RNS Number:2942I
Profile Therapeutics PLC
05 March 2003
Immediate Release 07:00, 5 March 2003
Profile Therapeutics plc
Interim Results
For the Six Months Ended 31 December 2002
Profile Therapeutics plc ("Profile"), which develops and commercialises
specialist inhaled therapies to improve the treatment of respiratory patients,
today announces Interim results for the six months to 31 December 2002.
Highlights:
* UK launch, on schedule, of Profile's first pharmaceutical product for
cystic fibrosis, PromixinTM - successfully approved by UK Medicines
Control Agency
* Group revenues up by 6% to #6.29m (2001: #5.96m) - due to continued
success of Profile Respiratory Systems in UK respiratory therapy
market
* Group operating losses down 15% to #2.73m (2001: #3.21m) - in line
with expectations
* Announced today, deal with Breath Ltd, a subsidiary of Arrow Group (a
leading provider of generic pharmaceutical products), to increase
respiratory drug pipeline (see separate release):
o supply and licence agreement for respiratory drugs in Europe
o agreement to form joint venture to develop and market a range
of respiratory products in the North American homecare market
Commenting on these results, Executive Chairman, Mark Kirby said:
"The six-month period to 31 December 2002 has seen important progress throughout
Profile. Above all, I am delighted to be able to report that Profile Pharma's
pipeline of products and geographic coverage have broadened significantly over
the period and, following today's Breath announcement, Profile now has access to
the principal therapies in its target respiratory markets as well as the
opportunity to work with a highly effective partner.
"The coming periods will be focused on bringing our products to market in
branded form as efficiently as possible and I look forward to updating you on
events."
-ENDS-
For further information, please call:
Profile Therapeutics On 05.03.03: Tel: 020 7466 5000
Mark Kirby, Executive Chairman Thereafter: Tel: 0870 770 2000
John Lisle, Chief Executive Officer
Buchanan Communications
Nicola How Tel: 020 7466 5000
Profile Therapeutics plc
Interim Results
For the Six Months Ended 31 December 2002
OVERVIEW
The six-month period to 31 December 2002 has seen important progress throughout
Profile Therapeutics plc. Evidence of this progress is clear from the news today
and in recent weeks related to the approval of our first drug and the filling of
our respiratory drug pipeline. These are significant milestones towards our core
goal; to become a profitable pharmaceutical and inhaled therapeutic equipment
business, building on our successful position serving the needs of the young,
the elderly and those with severely-impaired breathing.
During the period under review, turnover grew by 6% to #6.29m (2001: #5.96m)
predominantly from our continued success in the UK respiratory therapy market.
Group operating losses, which are principally driven by research and development
into our drug delivery systems, were reduced to #2.73m (2001: # 3.21m), as we
completed the development of our second-generation intelligent inhaler.
In October we welcomed my successor, John Lisle, to the Board as Chief Executive
and I assumed the role of Executive Chairman. John, who had previously been a
National Business Director at GlaxoSmithKline, has actively assessed the key
strategic opportunities for Profile and has begun to align the organisation
primarily around the exciting prospects associated with Profile Pharma and its
growing portfolio of respiratory drugs.
In summary, each of our three interrelated businesses achieved their planned
goals during the period:
Profile Pharma, our specialist pharmaceutical business, has finalised
preparation for the UK launch of its first inhaled drug, PromixinTM, on
schedule. The UK launch of Promixin took place on 3 March.
Profile Respiratory Systems, our respiratory therapy equipment and services
business, has performed well in spite of markets that remained weak in terms of
healthcare capital equipment expenditure.
Profile Drug Delivery, the developer of our proprietary intelligent inhalers,
completed the development of its second-generation inhaler, the Prodose AAD(R)
System, which has been made available to a number of cystic fibrosis clinical
centres in advance of Profile Pharma's Promixin launch.
OPERATING REVIEW
Profile Pharma
Profile Pharma is a pharmaceutical business providing inhaled treatments for
severe respiratory conditions.
Promixin Launch:
The application for a Marketing Authorisation for Profile Pharma's first
pharmaceutical product - an inhaled antibiotic for cystic fibrosis - was
successfully approved by the UK Medicines Control Agency on 20 February 2003.
Promixin will be marketed alongside our Prodose AAD System to cystic fibrosis
specialists.
