Final Results
Preliminary results statement for the 12 months ended 30 June 2005.
Oxford, UK, 8 September 2005 The Board of Physiomics plc (AIM:PYC), a European
systems biology simulation company, today announces the financial results for
the year to 30 June 2005. Physiomics plc is a computational systems biology
services company, developing computer simulations aimed at reducing the high
cost and attrition rates of clinical trials, particularly for cancer therapies.
Highlights of the period
* Turnover of £204,695, an increase of over 330%
* £750,000 before expenses raised in AIM listing
* Losses after tax of £381,843, reflecting one-off pre-IPO costs and higher R
&D expenditure
* Physiomics appointed distributor for Bayer's PK-Sim®
* Option agreement to license two therapeutic products from Cronos
Therapeutics signed
* New research staff appointments & employee share scheme
* UK trademark granted for Physiomics' SystemCell® software (virtual cell
replication)
Mr David Evans, Chairman of Physiomics plc, commented
'I have great pleasure in introducing the first Annual Report and Accounts
since Physiomics was listed on AIM in December 2004. It was only on the 25th of
August 2005 that I accepted the position of Chairman succeeding Dr Stephen
Parker who took the Company through its flotation.
For my part I am looking forward to working with everyone at Physiomics to
ensure it moves forward positively over the short, medium and long term.
As I have only just joined the Company the review of the year and an update on
commercial progress is contained within the Chief Executive's review.'
For further information please contact:
Physiomics plc
Mr David Evans (Chairman) Tel: 07740 084452
Dr John Savin (CEO) Tel: 01865 784981
Northbank Communications Tel: 020 7886 8150
Emma Palmer (financial enquiries)
Fiona Brown/Rowan Minnion (media enquiries)
Notes to Editors
Physiomics plc
Physiomics plc (AIM:PYC) is a computational systems biology services company
applying simulations of cell behaviour to drug development to reduce the high
attrition rates of clinical trials. As 80-90 per cent of all clinical drug
candidates fail to reach the market, estimates show that an overall ten per
cent. improvement in success rates could reduce the cost of one drug's
development by as much as $242 million, from the current estimate of around
$800 million.
Physiomics is currently focused on optimising the design of cancer clinical
trials as a service to major pharmaceutical companies. In addition, it has
secured an option to in-license two innovative molecules in the cancer area
from Cronos Therapeutics. Physiomics has a major collaboration with Bayer
Technology Services GmbH to develop globally clinical response prediction
services using both companies' proprietary technologies and mathematical cell
models, including the SystemCell® technology developed by Physiomics. In June
2005, Physiomics became a distributor of Bayer's PK-Sim® product for
understanding the way pharmaceuticals are distributed round the body.
Physiomics, based in Oxford, UK, was founded in 2001, and floated on AIM in
2004.
For further information, please visit www.physiomics-plc.com
SystemCell is a registered trademark of Physiomics plc
CEO's statement
Financial review
The period from July 2004 to June 2005 included the company's IPO on AIM in
December 2004 and was an eventful time for the Company in which substantial
progress was made in the development and commercialisation of the Company's
technology. The Company recorded turnover of £204,695, up 330% on the previous
year (£61,815). There was a loss after tax of £381,843 (2004: £225,027); the
pre-tax loss was £431,917 (2004: £230,027). Since the IPO in December 2004,
underlying internal costs have, as planned, risen due to investment in R&D and
marketing plus the standard corporate costs associated with maintaining a stock
market listing. The loss before tax in the second half was approximately £
205,000 on turnover of £108,000.
Management has worked hard to minimise `cash burn' and the cash balance at the
year end was £294,908. As part of this cash burn, the Company invested £18,500
in capital expenditure, mainly in computer systems to support the R&D
programme. In addition, the Company has a call facility available with Billam
plc and Billam AG until June 2006 for a maximum of £243,000.
Bayer Collaboration
On 20 July 2004, a major collaboration agreement was concluded with Bayer
Technology Services GmbH. This gave Physiomics access to a very sophisticated
software product and service for physiological analysis (PK-Sim®, a way of
simulating the entire body) to examine the efficiency with which
pharmaceuticals are utilised by the patient's body. In addition, the two
Companies have developed joint marketing initiatives based on Clinical Response
Prediction to look at how a dose of a drug affects disease progression in
cancer. Finally, a close research and development process was initiated which
has strengthened Physiomics' capabilities, for example, in the development of
accurate simulation of the gene copying process which occurs as cells divide.
This is critical to the simulation of the action of many anti-cancer drugs and
of great importance to actual and potential customers.
Marketing and Business Development
Using business development consultants, Physiomics has refined the marketing
platform for Clinical Response Prediction. This integrates Physiomics' model of
the human cell cycle, the process by which cells, especially cancer cells, grow
and divide, with PK-Sim and combines it with Physiomics' SystemCell® software
through a process known as the Clinicophore™. SystemCell® allows Physiomics to
'grow' a diverse population of virtual cancer cells to assess therapeutic
outcomes.
