10th Mar 2005 07:01
Ark Therapeutics Group PLC10 March 2005 Ark Therapeutics Group plc Preliminary results for the year ended 31 December 2004 A YEAR OF SUBSTANTIAL PROGRESS AND ACHIEVEMENT London, UK, 10 March 2005 - Ark Therapeutics Group plc today announces itspreliminary results for the year ended 31 December 2004. HIGHLIGHTS • Listing on London Stock Exchange raised £55 million• Kerraboot(R) received UK Drug Tariff Listing at a reimbursement price of £14• Kerraboot(R) UK sales showed steady upward trend in first six months of primary care promotion• Second safety and efficacy study for Cerepro(TM) showed mean patient survival time increased by 80% in malignant glioma• Trinam(R) received Orphan Drug Designation in the EU• First international out-licensing deal signed with Teva Medical for Kerraboot(R) in Israel• EG005 Phase II in lipodystrophy completed enrolment• Finnish manufacturing facility received Good Manufacturing Practice certification (cGMP)• Named patient supplies of Vitor(TM) made available at request of investigators for patients completing Phase III study• Cash of £47 million at 31 December 2004 POST YEAR-END EVENTS • Patent for Trinam(R) granted by European Patent Office Dr Nigel Parker, CEO of Ark, commented: "We made substantial progress in all aspects of our business in 2004 anddemonstrated that we are delivering on key milestones during our first year as apublicly quoted company. Our progress to date supports our belief that we arewell placed to achieve our goal of becoming one of a successful new breed ofdiversified healthcare companies servicing areas of high clinical need inhospital and specialist medicine." For further information: Ark Therapeutics Group plc Tel: + 44 (0)20 7388 7722Dr Nigel Parker, CEOMartyn Williams, CFO Financial Dynamics Tel: +44 (0)20 7831 3113David YatesLucy Briggs Notes to Editors Ark Therapeutics Group plc Ark is a specialist healthcare group (the "Group") with one marketed product andthree further lead products in late stage clinical development. Capitalising onover ten years of research in vascular biology and gene-based medicine, Ark hasa balanced product portfolio targeted at specific unmet clinical needs withinvascular disease and cancer. These are large and growing markets, whereopportunities exist for effective new products to generate significant revenues. Ark's products are sourced from related but largely non-dependent technologieswithin the Group and have been selected to enable them to be taken throughdevelopment within the Company's own means and to benefit from Orphan DrugStatus and/or Fast Track Designation, as appropriate. This strategy has allowedthe Group to retain greater value and greater control of clinical developmenttimelines, and to mitigate the risks of dependency on any one particularprogramme or development partner. Ark has secured patents or has patentapplications pending for all its lead products in principal pharmaceuticalmarkets. Ark has its origins in businesses established in the mid-1990s by Professor JohnMartin and Mr Stephen Barker of University College London and Professor SeppoYla-Herttuala of the AI Virtanen Institute at the University of Kuopio,Finland, all of whom continue to play leading roles in the Company's researchand development programmes. This announcement includes "forward-looking statements" which include allstatements other than statements of historical facts, including, withoutlimitation, those regarding the Group's financial position, business strategy,plans and objectives of management for future operations (including developmentplans and objectives relating to the Group's products and services), and anystatements preceded by, followed by or that include forward-looking terminologysuch as the words "targets", "believes", "estimates", "expects", "aims","intends", "will", "can", "may", "anticipates", "would", "should", "could" orsimilar expressions or the negative thereof. Such forward-looking statementsinvolve known and unknown risks, uncertainties and other important factorsbeyond the Group's control that could cause the actual results, performance orachievements of the Group to be materially different from future results,performance or achievements expressed or implied by such forward-lookingstatements. Such forward-looking statements are based on numerous assumptionsregarding the Group's present and future business strategies and the environmentin which the Group will operate in the future. Among the important factors thatcould cause the Group's actual results, performance or achievements to differmaterially from those in forward-looking statements include those relating toArk's funding requirements, regulatory approvals, clinical trials, reliance onthird parties, intellectual property, key personnel