Medical Marketing International Group - (MMG).

Medical Mkting Int'l Interim Results


RNS Number:8591N
Medical Marketing Int'l Group PLC
14 December 2006


MMI announces interim results for the six months ended 30 September 2006


December 14th 2006. Medical Marketing International Group plc (the "Company")
(AIM:MMG) the UK virtual pharmaceutical development company focused on drugs for
the treatment of cancer and infectious diseases, today announces its interim
results for the six months ended 30 September 2006.

Highlights

DNA vaccines

* Completed 2nd dose cohort recruitment for Phase IIa prostate cancer
trial
* Broad spectrum cancer vaccine trial progressing
* Using platform to develop therapeutic vaccines for serious infections,
including influenza, TB and HPV
* Clinical programme for influenza expected to commence in 2007

Chemotherapy

* First three compounds successfully manufactured to GMP/clinical grade
standard
* Key data from preclinical studies available for review in early 2007
* Clinical trials expected to commence following review of preclinical
data

Ribozyme anti-virals

* Ribozyme shown to block HIV infection in vitro
* Advanced in vivo proof-of-concept model on schedule
* Developed novel biological delivery mechanism
* Hepatitis B ribozyme shares same delivery mechanism

Corporate

* Partnering discussions for all three therapeutic platforms ongoing
* Mark Burton appointed as Chief Technical Officer
* Dr Mike Rance appointed as Non-executive Director

Financial

* As planned, R+D expenditure tripled, resulting in retained loss of #1.6 million
* Maintained income
* Net cash of #7.4 million as at 30 September 2006

2006 2005 Change
# # %
Turnover 156,298 153,256 2.0
Research and development costs (1,047,244) (332,153) 215.3
Operating loss (1,972,475) (1,008,242) 95.6
Retained loss (1,605,832) (979,231) 64.0
Loss per ordinary share (basic and diluted) (2.74)p (1.93)p 42.0
Net cash 7,401,377 960,413 670.6
Shareholders' funds 9,331,802 2,663,773 250.3


Commenting on the results, David Best, Executive Chairman, said:

"We are delighted that all three of our major therapeutic platforms have
progressed significantly along the development pathway and up the value curve,
all within budget. With a robust and diverse pipeline, an enhanced management
team, and with product news expected from each area of our portfolio, we will
start 2007 with great confidence."

-ends-

Contacts
Medical Marketing International Group plc Brunswick Group LLP
David Best Justine McIlroy / Margherita Lupi /
Executive Chairman Jon Coles
Tel. +44 (0) 207 404 5959
Rob Sprawson
Chief Financial Officer
Tel: +44 (0) 1223 477 677


About MMI Group

MMI is a virtual pharmaceutical development company that identifies, acquires
and develops world-class compounds and technologies from leading academic
organisations. These technologies are aimed at producing blockbuster drugs to
satisfy unmet needs in major therapeutic markets. The company manages the
preclinical and early clinical development of drug candidates before pursuing
licensing partners to manage late-stage development. Through its three platform
technologies MMI has a risk-balanced portfolio of compounds in development for
the treatment of cancer and infectious disease. Please visit www.mmigroup.co.uk
for further information.

Executive Chairman's report

During the last year we have, as planned, used our strong balance sheet to more
than treble our R&D expenditure on progressing our three therapeutic platforms.
I am pleased to be able to report that this investment has taken each of these
platforms significantly higher up the development and hence value curve. We are
now in a position that is unusual in our sector as we have not one, but three,
defined and diverse therapeutic platforms, all of which are of interest to
global pharmaceutical companies. Our cash of #7.4 million, is sufficient for us
to add significant value to each of the therapeutic platforms and to enable us
to choose the optimum time to enter into commercial partnerships, thus
maximising shareholder benefit.

DNA vaccines

Recent clinical results with novel immunotherapies have been largely positive
which, together with refreshed interest in vaccines, has lead to the acquisition
of various DNA vaccine technologies by major pharmaceutical companies. Our
technology is at the forefront of the DNA vaccine field with our proprietary
tetanus toxin system and we are now applying this not only to cancer but also to
serious infections including influenza, tuberculosis (TB) and human papilloma
virus (HPV), one of the major causes of cervical cancer.

