Full year results

RNS Number : 8098G

e-Therapeutics plc

12 May 2014

 



 

e-Therapeutics' full year results for the 12 months ended 31 January 2014

12 May 2014:  e-Therapeutics plc (AIM: ETX), the drug discovery and development company, today announces its full year results for the 12 months ended 31 January 2014.

Operational highlights

Positive interim results from lead cancer drug ETS2101

·      Phase I trial in brain cancer, five dose escalation steps completed, no serious drug-related adverse events

·      Post year end

o  Phase I study with oral formulation commenced in healthy volunteers; completion expected Q4 2014

o  Temporary halt of recruitment to trial due to drug storage issues now reversed in both the UK and US

o  Positive interim results achieved from UK study in a variety of solid tumours; well tolerated, no further occurrence of dose-limiting fatigue and early evidence of possible retarding of tumour progression

Progress and decisions on other programmes

·      Commencement of Phase IIb trial of ETS6103 in major depressive disorder

·      Positive preclinical data for ETX1153c against C.difficile; search for development partner ongoing

Increased resource applied to drug discovery using Network Pharmacology

·      Expansion of discovery and informatics capabilities in Oxford complete and operating fully

·      A number of discovery projects in in vitro testing

Financial highlights

·      Successful fund raising of £40 million (gross) with support from Invesco and Aviva, providing runway through to 2019 to support multiple efficacy studies of ETS2101 and further build the pipeline

·      Cash and liquid resources of £43.1 million at 31 January 2014 (31 January 2013: £9.8 million)

·      Full year loss before tax of £6.1 million (FY 2013: loss of £5.0 million) as investment continues into clinical and development pipeline

·      Post year end, appointment of new Finance Director, Steve Medlicott

Commenting on the results, Professor Malcolm Young, CEO of e-Therapeutics, said: 

"e-Therapeutics is making substantial progress in our clinical programmes and in discovery, with four clinical trials ongoing in the UK and US that are expected to generate further data in the next period. Financially, the Company is well capitalised, with solid support from its investors, and operationally, both locations in Oxford and Newcastle are fully resourced and operating well. Consequently we have a clear, unobstructed road forward on which to progress and the next few years hold significant promise for the Company."

For more information, please contact:

e-Therapeutics plc

Malcolm Young, CEO / Steve Medlicott, Finance Director

Tel: [phone]

www.etherapeutics.co.uk 

Panmure Gordon (UK) Limited

Fred Walsh / Duncan Monteith

Tel: [phone]

www.panmure.com

 
Instinctif Partners

Melanie Toyne Sewell / Stefanie Bacher

Tel: [phone]

Email: [e-mail]

ComStrat Group (US)

Ted Agne

Tel: [phone] 

Email: [e-mail]

Chairman's statement

Overview of the year

e-Therapeutics' business has been built around its proprietary platform technology in Network Pharmacology, an innovative approach to drug discovery that has been pioneered by the team, led by Professor Malcolm Young. The focus for the Company's drug discovery in recent years has been cancer and central nervous system disorders.

We are presently developing two drug molecules, ETS2101 and ETS6103, through clinical trials. During the year, our leading cancer drug candidate, ETS2101, continued to make progress in two phase I trials. We also began the phase IIb trial of our major depressive disorder candidate, ETS6103.  We are proud of the fact that, albeit a small company, we are currently running four clinical trials to develop these products further.

Financially, in March 2013, the Company raised £40 million (£38.9 million net of expenses) in a share placing to existing and new investors, significantly strengthening our balance sheet. The funds will be used to support the advancement of our compounds independently into Phase II clinical testing and to further invest in drug discovery and development. The Board believes the Company is now funded through to 2019, past several potentially important value inflections.

Operationally, the Network Pharmacology Centre near Oxford has expanded its team of scientists and drug development specialists. We are now well placed to broaden the portfolio through the discovery of new drug candidates and to continue the development of our existing clinical candidates.

Overall, significant progress has been made this financial year, clinically, operationally and financially, and the Board remains optimistic with regard to further positive developments over the coming year.