We anticipate submitting applications to territories within the European
Economic Area in the coming months. Subject to due regulatory process, we would
expect our first Marketing Authorisations in these territories to be granted in
approximately twelve months' time.
During the period, Profile Pharma continued to develop its pipeline of
respiratory drugs both in Europe and the United States. The first proof of the
success of this strategy, entered into today, is the European supply and licence
contract and the agreement to form a US joint venture with Breath Limited, a
subsidiary of Arrow Group, in respect of a range of respiratory drugs. Profile
now has access to the principal pharmaceuticals used in the treatment of our
core respiratory patient population. These agreements are significant milestones
for the development of this business and Profile as a whole.
Profile Respiratory Systems
Profile Respiratory Systems develops and markets aerosol, oxygen therapy and
ventilation equipment and related services for home and hospital, directly in
the UK and through international distribution partners.
Profile Respiratory Systems' revenues grew to #6.21m, an increase of 6.3% over
the comparative period (2001: #5.84m). This is a good performance demonstrating
the strength of our consumable products in the context of continued NHS
budgetary constraint in respect of capital equipment purchase.
Highlights in the half-year performance include:
* 11.7% growth in revenues from UK sleep therapy and non-invasive
ventilation markets;
* 6.4% growth in revenue from the UK aerosol therapy market;
* 15% growth in sales to the US, which materially offset weak performances
in a number of European territories; and
* Operating profits up 75% to #0.55m (2001: #0.32m).
The sleep therapy business, which grew by 21% on the comparative period,
continued to benefit from the establishment of the Management Of Sleep Therapy
("MOST") programme - a service that provides a complete patient support package
for management of sleep apnoea therapy. During the period, we have accumulated
some excellent data showing substantial enhancement to patient compliance under
the MOST programme compared with normal market experience. We anticipate the
publication of this data later in 2003.
In the continued absence of significant demand for premium capital equipment,
the UK non-invasive ventilation business posted 8.6% revenue growth on the
comparative period, largely as a result of the sale of consumable items to
service the installed base.
Sales made by the homecare team direct to patients continued to grow well, up 8%
on the prior period. This business function is key to Profile as, once Promixin
is launched by Profile Pharma, it will be used to support cystic fibrosis
patients using Prodose AAD Systems.
During the period, Profile Respiratory Systems continued to provide services to
other group companies predominantly in the areas of customer support, production
and supply logistics.
Profile Drug Delivery
Profile Drug Delivery researches and develops intelligent inhaler systems using
a proprietary patented platform technology known as Adaptive Aerosol DeliveryTM
("AAD(R)") which is designed to ensure precise and reproducible dosing in the
home environment by responding to, and delivering drug into, individual patient
breathing patterns.
In the period, Profile Drug Delivery launched the Prodose AAD System, our
second-generation intelligent inhaler, to prepare the market for launch of
Promixin. Feedback from cystic fibrosis patients who have used the device
indicates a high degree of preference in comparison to the conventional drug
delivery systems commonly used in this indication.
Development of our third-generation inhaler, the Miniature AAD System, has
continued on plan, and we remain on target for an H1 2004 launch.
External collaborations:
Schering AG: During the period, we continued to support Schering AG in respect
of its application for a Marketing Authorisation for inhaled Iloprost. Subject
to due regulatory process, we would expect the launch of this product later in
2003 to generate sales of Prodose AAD Systems.
Pfizer: Despite successfully completing the first stage of the development work
for Pfizer Limited on a pre-clinical experimental respiratory drug, this project
has been halted and is unlikely to progress further. In financial terms this
project was not material to Profile.
Alpha Therapeutic Corporation: On 20 December it was announced that Baxter
Healthcare Corporation had agreed to acquire certain assets, intellectual
property and products of Alpha. As a result of this deal, in our opinion, there
remains considerable uncertainty over Alpha's ultimate ability to progress the
inhaled Alpha-1-Proteinase Inhibitor project, at least until the proposed
acquisition has completed regulatory review in the US. As this is expected to
take until the summer, Profile has voluntarily elected to terminate the
exclusive development and licence agreement in its current form at no cost to
the company. The project was at pre-clinical stage and would, if successful,
have resulted in a market launch in 2008.
