Interim Results
Phytopharm PLC
11 May 2005
Phytopharm plc
Interim results for the period to 28 February 2005
Phytopharm plc today announces interim results for the six-month period ended 28
February 2005.
Key Points - Operational
• Completion of a Licence and Joint Development Agreement with Unilever
for Hoodia gordonii extract
• Successful interim data review for Phase II proof of principle study
in Alzheimer's disease (Cogane(TM))
• Receipt of £4 million milestone confirmed in February 2005 (£3.6
million net received in March 2005) from Yamanouchi Pharmaceutical
Co., Ltd following evaluation of interim Phase II Alzheimer's disease
data (Cogane(TM)), confirming that the data had met the criteria in
the licensing agreement
• Termination of licensing agreement with Yamanouchi Pharmaceutical
Co., Ltd (Cogane(TM)) in March 2005, following Yamanouchi's
post-merger portfolio review
Key Points - Financial
• Revenues of £6.3 million (H1 2004: £1.1 million) and milestone
receipts enable Phytopharm to record a profit for the period of
£734,999 (H1 2004: loss of £1.9 million)
• Placing of new shares announced in April raised £9.0 million after
expenses
Dr Richard Dixey, Chief Executive of Phytopharm, said:
'The highlight of the first half was the signing of a worldwide licence
agreement with Unilever, the global leader in weight management products, for
our Hoodia gordonii extract. We will be seeking further licensing deals over the
next year, starting with our veterinary portfolio and then with our Alzheimer's
product Cogane(TM), following completion of phase II trials at the end of this
year.'
Enquiries:
Phytopharm plc Today: 07867 782000
Dr Richard Dixey, Chief Executive Thereafter: 01480 437697
Mobile: 07867 782000
Dr Wang Chong, Chief Financial Officer Tel: 01480 437697
Mobile: 07876 684223
Financial Dynamics Tel: 0207 831 3113
David Yates / Ben Atwell
A presentation for analysts will be held at Financial Dynamics, Holborn Gate, 26
Southampton Buildings, London WC2A 1PB at 9:30am today.
www.phytopharm.co.uk
Operational Review
Phytopharm is a small pharmaceutical company specialising in the discovery and
development of novel pharmaceutical and functional food products for
neurodegeneration, obesity and metabolic disease, dermatology and inflammation.
The Company's strategy is to develop first-in-class products through Phase II
clinical testing, and then secure pharmaceutical partners for late stage
development, sales and marketing. The progress of our products over the first
half of the year, each at different stages of development, is described on the
following pages.
Neurodegeneration
The neurodegeneration programmes include Alzheimer's disease, Parkinson's
disease and amyotrophic lateral sclerosis, a motor neurone disease.
Our lead product, Cogane(TM) (coded PYM50028) is being developed for Alzheimer's
and Parkinson's disease. In pre-clinical studies, PYM50028 is neuroprotective
and reverses both the decrease of neuronal growth factors and the neuronal
degeneration observed in the ageing brain. Importantly, this product has also
been shown to restore levels of proteins that are altered in the ageing brain,
returning them to levels observed in the young, causing beneficial outgrowth and
branching of neurites.
In January 2005, we announced the successful outcome of a scheduled interim data
review for the ongoing Phase II 'proof of principle' clinical study in
Alzheimer's disease of PYM50028. This study is being conducted under a clinical
trial authorisation (CTA) from the UK Medicines and Healthcare Products
Regulatory Agency (MHRA). The Phase II study utilises a randomised,
double-blind, placebo-controlled design to evaluate the safety, efficacy and
pharmacokinetic profile of PYM50028 after once daily oral administration over
three months. The effects of PYM50028 on memory, concentration and executive
function will be evaluated during the study. In accordance with the protocol,
an interim review was conducted after the first 60 subjects completed the study.
The objectives of this review were to evaluate the emergent safety profile of
the study and to re-estimate the total number of subjects required to measure
the efficacy of PYM50028 on cognitive performance.
