Interim Results

RNS Number : 4722I

Syntopix Group plc

12 March 2010

 



Press Release

12 March 2010

Syntopix Group plc

("Syntopix" or "the Group")

Interim Results

Syntopix Group plc (AIM: SYN), the speciality pharmaceutical research and development company focused on topical antimicrobial innovations for products in the medicine and consumer healthcare markets, today announces its interim results for the six months ended 31 January 2010.

Highlights

·	Board restructure and appointment of new Chairman, Tom Bannatyne
·	Evaluation agreement with major consumer healthcare company for synergistic pair of antimicrobials with patent application pending
·	Completion of Phase II clinical study of acneic skin has led to discussions with major healthcare companies
·	Strong patent portfolio with 24 core patents/applications.  11 patents have been granted in the UK
·	Finalising plans for proposed equity fund raising to progress commercial opportunities

Dr Stephen Jones, Chief Executive Officer, commented:  "The Group is pleased to report continued progress.  Our established partnerships with major consumer healthcare companies, the interest being generated from our Phase II clinical study, together with the depth of Syntopix's compound library, positions us well for the next twelve months of development activity and securing licensing deals for products. 

 "The Board is also delighted to welcome Tom Bannatyne as Chairman.  His strong investment experience will be extremely valuable as the Group seeks further funding to progress opportunities within the global consumer healthcare market."

- Ends -

For further information, please contact:

Syntopix Group plc
Tom Bannatyne, Chairman	[phone]
Dr Stephen Jones, Chief Executive Officer	www.syntopix.com

Zeus Capital Ltd
Ross Andrews	Tel: [phone]
Bobby Fletcher	www.zeuscapital.co.uk

Media enquiries:

Abchurch Communications
Sarah Hollins / Simone Elviss / Hannah Sharman	Tel: [phone]
[e-mail]	www.abchurch-group.com

The interim results will be available electronically on the Group's website: www.syntopix.com.

Notes to editors

About Syntopix Group plc

Syntopix is a specialised research and development business, focusing on topical antimicrobial innovations for products in consumer healthcare and pharmaceutical markets. The Group was founded in 2003 as a spin-out from the University ofLeeds by Dr Jon Cove and Dr Anne Eady, two of the world's leading experts in skin microbiology.

The Group's development focus is on its three leading, core compounds SYN0126, SYN1113 and SYN0017. Each has multiple potential uses across a number of large consumer healthcare marketsincluding skincare, hair-care and oral health. Syntopix has developed strong working relationships with a number of major consumer healthcare companies including Proctor & Gamble and is nowactively seeking to out-license these products to commercial partners.

Syntopix has a robust pipeline, with a growing library of over 2,500 compounds. Its strategy is to seek to reduce the risks and costs of drug discovery and development by discovering novel uses for known compounds and combinations of compounds, which have established safety profiles. The Group adopts an ongoing filing process that has resulted in 24 core patents/applications. 

The Group is based at the Institute of Pharmaceutical Innovation in Bradford, giving access to the expertise in skin biology, formulation and toxicology at the universities of Bradford and Leeds.

Syntopix' shareholders include Techtran Group Limited (a subsidiary of IP Group plc), The Wellcome Trust Limited, The University of Leeds and Ridings Early Growth Investment Company Limited. Syntopix joined the AIM market of the London Stock Exchange in March 2006.

For more information, please visit our website at www.syntopix.com.

Chief Executive Officer's Statement

Introduction

The Group is pleased to report the interim results for the six months ended 31 January 2010. 

As announced in February 2010, the Board has been re-organised and the Group is delighted to welcome Tom Bannatyne as Chairman.  His impressive investment experience will be extremely valuable, providing Syntopix with a stronger City presence and strategic guidance as it enters a new phase of heightened commercial development, targeting a multi-billion global consumer healthcare market.  In order to provide the additional working capital required to progress the commercial opportunities available, the Group is finalising plans for an equity fund raising and expects to make an announcement in respect of this shortly.

Syntopix has continued to identify and screen novel compounds for their antimicrobial potential in the treatment, prevention and maintenance of several dermatological and oral healthcare conditions.  Our focus and area of expertise continues to be acne, although the Group is responding to considerable interest from other areas of consumer healthcare that require the topical use of antimicrobials, such as oral healthcare and the treatment or prevention of body odour.  These opportunities are becoming equally commercially attractive and Syntopix is extending its expertise as the Group interacts with and understands our customers' requirements.

Last year, the Group reported a Phase II proof-of-concept clinical study in subjects with acne-prone skin. These results continue to attract interest, and the Group is in discussions with several major healthcare companies.