FINANCIAL REVIEW
Profit and Loss Account
Group losses for the six months to 31 December 2002 reflect the significant
planned AAD inhaler development costs and the build-up of Profile Pharma prior
to the anticipated launch of Promixin in this quarter. The Group's retained loss
for the period was #2.5m (2001: #2.9m loss).
The Group operating loss was #2.7m (2001: #3.2m loss) which represented the
beginning of a reduction of the Group's uncovered R&D expenditure from its
planned peak in the previous financial year. The operating results of each
business unit for the half-year to 31 December were:
Turnover Gross profit Overheads Operating result
2001 2002 2001 2002 2001 2002 2001 2002
#000 #000 #000 #000 #000 #000 #000 #000
Profile Pharma - - - - 219 620 (219) (620)
Profile
Respiratory
Systems 5,841 6,207 2,932 3,105 2,615 2,551 317 554
Profile Drug
Delivery 114 82 22 82 3,325 2,74 (3,303) (2,665)
Group 5,955 6,289 2,954 3,187 6,159 5,918 (3,205) (2,731)
Profile Pharma
Profile Pharma overheads relate to the salaries of its staff and regulatory and
marketing costs. All of these increased according to plan in the period as a
consequence of the anticipated launch of Promixin in the first quarter of 2003.
Profile Pharma also committed time and resource during the period to broadening
its portfolio of respiratory drugs.
Profile Respiratory Systems
Profile Respiratory Systems' revenue growth is discussed in the Operating Review
above. Gross margin at 50.0% declined marginally from 50.2% in the previous
comparable period, but has increased from the margin of 49.3% achieved for the
year ended 30 June 2002. The 2.5% reduction in overheads is a function of a cost
reduction exercise conducted in the last quarter of the previous financial year
and a reduction in marketing costs associated with new product launches. Profile
Respiratory Systems' net operating margin increased to 8.9% (2001: 5.4%). This
substantially contributed to the increase of 75% in operating profit over the
comparative six-month period.
Profile Drug Delivery
The revenue and gross profit performance reflects income earned from
collaboration partners. Investment into research and development continued
during the period with the completion of the second-generation intelligent
inhaler (the Prodose AAD System) and the progression of the development of the
third-generation inhaler (the Miniature AAD System), which proceeded according
to plan.
Net interest receivable
Net interest receivable for the period under review was #0.1m (2001: #0.3m). The
decrease is attributable to cash balances being lower than in the prior period.
Taxation
The taxation credit of #125,000 for the period (2001: #50,000 credit) represents
an estimate of tax credits receivable in respect of research and development
expenditure.
Balance Sheet and Cash Flow
At 31 December 2002, Group net assets amounted to #8.8m (2001: #13.4m),
including net cash balances of #5.9m (2001: #11.1m).
In September 2002, we secured a three-year revolving credit facility of up to
#5m with the Bank of Scotland to finance, inter alia, the future working capital
needs associated with the growth of Profile Pharma. None of this facility has
yet been utilised.
Net cash outflow before financing for the six-month period ended 31 December
2002 amounted to #2.4m (2001: #3.4m outflow).
The principal elements of the cash flow were:
* Operating cash outflow of #1.9m (2001: #3.3m);
* Capital expenditure payments, net of sales proceeds, of #0.7m (2001:
#0.6m); and
* Net interest received of #0.1m (2001: #0.3m).
Capital expenditure during the period primarily comprised investment by Profile
Drug Delivery and Profile Respiratory Systems in plant and equipment.
BOARD CHANGES
In addition to the appointment of John Lisle as Chief Executive, on 19 February
we announced the appointments of Dr John Padfield and Simon Constantine to the
Board as Non-Executive Directors. These appointments have strengthened Profile's
Board and will bring us into line with corporate governance best practice. Dr
David Bloxham, Non-Executive Director, having completed his two-year term of
appointment, will retire from the Board in May and I would like to take this
opportunity to thank him for the energy he has put into Profile over the last
two years - his advice and experience have been instrumental in getting Profile
to its current stage of development.
Some Executive Director changes have also taken place. John Ward, currently
Chief Financial Officer and Company Secretary, is to be appointed to the Board.
Having been with the Company since 1999, working as Finance Director, at
subsidiary level, and Company Secretary, John has played a key role in the
financial matters of the Group as well as being a hands-on member of the
executive team - we welcome him to the Board.