and other factors. Theseforward-looking statements speak only as at the date of this announcement. TheGroup expressly disclaims any obligation (other than pursuant to the ListingRules of the UKLA) or undertaking to disseminate any updates or revisions to anyforward-looking statements contained in this announcement to reflect any changein the Group's expectations with regard thereto or any change in events,conditions or circumstances on which any such statements are based. As a resultof these factors, prospective investors are cautioned not to rely on anyforward-looking statement. Chairman's and Chief Executive's review 2004 - a year of substantial progress and achievement We are very pleased to report that 2004 was a most successful year for the ArkGroup. In the first quarter, we completed our initial public offering on theLondon Stock Exchange, raising £55 million and we have gone on to achieve somevery notable milestones during the rest of the year. For example, we broughtour first product, Kerraboot(R), to the primary care market in the UK andcompleted our first international out-licensing deal for that product. Weachieved certification of our biologics manufacturing facility in Finland, aswell as progressing all our other lead products in later stage clinicaldevelopment. We were also pleased to introduce named patient supplies inresponse to investigator requests in our Vitor(TM) Phase III study (cancer-related cachexia) and our EG005 Phase II programme (lipodystrophy syndrome), toallow patients completing those trials to continue on active therapy. Ourfollow-on clinical portfolio has continued to show good progress, as have ourresearch teams working on the earlier stage baculoviral and Scavidin(R)programmes. Overall, we have made substantial progress in all aspects of our business andfinished the year with strong cash reserves (£47 million), having demonstratedthat we are delivering on key milestones in this, our first year as a publiccompany. The results for the year reinforce our belief that we are well placedto achieve our goal of becoming one of the successful new breed of diversifiedhealthcare companies servicing areas of high clinical need in hospital andspecialist medicine. Kerraboot(R) - a novel device for the management of leg and foot ulcers Launched in the UK and international commercialisation commenced Early in the year, we were encouraged to see initial orders being placeddirectly by hospitals through PASA, the NHS Purchasing and Supply Agency. UKDrug Tariff Listing, enabling the product to be prescribed in primary care, wasachieved in May at a price above analysts' expectations, and in June ournewly-recruited sales force commenced selling into hospitals and primary care.Since then, UK sales and market share have shown a steady upward trend, despitesome anticipated seasonal slowing over the Christmas holiday period. Salesdoubled between the third and fourth quarter. We also completed a primary care-based post-marketing comparative study withresults showing that the product met its primary endpoint of healthcare workerand patient acceptability, with the significant additional finding that theoverall healing profile of ulcers was better with Kerraboot(R) than with thestandard care dressing. Company sales representatives report a high level ofinterest in this novel product with clinical successes in all types of ulcers,including some of the most difficult cases. We achieved our goal of all three of the main UK wholesalers stocking theproduct by the end of 2004. We were also pleased to report that following the2004 tendering initiative in the UK, Kerraboot(R) was selected for inclusion inthe new NHS Framework Agreement (Framework Agreements, established by the NHSPurchasing and Supply Agency (PASA) which acts for the NHS Logistics Authority,are aimed at reducing costs in high expenditure categories in the NHS.) for theprovision of Advanced Wound Care Products to hospitals throughout Englandwithout price modification. In response to market feedback, the Company plans to introduce three newversions of the product during 2005: an extra large size, a non-see through bootand a super-absorbent version for high exudate cases. Internationally, we willbuild on our first out-licensing success, the agreement with Teva for Israel,and negotiations are progressing well with potential licensees in other majormarkets. We are excited by the sales potential and value to the Company of thisinnovative product. Cerepro(TM) for operable malignant brain cancer Moving forward with this pioneering treatment We presented the full results of the second safety and efficacy study ofCerepro(TM) in malignant glioma in June. Results showed an almost doubling ofmean survival time, confirming the findings of the previous