The Group has entered into an evaluation agreement with the major consumer healthcare company partnered last year for a synergistic pair of antimicrobials. This combination is being evaluated for use in a major consumer healthcare brand, and Syntopix has applied for patent protection on this opportunity.

Development programme

The Group's compound library is now in excess of 2,500 compounds and is continually growing.  All compounds are screened against our key microorganism, Propionibacterium acnes and further studies are conducted on active compounds to further characterise their antimicrobial potential and their ability to synergise with other compounds as appropriate.  These additional (proprietary) studies with several microorganisms add considerable value to the process of evaluating the suitability of compounds for use in healthcare, particularly in the fields of acne and oral care.

The Group continues to work with Procter & Gamble and are developing a good relationship with all our partner companies.

Clinical programme

Syntopix is continuing to move its lead compounds from research into clinical development.  Our Phase II clinical study from 2009 using SYN0126 in combination with (a) SYN0040 and (b) SYN0040 with SYN0854, is the subject of discussions with several major consumer healthcare companies.  The Group hopes to conclude these discussions in the near future and will announce developments as appropriate.

SYN1113 is the lead candidate for our next human use study in subjects with acneic skin.  Once development work is complete, the Group intends to commence the study in the autumn.

It is also the Group's intent to conduct a proof-of-principle study for compounds that may be of use in oral care. These compounds are currently being confirmed, and the study should start over the summer.

Intellectual Property

Our patent portfolio continues to be strengthened by careful strategic management.  Syntopix currently has 24 core families of patents/applications.  Of these, 11 are granted in the UK, and they are all at various stages of application in key international territories.

Financial and operational review

Income statement

A summary of the Group's results is set out below:

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2010	2009	2009
	£'000	£'000	£'000
Revenue	104	85	190
Operating loss	(517)	(656)	(1,292)
Loss for the period	(453)	(577)	(1,115)

During the period the Group derived sales revenue from commercial deals with pharmaceutical companies as described in more detail above.

The operating loss for the half-year to 31 January 2010 is lower than previous periods as a result of lower research and development expenditure which is largely due to the timing of the Group's clinical trial programme.

Balance sheet

The accounting period to 31 January 2010 ends with the Group having net assets of £387,000 (31 January 2009: £1,319,000).  The Group has no external borrowings and cash reserves of £396,000 (31 January 2009: £1,189,000). 

Cash

Cash balances have decreased in the period from £894,000 at 31 July 2009 to £396,000 at 31 January 2010 with the principal elements of the movement being:

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2010	2009	2009
	£'000	£'000	£'000
Net cash used in operating activities	(639)	(736)	(1,178)
Net cash used in investing activities	-	11	27
Issue of share capital	-	1,477	1,477
Tax received	141	-	131
Movement during the period	(498)	752	457

The Group continues to manage its operational expenditure prudently and plans its research and development programme to ensure that it continues to have sufficient cash resources for the foreseeable future.

Taxation

The Group continues to qualify for Research and Development tax credits and the financial statements contain a debtor of £64,000 (31 January 2009: £196,000) in respect of research costs incurred in the current period. 

Principal risks and uncertainties

A detailed explanation of the principal risks and uncertainties faced by the Group and the steps taken to manage them is set out in Syntopix Group plc's 2009 Annual Report and Accounts.  The principal risks and uncertainties are summarised as follows:

·	Early stage of operations
·	Research and development risk
·	Intellectual property protection
·	Risks that the Group will not achieve commercial success

There have been no significant changes in the nature of these risks that will affect the next six months of the financial year.

Outlook

The Board is pleased to be in continuing discussions with a number of high profile healthcare companies as a result of the Group's promising compounds and clinical trial results obtained to date.  The Board expects the planned equity fund raising to be successful and this will enable the Group to progress a number of exciting opportunities from our pipeline.

Dr Stephen Jones

Chief Executive Officer

Condensed consolidated interim income statement - unaudited

For the six months ended 31 January 2010

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2010	2009	2009
	£'000	£'000	£'000
Revenue	104	85	190
Administrative expenses:
Research and development costs	(331)	(409)	(861)
Other administrative expenses	(290)	(332)	(621)
	(621)	(741)	(1,482)
Operating loss	(517)	(656)	(1,292)
Financial income	-	14	36
Loss before tax	(517)	(642)	(1,256)
Income tax credit	64	65	141
Loss for the period	(453)	(577)	(1,115)
Attributable to:
Owners of the parent	(453)	(577)	(1,115)
Loss per share
Basic and diluted	(5.9p)	(7.5p)	(14.5p)

All Group activities relate to continuing operations.

