TIDMGWP
RNS Number : 6258W
GW Pharmaceuticals PLC
23 November 2010
GW Pharmaceuticals plc
("GW" or "the Group")
Preliminary Results
Porton Down, UK, 23 November 2010: GW Pharmaceuticals plc (AIM:
GWP), the specialty pharmaceutical company focused on cannabinoid
science, announces its preliminary results for the year ended 30
September 2010.
OPERATIONAL HIGHLIGHTS
-- Sativex(R) receives first ever full regulatory approval for a cannabis
derived medicine in the UK, Spain, Canada and New Zealand for the
treatment of spasticity due to Multiple Sclerosis
-- Sativex successfully launched in the UK with positive initial market
response and clinician feedback
-- Spanish pricing approval expected towards end of 2010 with launch due
early 2011
-- Sativex European Mutual Recognition Procedure filing submitted in July
2010, targeting approvals in additional European markets
-- Regulatory submissions in other parts of the world planned for 2011
-- Positive Sativex Phase IIb cancer pain data reported. Phase III cancer
pain programme, fully funded by Otsuka, now underway (see separate
announcement today)
-- Phase II clinical programme of novel cannabinoid medicine in
diabetes/metabolic disease commenced Q3 2010
-- Otsuka research collaboration in cancer and Central Nervous System (CNS)
disorders extended for a further three years with an additional minimum
$12m in funding
FINANCIAL HIGHLIGHTS
-- Net profit before tax increased to GBP4.6m (2009: GBP1.2m)
-- Turnover increased 27% to GBP30.7m (2009: GBP24.1m), including Sativex
sales up 64% to GBP2.8m (2009: GBP1.7m)
-- Cash and short term deposits at 30 September 2010 increased to GBP25.2m
(2009: GBP20.6m)
Dr Geoffrey Guy, GW's Chairman, said, "This has been a landmark
year for GW. We have reported a strong rise in revenues and
profits, gained our first major approvals in Europe for Sativex,
and advanced this innovative medicine into late stage development
for the US market. At the same time we have enhanced our longer
term prospects through the extension of our research collaboration
with Otsuka and generation of exciting data in our earlier stage
pipeline. We are very pleased with the UK launch of Sativex, which
marks the beginning of the evolution of GW from a late stage
development company to a commercial biopharmaceutical business, and
we look forward to commercialising this product across many regions
of the world as further approvals are obtained. With an approved
lead product, exciting cannabinoid pipeline, strong partnerships,
and a healthy financial position, we believe we are well positioned
for growth and are excited about the company's prospects for the
future."
An analyst presentation of the preliminary results is being held
today at 9.30am at Financial Dynamics, Holborn Gate, 26 Southampton
Buildings, London WC2A 1PB. Please contact Juliet Edwards at
Financial Dynamics on +44 20 7269 7125 for details. An audio
webcast of the presentation will be available on GW's website at
www.gwpharm.com later this afternoon.
Enquiries:
(23/10/10) + 44 20 7831
GW Pharmaceuticals plc 3113
(Thereafter) + 44 1980
Dr Geoffrey Guy, Executive Chairman 557000
Justin Gover, Managing Director
Financial Dynamics + 44 20 7831 3113
Ben Atwell / John Dineen
Piper Jaffray Ltd +44 (0)20 3142 8700
Neil Mackison / Rupert Winckler
INTRODUCTION
This has been a landmark year for GW in which we have seen the
first major approvals and commercial launch of Sativex as well as
significant progress with the earlier stage cannabinoid pipeline.
Sativex is now being marketed in the UK as a treatment for Multiple
Sclerosis (MS) Spasticity and this indication is also now approved
in Spain, Canada and New Zealand, with the launch in Spain due in
the very near term. Regulatory filings are now under way to expand
the approval into other European markets and GW is also planning
additional submissions in several other parts of the world in the
near future.
Separately, the development of Sativex as a treatment for cancer
pain made a significant advance with the reporting of positive data
from a 360 patient Phase IIb trial in this indication. The Phase
III clinical programme in this indication has just commenced and
includes two Phase III trials. This programme represents the
initial target indication for Sativex in the United States and is
fully funded by our US marketing partner, Otsuka Pharmaceutical Co.
Ltd.
We believe that the recent successes with Sativex provide
validation of GW's cannabinoid technology platform. This is further
evidenced by the agreement announced this year with Otsuka to
extend their cannabinoid research collaboration with GW for a
further three years and to increase their investment in the
development of GW's pipeline. Under the extended agreement, GW and
Otsuka research a range of GW cannabinoids as potential new drug
candidates in the field of CNS disorders and oncology.
With a world leading position in cannabinoid science, a
promising pipeline, partnership track record, and a prudent
financial model focused on revenue growth and partner funded
R&D, we believe that GW has the assets and capability to create
further valuable product opportunities. GW therefore intends to
continue to pursue a strategy which focuses on maximising the
commercial potential of Sativex through global commercialisation
and expansion of approved indications, as well as leveraging the
company's cannabinoid platform to expand, advance and partner the
pipeline.
SATIVEX IN MS SPASTICITY
Regulatory Strategy
In Europe, regulatory approval for Sativex in the UK and Spain
for the indication of MS spasticity has now been achieved and
marketing authorisation is now being sought in other major European
countries via the Mutual Recognition Procedure (MRP). The first MRP
filing was made in July 2010 with the objective of obtaining
approval in other European markets - the validation phase of this
filing is now taking place and the final country list will be
determined at the end of this step. This MRP process is expected to
be completed around mid 2011 and the first launch is expected in
Germany shortly thereafter. Following this, GW intends to file an
additional MRP application to broaden the approval into further
European countries.
