Final Results
Ardana PLC
28 June 2007
PRELIMINARY ANNOUNCEMENT FOR THE
YEAR ENDED 31 MARCH 2007
Ardana plc (LSE: ARA), the emerging pharmaceutical company focused on the
discovery, development and marketing of innovative products to improve human
reproductive health, today announces its Preliminary Results for the year ended
31 March 2007.
Highlights
Commercial
- Emselex(R) (darifenacin hydrobromide)
o Agreement reached with Novartis for promotion by ardana in the UK
o Product launched
- Invicorp(TM)
o Launched in Denmark
- Striant(TM) SR
o Launched in the Netherlands
- Teverelix Long Acting (LA)
o Discussions with potential development partners ongoing; intend to
complete before start of Phase III studies
Pipeline development
- Teverelix LA
o US patent granted
o Positive preliminary Phase II results in the indication of benign
prostatic hyperplasia (BPH)
o Positive preliminary Phase I results in the indication of
endometriosis
o Further Phase I results of Teverelix LA to support the indication of
prostate cancer
- Testosterone Cream - testosterone replacement in male hypogonadism
o Positive preliminary Phase II results
o Commencement of Phase III study
Financial
- Loss before tax for the year ended 31 March 2007 of £12.2 million
(2006: £8.8 million)
- Research and development costs expensed of £8.9 million (2006: £6.4
million)
- Placing and Open Offer in October 2006 raised an additional £9.9
million after expenses
- Cash and cash equivalents at 31 March 2007 of £16.6 million (2006:
£19.1 million)
People
- Huw Jones appointed as Non-executive Director
Recent events
- ARD-07, oral Growth Hormone Secretagogue (GHS)
o Orphan Drug status granted by US Food and Drug Administration
(FDA)
o Site initiation for pivotal registration study for diagnosis of
growth hormone deficiency
- Positive opinion received from the Scottish Medicines Consortium (SMC)
for Emselex(R)
- Chris Moyses replaces Ian Kent as Non-executive Director
Dr Maureen Lindsay, CEO, commented 'During the financial year we have made
significant progress towards our objective of building a successful
pharmaceutical business in the field of reproductive health. This progress
includes the expansion of our product portfolio to include Novartis' Emselex(R),
reporting good clinical results with Teverelix in all three indications and
Testosterone Cream, and obtaining Orphan Drug Status for our oral GHS
diagnostic. We are particularly pleased that Testosterone Cream has recently
commenced Phase III registration studies and sites have been initiated in a
pivotal registration study for GHS. This is the first Phase III study Ardana
has undertaken and represents a significant milestone for the company. We are
excited by the prospects for these and our other product candidates, and look
forward to reporting on further results during the current financial year.'
Enquiries
For more information contact:
Maureen Lindsay/Graham Lee + 44 (0) 131 226 8550
Ardana
Julia Phillips/John Gilbert +44 (0) 20 7831 3113
Financial Dynamics
Ardana plc is a pharmaceutical company focused on the discovery, development and
marketing of innovative products to improve human reproductive health, a US$25.5
billion market*.
Since its foundation, Ardana has built a broad and balanced portfolio to manage
risk and actively pursues product and technology in-licensing and outlicensing
to maintain a robust pipeline.
Ardana's lead products are summarised below:
• Emselex(R), a once a day treatment for the symptoms of overactive bladder
syndrome, which Ardana has exclusive UK marketing and promotion rights and
is being distributed in collaboration with Novartis Pharmaceuticals UK
Limited;
• Striant(TM) SR, a testosterone replacement therapy for men with confirmed
hypogonadism, that has been launched by Ardana through its own sales force
in the UK and through marketing partners in certain European countries;
• Invicorp(TM), an injectable combination drug treatment for erectile
dysfunction, for which Ardana has marketing and manufacturing rights in
Europe, which has been launched in Denmark and is awaiting commencement of
EU Mutual Recognition Procedure (MRP);
• Testosterone Cream, a trans-dermal testosterone delivery system in
development for the treatment of male hypogonadism, in Phase III trials;
• GHS, a growth hormone secretagogue in late stage development for the
diagnosis of growth hormone deficiency; and
• Teverelix LA, in development for three initial indications (prostate
cancer, benign prostatic hyperplasia and endometriosis).
In addition, Ardana has a strong portfolio of follow-on products in development.
Ardana is listed on the Official List of the London Stock Exchange.