The safety review was conducted by an independent consultant physician, who was
provided with blinded data for each of the two treatment groups. He concluded
that 'the data obtained to date indicate that the study medication is not
associated with any safety concerns.' Therefore, the study will continue with no
changes to the safety monitoring.
The sample size re-assessment was conducted by an independent statistician, who
reported that the sample size for the study should be increased from 200 to 238
subjects. Phytopharm subsequently received regulatory and ethics approval for
this amendment.
A total of 237 subjects have now been recruited into this study, and subject
recruitment is expected to be completed within two weeks. We therefore
anticipate the completion of the phase II trial for Cogane(TM) at the end of
2005 and, following analysis of the results, will be seeking further licensing
partners for this product.
In February 2005, we received confirmation of a milestone payment of £4 million
(£3.6 million net received in March 2005) from Yamanouchi Pharmaceutical Co. Ltd
('Yamanouchi') following receipt by Yamanouchi of the safety data in relation to
the first 60 patients treated with PYM50028 in the ongoing phase II proof of
principle study in patients with Alzheimer's disease. The study confirmed that
the data met the criteria set out in the licensing agreement.
In March 2005, Phytopharm also received confirmation from Yamanouchi that as a
result of a portfolio review arising out of the merger of Yamanouchi with
Fujisawa Pharmaceutical Co, Yamanouchi was terminating the licensing agreement,
covering Japan and some other Asian countries, in connection with PYM50028.
Phytopharm had previously announced in February 2005 that it had been informed
by Yamanouchi that it was likely to terminate this agreement.
Our second lead product Myogane(TM) (coded PYM50018) is being developed for
amyotrophic lateral sclerosis (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. In pre-clinical models, PYM50018
protects against neuronal damage, increases neurite outgrowth, reverses
oxidative damage and reverses neuronal apoptosis in vitro. When administered
orally to a transgenic pre-clinical model of ALS, PYM50018 delays the loss of
muscle strength and extends survival time.
Last year, we successfully completed a Phase Ia clinical study to evaluate the
safety, tolerability and pharmacokinetic profile of PYM50018. This residential
clinical study was conducted under an investigational new drug (IND) application
filed with the United States Food and Drug Administration (FDA) and confirmed
that the product was well absorbed with a good safety profile. We also announced
last year that the FDA had granted Orphan Drug and Fast Track designation to
PYM50018 for the treatment of ALS. Building on this success we are now
progressing the development package to support further clinical studies with
PYM50018 for ALS.
Obesity and metabolic disease
Our obesity programme includes an extract of Hoodia gordonii for the dietary
control of obesity, which contains a novel appetite suppressant that reduces
caloric intake in overweight subjects, as demonstrated in our double-blind,
placebo-controlled clinical study announced in December 2001.
In December 2004, we announced that we had granted an exclusive global licence
for our Hoodia gordonii extract to Unilever plc. As part of the agreement,
Unilever committed to initial payments totalling approximately £6.5 million
($12.5 million) out of a potential total of £21 million ($40 million) in
payments to us. In addition, we will receive a royalty on sales of all
products, including globally recognised brands, containing the extract. We are
collaborating with Unilever on a five stage research and development programme
of safety and efficacy studies with a view to bringing new products to market.
Unilever will manage the agronomy programme and will support the international
patent programme for the products. Phytopharm has also developed screens that
are predictive of appetite suppressant activity to evaluate pharmaceutical
development candidates in our obesity and metabolic disease programme.
Dermatology
The dermatology programmes include products for canine skin disorders and human
eczema. These products have a dual mode of action that targets both the allergic
and inflammatory components of skin disorders.
Following the success last year of the three-plant product, coded PYM00217 in
our European multi-centre study in canine atopic dermatitis, we launched
PYM00217 with the brand name Phytopica(TM). Following the successful UK launch
to registered veterinary practitioners, Phytopharm is now seeking global
partners to market Phytopica(TM) in other territories.
Inflammation
Finally, the inflammation programmes include products for canine joint disorders
and human inflammatory disorders, including asthma. These products are
characterised by their inhibition of a wide range of enzymes central to chronic
inflammation.
