30th Mar 2006 07:02
Stem Cell Sciences plc30 March 2006 30 March 2006 Stem Cell Sciences plc ("Stem Cell Sciences", "SCS", "the Group" or "the Company") MAIDEN PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 Stem Cell Sciences plc, the global biotechnology company focused on stem cell technologies and novel cell therapies, is pleased to announce its maiden preliminary results for the year ended 31 December 2005. Highlights Year to Date • Admission to AIM in July 2005, successfully raising £5.6m net of expenses • Marketing and Distribution agreement signed with Chemicon Inc to launch first commercial media product • Licensing agreements signed with Deltagen Inc and Lexicon Genetics Inc • Licensed exclusive IP commercialisation rights for neural stem cells (NS cell) • SCS KK, an associate company, based in Kobe, Japan, licensed IP commercialisation rights for human multipotent tissue stem cells (hMADS) • SCS-led consortium secured £1.22m funding from the Department of Trade and Industry, UK (DTI), for stem cell-based drug discovery • Net cash and liquid resources of £5.2m at 31 December 2005 Peter Mountford, President and CEO of Stem Cell Sciences, said: "I am delighted to announce our first set of full year results as a publiccompany. This year has been one of enormous progress for the Company. We arehitting milestones and since the year-end we have continued to makesignificant developments in product commercialisation and research anddevelopment. "Looking to the year ahead there are many promising opportunities for theCompany. Our proprietary technologies, commercialisation programmes andcollaborative partnerships with scientific pioneers continue to offersignificant growth opportunities and the most realistic route to deliveringmedical benefits for those who suffer currently incurable diseases." - Ends - For further information, please contact: Stem Cell Sciences plcMichael Dexter, Chairman 0131 662 9829Peter Mountford, Chief Executive Weber Shandwick Square Mile 020 7067 0700Yvonne Alexander/James Chandler Notes to Editors Stem Cell Sciences plc (SCS) is a global biotechnology company focused on thedevelopment of stem cell technologies. The Company has established a leadingintellectual property (IP) and technology portfolio that enables the commercialapplication of stem cells in pharmaceutical and biotechnology drug discovery,providing the Company with an early-stage revenue stream. In the longer term,the Company is developing regenerative, cell-based therapies. Stem Cell Sciences has four business units focused on key sustainable businessstrategies. SC Proven provides serum free, cell culture media (liquid formulations) andreagents that enable the growth and differentiation of stem cells for basicresearch and drug discovery purposes. The first commercially available product,a mouse embryonic stem cell growth medium, has been exclusively licensed formanufacture and marketing to Chemicon, a division of Serologicals Inc.SC Licensing licenses SCS proprietary technologies, such as Internal RibosomeEntry Site (IRES) and Stem Cell Selection, for application in laboratory-basedresearch and discovery. Current licenses for IRES are in place with Deltagen Incand Lexicon Genetics Inc.SC Services will provide specialised stem cell production for basic research anddrug discovery, including high-throughput applications.SC Therapies goal is to develop safe and effective cell-based therapies forcurrently incurable diseases. The first programme is being undertaken by SCS'Japanese affiliate, which recently announced the exclusive licensing of human multipotent tissue stem cells (hMADS) for therapeutic purposes. SCS KK plans to conduct initial preclinical studies to evaluate their potential application in the treatment of Duchene's Muscular Dystrophy. SCS plc is a global Company with operations in the UK, Australia, and via itsassociate company in Japan. Each company is affiliated with a regional centre ofacademic excellence facilitating the global commercialisation of new IP and celllines. These include the Institute of Stem Cell Research (ISCR) , Edinburgh, UK,RIKEN Centre for Development Biology, Kobe, Japan and the Australian Stem CellCentre, Melbourne, Australia. SCS, which listed on the London Alternative Investment Market in July 2005, wasfounded in 1994 to commercialise findings from the ISCR and Monash University,Melbourne, Australia. The Company is a participant in two research projectsunder the European Union's Framework Six Programme for Research and TechnologyDevelopment and is a contributor to the UK Stem Cell Initiative. 