29th Nov 2007 07:01
Phytopharm PLC29 November 2007 Company Contact: U.K. Investor Relations Contact: FDPhytopharm plc David YatesDr Daryl Rees CEO Ben AtwellPiers Morgan CFO +44 207 831 3113+44 1480 437 697www.phytopharm.com 29 November 2007 Phytopharm plc Preliminary Results for the period ended 30 September 2007 Phytopharm plc (PYM: London Stock Exchange) ("Phytopharm" or the "Company")announces today its preliminary results for the thirteen months ended 30September 2007. Phytopharm changed its financial year during the period from 31August to 30 September for administrative reasons. Portfolio Highlights Hoodia extract • Hoodia extract, our weight management product partnered with Unilever, enters final development stage prior to registration and commercial launch• Good progress in clinical trials with healthy overweight subjects Phytopica(R) • Sales of canine skin health product, Phytopica(R), by our partner Schering-Plough exceed expectations (103% growth on an annualised basis)• Schering-Plough launches Phytopica(R) in Italy in March and in France in April 2007 MyoganeTM • Successful completion of a Phase Ib healthy volunteer clinical trial for our amyotrophic lateral sclerosis (ALS) product in July 2007 CoganeTM • Data on pre-clinical models of Parkinson's disease presented at 'The Movement Disorder Society's 11th international congress' in Istanbul, Turkey, June 2007, supporting a novel mode of action for treating the underlying disease PYM60086 • In-licence of a novel functional food for memory and concentration from the Beijing Institute, China in June 2007 Key Financials • Revenue of £3.12 million (2006 £1.88 million)• Operating loss of £6.55 million (2006 £6.62 million)• Loss after tax of £5.81 million (2006 £5.64 million)• Cash balance of £2.24 million (2006 £6.00 million)• £1.68 million (£1.53 million net of expenses) raised through placing of new Ordinary Shares in March 2007 Board changes • Appointment of Dr Daryl Rees as CEO and Piers Morgan as CFO in January 2007• Appointment of Alistair Taylor as Non-Executive Chairman in June 2007 Dr Daryl Rees, Chief Executive, commented: "Phytopharm's new management team has delivered fully on its strategicobjectives over the year. Hoodia extract, our weight management productpartnered with Unilever, has entered the final stage of development prior toregistration and commercial launch. We have seen good sales growth from ourcanine skin health product, Phytopica(R), partnered with Schering-Plough. Ourpharmaceutical products CoganeTM and MyoganeTM continued to make good progressduring the year and we are now finalising strategic financial support fromcharitable organisations for the further development of these products, whichwill reduce our net development costs while increasing long term shareholdervalue. We look forward with confidence to building on our achievements andreporting on our progress during the coming year." Chief Executive's statement I am pleased to report that Phytopharm is making good progress in developing abroad, balanced portfolio of products with diversified risk and substantialpotential value. Upon my appointment to Chief Executive in January 2007, Iimplemented a series of strategic objectives that included rationalising ourdevelopment pipeline while improving our ability to partner our products. Withthe appointment of Piers Morgan as Chief Financial Officer in January 2007, themanagement team is strengthened, bringing significant benefits to the Board andthe Company. Over the period we have continued to make good progress in clinical trials withour weight management product, Hoodia extract, and advanced successfully intostage 3 of our Joint Development Agreement with our partner Unilever, inSeptember 2007. Stage 3 is the final development stage prior to registrationand launch which includes supply chain expansion and consumer studies that willevaluate reductions in calorie intake as part of a weight management programmein the general population. It is encouraging that UK sales of our canine skinhealth product, Phytopica(R), by our partner Schering-Plough have exceededexpectations (103% growth on an annualised basis) and that their Europeanrollout has begun with launches in Italy in March 2007 and France in April 2007.Schering-Plough will continue to explore the marketing and distribution ofPhytopica(R) in further countries worldwide. One of our strategic objectives is to partner our pharmaceutical products toshare the cost and risk of product development while increasing long termshareholder value. Over the period we have made steady progress with ourpharmaceutical products in clinical development. We have successfully advancedMyoganeTM for amyotrophic lateral sclerosis (ALS) through a Phase Ib healthyvolunteer clinical trial in July 2007 and anticipate requesting EU orphanmedicinal product status for MyoganeTM in December 2007. We have alsodemonstrated that in