For further information please see www.ardana.co.uk
*Source: Company estimates, based on independent market data
Statements contained within this press release may contain forward-looking
comments which involve risks and uncertainties that may cause actual results to
vary from those contained in the forward-looking statements. In some cases, you
can identify such forward-looking statements by terminology such as 'may', '
will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', '
estimates', 'predicts', 'potential', or 'continue'. Predictions and
forward-looking references in this press release are subject to the satisfactory
progress of research which is, by nature, unpredictable. Forward projections
reflect management's best estimates based on information available at the time
of issue.
Chairman's Statement
Since Ardana's foundation in 2000, we have pursued a four-part strategy to
create value from the business by:
• Maintaining a broad and balanced portfolio to manage risk, focusing on
the therapeutic area of human reproductive health;
• Actively pursuing an in-licensing and acquisition programme for
products and technologies to maintain a robust pipeline, including near-term
commercial products and potential high value development candidates;
• Retaining value in our portfolio by building a sales and marketing
capability in leading European markets, through both our own infrastructure and
partnerships; and
• Maintaining a lean organisation by selective outsourcing in order to
achieve flexibility.
We continued our rapid progress during the financial year. In October 2006 we
completed a Placing and Open Offer, which raised £9.9 million after expenses.
The net proceeds will be used to launch and promote Emselex(R) and to invest in
the clinical development of ARD-07, Ardana's oral Growth Hormone Secretagogue
(GHS), in its first indication for the diagnosis of growth hormone deficiency
and in the first therapeutic indication.
We continue to expand and develop our Board to meet the challenges facing the
business as it grows. We are pleased to welcome two new Non-executive Directors
to Ardana. Huw Jones, who joined the Board in June 2006, brings pharmaceutical
sales and commercial expertise to the business. Huw was formerly president of
CV Therapeutics Europe Ltd, senior vice-president Northern Europe of Elan
Pharmaceuticals and UK marketing director for SmithKline Beecham
Pharmaceuticals. Huw joined each of the Board committees.
Dr Chris Moyses was appointed to the Board on 27 June 2007. Chris is a Member
of the Royal College of Physicians of London, and is currently Chief Medical
Officer of Argenta Discovery Ltd. He brings substantial clinical and technical
experience to Ardana. Chris joins each of the Board committees.
On behalf of the Company and my fellow Directors I would like to thank Ian Kent,
a founder Director who after almost seven years on the Board has announced his
retirement with effect from 27 June 2007. Ian has given invaluable advice and
support to the Company in its formative years which has been appreciated by all
who have worked with him. We wish him every success with his other ventures.
Huw Jones will replace Ian Kent as Chair of the Remuneration Committee.
These key appointments will bring significant benefits to Ardana, in particular
as we progress our development pipeline and build further on our sales and
marketing capabilities in the UK and Europe.
I believe Ardana is well-positioned to meet the challenges that it faces. I
thank the Board for their hard work this year and we look forward to continuing
to deliver on our key strategic aims and generating value for our shareholders.
Chief Executive's Statement
During the financial year we have made significant progress across all aspects
of Ardana's business. In September 2006 we reached agreement with Novartis
Pharmaceuticals UK Ltd ('Novartis') for Ardana to be granted sole and exclusive
rights to launch and promote Emselex(R) for the symptomatic treatment of
overactive bladder ('OAB') in the UK for a 10 year term. Emselex(R) was
subsequently launched by Ardana in November 2006.
Our compounds in clinical development are advancing to plan. We are
particularly pleased that our Testosterone Cream has recently commenced a Phase
III registration study; this is the first Phase III study Ardana has undertaken
and represents a significant milestone for the Company. Also sites have been
initiated in the pivotal registration study for oral GHS. We are excited by the
prospects for both these product candidates, and look forward to reporting on
the preliminary results during the current financial year.
Our lead compound, Teverelix LA, progresses well, and we have announced positive
preliminary results from studies across all three indications; prostate cancer,
benign prostatic hyperplasia (BPH) and endometriosis, during the last twelve
months.
Ardana's strategy is to manage risk by continuing to maintain a broad and
balanced pipeline of products and product candidates through relationships with
leading research institutions and the acquisition of products and intellectual
property rights. We have already established a targeted sales force in the UK
and it is our intention to establish a sales and marketing infrastructure in the
five largest European markets to support the future launch of additional
products, as and when commercially appropriate. This infrastructure will be in
place to support the planned launch of Teverelix LA in Europe. Having our own
sales and marketing capability will allow us to keep more value in the Group for
the benefit of our shareholders. In the interim, commercialisation will be by a
combination of our own sales teams and strategic partnerships.
Currently, Ardana's key customers are endocrinologists and urologists and, as
the portfolio expands, the customer profile will include other reproductive
health specialists such as obstetricians and gynaecologists. These are small,
well defined groups of clinicians easily addressed by a small team of sales
representatives.