The Network Pharmacology approach to drug discovery

The intention of Network Pharmacology is to be more realistic about what happens when a drug molecule is in the body than the "magic bullet" idea that has motivated much drug discovery for many decades. Network Pharmacology uses advances in two sciences, Network Science and Chemical Biology, as a basis for drug discovery. At e-Therapeutics, we use Network Science to examine more realistically the very large biological networks that underlie disease processes. We use information from Chemical Biology, of the extensive interactions that drug molecules have with the many proteins that make up these networks, more realistically to design and select drug molecules that should be effective in the disease. We believe that increased realism will lead directly to an increased probability that the drugs that we select in this way will be safe, efficacious and valuable.

The most important differentiator of our approach is that we focus on drugs that will have a multiple impact on disease networks; traditional drug discovery has tended to emphasise the impact of a molecule at a single protein target. When the Company began, its motivating ideas: the complexity of the networks that mediate normal and diseased function; the necessity of making multiple interventions with a drug molecule in order to affect these robust networks beneficially; and drug molecules affecting many proteins in these networks by binding promiscuity and pleiotropy, were all very far from the consensus in drug discovery activities around the world. However, there is little doubt that these principles have been borne out subsequently by science that we, and laboratories unconnected to the Company, have carried out in the intervening time. This newer approach to drug discovery, and applications of network analysis in many other areas, are now becoming widespread, and we continue our strategy of consolidating our intellectual property position in these areas.

The business strategy

The Company's business strategy is to develop promising drug candidates through early and mid-clinical phases to 'clinical proof of concept', and to license them to an industry partner for late stage development and commercialisation. We expect this approach to generate revenues in the form of upfront payments, progress-based milestone payments and royalties on sales. e-Therapeutics may also enter into strategic discovery collaborations with selected organisations.

Following this strategy is expected to result in continuing losses until revenues from these sources exceed investment in R&D. However, as a result of the Company's recent placing, the Board expects to be able to support all its discovery and development plans into 2019 even in the absence of any income from partners.

During this period we plan to complete mid-stage trials of our lead cancer drug ETS2101 and to conclude a licensing deal for the product if the clinical data are supportive. We also expect to add new candidates to our pipeline and advance a small number of the best of these through preclinical and early clinical development, giving e-Therapeutics a broader portfolio in which risk is diversified and with multiple sources of potential upside.

Clinical highlights

ETS2101 makes progress in trials

The cancer drug candidate, ETS2101, targets cancer cells' ability to resist their own self-destruct mechanisms. "Apoptosis" is the process of programmed cell death that is present in all cells, but has been switched off in malfunctioning cancer cells. ETS2101 has been in two phase I studies during the year:

·      Brain cancer - an investigator-led trial taking place at the University of California San Diego Moores Cancer Center, in La Jolla, California.

·      Solid tumours - a Company-sponsored study that is enrolling patients with a variety of solid tumours at hospitals in Newcastle, Leeds and Glasgow, UK.

Both trials have a dose-escalating design, in which successive groups of patients receive increasing doses of ETS2101. The aim is to establish an appropriate dose for phase II development, assess safety and tolerability and identify any initial signs of anti-cancer activity.

In January 2014, we announced the continuation of the brain cancer trials in the USA. To date, five dose escalation steps have been completed with 15 patients at doses of up to 24mg/kg body weight without any serious adverse events related to the drug. No objective tumour responses have been reported based on the Response Assessment in Neuro-Oncology (RANO) Working Group criteria. There was a temporary halt of recruitment later in January, in both the UK and USA trials, due to drug supply issues which were traced to be due to a formulation and storage issue which can be overcome by revised handling. This revised approach has been approved by both the FDA and Medicines and Healthcare Products Regulatory Agency (MHRA). This has had no impact on the patients on study. UK recruitment resumed in March 2014 following MHRA approval, and we announced on 8 May 2014 that US recruitment had resumed following approval from the FDA.

Post year end, in February 2014, a further phase I study started with an oral formulation of ETS2101 in healthy volunteers. This Phase I study will also employ escalating doses of ETS2101 given orally to evaluate the pharmacokinetics (PK) and oral bioavailability of ETS2101 in this form. The trial, which is being conducted in the UK, is expected to recruit 24 healthy volunteers and is anticipated to complete in Q4 2014.

In March 2014, we announced positive interim results from the UK solid tumour study. 23 patients completed treatment at doses of up to 22mg/kg without any serious adverse events related to the drug. There had been no further occurrence of dose-limiting fatigue (this had been experienced by one patient in an earlier cohort on a low dose) and we were encouraged by evidence that tumour progression may be being retarded by the drug at these doses.

