RNS Number:0881P
GeneMedix PLC
27 August 2003
GENEMEDIX PLC
Interim Results for the six months to 31st May 2003
GeneMedix plc ("GeneMedix" or "the Company"), the UK generic biopharmaceutical
company with operations in Europe and Asia and with joint London and Singapore
Stock Exchange listings, announces its interim results for the six months to
31st May 2003. GeneMedix is involved in the development and manufacture of
therapeutic proteins using recombinant DNA technology and novel cell culture.
Key highlights for the period
* Collaborative Agreement signed with Antares Pharma to utilise injection
devices for the delivery of proteins
* Formation of a joint venture with Antibioticos Group and access to three
major new products
* Cash balances at period end - #3.4 million
* Cost of operation for Group in line with expectation as cost control
measures remain in force
Post period
* Collaborative Agreement signed with Penang Development Corporation of
Malaysia to set up facility for the manufacture of human insulin.
Milestone payment in excess of #2 million expected.
* #1.5 million fundraising round completed
Paul Edwards, Chief Executive Officer, commented:
"The Company has created a position where we have the opportunity to develop a
range of first and second generation biopharmaceutical products with the
potential to make a major market impact in Europe and USA.
However, as we commented last May, the Directors believe that we shall be unable
to fund all our ongoing and proposed new activities from existing financial
resources. We have therefore been actively progressing a number of major
commercial and corporate initiatives which we expect will strengthen our cash
position in the short and medium term."
27th August 2003
ENQUIRIES:
GeneMedix plc Tel: 01638 663 320
Paul Edwards, Chief Executive Officer
Bankside Consultants Tel: 020 7444 4140
Michael Padley / Susan Scott
Chief Executive Officer's Statement
In the first six months of the financial year, GeneMedix has continued to make
progress with its infrastructure and product development programmes, and has
broadened its product portfolio, although we have continued to manage our cash
situation tightly. The Company is now in a position where we have the
opportunity to develop a range of first and second generation biopharmaceutical
products, with the potential to make a major market impact in Europe and USA.
However, to pursue this strategy successfully, we will need to create a more
substantial infrastructure and have the ability to fund this growth. To this
end, we are in detailed discussions with a number of potential partners with the
aim of gaining access to additional funding for our existing programmes, as well
as the new opportunities to develop novel formulations or introduce new and
complementary products into our infrastructure. Whilst these discussions are
advancing we are exercising prudent cost control measures, which ensure that we
are undertaking expenditure only on current development programmes.
Corporate activities
We were pleased to announce the signing of a Letter of Intent ("LoI") under
which GMX and Penang Development Corporation (PDC) are working together to set
up a company in Penang, Malaysia for the development, manufacture and
commercialisation of human insulin. Under the LoI, GeneMedix has out-licensed
its existing insulin know-how to a newly-formed Malaysian company and will use
its expertise in the development of biopharmaceuticals and in the design,
construction and operation of state-of-the-art manufacturing facilities to
construct a facility built to international quality standards. The total
anticipated investment of US$34 million is to be funded by a mixture of
development loans, grants and an issue of equity in the newly formed company to
local investors. PDC has made land available, and has assisted in gaining access
to the development loans on attractive commercial terms and to grant funding.
GeneMedix will out-license its insulin know-how to the newly-formed company in
return for an up-front milestone payment and royalty fee payable on sales of
bulk product. GeneMedix will retain a majority shareholding in the new company,
which will be separately financed, and will complete the development of the
full-scale industrial process and technology transfer into the facility at its
own expense. Target completion date for the facility is mid 2005.
We expect to announce the capitalisation of the new venture over the coming
weeks, completion of which will trigger a milestone payment to GeneMedix of a
minimum of #2 million.
In February we completed an Agreement with Antibioticos Spa of Milan, Italy,
under which we gained exclusive access to three new cell lines for the
production of Interferon-beta, G-CSF and human growth hormone, which currently
have a worldwide market of US$ 4 billion. In March we announced a collaboration
with Antares Pharma, Inc (Nasdaq: ANTR) through which Antares' current and
future injection devices will be used to support our introduction of generic
proteins into certain territories.
