Interim Results
Phytopharm PLC
01 May 2007
Company Contact: U.K. Investor Relations Contact:
Phytopharm plc FD
Dr Daryl Rees CEO David Yates
Mr Piers Morgan CFO Ben Atwell
+44 1480 437 697 +44 207 831 3113
www.phytopharm.com
1 May 2007
Phytopharm plc
Interim Results
Phytopharm plc (PYM: London Stock Exchange) ('Phytopharm' or the 'Company', or
the 'Group') announces today its interim results for the six months ended 28
February 2007.
Portfolio Highlights
Hoodia extract
• Successfully advancing through the second stage of Joint Development
Agreement with Unilever for our weight management product, Hoodia extract
• Good progress in clinical trials with healthy overweight subjects
Phytopica(R)
• UK sales of canine skin health product, Phytopica(R), by our partner
Schering-Plough exceed expectations
• Schering-Plough launch Phytopica(R) in Italy in March 2007
• Schering-Plough launch Phytopica(R) in France in April 2007
Myogane(TM)
• Significant progress towards initiation of a Phase Ib healthy volunteer
clinical trial for amyotrophic lateral sclerosis (ALS) in H2 2007
Cogane(TM)
• Data on pre-clinical models of Parkinson's disease presented at 'The
Movement Disorder Society's 10th international congress' in Kyoto, Japan,
November 2006
Key Financials
• Revenue of £1.59 million (H1 2006 £0.88 million)
• Loss after tax of £2.86 million (H1 2006 £3.64 million)
• Cash balance of £3.38 million (H1 2006 £8.07 million) with an additional
£1.68 million (£1.53 million net of expenses) raised through placing of
4,425,416 new Ordinary Shares after the period end
Board changes
• Appointment of Dr Daryl Rees as Chief Executive Officer (formerly Chief
Operating Officer)
• Appointment of Mr Piers Morgan as Chief Financial Officer
Dr Daryl Rees, Chief Executive, commented:
'Phytopharm has made significant progress on its strategic objectives for the
year. With the new management team in place, we have rationalised our
development pipeline while improving our ability to partner our products. Our
partner Schering-Plough has launched Phytopharm's canine skin health product,
Phytopica(R), in two more major European territories while our partner Unilever,
has continued to make good progress in the clinic with our weight management
product, Hoodia extract. Throughout the remainder of 2007, we look forward to
continuing to execute our strategic plan, including progressing Hoodia through
the third stage of the development agreement with Unilever and completing an
out-licensing agreement for one of our pharmaceutical products.'
Chief Executive's statement
I am pleased to report that Phytopharm is making good progress in developing a
broad, balanced portfolio of products with diversified risk and substantial
potential value. Upon my promotion to Chief Executive in January 2007, I
implemented a series of strategic objectives that included rationalising our
development pipeline while improving our ability to partner our products. With
the appointment of Piers Morgan as Chief Financial Officer in January 2007, the
management team is strengthened, bringing significant benefits to the Board and
the Company.
Over the period we have continued to make good progress in clinical trials with
our weight management product, Hoodia extract, with our partner Unilever, and
continue to advance successfully through all other aspects of the second stage
of our Joint Development Agreement. We look forward to progressing into the
third stage of the Agreement in calendar H2 2007. It is encouraging that UK
sales of our canine skin health product, Phytopica(R), by our partner
Schering-Plough have exceeded expectations and that their European rollout has
begun with launches in Italy in March 2007 and France in April 2007.
