Interim Results
Phytopharm PLC
30 April 2001
30 April 2001
Phytopharm plc
Interim results for the period to 28 February 2001
Phytopharm plc today announces interim results for the six month period to 28
February 2001.
Highlights
* Results of Phase II trial in chemo-prevention of bowel cancer P54
* Completion of single dose phase I study for appetite suppressant P57
* Commencement of Phase II evaluation in inflammatory bowel disease with
anti-inflammatory product P54
* Results of Phase II trial on alopecia androgenica with topical product
P45
* Commencement of kilogram-scale manufacture of semi-synthetic Alzheimer's
product P58
* Commencement of proof of principle study for appetite suppressant P57
Dr Richard Dixey, Chief Executive of Phytopharm, said:
'Our four major drug discovery platforms in obesity, Alzheimer's disease,
eczema and inflammation continue to make good progress in the clinic, and
multiple product opportunities are now emerging from each of them.'
Enquiries:
Phytopharm plc Today: 0207 638 4010
Dr Richard Dixey, Chief Executive Thereafter: 01480 437697
Mobile 07867 782000
Financial Dynamics Tel: 0207 831 3113
David Yates/ Fiona Noblet
A presentation for analysts will be held at 9.30 am today, 30 April 2001, at
the offices of WestLB Panmure Ltd, 35 New Broad Street, London EC2M 1SQ. A
copy of the presentation will be available via audio webcast on
www.phytopharm.co.uk from 3pm today. Please call Mo Noonan on 0207 831 3113
for further details.
Operational review
Work during the last six months has concentrated on the four fully fledged
drug discovery platforms in obesity, age related dementias, eczema and
inflammation.
In obesity, the P57 drug substance manufactured using our GMP site in South
Africa is now the subject of a proof of principle study in obese subjects.
This study has established therapeutic levels of drug substance in a single
dose study in healthy volunteers, and is now in its second phase where obese
subjects are being monitored using escalating doses of the drug over a 5 day
period. This will be followed by a final phase in which obese subjects will be
dosed at two dosing levels for a 10 day period in which daily calorific intake
will be monitored against placebo. If meaningful reductions in calorific
intake are achieved, proof of principle will have been demonstrated in this
highly important therapeutic area.
Alongside this activity, work continues to further understand the mode of
action of the product and develop chemical derivatives of the active
molecules. At present, 15 such molecules have been isolated, and these are
protected by seven patent applications in process worldwide. P57 is one of the
most advanced appetite suppressants in development in the world for a market
that addresses both clinical obesity and obese onset diabetes.
Product P58 for Alzheimer's disease is derived from our second drug discovery
platform which concerns age-related declines in performance. Here, work
developing a semi-synthetic compound is complete and the manufacture of this
compound is now proceeding at the kilogram scale. Toxicological studies are
now in progress to support repeat dosing in the elderly which is due to start
in Q3 of this year. Whilst our initial emphasis for this platform has been in
the treatment of age-related cognitive impairment and Alzheimer's disease, we
are also assessing the potential of this drug family in reversing Parkinson's
disease. Studies to further evaluate the product in this important indication
are currently underway alongside further studies on the novel mode of action
of this drug family at a molecular level. This drug discovery platform has now
generated 45 active molecules and is protected by 9 patent families.
Our work on the anti-inflammatory platform is exemplified by product P54, a
product based on food plants that has yielded confirmatory data in a clinical
study concerning its potential in the treatment of bowel cancer. This
application, where lifetime therapy for patients with colonic polyps is
strongly recommended by doctors, is a major emerging market opportunity. Data
is also being finalised from the evaluation of P54 in canine arthritides that
will be published before the end of Q2 this year. P54 is protected by granted
patents in the USA and Europe and has 8 further semi-synthetic molecules in
development.
The Eczema drug discovery platform concerns products P7v and P55. It was the
subject of the largest ever study in canine atopy using P7v which reported in
Q4 of last year. Discussions are currently in progress with licensees
interested in marketing this product. Work to identify the active component is
nearing completion and will be the subject of further patenting and
derivatisation activity. This platform has generated two patent families going
to grant worldwide with active molecules currently in isolation.
