22nd Jan 2008 07:00
GW Pharmaceuticals PLC22 January 2008 GW Pharmaceuticals plc ("GW" or "the Group") Preliminary Results For The Year Ended 30 September 2007 Porton Down, UK, 22 January 2008: GW Pharmaceuticals plc (AIM: GWP), thedeveloper and manufacturer of a range of new cannabinoid medicines includingSativex(R), announces its preliminary results for the year ended 30 September2007. OPERATIONAL HIGHLIGHTS • Sativex US licence agreement signed with Otsuka, including $18m signature fee, additional $255m milestone payments and significant long term commercial supply price and royalty • Global cannabinoid research collaboration signed with Otsuka to research and develop cannabinoid medicines in the field of CNS and oncology • Sativex approved in Canada for the relief of cancer pain • First large scale US clinical trial of Sativex in cancer pain commenced with results due at end 2008 • Sativex European regulatory application in MS spasticity withdrawn. Additional Phase III MS spasticity trial, requested by regulators, commenced with results due at end 2008 • European Phase III MS neuropathic pain trial completed patient recruitment and due to report results in late Q1 08 • UK regulator, the MHRA, published report on Sativex due to the extent of " named patient" prescription use of Sativex in the UK • New Zealand government requested access to Sativex for named patient prescriptions and invited regulatory application • THCV, a new potential cannabinoid treatment for diabetes and related metabolic disorders, successfully completes Phase I trial with plans to enter Phase II in 2008 FINANCIAL HIGHLIGHTS • Turnover of £5.7m (2006: £2.0m) • Net loss for the year of £10.9m (2006: £13.3m), in line with expectations • Cash and short term deposits at 30 September 2007 of £21.0m (2006: £19.9m) Dr Geoffrey Guy, GW's Chairman, said: "The formation of our strategic alliancewith Otsuka marked 2007 as a transformational year for GW. The US licenceagreement has secured the future of Sativex in the world's largestpharmaceutical market whilst the global cannabinoid research collaboration hasaccelerated the development of GW's pipeline of new cannabinoid medicines in thefield of central nervous system disorders and oncology. "2008 promises to be an equally eventful year for GW, with the results of anumber of key Sativex Phase III trials in Europe and the US due to be reported.The momentum behind Sativex and the wider field of cannabinoid medicines, ashighlighted today by the promising results of our THCV metabolic researchprogramme, continues to grow. We look forward to reporting news of our progressduring 2008." Enquiries: GW Pharmaceuticals plc (Today) + 44 20 7831 3113Dr Geoffrey Guy, Executive Chairman (Thereafter) + 44 1980 557000Justin Gover, Managing Director Financial Dynamics + 44 20 7831 3113David Yates / Ben Atwell An analyst presentation of the interim results is being held today at 09.30 atFinancial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB.Please contact Gemma Cross Brown at Financial Dynamics on +44 20 7269 7125 fordetails. An audio webcast of the presentation will be available on GW's websiteat www.gwpharm.com later this afternoon. GW Pharmaceuticals plc ("GW" or "the Group") Preliminary Results For The Year Ended 30 September 2007 GW's prospects and strategic outlook were significantly enhanced in 2007 throughthe signing of two major licence agreements with Otsuka Pharmaceutical Co. Ltd,one of Japan's largest pharmaceutical companies and a world leader in CentralNervous System (CNS) research. The collaboration with Otsuka has not onlycreated a pathway towards the future commercialisation of our lead product,Sativex, in the United States, the world's largest pharmaceutical market, but ithas also provided important new investment in the development of GW's pipelineof new cannabinoid medicines. Having completed the US licence for Sativex, GW has now successfully partneredthis important product across Europe (Bayer HealthCare in UK, Almirall incontinental Europe) and North America (Bayer HealthCare in Canada, Otsuka in theUS). Taken together, the licensing terms for this product total $51m ofsignature fees, $376m of milestone payments as well as substantial long-termsupply price and royalty provisions. The international clinical and regulatory programme for Sativex continues toprogress. In Canada, we achieved our second regulatory approval for Sativex,extending the licence to include the indication of cancer pain. In the US, wereached agreement with the Food & Drug Administration (FDA) on our proposeddevelopment plan and commenced the first US late stage clinical trial in cancerpain. In Europe, we elected to withdraw our Multiple Sclerosis (MS) Spasticityapplication but received clear guidance on