Condensed consolidated statement of comprehensive income - unaudited

For the six months ended 31 January 2010

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2010	2009	2009
	£'000	£'000	£'000
Loss for the period	(453)	(577)	(1,115)
Other comprehensive income net of tax	-	-	-
Total comprehensive loss for the period	(453)	(577)	(1,115)
Attributable to:
Owners of the parent	(453)	(577)	(1,115)

Condensed consolidated interim statement of financial position - unaudited

As at 31 January 2010

	At	At	At
	31 January	31 January	31 July
	2010	2009	2009
	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	39	65	56
Current assets
Trade and other receivables	60	107	58
Income tax	64	196	141
Cash and cash equivalents	396	1,189	894
Total current assets	520	1,492	1,093
Total assets	559	1,557	1,149
Liabilities
Current liabilities
Trade and other payables	(172)	(238)	(333)
Total liabilities	(172)	(238)	(333)
Net assets	387	1,319	816
Capital and reserves attributable to equity holders of the company
Share capital	772	772	772
Share premium reserve	4,657	4,657	4,657
Merger reserve	338	338	338
Share-based payments reserve	202	117	178
Retained losses	(5,582)	(4,565)	(5,129)
Total equity	387	1,319	816

Consolidated statement of changes in equity - unaudited

For the six months ended 31 January 2010

				Share
				Based	Retained
	Share	Share	Merger	Payments	(losses)/
	Capital	Premium	Reserve	Reserve	Earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 August 2008	573	3,379	338	226	(4,183)	333
Loss for the six month period ended 31 January 2009	-	-	-	-	(577)	(577)
Total recognised (expense) for the period	-	-	-	-	(577)	(577)
Shares issued (net of expenses)	199	1,278	-	-	-	1,477
Share options cancelled	-	-	-	(195)	195	-
Share option charge in the period	-	-	-	86	-	86
Balance at 31 January 2009	772	4,657	338	117	(4,565)	1,319
Balance at 1 August 2008	573	3,379	338	226	(4,183)	333
Loss for the year ended 31 July 2009	-	-	-	-	(1,115)	(1,115)
Total recognised (expense) for the year	-	-	-	-	(1,115)	(1,115)
Shares issued (net of expenses)	199	1,278	-	-	-	1,477
Share options cancelled	-	-	-	(169)	169	-
Share option charge in the year	-	-	-	121	-	121
Balance at 31 July 2009	772	4,657	338	178	(5,129)	816
Balance at 1 August 2009	772	4,657	338	178	(5,129)	816
Loss for the six month period ended 31 January 2010	-	-	-	-	(453)	(453)
Total recognised (expense) for the period	-	-	-	-	(453)	(453)
Share option charge in the period	-	-	-	24	-	24
Balance at 31 January 2010	772	4,657	338	202	(5,582)	387

Condensed consolidated interim statement of cash flows - unaudited

for the six months ended 31 January 2010

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2010	2009	2009
	£'000	£'000	£'000
Cash flows from operations
Loss for the period	(453)	(577)	(1,115)
Adjustments for:
Interest received	-	(14)	(36)
Income tax credit	(64)	(65)	(141)
Depreciation	17	17	32
Share option expense	24	86	121
Decrease/(increase) in trade and other receivables	(2)	(49)	-
(Decrease)/increase in trade and other payables	(161)	(134)	(39)
Net cash from operating activities	(639)	(736)	(1,178)
Income tax received	141	-	131
Net cash flows used in operating activities	(498)	(736)	(1,047)
Cash flows used in investing activities
Interest received	-	14	36
Purchase of property, plant and equipment	-	(3)	(9)
Net cash flows used in investing activities	-	11	27
Cash flows from financing activities
Share issue	-	1,477	1,477
Net cash flows from financing activities	-	1,477	1,477
Net decrease in cash and cash equivalents	(498)	752	457
Cash and cash equivalents at start of period	894	437	437
Cash and cash equivalents at end of period	396	1,189	894

Notes to the consolidated interim report

For the six months ended 31 January 2010

Basis of preparation

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 July 2009, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The interim financial information for each of the six month periods ended 31 January 2010 and 31 January 2009 has not been audited and does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006.  The information for the year ended 31 July 2009 does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006, but is based on the statutory accounts for that year, on which the Group's auditors drew attention to going concern by way of emphasis without qualifying their report and which have been filed with the Registrar of Companies.

The condensed consolidated interim financial information was approved for issue on 12 March 2010.

Accounting Policies

The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its audited consolidated financial statements for the year ended 31 July 2009 and which will form the basis of the 2010 Annual Report except as described below.  The basis of consolidation is set out in the Group's accounting policies in those financial statements.