One of our strategic objectives is to partner one of our pharmaceutical products
in calendar H2 2007. The out-licence of our pharmaceutical products to partners
will enable us to share the cost and risk of product development while also
providing near term cash in-flows on achievement of development milestones. We
have continued to advance the development of our pharmaceutical products and
have made significant progress towards initiation of a Phase Ib healthy
volunteer clinical trial with Myogane(TM) for amyotrophic lateral sclerosis (ALS)
in H2 2007 and anticipate requesting EU orphan drug status for Myogane(TM) during
the same period. We have also made significant progress in pre-clinical models
of Parkinson's disease demonstrating that Cogane(TM) reverses the changes in the
area of the brain involved in Parkinson's disease, providing encouraging
evidence that Cogane(TM) has a disease modifying effect. This data was presented
at 'The Movement Disorder Society's 10th international congress of Parkinson's
disease and movement disorders' in Kyoto Japan, November 2006 and has received
considerable interest from potential partners. We also intend to pursue
in-licensing opportunities to supplement the existing product portfolio, while
limiting any significant increase in development costs from these activities.
In March 2007, we raised approximately £1.68 million before expenses (£1.53
million after expenses) by way of a placing of new Ordinary Shares in the
Company, the proceeds of which will be used to strengthen the Company's balance
sheet and continue the development of its products effectively.
By delivering on our strategic objectives, we believe we will be able to create
value for our shareholders and we look forward with confidence to building on
the achievements of the first six months and reporting on the development of our
pipeline and the progress of out-licensing one of our pharmaceutical products
during calendar H2 2007.
Business Review
Phytopharm is a pharmaceutical development and functional food company whose
product leads are generated from medicinal plants. The Company's strategy is to
develop these products through 'proof of principle' clinical testing, and then
secure partners for late stage development, sales and marketing. Laboratory,
manufacturing and clinical work is outsourced to selected specialists, operating
under expert in-house management. This operational structure allows access to
the best external research facilities whilst maintaining low fixed overheads and
a lower development cost structure.
Pharmaceutical Products
The progress of our pharmaceutical products over the period is described below.
Parkinson's and Alzheimer's disease and niche neurodegenerative diseases
Cogane(TM) (PYM50028), a novel synthetic chemical, is an orally active,
neurotrophic factor inducer being developed as a potential disease modifying
agent for neurodegenerative diseases including Parkinson's and Alzheimer's
disease. A consistent feature of Parkinson's disease is the loss of
dopamine-containing neurones in the substantia nigra area of the brain. Current
drugs can mitigate many of the symptoms for a while but do not alter the
prognosis of steady decline. Phytopharm has made significant progress
demonstrating that in pre-clinical models of Parkinson disease, Cogane(TM)
reverses the damage to dopamine containing neurones and reverses the decrease of
neuronal growth factors and dopamine receptors in the brain and as such is a
promising novel treatment for Parkinson's disease. This data was presented at '
The Movement Disorder Society's 10th international congress of Parkinson's
disease and movement disorders' in Kyoto Japan, November 2006 and has received
considerable interest from potential partners.
The neuroprotective and neurotrophic actions of Cogane(TM) suggest potential
beneficial effects in other neurodegenerative diseases including diabetic
neuropathy. In pre-clinical models, Cogane(TM) protects against sensory and motor
neuronal damage, increases neurite outgrowth, reverses oxidative damage and
reverses neuronal apoptosis in vitro.
Cogane(TM) restores the learning and memory ability in Alzheimer's disease
pre-clinical models and thereby offers the potential to arrest or reverse the
progression of Alzheimer's disease. In late November 2005, we announced the
preliminary results obtained from the Phase IIa clinical study of Cogane(TM) in
mild and moderate Alzheimer's disease patients. Two hundred and fifty-six
subjects with Alzheimer's disease ranging in severity from mild to moderate were
randomly allocated to receive either 120 mg Cogane(TM) (n = 127) or a placebo (n =
129), orally once daily for 12 weeks. The majority of patients enrolled had mild
disease. Although the disease progression over the short study period was
insufficient to detect a beneficial effect of Cogane(TM) in the mild patients
there was an encouraging trend for slower disease progression in more moderate
Alzheimer's patients with Cogane(TM). This, coupled with its excellent safety
profile and tolerability, provides positive data for longer term studies for
efficacy determination. Initial discussions with potentially suitable licensees
have now led to detailed assessments and due diligence evaluations of the full
data set.