the additional trial required forapproval in this indication, a trial which is now underway. In the indicationof MS neuropathic pain, our Phase III clinical trial completed recruitment ontime and we look forward to results in the near future. The global cannabinoid research collaboration with Otsuka has now commenced anda range of pre-clinical research activities are progressing with promisingcannabinoid product candidates in the field of CNS and oncology. In addition, wecontinue to invest in early stage cannabinoid research in other therapeuticareas, most notably in the field of diabetes and other metabolic disorders wherewe advanced a new product, THCV, into Phase I clinical trials. OTSUKA Sativex US Licence In February 2007, GW granted Otsuka an exclusive licence to develop and marketSativex, GW's lead product, in the US. GW will be responsible for themanufacture and supply of Sativex to Otsuka, and Otsuka will be responsible formarketing and sales activities in the US. The financial terms of this agreement include an $18m signature fee, which hasbeen received, further milestone payments to GW of up to $255m as well as a longterm commercial supply price and royalty. In addition, Otsuka will bear thecosts of all US development activities for Sativex in the treatment of cancerpain, additional indications and future formulations. Under this agreement, GW and Otsuka jointly oversee US clinical development andregulatory activities as well as the commercialisation strategy. GW isresponsible for carrying out the US clinical development program, the costs ofwhich are borne by Otsuka. GW will also continue to be the holder of theInvestigational New Drug (IND) application with the FDA until the filing of aNew Drug Application, which will be in Otsuka's name. Cannabinoid Research Collaboration In July 2007, GW extended its strategic collaboration with Otsuka by signing aglobal cannabinoid research collaboration in the field of CNS and oncology inorder to research, develop and commercialize a range of candidate cannabinoidproducts. The cannabinoid research collaboration has an initial term of three years,during which Otsuka will make available a research fund of $9 million, which maybe increased from time to time by Otsuka, to cover research activities carriedout by GW and its scientific collaborators under this agreement. The GW-Otsuka collaboration research team, which incorporates senior scientistsfrom both companies, is evaluating a range of GW cannabinoids as drug candidateswithin the field of CNS and oncology, with a view to selecting the mostpromising candidates for full clinical development, regulatory approval andglobal commercialisation. Products selected for full development will be thesubject of a licence from GW. Under the terms of each product licence, Otsukawill fund the global development and commercialisation of such products, and GWwill receive licence fees, milestone payments and a long term commercial supplyprice and royalty. The financial terms of each licence are to be agreed at thetime of selection of each product for global development. SATIVEX REGULATORY STRATEGY The clinical and regulatory strategy for Sativex is focused on four specifictherapeutic indications, each of which represents a distinct regulatoryopportunity and each of which requires a distinct set of clinical efficacy data. These indications are as follows: • Cancer Pain • MS Neuropathic Pain • MS Spasticity • Peripheral Neuropathic Pain Each of these target indications is supported by existing positive Phase IIIdata and will continue to be supplemented by further late stage trials over thenext few years in order to supplement globally approvable regulatory packagesand provide more data to support the marketing of the product post approval. The lead indication for Sativex differs across different regions of the world.In the US, Cancer Pain is the chosen initial target. In Canada, MS NeuropathicPain was the first approved indication, which has now been successfully followedby the approval in Cancer Pain. In Europe, the entry point for Sativex is MS,with both MS Spasticity and MS Neuropathic Pain indications representingdistinct near term approval possibilities This clinical and regulatory programme is designed to provide multipleopportunities over the next few years to obtain approvals for Sativex acrossvarious indications in a number of territories. GEOGRAPHIC REVIEW United States The FDA has permitted Sativex to enter directly into Phase III clinicaldevelopment in the US for the treatment of pain in patients with advancedcancer, who experience inadequate analgesia during optimized chronic opioidtherapy. Since the signature of the Otsuka licence agreement, GW and Otsuka haveheld positive discussions with the FDA with regard