TIDMPYM
RNS Number : 7449R
Phytopharm PLC
22 November 2012
22 November 2012
Phytopharm plc
Preliminary Results
Phytopharm plc (PYM: London Stock Exchange) ("Phytopharm", the
"Group", or the "Company") announces today its preliminary results
for the year ended 30 September 2012.
Business highlights
Operational
-- Recruitment into CONFIDENT-PD Phase II clinical trial of
Cogane(TM) in untreated patients with early stage Parkinson's
disease was completed in April 2012 and the last patient is
expected to complete the trial in late November 2012. Headline
results from the trial remain on track to be available in February
2013.
-- Cogane(TM) demonstrated efficacy in the "gold standard"
preclinical model of amyotrophic lateral sclerosis ("ALS"), the
most common form of motor neurone disease. Positive data have now
been obtained in four models of ALS, providing a strong rationale
for Cogane(TM) as a potential treatment for this devastating
condition.
-- A Phase I clinical trial to evaluate Cogane(TM) solid dose
oral formulations for up to 28 days has been initiated.
-- A study of Myogane(TM) in a preclinical model of glaucoma was
inconclusive due to an unexpectedly low neuronal cell loss in the
control group which prevented evaluation of a neuroprotective
effect of Myogane(TM).
Corporate
-- Dr Ian Tulloch was appointed as a non-executive Board
director in February 2012. As planned, Mr Sandy Morrison stepped
down from the Board following the Company's Annual General Meeting
in March 2012.
Financial
-- Loss after tax of GBP7.77 million in line with expectations
reflects ongoing focus on the development of our pharmaceutical
programmes (2011: GBP7.66 million).
-- Cash and money market investments of GBP8.89 million (2011:
GBP17.57 million). Based on our current expectations Phytopharm is
financed to at least the end of Q1 2014.
Mr Tim Sharpington, CEO commented: "Over the past year the Group
has continued to focus on the development of its pharmaceutical
pipeline whilst retaining tight financial control. Operationally,
good progress has been made on the development of our lead program,
Cogane(TM). Patient recruitment was completed in the CONFIDENT-PD
Phase II clinical trial in Parkinson's disease and the preclinical
study of Cogane(TM) in ALS (motor neurone disease) was successfully
completed, the results being supportive of progression into
clinical trials.
The results from CONFIDENT-PD, expected in February 2013,
represent an important milestone for the Group and are eagerly
awaited. Initial discussions have been held with potential partners
and plans put in place for the next steps in the development of our
pipeline assets, be that alone or in partnership with other
companies, to ensure that we are well positioned to extract maximum
value for our shareholders."
Enquiries Broker U.K. Investor Relations
Phytopharm plc Peel Hunt LLP FTI Consulting
Tim Sharpington, CEO James Steel Limited
Roger Hickling, R & D Director Vijay Barathan Ben Atwell
+44 1480 437 697 +44 207 418 8900 John Dineen
+44 207 831 3113
For further information about Phytopharm, please see our website
at http://www.phytopharm.com
Business Review
Strategy
Phytopharm plc ("Phytopharm") is a development stage
pharmaceutical Group developing novel treatments targeting diseases
with high levels of unmet need. Our lead series of compounds, the
sapogenins (including Cogane(TM) and Myogane(TM)), has the
potential to be a new class of therapy for neurodegenerative
diseases including Parkinson's disease, amyotrophic lateral
sclerosis ("ALS") and glaucoma.
Phytopharm operates as a virtual Group ensuring the majority of
our financial resources are focussed on our pharmaceutical
pipeline. We utilise a network of external scientific and clinical
experts to help guide our development programmes with our
experienced pharmaceutical managers overseeing operations.
Our commercially focused development programmes have the
potential to produce significant treatment advances in our target
areas of neurodegeneration and inflammatory disease. Our products
are single chemical entities with novel mechanisms of action
protected by strong patent families. Our pipeline has been sourced
from our own research activities and from licensing activities,
particularly from leading research institutions in China with which
the Group has long-standing relationships.
Our objective is to develop products aimed at major markets with
high unmet medical need to key value inflection points before
seeking late-stage development and/or commercial partners as
appropriate.
Overview
We continue to progress our strategy of focussing on our
pharmaceutical programmes, specifically on the development of
Cogane(TM) for Parkinson's disease, and headline results from the
CONFIDENT-PD clinical trial are expected in February 2013.
Programme 2012 Key highlights
------------ ---------------------- --------------------------------------------------------------------------------
Cogane(TM) Parkinson's disease CONFIDENT-PD: April 2012 - completion CONFIDENT-PD: Late November 2012 -
of recruitment last patient expected to complete
------------ ---------------------- --------------------------------------- ---------------------------------------
A Phase I bioavailability clinical trial of new solid dose oral formulations
initiated
------------ ---------------------- --------------------------------------------------------------------------------
ALS Positive data from preclinical Charitable funding opportunities being
evaluation evaluated
------------ ---------------------- --------------------------------------- ---------------------------------------
Myogane(TM) Glaucoma Inconclusive results in a preclinical model which prevented evaluation of a
neuroprotective
action
------------ ---------------------- --------------------------------------------------------------------------------
P61 Inflammatory diseases Characterisation of lead compound ongoing
------------ ---------------------- --------------------------------------------------------------------------------
Business Review (continued)
Pharmaceutical programmes
Neurodegeneration
Neurodegeneration is the umbrella term for the progressive death
or loss of structure and function of neurones. Many
neurodegenerative diseases, e.g. Parkinson's disease, ALS, glaucoma
and Alzheimer's disease, occur as a result of neurodegenerative
processes that exhibit many similarities suggesting that these
diseases are related on a sub-cellular level. Because of the
similarities in neurodegeneration across this range of diseases,
there is hope that therapeutic advances, such as Phytopharm's lead
pharmaceutical programmes Cogane(TM) and Myogane(TM), could be
beneficial in more than one of these diseases.
