Final Results

RNS Number : 8197S

e-Therapeutics plc

22 March 2016

 

e-Therapeutics plc
('e-Therapeutics' or the 'Company')

Strategic prioritisation on discovery platform and commercialisation

22 March 2016: e-Therapeutics plc (AIM: ETX), the drug discovery and development company, announces its full year results for the year ended 31 January 2016.

Operational highlights

·     Highly productive discovery platform

-      Strategic focus for the business, now fully developed and generating many potent compounds

-      12 active projects (FY15: 6) and three projects in lead optimisation (FY15: nil)

·     ETS6103 - detailed update on analysis of Phase IIb trial results

-      Confirmed antidepressant activity for SSRI non-responders

-      Fewer side effects and better tolerance profile than current post-SSRI treatment

·     ETS2101 - refocus from infused form to explore oral form

-      Early phase experimental clinical trials completed

-      New data suggests potential for compound when given without a steroid pre-med

·     Board changes - appointment of Professor Trevor Jones as Non-Executive Director and Iain Ross as Non-Executive Chairman

·     Prioritisation of asset commercialisation - progressing more projects from discovery platform and seeking partners for assets

Financial highlights

·     Net cash at £24.8m (FY15: £33.8m)

·     Operating loss of £11.6m (FY15: loss of £10.2m)

·     R&D tax credit of £2.5m  (FY15: £2.0m)

·     Discovery spend was £4.3m (FY15: £2.7m) due to the increase in number of active projects

Professor Malcolm Young, CEO of e-Therapeutics, said:

"This has been a very productive year for our discovery platform which continues to exceed our expectations by generating high quality, potent compounds. Some of these programmes have the potential to be game changers in immuno-oncology, cancer drug-resistance and anti-infection.

"Detailed analysis of the Phase IIb clinical data for ETS6103 has confirmed its effectiveness as an anti-depressant for patients who have not responded to an SSRI. Early stage exploratory clinical trials on ETS2101 have established an acceptable dose for this product candidate and important information concerning the potential route of administration. 

"Our main priorities are to drive the productivity of the discovery platform further and realise shareholder value through the commercialisation of our assets. We maintain a healthy cash position in support of our strategy."

-Ends-

For more information, please contact:

e-Therapeutics plc Malcolm Young, CEO Steve Medlicott, Finance Director	Tel: [phone] www.etherapeutics.co.uk
Numis Securities Limited Michael Meade / Freddie Barnfield (Corporate Finance) James Black (Corporate Broking)	Tel: [phone] www.numis.com
Instinctif Partners Melanie Toyne Sewell / Jayne Crook / Emma Barlow	Tel: [phone] Email: [e-mail]

About e-Therapeutics plc

e-Therapeutics (AIM: ETX) is a drug discovery and development company with a proprietary discovery platform based on advances in network pharmacology and chemical biology.

The Company is applying its platform to the discovery of new drug candidates. The therapeutic focus of the Company's discovery activity is in immuno-oncology, addressing drug resistance to targeted cancer therapies, and antivirals. The platform is yielding multiple, highly potent, selective and diverse molecules at much higher yields than is reported for conventional drug discovery. 

The Company has generated a variety of preclinical stage assets, including ETX1153c, a functionally resistance-less antibiotic; ETS2300, telomerase inhibition in anti-cancer; ETS3100, small molecule anti-TNFα; ETS2400, in Hedgehog pathway inhibition; and ETS5200, novel broad-spectrum antivirals. 

e-Therapeutics has also advanced selected drug candidates into clinical trials. A Phase IIb study of a drug candidate for major depressive disorder, ETS6103 is complete, plus Phase I clinical trials in cancer for ETS2101.   

The Company is well funded to advance its programmes. It is based at sites in Oxford and Newcastle, UK. For more information about the Company, please visit www.etherapeutics.co.uk 

 

Chairman's statement

In January of this year, I was delighted to be appointed as Chairman of the e-Therapeutics Board. During my short tenure, I have been impressed with the competence and skills of the management and staff, and also with the commitment of the shareholders and the Company's advisers. In my view, e-Therapeutics is entering an exciting new chapter.