Clinical Response Prediction is global in scope and has attracted interest from
major companies in both Europe and the USA. It is designed as a high value
service. Customers can access it through an initial pilot study before
embarking on a highly customised and focussed collaboration. In essence,
customers are outsourcing computational biology based on Physiomics'
proprietary software and, most importantly, mathematical models of cell
processes. Market development of this brand is continuing, with a US marketing
campaign underway.
Physiomics' efforts in marketing and sales have led to it, in a separate
agreement on 23 June 2005, being appointed as a distributor for PK-Sim.
Marketing and sales activity started on this at the end of the financial year
and is now building up with the UK as the immediate target market. This
distribution agreement enables Physiomics to sell into all therapeutic areas
including brain disorders, inflammatory disease (such as rheumatoid arthritis)
and metabolic diseases (like diabetes), as well as cancer.
With the potential for a variety of commercial agreements from late calendar
2005 onwards, the Company is well placed to take advantage of the growing
interest in systems and computational biology to improve the success rates in
clinical development. The Company looks forward to announcing further progress
in this regard during the current financial period.
Cronos Therapeutics
In November 2004, Physiomics and Cronos Therapeutics announced an alliance
whereby Physiomics will use its novel in silico technology to select optimal
targets for the highly-selective GeneICE technology from Cronos Therapeutics.
The alliance will co-develop the lead GeneICE constructs.
The Cronos GeneICE technology is a highly gene-specific and potentially longer
acting alternative to antisense and RNAi technologies, developed at Imperial
College, London. It has been shown that GeneICE can switch off specific genes
following one administration. As GeneICE acts on the genes directly, it is
anticipated that much lower doses may need to be administered compared to
conventional therapies.
Intellectual property
Legal issues over the assignment of the patent covering SystemCell software
were partly resolved by the assignment to Physiomics of the UK patent prior to
Christmas. A successful High Court application in April will now enable the
Official Receiver to sign patent assignments in favour of Physiomics in respect
of other European jurisdictions. Physiomics has owned the US version of this
patent since 2003. The UK trademark for SystemCell software was received in the
period and a trademark for Clinicophore giving worldwide priority has been
applied for.
Board Changes
The Board was extended during the year by the appointment of Dr Paul Harper in
September 2004 and Mr John Pool in December 2004. Mr Pool represents the
majority shareholder, EiRx Pharma Ltd., and is a non-independent Director.
As a post balance sheet event, regretfully the Board accepted the resignation
of Dr Stephen Parker and wished him well in his new career. The Board was,
however, delighted that Mr David Evans was able to join as the new Chairman. Mr
Evans brings extensive small listed company experience to the Board,
particularly in the life science sector, and will be key to the Company's
corporate development.
Staff and Share options
Two key new members of staff, both at Ph.D. level, were recruited in the
period, one from a leading German mathematical biology group and the other in
computation and software from an international, US-led systems biology software
team. This has significantly boosted the strength and capacity of the
development team.
For a rapidly developing high technology business like Physiomics, staff
retention and motivation are essential to long-term shareholder returns. On 24
June 2005, an unapproved share option scheme was established. In addition,
staff and directors were given the chance to subscribe for shares to a maximum
value of £5,000 each. This subscription was partly funded by an interest free
loan. These incentives are designed to ensure that the enthusiasm and
commitment of all employees is kept within the business and rewarded, to the
benefit of all shareholders. The terms of these schemes were established by the
Remuneration Committee. In addition, a stakeholder pension scheme was
established and other cost-effective benefits introduced such as Death in
Service insurance.
Prospects for 2006
The Company is actively focussing its science efforts on commercially relevant
pharmaceutical targets where substantive potential markets clearly exist. The
USA is likely to be the continued focus of attention given the interest in
systems approaches now apparent. The period since the IPO laid the basis for a
strong development of the business and will enable us to take advantage of
appropriate commercial opportunities as they arise.
Dr John Savin
CEO
7 September 2005
Financial Statements for the Year Ended 30 June 2005
Profit and Loss Account
2005 2004
£ £
Turnover 204,695 61,815
Other operating expenses (645,140) (298,898)
Other operating income - 7,056
Operating loss (440,445) (230,027)
Interest receivable 8,528 -
Loss before tax (431,917) (230,027)
Tax on loss on ordinary 50,074 5,000
activities
Loss transferred from (381,843) (225,027)
reserves
………… …………
Basic and diluted loss per (0.19) (0.13)
share (pence)
All of the activities of the Company are classed as continuing.
The Company has no recognised gains or losses other than the results for the
year as set out above.