Indication Opportunity
-------------------------- --------------------------------------------
Parkinson's disease Second largest neurodegenerative disease(1)
-------------------------- --------------------------------------------
Estimated to affect more than 4 million
people globally(1)
-------------------------- --------------------------------------------
Estimated to reach 8.3 to 9.3 million
people by 2030(2) across the world's most
populous countries(a)
--------------------------------------------
$3.0 billion market in 2011(3)
-------------------------- --------------------------------------------
Motor neurone disease/ALS Estimated to affect more than 400,000
people globally(4)
-------------------------- --------------------------------------------
Approximately 120,00 new cases diagnosed
annually(5)
-------------------------- --------------------------------------------
Designated orphan disease
--------------------------------------------
Estimated market $211 million in 2012(6)
. Potential market size forecast of $2
billion(4) for effective treatment
-------------------------- --------------------------------------------
Glaucoma Currently the second leading cause of
blindness worldwide(6)
-------------------------- --------------------------------------------
Estimated to affect 70 million people
globally(6)
-------------------------- --------------------------------------------
Estimated market $3 billion in 2010(6)
-------------------------- --------------------------------------------
(Sources: (1) Business Insights 2010; (2) European Parkinson's
Disease Association 2012; (3) ASD Reports 2012; (4) ALS-TDI 2012;
(5) International Alliances of ALS/MND Associations 2012; (6)
Global Data 2011.)
(a) Bangladesh, Brazil, China, France, Germany, India, Italy,
Indonesia, Japan, Nigeria, Russia, Spain, UK and USA.
Parkinson's disease
Parkinson's disease is a movement disorder characterised by
muscle rigidity, tremor and a slowing of physical movement
(bradykinesia) and, in extreme cases, a loss of physical movement
(akinesia). The primary symptoms are the result of altered
signalling in an area of the brain, the striatum, responsible for
the control of movement. This is caused by degeneration of
dopaminergic neurones that project from the substantia nigra to the
striatum, leading to insufficient formation and action of dopamine.
Parkinson's disease is therefore termed a neurodegenerative
disease. The disease is slow in onset and the appearance of
symptoms reflects the gradual loss of dopaminergic neurones.
Motor neurone disease/ALS
ALS, also known as Lou Gehrig's disease, is the most prevalent
form of motor neurone disease which generally occurs in people
between 40 and 60 years of age. It is characterised by progressive
loss of both lower (spinal cord and brain stem) and upper (cerebral
cortex) motor neurones, which leads to severe muscle weakness and
wasting, followed by paralysis and death, generally caused by
respiratory failure with only 50% of patients surviving 18 months
from diagnosis and only 20% surviving beyond five years from
diagnosis(7) . There is an urgent need for the development of new
approaches to treat this devastating condition.
(Source: (7) ALS-TDI 2012)
Business Review (continued)
Glaucoma
Current pharmacological treatments for glaucoma are
predominantly focused on reducing the elevated intra-ocular
pressure ("IOP") in the eye, which is often associated with
glaucoma. However, a significant number of patients with glaucoma
do not exhibit raised IOP and, in addition, a significant number of
patients whose IOP is successfully reduced still experience ongoing
neurodegeneration resulting in deterioration of sight. It is
therefore believed that there is a major unmet need and a
commercial opportunity for products which could successfully treat
the underlying neurodegenerative process in glaucoma.
The sapogenins
Cogane(TM) and Myogane(TM) are structurally related, small
molecule, chemical entities and members of the sapogenin class of
compounds.
Cogane(TM) Myogane(TM)
---------------------------------------------------------- ----------------------------------------------------------
Orally bioavailable neurotrophic factor modulators that readily cross the blood-brain barrier
----------------------------------------------------------------------------------------------------------------------
Demonstrated neuroprotective effects in a range of preclinical models
----------------------------------------------------------------------------------------------------------------------
Induce and modulate the production of neurotrophic factors
----------------------------------------------------------------------------------------------------------------------
Completed long-term toxicology studies
----------------------------------------------------------------------------------------------------------------------
Formulated as once daily, orally administered therapies with good bioavailability and safety
profiles
----------------------------------------------------------------------------------------------------------------------
Currently being evaluated in a Phase II trial of Evaluated in a preclinical model of glaucoma. Data from
untreated patients with early stage Parkinson's this study will be further evaluated
disease (CONFIDENT-PD)
---------------------------------------------------------- ----------------------------------------------------------
Evaluated for safety and tolerability in patients with
Alzheimer's disease
---------------------------------------------------------- ----------------------------------------------------------
Positive results in preclinical models of ALS which
provides strong support for the utility
of Cogane(TM) in the treatment of this condition
---------------------------------------------------------- ----------------------------------------------------------
Mode of action
Cogane(TM) and Myogane(TM) are therapies which are administered
orally. Once absorbed by the body they readily cross the
blood-brain barrier and concentrate in the central nervous system
("CNS"). Once delivered to the brain and CNS it is hypothesised
that they exert their beneficial actions by modulating the
production of neurotrophic factors. Glial cell-derived neurotrophic
factor ("GDNF") and brain derived neurotrophic factor ("BDNF") are
naturally occurring proteins in the brain that have been shown to
be effective in re-growing damaged nerves. As neurotrophic factors
are proteins, they cannot themselves be given orally (in tablet or
liquid form) because they are degraded in the stomach and intestine
and also do not readily cross the blood-brain barrier.
Direct infusion of GDNF into the area of the brain involved in
Parkinson's disease has shown evidence of being clinically
effective in restoring the control of movement but requires highly
complex and difficult surgical procedures.