Last year, we announced the launch of Zanthofen(TM) (coded PYM50014) for the
maintenance of canine joint mobility. Pre-clinical studies have demonstrated
that the components of Zanthofen(TM) maintain normal white cell function and have
anti-oxidant properties that help maintain joint mobility. Zanthofen(TM) is
available to veterinary practitioners across the UK and is marketed by
Phytopharm's marketing partner, Genitrix Ltd, a UK based veterinary product
company.
Steady progress has been made in developing novel synthetic molecules intended
to result in a pharmaceutical prescription medicine for the treatment of asthma
and other inflammatory disorders. Pre-clinical studies have demonstrated
anti-inflammatory and anti-spasmodic activity in several models of asthma and
inflammation. We anticipate that further proof of concept studies will be
investigated during the year using these compounds in pre-clinical models of
asthma.
Financial Review
Summary
The financial performance for the first six months to 28 February 2005 has been
influenced by two main events: the income from Unilever for Hoodia gordonii
extract after the agreement was signed in December 2004 and the third milestone
payment due from Yamanouchi for PYM50028 in February 2005. The Company's
investment in research and development continues to grow in line principally
with the continuing progress of our programmes for Alzheimer's disease,
amyotrophic lateral sclerosis and the dietary control of obesity.
Turnover
Revenues of £6.34 million for the first six months (H1 2004: £1.05 million, H2
2004: £0.02 million) comprised principally £2.27 million in payments received
from Unilever, for the exclusive licence to develop, manufacture and market
Hoodia gordonii extract for the dietary control of obesity on a global basis,
and a £4 million (£3.6 million net of Japanese withholding tax) milestone
payment from Yamanouchi, following acknowledgement by Yamanouchi that the safety
data in relation to 60 patients treated with PYM50028 had fulfilled the criteria
in the licensing agreement. The significant increase in revenues for the period
reflects the intermittent timing of milestone payments.
Expenses
Research and development remained our most significant investment, totalling
£4.11 million or 78% of total operating costs, an increase of 58% (H1 2004:
£2.60 million, H2 2004: £3.75 million). This is largely due to the successful
progress of the Alzheimer's disease and amyotrophic lateral sclerosis
programmes, which are in clinical trials, and also the dietary control of
obesity programme, which is now fully funded by Unilever. The research and
development activity required administrative support of £1.15 million (H1 2004:
£0.59 million, H2 2004: £1.12 million), due to the additional one-off costs of
an aborted £23.9 million fund raising, US financial compliance costs and the
share option compensation charge. This period's total operating expenses were
£5.26 million, an increase of 65% (H1 2004: £3.18 million, H2 2004: £4.87
million).
Interest and Tax
Interest income of £0.09 million was higher this period (H1 2004: £0.07 million,
H2 2004: £0.17 million), due to a combination of changing cash balances and
higher interest rates, and represents an average return of 2.04% on the cash
balances throughout the period. There was a net tax charge of £0.07 million
instead of net tax recoverable in previous periods (H1 2004: £0.21 million, H2
2004: £0.33 million), despite a similar research and development corporation tax
credit to the previous period, due to the payment of a 10% Japanese withholding
tax deducted from the Yamanouchi income.
Liquidity and Capital Resources
At 28 February 2005 the Group had cash and liquid resources of £3.67 million,
£1.76 million lower than at the start of the financial year. Cash and liquid
resources were strengthened by a placing and open offer of £9.0 million net,
post the period end.
The fixed asset base remained low at £0.16 million since the start of the six
month period as research and development activities are contracted out so that
the Group does not need to finance its own laboratory facilities. Debtors of
£6.33 million are 297% higher than at the start of the period, comprising
principally the Yamanouchi milestone payment and to a lesser extent, research
and development tax credits. Creditors of £4.27 million are 89% higher than at
the start of the period, comprising mainly trade creditors and accruals.
Working capital at 28 February 2005 was £6.07 million, an increase of £0.96
million during the period and is a manifestation of the sporadic nature of
milestone payments. The underlying utilisation of working capital in FY2005 is
anticipated to be similar to previous periods.