to the US development plan,in particular with respect to the first US pivotal efficacy clinical trial. GW and Otsuka commenced this first US pivotal trial in November 2007. Thisfive-week, placebo-controlled study is a Phase II/III dose ranging study whichwill include approximately 40 centres primarily in the US and will recruit atotal of 336 patients. The primary objective of the study is to evaluate thepotential role and dose range of Sativex in these patients as an adjunct totheir pre-existing pain medications. This Phase II/III dose ranging study follows positive results from a previous,two-week clinical trial in 177 patients conducted in Europe. In this Europeanstudy, Sativex, as adjunctive treatment to strong opioid therapy, was associatedwith a larger decrease in pain score than was placebo and strong opioids (p=0.014), the primary endpoint of the study. In addition, 43% of patients whoreceived Sativex, while remaining on opioids, exhibited at least a 30% decreasein their pain score compared to 21% of patients receiving placebo and opioids (p= 0.024) It is expected that results from the first US study will be available at the endof 2008. The current US development program anticipates two further Phase IIItrials to be conducted during 2009, prior to a subsequent submission of a NewDrug Application to the FDA. All data generated in the US will also be availableto GW for submission to regulatory authorities in Europe and elsewhere. Canada In August 2007, Health Canada approved Sativex as adjunctive analgesic treatmentin adult patients with advanced cancer who experience moderate to severe painduring the highest tolerated dose of strong opioid therapy for persistentbackground pain. This is the second approval for Sativex in Canada, followingthe initial approval in 2005 in the indication of MS Neuropathic Pain. Both approvals for Sativex in Canada have been obtained under the Notice ofCompliance with Conditions (NOC/c) policy. Products approved under HealthCanada's NOC/c policy have demonstrated promising benefit, are of high qualityand possess an acceptable safety profile based on a benefit/risk assessment forthe approved use. The condition can be removed by Health Canada following thesubmission of confirmatory clinical data. The product is exclusively marketed in Canada by Bayer HealthCarePharmaceuticals. Europe In July 2007, GW elected to withdraw its European regulatory application forSativex in the treatment of MS Spasticity with a view to resubmitting followingcompletion of an additional clinical trial. This additional clinical trialcommenced in November 2007 and is due to report results around the end of 2008. The decision to withdraw followed constructive and detailed discussions withregulatory authorities in which they provided a clear path to approval forSativex in the treatment of MS Spasticity. The regulatory application processconfirmed that quality and safety data were sufficient to support a marketingauthorisation of Sativex. However, in respect of efficacy, the regulatorsrequired GW to carry out an additional clinical trial to clarify the magnitudeof the treatment effect of Sativex in "responders" (those patients that respondto treatment). The trial is intended to replicate "post-hoc" analyses on GW'sexisting clinical data which shows that responders can be reliably identifiedafter four weeks treatment and that, after 12 weeks, the difference from placebois clinically important and highly statistically significant (p=0.015). There are two potential opportunities for re-submission in Europe in the nearterm. In the indication of MS Neuropathic Pain, a second pivotal Phase III trialhas completed patient recruitment and is due to report results in late Q1 2008.This could lead to a regulatory filing in this indication shortly thereafter. Inthe event that GW does not submit for this indication, the second opportunity isto resubmit for MS Spasticity in early 2009 following completion of the newstudy outlined above at the end of 2008. Although Sativex still awaits regulatory approval in Europe, the UK regulator,the Medicines and Healthcare products Regulatory Agency (MHRA), published aPublic Information Report on Sativex in December 2007. The MHRA took thisunprecedented step due to its view of the "huge public interest" in Sativex andthe fact that approximately 1400 patients in the UK have so far received themedicine on prescription on a named patient basis. New patients continue to beprescribed Sativex every day. Hence, the MHRA considered that it is in thepublic interest for potential prescribers to have further information on themedicine. New Zealand In response to requests from the New Zealand Ministry of Health, GW is settingup a programme to enable patients in New Zealand to access