Emselex(R)
Ardana has reached agreement with Novartis to be granted the sole and exclusive
rights to launch and promote Emselex(R) (darifenacin hydrobromide) in the UK.
Emselex(R) is an oral once-daily muscarinic M3 selective receptor antagonist (M3
SRA) for the treatment of OAB. Symptoms of OAB include urinary urgency (a
sudden and compelling desire to pass urine, which is difficult to defer) with,
or without, urge urinary incontinence (involuntary leakage accompanied or
immediately preceded by urgency), usually with urinary frequency (voiding the
bladder too often), and nocturia (waking at night one or more times to void the
bladder).
Emselex(R) works by selectively inhibiting the M3 receptor, the primary mediator
of detrusor contraction, whilst relatively sparing the M1 and M2 receptors that
are located in various body organs, including the brain and heart. Emselex(R)
has been shown to effectively reduce the number of weekly incontinence episodes
by up to 77 per cent. versus baseline. Pooled data from Phase III studies
showed that the incidence of cardiovascular adverse events for Emselex(R) was
low. Furthermore, a study in elderly healthy volunteers indicated that Emselex
(R) did not significantly impair memory function.
In clinical trials involving more than 10,000 subjects and patients, Emselex(R)
has been shown to improve significantly all other key symptoms of OAB across a
range of pivotal endpoints. These include the number of times patients had to
visit the bathroom each day, frequency of urgency, severity of urgency and the
number of incontinence episodes leading to a change in clothing or pads.
Consistent with the pharmacological profile of Emselex(R), the most commonly
reported adverse events were dry mouth and constipation, but discontinuation
from treatment due to these adverse reactions was infrequent.
In 2001 the OAB market was estimated to be worth £45.5 million per annum. The
OAB market in the UK is currently estimated at £91.7 million and is estimated to
be growing at 11 per cent. per annum (source: IMS Health MAT 4/07).
Emselex(R), 7.5mg and 15mg, was granted Marketing Authorisation for the
treatment of OAB in all 25 EU member states as well as Norway and Iceland in
October 2004. Novartis is able to market Emselex(R) throughout these countries.
Novartis has entered into commercial arrangements for Emselex(R) for
territories other than the UK. For instance, Emselex(R) in Germany was launched
in collaboration with Bayer Vital GmbH in December 2004, and in the US, where
Emselex(R) is known as Enablex(R), in collaboration with Procter & Gamble
Pharmaceuticals, Inc in July 2005.
Emselex(R) is a product which fits with Ardana's therapeutic focus of human
reproductive health. One of the potential groups of customers for Emselex(R) is
urologists, which will also be the core customer group for Ardana's erectile
dysfunction product, Invicorp. This additional marketed product in the UK
leverages the current sales force, and presents an opportunity for Ardana to
grow its sales and marketing infrastructure in time for the anticipated UK
launch of Testosterone Cream and GHS as a diagnostic.
Under the terms of the 10 year agreement Ardana will be responsible for
launching Emselex(R) in the UK and thereafter for all promotional activities in
the UK including sales force promotion and production of marketing and training
materials. Novartis will be responsible for the manufacture and distribution of
Emselex(R).
Ardana launched Emselex(R) in the UK in November 2006. The product has received
a positive opinion from both the National Institute for Health and Clinical
Excellence (NICE) in October 2006 and the Scottish Medicines Consortium in June
2007.
Striant(TM) SR
An effective, unique and innovative controlled-release buccal tablet containing
30 mg of testosterone indicated for testosterone replacement therapy in men with
confirmed hypogonadism, the most common hormone deficiency in men. The
Striant(TM) SR tablet is applied twice daily to the gum above the front incisor
tooth, providing a novel method of delivery compared with existing testosterone
replacement products. Ardana commenced UK commercial sales in June 2004.
Striant(TM) SR is the first-to-market buccal adhesive tablet and marketing to
urologists and endocrinologists in the UK by Ardana's own sales force continues
to progress.
During February 2006 we further extended our partnership network by signing an
agreement granting Twinpharma BV exclusive rights to market Striant(TM) SR in
the Netherlands.
Following a positive opinion under the Mutual Recognition Procedure, Striant(TM)
SR has now launched in Germany, the Republic of Ireland, the Netherlands and the
Nordic region. We will continue to develop our distribution capability around
Europe with the appointment of further strategic partners.