However, it is with regret that I also have to announce the departure of Simon
Shaw. As might be expected for a company of our size, to have an Executive
Chairman, a Chief Executive and a Chief Operating Officer leads to duplication
of roles and responsibilities. We have therefore agreed that Simon will leave
the Company at the end of April. Having joined Profile in 1997 in the role of
Finance Director, Simon was promoted to Chief Operating Officer in 1998 and was
instrumental in our successful flotation in 2000. Since then he has made
substantial contributions to strategy development and leadership of the
collaborative deals we have concluded, as well as representing Profile in the
investment community. I would like to thank him on behalf of the Board for the
significant value that he has added to Profile. We wish him every future
success.
OUTLOOK
Receipt of the Promixin Marketing Authorisation from the MCA makes Profile the
first of the novel inhaled drug delivery companies to reach the market with both
a drug and a delivery system. We anticipate good take up of our offering in this
market and other European licences to be forthcoming within the next 12 months.
We have begun to reduce drug delivery research and development expenditure from
the planned peak in 2002 as our principal inhaler projects have progressed
through the development process. This process is expected to continue during the
remainder of 2003 after which the third-generation system will be substantially
complete and ready for launch.
Since the period-end, I am delighted to be able to report that Profile Pharma's
pipeline of products and geographic coverage have broadened significantly.
Profile now has access to the principal therapies in its target respiratory
markets both in Europe and the United States, as well as a highly effective
partner with which to work. The coming periods will be focused on bringing those
products to market in branded form as efficiently as possible.
Profile Therapeutics is well placed to deliver significant benefits to the
treatment of our core patient groups, thereby delivering value to our
shareholders. I look forward to updating you on events.
MR Kirby
Executive Chairman
4 March 2003
Independent Review Report by the Auditors
to the shareholders of Profile Therapeutics plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 December 2002 which comprises the Group Profit and Loss
Account, Group Balance Sheet, Group Statement of Cash Flows and the related
notes 1 to 6. We have read the other information contained in the Interim Report
and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of group management and applying analytical procedures to the financial
information and underlying financial data, and based thereon, assessing whether
the accounting policies and presentation have been consistently applied, unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2002.
Ernst & Young LLP
Southampton 4 March 2003
Group Profit and Loss Account
for the six months ended 31 December 2002
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2002 2001 2002
Notes #000 #000 #000
Turnover 6,289 5,955 12,680
Cost of sales 3,102 3,001 6,476
Gross profit 3,187 2,954 6,204
Selling, marketing and distribution costs 1,688 1,737 3,206
Research and development expenses 1,849 2,405 5,034
Administrative expenses 2,381 2,017 3,758
5,918 6,159 11,998
Group operating loss (2,731) (3,205) (5,794)
Net interest receivable 131 304 565
Loss on ordinary activities before taxation (2,600) (2,901) (5,229)
Tax on loss on ordinary activities 2 125 50 383
Loss on ordinary activities after taxation
and retained loss for the period (2,475) (2,851) (4,846)
Loss per ordinary share
Basic and diluted (loss)
per share (pence) 3 (5.0)p (5.8)p (9.9)p
Group Balance Sheet
at 31 December 2002
Unaudited Unaudited Audited
31 December 31 December 30 June
2002 2001 2002
Notes #000 #000 #000
Fixed assets
Intangible assets 498 520 445
Tangible assets 1,887 1,085 1,633
Investments 142 142 142
2,527 1,747 2,220
Current assets
Stocks 918 957 908
Debtors 2,593 2,547 2,514
Cash at bank and in hand 610 719 617
Short-term deposits 5,303 10,365 7,725
9,424 14,588 11,764
Creditors:
amounts falling due within one year 3,086 2,985 2,660
Net current assets 6,338 11,603 9,104
Total assets less current liabilities 8,865 13,350 11,324
Creditors:
amount falling due after more than one year 22 - -
Net assets 8,843 13,350 11,324
Capital and reserves
Called up share capital 983 983 983
Share premium account 24,436 24,436 24,436
Profit and loss account (16,576) (12,069) (14,095)
Shareholders' funds -
equity interests 4 8,843 13,350 11,324
Group Statement of Cash Flows
for the six months ended 31 December 2002
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2002 2001 2002
Notes #000 #000 #000
Net cash outflow from
operating activities 5 (1,871) (3,266) (5,585)
Returns on investments and servicing of finance
Dividends received - 83 149
Interest received 140 343 534
Interest paid - - (1)
Interest element of finance lease and
hire purchase rental payments (1) (1) (1)
139 425 681
Taxation
Corporation tax refunded - 57 285
Overseas tax paid - (4) -
- 53 285
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (72) (48) (99)
Payments to acquire tangible fixed assets (636) (536) (1,406)
Receipts from sales of tangible fixed assets 20 17 32
(688) (567) (1,473)
Net cash outflow before management of liquid
resources and financing
(2,420) (3,355) (6,092)
Management of liquid resources
Decrease in short-term deposits 2,422 3,869 6,509
Financing
Debt Issue Costs (8) - -
Repayments of capital element of finance
leases and hire purchase contracts (1) (7) (12)
(9) (7) (12)
(Decrease)/increase in cash in period 6 (7) 507 405
Notes to the Financial Information
1. Basis of preparation
The financial information contained in this Interim Report has been prepared on
the basis of the accounting policies set out in the Group's audited accounts for
the year ended 30 June 2002.