Cogane(TM) therefore has the potential to overcome many of the
difficulties associated with GDNF administration, whilst retaining
its therapeutic promise. In preclinical models, Cogane(TM)
modulated the release of GDNF and BDNF in the brain and increased
neurite outgrowth. When administered orally in several different
preclinical models of Parkinson's disease, Cogane(TM) modulated
neurotrophic factor production and reversed the loss of
dopaminergic neurones in the substantia nigra, the area of the
brain most affected in Parkinson's disease.
Business Review (continued)
Cogane(TM) in Parkinson's disease - progress to date
The preclinical neuroprotective profile of Cogane(TM) suggests
that it will have benefit on both motor and non-motor symptoms of
Parkinson's disease. In addition its effect on restoring damaged
neurones to a functioning state implies that it might result in a
delay in the progression of disease in recently diagnosed
patients.
Cogane(TM) is currently being evaluated in a multi-national
Phase II, randomised, double blind, placebo controlled, dose
ranging trial (CONFIDENT-PD). The trial is comparing the safety,
tolerability and efficacy of three doses of Cogane(TM) and placebo
when administered for 28 weeks to untreated patients with
early-stage Parkinson's disease. The trial will assess the efficacy
of Cogane(TM) in the treatment of both motor and non--motor
symptoms of Parkinson's disease. Recruitment into the trial
completed in April 2012 and the last patient is expected to
complete the trial in late November 2012. It is anticipated that
headline data from the trial will be available in February
2013.
Data from preclinical models also indicates that in addition to
its effectiveness as a monotherapy, Cogane(TM) administered in
conjunction with L--DOPA, a commonly used symptomatic treatment of
Parkinson's disease, shows additional benefit over L--DOPA alone.
Other data suggests that Cogane(TM) co-administration reduces the
side effects associated with L--DOPA. If these effects of improved
efficacy and reduced side effects of L--DOPA by co-administration
of Cogane(TM) are also observed in patients, this will have
significant benefit in the management of patients with more severe,
later stage disease.
Cogane(TM) is administered in a liquid formulation in the
current CONFIDENT-PD clinical trial. In parallel to this trial the
Group has been developing solid dose oral formulations which it
believes will be a more commercially attractive proposition to take
forward into Phase III registration trials and onto the market. A
Phase I bioavailability clinical trial has been initiated to assess
the bioavailability of these solid dose formulations of Cogane(TM)
in healthy volunteers for a period of up to 28 days. The results of
the trial are expected in early 2013.
Cogane(TM) in motor neurone disease/ALS - progress to date
A study of Cogane(TM) in the genetic "gold standard" preclinical
model of ALS was completed during the period. The model has a
mutation in the SOD1 gene (SOD1(G93A) ); mutation of the SOD1 gene
is a known cause of ALS in humans. In this study, Cogane(TM) was
administered orally for 50 days, commencing after ALS--type
symptoms had manifested. This is therefore considered to be a model
of severe, late-stage ALS. The main findings from the study
are:
-- administration of Cogane(TM) resulted in a 30 - 50%
improvement in muscle strength in one muscle type compared to both
the untreated control group and a group treated with riluzole (the
only currently approved treatment of ALS);
-- treatment with Cogane(TM) also resulted in an increase in the
number of motor units (a measure of functional motor neurones)
compared with both the untreated and riluzole treated groups;
-- treatment effects were less clear in a second muscle type
which was more severely damaged in the model, though the group
treated with Cogane(TM) again showed an improvement in strength
compared to the riluzole treated group; and
-- histopathology data shows that administration of Cogane(TM)
reduced the loss of spinal cord motor neurones by 39% compared with
the number damaged in the untreated group (a statistically
significant difference; p=0.008). Treatment with riluzole resulted
in a 29% but not statistically significant reduction. Additionally,
microscopic examination showed that Cogane(TM) protected muscle
composition, supporting the results on muscle strength.
This study was performed by Professor Linda Greensmith's group
at University College London with the financial support of the
Motor Neurone Disease Association, a UK based charitable
organisation which provided a grant to cover the costs of the
study.
These results support those reported previously by Phytopharm in
which Cogane(TM) showed benefit in an environmental (toxin-induced)
model of ALS, in a progressive motor neuropathy model and in a
nerve crush model. Collectively the results from these four
different models of motor neuron damage provide strong support for
the utility of Cogane(TM) in the treatment of this condition.
As Cogane(TM) is already in clinical trials for Parkinson's
disease, rapid progression into efficacy indicating trials would be
possible, subject to funding.
Cogane(TM) has been granted Orphan Drug status by both the
European Commission and by the US Food & Drug Administration
for development in ALS and this will allow significant access to
the regulatory authorities for advice and expedited clinical
progression as well as providing financial advantages.
Business Review (continued)
Myogane(TM) in glaucoma - progress to date
Myogane(TM) has demonstrated neuroprotective effects in a range
of preclinical models of neurodegenerative diseases. Specifically,
Myogane(TM) has been shown to modulate the production of
neurotrophic factors in a number of cell types and to have
beneficial neuroprotective and neurorestorative effects on retinal
ganglion cells, the cells which degenerate in glaucoma.
The Company has completed a study with Myogane(TM) in an animal
model of glaucoma that was inconclusive. The study did not yield a
valid result because of an unexpectedly low level of neuronal cell
death in the control group which prevented evaluation of the
neuroprotective effect of Myogane(TM).
The study was designed to evaluate the neuroprotective effects
of treatment with Myogane(TM) in an established model of glaucoma.
