19th Mar 2007 07:03
ReGen Therapeutics PLC19 March 2007 REGEN THERAPEUTICS PLC Chairman's Statement and preliminary results to 31 December 2006 PRELIMINARY STATEMENT to 31 December 2006 2006 was a good year for ReGen in which some important milestones were achievedand which we highlight in the following paragraphs: FINANCIALS Turnover increased by 250% over the previous year to £404,918, with cost ofsales at £208,789. Development costs rose 11% to £825,888, which reflected thecontinuing increase in the Company's research and development programmes. Othercosts, primarily personnel rose by 12% to £1,672,486, which partly reflected theexpansion at our Guildford subsidiary. The result was that loss on ordinaryactivities after taxation increased by 5% to £2,252,860. The only major difference between 2006 and 2005 in balance sheet terms is thereduction in cash at bank and at hand. The Board would like to point out that£1,138,813 was raised in February 2007 following the closure of the accountingperiod. This money is being used in our development of Colostrinin(TM) andzolpidem. SCIENTIFIC AND COMMERCIAL DEVELOPMENT Scientific development: In 2006 ReGen published important papers on the development of both its mainproducts Colostrinin(TM) and zolpidem. Colostrinin(TM): In January 2006 ReGen announced that the full results of an in-vitro studyshowed that Colostrinin(TM) could cause precursor nerve cells to differentiateand proliferate. This was published in the peer-reviewed journal Cell andMolecular Neurobiology(1) in January 2006. The potential to slow down orprevent the death of nerve cells in the brain has clear applicability toneurodegenerative diseases such as Alzheimer's, Parkinson's and AmyotrophicLateral Sclerosis. In August 2006 a further in-vitro study published in the peer reviewed Journalof Experimental Therapeutics and Oncology (2) showed that Colostrinin(TM)reduced the spontaneous or induced mutation frequency in the DNA of cells. Thiswould suggest an impact on both the ageing process and the development ofcancer. Following on from the previous research ReGen announced in February 2007 thatColostrinin(TM) has been shown in an in-vivo study(3) to increase the lifespanand improve the neurological performance of inbred mice predisposed to prematureageing. We are also currently screening peptides derived from Colostrinin(TM) in aprogramme designed to show activity in neurodegenerative disorders. Zolpidem: In May 2006 consultants to the Company Drs Clauss and Nel published an articlein the journal Neurorehabilitation(4) showing that the 'arousal' effect ofzolpidem in three subjects in a persistent vegetative state resulting from braindamage is maintained after daily treatment over a period of up to six years. In December 2006 ReGen started a double blind Phase IIa 'clinical proof ofconcept' study in South Africa in known zolpidem responders. The object of thetrial is to maintain the reversal of brain dormancy and, with either lowerdosage or a different formulation, to lower the sedative effect of zolpidem.The results of this trial are expected in the first half of this year. The Company has a scientific background programme looking at the metabolites ofzolpidem and the likely mode of action. Research from this programme should becompleted in the first half of 2007. We should also stress that a very large amount of media interest was generatedby the zolpidem discoveries. Currently, an independent TV production company ismaking a documentary about what zolpidem has done and this is expected to bescreened in the UK and the US in the near future. Commercial development: The crucial commercial development of the year was announced in July 2006 whenReGen signed its first commercialisation deal for Colostrinin(TM). ReGenentered into an exclusive licence agreement with Metagenics, Inc. for thecommercialisation of Colostrinin(TM) as a human nutraceutical in North America.Headquartered in San Clemente, California, Metagenics is a leading developer,manufacturer and marketer of nutraceuticals, dedicated to researching andevaluating the effects of natural ingredients on genetic expression and proteinactivity. Metagenics states that it serves over 30,000 healthcare practitionersin North America. ReGen produces bulk Colostrinin(TM) in South Dakota and is working withMetagenics to establish the best commercialisation strategy to introduceColostrinin(TM) into the North American market. The agreement providesMetagenics with the exclusive right to market Colostrinin(TM) via healthcareprofessionals with an option to extend this exclusivity into the retailchannels, such as drugstores and supermarkets. This option is valid for sixmonths after first launch of a human nutraceutical containing Colostrinin(TM)and is subject to Metagenics being able to identify retail partners acceptableto ReGen and the achievement