Teverelix LA
A long-acting formulation of a GnRH (gonadotrophin releasing hormone) antagonist
that provides dose-dependent control of the release of sex hormones such as
testosterone in men and oestrogen in women. GnRH is considered to be the master
switch by which the body controls the production of sex hormones. The potential
benefit of Teverelix LA is that its mode of action means that it can be used as
either an 'on/off' or ''dimmer'' switch for hormone release. This is important
in those diseases where the progression of the disease is fuelled by a supply of
the sex hormones. Thus for the malignant diseases Teverelix LA can switch off
and stop the production of either testosterone or oestrogen. In the case of
benign diseases, Teverelix LA can decrease (or 'dim') the levels of the sex
hormones in a dose-dependent manner, reducing sex hormone levels to the low end
of the normal range, which should result in symptomatic benefit while helping to
avoid a chemical castration and its related symptoms. Ardana is developing
Teverelix LA initially to treat three major indications:
• prostate cancer
• benign prostatic hyperplasia (BPH)
• endometriosis.
In trials conducted to date, Teverelix LA has shown to be well tolerated and
demonstrates a dose-dependent reduction of testosterone in men and oestradiol in
women.
During August 2006 we were delighted to announce that we have been granted a US
patent covering the long acting formulation of our GnRH antagonist, Teverelix
(Teverelix LA). The patent is subject to a US patent term extension, which means
that it is not due to expire in the US until April 2023.
Teverelix LA - Prostate Cancer
The progression of prostate cancer is driven by male sex hormones (androgens)
such as testosterone. It is widely accepted that reducing levels of these
hormones in advanced disease can help slow the growth of the cancer and prolong
survival. The production of testosterone can be reduced either surgically, with
the removal of the testes, or through medicines that affect production of
testosterone. Previous studies have confirmed that Teverelix LA can attain and
maintain suppression of testosterone to castration levels in patients with
advanced prostate cancer.
During 2006 we reported positive results from Phase II trials of Teverelix LA in
the indication of prostate cancer. We have continued this development during
the current year and in February 2007 reported the results of a Phase I study,
which provided evidence that, over an 8-week period, there were no significant
differences between normal weight and obese subjects, in terms of both the
pharmacokinetics of Teverelix LA and its effect on testosterone suppression.
This study had been undertaken in response to an issue raised by the US Food and
Drug Administration ('FDA') at a pre-IND (Investigational New Drug) meeting held
in 2005.
Ardana has reached agreement with the FDA on the path forward for the
development of Teverelix LA for the treatment of prostate cancer. The use of
Teverelix LA in the treatment of prostate cancer will be the subject of further
Phase II clinical trials for optimisation of the dose regimen and these are
either ongoing or planned. On completion of the Phase II programme, if the
results are positive, Ardana intends to commence Phase III clinical trials,
subject to the appointment of a partner, targeting an earliest product launch
date in the multi-billion dollar prostate cancer market, towards the end of
2009.
Teverelix LA - Benign Prostatic Hyperplasia (BPH)
BPH is a common benign disease occurring in men over the age of 50, and
increases in prevalence with age. BPH is characterised by an enlargement of the
prostate gland, which results in urinary flow problems such as hesitancy, weak
or interrupted stream, urgency and more frequent urination, especially at night.
The growth of prostatic tissue is driven by male sex hormones (androgens),
primarily testosterone and its more potent metabolite dihydrotestosterone
(DHT). Reducing levels of these hormones can reduce the size and growth of the
prostate.
In December 2006 we announced preliminary results of a Phase II study, in which
Teverelix LA, administered as a single subcutaneous injection, demonstrated
symptomatic improvement from as early as week two and the duration of the effect
appears to be in the order of 8 weeks based upon a preliminary analysis of the
relevant clinical endpoint, the International Prostate Symptom Score (IPSS).
In previous clinical studies, Teverelix LA has been shown to decrease serum
testosterone levels and subsequently DHT in a dose-dependent manner. Therefore,
Teverelix LA can reduce serum testosterone levels to the low end of the normal
range, which should avoid a chemical castration and its related symptoms. In an
earlier Phase II study in patients with BPH, Teverelix LA demonstrated a
statistically significant improvement in symptoms of BPH as measured by the
IPSS.
We are very encouraged by the results of our Phase II studies, which suggest
that Teverelix LA, administered by subcutaneous injection two to six times per
year, could be used not only for the improvement of symptoms but also to delay
the progression of BPH. We believe that this compound has considerable potential
in the BPH market, which is currently worth about US$4.9 billion per annum
(source: Wood Mackenzie). With consensus reached with the FDA on the company's
development plan for the therapy, we anticipate that Teverelix LA in BPH could
reach the market in 2010.
Teverelix LA - Endometriosis
Endometriosis is a hormone responsive condition arising in women in which the
tissue lining the uterus (the endometrium) grows outside the uterus. These
ectopic deposits are usually benign but are associated with pelvic pain, heavy
menstruation and infertility.