In this model intraocular pressure is elevated in order to induce
neuronal cell loss in the retina. The endpoint was a comparative
measurement of neuronal cell loss. However, the extent of induced
neuronal cell loss was much less than anticipated (from literature
precedent) in the control group. While there were some indications
of a neuroprotective effect following Myogane(TM)treatment, it was
not possible to draw definitive conclusions because of the limited
neurodegeneration in the control group. Pharmacokinetic evaluation
indicated that levels of Myogane(TM) in the plasma were broadly in
line with that expected from previous studies and that Myogane(TM)
was present in the retina. This study was performed with the
financial support of the UK Technology Strategy Board. Further
tests will be conducted in glaucoma when resources permit.
P61 programme - progress to date
The P61 programme was established to investigate the known
pharmacological properties of curcumin and gingerol. P61 is a
series of novel new chemical entities ("NCEs") which exhibit
anti-inflammatory, anti-remodelling, anti-spasmodic and TRPV1
modulating activities. This range of activity within single
molecules could provide attractive therapeutic options for a number
of inflammatory diseases. A lead compound has been identified and
is being characterised to better understand its pharmaceutical
potential.
Legacy products
Hoodia
The Council for Scientific and Industrial Research, South
Africa, is continuing its evaluation of Hoodia gordonii as an
appetite suppressant.
Phytopica(R)
During the year we signed a global licence agreement for
Phytopica(R) , a natural product for canine skin health, with a
Chinese company, Hebei Meiwei Chinese Medicinal Herbs Co. Limited
("Hebei Meiwei"). We have retained a commercial interest in the
project and will receive a proportion of any future commercial
milestones and royalties from the project following a period of
further development by Hebei Meiwei.
Financial Review
The financial performance for the year ended 30 September 2012
reflects the Group's ongoing pharmaceutical development activities,
particularly the progress of our pharmaceutical development
programmes in neurodegenerative diseases.
During the year we have continued to progress our pharmaceutical
programmes as planned whilst maintaining our lean operating
structure. Alongside the development work on Cogane(TM) in
Parkinson's disease and ALS, we have continued discussions with
potential partners. We have also benefited from changes in the
research and development corporation tax credit system which were
confirmed during the year. Based on our current expectations, we
have sufficient cash resources to at least the end of Q1 2014.
Revenue
Revenue from continuing operations for the year of GBP0.02
million (2011: GBP0.07 million) was principally generated from
activities on the Group's legacy programmes.
Other income of GBP0.08 million (2011: GBPnil) has been received
in respect of a grant towards the preclinical development programme
for Myogane(TM) in glaucoma.
Research and development expenses
Our research and development expenses are in line with our
expectations at GBP8.29 million, an increase from GBP7.46 million
in 2011. The increase in our research and development expenses over
the last two financial years reflects the investment in our
development programmes, in particular the ongoing CONFIDENT-PD
clinical study.
Administrative expenses
Our virtual business model allows us to operate with a low cost
base which is reflected in our administrative expenses of GBP1.10
million (2011: GBP1.15 million).
Finance income
Finance income decreased to GBP0.21 million for the year (2011:
GBP0.38 million) and represents interest received and receivable
from our cash balances. The reduction reflects the utilisation of
cash resources on our research and development programmes.
Taxation
During the year a number of changes to the research and
development corporation tax credit system were confirmed. These
changes included the removal of the cap on the level of refund
payable at the level of PAYE and NIC paid in each year. This change
has resulted in a substantial increase in the corporation tax
refund for the year to GBP1.32 million (2011: GBP0.51 million).
This refund is expected to be received in 2013.
Balance sheet
Non-current assets
Non-current assets representing property, plant and equipment
amounted to GBP0.06 million at 30 September 2012 (2011: GBP0.08
million).
Current assets
Current assets at 30 September 2012 amounted to GBP10.53 million
compared to GBP18.51 million at the same time last year. The
movement during the year principally comprised the increased
research and development tax credit receivable for the year of
GBP1.32 million (2011: GBP0.48 million) offset by a reduction in
our cash balances representing the investment in our pharmaceutical
programmes.
Cash balances of GBP8.89 million (2011: GBP17.57 million)
comprise money market investments and cash and cash equivalents.
Money market investments represent fixed-rate, short-term deposits
placed with a range of financial institutions at fixed terms with a
maturity date of more than three months. Cash and cash equivalents
are invested with a similar range of financial institutions for a
period of 90 days or less.
Current liabilities
Our current liabilities principally comprise trade and other
payables of GBP2.22 million at 30 September 2012, a slight decrease
from GBP2.63 million last year.
Financial Review (continued)
Equity
Share capital and share premium amounted to GBP3.47 million and
GBP77.29 million respectively at the year end and have increased
slightly during the year due to the exercise of share options under
which the Group issued 99,777 new ordinary shares for cash.
Cash flow
We continue to utilise our cash to fund the development of our
pharmaceutical programmes and the net cash used in operating
activities was GBP9.00 million (2011: GBP6.42 million). We expect
to continue utilising our cash resources to fund our ongoing
programmes as planned.
We expect our cash outflow to continue as we continue the
progression of our pharmaceutical programmes, primarily Cogane(TM)
in the CONFIDENT-PD clinical trial which we expect will provide us
with headline data in February 2013.
Outlook
Our CONFIDENT-PD clinical study is expected to generate clinical
data in February 2013, which, if positive, will allow us to
maximise shareholder value by seeking late-stage development and/or
commercial partners as appropriate. We are also evaluating
opportunities following the successful completion of our
investigations into the effects of Cogane(TM) in ALS which may,
funding dependent, allow us to investigate further
efficacy-indicating clinical trials in this indication. We will
continue to evaluate funding opportunities as they arise. We also
expect to complete the current phase of the P61 programme.
In line with our virtual operational structure, we will continue
to outsource the majority of our operations to specialist external
organisations enabling us to operate with a low headcount and
minimal infrastructure. This lean operational structure confers
substantial cost and technical benefits. Efficiency and cost
control continue to be a key focus. Our lean operational structure
continues to provide substantial cost and technical benefits as the
nature and range of our activities evolve in tandem with our
programmes' progress through the various stages of development.