Beyond Europe, Sativex has recently received full regulatory
approval in Canada and New Zealand. With this positive regulatory
track record, there are a large number of other territories around
the world for which the existing approvals provide an excellent
basis for a regulatory submission. Of additional note is that
Sativex has now been exported to 28 countries either on a named
patient prescription basis or in clinical trials. GW therefore
expects to make regulatory filings in several other countries over
the next year in parallel with putting into place distribution
partners for these countries/regions. A filing is already under way
in Israel in collaboration with Neopharm, Israel's largest domestic
pharmaceutical company.
UK Launch
Sativex was launched in the UK at the end of June by GW's UK
marketing partner, Bayer Schering Pharma. Bayer already has a
leading position in the field of MS disease modifying treatments,
established through its Betaferon(R) product, and is therefore able
to take advantage of its close relationships with key opinion
leaders and patient organisations in the MS field. Bayer has in
place eight MS specialist sales persons targeting the 85 MS centres
in the UK and these individuals are responsible for the Sativex
sales effort.
Bayer's launch campaign has focused on maximising opinion leader
support for Sativex amongst senior MS specialists, hosting in-depth
meetings around the UK for prescribers, marketing campaigns in
relevant medical journals, and visits to MS centres across the
country. Initial market response to the launch of Sativex has been
positive and both GW and Bayer are pleased with initial
prescription rates and clinician feedback. Sativex is also
receiving strong support from the UK's two leading MS patient
organisations, the MS Society and the MS Trust.
Prior to commercial launch, Sativex had been available in the UK
on named patient prescription since January 2006 and annual
in-market sales had reached a peak of approx. GBP900,000 in the
year prior to launch. In the first four months since launch,
in-market sales have already reached GBP900,000 and the rate of new
patients starting Sativex treatment has increased fourfold. Perhaps
more importantly, there is widespread clinician support for Sativex
in meeting patients' unmet needs in MS spasticity.
As with all newly approved innovative branded treatments in the
UK, the market access environment has become more challenging in
recent years. Bayer Schering employs a dedicated market access team
to focus on efforts to secure NHS funding for its treatments since
the Primary Care Trusts (PCTs) which are responsible for funding
decisions often present hurdles which need to be overcome. In this
respect, the UK market environment is one now characterised by
steady growth rather than rapid market uptake. We expect Sativex to
follow this established industry pattern.
Bayer's commercial plan for Sativex in the UK is tailored to
this market circumstance. Their strategy focuses on key MS centres
and specialists and aims to secure access for the Sativex target
patient population. In targeting this patient group, obtaining
wholesale 'formulary' acceptance by PCT's, or endorsement from the
Wales or Scotland national recommendation bodies, is not core to
the strategy since there are alternative means to gain NHS
reimbursement for this patient population, such as the exceptional
use route in which individual patient circumstances are
considered.
Since launch, Sativex has been prescribed in approximately 85%
of English PCT regions. It is not yet known whether Sativex will be
reviewed as part of a Health Technology Appraisal by the National
Institute for Clinical Excellence (NICE) or whether it will be
reviewed as part of the NICE MS Treatment Guidelines which are due
to start to be revised early next year. We expect a draft scoping
document to be issued by NICE in December 2010 in order to consult
stakeholders on this matter.
Bayer's marketing plan for 2011 aims to build on the positive
initial market response by continuing to focus efforts on working
together with specialist prescribers and PCTs to facilitate
appropriate access to patients for whom Sativex may offer a
valuable treatment option.
European Launch Preparation
The UK represents just the start of a planned European roll-out
for Sativex. The market opportunity in continental Europe is
significant with over 400,000 people with MS, compared with 100,000
in the UK. In all European countries except the UK, Sativex will be
marketed by Almirall S.A.
Sativex has also now received regulatory approval in Spain and
is awaiting pricing/reimbursement approval. The latter is required
in Spain prior to commercial launch. GW's European partner,
Almirall, expects pricing approval prior to the end of 2010 with
commercial launch to follow shortly thereafter in the new year.
The Sativex launch team at Almirall benefits from Almirall's
position as Spain's largest domestic pharmaceutical company.
Almirall's last reported annual sales in Spain exceeded EUR530m.
Almirall has a dedicated central European brand and marketing team
for Sativex as well as a local team for each individual country,
including Spain. As with Bayer, GW has a close working relationship
with all relevant functions within Almirall as we work together
towards launch in Spain and thereafter in the rest of Europe.
As mentioned above, we are currently seeking approvals via the
MRP process in other European markets and expect an outcome in mid
2011. Following approval, the first major country to launch within
this group is expected to be Germany, which has the highest MS
patient population in Europe. In preparation for German launch,
Almirall has recruited a dedicated Sativex marketing and sales
team. In addition, Almirall has recently established a wholly owned
subsidiary in Scandinavia in advance of the Sativex launch and is
expected to expand operations in other markets such as Italy and
France in preparation for product launch.
In October 2010, Almirall hosted a Satellite Symposium at
Europe's leading MS conference, the 26th annual congress of the
European Committee for Treatment and Research in Multiple Sclerosis
(ECTRIMS). This Symposium was attended by a large number of
European MS specialists and we are encouraged by the level of
enthusiasm within Europe for the anticipated launches of
Sativex.
SATIVEX IN CANCER PAIN
Sativex is also being developed to treat cancer pain. This year
has seen considerable progress in the development of this
indication and a comprehensive Phase III programme is now
underway.