30 March 2006 Stem Cell Sciences plc ("Stem Cell Sciences", "SCS", "the Group" or "the Company") MAIDEN PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 Chairman's Statement This year has been a very significant one for SCS both operationally andfinancially. In July the Company successfully listed on the AlternativeInvestment Market (AIM), raising £5.6m net of expenses. The proceeds have given Stem Cell Sciences the resources to expand product commercialisation,business development and investment in research. The wider application of stemcells to drug discovery represents a real commercial opportunity for the Companygiven its proprietary technologies. In the longer term, these very technologieswill be used in developing novel cell-based therapies. The Company isincreasingly well positioned to take advantage of the growing research effortsin the stem cell arena. The listing on AIM marks the most significant milestone in the longer-termdevelopment of the Company, which was founded in 1994 to commercialise findingsby Professor Austin Smith and Dr. Peter Mountford at the Institute of Stem CellResearch, Edinburgh, UK and Monash University, Melbourne, Australia. In the 12years since then the Company has grown a strong portfolio of proprietaryintellectual property (IP) in the stem cell field by working in closecollaboration with its global academic partners. Stem Cells and the Market The phrase 'stem cells' is a broad term used for cells that are categorisedaccording to their source into two different types: embryonic stem cells ("ES")and tissue-specific stem cells (also called adult or somatic stem cells). EScells, derived from an early stage (3-5 days after fertilisation) embryo, can begrown in the laboratory whilst still retaining the ability/potential to form allthe different specialised cells found in the body, such as neurons, heart andblood cells. For this reason, ES cells are referred to as 'pluripotent' stemcells. Tissue-specific stem cells are 'multipotent' as they are specific typesof stem cells sourced from various body tissues and offer a more restrictedpotential as they can usually only differentiate into their own or related celltype. Stem Cell Sciences has developed its business model and IP around bothembryonic and tissue-specific stem cells and is well positioned to harness thepotential this emerging area of science holds in both drug discovery andcell-based therapies. Stem cells hold great promise to deliver longer term potential as safe andeffective treatments for a variety of human illnesses that are currently withoutcures. The Company aims to be a key provider of the cellular materials neededfor these therapies. By using stem cells, scientists are already able toinvestigate and better understand normal body processes and those of humandisease, by testing specific genes to identify their role in cells, and todiscover and test new drugs in a representative 'human' environment. The abilityto grow and use stem cells in the laboratory is accelerating basic research andwill ensure faster and more successful drug discovery and development. The keychallenges for the successful application of stem cells are robust andreproducible growth and differentiation (generation of pure populations of thedesired cell type). Stem Cell Sciences has developed and continues tomethodically develop the products and technologies needed to overcome thesechallenges. The Company is advancing early stage preclinical research to developcells suited for treating central nervous system (CNS) diseases such asParkinson's Disease and Epilepsy. The Company recognises that the development of new cell-based therapies willrequire the support and participation of multiple organisations and individualsincluding governments, universities, clinicians, financiers, patients andpatient support groups, on a worldwide and a collaborative basis. To thispurpose, the Company continues to build a global network of operations tofacilitate interaction and access to key contributing academic and commercialorganisations around the world. The significant progress that Stem Cell Sciences has made in 2005 is veryencouraging and the Board looks forward to the further growth of the business in2006. The Board would like to thank all the Company's staff for their professionalefforts in building the success of SCS and acknowledge the continued valuablesupport of the Company's Shareholders. Michael DexterChairman30 March 2006 Chief Executive Officer's Review of Operations Over the last year the Company has made significant progress in the developmentand commercialisation of its proprietary products and technology. During thisperiod the Company was restructured into four Business Units to better serve thekey areas of commercial interest. This restructuring, in conjunction with thefunding and validation generated from the flotation, has positioned the Companyfor further growth. SC Proven SC Proven has developed a range of cell culture media products to enable thestandardised and reproducible production of embryonic and tissue-specific stemcells. The Company intends that these growth and differentiation media and othersupporting products will be sold under the trademark protected brand, SCProven TM. On 3 November 2005 the Company announced an exclusive