Since neither of the phase I trials have yet identified a maximum tolerated dose (MTD), they are to be extended by adding more cohorts at higher doses. Further data is expected from these trials later this year and, provided these results are supportive, the plan is to move rapidly into the next phase of clinical development. Initially, this will include a phase Ib/II trial in four to six specific cancer indications. These studies are intended to clarify the most susceptible cancer types to ETS2101, and it is further intended to begin a randomised phase II programme in the second half of 2015.

e-Therapeutics remains on track to complete a programme of efficacy trials in time to conclude one or more licensing deals by 2018, should the data be supportive. ETS2101 represents a significant commercial opportunity because evidence to date suggests that it could address unmet needs in multiple high-value oncology market segments. For this reason, ETS2101 is, at present, the most promising candidate to deliver material for our shareholders.

ETS6103 begins phase IIb trial

ETS6103 is aimed at patients suffering from severe depression. The phase IIb trial is evaluating ETS6103 as a second-line therapy for patients who have not responded adequately to first-line treatment with an SSRI (selective serotonin reuptake inhibitor). The trial is also designed to show whether ETS6103 shows antidepressant activity 'non-inferior' to amitriptyline.

In October 2013, the phase IIb trial of ETS6103 started in major depressive disorder in a group of primary care centres in Glasgow, UK. The trial is a randomised, double-blind, controlled study that builds on an earlier, small phase IIa study that produced encouraging results with ETS6103 in comparison with the approved tricyclic anti-depressant amitriptyline. Safety, and a number of secondary efficacy measures, will also be assessed.

Patients are enrolled prior to first line treatment so that treatment can be standardised. Each patient is then given the standard treatment, citalopram. Those patients with significant depressive symptoms remaining after six weeks on citalopram enter the randomised phase of the study. Approximately 160 patients will be randomised. In the event that the two ETS6103 dose regimens have antidepressant activity, non-inferior to that of amitriptyline, we believe that the drug could offer an attractive alternative second line treatment due to reduced side effects when compared to existing treatment.

The results of the trial are expected in the first half of 2015 and if these are positive, the strategy is to seek a licensing deal for the drug.

ETS6103 is seen as a smaller commercial opportunity than ETS2101, but one that justifies the further limited investment needed to complete the proof-of-concept trial described above.

ETX1153c options continue to be evaluated

This product is an anti-infective candidate against Clostridium difficile (C. difficile), combining two constituents, miconazole and nisin. These two constituents have been shown to work together effectively against all C. difficile strains tested, including the most resistant strains. Extensive testing of this candidate suggest that it is very hard for the bacteria to generate any resistance to the drug, but at the interim results in October 2013, we announced that we would not continue unilateral clinical development due to the cost of further development compared to the likely small size of the market niche for a new antibiotic. We continue to evaluate our options with this product.

Drug discovery research progress continues

Our team of drug discovery scientists are engaged in searching for new drug candidates, primarily in complex diseases in which we believe our platform has particular strengths. Drug candidates are assessed against clinical, commercial and technical criteria before proceeding to subsequent stages of research.

During the year the Oxford facility made significant progress in the three areas of discovery, namely disease network construction, disease network analysis and compound discovery. This has improved both the breadth and depth of the platform. It is difficult to articulate the extent of the work that has been achieved over the last twelve months; ultimately the outside measure of this will be the quality of new drug candidates. In this context, a number of new discovery projects are now in the in vitro testing stage.

We also continue to invest in improvements to our discovery platform, and in building additional intellectual property protection. Further patents have been granted in Europe during the period. We also remain active in exploring opportunities to collaborate with other companies on discovery programmes. The aim of this continued focus on discovery is to establish a portfolio of product assets of the highest quality that can be developed utilising funds generated from licensing deals.

Financial review: increased R&D spend in line with clinical programmes, supported by significant inward investment

The share placing completed in March 2013 provided the Company with £40.0 million (£38.9 million net of expenses) in cash to support drug discovery and development. Our operating expenditure increased from
£5.2 million last year to £6.7 million, with research and development expenditure increasing by approximately 30% on the year ended 31 January 2013. We had no revenues in the period (2013: nil), but recognition of R&D tax credits of £1.1 million (2013: £0.8 million) and net interest income of £0.6 million (2013: £0.2 million) reduced our net loss to £5.0 million (2013: £4.2 million). Our latest forecasts, including the impact of the recent welcome changes to the R&D tax credit regime, indicate that our cash resources will now last into 2019. At 31 January 2014, we had cash and short-term investments of £43.1 million (31 January 2013: £9.8 million), this figure excludes the anticipated R&D tax credit receipt of £1.1million.