Sativex on a namedpatient basis. Any prescribing decision shall be a matter for the physician todetermine on a case by case basis. In order to assist doctors, the New Zealand authorities have published adocument for application and approval to administer Sativex. According to thisdocument, eligible patients include those with nausea, anorexia and wasting(cachexia) associated with cancer and AIDS, or chronic pain (including cancerpain) for which other pain relief treatments are ineffective, or havesignificant/severe adverse side-effects; or neuropathic pain (associated withconditions including MS, stroke, cancer, spinal cord injury, severe physicaltrauma and peripheral neuropathy resulting from diabetes) or muscle spasm andspasticity associated with MS or spinal cord injury. As part of discussions with the New Zealand authorities, GW was invited tosubmit a regulatory application for Sativex to MedSafe, the New Zealandregulatory authority, under Section 23 of the Medicines Act 1981. Thisapplication was submitted in late December 2007. If successful, Sativex would begranted approval with a commitment to provide additional data post-marketauthorisation. SATIVEX CLINICAL TRIALS PROGRAMME MS Spasticity The body of clinical evidence supporting the efficacy of Sativex in MSSpasticity includes two pivotal Phase III trials, a pooled analysis, as well assupportive positive data from Phase II trials. This evidence formed the basisof the recent regulatory submission during which the regulators confirmed thatthe data provide statistically significant evidence and "could in principle leadto a positive risk benefit conclusion". As mentioned above, the outstanding regulatory requirement is to perform anadditional Phase III clinical trial, which is now underway and due to reportresults around the end of 2008. This new study follows an "enriched design"which first identifies responders over a four week period (Phase A), and thenfocuses on analysing the effect of Sativex vs placebo on those responders over afurther period of 12 weeks (Phase B). The study aims to recruit a total of 244patients into Phase B. The primary endpoint of the study is the differencebetween the Sativex and placebo groups in Phase B of the study in MS Spasticityas measured on a Numeric Rating Scale. This study will include hospital centresacross five European countries. MS Neuropathic Pain GW has obtained approval for Sativex in Canada in the indication of NeuropathicPain in MS. This approval was obtained under the Canadian NOC/c policy on thebasis of a single positive Phase III trial. This study, which was published inthe peer-reviewed journal, Neurology (1), showed that Sativex was significantlysuperior to placebo in reducing pain (p=0.005) and sleep disturbance (p=0.003). GW has completed patient recruitment in a second Phase III study in thisindication. The study has recruited 339 patients in the UK, Canada, France,Spain and the Czech Republic and is GW's largest clinical trial to date. Theduration of treatment in the study is 14 weeks. The last patient has exited thestudy and headline results are expected in late Q1 2008. This second pivotal Phase III study in MS Neuropathic Pain has two potentialroles in the regulatory strategy for Sativex, as follows: In Europe, this study may provide a clinical data package to support aregulatory submission for Sativex in the indication of MS Neuropathic Pain In Canada, this study is intended to meet the condition associated with theapproval of Sativex in order to obtain a full Notice of Compliance Cancer Pain GW's Cancer Pain programme is being performed in the US and funded by Otsukaunder the Sativex US Licence Agreement. The status of this trials programme isdescribed above. These trials are designed to obtain approval from the FDA butit is also intended that they form the basis of a European regulatoryapplication in this indication. Peripheral Neuropathic Pain GW has generated positive results from clinical trials in a number of models ofperipheral neuropathic pain. These data contribute to a future regulatory filingin this indication and GW intends to continue to add to this evidence base byconducting additional confirmatory trials in due course following the initialapproval for Sativex in Europe for MS. THCV CLINICAL PROGRAMME In June 2007, GW commenced the clinical development programme of its novelcannabinoid product, delta-9-tetrahydrocannabivarin (THCV). THCV has shownpromise in pre-clinical studies as a potential treatment for diabetes andrelated metabolic disorders. The first Phase I study was a randomised, double blind, placebo controlled, doseescalation, safety and tolerability study of single doses of THCV in twelvehealthy volunteer subjects. This trial showed that the study medication was