Motor neurone disease
Myogane(TM) (PYM50018) is being developed for ALS (also known as Lou Gehrig's
disease). ALS is the most common motor neurone disease and results from
progressive degeneration of both upper and lower motor neurones. This condition
has a high unmet medical need. Although the precise molecular pathways that
cause the death of motor neurones in ALS remain unknown, possible mechanisms
include oxidative and glutamate mediated damage. In pre-clinical studies, the
single chemical Myogane(TM) protects against neuronal damage, reverses the
decrease of neuronal growth factors and reverses neuronal degeneration observed
in motor neurones. Myogane(TM) also increases neurite outgrowth, reverses
oxidative damage and reverses neuronal apoptosis in vitro. When administered
orally to a transgenic pre-clinical model of ALS, Myogane(TM) delays the loss of
muscle strength and extends survival time.
Phytopharm has successfully completed a Phase Ia clinical study that evaluated
the safety, tolerability and pharmacokinetic profile of Myogane(TM). This
residential clinical study was conducted under an investigational new drug (IND)
filed with the United States Food and Drug Administration (FDA) and confirmed
that the product was well absorbed with an excellent safety profile. We also
announced that the FDA had granted Orphan Drug and Fast Track designation to
Myogane(TM) for the treatment of ALS. Building on this success we have further
developed a new liquid formulation suitable for ALS patients and have made
significant progress towards initiation of a Phase Ib healthy volunteer clinical
trial for H2 2007. Initial discussions with potentially suitable licensees have
now led to detailed assessments and due diligence evaluations of the full data
set.
The neuroprotective and neurotrophic actions of Myogane(TM) suggest potential
beneficial effects in other orphan neurodegenerative diseases including
Friedrich's ataxia, progressive supranuclear palsy, Huntington's disease and
multiple system atrophy as well as niche market diseases.
Asthma and other inflammatory disorders
Asthma is a chronic inflammatory disorder of the airways that causes recurrent
episodes of wheezing, breathlessness, chest tightness and coughing. In
addition, asthma is usually associated with widespread but variable airflow
obstruction. Inhibition of inflammation and opening of the airways are
therefore key components of asthma treatment. Steady progress has been made in
identifying novel synthetic molecules from the PYM60001 series that can be
developed as a pharmaceutical medicine for the treatment of asthma and other
inflammatory disorders. Pre-clinical comparative, 'proof of concept', studies
with marketed products have demonstrated encouraging results showing improved
beneficial effects in several models of asthma including opening of the airways
and reduction in airway inflammation.
Metabolic syndrome
Obesity leads to a cluster of metabolic alterations and as a result is a major
risk factor for insulin resistance, type 2 diabetes, coronary artery disease,
hypertension, stroke, osteoarthritis and certain forms of cancer. Weight is
gained when energy intake exceeds energy expenditure. The excess energy is
stored as fat, and if there is an extended period of positive energy balance,
obesity will result. The mechanism of action of the chemical series based on
the active components of our Hoodia extract (see below) is under investigation.
Proteomic research is helping to define novel targets and the design of new
molecules from the PYM60004 series as pharmaceutical candidates for metabolic
syndrome and Prader-Willi syndrome which is an orphan disease characterised by
clearly definable features including obesity due to hyperphagia and a decreased
calorific requirement owing to low energy expenditure.
Functional Foods
Our functional food products continue to make strong progress.
Dietary weight management
Our weight management functional food product is based on an extract of the
succulent plant, Hoodia, which contains a novel satiety stimulator that reduces
calorie intake in overweight subjects, as demonstrated in our double-blind,
placebo-controlled clinical study. Extracts of Hoodia and the active molecules
therein are the subject of a global patenting programme, with major patents
granted in the US, UK, Europe and Japan and pending in all other major
territories.