To focus, partner and commercialise

I believe e-Therapeutics is at the cutting edge of science, has an excellent share register and is at a pivotal point in its development. Over a number of years, the Company has developed and refined its network pharmacology discovery platform. The team, led by Professor Malcolm Young, believes it now has the capability to provide the pharmaceutical and biotech industry with access to a highly efficient, proprietary 'drug discovery engine', which can enable and accelerate the identification of novel compounds in significant areas of unmet medical need.  In my view, our mantra going forward should be to "Focus, Partner and Commercialise" to realise value for shareholders.

The core strength of the business lies in our novel discovery capability

Since originally identifying our first lead development compounds, substantial investment has enabled us to accelerate the development and expand the Company's discovery capabilities and infrastructure. The platform is now the core focus for the business as it provides fast and accurate data enabling the identification of highly potent novel compounds which have the potential to be 'game changers' in established multiple, billion dollar markets.  

We have continued with further analysis of the data since our preliminary examination of the ETS6103 Phase IIb results. The data confirm the predicted anti-depressant activity of the compound and a detailed analysis is included in the CEO's report. We will not further fund the development of this program in the absence of a partner. Accordingly, the management is currently assessing the viability of the options for partnering this programme.

In respect of ETS2101, we commenced a Phase Ib trial mid-year using an infusion formulation in hepatocellular cancer and pancreatic cancer. Recent evidence indicates the possibility that a different dosage form of ETS2101 may be preferable, as outlined in the CEO's report. We intend therefore to bring clinical trials using the infusion formulation to an orderly close, in order to explore potentially superior routes of administration.

Beyond these older assets, the real core strength of this business lies in its novel discovery capability. This is where we intend to increasingly focus our efforts.

By partnering we will accelerate the productivity of our discovery engine

The key challenge over the next 18-24 months will be to further validate our novel discovery platform by entering collaborations with established industry partners who can financially and commercially translate the outputs of our platform into meaningful and important medicines.

By not going it alone, we can considerably reduce the development risk; at the same time, we can increase the probability of success by engaging with appropriate partners with specific expertise in the most appropriate therapeutics sectors. As a result, we have already started to target and engage with a number of potential partners. We recognise that it will take time and patience to be able to secure material partnerships.

We need to be fit for purpose and flexible

Over the next few months we intend to build our in-house business development capabilities so that we will be in a better position to identify and engage with key industry players and work effectively towards securing meaningful partnerships. We will need to maintain a degree of flexibility in terms of the timing and stage at which we secure partnerships and collaborations. The value inherent in our discovery projects and platform could be unlocked via preclinical out-licensing deals, early stage clinical development deals or discovery collaborations, providing important validation and portfolio diversification.

In parallel with business development activities, our intellectual property portfolio will continue to be strengthened and broadened and we will take the necessary steps to protect our portfolio going forward as it is an inherent component of our enterprise value.

Strengthened Board for commercialisation chapter

During the period, Professor Trevor Jones joined the Board. He not only brings long scientific and R&D experience, but his acute insight and knowledge of the pharmaceutical industry will prove invaluable as we seek to market our capabilities. The Board and management will continue to evolve and strengthen to meet the challenges before us.

I believe that e-Therapeutics' time has come and I look forward to working with the Board and Management team to deliver some transformational relationships, which will ensure and enhance shareholder value.

Iain G. Ross
Chairman

CEO's report

Overview

The Company sustained a high level of activity throughout the year, particularly in Discovery.  We also reported preliminary analysis of clinical data on our anti-depression programme, ETS6103, which is reported definitively later in this report. The infused version of ETS2101 entered Phase Ib and we have detailed new evidence which is pivoting our interest to a possible oral doseform.

Our cash resources were £24.8m at the end of the year and we anticipate receipt of an R&D tax credit of £2.5m relating to R&D spend incurred in the year. The Company remains well funded.

Progress in Discovery

Following the substantial investment in 2013, e-Therapeutics' discovery platform has been developed from a prototype or 'academic' system into a highly efficient, engineered production system, which is now in full operation. 

Our approach to drug discovery continues to yield a high number of potent compounds across multiple indications, delivered in a significantly shorter timeframe and at lower cost than traditional drug discovery approaches. We have identified thousands of active molecules in medically and commercially important areas. During the year, we undertook 12 active projects (FY15: 6) and 3 projects (FY15: nil) are in lead optimisation.