Organisational changes

In April 2014, Steve Medlicott was appointed to the Board as Finance Director. Steve is a chartered accountant and has over 20 years' experience in the UK equity market. He advised on and has been instrumental in many IPOs, share placings and M&A transactions; this includes advising e-Therapeutics in support of its March 2013 fundraising. We look forward to benefiting from his knowledge and experience to generate value for shareholders. He replaces Daniel Elger, who left the Company in April 2014. On behalf of the Board, I would like to thank Daniel for his contribution to the Company and wish him well for the future.

Outlook

Looking ahead, e-Therapeutics has a sound financial base following the 2013 fund raising, which it is using to continue to support its current discovery and development efforts and potentially add new opportunities to its pipeline. Further clinical data from the phase I trials of ETS2101 are expected later this year, following which the programme of efficacy trials can start. Meanwhile, the results of the phase IIb trial of ETS6103 will be available in 2015.

The Board greatly appreciates the continued support of the shareholders and looks forward to updating them on the progress of the clinical and discovery programmes in the coming year.

Professor Oliver James

12 May 2014

Notes

About the RECIST criteria used to assess tumour responses

RECIST (Response Evaluation Criteria in Solid Tumours) provide a standardised way of assessing the response of solid tumours to treatment. Under the criteria, a partial response is recorded when the linear dimensions of the tumour lesions selected for measurement at the start of the study reduce by at least 30% from baseline and no new lesions appear.

About the RANO criteria used to assess tumour responses

The RANO (Response Assessment in Neuro-Oncology) criteria incorporate information from radiographic scans and neurological examinations and also take account of patients' Karnofsky Performance Status and steroid use. If other measures are satisfied, tumour responses are classified as "complete" if there is total disappearance of lesions or "partial" if there is at least a 50% reduction in the size of all measurable lesions for at least 4 weeks; for some brain tumour types not including high-grade gliomas or brain metastases 25-50% reductions are classified as "minor responses".

Consolidated income statement

For the year ended 31 January 2014

		2014	2013
		£000	£000
Revenue		-	-
Cost of sales		-	-
Gross profit		-	-
Research and Development expenditure		(5,367)	(4,093)
Administrative expenses		(1,352)	(1,154)
Operating loss		(6,719)	(5,247)
Financial income		617	223
Financial expense		-	-
Loss before tax		(6,102)	(5,024)
Taxation		1,063	846
Loss for the year attributable to equity holders of the Company		(5,039)	(4,178)
Loss per share - basic and diluted		(1.98)p	(3.02)p

Consolidated statement of comprehensive income

For the year ended 31 January 2014

	2014	2013
	£000	£000
Loss for the financial year	(5,039)	(4,178)
Other comprehensive income	-	-
Total comprehensive income for the financial year	(5,039)	(4,178)

Consolidated statement of changes in equity

For the year ended 31 January 2014

	Share	Share	Warrant	Retained
	capital	premium	reserve	earnings	Total
	£000	£000	£000	£000	£000
As at 1 February 2012	138	25,552	132	(11,098)	14,724
Total comprehensive income for year
Loss for the financial year	-	-	-	(4,178)	(4,178)
Total comprehensive income for year	-	-	-	(4,178)	(4,178)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	15	-	-	15
Equity-settled share-based payment transactions	-	-	-	19	19
Total contributions by and distribution to owners	-	15	-	19	34
As at 31 January 2013	138	25,567	132	(15,257)	10,580
As at 1 February 2013	138	25,567	132	(15,257)	10,580
Total comprehensive income for year
Loss for the financial year	-	-	-	(5,039)	(5,039)
Total comprehensive income for year	-	-	-	(5,039)	(5,039)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	126	38,916	-	-	39,042
Equity-settled share-based payment transactions	-	-	-	35	35
Total contributions by and distribution to owners	126	38,916	-	35	39,077
As at 31 January 2014	264	64,483	132	(20,261)	44,618

