TIDMLPX
RNS Number : 9150M
Lipoxen PLC
24 August 2011
Lipoxen plc
('Lipoxen' or the 'Company')
Interim results for 6 months to 30 June 2011
Lipoxen (AIM: LPX.L), the bio-pharmaceutical company
specialising in the development of high-value differentiated
biologic drugs and vaccines, announces its financial results for
the six months ended 30 June 2011.
Financial Highlights
- Revenue of GBP0.64m (2010: GBP0.76m)
- Losses before tax reduced to GBP1.28m (2010: GBP1.54m)
- Loss per share down to 0.72p (2010: 0.94p)
- Cash balances at 30 June 2011 of GBP0.32m (2010: GBP0.95m)
These results must be read in conjunction with a
transformational set of development proposals ("the Proposals")
that were announced post-period end and which will be put to
shareholders at a General Meeting to be held on 1 September 2011.
Highlights of the Proposals are given below with more detail in the
Chairman's statement. Full details of the Proposals can be found in
the Shareholder Circular already sent to shareholders and can be
downloaded from the Company's website: www.lipoxen.com
The Proposals
- Funds of GBP14.4m (before expenses) to be raised via a Placing
with SynBio LLC, a subscription for shares by Serum Institute of
India Limited ("SIIL") and an Open Offer to existing shareholders
at 11 pence per share being a premium of more than 44% over the
mid-market closing price on 23 August 2011
- Acquisition of SymbioTec GmbH for GBP8.8m settled entirely in
shares (at 11 pence per share). This is the acquisition of a
complementary natural platform technology with two lead product
candidates focused on orphan drug applications. The platform has
the potential to be applied across a broad spectrum of cancer
therapies.
- Co-development agreement with SynBio to license into Russia
six product candidates
- Master Agreement to consolidate and refine Lipoxen's
commercial arrangements with SIIL
- Change of name to Xenetic Biosciences plc.
Commenting on the Proposals, M. Scott Maguire, CEO of Lipoxen,
said:
""We are pleased that in the current market environment we have
secured the Company's capital needs for at least two years and
further delighted that the Placing will be conducted at a
substantial premium. The Board is confident that the Proposals
being presented to shareholders will be utterly transformational
for Lipoxen as they will reduce our dependence on third parties,
allow us to control our destiny through proprietary drug
development, allow the acquisition of complementary natural
platform technologies, and new orphan drug candidates with
near-term commercialisation potential. Given the transformational
nature of the Proposals, the Board has determined that a change in
the Company's name is appropriate. Xenetic Biosciences will allow
greater strategic flexibility by lessening the focus on liposomes,
our secondary platform technology."
Enquiries:
Lipoxen plc +44 (0)20 7389 5015
M. Scott Maguire, Chief Executive
Officer
Singer Capital Markets (NOMAD
& Broker) +44 (0)20 3205 7500
Jeff Keating / Claes Spang
Walbrook PR +44 (0)20 7933 8780
Paul McManus paul.mcmanus@walbrookpr.com
Paul Cornelius paul.cornelius@walbrookir.com
CHAIRMAN'S STATEMENT
It has only been around 6 weeks since the company's Annual
General Meeting (28th June) and barely over 2 months since we
published our full year results for FY2010 on 3rd June 2011.
Consequently, I believe that it is appropriate that my report made
alongside these Interim results for the 6 months to 30th June 2011
can be briefer than usual, the more so as the Company was
absolutely delighted on 4th August to announce to shareholders and
to the market a transformational set of development proposals ("the
Proposals") to be put to a General Meeting of the company being
held on 1st September. The only sadness was that Lipoxen made
possibly the most positive announcement in its history on the day
that saw what continues to look like the genesis of another period
of uncertainty in the global financial markets.
That said, the nature of this Company's business is one of
longer term investment in the development and commercialisation of
a substantial intellectual property portfolio, and shareholders
should be reassured that short term market instabilities bear very
much less on Lipoxen than on enterprises in other sectors;
ultimately shareholder value will be generated from clinical
success across our product portfolio and it is upon that target
that the Board and executive management team are closely
focussed.