The principal application of our DNA vaccine platform in cancer is also
progressing. The preliminary assessment of responses in the follicular lymphoma
cancer vaccine trial showed increasing antibody to the tetanus toxin or T cell
responses in eight out of ten patients. This demonstrated that the vaccine is
successfully presenting antigens to the immune system. Five of these patients
demonstrated T cell responses to their specific cancer antigen and all five
patients remained in complete remission or with very low volume of local disease
at one to two years from the start of vaccination. A clinical trial with
prostate cancer using our vaccine technology has completed recruitment for the
second of three dosing cohorts. No adverse events have been reported to date and
we expect to be in a position to review the data from the first dose cohort
towards the end of 2006. The vaccine technology is additionally being used in a
Cancer Research UK trial for patients who have tumours which express
carcino-embryonic antigen (CEA), an antigen present in 70% of all tumours. This
trial is focusing primarily on the treatment of patients with colon and lung
cancer.

With the safety of the DNA vaccine technology now demonstrated in nearly 70
patients we believe that it is now the right time to apply the technology to
serious infections such as influenza, TB and HPV. Major advantages of DNA
vaccines over traditional vaccine technology include the speed with which
vaccines against new pathogens can be developed and the relatively low
production cost. This is particularly important in, for example, pandemic
influenza. We expect to begin a clinical programme using our DNA vaccine for
influenza before the end of 2007.

Further patents received notification of grant in Europe, strengthening our
proprietary position in the use of immunostimulants as fusion vaccines.
Discussions with pharmaceutical companies continue with interest ranging from
acquiring our whole DNA platform to licensing specific applications of it.

Chemotherapy

We have previously shown that our patented organometallic complexes based on the
precious metal ruthenium are more effective and have a better safety profile
than the benchmark platinum based drugs in in vitro laboratory tests using human
cancer cells. If we can demonstrate these advantages in clinical trials, then
our ruthenium drugs have the potential to replace the market leading platinum
based ones. Our objectives are to complete the appropriate preclinical tests to
substantiate our early findings and to satisfy the regulatory requirements for
beginning the clinical development of these compounds.

Two of our patented compounds (MMI/ONCO 4402 and MMI/ONCO 4403) are being
progressed through a preclinical programme, using standard models and approaches
that are accepted in the industry for cytotoxic compound development. The
compounds used for these studies have been manufactured to clinical trials grade
by SAFC Pharma in their FDA-approved high potency facility in the US. The
production of a third compound (MMI/ONCO 4417) has also been successfully scaled
up and manufactured to clinical grade. We have also appointed SAFC Pharma to
provide us with the on-going stability testing of these compounds. Efficacy
studies in the laboratory using human cancer cell lines demonstrate these
clinical materials to be equivalent to those prepared in earlier research.

The preclinical programme has the principal objective of determining the safe
starting dose for initiating clinical trials. The data also provides us with the
pharmacokinetic characteristics (how long and at what concentration the
compounds remain in the body) of the ruthenium drugs. The key data from these
pivotal preclinical studies will be available for review in January 2007 and
will be used to select the lead compound for clinical evaluation.

Several major pharmaceutical companies are interested in collaborating with us
on ruthenium. However, products in the clinic are valued much more highly than
those at a preclinical stage. As the planned clinical trials for ruthenium are
in our existing budget it would not, therefore, be in shareholder's interests to
conclude a commercial arrangement at the preclinical stage.

