Half Yearly Report

RNS Number : 2345S

Plethora Solutions Holdings PLC

07 September 2010

 

 

 

 

7 September 2010

 

PLETHORA SOLUTIONS HOLDINGS PLC

("Plethora" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010

 

Operational Highlights

·; A portfolio of 8 products created within The Urology Company

·; First product sales achieved in Q2'10

·; Preparation for filing for approval of PSD502 underway in the hands of commercial partner

 

Financial Highlights

·; H1 revenues of £1.06m (H1 2009: £15.79m; FY2009 £17.74m)

·; Operating expenses reduced to £0.88m (H1 2009: £4.82m; FY2009 £8.24m)

·; Operating profit of £0.18m (H1 2009: £10.97m; FY2009 £9.50m)

·; Net profit for the period £0.05m (H1 2009: £10.92m; FY2009 £9.57m)

·; Cash £1.42m (H1 2009: £2.98m; FY2009 £1.43m)

·; Two further tranches of capital totalling £1.55m secured during the period

 

Bill Robinson, Non-Executive Chairman, commented:

 

"During the first half of 2010 we have delivered on our objectives by creating the infrastructure required for The Urology Company, building a portfolio of at least eight products for launch this year and recording our first sales in this business unit. Our focus in the second half is on driving sales growth in The Urology Company and maximising value from our development stage assets, including PSD502 and 503, through existing and new commercial partnerships."

 

Enquiries:

 

Plethora Solutions Steven Powell/Ronald Openshaw	Tel : +44(0) 203 077 5400
FinnCap Geoff Nash/Marc Young	Tel : +44(0) 207 600 1658
Hansard Communications John Bick/Kirsty Corcoran	Tel: +44(0) 207 245 1100 Tel: +44(0) 7872 061 007

 

About Plethora:

 

Plethora develops and markets products for the treatment of urological disorders. The Company has products in clinical development for the treatment of overactive bladder (PSD506), stress urinary incontinence (PSD503), interstitial cystitis (PSD597), gynaecological pain (PSD508), erectile dysfunction (PSD510) and premature ejaculation (PSD502). Plethora's subsidiary, The Urology Company Limited, was established in 2009 to market and distribute a range of products for the treatment of urology, andrology and obstetric conditions. The Company is headquartered in the UK and is listed on the London Stock Exchange (AIM: PLE.L).

 

Further information is available at:

 www.plethorasolutions.co.uk and www.theurologyco.com

 

 

  PLETHORA SOLUTIONS HOLDINGS PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010

 

Operational review

 

Our goal is to create a speciality pharmaceutical and healthcare company focused on urology, gynaecology and sexual health.

 

After the significant financial and operational restructuring programme undertaken in 2009, the Board set three, core performance objectives for 2010. These are:

 

1) To derive value for shareholders from Plethora's clinical development stage assets through

existing and new commercial partnerships.

 

2) To create the foundations for a profitable, urology focused marketing and distribution

business.

 

3) To minimise operational costs and strengthen the balance sheet as we drive the business to

financial stability and profitability.

 

We are pleased to report that, at the midpoint in the year, substantial progress has been made against all three performance indicators.

 

Last year, commercial rights to two key products developed by Plethora were embedded within major pharmaceutical companies; namely PSD502 for the treatment of premature ejaculation and PSD503 for the treatment of stress urinary incontinence.

 

Shionogi Pharma Inc. acquired global rights to PSD502 and we expect to earn milestone and royalty income from the commercialisation of this potentially best in class product from outside the USA and Japan. Following the completion of clinical development last year, Plethora has continued to support Shionogi in its preparation of dossiers for the US Food & Drug Administration and the European Medicines Agency. Once approved by these agencies PSD502 will be available for sale.

 

In November 2009 Plethora outlined a strategy for the creation of a new subsidiary, The Urology Company, which would become a profitable, UK-centred sales & marketing company. In December shareholders provided the Company with further capital to execute this plan with an expectation that the business unit would launch between 6 and 9 products in 2010.

 

In H1 2010, the Company established, ahead of schedule, the operational infrastructure required to market pharmaceutical products in the UK. This included the grant of a Wholesaler Dealers Licence from the UK Medicines and Healthcare products Regulatory Agency ("MHRA"), recruitment of experienced personnel for key roles in sales and marketing and the appointment of a partner to provide all aspects of logistics and supply chain management.

 

Significantly, by the end of the first half and again ahead of schedule, The Urology Company has identified and sourced 8 products for launch this year - these products and their launch status is summarised in the table below.

 

Status of The Urology Company Product Portfolio as of 30 June 2010:

 

Product	Product Category*	Indication	Launch Date
Dianatal	CE	Obstetric gel	Launched May'10
hI-Cran	Supplement	Female UTI	Launched June'10
hI-Argenol	Supplement	Male health	Launched July'10
TUC-OLS-2	POM	Urinary incontinence	Launched July'10
Hyalofemme	CE	Atrophic vaginitis	Q3
Striant SR	POM	Hypogonadism	Q3/4
TUC-OLS-1	POM	Overactive bladder	Q3/4
Urolieve	POM-Special	Bladder pain	Q4

 

*: POM = Prescription only medicine, CE = CE marked product, Special = A 'special' prescription medicine as defined in the UK by the MHRA

 

The Company has created a diversified product portfolio incorporating prescription medicines, medical devices and consumer healthcare products where no single product dominates the Company's prospects for revenue generation.