The key issue for any biotech company is the quantum of
available capital to sustain its product development efforts, and
the proposed share placing and subscription, if approved by
shareholders, will serve to underpin operations for at least 2
years while also funding early stage EMA/FDA clinical trials on at
least three product candidates.
I will therefore largely limit my report this time to a
reiteration of the Proposals being put to shareholders on 1st
September:
-- Strategic Investment - Placing with SynBio LLC ("SynBio") of
110.8 million ordinary shares in the capital of the Company at an
issue price of 11 pence per share, to raise GBP12.19 million
(before expenses). SynBio will also be granted five-year warrants
over shares in the capital of the Company representing up to
11,080,000 ordinary shares at a price of 33 pence per share,
representing a premium of 256% over the closing mid-market price on
3rd August 2011.
-- Placing at a substantial premium- The Placing is being
carried out at a premium of 18.9% over the closing mid-market price
of an ordinary share on 3rd August 2011.
-- Sovereign fund major investment partner - SynBio LLC is a
newly-formed Russian company whose majority shareholder will be the
multi-billion dollar Russian state-owned nanotechnology investment
company, Russian Corporation of Nanotechnologies ("Rusnano")
(www.Rusnano.com).
-- Co-Development Agreement- Lipoxen will enter into a
comprehensive Co-Development Agreement with SynBio. Through this
agreement Lipoxen will license into Russia six product candidates
to efficiently exploit its technologies and establish human proof
of concept in advance of initiating EMA/FDA clinical trials. The
Directors believe that this strategy will mitigate the technical
and commercial risks of future drug development.
-- Acquisition - The Company intends to acquire the entire
issued share capital of SymbioTec GmbH ("SymbioTec") for a total
consideration of GBP8.8 million, which is to be satisfied by the
issue of 80 million new ordinary shares in the capital of the
Company at the Placing Price of 11 pence per share.
-- Orphan drug candidates and new technology platform -
SymbioTec is a company registered in Germany and has a portfolio of
patents around a naturally occurring platform technology, histone,
which has potential application across a broad spectrum of cancers.
SymbioTec is in clinical development for its patent-protected lead
drug candidate, OncoHist(TM), a treatment for acute lymphocytic
leukaemia ("ALL") and acute myeloid leukaemia ("AML"), which has
been granted orphan drug status by both the FDA and the EMA.
SymbioTec's license partner is currently conducting a Phase IIb
clinical trial in Russia involving up to 120 patients in late stage
relapsed or resistant AML. The Company hopes that Phase IIb
clinical trials will be completed by the end of 2013. Upon
completion of Phase IIb clinical trials, Lipoxen's license partner
plans to file for market launch in Russia and the former CIS.
-- Agreement with Serum Institute of India Limited ("SIIL") -
Lipoxen has entered into a Master Agreement to consolidate and
refine the Company's commercial arrangements with SIIL. This will
include the surrender back to the Company of the development rights
of up to 14 drug candidates, and uplift the Company's economic
interests in ErepoXen(R).
-- New share subscription by SIIL - SIIL is subscribing for 2.5
million new ordinary shares in the capital of the Company at an
issue price of 11 pence per share and will be granted two-year
warrants over the shares in the capital of the Company representing
up to 7.5 million shares at an average exercise price of 20 pence
per share.
-- Open offer - Following completion of the Placing and
Acquisition, the Company is proposing to raise up to approximately
GBP1.95 million (before expenses) through a proposed Open Offer to
existing shareholders. Further details of the Open Offer, detailed
timetable and an Application Form will be posted to Qualifying
Shareholders in due course.
-- Substantial funding for future clinical and operational
development - Funds from the Placing, SIIL Subscription and Open
Offer are expected to raise up to GBP14.4 million (before expenses)
and are expected to be sufficient to fund the Company's drug
development initiatives and operational requirements for two years
following implementation of the Proposals.
-- Change of Name - The Directors believe that the Proposals
represent a transformational step forward for Lipoxen and, as such,
the Company proposes to change its name to "Xenetic Biosciences
plc".