Reducing levels of female sex hormones (ie oestrogen) can cause endometrial
growths to shrink. Our first Phase I trial completed last year showed that
Teverelix LA can decrease oestrogen in a dose- dependent manner.
On 7 September 2006 we announced preliminary results of a Phase I study of
Teverelix LA in healthy female subjects. Preliminary data from this Phase I,
randomised, single-blind, placebo-controlled study of a single subcutaneous
injection of Teverelix LA, at one of two doses to 24 healthy female subjects,
indicates that Teverelix LA can reduce oestrogen levels to a desired level at
the lower end of the normal range which should help to avoid menopausal signs
and symptoms including bone loss. In this study oestrogen levels were reduced
to average concentrations over a period of 8 weeks to 40.5 pg/ml and 49.0 pg/ml
respectively vs. 88.8 pg/ml for placebo.
The effect of Teverelix LA on certain bone absorption markers was also
investigated in the study. On the basis of the available data these markers
appear unaffected by Teverelix LA. Additional data analysis is ongoing.
This study provides data to support the further development of Teverelix LA in
endometriosis. Treatment of this indication meets a significant unmet medical
need, and a Phase II study is being planned.
Testosterone Cream
We are developing Testosterone Cream for the treatment of male hypogonadism. It
is based on our Bi-Gel technology, which is a novel trans-dermal drug delivery
system.
In September 2006 we announced preliminary results of a Phase II study in
hypogonadal men. The open-label, randomised study involved 16 patients diagnosed
with male hypogonadism i.e. testosterone deficiency. A preliminary analysis of
the data confirms that Ardana's Testosterone Cream is effective in restoring
testosterone levels to the normal range in hypogonadal men when administered as
a single dose of 2.25g or 4.5g on a daily basis. Furthermore, the data suggests
that Testosterone Cream should meet efficacy criteria set by the FDA.
A Phase II long-term dose-titration study in hypogonadal men is currently
ongoing. Also a Phase I study, conducted in the US under an IND application, is
ongoing, investigating the effect of showering on the absorption of
testosterone.
We have commenced a pivotal Phase III registration study in the US. We look
forward to reporting on preliminary results from our Phase III study during the
current financial year.
We are very encouraged by our progress in the development of Testosterone Cream.
In 2006 (source: IMS Health, MAT 4/06), the testosterone replacement market in
Europe and in the US was estimated to be US$550 million, of which the US market
is the most attractive, accounting for 90% of the total sales. In the US
market, which is growing at around 8% per annum, testosterone gels account for
over 75% of sales. Other therapies for male hypogonadism include injectable
formulations of testosterone, oral preparations, transdermal patches, topical
gels, subcutaneous implants and buccal tablets.
Based upon the knowledge we have gained on our Bi-Gel technology, Ardana should
be able to not only develop additional compounds to market ourselves but also
offer this platform to other companies and thereby generate licensing income.
Accordingly, we have utilised the Bi-Gel technology to complete a pilot Phase I
study in a female indication.
Invicorp(TM)
We acquired the marketing rights for Invicorp(TM) in June 2004 from Senetek plc
for the European market. It is an injectable treatment for erectile
dysfunction. Marketing authorisation for Invicorp(TM) has been granted in
Denmark and in December 2006 we announced that Invicorp(TM) has been launched in
that country. We are awaiting the initiation of the European Mutual Recognition
Procedure and hope to launch in other European markets during this financial
year.
Oral GHS
We are very pleased to have commenced a pivotal registration study of our oral
formulation of GHS for the diagnosis of growth hormone deficiency in adults.
Earlier clinical development has indicated that oral GHS may potentially be
useful as a treatment for growth hormone deficiency disorders and metabolic
complications associated with critical illness.
GHS is a novel synthetic compound that is orally active and stimulates the
secretion of growth hormone (GH) from the patient's pituitary gland for the
treatment of growth hormone disorders. Phase I trial results show that GHS
stimulates GH release in a selective manner without affecting the stimulation of
other hormones and suggest it is well tolerated.
As well as being developed as a diagnostic for GH deficiency, potential
applications for GHS include the diagnosis and treatment of growth hormone
deficiency disorders (especially in children), and frailty in the elderly as
well as metabolic complications associated with critical illness such as
cachexia (wasting) in cancer and AIDS, trauma, uremia, and lipodystrophy. The
growth hormone market currently is worth about US$3.1 billion per annum
worldwide (source: Wood Mackenzie) and as the majority of products are
injectables we believe that GHS could offer an attractive alternative for
patients.