At 30 September 2012, the Group had cash resources (being cash
and cash equivalents and money market investments) of GBP8,887,220
(2011: GBP17,574,476). These cash resources are sufficient for the
Group to complete the CONFIDENT-PD trial and any other ongoing
research and development studies and to fund, entirely from its own
existing resources, the Group's ongoing activities to at least the
end of Q1 2014. Thus, after making enquiries and taking into
account management's estimate of future expenditure, the directors
have a reasonable expectation that the Group will have adequate
financial resources to continue in operation for the foreseeable
future.
Forward-looking statements
Certain information included in these statements is
forward-looking and involves risk and uncertainties that could
cause results to differ materially from those expressed or implied
by the forward-looking statements.
Forward looking statements include, without limitation,
projections relating to results of operations and financial
conditions, market estimates, the Group's plans and objectives for
future operations, including future revenues, financial plans and
expected expenditures and divestments. All forward-looking
statements in this report are based on information known to the
Group on the date of this release. The Group undertakes no
obligation to publicly update or revise any forward looking
statement, whether as a result of new information, future events or
otherwise.
It is not reasonably possible to itemise all of the many factors
and specific events that could cause the Group's forward looking
statements to be incorrect or that could otherwise have a material
adverse effect on the future operations or results of the
Group.
Principal risks and uncertainties
The nature of pharmaceutical development is such that there are
significant inherent risks due to the long and complex development
process.
Below are those principal risks and uncertainties that the Board
considers could have a material impact on the Group's operational
results, financial condition and prospects. These risks are not in
any particular order of priority and there may be other risks that
are either currently unknown or not considered material which could
have a similar impact on the Group's business in the future.
The Board reviews each area of the business at least annually to
identify material risks and the controls in place to manage these
risks where possible.
Industry risk
In common with other research and development stage businesses,
Phytopharm's business risks relate principally to the success of
its development programmes and to the need to fund its operations
through these. The success of the Group's programmes depends upon
the quality of the design and the implementation of each programme.
The Group utilises a range of external scientific and clinical
experts to help guide its development programmes. The progress of
the development programmes therefore represents the best indicator
of the Group's performance.
Clinical and regulatory risk
Successful commercialisation of the Group's products is likely
to depend on successful progress through clinical studies and
registration. Development of product candidates involves a lengthy
and complex process and products may not meet the necessary
requirements in terms of toxicity, efficacy or safety, or the
relevant regulators may not agree with the conclusions of the
Group's research and may require further testing or withhold
approval altogether. The Group manages its clinical and regulatory
risk by working closely with its expert regulatory advisors and,
where appropriate, seeking advice from regulatory authorities on
the design of key development plans for its preclinical and
clinical programmes.
Counterparty risk
The Group relies on third party organisations to conduct its
clinical trials and to manufacture its products. If the
relationship with, or performance of, any of these partners is
adversely affected, the Group's results or operations may be
adversely impacted. The Group also may derive revenue or financial
support from collaborators and from partnering with certain
charitable organisations. If these relationships are adversely
affected, or if the products involved fail to continue to make
satisfactory progress, the Group's results or operations may be
adversely impacted. Where appropriate the Group will assess third
party organisations to establish that such organisations have the
required capability, expertise and financial stability to perform
relevant services for the Group.
Competition risk
The Group's success depends on acceptance of the Group's
products by the markets, including physicians and third party
payers, and consequently the Group's progress may be adversely
affected if it is unable to achieve market acceptance of its
products. Factors which may affect the rate and level of market
acceptance of any of the Group's products include the existence or
entry on to the market of superior competing products or therapies
and the price of the Group's products compared to competing
products and overall cost effectiveness of the product. The Group
works closely with its legal advisors and obtains, where necessary,
opinions on the intellectual property landscape relevant to the
Group's product development programmes.
Intellectual property risk
The Group's success depends in part, on its ability to obtain
and maintain protection for its intellectual and proprietary
information, so that it can stop others from making, using or
selling its inventions or proprietary rights. The Group's patent
applications may not be granted and its existing patent rights may
be successfully challenged and revoked. The Group invests in
maintaining and protecting this intellectual property to reduce
risks over the enforceability and validity of the Group's patents.
The Group works closely with its legal advisors and obtains, where
necessary, opinions on the intellectual property landscape relevant
to the Group's programmes and activities.
Principal risks and uncertainties (continued)
Financial risk
Cash flow
The Group has a history of operating losses which are
anticipated to continue until the Group is able to generate
sufficient revenues from its development programmes. However, the
Group may need to seek further capital through equity or debt
financings in the future and if this is not successful, the
financial condition of the Group may be adversely affected. As at
30 September 2012, the Group had cash resources of GBP8,887,220
which the Group considers sufficient to finance its operational
activities to at least the end of Q1 2014.
Counterparty credit risk
The Group is exposed to credit-related losses on cash deposits
in the event of non-performance by counterparties.
With the current economic uncertainty, counterparty risk is a
key consideration when placing cash funds on deposit. The Group's
policy is to minimise the risks associated with cash deposits by
placing them with institutions with a recognised high rating
(typically A or above assigned by international credit-rating
agencies) or with one of the major clearing banks. If any
counterparty were to experience financial difficulties, this may
impact on the Group's liquidity in the future.