GW's cancer pain clinical programme is being wholly funded by
Otsuka, which has licensed the US commercialisation rights to this
product. The cancer pain trials are designed to obtain approval in
this indication from the FDA in the US, but these data will also be
used by GW for future regulatory applications in this indication in
Europe and around the world.
In March 2010, GW announced preliminary results of a 360 patient
Phase IIb cancer pain trial, performed in conjunction with Otsuka.
The study met its key objectives of providing data to support entry
into Phase III showing statistically significant differences from
placebo in pain scores, according to both the "continuous response
analysis of percent improvement from baseline" (an analysis of
percent improvement in pain across the spectrum of response levels)
and the change from baseline analysis in average pain score.
The results of the Phase IIb dose ranging study were consistent
with a 177 patient Phase IIa study in which Sativex also showed
statistically significant improvements versus placebo. This study
was published earlier this year in the Journal of Pain and Symptom
Management.
The Phase III programme includes two Phase III randomised
placebo-controlled multi-centre multinational trials as well as a
long term extension study. Each Phase III trial will include 370
patients and will evaluate the efficacy and safety of Sativex
versus placebo over a 5 week treatment period. The primary efficacy
analysis is the continuous response analysis, the same analysis
that has yielded statistically significant results in both the
Phase IIa and IIb trials.
The Phase III trials are expected to recruit patients in Europe,
North America, Latin America and Asia. The first Phase III trial
site has now been initiated in Europe and the first patient is
expected to be recruited during December 2010.
OTHER SATIVEX INDICATIONS
Having now achieved the first approvals for Sativex in MS
spasticity and with the cancer pain development programme now
advancing into Phase III, GW is broadening the commercial
opportunity for the product through a clinical development
programme in at least one additional indication. In recent years,
GW has generated positive results from clinical trials in a range
of indications, including various types of pain, as well as other
symptoms of MS. GW is currently evaluating these opportunities in
conjunction with its marketing partners before selecting the first
new target indication for development and hopes to commence an
additional Sativex clinical trial during 2011.
CANNABINOID PLATFORM
GW occupies a world leading position in cannabinoid science. The
company has developed a proprietary and validated cannabinoid
technology platform and formed constructive collaborations with
leading international scientists in the field. GW's extensive
research into the pharmacology of cannabinoids continues to yield
highly promising data and new intellectual property across a range
of therapeutic areas and provides GW with the potential to develop
and license several new cannabinoid drug candidates in the coming
years. GW expects to step up the pace of this research in the
coming years to maximise the potential of its in-house
pipeline.
Otsuka Research Collaboration
In June, GW was pleased to announce a three year extension to
its global cannabinoid research collaboration with Otsuka. We
believe that this provides a significant endorsement of the
potential of GW's cannabinoid pipeline. This collaboration was
originally signed in July 2007 with a three year term, and the
collaboration will now extend to the end of June 2013. Under this
agreement, GW and Otsuka research a range of GW cannabinoids as
potential new drug candidates in the field of CNS disorders and
oncology.
All research activities within this collaboration are funded by
Otsuka. Over the next three years, Otsuka will make available a
research fund of $12 million to cover these research activities.
Otsuka has the discretion to increase this funding from time to
time as the development of selected drug candidates advances.
The GW-Otsuka research collaboration is led by a joint research
team incorporating senior scientists from both companies. This team
works in close collaboration with a number of leading cannabinoid
scientists around the world. The objective of this collaboration is
to select the most promising candidates for full clinical
development, regulatory approval and global commercialisation.
Products selected for full development will be the subject of a
licence from GW to Otsuka.
Cancer
We have shown in pre-clinical studies the ability of certain
cannabinoids to inhibit the growth of various cancers, notably
prostate, breast and colon cancer. We have also produced promising
data showing a potential synergistic action of cannabinoids with
existing anti-cancer agents in reducing the proliferation of glioma
cells in cancer models. The mechanisms of action that cause these
effects are becoming better understood and extend far beyond
actions at the cannabinoid receptors. Several new patent filings
have been submitted to protect these data. As a result of the
promising progress to date in this area, GW expects an increased
focus on its cancer research programme in the next 12 months.
Neuroscience
Research into nervous system disorders is currently focused
primarily on epilepsy and psychiatric illness. This research
programme is also funded as part of the GW-Otsuka research
collaboration agreement.
A number of GW phytocannabinoids have already shown a marked
anti-epileptic effect in several pre-clinical models of epilepsy. A
lead candidate has now been identified and efforts to define its
mechanism of anti-seizure activity are now being made. This
research is centred at the University of Reading and data are now
being published.
In the field of schizophrenia, GW cannabinoids have shown
notable anti-psychotic effects in accepted pre-clinical models of
schizophrenia and importantly have also demonstrated the ability to
reduce the characteristic movement disorders induced by currently
available anti-psychotic agents.
GW expects to advance its research effort in both the above
therapeutic areas and is confident that the data generated will
support advancing new cannabinoid drug candidates into clinical
trials.
Diabetes/Metabolic Disease
GW's research in diabetes/metabolic syndrome falls outside the
GW-Otsuka collaboration and is at present funded in-house with a
view to potential future outlicensing. In September, GW commenced
the first of a programme of Phase IIa exploratory clinical trials
exploring GW's cannabinoids as potential treatments in this
therapeutic area. This study programme follows promising
pre-clinical research results and comprises at least three small
scale clinical trials evaluating various metabolic parameters.