Phase II safety andefficacy study. In the third quarter we completed the 'top up' toxicologystudy agreed during our ongoing discussions with the EMEA, enabling us to updatethe pre-clinical dossier. Other milestones included approvals for the furtherdevelopment of Cerepro(TM) from both national agency and gene therapy advisorycommittees in seven of the nine countries participating in the next study. Thisis enhancing confidence in Ark's handling of the complex regulatory pathway forthe development of gene-based medicines. Certification in November of our manufacturing facility by the Finnish NationalAgency of Medicines was a very significant achievement. Amongst other things,this allows us to produce clinical supplies of Cerepro(TM) for the corroborativestudy and to start finalising the chemistry and manufacturing dossier for theEMEA. This is required as part of our expected submission in the first half of2005 for Cerepro(TM) to be considered for approval under exceptional circumstances in Europe. With the progress made in 2004, we believe that Cerepro(TM) remains on track tobecome one of the world's first commercially available gene-based medicines. Vitor(TM) for cachexia of cancer Interesting new mode of action data: enrolment in Phase III trial nearscompletion Enrolment into the Phase III study accelerated markedly in the second half ofthe year after we opened further centres in Eastern Europe. Completion ofenrolment is expected around the end of this quarter. The Drug SafetyMonitoring Board continued to advise that no side effects had been reported thatmight give rise to concern as to the safety of the product. Furthermore, the research elucidating the way Vitor(TM) works in preventing musclecell breakdown in cachexia received recognition at the 2004 Multi-NationalAssociation of Supportive Care in Cancer (MASCC) conference in the USA, whereour research collaborators (Professor Tisdale and his team at Aston University,Birmingham) won one of the Investigator of the Year Awards. The Company also announced in December its agreement to supply Vitor(TM) to namedpatients at the request of Canadian, US and UK investigators, so that patientscompleting the trial could continue on active therapy. Trinam(R) treatment to prevent haemodialysis access surgery complications 'First time into man' approval and first patients successfully treated in PhaseII study In the first half of 2004, Trinam(R) achieved a milestone Ethics Committeeapproval in the US, clearing the 'first-time into man' hurdle and, consequently,we were able to open the Phase II study for patient recruitment. The firsttreatment of a patient with Trinam(R) took place in May and at the end of 2004five patients had been treated at Duke University, with four going on tosuccessful haemodialysis and the other having a successful kidney transplant.Further centres have now been opened in Miami, where the first patient isawaiting treatment and Norfolk, Virginia where screening has commenced. To dateno safety issues of concern have arisen. The Company expects to report initialresults around the end of 2005. Trinam(R) received EU Orphan Medicinal Product Designation in June, in additionto the US Orphan Designation previously granted and we announced recently thatthe European Patent Office has granted the patent. FOLLOW ON PRODUCTS EG005 - full enrolment of the EG005 Phase II study in HIV positive-relatedlipodystrophy syndrome occurred in November and we remain encouraged that themajority of patients completing the blinded three month placebo controlled phaseof the study elected to go into the one year open label extension phase. Almostall patients completing the one-year extension have requested to continuetreatment on a named-patient basis and we were pleased to respond to thoserequests and make the product available. If the Phase II results expected inthe first half of 2005 are favourable, the Company intends to move the productinto its lead portfolio. EG010 is a diagnostic test measuring oxidised low density lipoproteins presentin blood as a marker to assess a patient's risk of having a heart attack.Trials to date have shown high prediction levels. The product is currentlyundergoing stability testing and is likely to be one of the first tests tocomply with the latest European 'equivocal zone' regulations, having its owninternal controls to increase its accuracy. CE-marking is expected in the firsthalf of 2005. Pre-clinical The business model employed by Ark for sourcing pre-clinical candidates,combines academia and industry in a way which is proving highly cost-effective.We have made good progress with both our versatile baculoviral vector andfunctional genomics programmes, as well as with Scavidin(R), our targeted drugdelivery platform. We also have interesting