pre-clinical models of Parkinson's disease, CoganeTMreverses the neuronal damage and elevates glial-derived neurotrophic factor(GDNF) in the area of the brain involved in Parkinson's disease. Elevation ofGDNF has been shown to improve symptoms in Parkinson's disease patients. Ourdata has generated considerable interest from charitable organisations and weare now finalising the strategic financial support from these organisations forfurther development activities. With these partners in place, Phytopharm iswell positioned to continue the development of these products during the comingyear. In July 2007, we licensed a novel functional food from the Beijing Institute,China. This in-licence fulfils one of our strategic objectives of expanding ourproduct portfolio with a functional food candidate for memory and concentration,an area in which we have established expertise. Importantly, this productin-licence supplements the existing portfolio, while limiting development costsfor these activities. In March 2007, we raised approximately £1.68 million before expenses (£1.53million after expenses) by way of a placing of new Ordinary Shares in theCompany, the proceeds of which were used to strengthen the Company's balancesheet and continue the development of its products effectively. In June 2007, we announced that Alistair Taylor was appointed as Non-ExecutiveChairman of the Board following the retirement of Dr Paul Whitney. Hisappointment brings significant benefits to the Company, in particular hisexperience running major healthcare companies and the insights gained frombuilding these organisations into highly successful businesses. Outlook Phytopharm has developed a broad portfolio of products with diversified risk andsubstantial value. Our functional food products are now generating revenue. Ourpartner Schering-Plough continues its European rollout of Phytopica(R) withrevenues exceeding expectations and with their global presence we look forwardto continued growth. Meanwhile, Unilever is fully funding our programme forHoodia extract, and we look forward to generating royalty income in the nearfuture on product launch. We operate with a low cash burn and with strategic financial support beingfinalised from charitable organisations to develop further our pharmaceuticalproducts CoganeTM and MyoganeTM, we will continue to reduce our net developmentcosts while increasing long term shareholder value. By delivering on ourstrategic objectives, we look forward with confidence to building on ourachievements and reporting on the continued development of our pipeline over thecoming year. Business Review Phytopharm is a pharmaceutical development and functional food company whoseproducts are generated from medicinal plants. The Company's strategy is todevelop these products through 'proof of principle' clinical testing, and thensecure partners for late stage development, sales and marketing. Laboratory,manufacturing and clinical work is outsourced to selected specialists, operatingunder expert in-house management. This operational structure allows access tothe best external research facilities whilst maintaining low fixed overheads anda lower development cost structure. Pharmaceutical Products The progress of our pharmaceutical products in clinical development is describedbelow. Parkinson's and Alzheimer's disease and neuropsychiatric disorders CoganeTM (PYM50028) is an orally active, neurotrophic factor inducer beingdeveloped as a disease modifying agent for Parkinson's and Alzheimer's diseaseand has the potential as a treatment for neuropsychiatric disorders. Aconsistent feature of Parkinson's disease is the loss of dopamine-containingneurones in the substantia nigra area of the brain. Current drugs can mitigatemany of the symptoms for a while but do not alter the prognosis of steadydecline. Over the period we have made significant progress demonstrating that inpre-clinical models of Parkinson's disease, CoganeTM reverses the damage todopamine-containing neurones and the decrease of dopamine receptors in the brainand elevates GDNF in the area of the brain involved in Parkinson's disease.These studies were partly funded by The Cure Parkinson's Trust. Elevation ofGDNF has been shown to improve symptoms in Parkinson's disease patients and ourdata has generated considerable interest from charitable organisations. We arenow finalising strategic financial support from these organisations for furtherdevelopment activities for Parkinson's disease. CoganeTM restores the learning and memory ability in Alzheimer's diseasepre-clinical models and thereby offers the potential to arrest or reverse theprogression of Alzheimer's disease. In late November 2005, we announced theresults of our Phase IIa clinical study of CoganeTM in mild and moderateAlzheimer's disease patients. The majority of patients enrolled had milddisease and as such the study period was too short to detect a