The first Phase IIa study to commence is a multi-centre,
randomised, double blind, placebo controlled, parallel group pilot
study in the treatment of dyslipidaemia in patients with Type 2
diabetes. At least two additional studies are planned as part of
this programme. One of these further studies is due to start in the
near future and another is due to start later in 2011. The overall
programme is aimed at examining the effects of GW cannabinoids on a
range of features of the metabolic syndrome including cholesterol,
lipid parameters, glucose control and insulin sensitivity.
This progress into Phase IIa clinical trials follows a
significant pre-clinical research programme on GW cannabinoids in
several models of type 2 diabetes at the GW Metabolic Research
Laboratory. This Laboratory is led by Professor Mike Cawthorne,
Director of Metabolic Research at the Clore Laboratory, University
of Buckingham, and a recognised world leading authority in the
research of new treatments for metabolic syndrome.
Results of this research have also shown desirable effects of a
number of GW cannabinoids on plasma insulin, leptin and adiponectin
levels, hormones of particular relevance to the development and
treatment of diabetes and metabolic function. In addition, these
results have shown a reduction in total cholesterol with an
increase in the proportion of HDL (good) cholesterol. Of particular
note, GW research cannabinoids have also shown the ability to
reduce liver fat levels in animal models of hepatic steatosis.
Fatty liver is a significant and increasing clinical problem and
represents a clear unmet medical need.
Inflammation
Several GW cannabinoids have shown anti-inflammatory properties
in a number of models of inflammation, and have the capacity to
inhibit the production in tissues of chemical mediators of
inflammation. We are currently working to select candidate
cannabinoids with a view to constructing proof of concept studies
in inflammatory conditions.
BOARD
In July, we were pleased to announce the appointment of Tom
Lynch as a non-executive director. Tom replaced Hans Schram who had
served as a non-executive of GW for the last 7 years.
Tom sits on the Remuneration Committee as well as the Audit
Committee. He has become Chairman of the Remuneration Committee, of
which Hans Schram was the previous Chairman. James Noble remains
Chairman of the Audit Committee.
FINANCIAL REVIEW
This year's financial results show strong profit growth,
increased revenues, positive cash flow and a robust cash
position.
Income Statement
Pre-tax profit for the year was GBP4.6m, compared with a pre-tax
profit of GBP1.2m in 2009.
Revenues increased by 27% to GBP30.7m (2009: GBP24.1m),
reflecting increased Sativex sales, milestone income and additional
research activity carried out on behalf of Otsuka.
Milestone income comprised GBP10.0m received from Bayer
following the UK approval of Sativex and a further GBP1.2m received
from Bayer following approval in Canada. The prior year included an
GBP8.0m milestone from Almirall that was paid upon achievement of
positive MS Spasticity clinical trial results.
Total Sativex sales increased by 64% to GBP2.8m (2009: GBP1.7m),
primarily as a result of the UK commercial launch by Bayer in the
last three months of our financial year. Prior to commercial
launch, GW supplied Sativex on a named patient basis to UK patients
to the value of GBP0.7m, all of which was retained as revenue by
GW. Following commercial launch in late June, GW's product sales
revenues are earned through product supply to Bayer at a supply
price calculated as a percentage of Bayer's commercial in-market
sales. Hence, post launch, the named patients previously supplied
by GW immediately transferred to Bayer to be supplied on a
commercial basis in future. GW's product sales to Bayer for the UK
market, totalling GBP1.1m, included an initial launch stock order
of GBP0.9m.
Sales in Canada remained flat year on year at GBP0.4m. As in
prior years this situation is due to the lack of public
reimbursement for Sativex in that country. The receipt of a full
approval for the MS Spasticity indication from Health Canada at the
end of August provides an opportunity to seek to change this
position, a process which is likely to take some time.
Named patient sales in Spain generated revenues of GBP0.4m
(2009: GBP0.3m). Following regulatory approval in Spain, we now
await pricing approval following which commercial launch can take
place.
Research and development fee revenues of GBP14.8m (2009:
GBP12.5m) represent an increase of 18% over the previous financial
year. These fees consist of research and development costs incurred
by GW and charged to Otsuka under the Sativex US development
agreement, totalling GBP10.2m (2009: GBP9.1m) and the research
collaboration agreement of GBP4.6m (2009: GBP3.4m). Otsuka has
continued to utilise the services of GW's clinical team to manage
the Sativex US clinical programme. The GW clinical team will
continue to play a major part in the management of the proposed
Phase III trials programme that is now getting underway.
Total research and development expenditure, which is expensed as
incurred, was GBP21.8m (2009: GBP19.3m), of which GBP14.8m (2009:
GBP12.5m) was funded by Otsuka. GW-funded research increased
marginally to GBP7.0m (2009: GBP6.8m) but still represented just
32% (2009: 35%) of total research and development spend.
Management and administration expenditure was GBP3.0m (2009:
GBP2.7m) whilst the share-based payment charge remained at GBP0.6m
(2009: GBP0.6m) and interest receivable was GBP0.1m (2009:
GBP0.1m). We continue to take a very conservative approach to
managing counterparty credit risk on our cash deposits.
The Group has not claimed a research and development tax credit
for the year ended 30 September 2010 (2009: GBP0.3m). The small tax
credit in the P&L represents the successful outcome of the 2009
R&D claim which resulted in receipt of a tax credit marginally
higher than had been accrued in the 2009 year end accounts.
Cash Flow
Having started the year with GBP20.6m of cash, the Group ended
the year with GBP25.2m, a net inflow of GBP4.6m. Cash flow was
significantly enhanced by the receipt of GBP11.2m of approval
milestones from Bayer and the GBP0.7m of funds received from the
exercise of share options by members of staff.