We also continued to work closely with our partners, SkyePharma (LSE: SKP;
Nasdaq: SKYE) in the development programme for a slow release version of
interferon-alfa.
Programmes
The Company has continued to pursue a strategy of developing both "generic"
versions of biopharmaceuticals that are due to come off patent in the EU and
other territories, and "second generation" versions of these products by
developing innovative formulations of our portfolio products with collaboration
partners.
To this end, we have continued with our development programmes for EPO and
rhInsulin, as well as successfully completing our Malaysian clinical programme
for GM-CSF. Also we have been engaged actively in dialogue with the CPMP
regarding our programme for illustrating comparability between our version of
EPO (Epostim) and the innovator product. Our approach to the registration of our
products has been to rely on a strong scientific basis for the design of our
clinical strategy, and having received scientific advice from the CPMP on the
regulatory pathway for the production of Epostim, we are confident that our
clinical programmes are well designed to enable comparability with the marketed
product. However, when we take into account the demands of exhibiting consistent
comparability with the marketed product, the outstanding patent issues and the
time from submission of a dossier to receipt of final approvals, we believe it
will be extremely difficult for any company to launch a generic version of EPO
prior to 2006. In line with this conclusion, we have amended our launch
forecasts for Epostim to late 2006.
With regard to second generation products, we have been progressing our
collaboration with SkyePharma, for the development of an extended release
formulation of interferon alpha-2b, using SkyePharma's Depofoam(TM) injectable
drug technology. Our recent collaboration with Antibioticos gives us access to
G-CSF, Interferon-beta and human growth hormone, all of which have the potential
to be successfully formulated as extended release versions. The potential to
develop these "second generation", improved formulations is becoming an
increasingly significant opportunity for the Company and forms the basis of a
number of the discussions we are having currently with corporate partners.
It is now evident that GM-CSF has not achieved a foothold in China and therefore
does not provide an attractive market for a generic version of this protein. As
such, we do not anticipate any significant sales of this product in China. We
are evaluating currently a number of options to bring in new products and the
setting up of contract manufacturing or development and, to this end, the
facility has been shut for the past four months, whilst upgrades of some major
items of plant have occurred. This process is nearing completion and we
anticipate that an announcement regarding the future direction of the plant will
be made over the coming months.
Financial review
Operating losses of #2.7 million and cash burn for the period were within
expectations. There was little capital expenditure during the period except on
the plant upgrades in China. Administration costs were up on Quarter 1 levels
due to the high amount of corporate activity that occurred in the period. We
also had a substantial amount of product manufactured for our collaboration with
SKP, which caused an increase in our development costs on the previous quarter.
These costs will not be sustained in the second half of the year.
Cash balances at the end of the period were #3.4 million but we had a
mini-fundraising round immediately post the period end, which brought in #1.5
million from a number of existing investors in South-East Asia. Current
operating cash burn is approximately #1 million a quarter.
Outlook
Our twin strategy of developing both generic and second generation products
offers significant potential for GeneMedix and it is the Board's intention to
continue to follow this direction. However, as we commented last May, the
Directors believe that we shall be unable to fund all our ongoing and proposed
new activities from existing commercial activities, and are therefore looking to
attract additional cash in-flows over the coming months to address the resulting
funding shortfall.
We have received interest from a number of parties regarding various degrees of
collaboration and we are actively progressing a number of these initiatives. In
the light of these current discussions, we have instructed our financial
advisors, Nomura International, to examine a broad range of strategic options
available to the Company to maximise value for shareholders from our extensive
development portfolio.