early evidence that our Neuropilin1 antagonist programme inhibits migration of tumour cells. Given the results wehave achieved to date, we intend to continue to employ this successful andcost-effective approach to primary research both to advance our existingprogrammes and to make new discoveries. Manufacturing - on track During the first half of 2004 we completed the structural work to upgrade ourFinnish manufacturing facility to Phase III/commercial supply. Validationcontinued throughout the second half of 2004 and we achieved our principal goalof certification of the facility in November. The Company intends to continueto invest in its manufacturing capabilities for CereproTM and Trinam(R)production. Board and management - strengthening David Prince, the former CFO of Cable and Wireless, joined the Board in May as aNon-Executive director and took up the position of Chairman of the AuditCommittee. David is an experienced Director who, with his strong track recordin financial management, is making a valuable contribution to the business. TheCompany is currently interviewing for an additional Non-Executive Director withinternational biotech/pharmaceutical experience. In April, Nick Plummer joined us from the law firm Ashurst as Legal Counsel andCompany Secretary, further strengthening our senior team. Simultaneous with the IPO, Professor John Martin and Dr Kalevi Kurkijarviresigned from our Board as part of the restructuring in connection with becominga public company. John Martin remains deeply involved in the business as ChiefScientific Officer and a member of the executive team. Both gave generously oftheir time and on behalf of the Board and our shareholders we thank them fortheir significant Board contributions to our success to date. Strengthened finances Following the Company's IPO in March, cash and liquid resources at 31 December2004 totalled £47.3 million (2003: £9.2 million), a level of funding which willenable the Group to progress with confidence its lead products through the finalstages of development and support the continued roll-out of Kerraboot(R). Operating expenses in the year were £16.1 million compared with £9.2 million in2003, principally as a result of the progression of our lead products though theclinical development process, together with increased investment in the Group'sadvanced biologics manufacturing facilities and in the Kerraboot(R) sales andmarketing structure. Research and development expenditure in 2004 rose to £9.1 million from £5.4million in 2003, reflecting the progress made in the Vitor(TM) Phase III study,the commencement of the Trinam(R) Phase II study and initiation costs for theCerepro(TM) corroborative study. Increased investment in the Finnishmanufacturing facility was also made in the year, culminating in certificationby the Finnish National Agency for Medicines. Sales and marketing costs at £1.3 million (2003: £0.3 million) related to the UKlaunch of Kerraboot(R), including recruitment and ongoing costs of the salesforce and marketing expenses. Administrative expenses in the period rose to £5.7 million from £3.6 million,reflecting the general increase in Group activities and the additionalmanagerial and administrative support for the growing research and developmentand sales activities. Prospects The year ahead of us will be an exciting one. We expect to build on thesignificant progress we have made since the IPO as we continue the transitionfrom a company focused on research and development to a commercial,revenue-generating business. In particular, we intend to continue to developthe UK sales and international commercialisation of Kerraboot(R) and we expectto report whether or not the EMEA is prepared to consider Cerepro(TM) as acandidate for approval under exceptional circumstances. We anticipate reachingkey clinical milestones in all our lead products. All those involved in the Company, both in the UK and Finland, have put in atremendous effort over the last year. As a result, we have achieved some of themost significant milestones in the history of the Company, whilst at the sametime Ark has made the transition to a public company. We are most grateful toall of our staff for their dedication and accomplishments. Much has also been achieved in furthering the strategic shift towards effectiveproduct exploitation. This, combined with Ark's significant strength in researchand development, underpins our confidence in the Company's potential in 2005 andbeyond. Dennis Turner, Chairman Dr Nigel Parker, Chief Executive Officer 10 March 2005 Consolidated profit and loss account (unaudited)for the year ended 31 December 2004 Note 2004 2003 £ £ ___________ ___________ Turnover 2 154,353 1,847 Cost of sales (45,401) (644) ___________ ___________ Gross profit 