Capital expenditure of GBP0.4m (2009: GBP1.2m) consisted mainly
of IT and laboratory equipment.
During the year the Group also received GBP0.4m (2009: GBP1.8m)
of research and development tax credit claimed in respect of the
2009 financial year.
Balance Sheet
The Group's net funds comprise cash balances together with
amounts held on short term deposit totalling GBP25.2m (2009:
GBP20.6m).
Inventory of GBP0.8m (2009: GBP0.6m) consists of finished goods,
consumable items and work in progress. This is stated net of a
realisable value provision of GBP3.9m (2009: GBP4.0m) which has
been calculated in accordance with the company's inventory
accounting policy.
Trade and other receivables at 30 September 2010 were GBP1.2m
(2009: GBP0.8m), consisting of GBP0.6m (2009: GBP0.1m) of trade
debtors (from sales of Sativex) and GBP0.6m (2009: GBP0.7m) of
other receivables and prepayments.
At 30 September 2010 the Group had received GBP3.2m (2009:
GBP2.7m) of advance payments for research activities to be carried
out on behalf of Otsuka in the next six months. This has been
disclosed as an advance payment received, within deferred revenue
due within one year.
Deferred signature fee revenue amounts to GBP13.5m (2009:
GBP15.4m), of which GBP1.9m (2009: GBP1.9m) is shown as due within
one year and GBP11.6m (2009: GBP13.5m) is shown as due after more
than one year, represents the balance of non-refundable Sativex
licence agreement signature fees. This will be recognised as
revenue in future periods.
The Group has tax losses of GBP44.3m (2009:GBP43.7m) which are
available to carry forward and relieve against future profits. The
value of these losses is not reflected in the Group balance
sheet.
Average headcount of the Group for the year was 120 (2009:
110).
2011 Financial Year
In 2011, we expect a GBP2.5m milestone from Almirall on Spanish
commercial launch and a further $4m from Otsuka on the recruitment
of the first patient into the first Phase III cancer pain trial.
The $4m is slightly less than the $5m previously guided and has
been adjusted to reflect the significant increase in Otsuka's
investment in GW's clinical operations as part of the US clinical
development programme. In 2011 we expect GW funded R&D to
increase by 20-30% over 2010 and it is likely we will report a
small loss for the year.
STRATEGIC OUTLOOK
The UK represents only the start of a planned global
commercialisation plan for Sativex. In the next few years, we will
be working to achieve approvals and launches of this medicine
across many regions of the world as well as gaining approvals in
other therapeutic indications. Today, for example, we announced the
commencement of Phase III trials in cancer pain, which is an
important step forward for GW in this large market opportunity.
We believe that recent successes with Sativex provide validation
of GW's cannabinoid technology platform. With a world leading
position in cannabinoid science, a promising pipeline, partnership
track record, and a prudent financial model focused on revenue
growth and partner funded R&D, we believe that GW has the
assets and capability to create further valuable product
opportunities. GW therefore intends to continue to pursue a
strategy which focuses on maximizing the commercial potential of
Sativex through global commercialisation and expansion of approved
indications, as well as leveraging the company's cannabinoid
platform to expand, advance and partner the pipeline.
In the near term, GW's financial results should feature an
increasing amount of Sativex sales. The growth in demand in each
country, the timing of approvals and country launches as well as
batch orders from marketing partners and each partner's stocking
policy will all affect GW's revenues in any particular period. In
addition, as outlined above, as a result of ongoing investment in
the in-house pipeline, we continue to expect the coming years to
feature increases in R&D expenditure as well as license and
milestone fee revenues. Taking the above into consideration, over
the next few years we expect to be profitable in some periods but
not in others.
By operating a financial model which seeks to generate benefits
from Sativex's commercialisation and partner-funded R&D whilst
at the same time maintaining investment in the in-house pipeline
with a view to securing additional partnership deals in the future,
we believe that our strategy will maximise returns for shareholders
over the medium and long term.
SUMMARY
GW is in excellent financial health and the company's prospects
are strong. This year's achievements provide GW with the
opportunity to continue to build a dynamic and successful
biopharmaceutical business. The company's strategy is not only to
maximise the Sativex business opportunity in terms of geographic
expansion and clinical indications, but also to leverage its world
leading cannabinoid platform to develop and out-license several new
cannabinoid drug candidates in the coming years. With an approved
lead product, exciting cannabinoid pipeline, strong partnerships,
and healthy financial position, we believe we are well positioned
for growth and are excited about the company's future.
GW Pharmaceuticals plc
Consolidated income statement
For the year ended 30 September 2010
Year ended Year ended
30 September 30 September
Notes 2010 2009
GBP000's GBP000's
Revenue 3 30,676 24,121
Cost of sales (752) (433)
------------------------------------------ ----- ------------ ------------
Gross profit 29,924 23,688
Research and development expenditure 4 (21,823) (19,337)
Management and administrative expenses (2,959) (2,693)
Share-based payment (630) (634)
------------------------------------------ ----- ------------ ------------
Operating profit 4,512 1,024
Interest income 92 128
------------------------------------------ ----- ------------ ------------
Profit before tax 4,604 1,152
Tax credit 5 37 353
------------------------------------------ ----- ------------ ------------
Profit for the period 4,641 1,505
------------------------------------------ ----- ------------ ------------
Earnings per share 6 3.6p 1.2p
- basic
------------------------------------------ ----- ------------ ------------
- diluted 6 3.4p 1.2p
------------------------------------------ ----- ------------ ------------
All activities relate to continuing operations.