Alongside these major platforms, Phytopharm's Botanical technology enables
initial evaluation of plant extracts based on traditional medicines to be
conducted at low cost. Earlier this year we were disappointed to announce the
failure of our product P45 to generate significant clinical benefit in the
treatment of alopecia androgenica. The commencement of a further initial study
in alopecia areata and totalis was announced in Q4 of last year. It should be
noted, however, that the total cost to Phytopharm for the initial study in
alopecia androgenica was only £170,000. Whilst it is disappointing to have
product failures, to be able to do so at such small cost is a benefit of the
clinical approach taken by the Company.
Mode of action work is also continuing on project P30, a plant extract that
displays activity as a potent inhibitor of gluconeogenesis. Control of this
process is of pivotal importance in the treatment of Type 2 diabetes, and it
should be the subject of initial clinical evaluation in Q4 2001. Preparations
are also underway to commence early evaluation of projects P56 (Hepatitis C)
and P62 (chronic idiopathic purpura) during the next quarter.
Botanicals lead to drug discovery platforms
Botanicals lie at the heart of Phytopharm's development strategy. Botanicals
enable the rapid evaluation of projects based plant extracts in important
diseases; the generation of patentable insights into their mode of action; the
development of screens based on this data to isolate and patent the active
molecules responsible, and the synthesis of derivatives of such molecules to
offer multiple additional product candidates. Therapeutic areas in which these
four phases are complete are called drug discovery platforms by Phytopharm,
and as noted above, the Company has four such platforms in full development,
with two further platforms emerging. With this achievement Phytopharm has now
developed a portfolio of product candidates that are attracting international
attention.
P58 represents an example of where this process has lead to the isolation of
single active molecules for development in the human prescription market.
However Botanical extracts themselves can also be developed for the human
prescription market as exemplified by P57. Such extracts are also appropriate
for development in the veterinary arena (such as P7v for canine eczema), as
well as being of potential importance as nutraceutical medicines where
long-term therapeutic exposure is required (such as P54 for anti-inflammatory
disease and cancer chemoprevention).
Multiple opportunities are an attractive feature of our approach to drug
discovery, and along with the low cash burn, underpin the low risk profile of
the company.
Financial review
Six months ended Year to
28 February 31 August 29 February 31 August
2001 2000 2000 2000
£000 £000 £000 £000
Turnover 682 496 1,582 2,078
Cost of sales - - 314 314
Research & development 1,883 1,584 1,810 3,394
Administrative costs 450 404 415 819
Pre-tax loss (1,374) (1,331) (852) (2,183)
Loss per share (p) (3.6) (3.8) (2.5) (6.3)
Cash 14,635 5,320 5,558 5,320
Comparison between the six month periods ended February 2001 and August 2000
The six months to February 2001 has shown an improvement in the Group's
results over the previous six months to August 2000 in that turnover has
increased by 37% and research and development expenditure by 19% whilst the
pre-tax loss has only increased by a marginal 3%.
Turnover comprises development and milestone income which arises under the
Group's licence and development agreement with Pfizer Inc for the P57 appetite
suppressant product. Turnover to February 2001 of £682,000 increased over the
previous six month period to August 2000 (£496,000) primarily due to phasing
in the development plan. At the end of the six month period to February 2001
the product entered into the next phase of clinical development with the proof
of principle clinical study which is currently ongoing.
Overall operating expenses for the first six months of financial 2001 were £
2,333,000, an increase of £345,000 over the previous six months. Within these
totals research and development expenditure increased by 19% to £1,883,000 due
to a combination of increased expenditure on P57 as the product moved into the
next clinical phase and an increase in expenditure on other products within
the portfolio. The increased administrative expenses arose mainly as a result
of increased staffing within the business development and licensing function
of the business.
Comparison between the six month periods ended February 2001 and February 2000
Turnover for the six months to February 2001 of £682,000 showed a reduction of
£900,000 compared to turnover for the six months to February 2000. This
reduction arose as the turnover for the six months to February 2000 included a
milestone of £628,000 earned under the licence and development with Pfizer,
and phasing within the development plan for P57 resulted in lower development
costs and income in the six months to February 2001 when compared to the six
months ended February 2000.