The disparity between the 'hit rate' of our platform and the published hit rates for older approaches to drug discovery remains strikingly high. Our projects' average hit rate is around 25%, whereas conventional hit rates range around 0.01% (e.g. Bender A. Curr. Op. Drug Disc. & Dev., 2008) - a disparity in our favour of some 2,500 times.

Among the molecules generated in this way, there are:

-      Telomerase inhibitors which are about 1,000 times more potent in killing cancer cells than the previous best small molecules;

-      Hedgehog pathway (cancer) inhibitors with nanomolar potency, which do not bind the protein 'SMO', potentially addressing drug resistance to current products;

-      Potent broad-spectrum antivirals, active against multiple rather than single strains of influenza.  

The most advanced of our discovery projects, in telomerase inhibition, hedgehog pathway inhibition and anti-TNFα (a key inflammatory cytokine) are now in lead optimisation. The expectation is that the most advanced will enter formal preclinical evaluation later this year.

Advantages of our platform

As we accumulate more data, we are increasingly confident that our discovery process improves fundamentally on the traditional approach to drug discovery, both in terms of time/cost and in its ability to identify active and highly potent compounds.

Our experience suggests that we can progress from project initiation to identification and adoption of a lead compound in 24 months. This compares to industry statistics that suggest a time frame of anywhere between 3 and 5 years to the same end. In the discovery phase of each preclinical project, we typically identify many potent compounds across multiple chemotypes. We believe that this breadth increases the probability that each project will successfully progress.

The agility of our platform means that we can now respond quickly and effectively to commercial opportunities. One example is that we are now generating small molecules in aspects of immuno-oncology as diverse as checkpoint inhibition, tumour microenvironment immune-potentiation, and control of systemic inflammatory response syndrome (SIRS - which is a very serious side effect of many advanced immunotherapies which may limit their practical use). We aim shortly to have the most comprehensive such programme available anywhere.

Similarly, our small molecule broad-spectrum antiviral programme has been focussed on dangerous influenza viruses, but is readily extensible to other pressing antiviral needs, such as Zika, Ebola and JCV (John Cunningham Virus).

Commercialisation is the priority

We are now focussing our efforts on commercialising both our preclinical and clinical assets, and our platform approach to drug discovery. Our work in this area has increased in the second half of the last financial year and the level of activity and focus will continue at a high level for the foreseeable future.

Development programmes

ETS6103

In February 2016, we gave a preliminary update following the unblinding of the Phase IIb trial data. Since initial examination, in-depth analysis has now shown that the profile we hoped to have for the compound has been achieved.  

This trial was focused on major depressive disorder that is refractory or relapsing from first-line treatment with an SSRI (a class of drugs often used as first-line antidepressants). The randomised, double-blind study was conducted in Glasgow. The study enrolled a total of 383 patients. 164 patients who did not respond adequately to the first-line SSRI treatment (citalopram) were then randomised into one of three study arms, which included two doses of ETS6103 and one of amitriptyline. Patients were dosed over an eight-week treatment period.

Our aim was to determine whether ETS6103: 

(i)   is an antidepressant,

(ii)  is capable of treating patients for whom SSRI treatment has not been successful,

(iii) could have a low therapeutic dose, consistent with a low tolerance and side effect burden, so that …

(iv) …it has a more benign side effect and tolerance profile than current treatment with a tricyclic antidepressant, such as amitriptyline.

An earlier small pilot trial showed that ETS6103 was an effective antidepressant, with non-inferiority in efficacy (p<0.05) compared to amitriptyline when ETS6103 was given at a higher dose (200-400mg). The recent Phase IIb trial also evaluated non-inferiority to amitriptyline even though, in this case, the doses of ETS6103 were much lower.

The results were:

(i)         ETS6103 is an antidepressant.

·     MADRS scores of patients in the ETS6103 arms improved significantly over the period of the trial (p<0.0001 for both 70mg and 20mg);

·     All other depression scores showed the same strong effect (for 70mg: CGI-S p< 10^-6, and HAM-D p<10^-14);

·     32% of patients taking 70mg ETS6103 responded, showing a decrease from baseline MADRS greater than 50% (28% for 20mg ETS6103);

·     20% of 70mg ETS6103 patients went into remission (MADRS score below 11) (13% on 20mg ETS6103);

·     Neither the response rate nor the remission rate for 70mg ETS6103 differed statistically from those of amitriptyline (p>0.3 for response rate, and p>0.15 for remission).