The Group has no gains or losses other than those shown above
and therefore no separate statement of recognised income and
expense has been presented.
GW Pharmaceuticals plc
Consolidated balance sheet
As at 30 September 2010
30 September 30 September
Notes 2010 2009
GBP000's GBP000's
Non-current assets
Intangible assets - goodwill 5,210 5,210
Property, plant & equipment 1,566 1,858
------------------------------------ ----- ------------ ------------
6,776 7,068
------------------------------------ ----- ------------ ------------
Current assets
Inventories 7 780 551
Taxation recoverable 5 - 360
Trade and other receivables 8 1,217 811
Cash and cash equivalents 25,219 20,601
------------------------------------ ----- ------------ ------------
27,216 22,323
------------------------------------ ----- ------------ ------------
Total assets 33,992 29,391
------------------------------------ ----- ------------ ------------
Current liabilities
Trade and other payables 9 (4,554) (4,496)
Obligations under finance leases (40) (35)
Deferred revenue 10 (5,120) (4,594)
------------------------------------ ----- ------------ ------------
(9,714) (9,125)
Non-current liabilities
Obligations under finance leases (6) (45)
Deferred revenue 10 (11,599) (13,499)
------------------------------------ ----- ------------ ------------
Total liabilities (21,319) (22,669)
------------------------------------ ----- ------------ ------------
Net assets 12,673 6,722
------------------------------------ ----- ------------ ------------
Equity
Share capital 11 131 129
Share premium account 65,355 64,677
Other reserves 19,262 19,262
Retained earnings (72,075) (77,346)
------------------------------------ ----- ------------ ------------
Shareholders' funds 12,673 6,722
------------------------------------ ----- ------------ ------------
The 2010 year end results were approved by the board of
Directors on 22 November 2010.
GW Pharmaceuticals plc
Consolidated statement of changes in equity
As at 30 September 2010
Called-up Share
share premium Other Retained
capital account reserves earnings Total
GBP000's GBP000's GBP000's GBP000's GBP000's
------------- ------------ ------------- ---------- ---------- ----------
At 1 October
2008 121 58,375 19,262 (79,485) (1,727)
Exercise of
share
options - 15 - - 15
Issue of new
share
capital 8 6,599 - - 6,607
Expenses of
share
placing - (312) - - (312)
Share-based
payment - - - 634 634
Retained
profit for
the year - - - 1,505 1,505
------------- ------------ ------------- ---------- ---------- ----------
Balance at
30
September
2009 129 64,677 19,262 (77,346) 6,722
Exercise of
share
options 2 678 - - 680
Share-based
payment - - - 630 630
Retained
profit for
the year - - - 4,641 4,641
------------- ------------ ------------- ---------- ---------- ----------
Balance at
30
September
2010 131 65,355 19,262 (72,075) 12,673
------------- ------------ ------------- ---------- ---------- ----------
GW Pharmaceuticals plc
Consolidated cash flow statement
For the year ended 30 September 2010
Year ended Year ended
30 September 30 September
2010 2009
GBP000's GBP000's
----------------------------------------------- ------------- -------------
Operating profit 4,512 1,024
Adjustments for:
Depreciation of property, plant and equipment 726 456
Share-based payment charge 630 634
----------------------------------------------- ------------- -------------
Operating cash flow before movements in
working capital 5,868 2,114
(Increase) in inventories (229) (48)
(Increase) in receivables (406) (38)
(Decrease) in payables (1,298) (2,599)
----------------------------------------------- ------------- -------------
Cash used by operations 3,935 (571)
Research and development tax credits received 397 1,791
----------------------------------------------- ------------- -------------
Net cash inflow from operating activities 4,332 1,220
Investment activities
Interest received 92 127
Purchases of property, plant and equipment (434) (1,061)
----------------------------------------------- ------------- -------------
Net cash from investing activities (342) (934)
Financing activities
Proceeds on issue of shares 680 6,622
Expenses of share issue (18) (294)
Capital element of finance leases (34) (67)
----------------------------------------------- ------------- -------------
Net cash from financing activities 628 6,261
Net increase in cash and cash equivalents 4,618 6,547
Cash and cash equivalents at beginning
of year 20,601 14,054
----------------------------------------------- ------------- -------------
Cash and cash equivalents at end of the
year 25,219 20,601
----------------------------------------------- ------------- -------------
1. General information
The financial information set out above does not constitute the
company's statutory accounts for the years ended 30 September 2010
or 2009, but is derived from those accounts. Statutory accounts for
2009 have been delivered to the Registrar of Companies and those
for 2010 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts; their
reports were unqualified did not draw attention to any matters by
way of emphasis without qualifying their report and did not contain
statements under section s498(2) or (3) Companies Act 2006 or
equivalent preceding legislation.
The Board of Directors of the Company approved this statement on
22 November 2010.
2. Accounting policies
a) Basis of accounting
This statement has been prepared using accounting policies
consistent with International Financial Reporting Standards (IFRS)
and is an abbreviated form of the 2010 statutory accounts which
will be issued to shareholders shortly. Although the statutory
accounts are fully compliant with IFRS, this abbreviated
announcement does not itself contain all of the disclosures
required for full IFRS compliance.
The full financial statements will be published on the Group
website at www.gwpharm.com.
This statement has been prepared under the historical cost
convention.