licensing agreement withChemicon Inc, a subsidiary of Serologicals Corporation, for the manufacture,marketing and distribution of SCS's first commercial stem cell media productsfor the serum-free growth of mouse embryonic stem cells. Chemicon is a leadingworld-wide supplier of research products to academia and the biotechnology andpharmaceutical industries. With its media production facilities, US/Europeandirect sales force and global distribution network, Stem Cell Sciences believesChemicon to be an excellent partner for wider commercialisation of the productthrough its established customer base. Since the announcement of this licensing agreement, the product was launched asESGRO Complete TM Clonal Grade Medium and has been available for sale since 28February 2006. Additional new products are in development for mouse and human embryonic andtissue-specific stem cells and will continue to be added to the SC ProvenTMportfolio throughout the financial period. SC Licensing This division sub-licenses the Company's proprietary portfolio of stem celltechnologies to the biotechnology and pharmaceutical industries and researchinstitutes. The technologies are valuable for efficient production, geneticengineering and selection of stem cells for use in drug discovery and basicresearch. The Company's strong IP and technology position in the area of stemcell selection, gene expression, media formulations and specific stem cell typesis capable of generating upfront license fees, as well as future royaltypayments for the Company. The Company's current technology portfolio is composed of the following offering: Stem Cell Selection Technology Selection Technology allows the purification of specific stem cell types from a complex mixture of cells. Internal Ribosome Entry Site (IRES) IRES is used to monitor gene expression in living cells and gain an understanding about the function of individual genes, through the efficient insertion of a reporter or marker gene. Various stem cell growth factors and media formulations Proprietary technology and reagents needed for reproducible and robust stem cell growth Neural Cell Technology (NS Technology) NS Technology enables the derivation and growth of SCS' patented NS cells. NS cells (mouse and human) are the first, mammalian tissue stem cells of any kind that can be stably grown outside the body as pure stem cells. In the period, the Company signed technology licensing deals with two UScompanies. In September, Deltagen, a tools and services provider in the drugdiscovery market, licensed the IRES technology in return for an upfront fee andfuture royalty payments. In November, an exclusive license deal was announcedwith Lexicon Genetics, in return for an upfront fee and future royalty payments.In addition SCS received access to certain Lexicon Genetics IP through a cross license. This agreement now positions Lexicon Genetics as the exclusive futuresub-licensor of the Company's IRES technology for generating animal models. StemCell Sciences retains the rights for the application of IRES technology incultured cells for both research and clinical applications. Stem Cell Sciences is advancing plans to support US-based business developmentthrough the establishment of a Californian office and expanded business team. SC Services SC Services plans to provide customised cells for application inhigh-throughput, cell-based drug discovery. This will enable biotechnology andpharmaceutical companies to search for and test new pharmacologically activecompounds in identical, large-scale laboratory grown cells over extended periodsof time. The Company is establishing an automated cell production facility inCambridge, UK, to translate current bench top cell production methods to anautomated platform suited to contract cell supply. SC Therapies The funds raised at the listing were not earmarked to fund a defined, internalclinical programme, however, Stem Cell Sciences is actively pursuing newopportunities to evaluate pre-clinical, proof of principle studies applying theCompany's proprietary NS cell technology. SC Therapies will initially focus on the development of cell therapies for CNSdiseases such as Parkinson's Disease and Epilepsy. Stem cells of the CNSrepresent a core scientific competency of the Company and its collaboratingacademic partners from which the NS cell IP has been sourced and with whom theyare undertaking collaborative development. Further technological support for theCompany's cell therapy programme will be gained through the scaled production ofNS stem cells in the Company's research businesses, and through participation inthe EU collaborative research programme, EuroStemCell, which aims to providefoundations for future clinical trials and where the Company has rights toarising intellectual property. Concurrently, Stem Cell Sciences KK (SCS KK, Kobe, Japan), an associate companyestablished as a joint venture between Stem Cell Sciences and Sosei