During the period, Phytopharm reported an operating profit of £0.71 million,
compared with a loss of £2.1 million in H1 2004. At a pre-tax level, profits
were £0.81 million, compared with a loss of £2.1m in H1 2004.
Phytopharm has raised a net total of £43 million since the IPO in 1996
(including the £9.0 million fund raising in April 2005). As at 28 February
2005, a net total of £29 million has been invested by shareholders in developing
Phytopharm and its product opportunities.
Independent review report to Phytopharm plc
Introduction
We have been instructed by the company to review the financial information which
comprises the consolidated profit and loss account, the reconciliation of
movements in Group shareholders' funds, the consolidated balance sheet and the
consolidated cash flow statement and the 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 directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which 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 for use in the United Kingdom. A review
consists principally of making enquiries of company 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 United Kingdom 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. 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 2005.
PricewaterhouseCoopers LLP
Chartered Accountants
Cambridge
10 May 2005
(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 profit and loss account for six months ended 28 February
2005
Notes Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
Turnover 2 6,340,644 1,052,360 1,072,082
Cost of sales (371,054) - (10,136)
__________ __________ __________
Gross profit 5,969,590 1,052,360 1,061,946
__________ __________ __________
Net operating expenses 3 (5,255,859) (3,184,923) (8,057,945)
__________ __________ __________
Operating profit/(loss) 713,731 (2,132,563) (6,995,999)
Interest receivable and similar income 93,356 69,693 239,235
Interest payable and similar charges (296) - (312)
__________ __________ __________
Profit/(loss) on ordinary activities 806,791 (2,062,870) (6,757,076)
before taxation
Tax on profit/(loss) on ordinary 4 (71,792) 205,434 530,946
activities
__________ __________ __________
Profit/(loss) for the period 7 734,999 (1,857,436) (6,226,130)
__________ __________ __________
Basic earnings/(loss) per share (pence) 5 1.7 (4.8) (15.3)
Diluted earnings per share 5 1.7 - -
Unaudited reconciliation of movements in Group shareholders' funds for the six
months ended 28 February 2005
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
Profit/(loss) for the period 734,999 (1,857,436) (6,226,130)
New share capital issued 157,893 6,517,429 6,519,929
Expenses of share capital issued - (163,721) (154,035)
Share option compensation charge 44,250 27,340 55,400
__________ __________ __________
Net increase in shareholders' funds 937,142 4,523,612 195,164
Opening shareholders' funds 5,292,048 5,096,884 5,096,884
__________ __________ __________
Closing shareholders' funds 6,229,190 9,620,496 5,292,048
__________ __________ __________
Unaudited consolidated balance sheet at 28 February 2005
Notes Unaudited Unaudited Audited
At At At
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
Fixed assets
Tangible assets 154,628 171,675 177,817
__________ __________ __________
154,628 171,675 177,817
Current assets
Stocks 347,574 195,820 350,534
Debtors amounts falling due after one year 6 - - 613,929
Debtors amounts falling due within one 6,325,063 1,122,908 977,837
year
Cash held on deposit as short term 3,524,233 2,541,243 5,237,452
investments
Cash at bank and in hand 147,269 6,526,875 193,708
__________ __________ __________
10,344,139 10,386,846 7,373,460
Creditors: amounts falling due within one (4,269,577) (938,025) (2,259,229)
year
__________ __________ __________
Net current assets 6,074,562 9,448,821 5,114,231
__________ __________ __________
Total assets less current liabilities 6,229,190 9,620,496 5,292,048
__________ __________ __________
Net assets 6,229,190 9,620,496 5,292,048
__________ __________ __________
Capital and reserves
Called up share capital 430,997 427,433 427,488
Share premium account 7 38,289,041 38,122,526 38,134,657
Merger reserve 7 (204,211) (204,211) (204,211)
Profit and loss account 7 (32,286,637) (28,725,252) (33,065,886)