The Directors have considered the financial position of the
Group, its cash position and future cash flows when considering
going concern. They have also considered the Group's business
activities, the key policies for managing financial risks and the
key factors affecting the likely development of the business in
2011. In light of this review, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
b) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 September each year. Subsidiaries
are all entities over which the Group has the power to govern the
financial and operating policies of the entity concerned, generally
accompanying a shareholding of more than one half of the voting
rights. All intra-group transactions, balances, income and expenses
are eliminated on consolidation. Acquisitions are accounted for
under the acquisition method.
c) Revenue
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
trade discounts, value added tax and other sales-related taxes. No
revenue is recognised for consideration, the value or receipt of
which is dependent on future events, future performance or refund
obligations. The Group's principal revenue streams and their
respective accounting treatments are set out below:
i) Product sales
Revenue from the sale of products is recognised upon shipment to
customers or at the time of delivery depending on the terms of
sale.
ii) Research and development fees
Revenue from contract research and development agreements is
recognised as the services are performed.
iii) Licensing fees
Licensing fees represent revenues derived from product
out-licensing agreements and from contract research and development
agreements.
Signature fees received in connection with product out-licensing
agreements, even where such fees are non-refundable and not
creditable against future royalty payments, are deferred and
recognized over the period of the license term, or the period of
the associated collaborative assistance if that period is
reasonably estimable.
iv) Development and approval milestones
During the term of certain contract research and development
agreements and licensing agreements, the Group is eligible to
receive non-refundable development and approval milestone payments
when certain clinical or regulatory results are achieved or upon
the occurrence of certain milestone events. These milestones are
recognised upon achievement of the relevant result or upon the
occurrence of the milestone event when they become receivable.
d) Research and Development
Research and Development expenditure is recognised as an
intangible asset only when the Group has achieved reasonable
certainty that future economic benefits will flow to the Group and
then only to the extent that the asset created is separately
identifiable and the costs of which can be measured reliably.
All Research and development expenditure incurred prior to
achieving regulatory approval is therefore expensed as
incurred.
e) Taxation
The tax expense represents the sum of the tax currently payable
or recoverable and deferred tax.
The tax payable or recoverable is based upon amounts expected to
be paid (or recovered) using the tax rates and laws that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised only to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised.
f) Intangible Assets - Goodwill
Goodwill arising on the acquisition of the subsidiary
undertakings, representing the excess of the fair value of the
consideration given over the fair value of the identifiable assets
and liabilities acquired, is recognised as an asset and shown
separately on the face of the balance sheet. Goodwill is tested for
impairment at least annually and, where appropriate, an impairment
charge is reflected in the income statement.
Determination of whether goodwill is impaired requires an
estimation of the value in use of the cash generating units to
which the goodwill has been allocated. The value in use calculation
requires an estimate of the present value of expected future cash
flows discounted at an appropriate discount rate. Where
appropriate, provision is then made to ensure that the carrying
value does not exceed this value in use estimate.
g) Property, plant and equipment
Fixtures and equipment are stated at cost, net of accumulated
depreciation and any provision for impairment. Depreciation is
provided on all tangible fixed assets, at rates calculated to write
off the cost of each asset on a straight-line basis over its
expected useful life commencing upon the satisfactory completion of
installation such that assets are ready for their intended use, as
follows:
Motor vehicles 4 years
Plant, machinery and laboratory 4 -10 years
equipment
IT and office equipment 4 years
Leasehold improvements 4 years or term of the lease
if shorter
h) Inventory
Inventory is stated at the lower of cost and net realisable
value. Cost is calculated using the First in First Out "FIFO"
method. Cost includes materials, direct labour and an attributable
proportion of manufacturing overheads based on normal levels of
activity. Net realisable value is the estimated selling price in
the ordinary course of business, less all estimated costs of
completion and costs to be incurred in marketing, selling and
distribution.
Provision is made for obsolete, slow moving or defective items
where appropriate. Inventory is also provided for where the level
of inventory held is in excess of the amount required to
manufacture projected future sales volumes based on the current
regulatory status of the relevant product. The provision ensures
that the carrying value of inventory does not exceed expected net
realisable value. Prior to achieving territorial regulatory
approvals, the sales volume projections for each territory, used to
estimate the required level of inventory provision, are derived by
applying historic growth rates to the current volumes being sold
via named patient sales programmes. Once a territorial approval is
achieved, volume projections are revised to take account of
expected commercial sales volumes for that territory, based upon
projections provided by commercial partners, adjusted to take into
account other factors such as historic experience of sales growth
rates and expected market penetration.
i) Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
j) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits
held at call with banks and other short term highly liquid
investments with an original maturity of three months or less.
k) Foreign currency
Transactions in foreign currencies are recorded at the rate of
exchange at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet
date are retranslated at the rates of exchange prevailing at that
date. Any gain or loss arising from a change in exchange rates
subsequent to the date of the transaction is included as an
exchange gain or loss in the income statement.
l) Share-based payment
The Group has applied the requirements of IFRS 2, Share-based
payments. In accordance with the transitional provisions, IFRS 2
has been applied to all grants of equity instruments after 7
November 2002 that were unvested as at 1 October 2005.
The Group issues equity-settled share-based payments to
employees. Equity-settled share-based payments are measured at fair
value (excluding the effect of non-market-based vesting conditions)
at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for the
effect of non-market-based vesting conditions.
Fair value is measured by use of the Black-Scholes pricing
model. The expected life used in the model has been adjusted, based
on management's best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural
considerations.
3. Business segments
The Directors consider that the Group operates within a single
business segment, being pharmaceutical development.