In December 2004, we announced that we had granted an exclusive global licence
for the Hoodia extract to Unilever plc. Under the terms of the agreement,
Phytopharm and Unilever are collaborating on a five-stage research and
development programme of safety and efficacy studies with a view to bringing new
weight management products to market. In April 2006, we announced that we had
successfully completed the first stage of our Joint Development Agreement. We
also announced the progression into the second stage which included clinical
studies. Over the period we have continued to advance successfully through
clinical trials in healthy overweight subjects as well as all other aspects of
the second stage of our Joint Development Agreement.
As part of the agreement, Unilever committed to initial payments of
approximately £6.5 million for the first stage and in April 2006 committed up to
£3.5 million for the second stage in payments to Phytopharm. In addition,
Phytopharm will receive an undisclosed royalty on sales of all products
containing the extract. Unilever is also managing a separate agronomy programme
and supporting the international patent programme for the products.
Phytopharm and Unilever have also become aware of many companies that are
selling products over the Internet and in some stores claiming to contain Hoodia
and causing weight loss. Analysis of these products has demonstrated that the
great majority of them contain little or no Hoodia. Phytopharm and Unilever
have made contact with the relevant authorities concerning this development and
are satisfied with the progress being made in these key discussions.
Canine skin health
Phytopica(R) is a natural, three plant product for canine skin health that
provides a novel 3 in 1 approach to help maintain a normal healthy immune
system, support normal white cell function and provide anti-oxidant benefits.
The beneficial effects and excellent safety profile of Phytopica(R) have been
proven extensively in clinical trials and the product has been found to be
suitable for all dogs whatever size or breed. Canine dermatological disorders
are well recognised by veterinarians to be a major problem in small animal
practice, with an estimated 15% of the UK dog population (around 900,000 dogs)
affected by skin conditions (source: Animal Pharm). Maintenance of a healthy
skin and coat and alleviation of itching are of major importance to canine
general health and quality of life.
In January 2006, Phytopharm entered into an exclusive global agreement with
Schering-Plough Animal Health ('Schering-Plough') for Phytopica(R). Under the
terms of the agreement, Phytopharm is responsible for manufacturing Phytopica(R)
whilst Schering-Plough is responsible for the global sales, marketing and
distribution. In April 2006, Schering-Plough launched Phytopica(R) in the UK
and the product has enjoyed firm support from veterinary dermatologists, with
sales exceeding expectations.
Schering-Plough launched Phytopica(R) in Italy and France in March and April
2007, respectively. With more than 8.5 million dogs, France is one of the
largest companion animal markets in Europe and of these, some 15% referred to
veterinarians may be affected by skin conditions. Following the French launch,
Schering-Plough will seek to market and distribute Phytopica(R) in further
countries worldwide. With Schering-Plough's global presence we look forward to
strong growth from this product.
Financial review
The financial performance for the six months ended 28 February 2007 reflects the
Group's ongoing pharmaceutical development and functional foods activities.
Income statement
The increased revenue of £1.59 million for the period was generated from our two
collaboration agreements: firstly with Unilever for the development of Hoodia
extract for dietary weight management; and secondly with Schering-Plough for the
global sales, marketing and distribution of Phytopica(R) for canine skin health.
Revenue for the comparable period to 28 February 2006 amounted to £0.88
million. Revenue from Unilever represents reimbursement to the Group of
development expenditure relating to the Hoodia extract programme, together with
funding of certain Phytopharm staff, and therefore the level of revenue in each
period depends on the nature of the ongoing activities and level of related
expenditure at that particular time. Revenue from Schering-Plough comprises the
sale of Phytopica(R) by Phytopharm to Schering-Plough for onward distribution
and eventual sale to end users. Of the revenue in the period to 28 February
2007, £1.58 million represents stage payments from Unilever, and £0.01 million
represents product sales to Schering-Plough; for the corresponding period to 28
February 2006 stage payments amounted to £0.84 million and product sales
amounted to £0.04 million.