Terbutaline Vaginal Gel
Phase II trials on Terbutaline formulated as a bio-adhesive vaginal gel for use
as a treatment for infertility linked to endometriosis are ongoing. Following
delays caused by additional regulatory requirements in one country we expect the
results from this trial to be available during the current financial year.
Commercial opportunities
Our business development team, alongside expanding our portfolio in the field of
reproductive medicine, looks to create value by out-licensing other compounds we
own which are not core to our strategy.
Operationally our strategy is to maximise value and manage risk in the business
through our flexible and low cost business model. We are building our sales and
marketing capability across Europe as strategically and financially appropriate
with our commercial products Emselex(R) and Striant(TM) SR, to be followed by
Invicorp(TM) and Testosterone Cream, so that we can build a solid relationship
with our customers, develop our understanding of the market and demonstrate
Ardana's commitment to the area in advance of the launch of Teverelix LA. We
are rapidly expanding our partnerships in research, regulatory and manufacturing
all of whom are directed by our team of experienced managers.
Management team
As our business develops and expands we are gradually building an experienced
team to manage our increasingly complex operations.
To this end we have strengthened our management team with the appointment of Dr
Laurence Skillern (previously at Pfizer) as our new Vice President, Clinical
Development, and Guthrie Sloss (previously at Aventis) as our Vice President,
Manufacturing. Both Laurence and Guthrie bring with them extensive
pharmaceutical, technical and regulatory experience which will be invaluable to
Ardana, as we progress our development pipeline and build further on our sales
and marketing capabilities in the UK and Europe.
Outlook
We are very pleased with the progress across our product portfolio and are
excited by the prospects afforded by our Testosterone Cream and oral GHS product
candidates which have recently commenced Phase III trials. Our lead compound
Teverelix LA, continues to progress well across all three indications; prostate
cancer, BPH and endometriosis. The clinical development and launch of Teverelix
LA for prostate cancer is on track in this multi-billion dollar market, and the
opportunities this product brings are very exciting for ourselves and potential
partners.
Ardana is in discussions with potential partners to collaborate on the future
development and commercialisation of Teverelix LA. We expect to have agreements
in place before the start of the first Phase III trials, and concluding these
discussions is management's top priority.
We believe it is important to retain value in the business for our shareholders
by developing our own sales force. With two products potentially ready for
launch in the US within the next two financial years we are considering Ardana's
strategic options to maximise the value of our portfolio in the US.
Furthermore, assuming clinical development and regulatory approvals progress as
planned, the broad and balanced pipeline we are building means that we have the
potential for one product launch each year for the next five years.
Through all the activities I have outlined we aim to maximise the value in our
portfolio.
Anticipated newsflow in next twelve months
• Partnership collaborations for Teverelix LA and other products
• Data from Phase II trial of Teverelix LA in the indication of BPH
• Data from Phase II trial of Teverelix LA in the indication of prostate cancer
• Invicorp(TM) mutual recognition
• Launch of Invicorp(TM) in the UK and Germany
• Data from Phase III trial of Testosterone Cream
• Regulatory submission of Testosterone Cream
• Data from registration study of oral GHS as a diagnostic
• Regulatory submission of oral GHS as a diagnostic
Financial Review
Summary
Ardana is an early-stage pharmaceutical company investing in the development of
its product portfolio and marketing infrastructure.
We continue to manage our research and development spend and overhead costs in a
controlled and consistent way to deliver results from our pipeline in accordance
with expectations. In this regard we have increased our spending on research
and development by 40% over the previous year to continue the Teverelix
programme and also to support the start of the phase III development in
Testosterone Cream and GHS diagnostic. The latter is in line with the programme
outlined in our October fundraising. We are also tightly managing our other
operating expenses, which have only increased by 7.5% despite our investment in
additional sales representatives and marketing expense for the launch of
Emselex(R)
Operating results
Total revenues from product sales for the year ended 31 March 2007 were £240,000
(2006: £384,000) being predominantly sales of Striant(TM) SR. Product revenues
from our European partners are, and will be, periodic bulk contractual sales
into the relevant territories and so will not allow a consistent comparison year
on year. Sales of services represent revenue from sales and marketing
activities which for the year ended 31 March 2007 were £17,000 (2006: £106,000).
Ardana made an operating loss of £13.0 million in the year compared to a loss of
£10.0 million in 2006. This increase was due principally to our investment in
research and development activity as our pipeline progresses. Research and
development costs this year represent 67% of our operating expenses compared to
60% in 2006. Other operating costs have increased by 7.5% primarily due to the
increase in sales and marketing expense for the launch of Emselex(R) this year.