The Interim Report was approved by the Board of Directors on 4 March 2003. The
financial information for the six months ended 31 December 2002 is unaudited,
but has been reviewed in accordance with Auditing Practices Board guidance by
Ernst & Young LLP, whose report is included on page 8.
The financial information on the Group set out above does not constitute "
statutory accounts" within the meaning of Section 240 of the Companies Act 1985.
Full financial statements for the year ended 30 June 2002, which received an
unqualified audit report, have been delivered to the Registrar of Companies.
2. Taxation
Taxation represents tax credits for certain research and development expenditure
and has been provided at a rate approximate to that estimated to apply for the
12 months to 30 June 2002.
3. Loss per share
The calculation of the loss per ordinary share is based on a loss of #2,475,000
(six months to 31 December 2001: loss of #2,851,000, year to 30 June 2002: loss
of #4,846,000), and on a weighted average of 49,143,423 shares in issue (six
months to 31 December 2001: 49,143,423 shares, year to 30 June 2002: 49,143,423
shares).
The loss attributable to ordinary shareholders and weighted average number of
ordinary shares for the purpose of calculating the diluted earnings per ordinary
share are identical to those used for basic earnings per share. This is because
the exercise of share options would have the effect of reducing the loss per
ordinary share and is therefore not dilutive under the terms of Financial
Reporting Standard 14.
4. Reconciliation of movements in shareholders' funds
Share
Share premium Profit and loss
capital account account Shareholders'
funds
#000 #000 #000 #000
At 1 July 2001 983 24,436 (9,215) 16,204
Loss for the period - - (2,851) (2,851)
Exchange difference - - (3) (3)
At 31 December 2001 983 24,436 (12,069) 13,350
Loss for the period - - (1,995) (1,995)
Exchange difference - - (31) (31)
At 30 June 2002 983 24,436 (14,095) 11,324
Loss for the period - - (2,475) (2,475)
Exchange difference - - (6) (6)
At 31 December 2002 983 24,436 (16,576) 8,843
5. Reconciliation of Group operating loss to net cash outflow from operating
activities
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2002 2001 2002
#000 #000 #000
Group operating loss (2,731) (3,205) (5,794)
Depreciation 386 274 568
Amortisation 19 123 249
(Profit)/loss on disposal of fixed assets (17) (10) 3
Decrease/(increase) in debtors 64 (687) (549)
Increase in stocks (10) (174) (125)
Increase in creditors 418 413 63
Net cash outflow from operating activities (1,871) (3,266) (5,585)
6. Reconciliation of net cash flow to movement in net funds
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2002 2001 2002
#000 #000 #000
(Decrease)/increase in cash in period (7) 507 405
Decrease in short-term deposits (2,422) (3,869) (6,509)
Cash (inflow)/outflow from (increase)/decrease
in debt and lease financing (6) 7 12
Change in net funds resulting from cash
flows and movement in net funds (2,435) (3,355) (6,092)
Net funds at start of period 8,342 14,434 14,434
Net funds at end of period 5,907 11,079 8,342
This information is provided by RNS
The company news service from the London Stock Exchange
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