decline in thesemild patients. In the more moderate Alzheimer's patients studied, a decline incognition was observed, together with an encouraging trend for slower diseaseprogression in the CoganeTM treated group. This data, coupled with itsexcellent safety profile and tolerability, provides positive data for longerterm studies for efficacy determination in both Parkinson's and Alzheimer'sdisease. The estimated market size for Parkinson's disease in 2010 isapproximately $5bn, and for Alzheimer's disease is approximately $8bn. The neuroprotective, neurorestorative and neurotrophic actions of CoganeTMsuggest potential beneficial effects in other neurodegenerative diseasesincluding diabetic neuropathy and neuropsychiatric disorders such asschizophrenia, depression and anxiety, which have an estimated aggregate marketsize by 2010 of $13bn. Motor neurone disease MyoganeTM (PYM50018) is being developed for ALS (also known as Lou Gehrig'sdisease). ALS is the most common motor neurone disease and results fromprogressive degeneration of motor neurones. This condition has a high unmetmedical need. In pre-clinical studies, MyoganeTM protects against neuronaldamage and when administered orally to pre-clinical models of ALS, delays theloss of muscle strength and extends survival time. Phytopharm has successfully completed a Phase Ia clinical study that evaluatedthe safety, tolerability and pharmacokinetic profile of MyoganeTM. Thisresidential clinical study was conducted under an investigational new drug (IND)filed with the United States Food and Drug Administration (FDA) and confirmedthat the product was well absorbed with an excellent safety profile. The FDAhas also granted Orphan Drug and Fast Track designation to MyoganeTM for thetreatment of ALS. Building on this success we have further developed a newliquid formulation suitable for ALS patients and in July 2007 successfullyprogressed through a Phase Ib healthy volunteer clinical trial conducted under aclinical trial authorisation (CTA) filed with the Medicines and Healthcareproducts Regulatory Agency (MHRA). Our data has generated considerable interestfrom charitable organisations and we are progressing discussions for furtherpre-clinical and clinical development activities with these organisations. The neuroprotective, neurorestorative and neurotrophic actions of MyoganeTMsuggest potential beneficial effects in other orphan motor neurodegenerativediseases including Huntington's disease, Friedrich's ataxia, progressivesupranuclear palsy and multiple system atrophy. The aggregate market size forthese orphan diseases is estimated at in excess of $1bn. In addition there arevery substantial healthcare costs associated with these diseases. Functional Foods Our functional food products continue to make strong progress. Dietary weight management Our weight management functional food product is based on an extract of thesucculent plant, Hoodia, which contains a novel satiety stimulator that reducescalorie intake in overweight subjects, as demonstrated in our double-blind,placebo-controlled clinical study. Extracts of Hoodia and the active moleculestherein are the subject of a global patenting programme, with major patentsgranted in the US, UK, Europe and Japan and pending in all other majorterritories. In December 2004, we announced that we had granted an exclusive global licencefor the Hoodia extract to Unilever plc. Under the terms of the agreement,Phytopharm and Unilever are collaborating on a five-stage research, developmentand launch programme of safety and efficacy studies with a view to bringing newweight management products to market. Over the period we have continued toadvance successfully through clinical trials in healthy overweight subjects aswell as all other aspects of our Joint Development Agreement. In September 2007,we announced that we had successfully progressed into stage 3 of our JointDevelopment Agreement. Stage 3 activities include supply chain expansion andconsumer studies that will evaluate reductions in calorie intake as part of aweight management programme in the general population, and is the final stageprior to submission for regulatory approval. Stage 4 and 5 activities compriseregistration and launch respectively. As part of the agreement, Unilever is committed to fully funding the developmentprogramme. In addition, Phytopharm will receive an undisclosed royalty on salesof all products containing the extract. Separately, Unilever is also managing the agronomy programme, including scale upfor launch, undertaking manufacturing and market research activities, andsupporting the international patent programme for the products. Phytopharm and Unilever have also become aware of many companies that areselling products over the Internet and in some stores claiming to contain Hoodiaand causing weight loss. Analysis of these products has demonstrated that thegreat majority of them contain