-- Notice of General Meeting - Lipoxen will hold a General
Meeting at the offices of Pinsent Masons LLP, 30 Crown Place,
London, EC2A 4ES at 11:00 a.m. on Thursday 1st September 2011.
Previous statements have expressed Management's active pursuit
of opportunities that have the over-arching objectives of:
(a) reducing Lipoxen's dependence on third parties for primary
clinical development efforts;
(b) allowing the Company to control the clinical development of
its proprietary product pipeline;
(c) acquiring complementary natural platform technologies,
and,
(d) acquiring new product candidates with near-term
commercialisation potential.
The Board is therefore delighted that the Management team has
been able to put together these Proposals as, in a single series of
deals, all of these objectives can be seen to be satisfied as
to:
Availability of new equity capital
Up to GBP14.4 million (before expenses) to directly control the
funding of clinical trials of three of the Company's proprietary
product candidates while also sustaining current levels of effort
in our own laboratories.
The funds being raised are a testament to the support from
collaborative partners, be they existing - in the shape of SIIL
with its long-standing relationship with the Company - or from
SynBio as a new partner, itself funded by the leading Russian
sovereign fund, Rusnano, that group's involvement lying at the
heart of Russia's unambiguously stated intention to develop a
vibrant home-grown nanotechnology sector, in this case in
pharmaceutical product development, manufacture and
distribution.
Acquisition of SymbioTec GmbH
This brings two EMA/FDA-recognised orphan drug candidates
(OncoHist(TM)) into Lipoxen's proprietary product portfolio which
the Company will be able to take into EMA/FDA clinical trials using
its own capital.
SymbioTec's underlying histone technology sits alongside the
Company's extant PolyXen(R) and ImuXen(R) IP portfolio as a
naturally-occurring platform with extended clinical application
potential.
Concomitant product development
The Co-Development agreement with SynBio further extends the
principle first established in 2009 with Pharmsynthez in St
Petersburg by licensing Lipoxen's technology to a second
development partner able to propel multiple products through
pre-clinical and Phase I clinical trials on accelerated timelines
thereby demonstrating human proof of concept as the basis on which
Lipoxen can initiate clinical trials in Europe and/or the USA.
This strategy de-risks the Company's drug development programme
and is designed to be a substantial aid to making its capital go
further, faster and to greater effect in creating shareholder value
in a business that is otherwise characterised by high capital risk
and extended timelines.
The Board was, therefore, delighted to announce these proposals
to shareholders on 4th August 2011 as it believes that this series
of transformational transactions will afford the Company
independence as a specialty drug developer with a clinical
development pipeline in not only potentially blockbuster
indications (with their associated costs and timelines) but also in
the orphan drug sector where our technologies can be brought to
bear more quickly, at lesser cost and with greater short term
market potential.
Financial Review
The financial results in the period under review were:
6 months
to 6 months 12 months
30/06/11 to 30/06/10 to 31/12/10
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Turnover 64 76 1,566
Total pre-tax losses for period 1,283 1,539 1,934
Non-cash component of total pre-tax
loss 116 232 755
Net cash at end of period 320 946 851
Net asset value at the end of the
period 712 1,989 1,987
Loss per share - basic and fully diluted 0.72 0.94 1.13
Net asset value per share - basic 0.40 1.12 1.12
Net asset value per share - fully diluted 0.40 1.11 1.11
Non-cash component of total pre-tax losses: GBP'000 GBP'000 GBP'000
Depreciation of owned assets 107 124 253
Share option expense - equity settled 9 108 135
Share based payment - Baxter warrants 00 367
--------- -------- ----------
Total principal non-cash items 116 232 755
======= ====== =======
Research and development -
cash settled Note (1) 522 751 1,467
Other expenses - cash settled Note (2) 706 633 1,280
---------- ---------- ----------
Total expenses - cash settled 1,228 1,384 2,747
Total non-cash items 116 232 755
---------- ---------- ----------
Total expenses 1,344 1,616 3,502
======= ======= =======
%% %
Research and development -
cash settled 42.5 54.3 53.4
Other expenses - cash settled 57.5 45.7 46.6
--------- ---------- ---------
Total expenses - cash settled 100.0 100.0 100.0
======= ======= =======
NOTES
1. The year-on-year reduction reflects, inter alia, the full
benefits derived from the FY2010 restructuring programme.
