,967,390) (2,077,185)working capitalandprovisions Decrease/(increase) in 13,482 (15,855)inventories Decrease/(increase) in 16,739 (1,930)receivables (Decrease)/increase in (247,956) 18,501payables ________ ________ Net cashoutflow from (2,185,125) (2,076,469)operatingactivities ________ ________Cash flows frominvestingactivities Interest 56,537 36,003received Purchase ofsubsidiary, - (21,360)net of cashacquired Purchase ofproperty, (710) (12,725)plant andequipment Purchase ofintangible (69,630) (92,173)assets ________ ________ Net cash usedin investing (13,803) (90,255)activities ________ ________Cash flows fromfinancingactivities Proceeds fromissue of 2,486,875 1,930,000share capital Expenses paidon share (177,733) (183,112)issue Interest paid (8,581) (8,675) ________ ________ Net cash fromfinancing 2,300,561 1,738,213 activities ________ ________Net increase /(decrease)in cash and 101,633 (428,511)cashequivalents Opening cashand cash 435,605 864,116equivalents ________ ________ Closing cashand cash 537,238 435,605equivalentsNote 7 ________ ________ ReGen Therapeutics Plc Notes forming part of the financial statements for the year ended 31 December 2007 1 Basis of preparation The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs and IFRIC interpretations)issued by the International Accounting Standards Board (IASB) as adopted byEuropean Union ("adopted IFRSs") and with those parts of the Companies Act 1985applicable to companies preparing their accounts under IFRS. This is the firsttime the Group has prepared its financial statements in accordance with IFRSs,having previously prepared its financial statements in accordance with UKaccounting standards. The Group's date of transition to IFRS is 1 January 2006being the start of the previous period that has been presented as comparativeinformation. Reconciliations to previously presented financial statements wereset out in the interim statement. The financial information contained in this announcement does not constitutestatutory financial statements within the meaning of Section 240 of theCompanies Act 1985. The financial information for the year ended 31 December2006 has been extracted from the statutory financial statements for that year,which have been filed with the Registrar of Companies. The financial informationhas been converted and presented in accordance with IFRS. The audit report onthose financial statements was unqualified and did not contain any statementunder Sections 237 (2) or (3) of the Companies Act 1985. It did contain,however, an explanatory paragraph dealing with a fundamental uncertaintyrelating to going concern. The financial information for the year ended 31December 2007 has been extracted from the draft statutory financial statementsfor that year upon which the auditors have yet to report. The auditors haveindicated that their final audit report will contain an explanatory paragraphdealing with the going concern referred to in note 3. 2 Events after the balance sheet date On 26 March 2008, the Company issued 629,685 ordinary shares of 10p each at apremium of 22.5p per share for a consideration of £204,648. On 27 March 2008, the Company issued 130,000 ordinary shares of 10p each at apremium of 22.5p per share for a consideration of £42,250. On 27 March 2008, the Company issued 138,889 ordinary shares of 10p each at apremium of 26p per share for a consideration of £50,000 representing the drawdown fees payable upon entering in to an agreement with Duke HoldingsCorporation Limited ("Duke") under which Duke will make available to the Companyan initial equity credit facility. The Company has an initial facility of£2,000,000, which is available for 24 months in two tranches of £1,000,000, withdraw downs based on traded share volumes achieved by the Company. 3 Going concern The financial statements have been prepared on a going concern basis. However,the Group's ability to continue as a going concern is reliant upon successfullyobtaining funds to finance ongoing development. In considering theappropriateness of this basis of preparation the directors have reviewed theCompany's working capital forecasts. They believe that the funds raised recentlytogether, with the use of further options being considered, taken in conjunctionwith revenues from licensing will be sufficient for the Group's purposes for aminimum of 12 months from 31 March 2008. If licensing deals, further fundraisingor ongoing development programmes are not successful then adjustments may benecessary to write down assets to their recoverable amounts, reclassify fixedassets and long term liabilities as current and provide for additionalliabilities. 4 Accounting policies Implementation of IFRS In implementing the transition to IFRS, the Group has followed the requirementsof IFRS 1 " First Time Adoption of International Financial Reporting Standards",which in general requires IFRS accounting policies to be applied fullyretrospectively in deriving the opening balance sheet at the date of transition.IFRS 1 contains certain mandatory exceptions and some optional exemptions tothis principal of retrospective application. Where the Group has taken advantageof the exemptions they are noted below. The adoption of IFRS represents anaccounting change only and does not affect the operations or cash flow of theGroup. The principal areas of impact are described below. Goodwill and Business Combinations (IFRS 3) The Group has elected to take the exemption not to apply IFRS 3 retrospectivelyto business combinations occurring prior to the date of transition to IFRS.Goodwill arising on such acquisitions has therefore been frozen at its UK GAAPcarrying value of £1,187,253 at 1 January 2006. A goodwill impairment review wasundertaken as at 1 January 2006. Research and development (IAS 38) Research expenditure is recognised in the income statement in the year in whichit is incurred. Development expenditure is recognised in the income statement in the year inwhich it is incurred unless it meets the recognition criteria of IAS38"Intangible Assets". Regulatory and other uncertainties generally mean thatsuch criteria are not met. Where, however the recognition criteria are met,intangible assets are capitalised and amortised on a straight-line basis overtheir useful economic lives from product launch. This policy is in line withindustry practise. Previously under UK GAAP all development expenditure wasexpensed. Employee benefits (IAS19) The Group has complied with the provisions of IAS 19 and has accrued holiday payfor all staff from the date of transition. No accrual is necessary at the 31December 2007 as it is the Company's policy not to carry over holiday into thenext year. Share-based payment The Group adopted FRS 20 last year. This is the same as IFRS 2 "Share-basedpayments" which continues to apply to employee options granted after 7 November2002 that had not vested by 1 January 2005. 5 Share Capital On 6 February 2007, the Company issued 151,841,668 ordinary shares of 0.1p eachat a premium of 0.65p per share for a consideration of £1,138,813. On 14 June 2007, the Company issued 179,741,600 ordinary shares of 0.1p each ata premium of 0.65p per share for a consideration of £1,348,062. The issued shares rank pari passu with existing shares. On 20 November 2007 there was a reorganisation of the Company's share capitalwhereby a resolution was passed at an Extraordinary General Meeting of theCompany at which every one hundred existing ordinary shares of 0.1p each wereconsolidated into one new ordinary share with a nominal value of 10p. 6 Loss per share 2007 2006NumeratorLoss for the year 2,385,074 2,176,057 _________ _________ DenominatorWeighted average number of shares of 10p/0.1p 9,276,893 595,192,463 ________ ________ The Company has instruments that could potentially dilute basic earnings pershare in the future, but that have not been included in the calculation ofdiluted earnings per share because they are antidilutive for the periodspresented. This year's loss per share has been impacted by the shareconsolidation which took place on 20 November 2007. 7 Note supporting cash flow statement Cash and cash equivalents comprises: 2007 2006 £ £ (Unaudited) (Audited) Cash available on demand 18,579 34,549Short-term deposits 569,258 473,496 ________ ________ Cash and cash equivalents 587,837 508,045Overdraft (50,599) (72,440) ________ ________ 537,238 435,605 ________ ________ The annual report and financial statements for the year ended 31 December 2007will be sent to all shareholders in due course and copies will be available onthe web site www.regentherapeutics.com and from the company's business addressat 73 Watling Street, London, EC4M 9BJ. This information is provided by RNS The company news service from the London Stock Exchange