little or no Hoodia. Phytopharm and Unileverhave made contact with the relevant authorities concerning this development andare satisfied with the progress being made to limit this activity. Canine skin health Phytopica(R) is a natural, three plant product for canine skin health thatprovides a novel 3 in 1 approach to help maintain a normal healthy immunesystem, support normal white cell function and provide anti-oxidant benefits.The beneficial effects and excellent safety profile of Phytopica(R) have beenproven extensively in clinical trials and the product has been found to besuitable for all dogs whatever size or breed. Canine dermatological disordersare well recognised by veterinarians to be a major problem, with an estimated15% of the UK dog population (around 900,000 dogs) affected by skin conditions(source: Animal Pharm). Maintenance of a healthy skin and coat and alleviationof itching are of major importance to canine general health and quality of life. In January 2006, Phytopharm entered into an exclusive global agreement withSchering-Plough Animal Health ("Schering-Plough") for Phytopica(R). Under theterms of the agreement, Phytopharm is responsible for manufacturing Phytopica(R)whilst Schering-Plough is responsible for the global sales, marketing anddistribution. In April 2006, Schering-Plough launched Phytopica(R) in the UKand the product has enjoyed firm support from veterinary dermatologists, withsales exceeding expectations. Schering-Plough launched Phytopica(R) in Italy and France in March and April2007, respectively. France is one of the largest companion animal markets inEurope with more than 8.5 million dogs and, of these, some 15% referred toveterinarians may be affected by skin conditions. Schering-Plough will continue to seek to market and distribute Phytopica(R) infurther countries worldwide. With Schering-Plough's global presence we lookforward to strong growth from this product. Pre-clinical product development The progress of our products in preclinical development over the period isdescribed below. Asthma and COPD Asthma is a chronic inflammatory disorder of the airways that causes recurrentepisodes of wheezing, breathlessness, chest tightness and coughing. Inaddition, asthma is usually associated with widespread but variable airflowobstruction. Inhibition of inflammation and opening of the airways aretherefore key components of asthma treatment. Steady progress has been made inidentifying novel synthetic molecules from the PYM60001 series that can bedeveloped as a pharmaceutical medicine for the treatment of asthma and chronicobstructive pulmonary disease (COPD). Pre-clinical comparative, 'proof ofconcept', studies with marketed products have demonstrated encouraging resultsshowing improved beneficial effects in several models of asthma includingopening of the airways and reduction in airway inflammation. Prader-Willi syndrome Prader-Willi syndrome is an orphan disease characterised by clearly definablefeatures including obesity due to hyperphagia and a decreased calorificrequirement owing to low energy expenditure. The mechanism of action of thechemical series based on the active components of our Hoodia extract (see above)is under investigation. Proteomic research is helping to define novel targetsand the design of new molecules from the PYM60004 series as pharmaceuticalcandidates for Prader-Willi syndrome. Memory and concentration In July 2007, we licensed a novel functional food candidate for memory andconcentration from the Beijing Institute (Institute of Radiation Medicine, theAcademy of Military Medical Sciences, Beijing). Under the terms of theCollaboration and Licence Agreement, Phytopharm and the Beijing Institute willcollaborate to progress the Beijing Institute's lead product for memory andconcentration (PYM60086) selected from its library of patented compounds derivedfrom Traditional Chinese Medicine (TCM). The Collaboration and LicenceAgreement also extends to certain other patented compounds that may have utilityin other disease areas including vascular disorders and stroke. Phytopharm hasbeen granted an exclusive licence from the Beijing Institute to develop andcommercialize these products globally in return for royalty and milestonepayments to the Beijing Institute upon the achievement of certain pre-definedgoals. The Beijing Institute's scientists bring significant knowledge on TCMand we look forward to working with them to advance the lead product throughclinical development. Financial information The financial performance for the thirteen month period ended 30 September 2007reflects the Group's ongoing pharmaceutical development and functional foodactivities. Period end During the period the Group changed its financial year end to 30 September 2007for administrative reasons. The financial results for the period thereforecomprise 13 months of trading for the period ended 30 September 2007; resultsfor