welltolerated at target therapeutic doses and demonstrated a satisfactory safetyprofile. Following on from this first study, GW is now preparing for THCV to enter aPhase IIa multiple dose study in diabetic patients in 2008. OTSUKA CANNABINOID RESEARCH COLLABORATION GW has, for several years, been undertaking a primary cannabinoid researchprogramme addressing a range of therapeutic areas under the direction ofProfessor Roger Pertwee, GW's Director of Pharmacology, at Aberdeen University,and in collaboration with a number of other world leading cannabinoidscientists. This research programme received a significant boost this year as a result ofthe collaboration signed in July 2007 with Otsuka to research, develop andcommercialise novel cannabinoid medicines in the areas of CNS and oncology. Under the GW-Otsuka collaboration, senior scientists from both companies aredirecting research into a range of GW cannabinoids as drug candidates within thefield of CNS and oncology. The research is being carried out at AberdeenUniversity as well as other selected international academic centres with whom GWhas developed a close relationship. PUBLICATIONS We continue to publish clinical papers in prestigious peer-review journals andpresent data at international congresses. In 2007, notable publications ofpositive Sativex data included a Phase III MS spasticity study in The EuropeanJournal of Neurology (2), a long term MS neuropathic pain study in ClinicalTherapeutics (3) and a Phase III peripheral neuropathic pain study in thejournal, Pain (4). Presentations of clinical data were made at meetings of theInternational Congress on Neuropathic Pain, European Neurological Society,European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS),and the British Pain Society. In addition to clinical data, GW's cannabinoidpre-clinical research continues to be published. In 2007, notable papersincluded those published in the British Journal of Pharmacology, EuropeanJournal of Pharmacology, European Journal of Neuroscience and the Journal ofNeuroscience. FINANCIAL REVIEW The 2007 financial year saw GW improve its cash position following signature ofthe Sativex US licence agreement with Otsuka, commencement of Otsuka-fundedresearch activities under both the US and cannabinoid research collaborationagreements, as well as achievement of the cancer pain approval in Canada. Weenter 2008 in a strong financial position with cash and short term deposits of£21.0m (2006: £19.9m). As part of the US licence agreement, in addition to the $18m (£9.2m) signaturefee received and further $255m of potential milestone payments, Otsuka will fundthe US development programme for Sativex. GW is responsible for carrying outthis programme and is paid quarterly in advance by Otsuka to cover all thirdparty costs. The research collaboration agreement will provide $9m over an initial three yearterm to fund research into the development of new cannabinoid medicines withinthe fields of CNS and oncology. Each new drug candidate selected by Otsuka forfurther development shall be licensed to Otsuka on commercial terms. Both the Otsuka agreements enable GW to progress the US development of Sativexand to exploit exciting early stage research opportunities without the need tocall on internal funds. Profit and Loss Account Turnover has increased substantially this year to £5.7m (2006: £2.0m). Sales of Sativex grew by 78% in the UK and by 125% in Canada. Turnover in thesetwo countries amounted to £1.1m (2006: £0.55m). Total product sales at £1.1m decreased from the prior year's total of £1.35m dueto completion of the fixed term supply contract with the Catalan governmentwhich accounted for turnover of £0.8m in 2006. For the first time GW has recorded research and development fee revenuestotalling £2.5m (2006: £nil). These fees represent research and developmentcosts incurred by GW and charged to Otsuka under both the Sativex US licenceagreement and the research collaboration. The balance of the £5.7m turnover for the year comprises £0.75m (2006: £nil) ofmilestone income for the Canadian cancer pain approval, plus £1.35m (2006:£0.6m) of income arising from recognition of up-front signature fees from boththe Almirall and Otsuka licence agreements. In respect of Almirall, the £12m signature fee is being recognised at the rateof £0.8m per year over 15 years. For Otsuka, where the Group's obligations areweighted towards the earlier years, the £9.2m signature fee will be recognisedfrom 1 April 2007 to 30 September 2011 at the rate of £1.1m per year and at£0.28m per year for the following 15 years. Research and development expenditure, which is expensed as incurred, was £15.0m(2006: £13.1m), of which £2.5m was paid for by Otsuka. As expected, GW- fundedexpenditure was in line with