of certain performance criteria. ReGen is currently discussing licensing arrangements for other markets inparticular Japan and Australia. We await the results of our zolpidem trial, which is proceeding in South Africa.Following the results, if successful, we will examine whether it is inshareholders interests to try to obtain a licensing deal now or continue furtherwork on the project. SUMMARY With a commercial deal signed for Colostrinin(TM0 and a clinical trial underwayin zolpidem, 2006 was a good year for ReGen. In our view 2007 is a pivotal yearin which we expect Colostrinin(TM) to come to the market and we get the resultsand possible rewards of our zolpidem programme. Percy W LomaxExecutive Chairman 19 March 2007 REGEN THERAPEUTICS PLC Consolidated profit and loss account for the year ended 31 December 2006 2006 2005 £ £ (Unaudited) (Audited) Turnover 404,918 115,657 Cost of sales 208,789 39,713 ________ ________ Gross Profit 196,129 75,944 Administrative costs Development costs 825,888 745,012Other 1,672,486 1,496,465Goodwill amortisation 96,349 94,036 ________ ________ 2,594,723 2,335,513 ________ ________ Operating loss (2,398,594) (2,259,569) Interest receivable 36,003 47,139Interest payable (8,675) (10,216) ________ ________ Loss on ordinary activities before taxation (2,371,266) (2,222,646) Taxation on loss from ordinary activities 118,406 81,930 ________ ________ Loss on ordinary activities after taxation (2,252,860) (2,140,716) ________ ________ Basic and diluted loss per share (0.38)p (0.56)p REGEN THERAPEUTICS PLC Consolidated balance sheet at 31 December 2006 2006 2006 2005 2005 £ £ £ £ (Unaudited) (Unaudited) (Audited) (Audited) Fixed assetsIntangible assets 2,183,597 2,166,765Tangible assets 26,317 21,180 ________ ________ 2,209,914 2,187,945 Current assets Stocks 20,131 4,276Debtors 344,982 309,419Cash at bank and in hand 508,045 941,503 ________ ________ 873,158 1,255,198 Creditors: amounts falling due within one year 632,031 618,477 Provision for liabilities and charges 100,000 ________ ________ Net current assets 141,127 636,721 ________ ________ Total assets less current liabilities 2,351,041 2,824,666 ________ ________ Capital and reservesCalled up share capital 5,992,251 5,797,689Share premium 11,991,836 10,437,948Other reserves 265,745 242,308Profit and loss account (15,898,791) (13,653,279) ________ ________ Shareholders' funds 2,351,041 2,824,666 ________ ________ REGEN THERAPEUTICS PLC Consolidated cash flow statement for the year ended 31 December 2006 2006 2006 2005 2005 £ £ £ £ (Unaudited) (Unaudited) (Audited) (Audited) Net cash outflow from operating activities (2,161,341) (1,263,628) Returns on investments and servicing of financeInterest received 36,003 47,139Interest paid (8,675) (10,216) ________ ________ 27,328 36,923 Taxation 84,872 104,202 Capital expenditure and financial investmentPayments to acquire tangible fixed assets (12,725) (10,814)Payments to acquire intangible fixed assets (92,173) (95,754) ________ ________ (104,898) (106,568)Acquisitions Purchase of a business:Acquisition expenses (21,360) - ________ (21,360) - ________ ________ Net cash outflow before management of liquid resources and financing (2,175,399) (1,229,071) Management of liquid resourcesDecrease/(increase) in short term deposits 436,762 (175,095) ________ ________ 436,762 (175,095) FinancingProceeds of shares issued for cash 1,930,000 1,556,000Expenses paid on share issue (183,112) (133,412) ________ ________ 1,746,888 1,422,588 ________ ________ Increase in cash 8,251 18,422 ________ ________ ReGen Therapeutics Plc Notes forming part of the financial statements for the year ended 31 December2006 1 Accounts The financial information contained in this announcement does notconstitute statutory financial statements within the meaning of Section 240 ofthe Companies Act 1985. The financial information for the year ended 31December 2005 has been extracted from the statutory financial statements forthat year, which have been filed with the Registrar of Companies. The auditreport on those financial statements was unqualified and did not contain anystatement under Sections 237 (2) or (3) of the Companies Act 1985. It didcontain, however, an explanatory paragraph dealing with a fundamentaluncertainty relating to going concern. The financial information for the yearended 31 December 2006 has been extracted from the draft statutory financialstatements for that year upon which the auditors have yet to report. Theauditors have indicated that their final audit report will contain anexplanatory paragraph dealing with the going concern referred to in the nextparagraph. 