(ii)        ETS6103 is capable of treating some depressed patients who did not respond to SSRI treatment: all the patients in (i) had previously not responded adequately to the SSRI citalopram.

(iii)       ETS6103 at even at low (20mg and 70mg) doses generated the results in (i) above.

(iv)       ETS6103 generated fewer treatment emergent adverse events than amitriptyline. Specifically, there were fewer adverse events overall, fewer gastrointestinal disorders, and fewer nervous system disorders than for amitriptyline.

As regards efficacy alone, while response and remission rates for 70mg ETS6103 did not differ statistically from those for amitriptyline, the two low doses of ETS6103 (20mg and 70mg) were not statistically non-inferior to amitriptyline. However, the overall benefit to patients who have not responded to an SSRI, taking account of response and remission rates together with a better side effect and tolerance profile when compared to amitriptyline, implies that ETS6103 may be an attractive therapeutic option for these patients.     

We have previously indicated that if the trial were successful we would look to out-licence ETS6103. Our conclusion is that the results support the target product profile of ETS6103 that we hoped to have. ETS6103 does indeed benefit SSRI-non-responders, and it does so with a better side effect and tolerance burden than other post-SSRI antidepressants, such as amitriptyline. In the context of a need for effective and less toxic antidepressants for those who are not treated successfully with SSRIs, ETS6103's profile may represent an additional treatment option for some patients, and we are progressing potential out-licensing steps.

ETS2101

During the year we completed three Phase Ia studies in the UK and US and commenced Phase Ib trials in Hepatocellular carcinoma (HCC) and pancreatic cancer, across multiple locations. The first patient in these trials was dosed in May 2015. All of these trials employed an infusion formulation containing Cremophor. We have determined the maximum tolerated dose (MTD) for this form as 30 mg/kg.

The current Phase Ib trial is investigating the safety, tolerability and anti-tumour activity of ETS2101 with the infusion formulation. Both the HCC and pancreatic cancer trials involve two arms: either in combination with the standard of care (SoC) for newly diagnosed HCC or pancreatic cancer patients or as a monotherapy in patients with primary HCC or pancreatic cancer who have relapsed or refractory disease. Eight patients have been enrolled into the HCC in combination with SoC; eight into pancreatic in combination with SoC; 12 into HCC relapsed or refractory monotherapy; and 19 into pancreatic relapsed or refractory monotherapy.

The presence of Cremophor in the infusion formulation requires that patients are pre-treated with dexamethasone because of its irritant side effects. Recent data show that ETS2101 can selectively modulate pro-immune cytokines, an effect that is likely to be suppressed by dexamethasone. We are therefore examining closely factors around an oral, or other non-steroid, formulation for further exploration of ETS2101, and therefore will bring the Phase Ib study to an orderly close. 

Summary

Overall, the output from our discovery platform continues to progress very strongly. We have three discovery programmes with differentiated candidate molecules in lead optimisation and a fully operational and highly productive discovery platform that will continue to deliver valuable molecules.  Realising the value of these projects is our priority, and we are now focused on partnering our programmes. We remain well funded for all our activities.   

Finance Director's Report

The Company's operating loss in the year was £11.6m (12 months to January 2015: loss of £10.2m). The overall expenditure on research and development increased over the previous year, although there was a change in mix with a £1.6m increase in discovery costs offset slightly by a £0.3m decline in development spend. Central and administrative costs were broadly flat at £1.8m (12 months to January 2015: £1.7m).

Discovery spend in the year was £4.3m (12 months to January 2015: £2.7m). Internal spend was broadly flat during the year. External project spend of £2.3m was £1.6m ahead of the prior year (12 months to January 2015: £0.7m). This increase is a reflection of the combination of the number of active projects and the relative stage, within preclinical discovery, of each project - the initial assay work is relatively less expensive than the later stages of optimisation and lead compound selection. 

External project spend in Q4 FY16 of £0.8m compares to £0.3m in Q1 FY16. Outstanding external project orders at the year-end were £1.7m. We anticipate a continued high level of external project spend throughout the current year.