__________ __________ __________
Equity shareholders' funds 6,229,190 9,620,496 5,292,048
__________ __________ __________
Unaudited consolidated cash flow statement for the six months ended 28 February
2005
Notes Unaudited Unaudited Audited
six months six months Year
ended ended Ended
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
Net cash outflow from continuing operating (2,604,414) (3,095,843) (6,826,047)
activities
Returns on investment and servicing of
finance
Interest received 93,356 69,693 239,235
Other interest paid (296) - (312)
__________ __________ __________
Net cash inflow from returns on investment 93,060 69,693 238,923
and servicing of finance
Taxation
UK corporation tax credit received - 277,600 855,699
Foreign taxation paid - (100,000) (100,000)
__________ __________ __________
Net cash (outflow)/inflow from taxation - 177,600 755,699
Capital expenditure and financial
investment
Purchase of tangible fixed assets (29,126) (59,945) (117,110)
Proceeds on sale of tangible fixed assets 9,000 9,750 14,575
Reimbursement of advances to/(advances to) 6 613,929 - (613,929)
suppliers
__________ __________ __________
Net cash inflow/(outflow) for capital 593,803 (50,195) (716,464)
expenditure and financial investment
__________ __________ __________
Cash outflow before use of liquid (1,917,551) (2,898,745) (6,547,889)
resources
Management of liquid resources
Decrease/(increase) in cash held on short 1,713,219 2,590,309 (105,900)
term deposit
__________ __________ __________
Financing
Proceeds from exercise of share options 157,893 33,367 36,625
Proceeds from issue of share capital - 6,484,062 6,483,304
Expenses of share capital issue - (163,721) (154,035)
__________ __________ __________
Net cash inflow from financing 157,893 6,353,708 6,365,894
__________ __________ __________
(Decrease)/increase in cash (46,439) 6,045,272 (287,895)
__________ __________ __________
Reconciliation of operating loss to net cash outflow from operating activities
Unaudited Unaudited Audited
six months Six months Year
ended ended ended
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
Continuing activities
Operating profit/(loss) 713,731 (2,132,563) (6,995,999)
Depreciation on tangible fixed assets 44,752 45,168 93,114
Gain on disposal of fixed assets (1,437) (4,723) (6,471)
Decrease/(increase) in stocks 2,960 (153,069) (307,783)
(Increase)/decrease in debtors (5,019,018) (525) (108,041)
Increase/(decrease) in creditors 1,610,348 (877,471) 443,733
Share option compensation charge 44,250 27,340 55,400
__________ __________ __________
Net cash outflow from continuing operating (2,604,414) (3,095,843) (6,826,047)
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 2004 annual report and are unaudited. The
information set out in this interim report for the six months to 28 February
2005 does not comprise statutory accounts within the meaning of the Companies
Act 1985.
The figures for the year ended 31 August 2004 are abridged from the Group's
statutory accounts for that year, which received an unqualified auditors' report
and have been filed with the Registrar of Companies.
2. Turnover
Six months Six months Year
ended ended ended
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
By business activity
Licensing and development 6,266,426 1,052,360 1,052,360
Product sales 74,218 - 19,722
__________ __________ __________
6,340,644 1,052,360 1,072,082
__________ __________ __________
3. Net Operating Expenses
Net operating expenses comprise:
Six months Six months Year
ended ended ended
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
Research and development expenditure 4,109,707 2,597,986 6,347,431
Administrative expenditure 1,146,152 586,937 1,710,514
__________ __________ __________
5,255,859 3,184,923 8,057,945
__________ __________ __________
4. Tax on Loss on Ordinary Activities
Six month Six months Year
ended ended ended
28 Feb 2005 29 Feb 2004 31 Aug 2004
£ £ £
Current tax
UK corporation tax credit on loss for period 328,208 305,434 630,946
Foreign tax (400,000) (100,000) (100,000)
__________ __________ __________
Corporation tax (charge)/credit (71,792) 205,434 530,946
__________ __________ __________
Foreign tax related to 10% Japanese withholding tax.