Balance Sheet for the Year Ending 30June 2005
2005 2004
£ £
Fixed assets
Intangible assets 53,463 58,107
Tangible assets 24,924 13,557
Investments 1 1
78,388 71,665
Current assets
Debtors 154,505 12,605
Cash at bank 294,908 8,687
449,413 21,292
Creditors: amounts falling due within (114,302) (447,020)
one year
Net current assets / (liabilities) 335,111 (425,728)
Total assets less current liabilities 413,499 (354,063)
Net assets/(liabilities) 413,499 (354,063)
Capital and reserves
Called up share capital 92,810 67,140
Share premium account 1,329,022 205,287
Profit and loss account (1,008,333) (626,490)
Shareholders' funds 413,499 (354,063)
Cash Flow Statement
2005 2004
£ £
Net cash outflow from operating (447,066) (218,305)
activities
Returns on investments and servicing of
finance
Interest received 8,528 -
Net cash inflow from returns on 8,528 -
investments and servicing of finance
Taxation 18,777 -
Capital expenditure
Purchase of tangible fixed assets (18,503) (11,943)
Net cash outflow from capital (18,503) (11,943)
expenditure
Net cash outflow before financing (438,264) (230,248)
Financing
Issue of shares 724,485 -
Net inflow from related parties - 235,591
Net cash inflow from financing 724,485 235,591
Increase in cash 286,221 5,343
1 Basis of Preparation
The preliminary announcement has been prepared in accordance with applicable
accounting standards and under the historical cost convention. The principal
accounting policies of the company have remained unchanged from those set out
in the Company's 2004 annual report and financial statements.
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet as at 30 June 2005 and the summarised profit and
loss account, summarised cash flow statement and associated notes for the year
then ended have been extracted from the Company's 2005 statutory financial
statements upon which the auditors opinion is unqualified and does not include
any statement under section 237 of the Companies Act 1985.
Those financial statements have not yet been delivered to the registrar of
companies.
2 Reconciliation of movements in shareholders funds
2005 2004
£ £
Loss for the financial year (381,843) (225,027)
Issue of shares 1,149,405 -
Net increase / (decrease) in shareholders' funds 767,562 (225,027)
Shareholders' funds at 1 July 2004 (354,063) (129,036)
Shareholders' funds at 30 June 2005 413,499 (354,063)
3 Net cash outflow from operating activities
2005 2004
£ £
Operating loss (440,445) (230,027)
Depreciation 7,136 2,645
Amortisation 4,644 4,648
(Increase) / decrease in debtors (90,606) 1,129
Increase in creditors 72,205 3,300
Net cash (outflow) from operating activities (447,066) (218,305)
4 Reconciliation of net cash flow to movement in net debt
2005 2004
£ £
Increase in cash in the year 286,221 5,343
Net cash inflow from other long-term creditors - (235,591)
Change in net funds resulting from cash flows 286,221 (230,248)
Other non-cash items : debt / equity conversion 404,920 -
Movement in net debt in the year
Net debt at 1 July 2004 (396,233) (165,985)
Net cash / (debt) at 30 June 2005 294,908 (396,233)
5 Earnings per share note
The calculation of the basic earnings per share is based on the loss
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year.
2005 2004
Loss Weighted Loss per Loss Weighted Loss per
average share average share
number of number of
shares shares
£ Pence £ Pence
Loss (381,843) 203,149,976 (0.19) (225,027) 167,850,900 (0.13)
attributable to
shareholders
On 6 December 2004, the existing share capital was sub-divided and each
ordinary share of 1 pence was divided into 25 ordinary shares of 0.04p. The
above calculations show the 2004 loss per share on a comparable basis, as
though the shares had been sub-divided in 2004.
The share options in issue do not have any dilutive effect.
6 Tax on ordinary activities
a) The tax credit represents:
2005 2004
£ £
United Kingdom Corporation tax at 30% (2004: - -
30%)
Research and Development tax credits: current (36,297) -
year
Research and Development tax credit in respect (13,777) (5,000)
of prior year
Total current tax (50,074) (5,000)
Unrelieved tax losses of approximately £425,000 (2004: £280,000) remain
available to offset against future trading profits subject to Inland Revenue
approval.
b) Factors affecting the current tax charge
The tax assessed on the loss on ordinary activities for the year is higher than
the standard rate of corporation tax in the United Kingdom of 19% (2004: 19%).
2005 2004
£ £
Loss on ordinary activities before (431,917) (230,027)
taxation
Loss on ordinary activities multiplied (82,064) (43,705)
by standard rate of corporation tax
in
the United Kingdom of 19%
(2004:19%)
Expenses not deductible for tax 1,400 1,440
purposes
Capital allowances for period in excess (785) (462)
of
depreciation
Unutilised tax losses 45,052 42,727
Adjustments to tax charge in respect of (13,677) (5,000)
previous
periods
-----------------------------
-----------------------------
Total current tax (note 6(a)) (50,074) (5,000)
7 Availability of accounts
The annual report and accounts will be posted to shareholders during October
2005 and will be available at www.physiomics-plc.com for at least a month
following the mailing date.
--ENDS-
Physiomics plc
Registered in England and Wales Number 4225086
Registered Office: The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA, UK
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