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses.  Estimates and judgements are continually evaluated and are based on historical experience and other factors, such as expectations of future events and are believed to be reasonable under the circumstances.  Actual results may differ from these estimates.  In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited consolidated financial statements for the year ended 31 July 2009.

Changes in accounting policies

In the current financial year, the Group has adopted IAS 1, "Presentation of Financial Statements" (Revised), IFRS 8, "Operating Segments" and the amendment to IFRS 2, "Share-based payments: vesting conditions and cancellations".

IAS 1 Presentation of Financial Statements (Revised) includes the requirement to present a Statement of Changes in Equity as a primary statement and introduces the possibility of either a single Statement of Comprehensive Income (combining the Income Statement and a Statement of Comprehensive Income) or to retain the Income Statement with a supplementary Statement of Comprehensive Income. The second option has been adopted by the Group. As this standard is concerned with presentation only it does not have any impact on the results or net assets of the Group.

IFRS 8, Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker ("CODM"). By contrast IAS 14, "Segmental Reporting" required business and geographical segments to be identified on a risks and rewards approach. The business segmental reporting bases used by the Company in previous years are those which are reported to the CODM, so the changes to the segmental reporting for 2009 are in respect of the additional disclosure only.

Amendment to IFRS 2, "Share-based payments: vesting conditions and cancellations" results in an immediate acceleration of the IFRS 2 expense that would otherwise have been recognised in future periods should an employee decide to stop contributing to the savings plan. Management has concluded that to date there has been no impact on the results of the Group as a result of this amendment.

Business segments

The Chief Operating Decision Maker is defined as management, including the board of Directors.

Management considers that the Group's research and development activity constitutes one operating and reporting segment, as defined under IFRS 8. Management review the performance of the Group by reference to group-wide results against budget.

The group-wide profit measures are operating loss and loss for the year, both disclosed on the face of the consolidated income statement. No differences exist between the basis of preparation of the performance measures used by management and the figures in the group financial statements.  There is no allocation of revenues, operating expenses, profit measures, assets and liabilities to individual commercial agreements.

All of the revenues generated relate to commercial agreements and are wholly generated within the UK.  Accordingly there are no additional disclosures provided to the primary statements.

Earnings per share

The calculation of basic and diluted loss per share is based upon the loss after tax divided by the weighted average number of shares in issue during the period.  Due to the losses incurred there is no dilutive effect from the issue of share options.

		Weighted
	Loss after tax	average number	EPS
Basic and diluted loss per share	£'000	of shares	(pence)
6 months ended 31 January 2010	(453)	7,717,831	(5.9p)
6 months ended 31 January 2009	(577)	7,658,002	(7.5p)
12 months ended 31 July 2009	(1,115)	7,690,636	(14.5p)

At 31 January 2010 and at 31 January 2009, there were 703,616 share options granted but not yet exercised.

Related party transactions

The following transactions took place during the year with other related parties:

	Purchase of			Amounts owed to
	goods and services			related parties
Group	H1 2010	H1 2009	FY 2009	H1 2010	H1 2009	FY 2009
	£000	£000	£000	£000	£000	£000
The University of Leeds1	44	26	56	21	69	21
Atraxa Consulting Limited2	18	13	33	4	4	3
Four Shaw Consulting Limited3	-	1	11	-	-	11

1 - The University of Leeds is a significant shareholder and supplies the services of Dr Jon Cove to the Group through a secondment agreement.

2 - Atraxa Consulting Limited provides accountancy services to the Group.  One of the Company's directors, Darren Bamforth, is a director and shareholder of Atraxa Consulting Limited. 

3 - Four Shaw Consulting Limited provides consultancy services to the Group.  One of the Company's former directors, Dr Helen Shaw, who was a director during the period, is a director and shareholder of Four Shaw Consulting Limited. 

Statement of Directors' Responsibilities

The directors confirm to the best of their knowledge that:

i)  The condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union; and

ii)  The interim management report includes a fair review of the information required by the FSA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R).

Financial statements are published on the Group's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The maintenance and integrity of the Group's website is the responsibility of the directors.  The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

The directors of Syntopix Group plc and their functions are listed below.

Further information for Shareholders

Company number:	05656604
Registered office:	Institute of Pharmaceutical Innovation
	Bradford
	BD7 1DP
Directors:	Mr Thomas Bannatyne (Chairman)
	Dr Stephen Jones (Chief Executive Officer)
	Dr Jonathan Cove (Research Director)
	Darren Bamforth (Group Finance Director)
	Alan Aubrey (Non-Executive Director)
	Dr Gwyn Humphreys (Non-Executive Director)
Company Secretary:	Darren Bamforth

 

END

 

 

IR SFDFWFFSSEFD