108,952 1,203 Research and development expenses (9,147,324) (5,368,766) ___________ ___________ Selling, marketing and distribution costs (1,305,970) (318,710) ___________ ___________ Other administrative expenses (5,573,852) (4,225,520) Share-based compensation (95,502) 593,691 ___________ ___________ Administrative expenses (5,669,354) (3,631,829) ___________ ___________ Other income 28,290 108,870 ___________ ___________ Operating loss 2 (15,985,406) (9,209,232) Net interest receivable 1,954,855 457,640 ___________ ___________ Loss on ordinary activities before taxation (14,030,551) (8,751,592) Taxation on loss on ordinary activities 1,211,436 650,949 ___________ ___________ Loss on ordinary activities after taxation, being retained loss for the financial year 4 (12,819,115) (8,100,643) ___________ ___________ Loss per share - basic and diluted 3 (0.11) (0.10) All results relate wholly to continuing activities. There is no material difference between the reported loss and the historic costloss. Consolidated statement of total recognised gains and lossesfor the year ended 31 December 2004 2004 2003 £ £ ___________ ___________ Loss for the financial year (12,819,115) (8,100,643) Currency translation losses on foreign currency net investments (1,783) (12,741) ___________ ___________ Total recognised losses for the year (12,820,898) (8,113,384) ___________ ___________ Group Balance Sheet (unaudited)at 31 December 2004 Note 2004 2003 £ £ ___________ ___________ Fixed assets Intangible assets 52,247 1,306,091 Tangible assets 1,060,970 834,838 ___________ ___________ 1,113,217 2,140,929 ___________ ___________ Current assets Stocks 331,010 9,200 Debtors 2,576,572 1,017,536 Cash at bank and in hand 47,256,285 9,157,565 ___________ ___________ 50,163,867 10,184,301 Creditors: amounts falling due within one year (3,617,473) (2,582,764) ___________ ___________ Net current assets 46,546,394 7,601,537 ___________ ___________ Total assets less current liabilities 47,659,611 9,742,466 Creditors: amounts falling due after more than one year (493,060) (486,808) ___________ ___________ Net assets 2 47,166,551 9,255,658 ___________ ___________ Capital and reserves Called up share capital 1,263,337 57,751 Share premium 4 49,430,703 - Merger reserve 4 36,988,989 36,988,989 Profit and loss account 4 (40,516,478) (27,791,082) ___________ ___________ Shareholders' funds 5 47,166,551 9,255,658 ___________ ___________ Shareholders' funds may be analysed as: Equity interests 47,166,551 9,205,658 Non-equity interests - 50,000 ___________ ___________ 47,166,551 9,255,658 ___________ ___________ Consolidated cash flow statement (unaudited)for the year ended 31 December 2004 Note 2004 2003 £ £ ___________ ___________ Net cash outflow from operating activities 6 (14,087,941) (8,114,251) Returns on investments and servicing of finance 7 1,936,634 457,640 Taxation 7 - 1,033,813 Capital expenditure and financial investment 7 (440,732) (256,661) ___________ ___________ Cash outflow before financing (12,592,039) (6,879,459) ___________ ___________ Financing 7 50,692,542 169,916 ___________ ___________ Increase/(decrease) in cash in the year 38,100,503 (6,709,543) ___________ ___________ Notes to the preliminary results (unaudited) 1. The financial information for 2003 has been extracted from the statutoryaccounts for the year ended 31 December 2003, which have been delivered to theRegistrar of Companies. The auditors' report on those accounts was unqualifiedand did not contain any statement under section 237(2) or (3) of the CompaniesAct 1985. The statutory accounts of the company for the year ended 31December 2004 will be finalised on the basis of the financial informationpresented by the directors in this preliminary announcement and will bedelivered to the Registrar of Companies for England and Wales in due course andwill also be sent to shareholders The preliminary statement was approved by the Board on 9 March 2005. 2. Segment information There is only one class of business, which is the discovery, development andcommercialisation of products in areas of specialist medicine with particularfocus on vascular disease and cancer. The analysis of turnover, operating loss, loss before taxation and the netassets of the Group by geographical segment is as follows: Turnover in both years relates wholly to sales made and originating in the UK Year ended 31 December 2004 UK Finland US Total £ £ £ £ ____________ ____________ ____________ ____________Operating (loss)/profit (12,644,407) (3,593,098) 252,099 (15,985,406) ____________ ____________ ____________ ____________(Loss)/profit before taxation (10,684,516) (3,598,134) 252,099 (14,030,551) ____________ ____________ ____________ ____________Net assets 47,062,151 103,922 478 47,166,551 ____________ ____________ ____________ ____________ Year ended 31 December 2003 UK Finland US Total £ £ £ £ ____________ ____________ ____________ ____________ Operating (loss)/profit (7,222,401) (1,731,455) (255,376) (9,209,232) ____________ ____________ ____________ ____________(Loss)/profit before taxation (6,767,868) (1,728,348) (255,376) (8,751,592) ____________ ____________ ____________ ____________Net assets/(liabilities) 9,297,360 57,820 (99,522) 9,255,658 ____________ ____________ ____________ ____________ 3. Loss per share The weighted average number of shares is adjusted to reflect the restructuringof share capital on listing of the Company and is presented as if the sharerestructuring had happened at the beginning of the period under review. The calculation of basic loss per ordinary share is based on the loss for theyear ended 31 December 2004 of £12,819,115 (2003: £8,100,643) divided by theweighted average number of ordinary shares in issue of 118,524,359 (2003:81,106,688). FRS 14 requires presentation of diluted earnings per share when a company couldbe called upon to issue shares that would decrease net profit or increase netloss per share. For a loss making company with outstanding share options, netloss per share would only be increased by the exercise of out-of-money options.Since it seems inappropriate to assume that option holders would exerciseout-of-money options, no adjustment has been made to diluted loss per share forout-of-money share options. 4. Reserves Group Profit Share Merger and loss Premium reserve account Total £ £ £ £ ____________ ____________ ____________ ____________ At 1 January 2004 - 36,988,989 (27,791,082) 9,197,907 Issue of shares 54,919,775 - - 54,919,775 Bonus issue (839,589) - - (839,589) Share issue expenses (4,649,483) - - (4,649,483) Loss for the financial year - - (12,819,115) (12,819,115) Share-based compensation - - 95,502 95,502 Currency translation differences onforeign currency net investment - - (1,783) (1,783) ____________ ____________ ____________ ____________ At 31 December 2004 49,430,703 36,988,989 (40,516,478) 45,903,214 ____________ ____________ ____________ ____________ 5. Reconciliation of movements in consolidated shareholders' funds 2004 2003 £ £ ____________ ____________ As at 1 January 2004 9,255,658 17,962,733Redemption of preference share capital (50,000) -Issue of shares 55,335,772 -Share issue expenses (4,649,483) -Loss for the financial year (12,819,115) (8,100,643)Currency translation losses on foreign currency net investments (1,783) (12,741)Share-based compensation 95,502 (593,691) ____________ ____________As at 31 December 2004 47,166,551 9,255,658 ____________ ____________ 6. Net cash outflow from operating activities 2004 2003 £ £ ____________ ____________Operating loss (15,985,406) (9,209,232)Depreciation charge 270,553 155,950Amortisation of goodwill 1,253,844 1,253,844(Increase)/decrease in debtors (379,379) 68,622Increase in stocks (321,810) (9,200)Increase in creditors 978,755 219,456Share based compensation 95,502 (593,691) ____________ ____________Net cash outflow from operating activities (14,087,941) (8,114,251) ____________ ____________ 7. Analysis of cash flows for headings netted in the cash flow statement 2004 2003 £ £ ____________ ____________Returns on investments and servicing of financeInterest received 1,936,634 457,640 ____________ ____________ TaxationResearch and development tax credit - 1,033,813 ____________ ____________ Capital expenditure and financial investmentPayments to acquire tangible fixed assets (440,732) (256,661) ____________ ____________ FinancingIssue of Ark Therapeutics Group plc Ordinary Shares 50,686,290 -Capital element of finance lease rental payments - (5,867)Repayment of loans (72,603) (33,638)New loans 78,855 209,421Net cash inflow from financing 50,692,542 169,916 8. Analysis of changes in net funds 1 January Exchange 31 December 2004 Cash flow movements 2004 £ £ £ £ ___________ ___________ ___________ ___________Cash at bank and in hand 9,157,565 38,100,503 (1,783) 47,256,285Debt - due within one year (47,478) (268) 134 (47,612)Debt - due after more than one year (486,808) (7,626) 1,374 (493,060) ___________ ___________ ___________ ___________Net funds 8,623,279 38,092,609 (275) 46,715,613 ___________ ___________ ___________ ___________ 9. Reconciliation of net cash flow to movement in net funds 2004 £ ____________Increase in cash in the year 38,100,503New loan notes (7,894) ____________ Change in net funds arising from cash flows 38,092,609Foreign exchange (275) ____________ 38,092,334Net funds at 1 January 2004 8,623,279 ____________ Net funds at 31 December 2004 46,715,613 ____________ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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