Co (Tokyo),has initiated plans for pre-clinical cell-therapy research in Duchene's MuscularDystrophy (DMD). In November the company licensed patents and technologiesrelating to human multipotent tissue stem cells (hMADS) from the University of Nice, France and in December announced the lease of a GMP (Good Manufacturing Practice) cell processing facility. This facility will enable the supply of cells for a pre-clinical research programme scheduled to commence in 2006. The foundingstructure of the joint venture entitles SCS to a share of future revenuesderived from a successful therapy under a territory defined arrangement. Intellectual Property Stem Cell Sciences has secured exclusive rights to a high quality intellectualIP portfolio for efficient production, genetic engineering and the selection ofstem cells for use in drug discovery. In July 2005 the Company secured exclusive rights to an important new discovery,the NS cell and methods for growing it. This patent pending technology isexpected to have immediate and significant benefits when used for drug discoveryand exciting future potential in cell-based therapies. This cell isfundamentally different to other neural stem cell technologies in that itidentifies the exact cell type of interest and enables stable propagation ofthat cell in a serum-free medium. Through its associate company SCS KK, the Company also secured exclusive rightsfor therapeutic applications of a newly identified stem cell derived from humanfat tissue. These cells produce a number of tissue cell types including muscle,bone and cartilage cells and are referred to as human multipotent adiposederived stem cells (hMADS). A pre-clinical programme is being developed inconjunction with the academic team responsible for the discovery at theUniversity of Nice, France. Major Government and Not-for-profit Initiatives Stem Cell Sciences recognises the importance of collaborating with governmentand not-for-profit funded initiatives in the stem cell field. The Company hasestablished itself on a global basis with operations in Europe, Asia andAustralia participating in collaborative research programs of this nature.In October 2005, the Company initiated work within the £1.2m UK government DTI grant for the development and formatting of high-throughput stem cell-based screening assays. It is anticipated that this initiative will generate early product opportunities for further development in the Cambridge based production facility. As a respected contributor in this field, the Company made significantcontributions to various government advisory committees during the year,including as a participant in the advisory panel of the UK Stem Cell Initiative(UKSCI), which has been tasked with developing the 10 year vision and cost planfor UK stem cell research. In Australia, the Company contributed to theAustralian Government's Lockhart review, which is advising Parliament, with theview to changes in regulations in the stem cell field. The Company also sits onthe advisory committee of the Scottish Stem Cell Network. Financial Review The Company reports revenues of £0.8m (2004:£0.3m) for the year ended 31December 2005, which included the first revenue stream from licensing agreementsrelating to the SC Proven media products and SC Services IRES technology rights.Other operating income of £0.2m represents grant income from the EU Framework VIand other collaborative funded research programmes. Operating costs increased by £1.6m to £3.2m (including Research and Development) due to the expansion of the Group's operating activities. As planned, headcount increased in the Research and Development function to accelerate delivery withinthe SC Proven, SCS Services and SCS Licensing business units. The Company raised a net £5.8m this year from the issue of shares including thelisting in July 2005. Net cash outflow from operations was £1.8m and, afterallowing for cash inflows from investment returns and taxation received, thecash outflow before new financing was £1.6m. The overall increase in cash in the year was £4.2m. Cash balances held areinvested in interest bearing accounts. Outlook Looking to the year ahead there are many promising opportunities for theCompany. Our proprietary technologies, commercialisation programme andcollaborative partnerships with scientific pioneers continue to offersignificant growth opportunities and the most realistic route to deliveringmedical benefits through cell-therapies to those who suffer currently incurablediseases. Consolidated profit and loss accountfor the year ended 31 December 2005 2005 2004 £'000 £'000 Turnover 847 290 Administrative expenses (2,343) (1,137)Research and development costs (836) (476)Other operating income 194 171 ------ ------Group operating loss (2,138) (1,152)Share of operating loss of associate (512) (451) ------ ------Total operating loss (2,650) (1,603)Other interest receivable and similar income 130 61 ------ ------Loss on ordinary activities before taxation (2,520) (1,542)Tax credit on loss on ordinary activities 139 82 ------ ------Loss for the financial year (2,381) (1,460) ====== ======Loss per ordinary shareBasic and diluted loss per share (12.9)p (9.9)p ====== ====== Turnover and loss on ordinary activities before taxation for the current andprevious year relate wholly to continuing activities. Consolidated statement of total recognised gains and lossesfor the year ended 31 December 2005 2005 2004 £'000 £'000 Loss for the financial yearGroup (1,869) (1,009)Share of loss of associate (512) (451) ------ ------Total loss for the financial year (2,381) (1,460) Net exchange differences on the retranslation of overseas investments (11) (74) Unrealised gain on dilution of interest in associate 776 670 ------ ------Total recognised gains and losses relating to the financial year (1,616) (864) ====== ====== Consolidated balance sheetat 31 December 2005 2005 2005 2004 2004 £'000 £'000 £'000 £'000Fixed assetsTangible assets 115 99Investment in associate 710 467 ------ ------ 825 566 Current assetsDebtors 322 114Cash at bank and in hand 5,227 1,014 ------ ------ 5,549 1,128 Creditors: amounts falling due within one year (737) (255) ------ ------Net current assets 4,812 873 ------ ------Total assets less current liabilities 5,637 1,439 ------ ------Net assets 5,637 1,439 ====== ======Capital and reservesCalled up share capital 11,151 1Share premium account 2,297 7,633Foreign exchange reserve (25) (14)Merger reserve (1,248) (1,248)Profit and loss account (6,538) (4,933) ------ ------Total shareholders' funds - equity 5,637 1,439 ====== ====== Consolidated cash flow statementfor the year ended 31 December 2005 2005 2004 £'000 £'000 Cash flow statement Cash outflow from operating activities (1,797) (1,069)Returns on investments and servicing of finance 130 61Taxation 102 96Capital expenditure and financial investment (34) (62) ------ ------Cash outflow before financing (1,599) (974) Financing 5,809 123 ------ ------Increase/(decrease) in cash in the year 4,210 (851) ====== ======Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in the year 4,210 (851) Conversion of loan to equity - 176Foreign exchange movements 3 (74) ------ ------Movement in net funds in the year 4,213 (749) Net funds at the start of the year 1,014 1,763 ------ ------Net funds at the end of the year 5,227 1,014 ====== ====== Notes to the Preliminary Announcement 1 BASIS OF PREPARATION The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2005 or 2004. Stem CellSciences plc was incorporated on 18 May 2005 and the statutory accounts will bedelivered following the Company's annual general meeting. Statutory accounts for2004 for Stem Cell Sciences Holdings Ltd, the parent company prior to the grouprestructuring, have been delivered to the Registrar of Companies. The auditorshave reported on those accounts; their reports were unqualified and did notcontain statements under section 237 (2) or (3) of the Companies Act. 2 TAXATION At 31 December 2005, the Company has significant tax losses (£7.4m) thatwill be carried forward for utilisation against future taxable profits. 3 LOSS PER SHARE Loss per share is calculated as follows: 2005 2004 2005 2004 Loss Loss Loss Loss £'000 £'000 pence per share pence per share Basic (2,381) (1,460) (12.9) (9.9) ====== ====== ====== ======Diluted (2,381) (1,460) (12.9) (9.9) ====== ====== ====== ====== The weighted average number of shares used in each calculation is as follows: 2005 2004 Number of Number of shares shares Average number of shares in issue during the year 18,470,017 14,770,411 =========== =========== The loss attributable to ordinary shares and the number of ordinary shares for the purpose of calculating the diluted earnings per share are identical to those used for basic earnings per share. The exercise of share options would have the effect of reducing the loss per share and consequently is not taken into account in the calculation for diluted loss per share. 4 RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS 2005 2004 £'000 £'000 Group operating loss (2,138) (1,152)Depreciation 30 27(Increase)/decrease in debtors (171) 107Increase/(decrease) in creditors 482 (51) ------ ------Net cash outflow from operating activities (1,797) (1,069) ====== ======5 ANALYSIS OF CASH FLOWS 2005 2004 £'000 £'000 Returns on investments and servicing of financeInterest received 130 61 ------ ------Net cash inflow from returns on investment and servicing of finance 130 61 ====== ======Capital expenditure and financial investmentPurchase of tangible fixed assets 34 62 ------ ------Net cash outflow from capital expenditure and financial investment 34 62 ====== ======FinancingIssue of ordinary share capital 5,809 123 ------ ------Net cash inflow from financing 5,809 123 ====== ====== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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