Revenue: Year ended Year ended
30 September 30 September
2010 2009
GBP000's GBP000's
Product sales 2,768 1,689
Research and development fees 14,808 12,532
Licensing fees:
- signature fees 1,900 1,900
- development and approval fees 11,200 8,000
-------------------------------- ------------ ------------
30,676 24,121
-------------------------------- ------------ ------------
Geographical analysis of revenue:
Year ended Year ended
30 September 30 September
2010 2009
GBP000's GBP000's
UK 1,834 915
Europe (excluding UK) 12,511 9,152
North America 11,904 10,689
Asia 4,427 3,365
---------------------- ------------ ------------
30,676 24,121
---------------------- ------------ ------------
All revenue and profits before taxation originated in the UK.
All assets and liabilities are held in the UK.
4. Research and development expenditure
Year ended Year ended
30 September 30 September
2010 2009
GBP000's GBP000's
GW-funded research 7,015 6,805
Development partner-funded research 14,808 12,532
------------------------------------ ------------ ------------
Total 21,823 19,337
------------------------------------ ------------ ------------
5. Tax credit
Year ended Year ended
30 September 30 September
2010 2009
GBP000's GBP000's
UK Corporation tax - R&D tax credit:
Prior year (37) 7
Current period - (360)
------------------------------------- ------------ ------------
Total credit for the period (37) (353)
------------------------------------- ------------ ------------
The UK Corporation tax credit relates to research and
development expenditure claimed under the Finance Act 2000.
The amounts are subject to the agreement of HM Revenue and
Customs.
At 30 September 2010 there were tax losses available to carry
forward of approximately GBP44.3m (2009: GBP43.7m)
6. Earnings per share
Basic Diluted
-------------------- --------------------
2010 2009 2010 2009
GBP000's GBP000's GBP000's GBP000's
---------------------------------- --------- --------- --------- ---------
Profit for the financial year 4,641 1,505 4,657 1,511
---------------------------------- --------- --------- --------- ---------
Number of shares Number of shares
-------------------- --------------------
2010 2009 2010 2009
m m m m
---------------------------------- --------- --------- --------- ---------
Weighted average number of shares 129.9 122.5 136.7 128.1
---------------------------------- --------- --------- --------- ---------
The calculations of earnings per share are based on the
following profits and numbers of shares.
7. Inventory
30 September 30 September
2010 2009
GBP000's GBP000's
Raw Materials 126 93
Work in progress 505 286
Finished goods 149 172
----------------- ------------ ------------
780 551
----------------- ------------ ------------
Inventory is stated net of a realisable value provision of
GBP3.9m (2009 GBP4.0m)
8. Trade and other receivables
30 September 30 September
2010 2009
GBP000's GBP000's
Amounts falling due within one year
Trade receivables 645 129
Other receivables 154 75
Prepayments and accrued income 418 607
------------------------------------ ------------ ------------
1,217 811
------------------------------------ ------------ ------------
9. Trade and other payables
30 September 30 September
2010 2009
GBP000's GBP000's
Trade payables 1,281 2,463
Other taxation and social security 356 156
Accruals 2,876 1,834
Defined contribution pension scheme accruals 41 43
--------------------------------------------- ------------ ------------
4,554 4,496
--------------------------------------------- ------------ ------------
10. Deferred revenue
30 September 30 September
2010 2009
Amounts falling due within one year GBP000's GBP000's
Deferred signature fee income 1,900 1,900
Advance payments received 3,220 2,694
------------------------------------ ------------ ------------
5,120 4,594
------------------------------------ ------------ ------------
Amounts falling due after one year
------------------------------------ ------------ ------------
Deferred signature fee income 11,599 13,499
------------------------------------ ------------ ------------
Deferred signature fee income represents the balance of the
non-refundable signature fees received from Almirall and Otsuka.
These amounts will be recognised as revenue in future periods.
For Almirall the GBP12m signature fee is being recognised at the
rate of GBP0.8m per year over 15 years from December 2005. In the
case of Otsuka where the Group's obligations under the agreement
are weighted towards the earlier years, the $18m (GBP9.2m)
signature is being recognised from 1 April 2007 to 30 September
2011 at the rate of GBP1.1m per year and at GBP0.28m per year for
the following 15 years.
Advance payments received represents payments for research and
development activities to be carried out in the next financial year
on behalf of Otsuka. These amounts will be recognised as revenue in
future periods.
11. Share Capital
As at 30 September 2010 the authorised share capital of the
Company and the allotted, called-up and fully paid amounts were as
follows:
2010 2009
GBP000's GBP000's
----------------------------------------- -------- --------
Authorised
200,000,000 ordinary shares of 0.1p each 200 200
Allotted, called-up and fully paid
131,197,792 (2009: 129,277,655) ordinary
shares of 0.1p each 131 129
----------------------------------------- -------- --------
During the year the following ordinary shares of 0.1p each were
issued by the Company:
Number of Total nominal Total share Total
shares value premium consideration
Year Ended 30
September 2010 GBP000's GBP000's GBP000's
------------------- ---------- -------------- ------------ ---------------
Issue of new
ordinary shares - - - -
Exercise of share
options 1,920,137 2 678 680
------------------- ---------- -------------- ------------ ---------------
Number of Total nominal Total share Total
shares value premium consideration
Year Ended 30 GBP000's GBP000's GBP000's
September 2009
------------------- ---------- -------------- ------------ ---------------
Issue of new 8,470,920 8 6,599 6,607
ordinary shares 21,400 - 15 15
Exercise of share
options
------------------- ---------- -------------- ------------ ---------------
12. Availability of information
A copy of this statement is available from the Company Secretary
at Porton Down Science Park, Salisbury, Wiltshire, SP4 0JQ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UUVWRRSAAUAA
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