Expenditure on research and development has continued as planned for the six
months ended 28 February 2007. A total of £3.84 million was spent during the
period, compared to £3.79 million for the six months ended 28 February 2006.
54% of this expenditure related to the Hoodia extract functional food programme,
and 41% on the pharmaceutical development of Cogane(TM) and Myogane(TM). The
balance of development expenditure relates to Phytopharm's other pharmaceutical
development programmes, particularly for asthma, and a small amount of ongoing
work in relation to Phytopica(R). The Hoodia extract programme for dietary
weight management continues to make encouraging progress through Stage 2 of the
5-Stage Unilever Development and Launch Agreement, and Unilever continues to
make substantial further investment in this programme, in addition to the
funding it pays to Phytopharm.
Expenditure on selling, general and administrative expenses for the six months
ended 28 February 2007 reduced slightly to £0.94 million from £1.08 million in
the six months ended 28 February 2006.
Interest receivable for the six months ended 28 February 2007 amounted to £0.11
million, compared to £0.22 million for the comparable period to 28 February
2006.
The reduced overall net loss for the period to 28 February 2007 was £2.86
million compared to £3.64 million for the period ended 28 February 2006.
Balance sheet
Non-current assets comprise property, plant and equipment. At 28 February 2007
these amounted to £0.21 million compared to £0.24 million at 28 February 2006.
Current assets amounted to £5.47 million at 28 February 2007 and comprised
inventories of £0.86 million, amounts receivable of £1.23 million (of which
£0.85 million related to R&D tax credits), and cash resources of £3.38 million.
Inventories rose slightly in the six months ended 28 February 2007 as the Group
manufactured further finished stocks of Phytopica(R) to support the launches in
Italy and France in March and April 2007 respectively as well to meet UK demand.
These finished goods were supplied and invoiced to Schering Plough after the
period end. Amounts receivable excluding R&D tax credits have reduced to £0.38
million at 28 February 2007 from £0.65 million at 28 February 2006; amounts at
28 February 2006 included £0.25 million receivable from Unilever under the
development and launch agreement (£nil at 28 February 2007). The level of R&D
tax credit receivable by the Group, at £0.85 million, is in line with previous
periods. Cash resources, described as cash and cash equivalents, are invested
for periods of 90 days or less. The decrease in cash resources during the
period of £2.62 million reflects the cash utilised in the business and excludes
the proceeds of the fundraising by the Group in March 2007.
Current liabilities at 28 February 2007 have reduced to £1.73 million from £2.17
million at 28 February 2006, reflecting a reduction in accruals for clinical
trial expenditure relating to the Group's development activities.
The increase on the Share Premium account for the period ended 28 February 2007
reflects the recovery and capitalisation of VAT previously written off against
that reserve, following a change in HMRC policy with respect to the Group's May
2005 fundraising.
Cash flow
The net cash used in operating activities for the six months ended 28 February
2007 was £2.73 million, a reduction from £3.64 million in the period ended 28
February 2006.
Outlook
Throughout the remainder of 2007 we look forward to continuing to implement our
strategic plan, which includes progressing Hoodia through the third stage of the
development agreement with Unilever and completing an out-licensing agreement
for one of our pharmaceutical products. We also look forward to continued
growth in sales of our canine skin health product, Phytopica(R) with our
partner, Schering-Plough.
Dr Daryl Rees
Chief Executive
Piers Morgan
Chief Financial Officer
Independent review report to Phytopharm plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 28 February 2007 which comprises the unaudited consolidated
interim balance sheet as at 28 February 2007 and the related unaudited
consolidated interim statements of income, cash flows and changes in
shareholders' equity for the six months then ended and related notes. We have
read the other information contained in the interim report and considered
whether it contains 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 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.
The Interim Report has been prepared in accordance with the basis set out in
note 1.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. 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 and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of the Listing Rules of the Financial Services Authority
and for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
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 2007.