2. The increase compared to the comparable period last year is
driven mainly from, (a), adverse foreign exchange costs, and, (b),
an increase in PR costs arising from the production costs of the
Company's animated DVD.
The Shareholder Circular referred to above is deemed to be
included herein by reference, and shareholders are invited to fully
familiarise themselves with its contents. While a copy of the
Circular has already been sent to all shareholders of record as of
close of business on 3rd August 2011 (and copies will sent to all
those who have come on the register in the meantime), copies can
also be downloaded from the Company's website at www.lipoxen.com,
or a hard copy obtained either by telephoning +44 (0)20 7389 5015
or by making an email request to info@lipoxen.com.
The upcoming period for the Company promises to be truly
transformational and so I look forward to welcoming as many
shareholders as possible to the General Meeting in order to share
with them the full import of the Proposals and the resulting
shareholder resolutions being put before them.
Brian Richards
Non-Executive Chairman
London: 24th August 2011
INDEPENDENT REVIEW REPORT TO LIPOXEN PLC
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30th June 2011 which comprises the condensed
consolidated statement of comprehensive income, the condensed
consolidated balance sheet, the condensed consolidated cash flow
statement, the condensed consolidated statement of changes in net
equity and the related notes. We have read the other information
contained in the half-yearly financial report and have considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards ("IFRSs") as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
report has been prepared in accordance with IAS 34, Interim
Financial Reporting ("IAS 34"), as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity ("ISRE 2410") issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30th
June 2011 is not prepared, in all material respects, in accordance
with the AIM Rules of the London Stock Exchange and IAS 34 as
adopted by the European Union.
Emphasis of matter - going concern
In forming our conclusion on the condensed set of financial
statements we have considered the adequacy of the disclosures in
Note 2 Fundamental accounting concept - going concern ("Note 2").
This notes that in order to maintain the level of scientific effort
required to develop the Group's technologies and to commercialise
them to such degree as will be necessary to become a
cash-generative business, the Group will need to access new cash in
addition to that available to it at the period end; such new cash
will either be generated internally from, as yet, non-contractual
feasibility and licensing sources and/or from the raising of new
capital.
These conditions, along with the other matters explained in Note
2 to the financial statements, indicate the existence of a material
uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern. However, on 4th August 2011
(and as fully set out in the Shareholder Circular issued by the
Company on that date) the Company entered into a set of legally
binding contractual arrangements which at legal completion, in the
opinion of the directors, should result in the injection of a
material sum of new equity capital into the Company.
Consequently, the condensed set of financial statements do not
reflect any adjustments that would be required to be made if they
were to be prepared on a basis other than the going concern
basis.