the comparative period comprise trading for the twelve months ended 31August 2006. Income statement The increased revenue of £3.12 million for the 13 month period (12 months 2006:£1.88 million) was generated from our two collaboration agreements: firstly withUnilever for the development of Hoodia extract for dietary weight management;and secondly with Schering-Plough for the global sales, marketing anddistribution of Phytopica(R) for canine skin health. Revenue from Unileverrepresents reimbursement to the Group of development expenditure relating to theHoodia extract programme, together with funding of certain Phytopharm staff, andtherefore the level of revenue in each period depends on the nature of theongoing activities and level of related expenditure at that particular time.Revenue from Schering Plough comprises the sale of Phytopica(R) by Phytopharm toSchering-Plough for onward distribution and eventual sale to end users. Of therevenue in the period to 30 September 2007, £2.64 million represents revenuefrom Unilever, and £0.48 million represents product sales to Schering-Plough(103% growth on an annualised basis); for the corresponding 12 month period to31 August 2006 revenue amounted to £1.66 million and product sales amounted to£0.22 million. Expenditure on development has continued as planned for the thirteen monthsended 30 September 2007. A total of £7.50 million was spent during the 13 monthperiod, compared to £6.54 million for the twelve months ended 31 August 2006.The Hoodia extract programme for dietary weight management continues to makeencouraging progress, with the initiation of Stage 3 activities of the fiveStage Unilever Development and Launch Agreement. Stage 3 is the final stageprior to registration and commercial launch of the product. Unilever continuesto make substantial further investment in this project, independently of thefunding it pays to Phytopharm. Expenditure on selling, general and administrative expenses for the thirteenmonths ended 30 September 2007 rose slightly to £1.92 million from £1.63 millionfor the twelve months ended 31 August 2006. Interest receivable for the thirteen months ended 30 September 2007 amounted to£0.22 million, compared to £0.38 million for the year to 31 August 2006,reflecting the lower average cash balance during the period. The reduced overall operating loss for the thirteen month period to 30 September2007 was £6.55 million compared to £6.62 million for the twelve month period to31 August 2006. The loss after tax for the thirteen month period to 30September 2007 was slightly higher at £5.81 million from £5.64 million for thetwelve months ended 31 August 2006, although on a pro rata basis, the overallloss ran at a lower level than in the previous financial period. Balance sheet Non-current assets comprise property, plant and equipment. At 30 September 2007these amounted to £0.20 million compared to £0.20 million at 31 August 2006. Current assets amounted to £3.95 million at 30 September 2007 and comprisedinventories of £0.68 million, amounts receivable of £1.03 million (of which£0.52 million related to R&D tax credits), and cash resources of £2.24 million.Inventories fell slightly in the thirteen months ended 30 September 2007 as theGroup manufactured and sold through further finished stocks of Phytopica(R) tosupport the launches in Italy and France in March and April 2007 respectively.Amounts receivable excluding R&D tax credits at £0.51 million at 30 September2007 are broadly in line with previous levels of £0.57 million at 31 August2006. The level of R&D tax credit receivable by the Group, at £0.52 million, isslightly lower than the previous period of £0.60 million at 31 August 2006,reflecting the fact that during the period a higher proportion of the Group's R&D activities have been related to the Hoodia extract programme which, because itis fully reimbursed by Unilever, does not qualify for R&D tax credits. Cashresources, described as cash and cash equivalents, are invested for periods of90 days or less. The decrease in cash resources during the period to £2.24million reflects the cash utilised in the business during the period. Current liabilities at 30 September 2007 have reduced to £1.35 million from£1.74 million at 31 August 2006 reflecting a reduction in trade payables andaccruals for clinical trial expenditure relating to the Group's developmentactivities. The increase on Share Capital and Share Premium accounts for the period ended 30September 2007 reflects the issue of new shares for cash on 1 March 2007, toraise £1.68 million (£1.53 million net of expenses) and the recovery of VAT of£0.04m previously written off against that reserve following a change in HMRCpolicy with respect to the Group's May 2005 fund raising. Cash flow The net cash used in operating activities for the thirteen months ended 30September 2007 was £5.46 million, a reduction from £5.85 million in the