2 Going concern The directors have reviewed and amended the Company's plans forutilising its existing resources and believe that future funds availabletogether with revenues from North American licensing will be sufficient for thegroup's purposes for a minimum of 12 months. On this basis the Directors consider it appropriate to prepare the financialstatements on the going concern basis. If licensing deals, further fundraising or ongoing drug development programmeare not successful then adjustments may be necessary to write down assets totheir recoverable amounts, reclassify fixed assets and long term liabilities ascurrent and provide for additional liabilities. 3 Accounting policies In preparing these financial statements the Group has adopted FRS 20 "Share-based payment" for the first time. FRS 20 "Share based payment" requires therecognition of share-based payments at fair value at the date of grant. Prior tothe adoption of FRS 20, the Group recognised the financial effect of the sharebased payment in the following way: when shares and share options were grantedto employees a charge was made to the Group profit and loss account and areserve created in capital and reserves to record the intrinsic value of theawards in accordance with UITF Abstract 17 (revised 2003) 'Employee ShareSchemes'. The change in accounting policy has not resulted in a prior year adjustment asall the previous outstanding share options issued after 7 November 2002 hadvested as of 1 January 2006, and no liabilities for share-based transactionsexisted at 1 January 2006. 4 Intangible fixed assets Costs amounting to £92,173 relating to patent rights have been capitalised inthe year in accordance with the Group's stated accounting policy. 5 Share Capital On 14 February 2006, the Company issued 1,562,500 ordinary shares of 0.1p eachat a premium of 1.5p per share for a consideration of £25,000 in exchange for100 £1 ordinary shares, the entire share capital of Sciencom Limited. Inaccordance with Section 131 of the Companies Act 1985 this premium has not beenrecorded as share premium. However it has been included in other reserves. On 25 May 2006, the Company issued 77,500,000 ordinary shares of 0.1p each at apremium of 0.9p per share for a consideration of £775,000. On 8 June 2006, the Company issued 4,500,000 ordinary shares of 0.1p each at apremium of 0.9p per share for a consideration of £45,000. On 26 July 2006, the Company issued 111,000,000 ordinary shares of 0.1p each ata premium of 0.9p per share for a consideration of £1,110,000. The issued shares rank pari passu with existing shares. 6 Loss per share The basic loss per ordinary share has been calculated using the weighted averagenumber of shares in issue during the relevant financial year. The weightedaverage number of equity shares in issue are 595,192,463 ordinary shares of 0.1peach and the loss on ordinary activities after taxation is £2,252,860 (2005 -383,344,701 ordinary shares of 0.1p each and a loss on ordinary activities aftertaxation of £2,140,716). The effect of all potential ordinary shares is anti-dilutive. 7 Reconciliation of movements in equity shareholders' funds 2006 2005 £ £ (Unaudited) (Audited) Loss for the financial year (2,252,860) (2,140,716) Share option charge 7,348 - New shares issued 1,771,887 1,422,588 ________ ________ (Decrease) to equity shareholders' funds (473,625) (718,128) Opening equity shareholders' funds 2,824,666 3,542,794 ________ ________ Closing equity shareholders' funds 2,351,041 2,824,666 ________ ________ 8 Reconciliation of operating loss to net cash outflow from operatingactivities 2006 2005 £ £ (Unaudited) (Audited) Operating loss (2,398,594) (2,259,569)Amortisation 221,601 119,119Depreciation 7,588 8,132Share option charge 7,348 -(Increase) in stocks (15,856) (3,776)(Increase)/decrease in debtors (1,929) 831,858Increase in creditors 18,501 40,608 ________ ________ Net cash outflow from operating activities (2,161,341) (1,263,628) ________ ________ 9 Reconciliation of net cash flow to movement in net funds 2006 2005 £ £ (Unaudited) (Audited) Increase in cash in the year 8,251 18,422(Decrease)/increase in liquid resources (436,762) 175,095 ________ ________ Movement in net (debt)/funds in the year arising from cash flows (428,511) 193,517 Net funds at start of year 864,116 670,599 ________ ________ Net funds at end of year 435,605 864,116 ________ ________ The annual report and financial statements for the year ended 31 December 2006will be sent to all shareholders in due course and copies will be available fromthe company's business address at Suite 406, Langham House, 29-30 MargaretStreet, London, W1W 8SA. Further information: Andrew MarshallGreycoat CommunicationsTel: 020 7960 6007 -------------------------- (1) Volume 25, nos 7, November 2005 (2) Volume 5, pages 249 to 259 (3) Poster; 8th International Conference of Alzheimer's and Parkinson's disease,Salzburg, Austria, March 14-18 2007 (4) Volume 21, pages 23 to 28 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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