Foreign exchange risk
The Group records its transactions and prepares its financial
statements in sterling. Where possible the Group maintains natural
hedges by matching foreign currency income with foreign currency
expenditure. The Group incurs expenditure in foreign currency
relating principally to clinical trials which may exceed any
revenues in foreign currencies. To the extent that income and
expenditure in foreign currencies are not matched, fluctuations in
exchange rates between sterling and foreign currencies, principally
US dollar and euro, may result in realised or unrealised foreign
exchange gains and losses. Where there is certainty of the amount
and timing of expenditure of foreign currencies, the Group may
purchase financial instruments to minimise any foreign exchange
gains or losses. Where the timing and/or the amount to be received
is uncertain, risk management is more difficult and the Group will
use financial instruments wherever possible. To the extent that
financial instruments are not utilised, any fluctuations in foreign
exchange movements may have a material adverse impact on the
results from operating activities.
Return on investment
The drug development process is inherently risky and is
conducted over several years and consequently is extremely costly.
Many drug candidates fail in development due to the clinical and
regulatory risks, and even in those circumstances where drugs are
approved, sales levels can be disappointing due to competition,
healthcare regulation and/or intellectual property challenges. As a
result the returns achieved may be insufficient to cover the costs
incurred. The Group looks to mitigate the development and
commercial risk of its development programmes by partnering drug
candidates for late stage development and commercialisation. By
partnering in this way, part of the programmes' value can be
realised whilst retaining a potential upside through future
milestones and royalty payments from commercial sales.
Unaudited consolidated statement of comprehensive income
for the year ended 30 September 2012
2012 2011
Unaudited Audited
Note GBP GBP
Revenue 2 18,717 66,659
Cost of sales - -
Gross profit 18,717 66,659
Other income 77,400 -
Operating expenses 3 (9,392,016) (8,613,800)
Operating loss (9,295,899) (8,547,141)
Finance income 211,481 375,685
Loss before taxation (9,084,418) (8,171,456)
Taxation 4 1,318,109 513,126
Loss and total comprehensive losses for
the year (7,766,309) (7,658,330)
Basic and diluted loss per ordinary share
(pence) 5 (2.2) (2.2)
All of the loss is attributable to the owners of the parent.
Unaudited consolidated balance sheet
as at 30 September 2012
2012 2011
Unaudited Audited
Note GBP GBP
Assets
Property, plant and equipment 62,284 83,646
Non-current assets 62,284 83,646
Trade and other receivables 6 321,562 459,954
Current tax receivable 1,318,109 479,229
Money market investments 8,600,507 14,500,000
Cash and cash equivalents 286,713 3,074,476
Current assets 10,526,891 18,513,659
Total assets 10,589,175 18,597,305
Liabilities and equity
Trade and other payables 7 2,215,453 2,633,307
Total Current liabilities 2,215,453 2,633,307
Equity attributable to owners of the parent
Ordinary shares 8 3,469,017 3,468,019
Share premium 8 77,286,854 77,283,731
Merger reserve (204,211) (204,211)
Accumulated losses (72,177,938) (64,583,541)
Total equity 8,373,722 15,963,998
Total liabilities and equity 10,589,175 18,597,305
Unaudited consolidated statement of changes in equity
for the year ended 30 September 2012
Unaudited Unaudited Unaudited
ordinary Unaudited merger accumulated Unaudited
shares share premium reserve losses Total
GBP GBP GBP GBP GBP
Balance at 1 October
2010 3,466,774 77,278,113 (204,211) (57,062,371) 23,478,305
Comprehensive income
Loss attributable
to owners of the
parent - - - (7,658,330) (7,658,330)
- - - (7,658,330) (7,658,330)
Transactions with
owners:
Issue of ordinary
shares 1,245 5,618 - - 6,863
Purchase of shares
in Phytopharm plc - - - (373) (373)
Credit in respect
of share options - - - 137,533 137,533
Transactions with
owners 1,245 5,618 - 137,160 144,023
Balance at 30 September
2011 and 1 October
2011 3,468,019 77,283,731 (204,211) (64,583,541) 15,963,998
Comprehensive income
Loss attributable
to owners of the
parent - - - (7,766,309) (7,766,309)
(7,766,309) (7,766,309)
Transactions with
owners:
Issue of ordinary
shares 998 3,123 - - 4,121
Purchase of shares
in Phytopharm plc - - - (4,171) (4,171)
Credit in respect
of share options 176,083 176,083
Transactions with
owners 998 3,123 - 171,912 176,033
Balance at 30 September
2012 3,469,017 77,286,854 (204,211) (72,177,938) 8,373,722
Unaudited consolidated cash flow statement
for the year ended 30 September 2012
Unaudited Audited
2012 2011
GBP GBP
Cash flow from operating activities
Loss for the year (7,766,309) (7,658,330)
Finance income (211,481) (375,685)
Taxation (1,318,109) (513,126)
Depreciation 26,905 49,804
Loss/(gain) on disposal of property, plant
and equipment 383 (24,743)
Share option charge 176,083 137,533
(9,092,528) (8,384,547)
Changes in working capital
Decrease in trade and other receivables 35,778 17,052
(Decrease)/increase in trade and other
payables (417,854) 1,498,392
Cash used in operations (9,474,604) (6,869,103)
Taxation received 479,229 445,068
Net cash used in operating activities (8,995,375) (6,424,035)
Cash flows from investing activities
Purchase of property, plant and equipment (5,926) (20,800)
Sale of property, plant and equipment - 24,997
Interest received 314,095 379,653
Net cash generated from investing activities 308,169 383,850
Cash flows from financing activities
Issue of shares 4,121 6,863
Investment in shares of Phytopharm plc (4,171) (373)
Movement in money market investments 5,899,493 8,000,000
Net cash generated from financing activities 5,899,443 8,006,490
Movements in cash and cash equivalents
in the year (2,787,763) 1,966,305
Cash and cash equivalents at the beginning
of the year 3,074,476 1,108,171
Cash and cash equivalents at end of the
year 286,713 3,074,476
Money market investments at the end of
the year 8,600,507 14,500,000
Total cash, cash equivalents and money
market investments 8,887,220 17,574,476
Notes to the unaudited financial information
for the year ended 30 September 2012
1. Key accounting policies and basis of preparation
Phytopharm plc is a public limited company incorporated in
England and Wales and domiciled in the UK with a listing on the
London Stock Exchange under the symbol PYM. The address of its
registered office is Lakeview House, 2 Lakeview Court, Ermine
Business Park, Huntingdon, Cambridgeshire, England PE29 6UA.