The income statement shows a taxation credit of £0.8 million (2006: £0.6
million). This relates to research and development tax credit on qualifying
expenditure incurred.
Liquidity and capital resources
On 31 March 2007 Ardana had cash and cash equivalents of £16.6 million (2006:
£19.1 million). Net cash used by operating activities in the year was £13.1
million (2006: £11.4 million) due principally to the operating loss incurred
during the year.
Net cash from investing activities, being revenue from the investment of
available cash funds, was £0.2 million (2006: £1.2 million). The decline in
2007 follows cash outflows for the purchase of product rights and lower income
received from declining average cash deposits and investments.
The product rights have been capitalised within intangible assets and are being
amortised over ten years.
The Group invests funds which are surplus to short-term operational requirements
in fixed rate deposits placed with major clearing banks for up to twelve months.
Changes in returns from investing activities reflect differences in average
cash balances and interest received on invested funds.
Net cash from financing activities was £10.4 million (2006: Nil) predominantly
reflecting the Placing and Open Offer in October 2006 which raised £9.9 million
after expenses.
Net assets at 31 March 2007 were £16.5 million (2006: £17.4 million). This
reduction is due to the continued development cost for our product pipeline as
described in the Chief Executive's Statement.
Foreign currency risk
Ardana translates transactions in foreign currencies at the rates applying on
the invoice date and retranslates foreign currency assets and liabilities at the
rate applying on the balance sheet date. Our policy is to minimise foreign
currency exposure on the balance sheet by naturally balancing foreign currency
assets and liabilities wherever possible. The Group does not use derivative
financial instruments for speculative, hedging or any other purpose.
Loss per share
Loss per share (basic and diluted) in 2007 is 18.9p (2006: 14.7p).
Financial outlook
Ardana will continue to invest in its primary product development programmes for
Teverelix LA, GHS and Testosterone Cream and roll out the sale and distribution
of Striant(TM) SR and Invicorp(TM) across European-licensed territories. The
Group expects that research and development costs will exceed the revenue
derived from the sale of products and services for the near future. The Group's
principal source of finance has been the issue of new share capital to
shareholders. We intend to expand the sources of finance to include revenues
from out-licensing to third parties of products in development and further
in-licensing of marketed products to increase product revenue.
The Group intends to actively pursue in-license opportunities to increase the
number of marketed products to improve our product contribution to the business.
The focus of activity for our business development team will be to out-license
products within our portfolio to partners who will help to develop and market
the products as well as share in their costs and risk. We would expect that
out-license deals will contribute significantly to cash flows after any
in-licensing costs in future years.
Consolidated income statement
For the year ended 31 March 2007
Notes 2007 2006
£'000 £'000
Revenue: continuing operations
Product revenue 240 384
Revenue from sales of services 17 106
_____ _____
Total revenue 2 257 490
_____ _____
Operating expenses
Cost of product sales (69) (142)
Research and development (8,889) (6,359)
Other operating expenses (4,324) (4,021)
_____ _____
Total operating expenses (13,282) (10,522)
Operating loss: continuing operations (13,025) (10,032)
Gain on sale of available-for-sale investment - 229
Interest received 817 1,002
_____ _____
Loss on ordinary activities before taxation (12,208) (8,801)
Taxation 5 837 633
_____ _____
Loss for the financial year (11,371) (8,168)
_____ _____
Basic and diluted loss per share 3 (18.9p) (14.7p)
Consolidated balance sheet
As at 31 March 2007
Notes 2007 2006
£'000 £'000
Non-current assets
Intangible assets 585 -
Property, plant and equipment 14 15
_____ _____
599 15
_____ _____
Current assets
Inventories 298 76
Trade and other receivables 738 459
Research and development tax credits receivable 837 1,160
Cash and cash equivalents 16,576 19,051
_____ _____
18,449 20,746
_____ _____
Total assets 19,048 20,761
_____ _____
Current liabilities
Trade and other payables (2,510) (3,360)
_____ _____
Total liabilities (2,510) (3,360)
_____ _____
Net assets 2 16,538 17,401
_____ _____
Equity
Share capital 655 556
Other equity 375 240
Share premium account 37,135 26,949
Merger reserve 34,451 34,451
Own shares (13) (95)
Retained earnings (56,065) (44,700)
_____ _____
Total equity 16,538 17,401
_____ _____
Consolidated statement of changes in equity
Year ended 31 March 2007
Share Other Share Merger Own Retained Total
capital equity premium reserve shares earnings
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening balances 556 240 26,949 34,451 (95) (44,700) 17,401