PKF (UK) LLP
London, UK
24th August 2011
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30th JUNE 2011
6 months 6 months 12 months
to 30/06/11 to 30/06/10 to 31/12/10
Note Unaudited Unaudited Audited
GBP GBP GBP
REVENUE 4 64,411 76,011 1,566,261
--------------------- --------------------- ----------------------
Cost of goods sold 13,735 - -
Research and development expenditure 522,455 750,766 1,466,887
Administrative expenses 808,062 865,566 2,035,412
--------------------- --------------------- ----------------------
Total 1,344,252 1,616,332 3,502,299
--------------------- --------------------- ----------------------
OPERATING LOSS (1,279,841) (1,540,321) (1,936,038)
Finance income 885 1,338 1,761
Finance costs (4,376) - -
--------------------- --------------------- ----------------------
LOSS BEFORE TAXATION (1,283,332) (1,538,983) (1,934,277)
Income tax credit - - -
--------------------- --------------------- ----------------------
LOSS AND TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT (1,283,332) (1,538,983) (1,934,277)
================= ================= =================
Loss per share pence - basic and 6 0.72p 0.94p 1.13p
fully diluted
================= ================= =================
CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30th JUNE 2011
As at As at As at
30/06/11 30/06/10 31/12/10
Note Unaudited Unaudited Audited
GBP GBP GBP
NON-CURRENT ASSETS
Property, plant and
equipment 153,679 367,536 256,208
Goodwill 1,061,476 1,061,476 1,061,476
--------------------- --------------------- ---------------------
1,215,155 1,429,012 1,317,684
--------------------- --------------------- ---------------------
CURRENT ASSETS
Inventories 13,902 - -
Trade and other receivables 182,955 205,025 344,027
Cash and cash equivalents 319,935 946,213 850,804
--------------------- --------------------- ---------------------
516,792 1,151,238 1,194,831
CURRENT LIABILITIES
Trade and other payables (1,019,677) (591,580) (525,700)
--------------------- --------------------- ---------------------
NET CURRENT
(LIABILITIES)/ASSETS (502,885) 559,658 669,131
--------------------- --------------------- ---------------------
NET ASSETS 712,270 1,988,670 1,986,815
================= ================= =================
EQUITY ATTRIBUTABLE
TO EQUITY
HOLDERS OF THE PARENT
Share capital 2,519,661 2,519,661 2,519,661
Share premium account 26,521,349 26,521,349 26,521,349
JSOP shares (405,694) (405,694) (405,694)
Reverse acquisition reserve (8,252,127) (8,252,127) (8,252,127)
Accumulated losses (19,670,919) (18,394,519) (18,396,374)
--------------------- --------------------- ---------------------
TOTAL EQUITY 712,270 1,988,670 1,986,815
================= ================= =================
Net assets per share 7 0.40p 1.12p 1.12p
- basic
================= ================= =================
Net assets per share 7 0.40p 1.11p 1.11p
- fully diluted
================= ================= =================
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 30th JUNE 2011
6 months 6 months 12 months
to 30/06/11 to 30/06/10 to 31/12/10
Note Unaudited Unaudited Audited
GBP GBP GBP
Cash flows
from
operating
activities 5 (931,031) (1,233,629) (1,313,416)
Interest
received 885 1,338 1,761
Interest
paid (4,376) - -
--------------------- --------------------- ---------------------
Net cash
outflow
from
operating
activities (934,522) (1,232,291) (1,311,655)
--------------------- --------------------- ---------------------
Cash flows
from
investing
activities
Purchase of
property,
plant and
equipment (4,960) (11,516) (29,161)
Sale of
property,
plant and
equipment - - 1,600
Loan to
related
party (90,838) - -
--------------------- --------------------- ---------------------
Net cash
outflow
from
investing
activities (95,798) (11,516) (27,561)
--------------------- --------------------- ---------------------
Cash flows
from
financing
activities
Issue of
equity
share
capital - 1,172,130 1,172,130
Loan from
related
party 499,451 - -
--------------------- --------------------- ---------------------
Net cash
inflow from
financing
activities 499,451 1,172,130 1,172,130
--------------------- --------------------- ---------------------
Net decrease
in cash and
cash
equivalents (530,869) (71,677) (167,086)
Cash and
cash
equivalents
at
beginning
of year 850,804 1,017,890 1,017,890
--------------------- --------------------- ---------------------
Cash and
cash
equivalents
at end of
year 319,935 946,213 850,804
================= ================= =================
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET EQUITY
FOR THE SIX MONTHS TO 30th JUNE 2011
Reverse
Share acquisition Accumulated
capital Share premium JSOP shares reserve losses Total
GBP GBP GBP GBP GBP GBP
At 1st January
2010 2,405,486 25,057,700 - (8,252,127) (16,963,336) 2,247,723
Loss and total
comprehensive
income for
six months
ended 30th
June 2010 - - - - (1,538,983) (1,538,983)
Shares issued
for cash 87,583 1,138,576 - - - 1,226,159
Shares issued
under JSOP 26,592 385,590 - - - 412,182
Own shares
held by JSOP - - (405,694) - - (405,694)
Share issue
expenses - (60,517) - - - (60,517)
Share-based