The principal accounting policies adopted in the preparation of
this condensed consolidated financial information are set out
below. These policies have been consistently applied to both years
presented, unless otherwise stated.
Basis of preparation
This condensed consolidated financial information has been
prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU, IFRIC interpretations and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared
on a historical cost basis.
The results shown for 2012 are unaudited. The results shown for
2011 are audited. The consolidated financial information contained
in this announcement does not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006. Statutory
accounts of the Company in respect of the year ended 30 September
2011 were approved by the Board of directors on 9 December 2011 and
delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified and did not contain an emphasis
of matter paragraph nor any statement under Section 498 of the
Companies Act 2006.
Going concern
Having completed patient recruitment into the CONFIDENT-PD
clinical trial in patients with early-stage Parkinson's disease
during the financial year, the Group expects to receive the results
from the trial in February 2013. Once the trial has been completed,
the Group's research and development expenditure is expected to
fall substantially while the Group evaluates the results of this
important milestone. Initial discussions have been held with
potential partners and plans put in place for the next steps in the
development of the Group's pipeline assets, be that alone or in
partnership with other companies, to ensure that the Group is well
positioned to extract maximum value from its programmes.
At 30 September 2012, the Group had cash resources (being cash
and cash equivalents and money market investments) of GBP8,887,220
(2011: GBP17,574,476). These cash resources are sufficient for the
Group to complete the CONFIDENT-PD trial and any other ongoing
research and development studies and to fund, entirely from its own
existing resources, the Group's ongoing activities to at least the
end of Q1 2014. Thus, after making enquiries and taking into
account management's estimate of future expenditure, the directors
have a reasonable expectation that the Group will have adequate
financial resources to continue in operation for the foreseeable
future.
Basis of consolidation
The consolidated financial statements include the financial
statements of Phytopharm plc (the "Company") and all its subsidiary
undertakings (together the "Group"), made up to 30 September
2012.
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than one-half of the voting
rights. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated from
the date that control ceases.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Accounting policies
The results for 2012 reflect the accounting policies as stated
in Note 1 to the financial statements in the Annual Report and
Accounts filed with Companies House in the United Kingdom for the
financial year ended 30 September 2011.
Notes to the unaudited financial information
for the year ended 30 September 2012
1. Key accounting policies and basis of preparation (continued)
Accounting developments
Current financial year
There are no IFRS or IFRIC interpretations that are effective
for the first time for the financial year beginning on or after 1
October 2011 that would be expected to have a material impact on
the Group.
Future financial years
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
October 2011, and have not been applied in preparing these
consolidated financial statements. None of these is expected to
have a significant effect on the consolidated financial statements
of the Group. The following amendments to standards and new
standards may impact the Group in the future:
-- Amendment to IAS 1, 'Financial statement presentation'
regarding other comprehensive income. The main change resulting
from these amendments is a requirement for entities to group items
presented in 'other comprehensive income' ("OCI") on the basis of
whether they are potentially reclassifiable to profit or loss
subsequently (reclassification adjustments). The amendments do not
address which items are presented in OCI. The Group is yet to
assess the full impact of the amendment to IAS 1 and intends to
adopt this no later than the accounting period beginning on or
after 1 October 2013.
-- IFRS 9, 'Financial instruments', addresses the
classification, measurement and recognition of financial assets and
financial liabilities. IFRS 9 was issued in November 2009 and
October 2010. It replaces the parts of IAS 39 that relate to the
classification and measurement of financial instruments. IFRS 9
requires financial assets to be classified into two measurement
categories: those measured as at fair value and those measured at
amortised cost. The determination is made at initial recognition.
The classification depends on the entity's business model for
managing its financial instruments and the contractual cash flow
characteristics of the instrument. For financial liabilities, the
standard retains most of the IAS 39 requirements. The main change
is that, in cases where the fair value option is taken for
financial liabilities, the part of a fair value change due to an
entity's own credit risk is recorded in other comprehensive income
rather than the income statement, unless this creates an accounting
mismatch. The Group is yet to assess IFRS 9's full impact and
intends to adopt IFRS 9 no later than the accounting period
beginning on or after 1 October 2015, subject to endorsement by the
EU. The Group will also consider the impact of the remaining phases
of IFRS 9 when issued.
-- IFRS 13, 'Fair value measurement', aims to improve
consistency and reduce complexity by providing a precise definition
of fair value and a single source of fair value measurement and
disclosure requirements for use across IFRS. The requirements,
which are largely aligned between IFRS and US GAAP, do not extend
the use of fair value accounting but provide guidance on how it
should be applied where its use is already required or permitted by
other standards within IFRS or US GAAP. The Group is yet to assess
IFRS 13's full impact and intends to adopt IFRS 13 no later than
the accounting period beginning on or after 1 October 2013.
There are no other IFRS or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the group.
Notes to the unaudited financial information
for the year ended 30 September 2012
2. Segmental information
The Group's development and other functions operating across all
the Group's research programmes are managed centrally and are
reported internally as a single business. This also applies to the
Group's marketed products. The chief operating decision maker has
been identified as the Executive directors of Phytopharm plc. The
Executive directors review the Group's internal reporting in order
to assess performance and allocate resources. Management has
determined the operating segment based on these reports.
Accordingly, the Directors consider that there is only one
reporting segment, being the research and development of
pharmaceutical products.