Consolidated Profit & Loss Account
For the 6 months ended 31 May 2003
Notes Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 November
2003 2002 2002
(restated)*
# # #
Turnover 22,664 94,224 155,566
Cost of sales (9,245) (32,176) (91,719)
__________ __________ __________
Gross profit 13,419 62,048 63,847
Administrative expenses (1,783,348) (1,406,610) (3,509,446)
Research and development 1 (927,194) (1,177,389) (2,009,851)
Exceptional research and development 1 - - (3,250,000)
__________ __________ __________
Total research and development costs (927,194) (1,177,389) (5,259,851)
__________ __________ __________
Total operating expenses (2,710,542) (2,583,999) (8,769,297)
Operating loss (2,697,123) (2,521,951) (8,705,450)
Interest receivable 37,522 217,306 229,641
Interest payable (184,597) (13,824) (134,839)
__________ __________ __________
Loss on ordinary activities before taxation (2,844,198) (2,318,469) (8,610,648)
Tax on loss on ordinary activities - - -
__________ __________ __________
Loss on ordinary activities after taxation (2,844,198) (2,318,469) (8,610,648)
Equity minority interests 61,620 83,707 138,003
__________ __________ __________
Loss for the period (2,782,578) (2,234,762) (8,472,645)
__________ __________ __________
Loss per share - basic and diluted (1.0p) (0.8p) (2.9p)
__________ __________ __________
All of the results relate to continuing operations.
Consolidated Statement of Total Recognised Gains and Losses
For the 6 months to 31 May 2003
Notes Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 November
2003 2002 2002
(restated)*
# # #
Loss for the period (2,782,578) (2,234,762) (8,472,645)
Exchange adjustments offset in reserves (81,020) (53,512) (177,398)
__________ __________ __________
Total gains and losses recognised for the period (2,863,598) (2,288,274) (8,650,043)
Prior year adjustment 1 - (983,679) (983,679)
__________ __________ __________
Total gains and losses recognised for the period (2,863,598) (3,271,953) (9,633,722)
__________ __________ __________
* See Note 1
Consolidated Balance Sheet
As at 31 May 2003
Notes Unaudited Unaudited Audited
As at As at As at
31 May 31 May 30 November
2003 2002 2002
(restated)*
# # #
Fixed assets
Intangible fixed assets 7,813,144 4,279,526 4,121,335
Tangible fixed assets 7,564,625 6,277,186 7,095,090
Investment 2 11,607 - -
__________ __________ __________
15,389,376 10,556,712 11,216,425
__________ __________ __________
Current assets
Stock 195,270 120,206 146,402
Debtors - due within one year 1,069,245 604,973 788,695
Cash at bank and in hand 3,416,430 9,391,373 6,583,428
__________ __________ __________
4,680,945 10,116,552 7.518,525
Creditors: amounts falling due within one (2,330,096) (1,504,476) (2,145,890)
year
__________ __________ __________
Net current assets 2,350,849 8,612,076 5,372,635
__________ __________ __________
Total assets less current liabilities 17,740,225 19,168,788 16,589,060
Creditors: amounts falling due after one (1,600,993) (838,889) (1,454,041)
year
Debentures - convertible loan notes (7,276,193) - (3,319,007)
Provisions for liabilities and charges (42,005) (99,280) (42,753)
__________ __________ __________
Net assets 8,821,034 18,230,619 11,773,259
__________ __________ __________
Share capital and reserves
Called-up share capital 2,901,028 2,901,028 2,901,028
Share premium account 20,223,904 20,223,904 20,223,904
Profit and loss account 1 (14,721,283) (5,495,917) (11,857,685)
__________ __________ __________
Equity shareholders' funds 8,403,649 17,629,015 11,267,247
Equity minority interests 417,385 601,604 506,012
__________ __________ __________
Total capital employed 8,821,034 18,230,619 11,773,259
__________ __________ __________
* See Note 1
Consolidated Cashflow Statement
For the 6 months ended 31 May 2003
Notes Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 November
2003 2002 2002
(restated)*
# # #
Net cash outflow from operating activities (3,261,085) (1,195,038) (4,545,261)
Returns on investments and servicing of (29,918) 287,347 169,846
finance
Capital expenditure (496,818) (2,505,080) (4,082,257)
Acquisitions and disposals - - -
__________ __________ __________
Cash outflow before management of liquid (3,787,821) (3,412,771) (8,457,672)
resources and financing
Management of liquid resources 3,465,769 3,541,754 6,287,145
Financing 344,770 (39,040) 2,206,907
__________ __________ __________
Increase in cash in the period 22,718 89,943 36,380
__________ __________ __________
* See Note 1
Note to cash flow
Reconciliation of Operating Loss to Net cash Outflow from
Operating Activities
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 May 31 May 30 November