Development spend was down £0.3m in the year to £5.5m (12 months to January 2015: £5.8m). Spend on ETS2101 was £0.1m lower reflecting a combination of the completion of the Phase Ia UK and US trials and the absence of oral formulation trial costs in the last financial year.  The Phase Ib trials will account for the majority of the ETS2101 costs in the current year.  With the change in strategy for ETS2101, this cost is expected to fall significantly as the trial is wound down.

Spend on ETS6103 was lower in H2 FY16 than either of H1 FY16 or H2 FY15 as the Phase IIb trial neared completion. We anticipate some modest completion costs in the new financial year in relation to this trial.

Central spend was marginally ahead of the prior year at £1.8m. There was a £0.1m increase in the IFRS2 share-based payment charge and a £0.3m increase in business development expenditure, much of which was incurred in the second half.

We anticipate an R&D tax credit arising from allowable R&D spend in FY16 of £2.5m (12 months to January 2015: £2.0m). We are pleased to report that last year we were able to bring forward the cash receipt of the R&D tax credit by three months when compared to the prior year. This was as a result of advanced planning that meant that we were able to report audited preliminary figures two months earlier than the prior year. Consequently we were able to file our R&D tax claim early and this resulted in the cash receipt in H1 FY16. We are targeting a similar performance in the current year.   

The year-end net cash of £24.8m was £9m lower than the opening position. The difference between the net cash outflow of £9m and the operating loss of £11.6m is primarily a result of the receipt of the £2m R&D tax credit, £0.3m of interest received and a small net inflow from working capital offset slightly by a £0.1m investment in patents.

The anticipated receipt of the £2.5m R&D tax credit in the current year, when added to the year-end net cash position, gives us around £27m of funds. Subject to no change in the tax environment, we could receive up to an additional £6m of R&D tax credits over the coming years as we continue to invest in the core business.

Consolidated income statement

For the year ended 31 January 2016

		2016	2015
	Notes	£000	£000
Revenue		-	-
Cost of sales		-	-
Gross profit		-	-
Research and Development expenditure		(9,965)	(8,549)
Administrative expenses		(1,590)	(1,626)
Operating loss		(11,555)	(10,175)
Investment income		271	357
Finance costs		-	-
Loss before tax		(11,284)	(9,818)
Taxation	4	2,464	2,041
Loss for the year attributable to equity holders of the Company		(8,820)	(7,777)
Loss per share - basic and diluted	5	(3.34)p	(2.94)p

Consolidated statement of comprehensive income

For the year ended 31 January 2016

	2016	2015
	£000	£000
Loss for the financial year	(8,820)	(7,777)
Other comprehensive income	-	-
Total comprehensive income for the financial year	(8,820)	(7,777)

Consolidated statement of changes in equity

For the year ended 31 January 2016

	Share	Share	Warrant	Retained
	capital	premium	reserve	earnings	Total
	£000	£000	£000	£000	£000
As at 1 February 2014	264	64,483	132	(20,261)	44,618
Total comprehensive income for year
Loss for the financial year	-	-	-	(7,777)	(7,777)
Total comprehensive income for year	-	-	-	(7,777)	(7,777)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	77	-	-	77
Lapse of warrants	-	-	(132)	132	-
Equity-settled share-based payment transactions	-	-	-	106	106
Total contributions by and distribution to owners	-	77	(132)	238	183
As at 31 January 2015	264	64,560	-	(27,800)	37,024
As at 1 February 2015	264	64,560	-	(27,800)	37,024
Total comprehensive income for year
Loss for the financial year	-	-	-	(8,820)	(8,820)
Total comprehensive income for year	-	-	-	(8,820)	(8,820)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	12	-	-	12
Equity-settled share-based payment transactions	-	-	-	215	215
Total contributions by and distribution to owners	-	12	-	215	227
As at 31 January 2016	264	64,572	-	(36,405)	28,431