twelvemonth period ended 31 August 2006. Our goal is to increase shareholder value byprogressing our products through development, subject to available resources.Taking into account the future revenues from Phytopica(R) and the funding byUnilever of the Hoodia programme, Phytopharm expects its 2008 net cash outflow,funded from available resources, to be lower than in previous years. Cashoutflows in respect of CoganeTM, and the rate of its development, may befavourably impacted through the funding by charitable organisations, asdiscussed above, and likewise any future partnering arrangements in respect ofMyoganeTM would bring similar benefits. By delivering on our strategicobjectives, we look forward with confidence to building on our achievements andreporting on the continued development of our pipeline over the coming year. Forward looking statements In order to utilise the 'Safe Harbour' provisions of the United States PrivateSecurities Litigation Reform Act of 1995, Phytopharm is providing the followingcautionary statement. This preliminary announcement contains forward-lookingstatements with respect to the financial condition, results of operations andbusinesses of Phytopharm as well as assumptions relating to the extent ofpossible future markets. These statements may generally, but not always, beidentified by the use of words such as "should", "expects", "estimates", "believes" or similar expressions. By their nature, forward-looking statementsand forecasts involve risk and uncertainty because they relate to events anddepend on circumstances that will occur in the future. In the event such risksor uncertainties materialise, Phytopharm's results could be materially affected. There are a number of factors that could cause actual results and developmentsto differ materially from that expressed or implied by these forward-lookingstatements. These factors include, among other things, the inherent uncertaintyof pharmaceutical research; product development; manufacturing andcommercialisation; continued marketing, sales and distrubution bySchering-Plough; the loss or expiration of patents; marketing exclusivity ortrade marks; exchange rate fluctuations; continued funding by Unilever andsupport of several charitable organisations; the risk that R&D will not yieldnew products that achieve commercial success; the impact of competition, pricecontrols and price reductions; taxation risks; the risk of substantial productliability claims; the impact of any failure by third parties to supply materialsor services; the risk of delay to new product launches; the difficulties ofobtaining and maintaining governmental approvals for products; and the risk ofenvironmental liabilities. Unaudited consolidated income statementFor the thirteen month period ended 30 September 2007 13 months to 12 months to 30 September 31 August 2007 2006 note £ £ Revenue 3,121,018 1,882,501 Cost of sales (250,057) (341,067) _____ _____ Gross profit 2,870,961 1,541,434 Research and development expenses (7,500,404) (6,540,173)Selling, general and administrative expenses (1,922,340) (1,624,779) _____ _____ Operating loss (6,551,783) (6,623,518) Interest receivable and similar income 217,396 380,484Interest payable and similar charges (30) - _____ _____ Loss on ordinary activities before taxation (6,334,417) (6,243,034) UK tax credit on loss on ordinary activities 2 521,168 604,421 _____ _____ Loss for the period (5,813,249) (5,638,613) _____ _____ Basic and diluted loss per ordinary share (pence) 3 (10.9) (11.0) All revenue and expenses shown above were generated from continuing operations. Unaudited consolidated statement of changes in shareholders' equityFor the thirteen month period ended 30 September 2007 Share Share Other Profit and loss Total capital premium reserves account (deficit) £ £ £ £ £ Balance at 1 September 2005 511,809 47,156,708 (204,211) (35,650,581) 11,813,725Loss for the period - - - (5,638,613) (5,638,613)Equity share options charge - - - 302,492 302,492 _____ _____ _____ _____ _____ Balance at 31 August 2006 511,80 47,156,708 (204,211) (40,986,702) 6,477,604 _____ _____ _____ _____ _____ Loss for the period - - - (5,813,249) (5,813,249)Issue of equity share capital 44,254 1,489,287 - - 1,533,541Share issue costs recovered - 39,564 - - 39,564Equity share options charge - - - 563,202 563,202 _____ _____ _____ _____ _____ Balance at 30 September 2007 556,063 48,685,559 (204,211) (46,236,749) 2,800,662 _____ _____ _____ _____ _____ Unaudited consolidated balance sheetAs at 30 September 2007 13 months to 12 months to 30 September 31 August 2007 2006 note £ £ Non-current assetsProperty, plant and equipment 199,832 201,521 _____ _____ Non-current assets 199,832 201,521 Current assetsInventories 4 683,483 842,899Trade and other receivables 5 508,613 568,882Current tax receivable 521,168 604,421Cash and cash equivalents 2,240,947 5,997,428 _____ _____ Current assets 3,954,211 