2003 2002 2002
(restated)*
# # #
Operating loss (2,697,123) (2,521,951) (8,705,450)
Depreciation charge 408,157 180,822 515,689
Amortisation 158,191 158,191 3,566,382
Increase in stock (48,868) (47,699) (73,895)
Increase in Debtors (296,580) (344,685) (374,816)
(Decrease)/Increase in Creditors (784,115) 1,437,078 640,150
(Decrease)/increase in Provisions (747) (56,794) (113,321)
__________ __________ __________
Net cash outflow from operating activities (3,261,085) (1,195,038) (4,545,261)
_________ _________ __________
NOTES
1. Prior period adjustment
The accounts for the six months ended 30 May 2002 reflect a prior period
adjustment in relation to the accounting for development expenditure. On
commencing business the accounting policy of the Company was to write such
expenditure off, except where the Directors were satisfied as to the technical,
commercial and financial viability of individual projects. The application of
this policy resulted in #2,161,068 of capitalised development costs in the
balance sheet of the Company at 31 May 2002, to be amortised over the relevant
period of the commercial production. This policy is consistent with the
requirement of SSAP13 'Accounting for Research and Development'.
During the year ended 30 November 2002, management reviewed the policy relating
to the accounting for development expenditure, in accordance with FRS18
'Accounting Policies', to ensure that the policy remained appropriate to the
Company's circumstances. The Board reviewed the treatment of development costs
by other similar companies and decided that expensing development costs as they
are incurred was the most appropriate treatment, and the statutory accounts for
the year ended 30 November 2002 were restated to reflect this change in
accounting policy. The comparative information presented for 6 months ended 31
May 2002 is therefore restated, and the change in the accounting policy has
resulted in an increase to the net loss for that period, and a decrease in net
assets, of #1,177,389.
Profit and loss account
Unaudited
6 months to
31 May 2002
#
Loss brought forward (2,223,964)
Prior year adjustment (983,679)
__________
As at 1 December restated (3,207,643)
Retained loss for the period (2,234,762)
Exchange difference (53,512)
__________
Loss carried forward (5,495,917)
_________
2. Investment
This represents GeneMedix investment in the 25:75 Joint Venture with
Antibioticos.
3. Basis of preparation
The 6-month figures to 31 May 2003 and 31 May 2002 are unaudited. The
comparative figures for the year ended 30 November 2002 are not statutory
accounts but are extracted from the audited statutory accounts. The statutory
accounts for the year ended 30 November 2002 has been filed with the Registrar
of Companies. They received an unqualified audit report which did not contain a
statement under S237(2) or S237(3) of the Companies Act 1985. The interim
report should be read in conjunction with the statutory accounts for the year
ended 30 November 2002.
The Directors estimate that cash and short term investments held at the date of
approval of the financial statements within the Group are not sufficient to
continue funding the trading activities of the Group for a further twelve months
from the date of approval of the financial statements. Accordingly, the
Directors currently plan to secure additional funds, by raising further finance
or by entering into commercial agreements, which the Directors expect would
enable the Group to continue its activities for the foreseeable future. There is
uncertainty over the amount of funds which would be obtained and whether they
would be received within the expected timescale. However, the Directors believe
that the Company will be able to obtain such additional funds and therefore that
it is appropriate that these financial statements are prepared on the going
concern basis. This basis of preparation assumes that the Company and its
subsidiaries will continue in operational existence for the foreseeable future,
the validity of which depends on GeneMedix plc being able to obtain adequate
funds to continue its activities. The Company is pursuing a number of
initiatives, which the Company expects to provide the opportunity to strengthen
its cash position. The financial statements do not include any adjustment that
would result if the Company were unsuccessful in raising adequate additional
funds.
4. We were unable to pay a dividend in the period.
5. Further copies are available from the Group's head office - Rosalind
Franklin House, Fordham Road, Newmarket, Suffolk, CB8 7XN
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PUUCWRUPWGAM