the prior year at £12.5m (2006: £13.1m). Management and administrative expenses (including amortisation of goodwill)decreased to £3.2m (2006: £3.5m) and the Group benefited from net interestincome of £0.96m (2006: £0.93m). The adoption of FRS20 (Share-based payments) has resulted in a charge of £1.1min the year and £1.3m in the prior year. Comparatives have been restated toreflect this additional non-cash charge. All share options have been valuedusing the Black-Scholes option-pricing model. The Group has claimed a research and development tax credit of £2.0m (2006:£2.0m) which is shown as a credit to the profit and loss account and is subjectto final agreement with HM Revenue & Customs. The Group loss for the year ended 30 September 2007 was £10.9m (2006: £13.3m). The average headcount of the Group for the year was 120 (2006: 110). Balance Sheet Capital expenditure of £0.5m (2006: £0.6m) was focussed primarily upon improvingmanufacturing efficiency. Debtors at 30 September 2007 were £2.8m (2006: £4.3m), consisting of £2.0m R&Dtax credit, £0.2m of trade debtors (from sales of Sativex) and £0.6m of otherdebtors and prepayments. The reduction compared to 2006 was due to the recoveryduring the year of £1.2m of withholding tax from the Spanish tax authority. At 30 September 2007 the Group had received £1.5m of advance payments forresearch activities to be carried out on behalf of Otsuka. This has beendisclosed as a creditor due within one year and will be recognised as revenuewithin the next six months as the work is completed. Deferred income of £19.2m, of which £1.9m is shown in creditors due within oneyear and £17.3m is shown in creditors due after more than one year, representsthe balance of non-refundable Sativex licence agreement signature fees. Thiswill be recognised as revenue in future periods. The Group's net funds comprise cash balances together with amounts held on shortterm deposit totalling £21.0m (2006: £19.9m). 2008 Financial Year The Group will adopt International Financial Reporting Standards ('IFRS') in its2008 financial statements. Initial analysis suggests that adoption will resultin changing our goodwill amortisation policy to an annual impairment review. Wedo not expect to make any other material adjustments to reported profit or netassets as a result of this transition. In 2008, we expect GW-funded research and development expenditure to be in linewith that incurred in 2007. Total research and development expenditure isexpected to rise by between 25% and 40% as a result of Otsuka-funded activities.All of this third party funded research will result in additional sales revenuesin the form of research and development fees. BOARD OF DIRECTORS During the year, we were pleased to welcome to the Board two new independentnon-executive directors, James Noble and Richard Forrest, in place of David Maceand David Morrison, both of whom have stood down from the Board. James Noble hasalso been appointed to the newly created position of Deputy Chairman and is thenominated senior independent director. Now at the age of 74, Dr Brian Whittle, Scientific Director, has informed theBoard that he intends to retire at the 2008 Annual General Meeting. AlthoughBrian has gradually decreased his working time over the last few years, heplayed an instrumental role in the development of GW and will be greatly missed. SUMMARY AND PROSPECTS The formation of our strategic alliance with Otsuka marked 2007 as atransformational year for GW. The US licence agreement has secured the future ofSativex in the world's largest pharmaceutical market whilst the globalcannabinoid research collaboration has accelerated the development of GW'spipeline of new cannabinoid medicines. During the year, we also secured afurther approval for Sativex in Canada for the treatment of cancer pain andachieved clarity from the European regulators as to their requirements to gainapproval. Other highlights in 2007 include the increasing named patientprescription use of Sativex in the UK and the commencement of clinical trialsfor a novel cannabinoid medicine, THCV. 2008 promises to be an equally eventful year for GW, with the results of anumber of key Sativex Phase III trials in Europe and the US due to be reported.The momentum behind Sativex and the wider field of cannabinoid medicinescontinues to grow and we look forward to reporting news of our progress during2008. Footnotes: (1) D.J.Rog, T.J.Nurmikko, T.Friede, and C.A Young. Randomized, controlled trial of cannabis-based medicine in central pain in multiple sclerosis. Neurology 2005;65:812 (2) Collin C, Davies P, Mutiboko IK, Ratcliffe S, for the Sativex Spasticity in MS Study Group. Randomised controlled trial of cannabis based medicine in spasticity caused by Multiple Sclerosis. European Journal of Neurology (2007) 14 (3), 290-296 (3) Rog D, Nurmikko T, Young C. Oral Delta-9 Tetrahydrocannabinol/ cannabidiol for neuropathic pain associated with multiple sclerosis: an open label, uncontrolled, 2 year extension trial. Clinical Therapeutics. 