Company statement of changes in equity

For the year ended 31 January 2014

	Share	Share	Warrant	Retained
	capital	premium	reserve	earnings	Total
	£000	£000	£000	£000	£000
As at 1 February 2012	138	25,552	132	(8,274)	17,548
Total comprehensive income for year
Loss for the financial year	-	-	-	(4,178)	(4,178)
Total comprehensive income for year	-	-	-	(4,178)	(4,178)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	15	-	-	15
Equity-settled share-based payment transactions	-	-	-	19	19
Total contributions by and distribution to owners	-	15	-	19	34
As at 31 January 2013	138	25,567	132	(12,433)	13,404
As at 1 February 2013	138	25,567	132	(12,433)	13,404
Total comprehensive income for year
Loss for the financial year	-	-	-	(5,039)	(5,039)
Total comprehensive income for year	-	-	-	(5,039)	(5,039)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	126	38,916	-	-	39,042
Equity-settled share-based payment transactions	-	-	-	35	35
Total contributions by and distribution to owners	126	38,916	-	35	39,077
As at 31 January 2014	264	64,483	132	(17,437)	47,442

Balance sheets

As at 31 January 2014

			Group			Company
			2014	2013	2014		2013
	Notes		£000	£000	£000		£000
Non-current assets
Property, plant and equipment	2		121	150	121		150
Intangibles	3		496	378	3,320		3,202
Investments			-	-	-		-
			617	528	3,441		3,352
Current assets
Tax receivable			1,077	845	1,077		845
Trade and other receivables			780	320	780		320
Fixed-term deposits			36,250	5,550	36,250		5,550
Cash and cash equivalents			6,897	4,225	6,897		4,225
			45,004	10,940	45,004		10,940
Total assets			45,621	11,468	48,445		14,292
Current liabilities
Trade and other payables			1,003	888	1,003		888
			1,003	888	1,003		888
Total liabilities			1,003	888	1,003		888
Net assets			44,618	10,580	47,442		13,404
Equity
Share capital	4		264	138	264		138
Share premium	4		64,483	25,567	64,483		25,567
Warrant reserve	4		132	132	132		132
Retained earnings	4		(20,261)	(15,257)	(17,437)		(12,433)
Total equity attributable to equity holders of the Company			44,618	10,580	47,442		13,404

Statements of cash flow

For the year ended 31 January 2014

		Group			Company
		2014	2013	2014		2013
	Notes	£000	£000	£000		£000
Cash flows from operating activities
Loss for the year		(5,039)	(4,178)	(5,039)		(4,178)
Adjustments for:
Depreciation, amortisation and impairment	2,3	83	194	83		194
Loss on disposal of fixed assets		-	1	-		1
Financial income		(617)	(223)	(617)		(223)
Equity-settled share-based payment expenses		35	19	35		19
Taxation		(1,063)	(846)	(1,063)		(846)
		(6,601)	(5,033)	(6,601)		(5,033)
Increase in trade and other receivables		(64)	(52)	(64)		(52)
Increase in trade and other payables		115	344	115		344
Tax received		830	578	830		578
Net cash from operating activities		(5,720)	(4,163)	(5,720)		(4,163)
Cash flows from investing activities
Interest received		222	266	222		266
Acquisition of property, plant and equipment	2	(22)	(60)	(22)		(60)
Acquisition of other intangible assets	3	(150)	(189)	(150)		(189)
(Increase)/decrease in fixed-term deposits		(30,700)	2,200	(30,700)		2,200
Net cash from investing activities		(30,650)	2,217	(30,650)		2,217
Cash flows from financing activities
Net proceeds from issue of share capital	4	39,042	15	39,042		15
Net cash from financing activities		39,042	15	39,042		15
Net increase/(decrease) in cash and cash equivalents		2,672	(1,931)	2,672		(1,931)
Cash and cash equivalents at 1 February		4,225	6,156	4,225		6,156
Cash and cash equivalents at 31 January		6,897	4,225	6,897		4,225

Notes

1.     Basis of preparation

The 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.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 January 2014 or 2013. The financial information for 2013 is derived from the statutory accounts for 2013 which have been delivered to the Registrar of Companies. The auditor has reported on the 2013 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for 2014 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.