payments - - - - 107,800 107,800
--------------- ----------------- ----------------- ------------------- --------------------- -----------------
At 30th June
2010 2,519,661 26,521,349 (405,694) (8,252,127) (18,394,519) 1,988,670
Loss and total
comprehensive
income for
six months
ended 31st
December
2010 - - - - (395,294) (395,294)
Share-based
payments - - - - 393,439 393,439
--------------- ----------------- ----------------- ------------------- --------------------- -----------------
At 31st
December
2010 2,519,661 26,521,349 (405,694) (8,252,127) (18,396,374) 1,986,815
Loss and total
comprehensive
income for
six months
ended 30th
June 2011 - - - - (1,283,332) (1,283,332)
Share-based
payments - - - - 8,787 8,787
--------------- ----------------- ----------------- ------------------- --------------------- -----------------
At 30th June
2011 2,519,661 26,521,349 (405,694) (8,252,127) (19,670,919) 712,270
================= ================= ================= ================= ================= =================
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 30th JUNE 2011
1. GENERAL INFORMATION
The interim financial statements for the six months ended 30th
June 2011 are unaudited and were approved by the Directors of the
Company on 24th August 2011. The condensed financial information
set out above does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The comparative
figures for the year ended 31st December 2010 were derived from the
statutory accounts for that year which have been delivered to the
Registrar of Companies. Those accounts received an unqualified
audit report, which included a reference by way of emphasis without
modifying the report to the preparation of the accounts on the
going concern basis of accounting. The audit report contained no
statements under sections 498(2) or 498(3) (accounting records or
returns inadequate, accounts not agreeing with records and returns,
or failure to obtain necessary information and explanations) of the
Companies Act 2006.
The financial information has been prepared in accordance with
the accounting policies set out below. The accounts are drawn up in
compliance with IAS 34 and the AIM Rules of the London Stock
Exchange. The annual financial statements are prepared in
accordance with IFRSs as adopted by the European Union and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS and in accordance with the AIM Rules of the
London Stock Exchange.
2. ACCOUNTING POLICIES
The principal accounting policies of the Group have remained
unchanged from those set out in the Group's 2010 financial
statements.
Fundamental accounting concept - going concern
As an early-stage development life sciences business, the Group
has incurred operating losses in the period under review,
notwithstanding that substantial clinical and technical progress
was also made in the continuing successful development of its
proprietary technologies; consequently, the Group was a net
consumer of cash.
In order to maintain the level of scientific effort required to
develop the Group's technologies and to commercialise them to such
degree as will be necessary to become a cash-generative business,
the Group will need to access new cash in addition to that
available to it at the period end; such new cash will either be
generated internally from, as yet, non-contractual feasibility and
licensing sources and/or from the raising of new capital.
The Directors have prepared a financial forecast for the period
through to 31st December 2012. The forecast includes assumptions
that the Group will generate cash inflows in this period from:
(a) the ongoing roll-out and licensing of the Group's
technologies with its existing collaborative partners;
(b) the roll-out and licensing of the Group's technologies with
new collaborative partners; and
(c) the raising of new capital.
Whilst the Group has made further clinical progress in the
period under review and will continue to actively pursue all
opportunities arising in connection with (a) and (b) above,
important new capital raising arrangements have been entered into
which should result in the injection into the Group of substantial
new equity funding. Legally binding contracts have been entered
into and the full set of proposals being put to shareholders in a
General Meeting being held on 1st September 2011 is fully set out
in a Circular sent to shareholders on 4th August 2011.
The arrangements are fully supported by all of the Group's
Directors and principal shareholders, all of whom have given their
irrevocable undertaking to vote in favour of all resolutions in
which they can participate.
Page 20 of the Circular sets out the "Recommendation" from the
Board which states, inter alia:
"Accordingly, the Independent Directors unanimously recommend
that Shareholders vote in favour of the Resolutions to be proposed
at the General Meeting, as they have irrevocably undertaken to do
in respect of their own beneficial and connected shareholdings,
which amount in total to 11,264,595 Ordinary Shares representing
approximately 6.35 per cent. of the current issued share capital of
the Company.