Company statement of changes in equity

For the year ended 31 January 2016

	Share	Share	Warrant	Retained
	capital	premium	reserve	Earnings	Total
	£000	£000	£000	£000	£000
As at 1 February 2014	264	64,483	132	(17,437)	47,442
Total comprehensive income for year
Loss for the financial year	-	-	-	(7,777)	(7,777)
Total comprehensive income for year	-	-	-	(7,777)	(7,777)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	77	-	-	77
Lapse of warrants	-	-	(132)	132	-
Equity-settled share-based payment transactions	-	-	-	106	106
Total contributions by and distribution to owners	-	77	(132)	238	183
As at 31 January 2015	264	64,560	-	(24,976)	39,848
As at 1 February 2015	264	64,560	-	(24,976)	39,848
Total comprehensive income for year
Loss for the financial year	-	-	-	(8,820)	(8,820)
Total comprehensive income for year	-	-	-	(8,820)	(8,820)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	12	-	-	12
Equity-settled share-based payment transactions	-	-	-	215	215
Total contributions by and distribution to owners	-	12	-	215	227
As at 31 January 2016	264	64,572	-	(33,581)	31,255

Balance sheets

As at 31 January 2016

		Group		Company
		2016	2015	2016	2015
	Notes	£000	£000	£000	£000
Non-current assets
Intangible assets	6	740	637	3,564	3,461
Property, plant and equipment	7	64	96	64	96
Investments		-	-	-	-
		804	733	3,628	3,557
Current assets
Tax receivable	4	2,469	2,032	2,469	2,032
Trade and other receivables		1,472	1,570	1,472	1,570
Fixed-term deposits		18,500	32,000	18,500	32,000
Cash and cash equivalents		6,342	1,822	6,342	1,822
		28,783	37,424	28,783	37,424
Total assets		29,587	38,157	32,411	40,981
Current liabilities
Trade and other payables		1,156	1,133	1,156	1,133
Total liabilities		1,156	1,133	1,156	1,133
Net assets		28,431	37,024	31,255	39,848
Equity
Share capital	8	264	264	264	264
Share premium	8	64,572	64,560	64,572	64,560
Warrant reserve	8		-		-
Retained earnings	8	(36,405)	(27,800)	(33,581)	(24,976)
Total equity attributable to equity holders of the Company		28,431	37,024	31,255	39,848

Statements of cash flow

For the year ended 31 January 2016

		Group		Company
		2016	2015	2016	2015
	Notes	£000	£000	£000	£000
Cash flows from operating activities
Loss for the year		(8,820)	(7,777)	(8,820)	(7,777)
Adjustments for:
Depreciation and amortisation	6,7	73	72	73	72
Investment income		(271)	(357)	(271)	(357)
Equity-settled share-based payment expenses		215	106	215	106
Taxation	4	(2,464)	(2,041)	(2,464)	(2,041)
		(11,267)	(9,997)	(11,267)	(9,997)
(Decrease) / increase in trade and other receivables		40	(1,075)	40	(1,075)
Increase in trade and other payables		23	130	23	130
Tax received		2,027	1,087	2,027	1,087
Net cash from operating activities		(9,177)	(9,855)	(9,177)	(9,855)
Cash flows from investing activities
Interest received		329	642	329	642
Acquisition of property, plant and equipment	7	(6)	(31)	(6)	(31)
Acquisition of other intangible assets	6	(138)	(158)	(138)	(158)
Decrease in fixed-term deposits		13,500	4,250	13,500	4,250
Net cash from investing activities		13,685	4,703	13,685	4,703
Cash flows from financing activities
Net proceeds from issue of share capital	8	12	77	12	77
Net cash from financing activities		12	77	12	77
Net (decrease)/increase in cash and cash equivalents		4,520	(5,075)	4,520	(5,075)
Cash and cash equivalents at 1 February		1,822	6,897	1,822	6,897
Cash and cash equivalents at 31 January		6,342	1,822	6,342	1,822

Notes

1.     Status of Audit

The financial information presented in this statement does not constitute the Company's statutory accounts for the year ended 31 January 2016 or the year ended 31 January 2015, but is derived from those accounts. Statutory accounts for the year ended 31 January 2015 have been delivered to the Registrar of Companies and those for the year ended 31 January 2016 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 reports, and did not contain statements under s498(2) or (3) of the Companies Act 2006.
 

2.     Basis of preparation

This preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ("adopted IFRSs"), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. It does not include all the information required for full annual accounts.

This preliminary announcement has been prepared using the accounting policies published in the Group's accounts for the year ended 31 January 2015, which are available on the Company's website at www.etherapeutics.co.uk, with the exception of those new standards, interpretations and amendments which became effective during the year and were adopted by the Group, albeit with no impact on the Group's loss for the year or equity.
 