PricewaterhouseCoopers LLP
Chartered Accountants
Cambridge
1 May 2007
Notes:
a. The maintenance and integrity of the Phytopharm plc website is the
responsibility of the Directors; the work carried out by the auditors does
not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
interim report since it was initially presented on the website.
b. Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
Unaudited consolidated income statement
For the six months ended 28 February 2007
Notes Unaudited Unaudited Audited
Six months ended Six months ended Year ended
28 Feb 2007 28 Feb 2006 31 Aug 2006
£ £ £
Revenue 1,588,182 879,420 1,882,501
Cost of sales (30,168) (239,434) (341,067)
_____ _____ _____
Gross profit 1,558,014 639,986 1,541,434
Research and development expenses (3,840,704) (3,790,941) (6,540,173)
Selling, general and administrative (941,101) (1,076,732) (1,624,779)
expenses
_____ _____ _____
Operating loss (3,223,791) (4,227,687) (6,623,518)
Interest receivable and similar income 109,917 223,087 380,484
Interest payable and similar charges (30) - -
_____ _____ _____
Loss on ordinary activities before (3,113,904) (4,004,600) (6,243,034)
taxation
UK tax credit on loss on ordinary 2 250,221 367,544 604,421
activities
_____ _____ _____
Loss for the period (2,863,683) (3,637,056) (5,638,613)
_____ _____ _____
Basic and diluted loss per share (pence) 3 (5.6) (7.1) (11.0)
All revenues and expenses shown above were generated from continuing operations.
Unaudited consolidated statement of changes in shareholders' equity
For the six months ended 28 February 2007
Share capital Share premium Other Profit and loss Total
reserves account
(deficit) (deficit)
£ £ £ £ £
Balance at 1 September 2005 511,809 47,156,708 (204,211) (35,650,581) 11,813,725
Loss for the six month period - - - (3,637,056) (3,637,056)
Equity share options charge - - - 228,018 228,018
_____ _____ _____ _____ _____
Balance at 28 February 2006 511,809 47,156,708 (204,211) (39,059,619) 8,404,687
_____ _____ _____ _____ _____
Loss for the six month period - - - (2,001,557) (2,001,557)
Equity share options charge - - - 74,474 74,474
_____ _____ _____ _____ _____
Balance at 31 August 2006 511,809 47,156,708 (204,211) (40,986,702) 6,477,604
_____ _____ _____ _____ _____
Loss for the six month period - - - (2,863,683) (2,863,683)
Share issue costs recovered - 39,564 - - 39,564
Equity share options charge - - - 287,194 287,194
_____ _____ _____ _____ _____
Balance at 28 February 2007 511,809 47,196,272 (204,211) (43,563,191) 3,940,679
_____ _____ _____ _____ _____
Unaudited consolidated balance sheet
As at 28 February 2007
Notes Unaudited Unaudited Audited
At At At
28 Feb 2007 28 Feb 2006 31 Aug 2006
£ £ £
Non-current assets
Property, plant & equipment 205,347 242,474 201,521
_____ _____ _____
Non-current assets 205,347 242,474 201,521
_____ _____ _____
Current assets
Inventories 4 861,889 722,258 842,899
Trade and other receivables 5 377,504 646,827 568,882
Current tax receivable 854,642 891,885 604,421
Cash and cash equivalents 3,374,478 8,070,426 5,997,428
_____ _____ _____
Current assets 5,468,513 10,331,396 8,013,630
_____ _____ _____
Current liabilities
Trade and other payables 6 (1,733,181) (2,169,183) (1,737,547)
_____ _____ _____
Net current assets 3,735,332 8,162,213 6,276,083
_____ _____ _____
Net assets 3,940,679 8,404,687 6,477,604
_____ _____ _____
Equity
Share capital 511,809 511,809 511,809
Share premium 47,196,272 47,156,708 47,156,708
Other reserves (deficit) (204,211) (204,211) (204,211)
Profit and loss account (deficit) (43,563,191) (39,059,619) (40,986,702)
_____ _____ _____
Shareholders' funds 3,940,679 8,404,687 6,477,604
_____ _____ _____
Unaudited consolidated cash flow statement