Ribozyme anti-virals

There are over 40 million people currently living with HIV/AIDS and whilst the
majority of cases are in sub-Saharan Africa, the epidemic has advanced further
in more developed markets as well. In Europe and North America, the number of
infected individuals rose to 2.1 million in 2006 and in Western Europe the rate
of new diagnoses doubled in the period 2000-2005, with the UK showing the
largest increase. The global market for HIV drugs is currently worth some $8bn,
with highly active anti-retroviral therapy (HAART), a cocktail of anti-HIV
drugs, being the cornerstone of therapy. However, HAART has significant side
effects, can be complicated to administer and does not provide a cure for HIV.
Ultimately, many patients fail on their HAART regimens as the virus becomes
progressively resistant to the individual components of the cocktail. Hence
there is a real need for novel, innovative therapies and in this context, many
pharmaceutical companies are investigating a new class of drugs known as "viral
entry inhibitors", which prevent the HIV virus entering and infecting its target
cells.

Our anti-HIV ribozyme acts as a viral entry inhibitor and our studies have shown
that it is highly effective in preventing the expression of cellular receptors
needed for HIV entry, with the result that treated cells become resistant to HIV
infection. We have developed a biological delivery system for this ribozyme
which has been found to be highly efficient in delivering the ribozyme to the
required cells and the production of the ribozyme appears to be prolonged. This
means that infrequent dosing may offer long-term protection against the virus.
We will shortly be testing the ribozyme in an advanced in vivo model and should
this confirm earlier laboratory findings, will provide significant
proof-of-concept for the product, opening the way to clinical studies.

Our second ribozyme product is directed against Hepatitis B (HBV) and may also
use our biological delivery system. HBV infection is a massive worldwide
problem. There are currently no effective therapies and yet one in three people
have been infected at some point and 350 million people are chronically
infected.

Our ribozyme approach for the treatment of viral diseases by targeting RNA comes
at an opportune time as recent interest in RNAi has increased dramatically.
Virxsys recently announced some success in a clinical trial involving a
biological delivery system very similar to our own, albeit against a viral
target that could be rendered inactive by adaptive viral mutation. The 2006
Nobel Prize for Medicine was awarded to the scientists who discovered RNAi and
Merck has made an acquisition of an RNAi company valued at c$1bn. Our technology
is competitive in this new and exciting field and has already triggered the
interest of major pharmaceutical companies.

Financial

At the end of September 2005 we raised #10 million (received in early October
2005) to fund the development programmes of our three therapeutic platforms.
Accordingly, research and development costs have trebled, as planned, resulting
in the retained loss for the period increasing to #1.61 million (2005: #0.98
million). The increase in the Group's net assets to #9.39 million (2005: #2.72
million) is principally the result of the fundraising referred to above and the
associated increase in interest received. Net cash at 30 September 2006 was
#7.40 million (2005: #0.96million), a 670% increase.

In line with current best practice we have revised the definition of research
and development expenditure as set out in note 1 to the interim results and the
comparative figures have been revised accordingly. Using the revised definition,
research and development expenditure increased to #1,047,244 (2005: #332,153).

Administrative expenses include a charge of #202,496 (2005: #46,687) in relation
to the adoption of FRS 20 "Share-based payment" in these interim results. The
adoption of this accounting standard represents a change in accounting policy
and the comparative figures have been restated accordingly. Administrative
expenses excluding the FRS 20 charge have increased by approximately 12%, which
is primarily due to the planned recruitment of additional staff and salary
rises.

Turnover for the period of #156,298 (2005: #153,256) includes #105,051 in
relation to the full and final settlement of the agreement between the Company,
Octopus Asset Management Limited and Bioscience VCT plc (now called Hygea VCT
plc).


The MMI team

We have also continued to strengthen the Board. During the period we promoted
Mark Burton to the Board as Chief Technical Officer, a logical step following
his contribution to the substantial progress of our DNA vaccines and
chemotherapies, and immediately after the AGM we appointed Dr Mike Rance, who
had previously held a senior position at AstraZeneca, as a Non-executive
Director. Roland Cornish left the Company at the same time to concentrate on his
own growing business. We all thank Roland for his contribution over the past
five years and we wish him well with his own company. We intend to appoint
another Non-executive Director in the near future.

As our three therapeutic platforms move up the development curve, the work
increasingly requires industrial rather than academic skills. Consequently, we
have seen a transfer of work into our own laboratories. This planned shift has
lead to a small number of new appointments in our Cambridge based development
team.