2007: 9; 2068-2079 (4) Nurmikko T, Serpell M, et al. Sativex Successfully Treats Neuropathic Pain Characterised by Allodynia: a Randomised, Double-Blind, Placebo- Controlled Trial. Pain. 2007: doi:10.1016/j.pain.2007.08.028 Enquiries: GW Pharmaceuticals plc (Today) + 44 20 7831 3113Dr Geoffrey Guy, Executive Chairman (Thereafter) + 44 1980 557000Justin Gover, Managing Director Financial Dynamics + 44 20 7831 3113David Yates / Ben Atwell This news release may contain forward-looking statements that reflect theGroup's current expectations regarding future events, including the clinicaldevelopment and regulatory clearance of the Group's products. Forward-lookingstatements involve risks and uncertainties. Actual events could differmaterially from those projected herein and depend on a number of factors,including (inter alia), the success of the Group's research strategies, theapplicability of the discoveries made therein, the successful and timelycompletion of clinical studies, including with respect to Sativex and theGroup's other products, the uncertainties related to the regulatory process, andthe acceptance of Sativex and other products by consumers and medicalprofessionals GW Pharmaceuticals plc Preliminary Results for the year ended 30 September 2007 Consolidated Profit and Loss Account Notes 2007 2006 As restated £000's £000'sTurnover 2 5,677 1,981Cost of sales (254) (277) __________ __________Gross Profit 5,423 1,704Research and development costs 3 (14,970) (13,102)Management and administrative expenses (3,239) (3,468)Share-based payment (1,130) (1,338) __________ __________Operating loss (13,916) (16,204)Interest receivable 958 929 __________ __________Loss on ordinary activities before taxation (12,958) (15,275)Tax credit on loss on ordinary activities 4 2,015 2,022 __________ __________Loss on ordinary activities after taxation beingretained loss for the financial year (10,943) (13,253) __________ __________ Loss per share - basic and diluted 5 (9.1p) (11.2p) All activities relate to continuing operations. The Group has no recognised gains or losses other than the losses above andtherefore no separate statement of total recognised gains and losses has beenpresented. The results for the year ended 30 September 2006 have been restated to reflectthe adoption of FRS 20 Share-Based Payment as explained in note 9. GW Pharmaceuticals plcPreliminary Results for the year ended 30 September 2007Consolidated Balance Sheet Notes At 30 Sept At 30 Sept 2007 2006 £000's £000'sFixed assetsIntangible assets - goodwill 4,853 5,210Tangible assets 1,082 952 __________ __________ 5,935 6,162 __________ __________Current assetsStock 535 695Debtors 2,815 4,335Cash held on deposit as short term investments 13,000 14,437Cash at bank and in hand 7,966 5,438 __________ __________ 24,316 24,905Creditors: Amounts falling due within one year (7,634) (5,403) __________ __________Net current assets 16,682 19,502 __________ __________Total assets less current liabilities 22,617 25,664 __________ __________Creditors: Amounts falling due after more than one year (17,299) (10,567)Provisions for liabilities and charges (12) (40) __________ __________Net assets 5,306 15,057 __________ __________ Capital and reservesCalled-up share capital 120 120Share premium account 6 58,272 58,210Other reserves 6 19,262 19,262Profit and loss account 6 (72,348) (62,535) __________ __________Shareholders' funds 7 5,306 15,057 __________ __________ GW Pharmaceuticals plcPreliminary Results for the year ended 30 September 2007Consolidated Cash Flow Statement Notes 2007 2006 £000's £000'sNet cash outflow from operating activities 8 (1,453) (3,275)Returns on investments and servicing of finance 960 919Taxation 2,022 1,678Capital expenditure (500) (593) __________ __________Cash in / (outflow) before management of liquid resources and financing 1,029 (1,271)Management of liquid resources 1,437 (4,317)Financing 62 8,113 __________ __________Increase in cash during the year 2,528 2,525 __________ __________ Notes: 1 Basis of presentation The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 30 September 2007 or 2006, but is derivedfrom those accounts. Statutory accounts for 2006 have been delivered to theRegistrar of Companies and those for 2007 will be delivered following theCompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under s. 237(2) or(3) Companies Act 1985. This announcement is prepared on the basis of the accounting policies as statedin the previous year's financial statements with the exceptions of FRS 20 "Share-based payment" which was adopted during the year. See note 9 for details. The Board of Directors of the Company approved the statement on 21 January 2008. The statutory accounts will be issued to shareholders shortly, together with thenotice for the Annual General Meeting to be held at 11am on 18 March 2008 atPorton Down Science Park, Salisbury, Wiltshire. 