8,013,630 _____ _____ Current liabilitiesTrade and other payables 6 (1,353,381) (1,737,547) _____ _____ Net current assets 2,600,830 6,276,083 _____ _____ Net assets 2,800,662 6,477,604 _____ _____ Share capital 556,063 511,809Share premium 48,685,559 47,156,708Other reserves (204,211) (204,211)Profit and loss account (deficit) (46,236,749) (40,986,702) _____ _____ Shareholders' funds 2,800,662 6,477,604 _____ _____ Unaudited consolidated cash flow statementFor the thirteen month period ended 30 September 2007 30 September 31 August 2007 2006 £ £Cash flow from operating activitiesOperating loss (6,551,783) (6,623,518)Depreciation 97,164 108,259(Gain)/loss on disposal of property, plant and equipment (4,576) 10,068Share option charge 563,202 302,492 _____ _____ (5,895,993) (6,202,699)Changes in working capitalDecrease in trade and other receivables 60,269 96,207Decrease in trade and other payables (384,166) (520,725)Decrease in inventories 159,416 104,325 _____ _____ Cash used in operations (6,060,474) (6,522,892) Taxation received 604,421 674,341Interest paid (30) - _____ _____ Net cash used in operating activities (5,456,083) (5,848,551) Cash flows from investing activitiesPurchase of tangible fixed assets (127,760) (234,596)Sale of tangible fixed assets 36,861 60,750Interest received 217,395 380,484 _____ _____ Net cash generated from investing activities 126,497 206,638 Cash flows from financing activitiesIssue of shares 1,681,659 -Share issue costs (148,118) -Share issue costs recovered 39,564Capital element of finance leases - (1,398) _____ _____ Net cash generated from/(used in) financing activities 1,573,105 (1,398) _____ _____ Movements in cash and cash equivalents in the period (3,756,481) (5,643,311)Cash and cash equivalents at the beginning of the period 5,997,428 11,640,739 _____ _____ Cash and cash equivalents at end of period 2,240,947 5,997,428 _____ _____ Notes to the unaudited financial statementsFor the thirteen month period ended 30 September 2007 1 Basis of preparation The preliminary announcement for the period ended 30 September 2007 is unauditedand has been prepared in accordance with International Financial ReportingStandards (IFRS) as adopted by the European Union as at 30 September 2007.During the period the Group changed its financial year end to 30 September 2007.The financial results for the period therefore comprise thirteen months oftrading for the period ended 30 September 2007; results for the comparativeperiod comprise trading for the twelve months ended 31 August 2006. The financial information in this preliminary announcement does not constitutethe Group's statutory accounts for the period ended 30 September 2007 or theyear ended 31 August 2006, but the comparative information is derived from theGroup's statutory accounts for the year ended 31 August 2006. The Group's statutory accounts for the year ended 31 August 2006 have beendelivered to the Registrar of Companies; the report of the auditors on theseaccounts was unqualified and did not contain a statement under section 237(2) or(3) of the Companies Act 1985. 2 Tax on loss on ordinary activities 13 months to 12 months to 30 September 31 August 2007 2006 £ £Current tax:Current UK corporation tax credit on loss for the period 521,168 604,421 _____ _____ There is no corporation tax charge because of the incidence of tax losses. TheCompany has taken advantage of the Research and Development corporation taxcredits introduced in the Finance Act 2000 whereby a company may surrendercorporation tax losses incurred on research and development expenditure for acorporation tax refund at the rate of 24 pence on the pound of actualexpenditure. 3 Loss per ordinary share The calculation of basic and diluted loss per share on the net basis is based onthe loss on ordinary activities after taxation, namely £5,813,249 (2006:£5,638,613 and on 53,567,257 (2006: 51,180,893) ordinary shares, being theweighted average number of ordinary shares in issue and ranking for dividendduring the period. As the Group was loss-making in the period ended 30 September 2007 and the yearended 31 August 2006, there were no dilutive potential ordinary shares. 4 Inventories 30 September 31 August 2007 2006 £ £ Raw materials and consumables 433,595 482,056Work in progress 249,888 360,843 _____ _____ 683,483 842,899 _____ _____ 5 Trade and other receivables 30 September 31 August 2007 2006 £ £ Trade receivables 227,568 324,396Other receivables 96,477 34,740Prepayments and accrued income 184,568 209,746 _____ _____ 508,613 568,882 _____ _____ 6 Trade and other payables 30 September 31 August 2007 2006 £ £ Trade payables 242,839 522,222Other payables 15,064 73Other taxation and social security 48,165 61,598Accruals and deferred income 1,047,313 1,153,654 _____ _____ 1,353,381 1,737,547 _____ _____ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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