Due to the interests of the Concert Party in the matters dealt
with by the Independent Shareholder Resolution, those members of
the Concert Party who are currently Shareholders have undertaken
not to vote on such Independent Shareholder Resolution, though they
have irrevocably undertaken to vote in favour of the remaining
Resolutions in respect of their shareholdings which amount to
41,440,050 Ordinary Shares in aggregate representing approximately
23.36 per cent. of the current issued share capital of the
Company.
Accordingly, the Company has received irrevocable undertakings
to vote in favour of the Independent Shareholder Resolution in
respect of 59,648,181 existing Ordinary Shares in aggregate
representing 43.86 per cent. of the existing enfranchised issued
share capital of the Company and has received irrevocable
undertakings to vote in favour of the remaining Resolutions in
respect of 101,088,231 existing Ordinary Shares, in aggregate
representing 56.97 per cent. of the existing issued share capital
of the Company."
As a consequence of the nature of the Proposals being positively
transformational for the future of the Group and in consideration
of the above-noted undertakings, the Directors are confident that
the resolutions being put to shareholders on 1st September 2011
will be duly approved, and that the parties will move with all
possible expedition to legal completion of all matters, and, in
particular, the injection into the Company of new equity capital of
a quantum up to GBP14.4 million (before expenses).
The Directors therefore believe that the Company will have
adequate resources to continue in operational existence for the
foreseeable future. They have therefore prepared the financial
information contained herein on a going concern basis.
Consequently, the financial information does not reflect any
adjustments that would be required to be made if they were prepared
on a basis other than the going concern basis.
3. SEGMENTAL ANALYSIS
The revenue and loss before taxation are attributable to the one
principal activity of the Group. The net assets of the Group at
30th June 2011, 31st December 2010 and 30th June 2010 are wholly
attributable to the principal activity. The Group comprises one
operating segment for reporting purposes. Management measures
performance and allocates resources based on the results of this
one segment only.
4. REVENUE
An analysis of revenue (by location of customer) is given
below:
6 months 6 months 12 months
to to to
30/06/11 30/06/10 31/12/10
Unaudited Unaudited Audited
GBP GBP GBP
United
States 46,711 18,653 1,442,152
UK - 57,358 124,109
Europe 17,700 - -
--------------------- --------------------- ---------------------
64,411 76,011 1,566,261
================= ================= =================
5. RECONCILIATION OF LOSS BEFORE TAXATION TO
CASH OUTFLOWS FROM OPERATING ACTIVITIES
6 months 6 months 12 months
to to to
30/06/11 30/06/10 31/12/10
Unaudited Unaudited Audited
GBP GBP GBP
Loss before taxation (1,283,332) (1,538,983) (1,934,277)
Adjustments for:
Equity-settled share
options 8,787 107,800 134,726
Share based payment
expense - Baxter
warrants - - 366,513
Depreciation 107,489 124,562 253,535
Profit on disposal
of property, plant
and equipment - - (1,600)
Investment income (885) (1,338) (1,761)
Finance costs 4,376 - -
--------------------- --------------------- ---------------------
(1,163,565) (1,307,959) (1,182,864)
Increase in
inventories (13,902) - -
Decrease/(increase)
in receivables 251,910 30,467 (108,535)
(Decrease)/increase
in payables (5,474) 43,863 (22,017)
--------------------- --------------------- ---------------------
Net cash outflow
from operating
activities (931,031) (1,233,629) (1,313,416)
================= ================= =================
6. LOSS PER SHARE
6 months 6 months 12 months
to to to
30/06/11 30/06/10 31/12/10
=========================== =============== =============== ===============
Unaudited Unaudited Audited
=========================== =============== =============== ===============
GBP GBP GBP
=========================== =============== =============== ===============
Weighted average number of
ordinary shares in issue 177,232,254 163,820,952 170,581,718
=========================== =============== =============== ===============
Loss after taxation 1,283,332 1,538,983 1,934,277
=========================== =============== =============== ===============
Loss per share 0.72p 0.94p 1.13p
=========================== =============== =============== ===============
=============== =============== ===============
=========================== =============== =============== ===============
There is no dilutive effect of share options on the basic loss
per share.