For the six months ended 28 February 2007
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
28 Feb 2007 28 Feb 2006 31 Aug 2006
£ £ £
Cash flow from operating activities
Operating loss (3,223,791) (4,227,687) (6,623,518)
Depreciation 43,377 54,327 108,259
(Gain)/loss on disposal of property, plant and (4,725) 1,304 10,068
equipment
Equity share options charge 287,194 228,018 302,492
_____ _____ _____
(2,897,945) (3,944,038) (6,202,699)
Changes in working capital
Decrease in trade and other receivables 191,378 18,262 96,207
Decrease in trade and other payables (4,366) (89,085) (520,725)
(Increase)/decrease in inventories (18,990) 224,963 104,325
_____ _____ _____
Cash used in operations (2,729,923) (3,789,898) (6,522,892)
Taxation received - 150,000 674,341
Interest paid (30) - -
_____ _____ _____
Net cash used in operating activities (2,729,953) (3,639,898) (5,848,551)
Cash flows from investing activities
Purchase of property, plant & equipment (79,339) (178,854) (234,596)
Sale of property, plant & equipment 36,861 26,750 60,750
Interest received 109,917 223,087 380,484
_____ _____ _____
Net cash generated from investing activities 67,439 70,983 206,638
Cash flows from financing activities
Share issue costs recovered 39,564 - -
Capital element of finance leases - (1,398) (1,398)
_____ _____ _____
Net cash generated from/(used in) financing activities 39,564 (1,398) (1,398)
_____ _____ _____
Movements in cash and cash equivalents in the period (2,622,950) (3,570,313) (5,643,311)
Cash and cash equivalents at the beginning of the 5,997,428 11,640,739 11,640,739
period
_____ _____ _____
Cash and cash equivalents at the end of the period 3,374,478 8,070,426 5,997,428
_____ _____ _____
Notes to the unaudited financial statements
For the six months ended 28 February 2007
1 Accounting policies and basis of preparation
This financial information comprises the consolidated interim balance sheets as
at 28 February 2007 and 28 February 2006 and the year end balance sheet at 31
August 2006 together with the related consolidated interim statements of income,
cash flows and changes in shareholders' equity for the 6 and 12 month periods
then ended of Phytopharm plc.
In preparing this financial information in accordance with the Listing Rules of
the Financial Services Authority, management has used the principal accounting
policies as set out in the Group's annual financial statements for the year
ended 31 August 2006.
The Group has chosen not to adopt IAS34, 'Interim financial statements', in
preparing its 2007 interim statements and therefore, this interim financial
information is not in compliance with IFRS.
The interim financial information has not been audited and does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985
but has been reviewed by the auditors in accordance with Bulletin 1999/4 issued
by the Auditing Practices Board. The Company's statutory accounts for the year
ended 31 August 2006 have been delivered to the Registrar of Companies; the
report of the auditors on these accounts was unqualified and did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985.
2 Tax on loss on ordinary activities
There is no corporation tax charge because of the incidence of tax losses. The
Company has taken advantage of the Research and Development corporation tax
credits introduced in the Finance Act 2000 whereby a company may surrender
corporation tax losses incurred on research and development expenditure for a
corporation tax refund at the rate of 24 pence on the pound of actual
expenditure.
3 Loss per ordinary share
Basic loss per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential ordinary
shares. Since the Group is loss making there is no such dilutive impact.