The Group is domiciled in the UK. The revenue and other income
from external customers in the UK is GBP77,400 (2011: GBP4,761) and
the total revenue and other income from external customers in other
countries is GBP18,717 (2011: GBP61,898).
Revenue analysis
The revenue analysis in the table below is based on the country
of registration of the fee paying party:
2012 2011
Unaudited Audited
GBP GBP
Revenue
Europe 17,474 4,761
Asia 1,243 -
South Africa - 61,898
18,717 66,659
Other income
United Kingdom (i) 77,400 -
96,117 66,659
(i) Represents grant income recognised
3. Operating expenses
2012 2011
Unaudited Audited
GBP GBP
Research and development 8,290,976 7,461,246
Administrative expenses 1,101,040 1,152,554
9,392,016 8,613,800
Notes to the unaudited financial information
for the year ended 30 September 2012
4. Taxation
2012 2011
Unaudited Audited
GBP GBP
Current tax :
UK corporation tax
Current UK corporation tax credit on loss
for the year 1,318,109 479,229
Adjustment in respect of prior year - 33,897
Total current UK corporation tax credit on
loss for the year 1,318,109 513,126
No liability to UK corporation tax arose during the year due to
the loss incurred (2011: GBPnil).
The Group has taken advantage of the research and development
corporation tax credits introduced in the Finance Act 2000 whereby
a company may surrender corporation tax losses incurred on research
and development expenditure for a corporation tax refund at the
rate of 12.5% to 31 March 2012 and 11% from 1 April 2012.
5. Loss per ordinary share
2012 2011
Unaudited Audited
Attributable loss (GBP) (7,766,309) (7,658,330)
Weighted average number of shares in issue 346,654,352 346,619,213
Basic and diluted loss per ordinary share
(pence) (2.2) (2.2)
The loss per share is based on the weighted average number of
shares in issue during the period. IAS 33, 'Earnings per Share',
requires presentation of diluted earnings per share when a company
could be called upon to issue shares that would decrease net profit
or increase net loss per share. No adjustment has been made to the
basic loss per share, as the exercise of share options would have
the effect of reducing the loss per ordinary share, and therefore
is not dilutive.
Notes to the unaudited financial information
for the year ended 30 September 2012
6. Trade and other receivables
2012 2011
Unaudited Audited
GBP GBP
Trade receivables - 5,581
Other receivables 103,227 86,395
Prepayments and accrued income 218,335 367,978
321,562 459,954
7. Trade and other payables
2012 2011
Unaudited Audited
GBP GBP
Trade payables 523,968 665,109
Other taxation and social security 38,921 37,945
Other payables 11,541 10,662
Accrued expenses 1,641,023 1,919,591
2,215,453 2,633,307
8. Share capital
Ordinary shares of 1 pence
each Share premium
Number GBP GBP
At 1 October 2010 346,677,433 3,466,774 77,278,113
Issued under share option scheme 124,539 1,245 5,618
At 30 September 2011 and 1 October
2011 346,801,972 3,468,019 77,283,731
Issued under share option scheme 99,777 998 3,123
At 30 September 2012 346,901,749 3,469,017 77,286,854
Issue of shares
In the year ended 30 September 2012, the Company issued 99,777
new ordinary shares of 1 pence each for a total cash consideration
of GBP4,121 following the exercise of share options. The nominal
value of these shares was GBP998.
In the year ended 30 September 2011, the Company issued 124,539
new ordinary shares of 1 pence each for a total cash consideration
of GBP6,863 following the exercise of share options. The nominal
value of these shares was GBP1,245.
Phytopharm Share Incentive Plan 2007
Netted against the accumulated loss are purchases of shares in
Phytopharm plc, which relate to the Phytopharm Share Incentive Plan
2007, under which the Company issued one "Matching Share" for every
one "Partnership Share" purchased by the employee. All shares are
held by the scheme Trustees until the shares vest unconditionally
with the employee. During the year ended 30 September 2012, the
Group purchased 55,251 (2011: 5,171) ordinary shares of 1 pence at
a total cost of GBP4,171 (2011: GBP373). As at 30 September 2012,
176,851 (2011: 121,600) ordinary shares of 1 pence were held by the
scheme Trustees.
Notes to the unaudited financial information
for the year ended 30 September 2012
9. Post balance sheet events
A number of changes to the UK corporation tax system were
announced in the March 2012 Budget Statement. Certain of these tax
changes were substantively enacted in the Finance Act 2012 in July
2012. The impact of this has been reflected in the unrecognised
potential deferred tax asset.
Certain other changes are expected to be enacted in future
Finance Acts, including a reduction in the main rate of corporation
tax to 22% on 1 April 2014. As at 30 September 2012, there is an
unrecognised deferred tax asset of GBP12,671,010. If these changes
were applied to this, the impact would be to reduce the potential
deferred tax asset by GBP551,000.
10. Related party transactions
Identity of related parties
The Group consists of a parent, Phytopharm plc, a wholly-owned
trading subsidiary, Phytotech Limited, and a dormant subsidiary,
Phytodevelopments Limited.
The parent company is responsible for financing and setting
Group strategy. Phytotech Limited carries out the Group's research
and development strategy, employs all the staff including the
executive directors and manages the Group's intellectual property.
The proceeds of the issue of shares by the parent are passed from
Phytopharm plc to Phytotech Limited as a loan and Phytotech Limited
manages the Group's funds and makes payments, including managing
the payments of the parent company.
Group
Under IAS 24, 'Related Party Disclosures' the Group is not
required to disclose intra-group transactions which are eliminated
on consolidation.
Company
The Company has been charged GBP529,771 (2011: GBP548,148) for
corporate services provided by subsidiary undertakings. The Company
provides financing to its subsidiary undertakings.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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