Cost of sales of £314,000 in the period to February 2000 represented the
proportion of the milestone income from Pfizer due to the Council for
Scientific and Industrial Research (CSIR) from whom the Group licensed P57.
Overall operating expenses of £1,883,000 for the six months to February 2001
are very similar to the corresponding period last year, as is the split
between research and development and administrative expenses. However, the
research and development expenditure is spread more evenly across the Group's
portfolio in the current six month period compared to the six months ended
February 2000. The increase in administrative expenses arose mainly as a
result of increased staffing as noted above.
Balance sheet
The net assets of the Group of £14,343,000 showed an increase of £9,583,000
from £4,760,000 reported at the end of August 2000. This increase comprises
net proceeds of £10,801,000 from an issue of 5% of the ordinary share capital
of the company in November 2000 and £127,000 from the exercise of share
options offset by the loss for the period. The shares were issued at a small
premium to the market price. Debtors at the end of February 2001 of £594,000
(29 February 2000 £1,170,000) comprised mainly licence and development income
due under the licence and development agreement for P57. The balance at
February 2000 included the milestone of £628,000 noted above. Short term
creditors of £1,151,000 showed an increase of £267,000 over the balance at the
end of August 2000 which is as expected from the increased expenditure in the
period. The short term creditors figure of £1,247,000 at the end of February
2000 included the share of the milestone payment to the CSIR as noted above.
Financing
Overall, after allowing for the share issue in November 2000 and the exercise
of share options during the period, the Group utilised £1,389,000 of working
capital in the six months to February 2001. This compares with £863,000 in the
corresponding period last year and represents approximately £231,000 per month
(£144,000 per month to February 2000). However, the working capital utilised
to February 2000 was reduced by the inclusion of the milestone income from
Pfizer, and when this is excluded it gives a similar level of working capital
utilisation between the two periods.
Following the fundraising in November 2000 the Group had working capital of £
14,078,000 at the end of February 2001, which at the current expenditure rate
means that the Group has over four years working capital.
Independent review report to Phytopharm plc
Introduction
We have been instructed by the Company to review the financial information set
out on pages 7 to 9 and we have read the other information contained in the
interim report for any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consisted principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on the
financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 28 February 2001.
PricewaterhouseCoopers
Chartered Accountants
Cambridge, 26 April 2001
Unaudited consolidated profit and loss account for six months ended 28
February 2001
Notes Six Six Year
months months
ended ended ended
28 Feb 29 Feb 31 Aug
2001 2000 2000
£000 £000 £000
Turnover 2 682 1,582 2,078
Cost of sales - (314) (314)
______ ______ ______
Gross profit 682 1,268 1,764
Other operating expenses 3 (2,333) (2,225) (4,213)
______ ______ ______
Operating loss (1,651) (957) (2,449)
Interest receivable and similar income 282 109 275
Interest payable and similar charges (5) (4) (9)
Loss on ordinary activities before (1,374) (852) (2,183)
taxation
Tax on loss on ordinary shares 29 - -
______ ______ ______
Loss for the period 5 (1,345) (852) (2,183)
====== ====== ======
Basic and fully diluted loss per share 4 (3.6) (2.5) (6.3)
(pence)
IIMR loss per share (pence) 4 (3.6) (2.5) (6.3)
Unaudited consolidated balance sheets at 28 February 2001
Notes At At At
28 Feb 29 Feb 31 Aug
2001 2000 2000
£ 000 £000 £000
Fixed assets
Tangible assets 277 216 255
Investments 30 - 30
______ ______ ______
307 216 285
Current assets
Debtors 594 1,170 103
Cash held on deposit as short term 14,591 5,049 4,528
investments
Cash at bank and in hand 44 509 792
______ ______ ______
15,229 6,728 5,423