2 Turnover 2007 2006 £000's £000'sProduct sales 1,113 1,348Research and development fees 2,464 -Licensing fees: signature fees 1,350 633Licensing fees: development and approval fees 750 - __________ __________ 5,677 1,981 __________ __________ 3 Research and Development expenditure 2007 2006 £000's £000'sGW-funded research 12,506 13,102Development partner-funded research 2,464 - __________ __________ 14,970 13,102 __________ __________ 4 Tax credit on loss on ordinary activities The tax credit of £2,015,000 (2006: £2,022,000) has arisen as a result of theresearch and development expenditure claimed under the Finance Act 2000. At 30 September 2007 the Group had trading losses of approximately £41m (2006:£38m) available to carry forward against future tax liabilities. The tax credit and trading losses to be carried forward for the year are subjectto the agreement of HM Revenue & Customs. 5 Loss per share The calculations of loss per share are based on the following losses and numbersof shares. Basic Diluted 2007 2006 2007 2006 £000's £000's £000's £000'sLoss for the financial year (10,943) (13,253) (10,943) (13,253) ___________ ___________ ___________ ___________ 2007 2006 Number of shares Number of sharesWeighted average number of shares: 120,138,689 118,443,944 ___________ ___________ Since the Group reported a net loss, diluted loss per share is equal to basicloss per share. Hence, the calculation of diluted loss per share does notinclude the potential affect of outstanding share options and warrants. 6 Reserves Share premium Other Profit and account reserves Loss account Total £000's £000's £000's £000'sAt 1 October 2006 58,210 19,262 (62,535) 14,937Retained loss for the year - - (10,943) (10,943)Exercise of share options 62 - - 62Share-based payment - - 1,130 1,130 __________ __________ __________ _________At 30 September 2007 58,272 19,262 (72,348) 5,186 __________ __________ __________ _________ 7 Reconciliation of movements in Group shareholders' funds 2007 2006 £000's £000'sLoss for the financial year (10,943) (13,253)Add share-based payment 1,130 1,338New ordinary shares issued net of expenses 62 8,113 __________ __________Net reduction in shareholders' funds (9,751) (3,802)All employee share scheme charge - 147Opening shareholders' funds 15,057 18,712 __________ __________Closing shareholders' funds 5,306 15,057 __________ __________ 8 Reconciliation of operating loss to net cash outflow from operating activities 2007 2006 £000's £000'sOperating loss (13,916) (16,204)Depreciation charge 370 364Amortisation of goodwill 357 356Decrease / (increase) in stocks 160 (39)Decrease / (increase) in debtors 1,542 (1,846)Increase in creditors 8,904 12,609All employee share scheme charge - 147Share-based payment charge 1,130 1,338 __________ __________Net cash outflow from operating activities (1,453) (3,275) __________ __________ 9 Share-based payments The Group has applied the requirements of FRS 20 Share-based Payment in theyear. In accordance with the transitional provisions, FRS 20 has been applied toall grants of equity instruments after 7 November 2002 that were unvested as at1 October 2005. The Group issues equity-settled share-based payments to employees.Equity-settled share-based payments are measured at fair value at the date ofgrant. The fair value is expensed to the profit and loss account on astraight-line basis over the vesting period, based on the Group's estimate ofshares that will eventually vest and adjusted for the effect of non-market basedvesting conditions, with a corresponding credit being made to the profit andloss reserve. Fair value is measured using the Black-Scholes pricing model. The expected lifeused in the model has been adjusted, based on the Group's estimate of the sharesthat will eventually vest and for the effect of non-market based conditions. The adoption of FRS 20 has resulted in a change in accounting policy forshare-based payments. A prior year adjustment has been made to the financialinformation set out for the year ended 30 September 2006 to apply charges to theprofit and loss account for share options granted. The Group has recognised a total expense of £1,130,000 relating toequity-settled share option scheme transactions in the year to 30 September 2007(2006: £1,338,000). The impact on net assets was £nil (2006: £nil). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
GWP.L