Six months ended Six months ended Year ended
28 Feb 2007 28 Feb 2006 31 Aug 2006
Attributable loss (£) (2,863,683) (3,637,056) (5,638,613)
Weighted average number of shares in issue 51,180,893 51,180,893 51,180,893
_____ _____ _____
Basic and diluted loss per ordinary share (pence) (5.6) (7.1) (11.0)
_____ _____ _____
4 Inventories
Six months ended Six months ended Year ended
28 Feb 2007 28 Feb 2006 31 Aug 2006
£ £ £
Raw materials and consumables 483,558 303,335 482,056
Work in progress 256,837 418,923 360,843
Finished goods and goods for resale 121,494 - -
_____ _____ _____
861,889 722,258 842,899
_____ _____ _____
5 Trade and other receivables
Six months ended Six months ended Year ended
28 Feb 2007 29 Feb 2006 31 Aug 2006
£ £ £
Trade receivables 5,929 264,795 324,396
Other receivables 161,438 85,495 34,740
Prepayments and accrued income 210,137 296,537 209,746
_____ _____ _____
377,504 646,827 568,882
_____ _____ _____
6 Trade and other payables
Six months ended Six months ended Year ended
28 Feb 2007 28 Feb 2006 31 Aug 2006
£ £ £
Trade payables 790,720 342,487 522,222
Other payables - 102,333 73
Other taxation and social security 61,140 50,889 61,598
Accruals and deferred income 881,321 1,673,474 1,153,654
_____ _____ _____
1,733,181 2,169,183 1,737,547
_____ _____ _____
7 Related party transactions
On 9 January 2007 Dr Richard Dixey stepped down as Chief Executive Officer and
Board Director and his employment with the Company terminated on 31 January
2007. By way of compensation for loss of office and the early termination of
employment the Company made a contractual payment of £32,109 and a payment of
£5,000 in respect of post termination restrictions (in each case before the
deduction by the Company of PAYE and National Insurance Contributions, which are
the responsibility of Dr Dixey) together with a final pension contribution of
£180,000.
8 Performance share award
On 9 January 2007 the Remuneration Committee made a performance share award of
350,000 ordinary shares to Dr D Rees, and 250,000 ordinary shares to Mr P Morgan
at an exercise price of 45 pence per share. The Remuneration Committee
considered that there was a considerable risk of Dr Rees leaving the Company as
his existing share option awards were at option prices significantly in excess
of the current share price and this performance share award was granted, as
permitted by Listing Rule 9.4.2 (2) to retain the services of Dr Rees. The
Remuneration Committee considered that the award to Mr Morgan was necessary, as
permitted by Listing Rule 9.4.2 (2), to secure the services of Mr Morgan. The
awards are subject to performance conditions and the benefits are not
pensionable. The market - based performance condition is based on Total
Shareholder Return (TSR) over a three year period (with no retesting
opportunities) when compared to the FTSE Small Cap Index. 100% of the shares
awarded will vest for performance above the comparator group. None of the shares
awarded will vest for performance below the comparator group. TSR is considered
by the Remuneration Committee to be the most robust method of measuring company
performance over the period. The terms of the award will not be amended to the
benefit of Dr Rees or Mr Morgan without seeking shareholder approval.
9 Post balance sheet events
Phytopharm announced on 1 March 2007 that it had raised approximately £1.7
million before expenses (£1.6 million after expenses) by way of a placing of
4,425,416 new Ordinary Shares of 1 pence each in the Company, representing 8.65
per cent. of the Company's issued share capital prior to the placing. The
proceeds will be used to strengthen the Company's balance sheet and continue the
development of its products. The shares were admitted to trading on 7 March
2007. The new ordinary shares rank pari passu in all respects with the Company's
existing ordinary shares. Following the placing the Company has 55,606,309
Ordinary Shares in issue.
Phytopharm announced the launch by its partner, Schering-Plough Animal Health ('
Schering-Plough'), of Phytopica(R) in Italy on 26 March 2007, and in France on
16 April 2007. Following these launches, Schering-Plough will seek to market and
distribute Phytopica(R) in further countries.
This information is provided by RNS
The company news service from the London Stock Exchange
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