3.     Staff numbers

The average number of persons employed by the Group and the Company (including Executive Directors and excluding Non-Executive Directors) during the year, analysed by category, was as follows:

	Number of employees Group and Company
	2016	2015
Staff	23	23
Directors	4	3
	27	26

4.     Taxation

Recognised in the income statement:

	2016	2015
	£000	£000
Current tax income
Current year	(2,469)	(2,032)
Adjustments for prior years	5	(9)
Current tax income	(2,464)	(2,041)
Deferred tax expense
Origination and reversal of temporary differences	-	-
Reduction in tax rate	-	-
Recognition of previously unrecognised tax losses	-	-
Deferred tax expense	-	-
Total tax income	(2,464)	(2,041)

Reconciliation of effective tax rate:

	2016	2015
	£000	£000
Loss for the year	(8,820)	(7,777)
Total tax income	(2,464)	(2,041)
Loss excluding taxation	(11,284)	(9,818)
Tax at 20.17% (2014: 21.33%)	(2,275)	(2,094)
Expenses not deductible for tax purposes	44	24
Enhanced relief for Research and Development	(1,936)	(1,725)
Surrender of tax losses	965	1,072
Unrelieved tax losses	732	700
Other	1	(9)
Adjustments in respect of prior period	5	(9)
Total tax income	(2,464)	(2,041)

The tax receivable relates to Research and Development tax credits.

The Group has unrecognised deferred tax assets of £2,936,000 (2015: £2,518,000) and unused tax losses of £16,071,000 (2015: £12,424,000).

The deferred tax asset relates primarily to tax losses carried forward. It has not been recognised due to the uncertainty surrounding its future recovery against taxable profits.

Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and from 19% to 18% (effective from 1 April 2020) were substantively enacted on 26 October 2015. This will reduce the Group's future current tax charge accordingly. The unrecognised deferred tax asset at 31 January 2016 has been calculated based on the rate of 18% substantively enacted at the balance sheet date.
 

5.     Loss per share

The analysis of loss per share is as follows:

	2016	2015
Basic and diluted loss per share	(3.34)p	(2.94)p

Basic EPS is calculated by dividing the loss for the year of £8,820,000 (2015: £7,777,000) by the weighted average number of 264,419,476 shares (2015: 264,147,878) in issue during the year.

Diluted EPS is calculated in the same way as basic EPS but also with reference to reflect the dilutive effect of share options in existence at the year end over 12,118,842 (2015: 12,937,539) ordinary shares. The diluted loss per share is identical to the basic loss per share, as potential dilutive shares are not treated as dilutive since they would reduce the loss per share.

6.     Goodwill and intangible assets - Group and Company

	Group			Company
	Goodwill	Patents and trademarks	Total	Goodwill	Patents and trademarks	Total
	£000	£000	£000	£000	£000	£000
Cost
Balance at 1 February 2014	-	856	856	2,824	856	3,680
Other acquisitions - internally developed	-	158	158	-	158	158
Balance at 31 January 2015	-	1,014	1,014	2,824	1,014	3,838
Balance at 1 February 2015	-	1,014	1,014	2,824	1,014	3,838
Other acquisitions - internally developed	-	138	138	-	138	138
Balance at 31 January 2016	-	1,152	1,152	2,824	1,152	3,976
Amortisation and impairment
Balance at 1 February 2014	-	360	360	-	360	360
Amortisation charge for the year	-	17	17	-	17	17
Impairment charge	-	-	-	-	-	-
Balance at 31 January 2015	-	377	377	-	377	377
Balance at 1 February 2015	-	377	377	-	377	377
Amortisation charge for the year	-	35	35	-	35	35
Impairment charge	-	-	-	-	-	-
Balance at 31 January 2016	-	412	412	-	412	412
Net book value
At 1 February 2014	-	496	496	2,824	496	3,320
At 1 February 2015	-	637	637	2,824	637	3,461
At 31 January 2016	-	740	740	2,824	740	3,564

Amortisation and impairment charge

Amortisation has been charged on patents for which the registration process is complete. Where the process is incomplete no charge has been raised.