Summary and outlook

During the period we have progressed each of our three platform technologies
further along the development process. This reduces risk and adds value.
Although there is more work to be done, we have sufficient funds to complete key
value-adding tasks for each of these platforms and this will take them further
up the value curve. There is interest from major pharmaceutical companies across
the whole portfolio and we remain on track to have three platforms of drugs,
each of which could produce a series of blockbusters. We have a robust and
diverse pipeline, a sound balance sheet and an enhanced team and we are in a
strong position to secure commercial partnerships when these are in the best
interests of shareholders.

David Best
Executive Chairman



Consolidated profit and loss account

for the six months ended 30 September 2006

Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
Unaudited Unaudited Audited
Restated Restated
Note # # #
Turnover 2 156,298 153,256 199,866
Research and development costs (1,047,244) (332,153) (1,216,303)
Administrative expenses (1,081,529) (829,345) (2,127,736)
--------- --------- --------
Operating loss (1,972,475) (1,008,242) (3,144,173)

Net interest receivable 172,706 21,855 211,395
--------- --------- --------
Loss on ordinary activities
before taxation (1,799,769) (986,387) (2,932,778)
Tax on loss on ordinary
activities 3 - - 21,080
--------- --------- --------
Loss on ordinary activities
after taxation (1,799,769) (986,387) (2,911,698)
Equity minority interests 193,937 7,156 137,067
--------- --------- --------
Retained loss for the period (1,605,832) (979,231) (2,774,631)
========= ========= ========

Loss per 0.2p ordinary share
Basic 4 (2.74)p (1.93)p (5.10)p
========= ========= ========
Diluted 4 (2.74)p (1.93)p (5.10)p
========= ========= ========


All activities derive from continuing operations.

There are no recognised gains and losses other than as stated in the profit and
loss account.



Reconciliation of movement in Group shareholders' funds
for the six months ended 30 September 2006

Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
Unaudited Unaudited Audited
Restated Restated
Note # # #
Opening shareholders' funds
(as previously stated) 10,735,138 3,586,317 3,586,317
Prior year adjustment - FRS 20
share option charge (161,487) (37,290) (37,290)
Prior year adjustment - FRS 20
credit to reserves 161,487 37,290 37,290
--------- --------- --------
Opening shareholders' funds
(restated) 10,735,138 3,586,317 3,586,317

Loss for the period (1,605,832) (979,231) (2,774,631)
FRS 20 credit to reserves 1 202,496 46,687 124,197
Proceeds from the exercise of
share options - 10,000 229,310
Proceeds (net of expenses)
from the placing of shares - - 9,569,945
--------- --------- --------
Net change in shareholders'
funds (1,403,336) (922,544) 7,148,821
--------- --------- --------
Closing shareholders' funds 9,331,802 2,663,773 10,735,138
========= ========= ========


Consolidated balance sheet
at 30 September 2006

30 September 30 September 31 March
2006 2005 2006
Unaudited Unaudited Audited
Note # # #

Fixed assets
Intangible assets 5 1,774,347 1,544,184 1,574,416
Tangible assets 387,000 210,474 242,724
--------- --------- --------
2,161,347 1,754,658 1,817,140
--------- --------- --------
Current assets
Debtors 365,622 291,833 564,593
Short term deposits 6,750,000 500,132 8,500,000
Cash at bank and in hand 662,566 480,056 679,819
--------- --------- --------
7,778,188 1,272,021 9,744,412
Creditors: amounts falling due
within one year (446,267) (298,857) (645,581)
--------- --------- --------
Net current assets 7,331,921 973,164 9,098,831
--------- --------- --------
Total assets less current
liabilities 9,493,268 2,727,822 10,915,971
Creditors: amounts falling due
after more than one year (5,210) (11,189) (6,521)
Provisions for liabilities and
charges (79,436) - (160,000)
--------- --------- --------
Net assets 9,408,622 2,716,633 10,749,450
========= ========= ========