7. NET ASSET VALUE PER SHARE
The "basic" net asset value per share figures are calculated on
the basis of the net assets attributable to equity shareholders
divided by the number of ordinary shares in issue at the relevant
dates.
The "fully diluted" net assets per share figures are calculated
by adjusting the number of ordinary shares on the assumption of the
exercise in full of all options and warrant instruments extant as
at the relevant dates where the exercise price of any such
instrument is less than the "basic" net asset value per share.
8. POST BALANCE SHEET EVENT
On 4th August 2011, the Company issued a Circular to its
shareholders setting out a comprehensive range of proposals ("the
Proposals") to be put to them in a General Meeting to be held on
1st September 2011. The Proposals can be summarised as follows:
1. Includes two main provisions being:
- Subscription of 110.8 million new ordinary shares by Synbio at
a Placing Price of 11 pence per share to raise GBP12.19 million
(together with 5-year Warrants rights over 11.08 million shares at
an Exercise Price of 33 pence per share); and
- the entering into a Co-Development Agreement by which Synbio
will drive six new product candidates through human proof of
concept trials in Russia.
2. Acquisition of SymbioTec at a valuation of GBP8.8 million to
be satisfied by the issue of 80 million new ordinary shares as
fully paid. The principal assets of Symbiotec are:
- Intellectual Property and Patent Rights over a histone-based
platform technology; and
- two drug candidates with EMA and FDA recognised orphan drug
status.
3. Approval of waiver of the obligation (by Synbio and its
associated Concert Party) to make an Offer under Rule 9 of The
Takeover Code. As Synbio will hold more than 30% of the Company's
issued share capital this Proposal is aimed at satisfying an
important regulatory provision.
4. Agreement with SIIL which includes:
- the issue to SIIL of 9 million new ordinary shares issued as
fully paid in consideration for the surrender back to the Company
of the development rights of up to 14 product candidates;
- Beneficial changes to the economic interest of the Company in
the jointly developed product "ErepoXen"(R);
- Changes in the commercial supply arrangements between the
parties for the supply of Polysialic Acid ("PSA"); PSA is the
principal component in the Company's patented PolyXen(R) platform
technology;
- Subscription by SIIL for 2.5 million new ordinary shares a the
Placing Price together with Warrants rights over 7.5 million shares
exercisable over a period of two years at an average Exercise Price
of 20 pence per share.
5. Proposed Change of Name and Articles of Association which the
Directors believe will:
- better reflect the scope and breadth of the Company's
business;
- bring the Articles of Association up to date in compliance
with relevant provisions of the Companies Act 2006.
6. Notice of General Meeting to consider all of the above
matters.
Also included in the Circular is an intimation that the Company
proposes to launch a 1-for-10 Open Offer at the Placing Price (11
pence) to raise up to GBP1.95 million, this in order to give
existing shareholders the opportunity to participate in the capital
raise alongside Synbio and SIIL (all values noted above made in
connection with new share subscription are expressed before
expenses).
While a full understanding of the Proposals can be gained only
by a detailed review of the Circular, the Directors believe that
this proposed series of transformational transactions will afford
the Company financial independence as a specialty drug developer
with a clinical development pipeline in not only potentially
blockbuster indications (with their associated costs and timelines)
but also in the orphan drug sector where our technologies can be
brought to bear more quickly, at lesser cost and with greater short
term market potential.
The Shareholder Circular is deemed to be included herein by
reference and copies shall be available up to 1st September 2011.
Shareholders are invited to fully familiarise themselves with its
contents. Copies can be downloaded from the Company's website at
www.lipoxen.com, or a hard copy obtained either by telephoning +44
(0)20 7389 5015 or by making an email request to
info@lipoxen.com.
9. Copies of the interim report are available to the public free
of charge from the Company at London Bioscience Innovation Centre,
2 Royal College Street, London, NW1 0NH during normal office hours,
Saturdays and Sundays excepted, for 14 days from today.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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