Impairment testing

The goodwill in the Company balance sheet arose following the hive up of the trade and assets of InRotis Technologies Limited on 15 November 2007. The goodwill is allocated to the drug discovery and development activities of the Group. In assessing goodwill impairment, recoverable amount is based on fair value less costs to sell. The Group carries out a review at each balance sheet date to establish the economic value of each asset in the patent portfolio. If the economic value of a patent is believed to be lower than the carrying value, the carrying value is reduced accordingly. The economic value is based on estimated future income potential taking into account technical and commercial risks and external information on the likely market demand and penetration for the drugs for which the Group has patents. There is a risk that should these estimations require significant downward revision there would be a material adverse impact on the income statement in any one year.

7.     Property, plant and equipment

	Plant and	Fixtures
	equipment	and fittings	Total
Group and Company	£000	£000	£000
Cost
Balance at 1 February 2014	117	140	257
Additions	30	-	30
Disposals	(1)	-	(1)
Balance at 31 January 2015	146	140	286
Balance at 1 February 2015	146	140	286
Additions	2	4	6
Balance at 31 January 2016	148	144	292
Depreciation
Balance at 1 February 2014	79	57	136
Depreciation charge for the year	31	24	55
Eliminated on disposals	(1)	-	(1)
Balance at 31 January 2015	109	81	190
Balance at 1 February 2015	109	81	190
Depreciation charge for the year	20	18	38
Balance at 31 January 2016	129	99	228
Net book value
At 1 February 2014	38	83	121
At 1 February 2015	37	59	96
At 31 January 2016	19	45	64

8.     Capital and reserves

Reconciliation of movement in capital and reserves:

	Share	Share	Warrant	Retained	Total
	capital	premium	reserve	earnings	equity
Group	£000	£000	£000	£000	£000
Balance at 1 February 2013	138	25,567	132	(15,257)	10,580
Total recognised income and expense	-	-	-	(5,039)	(5,039)
Issue of share capital	126	38,916	-	-	39,042
Equity-settled share-based payment transactions	-	-	-	35	35
Balance at 31 January 2014	264	64,483	132	(20,261)	44,618
Balance at 1 February 2014	264	64,483	132	(20,261)	44,618
Total recognised income and expense	-	-	-	(7,777)	(7,777)
Issue of share capital	-	77	-	-	77
Lapse of warrants	-	-	(132)	132	-
Equity-settled share-based payment transactions	-	-	-	106	106
Balance at 31 January 2015	264	64,560	-	(27,800)	37,024
Balance at 1 February 2015	264	64,560	-	(27,800)	37,024
Total recognised income and expense	-	-	-	(8,820)	(8,820)
Issue of share capital	-	12	-	-	12
Equity-settled share-based payment transactions	-	-	-	215	215
Balance at 31 January 2016	264	64,572	-	(36,405)	28,431

8.     Capital and reserves (cont.)

	No. of ordinary shares
	2016	2015
Share capital	'000	'000
In issue at 1 February	264,363	263,881
Issued for cash	93	482
In issue at 31 January - fully paid	264,456	264,363
	2016	2015
	£000	£000
Allotted, called up and fully paid
264,362,821 (2014: 263,881,443) ordinary shares of £0.001 each	264	264
	264	264
Shares classified as liabilities	-	-
Shares classified in shareholders' funds	264	264
	264	264

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

During the period, exercise of options over 92,730 ordinary shares by staff led to an increase of £93 in share capital and a credit of £12,797 to the share premium account.

In March 2013, the Company raised £40.0 million (£38.9 million net of related expenses) through placings of 125,000,000 new ordinary shares of 0.1 pence. Shareholder approval was provided at a general meeting on 27 February 2013; 4,750,000 shares were duly allotted on that day, and a further 120,250,000 on 28 February 2013, with all new shares admitted to trading on AIM by 1 March 2013. The new shares all carry the same rights as the shares in issue immediately prior to the placings. The new shares represented 90.4% of the Company's issued ordinary share capital immediately prior to the placings.

The warrant reserve related to the following warrants:

	Exercise
	price		No. of
Issue date	£	Expiry date	warrants
March 2009	0.260	16 March 2014	198,332
March 2011	0.260	4 March 2014	677,409

All warrants lapsed unexercised on the expiry dates noted above.

 

END

 

 

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