Capital and reserves
Called up share capital 117,275 101,694 117,275
Share premium account 18,755,933 8,982,259 18,755,933
Other reserves 1,719,733 1,719,733 1,719,733
Profit and loss reserve (11,261,139) (8,139,913) (9,857,803)
--------- --------- --------
Equity shareholders' funds 9,331,802 2,663,773 10,735,138
Equity minority interests 76,820 52,860 14,312
--------- --------- --------
Capital employed 9,408,622 2,716,633 10,749,450
========= ========= ========





Consolidated cash flow statement
for the six months ended 30 September 2006

Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
Unaudited Unaudited Audited
Restated Restated
Note # # #

Net cash outflow from
operating activities 6 (1,823,848) (916,805) (2,538,986)

Returns on investments and
servicing of finance
Interest received 271,250 24,232 117,947
Interest element of finance
lease payments (919) (2,377) (4,177)
--------- --------- --------
Net cash inflow from returns
on investments and servicing
of finance 270,331 21,855 113,770

Taxation 3 - 16,846 37,926

Capital expenditure and
financial investment
Purchase of tangible fixed
assets (209,318) (1,077) (77,347)
--------- --------- --------
Net cash outflow from capital
expenditure and financial
investment (209,318) (1,077) (77,347)
--------- --------- --------
Net cash outflow before use of
liquid resources and financing (1,762,835) (879,181) (2,464,637)

Management of liquid resources
Decrease/(increase) in short
term deposits with banks 1,750,000 799,867 (7,200,000)
--------- --------- --------
Net cash flow from management
of liquid resources 1,750,000 799,867 (7,200,000)

Financing
Issue of ordinary share
capital (net of expenses) - 10,000 9,799,255
Capital element of finance
lease payments (4,418) (5,733) (9,901)
--------- --------- --------
Net cash flow from financing (4,418) 4,267 9,789,354
--------- --------- --------
(Decrease)/increase in net
cash (17,253) (75,047) 124,717
========= ========= ========

Reconciliation to net cash
Opening net cash 9,164,212 1,829,594 1,829,594
(Decrease)/increase in net
cash (17,253) (75,047) 124,717
Movement in liquid resources (1,750,000) (799,867) 7,200,000
Capital element of finance
lease payments 4,418 5,733 9,901
--------- --------- --------
Closing net cash 7,401,377 960,413 9,164,212
========= ========= ========



Notes to the interim results

1 Accounting policies

Basis of preparation
The interim results have been prepared in accordance with UK Generally Accepted
Accounting Practice on the basis of the accounting policies set out in the
Group's audited annual accounts for the year ended 31 March 2006 except as
stated below.
The financial information contained in this statement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The results for the six months ended 30 September 2005 and 30 September 2006
have not been audited. The figures for the year ended 31 March 2006, prior to
the restatement required for FRS 20 "Share based payment" (see below), have been
extracted from the statutory accounts which have been filed with the Registrar
of Companies and which are available on request from the Company Secretary at
The Bioscience Innovation Centre, Cowley Road, Cambridge, CB4 0DS. The auditors'
report on those accounts was unqualified.


New accounting standards
The Group has adopted, in these interim results, FRS 20 "Share based payment"
in respect of equity settled share based payments. In accordance with this
standard, the cost of share options awarded to employees under the Group's
share option schemes is measured by reference to their fair value at the date
of grant, with fair value being measured with a Black-Scholes pricing model.
The cost, recognised over the vesting period in the profit and loss account
with a corresponding movement in reserves, of the options is based on the
number of options which, in the opinion of the directors, will ultimately
vest. The cumulative cost relating to previous years has been recognised in
these interim results as a prior year adjustment and comparative figures have
been restated accordingly. The impact in the year ending 31 March 2006 is a
charge of #124,197, #46,687 of which relates to the six months ended 30
September 2005. The aggregate charge for periods up to 31 March 2005 is
#37,290 and the financial statements of prior periods have been adjusted
accordingly.