Creditors: amounts falling due within one (1,151) (1,247) (884)
year
______ ______ ______
Net current assets 14,078 5,481 4,539
______ ______ ______
Total assets less current liabilities 14,385 5,697 4,824
______ ______ ______
Creditors: amounts falling due after more (42) (50) (64)
than year
______ ______ ______
Net assets 14,343 5,647 4,760
====== ====== ======
Capital and reserves
Called up share capital 381 354 362
Share premium account 5 31,196 19,851 20,287
Merger reserve 5 (204) (204) (204)
Profit and loss account 5 (17,030) (14,354) (15,685)
______ ______ ______
Equity shareholders' funds 14,343 5,647 4,760
====== ====== ======
Unaudited consolidated cash flow statement for the six months ended 28
February 2001
Six Six Year
months months ended
ended ended
28 Feb 29 Feb 31 Aug
2001 2000 2000
£000 £000 £000
Net cash outflow from continuing operating (1,789) (1,724) (2,458)
activities
______ ______ ______
Returns on investment and servicing of finance
Interest received 296 91 264
Interest paid on finance leases (5) (4) (9)
______ _____ ______
Net cash inflow from returns on investment and 291 87 255
servicing of finance
Taxation
UK corporation tax paid - - -
Investing activities
Purchase of fixed assets investments - - (30)
Purchase of tangible fixed assets (89) (46) (102)
Proceeds on sale of tangible fixed assets 4 7 13
______ ______ ______
Net cash outflow from investing activities (85) (39) (119)
______ ______ ______
Net cash outflow before financing (1,583) (1,676) (2,322)
______ _____ _____
Management of liquid resources
Net movement of cash held on deposit (10,063) (3,040) (2,519)
______ ______ ______
Financing
Proceeds from issue of share capital 11,030 4,386 4,387
Proceeds from exercise of options 127 168 611
Expenses of issue of share capital (229) (116) (116)
Repayment of principal under finance leases (30) (31) (67)
______ ______ ______
Net cash inflow from financing 10,898 4,407 4,815
______ ______ ______
Decrease in cash (748) (309) (26)
====== ====== ======
Reconciliation of operating loss to net cash outflow from operating activities
Six Six Year
months months
ended ended ended
28 Feb 29 Feb 31 Aug
2001 2000 2000
£000 £000 £000
Continuing activities
Operating loss (1,651) (957) (2,449)
Depreciation on tangible fixed assets 64 57 119
Profit on disposal of fixed assets (1) (5) (9)
(Increase)/decrease in debtors (476) (989) 70
Increase/(decrease) in creditors 275 170 (189)
______ ______ ______
Net cash outflow from continuing operating (1,789) (1,724) (2,458)
activities
====== ====== ======
Notes to the interim report
1. Preparation of Interim Statements
The interim results have been prepared in accordance with the accounting
policies set out in the Group's 2000 annual report and are unaudited. The
information set out in this interim report for the six months to 28 February
2001 does not comprise statutory accounts within the meaning of the Companies
Act 1985.
The figures for the year ended 31 August 2000 are abridged from the Group's
statutory accounts for that year which received an unqualified auditor's
report and have been filed with the Registrar of Companies.
2. Turnover
Six months Six months Year
ended ended ended
28 Feb 2001 29 Feb 2000 31 Aug 2000
By business activity
Licensing and development 682 1,582 2,078
====== ====== ======
3. Other Operating Expenses
Other operating expenses comprise:
Six months Six months Year
ended ended ended
28 Feb 2001 29 Feb 2000 31 Aug 2000
Research and development expenditure 1,883 1,810 3,394
Administrative expenditure 450 415 819
______ ______ ______
2,333 2,225 4,213
====== ====== ======
4. Loss Per Share
The loss per share is based on losses of £1,345,000 and 37,123,814 ordinary
shares, being the weighted average number of shares in issue during the
period. The IIMR earnings per share figures exclude gains and losses from
disposals of fixed assets during the period.
5. Share Premium Account and Reserves
Share Merger Profit and
Premium Reserve Loss Account
Account £000 £000
£000
At 1 September 2000 20,287 (204) (15,685)
Premium on new share issue 10,909 - -
Loss for the period - - (1,345)
______ ______ ______
At 28 February 2001 31,196 (204) (17,030)
====== ====== ======
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