The preliminary announcement has been prepared using the accounting policies published in the Group's accounts for the year ended 31 January 2013, which are available on the Company's website at www.etherapeutics.co.uk, with the exception of the following 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;

•     IAS 19 'Employee Benefits' (2011), which includes revised requirements for pensions and other post-retirement benefits, termination benefits and other changes;

•     Amendment to IAS 1 'Presentation of Financial Statements', which revises the way other comprehensive income is presented; and

•     Annual Improvements to IFRSs - 2010-2012 Cycle, which include amendments to a number of accounting standards.

2.     Property, plant and equipment

	Plant and	Fixtures
	equipment	and fittings	Total
Group and Company	£000	£000	£000
Cost
Balance at 1 February 2012	160	134	294
Additions	29	31	60
Disposals	(90)	(29)	(119)
Balance at 31 January 2013	99	136	235
Balance at 1 February 2013	99	136	235
Additions	18	4	22
Balance at 31 January 2014	117	140	257
Depreciation
Balance at 1 February 2012	117	40	157
Depreciation charge for the year	24	22	46
Eliminated on disposals	(90)	(28)	(118)
Balance at 31 January 2013	51	34	85
Balance at 1 February 2013	51	34	85
Depreciation charge for the year	28	23	51
Balance at 31 January 2014	79	57	136
Net book value
At 1 February 2012	43	94	137
At 1 February 2013	48	102	150
At 31 January 2014	38	83	121

3.     Goodwill and intangible assets - Group and Company

	Group				Company
		Patents and				Patents and
	Goodwill	trademarks	Total	Goodwill		trademarks	Total
	£000	£000	£000	£000		£000	£000
Cost
Balance at 1 February 2012	-	517	517	2,824		517	3,341
Other acquisitions - internally developed	-	189	189	-		189	189
Balance at 31 January 2013	-	706	706	2,824		706	3,530
Balance at 1 February 2013	-	706	706	2,824		706	3,530
Other acquisitions - internally developed	-	150	150	-		150	150
Balance at 31 January 2014	-	856	856	2,824		856	3,680
Amortisation and impairment
Balance at 1 February 2012	-	180	180	-		180	180
Amortisation charge for the year	-	7	7	-		7	7
Impairment charge	-	141	141	-		141	141
Balance at 31 January 2013	-	328	328	-		328	328
Balance at 1 February 2013	-	328	328	-		328	328
Amortisation charge for the year	-	32	32	-		32	32
Balance at 31 January 2014	-	360	360	-		360	360
Net book value
At 1 February 2012	-	337	337	2,824		337	3,161
At 1 February 2013	-	378	378	2,824		378	3,202
At 31 January 2014	-	496	496	2,824		496	3,320

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 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 drug in the patent portfolio. If the economic value of a patent is believed to be lower than its 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. The Directors also consider that the market capitalisation of the Group is a market indicator of the value of future income streams. 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.

4.     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 2012	138	25,552	132	(11,098)	14,724
Total recognised income and expense	-	-	-	(4,178)	(4,178)
Issue of share capital	-	15	-	-	15
Equity-settled share-based payment transactions	-	-	-	19	19
Balance at 31 January 2013	138	25,567	132	(15,257)	10,580
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

	No. of ordinary shares
	2014	2013
Share capital	'000	'000
On issue at 1 February	138,198	138,126
Issued for cash	125,683	72
On issue at 31 January - fully paid	263,881	138,198

	2014	2013
	£000	£000
Allotted, called up and fully paid
263,881,443 (2013: 138,198,359) ordinary shares of £0.001 each	264	138
	264	138
Shares classified as liabilities	-	-
Shares classified in shareholders' funds	264	138
	264	138

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.

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.

During the period, exercise of options over 646,870 ordinary shares by former staff and the issue of 36,214 ordinary shares to Non-Executive Directors in payment of their fees led to an increase of £683 in share capital and a credit of £113,873 to the share premium account.

The warrant reserve relates to the following warrants:

Issue date	Exercise price £	Expiry date	No. of warrants outstanding at the beginning of the year	No. of warrants issued during the year	No. of warrants exercised during the year	No. of warrants outstanding at the end of the year
March 2009	0.260	16 March 2014	198,332	-	-	198,332
March 2011	0.260	4 March 2014	677,409	-	-	677,409

All warrants lapsed unexercised on the expiry dates noted above.

 

END

 

 

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