Research and development
The research and development accounting policy has remained unchanged however
the definition of research and development expenditure has been revised as set
out below. Comparative figures have been revised accordingly.
Fixed assets used for research and development are included as tangible fixed
assets and written off in accordance with the depreciation policy. Other
research and development expenditure is charged to the profit and loss account
as incurred and includes licence fees, patents, external contractors' charges,
laboratory consumables and relevant staff (on a pro rata basis), establishment
and equipment costs.

2 Turnover
Segmental analysis is as follows:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
Unaudited Unaudited Audited
Restated Restated
# # #
Fee income 51,126 97,322 165,653
Investment management 105,172 55,934 34,213
--------- --------- --------
156,298 153,256 199,866
========= ========= ========


Investment management revenue in the six months ended 30 September 2006
primarily relates to the full and final settlement of the agreement between the
Company, Octopus Asset Management Limited and Bioscience VCT plc (now called
Hygea VCT plc).

The segmental analysis of the operating loss and net assets by business class
has not been prepared on the basis that the costs incurred and assets utilised
across the Group support all these activities rather than supporting individual
business activities. All of the turnover and operating activities arises in the
United Kingdom. All net assets are based in the United Kingdom.

3 Taxation

No taxation arises in the period under review due to trading losses.

4 Loss per share

The calculation of loss per ordinary share is based on the loss for the first
six months of #1,605,832 (2005: #979,231) and the weighted average number of
ordinary shares of 0.2p each of 58,637,671 (2005: 50,846,606). The effect of the
share options is determined as being anti-dilutive.

5 Acquisitions

Genvax Limited

On 2 June 2006 the Company invested #150,000 in Genvax Limited by subscribing
for 300 new ordinary shares of 10p each. Immediately prior to this subscription
the Company owned 5,205 of the 10,205 ordinary shares in issue and Genvax
Limited had net liabilities of #64,849, giving rise to goodwill on consolidation
of #72,302.

On 5 September June 2006 the Company invested a further #297,500 in Genvax
Limited by subscribing for 595 new ordinary shares of 10p each. Immediately
prior to this subscription the Company owned 5,505 of the 10,505 ordinary shares
in issue and Genvax Limited had net liabilities of #3,700, giving rise to
goodwill on consolidation of #134,103.

At 30 September 2006 the Company owned 55% of Genvax Limited and it has an
agreement to subscribe for a further 900 shares at #500 per share which will
increase its ownership to 58%. On 1 December 2006 the Company subscribed for 300
of these shares by investing #150,000 in Genvax Limited.


Viratis Limited

On 3 April 2006 the Company invested #75,000 in Viratis Limited by subscribing
for 400 new ordinary shares of 0.1p each. Immediately prior to this subscription
the Company owned 3,200 of the 5,200 ordinary shares in issue and Viratis
Limited had net assets of #27,688, giving rise to goodwill on consolidation of
#26,025.

On 1 July 2006 the Company invested a further #75,000 in Viratis Limited by
subscribing for 400 new ordinary shares of 0.1p each. Immediately prior to this
subscription the Company owned 3,600 of the 5,600 ordinary shares in issue and
Viratis Limited had net assets of #41,371 giving rise to goodwill on
consolidation of #24,015.

At 30 September 2006 the Company owned 67% of Viratis Limited and it has an
agreement to subscribe for a further 1,200 shares at #187.50 per share which
will increase its ownership to 72%. On 2 October 2006 the Company subscribed for
400 of these shares by investing #75,000 in Viratis Limited.

6 Cash flow from operating activities
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
Unaudited Unaudited Audited
Restated Restated
# # #
Reconciliation of operating loss to
net cash outflow from operating
activities:
Operating loss (1,972,475) (1,008,242) (3,144,173)
FRS 20 share option charge 202,496 46,687 124,197
Depreciation of tangible fixed assets 65,042 47,056 91,074
Amortisation and impairment of goodwill 56,514 50,333 111,464
Decrease/(increase) in debtors 101,346 (16,919) (192,053)
(Decrease)/increase in creditors (196,207) (35,720) 310,505
(Decrease)/increase in provisions (80,564) - 160,000
--------- --------- --------
Net cash outflow from operating
activities (1,823,848) (916,805) (2,538,986)
========= ========= ========




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