1 April 2006 _____ _____ _____ _____ _____ _____ _____
Recognised directly in
equity
Issue of shares 96 - 10,927 - - - 11,023
Cost of share issue - - (1,068) - - - (1,068)
Equity share options 3 - 327 - - - 330
exercised
Movement in own shares - - - - 82 - 82
Gain on sale of EBT - - - - - 6 6
shares
Share-based payment - 135 - - - - 135
_____ _____ _____ _____ _____ _____ _____
Net change directly in 99 135 10,186 - 82 6 10,508
equity
_____ _____ _____ _____ _____ _____ _____
Loss for the year - - - - - (11,371) (11,371)
_____ _____ _____ _____ _____ _____ _____
Total movements 99 135 10,186 - 82 (11,365) (863)
_____ _____ _____ _____ _____ _____ _____
Equity at the end of 655 375 37,135 34,451 (13) (56,065) 16,538
the year
_____ _____ _____ _____ _____ _____ _____
Consolidated cash flow statement
For the year ended 31 March 2007
Notes 2007 2006
£'000 £'000
Cash flows from operating activities
Cash used by operations 4 (14,212) (11,775)
Corporation tax received 1,160 418
_____ _____
Net cash used by operating activities (13,052) (11,357)
Investing activities
Purchase of product rights (600) -
Interest received 817 1,002
Realised gain on sale of available-for-sale investment - 229
Purchase of property, plant and equipment (13) (11)
_____ _____
Net cash from investing activities 204 1,220
Financing activities
Issue of shares 11,023 -
Cost of share issue (1,068) -
Equity share options exercised 330 -
Sale of own shares 88 6
_____ _____
Net cash from financing activities 10,373 6
_____ _____
Net decrease in cash and cash equivalents (2,475) (10,131)
Cash and cash equivalents at beginning of year 19,051 29,182
_____ _____
Cash and cash equivalents at end of year 16,576 19,051
_____ _____
Notes to the financial information
1. Presentation of financial statements
The financial information set out above does not constitute Ardana's statutory
accounts for the years ended 31 March 2007 or 2006 but is derived from these
accounts. Statutory accounts for 2006 have been delivered to the Registrar of
Companies for England and Wales and those for 2007 will be delivered following
the annual general meeting. The auditors have reported on those accounts; their
reports were unqualified and did not contain statements under s237(2) or (3)
Companies Act 1985.
Whilst the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient information to
comply with IFRSs. The Company expects to publish full financial statements that
comply with IFRS in July 2007.
The financial information set out in this preliminary statement includes
comparative figures that have been prepared on the same basis.
2. Business and geographical segments
Primary reporting format - business segments
The Directors consider that the primary reporting format is by business segment.
The Group discovers, develops and markets a range of pharmaceutical products.
The Directors consider that there is only one business segment, being
pharmaceuticals. Revenue and the carrying value of assets in respect of
marketing are less than 10% in the current year and so have not been disclosed
separately. This may change as the business develops through the sale or
licensing of intellectual property or other development rights and services.
Secondary reporting format - geographical segments
The Group's operations are located in the UK, with commercialisation and
development activities being carried out in the UK and the rest of Europe.
The following table provides an analysis of the Group's revenue by geographical
market:
Revenue from external customers by
geographical market
2007 2006
£'000 £'000
UK 131 207
Rest of Europe 126 283
_____ _____
257 490
_____ _____
The following table provides an analysis of the carrying amount of segment
assets:
Total assets
by geographical market
2007 2006
£'000 £'000
UK 16,538 17,401
Rest of Europe - -
_____ _____
16,538 17,401
_____ _____
3. Loss per share
Basic and diluted loss per share is calculated by dividing the loss for the
financial period after taxation by the weighted average number of ordinary
shares in issue during the period.
The basic loss per share is calculated as follows:
2007 2006
Loss after taxation (£'000) (11,371) (8,168)
Weighted average number of ordinary shares in issue 60,158,787 55,562,806
_____ _____
Basic and diluted loss per share (18.9p) (14.7p)
_____ _____
4. Cash used by operations
2007 2006
£'000 £'000
Operating loss (13,025) (10,032)
Depreciation 14 29
Amortisation of intangible assets 15 -
(Increase)/ decrease in inventories (222) 31
Increase in trade and other receivables (279) (96)
Decrease in trade and other payables (850) (1,854)
Share-based payments 135 147
_____ _____
Cash used by operations (14,212) (11,775)
_____ _____
5. Taxation
2007 2006
£'000 £'000
UK corporation tax credit 837 669
Adjustment in respect of prior years - (36)
_____ _____
Total tax credit for the year 837 633
_____ _____
6. Approval by the Directors
This announcement was approved by the Directors on 27 June 2007.
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