The Group is forecasting tax losses for the full year The Group has taken
advantage of the Research and Development corporation tax credits introduced in
the Finance Act 2000 whereby the Group may surrender corporation tax losses
incurred on research and development expenditure for a corporation tax refund at
the rate of 24 pence in the pound of actual spend.
5. Earnings Per Share
The basic earnings per share is based on profits of £734,999 and 42,919,416
ordinary shares, being the weighted average number of shares in issue during the
period.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is diluted to assume conversion of all dilutive potential ordinary
shares. The Group has two classes of dilutive potential ordinary shares: these
share options granted to employees where the exercise price is less than the
average market price of the company's ordinary shares during the period and the
contingently issuable shares under the group's long term incentive plan. At 28
February 2005, the performance criteria for the vesting of the awards under the
incentive scheme had not been met and consequently the shares in question are
excluded form the diluted EPS calculation.
Reconciliations of the earnings and weighted average number of shares used in
the calculations for the period to 28 February 2005 are set out below. There is
no calculation for the comparative period as the group incurred a loss.
Earnings Weighted Per-share
£ Average Amount
Number of (pence)
shares
Basic EPS
Earnings attributable to ordinary shareholders 734,999 42,919,416 1.7
Effect of dilutive share options - 769,570 -
Diluted EPS
__________ __________ __________
Adjusted earnings 734,999 43,688,986 1.7
__________ __________ __________
6. Debtors
The Company was obliged to pay to the Inland Revenue £157,731.41 arising on the
exercise by Dr Dixey of 288,889 share options on 3 December 2004, near the end
of the exercise period. Dr Dixey is accordingly obliged to reimburse such
amount to the Company including interest charges at a commercial rate. He
intends to sell a sufficient number of his shares in the Company, as soon as he
is reasonably and legally able, to raise sufficient funds net of tax and costs
to enable him to reimburse the Company. This amount is included in debtors due
within one year.
The Company has been reimbursed by Unilever N.V. as part of the Joint
Development Agreement, for the advances made to suppliers shown as debtors due
after one year at 31 August 2004.
7. Share Premium Account and Reserves
Share Merger Profit and
Premium Reserve Loss Account
Account
£ £ £
At 1 September 2004 38,134,657 (204,211) (33,065,886)
Premium on new share issue 154,384 - -
Share option compensation charge - - 44,250
Loss for the period - - 734,999
__________ __________ __________
At 28 February 2005 38,289,041 (204,211) (32,286,637)
__________ __________ __________
8. Performance Share Award
On 3 December 2004 the Remuneration Committee made a performance share award of
150,000 ordinary shares at par to Dr G W Chong. The Remuneration Committee
considered that there was a considerable risk of Dr Chong 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 Chapter 13.13A of the Listing Rules to retain the services if Dr
Chong. The award is subject to performance conditions and the benefits are not
pensionable. The performance conditions are based on Total Shareholder Return
(TSR) over a three year period (with no retesting opportunities) when compared
to a peer group comprising 21 other listed UK biotech and pharmaceutical
companies for 100,000 shares and compared to the FTSE SmallCap index for the
remaining 50,000 shares. In each case 25% of the shares awarded will vest for
median performance against the comparator group rising to 100% for upper decile
and above performance. None of the shares awarded will vest for below median
performance. 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 Chong without seeking shareholder
approval.
9. Post Balance Sheet Events
Phytopharm announced on 29 March 2005 that it had received confirmation from
Yamanouchi Pharmaceutical Co. Ltd ('Yamanouchi) that as a result of a portfolio
review arising out of the merger of Yamanouchi with Fujisawa Pharmaceutical Co,
Yamanouchi is to terminate the licensing agreement covering Japan and some other
Asian countries in connection with Cogane(TM) (PYM50028), Phytopharm's candidate
product for the treatment of Alzheimer's disease.
Phytopharm announced on 4 May 2005 the completion of a Placing and Open Offer
raising approximately £10.1 million (£9.0 million net of expenses) comprising an
aggregate of 8,091,193 New Ordinary Shares at the Issue Price of 125 pence per
New Ordinary Share.
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