 

In the first half, The Urology Company recorded it first product sales. Since the end of June sales have commenced for hI-Cran, hI-Argenol, TUC-OLS-2 and Dianatal.

 

Financial Review

 

During the first half of 2010 Plethora recorded revenue of £1.06 million (H1 2009: £15.79 million; FY2009 £17.74 million). The majority of this arose as a result of recovering further development costs in relation to PSD502 from Shionogi. Plethora anticipates future reimbursement income will be limited. The surge in income in H1 2009 compared with the equivalent reporting period in H1 2008 and the current period (H1 2010) illustrates the irregular nature of income associated with the licensing of development candidates to larger pharmaceutical companies. The development of The Urology Company is part of the Company's strategy to generate a sustainable and growing stream of revenue, profit and cashflow.

 

Operating costs for the period fell to £0.88 million (H1 2009: £4.82 million; FY2009 £8.24 million), 82% less than the same period last year. This decline is due to a 45% reduction in General & Administrative costs to £0.68 million (H1 2009: £1.23 million; FY2009 £1.79 million) after implementation of a number of cost saving measures. R&D costs are shown as a net credit in the income statement of £0.09 million, this is due to the write back of costs accrued on two programmes of £0.58 million relating to costs anticipated that the Group has either avoided or are not anticipated to crystallise. Before these items R&D costs were £0.48 million (H1 2009: £3.29 million; FY2009 £6.05 million). This 85% reduction in R&D costs is the result of the completion of the clinical development of PSD502 and the transfer of the programme to Shionogi. Offsetting these cost reductions, sales and marketing costs increased to £0.29 million (H1 2009: Nil; FY2009 £0.12 million) as activity in The Urology Company increases.

 

As a result, the Company recorded an operating profit before tax and interest for the period of £0.18 million (H1 2009: £10.97 million; FY2009 £9.50 million).

 

Finance costs were £0.18 million (H1 2009: £0.22 million; FY2009 £0.42 million). This increase reflects the issuance of convertible loan notes in December 2009 and May 2010.

 

Overall, the Company recorded a profit after interest and tax for the six months ended 30 June 2010 of £0.05 million (H1 2009: £10.92 million; FY2009 £9.57 million).

 

Throughout the period the Company has sought to strengthen its balance sheet.

 

The Group has worked to reduce trade and other payables over the last year and balances have reduced from £4.01 million in June 2009, to £2.59 million at December 2009, to £0.94 million at 30 June. This was achieved in part by using the proceeds of the reimbursement income from Shionogi. At 30 June 2010 the Company had cash of £1.42 million (H1 2009: £2.98 million; FY2009 £1.43 million).

 

Despite the continued difficult financing climate for smaller companies, the Company has continued to secure the support of investors and completed two small fund raisings in the first half of 2010. In May the Company raised £0.55 million, equivalent to the unissued proportion of the £1 million Convertible Loan note approved by shareholders on 7 December 2009. On 29 June 2010 the Company entered into a 5 year £1 million term loan with the Capital for Enterprise Fund. This working capital will be used to drive the future development of The Urology Company.

 

Outlook

 

Since the restructuring last year and the transition away from a cash consuming, development centred business, the Company has completed three small financings and founded a new subsidiary to provide a consistent flow of revenue, profit and cash flow. Thanks to investor support for the new business model, the capital was in place to proceed with this development. Over the course of the last six months significant steps have been taken towards the Company's goal of becoming a profitable speciality pharmaceutical company.

 

Two products were launched towards the end of the first half. During the second half there is a focus on delivering revenue from these products and a further six products which are to be launched in the second half. The Company anticipates making further announcements about product launches during the remainder of 2010. Our objective is to establish a secure base of revenue this year, from which the Company can build a profitable business.

 

 Consolidated Statement of Comprehensive Income

	Note	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31  December 2009
		(Unaudited)	(Unaudited)	(Audited)
			(Restated)	(Restated)
		£'000	£'000	£'000
Revenue		1,061	15,787	17,742
Cost of sales		-	-	-
Gross profit		1,061	15,787	17,742
Research and development expenses		(484)	(3,294)	(6,049)
Exceptional item - R&D provisions released		578	-	-
Total R&D expenses		94	(3,294)	(6,049)
Exchange losses		-	(290)	(283)
Sales, marketing & distribution expenses		(293)	-	(121)
Administrative expenses		(677)	(1,231)	(1,787)
Total operating costs		(876)	(4,815)	(8,240)
Operating profit		185	10,972	9,502
Finance costs		(189)	(222)	(421)
Finance income		1	4	4
(Loss)/profit from Continuing Operations for the period before taxation		(3)	10,754	9,085
Taxation		52	-	324
Profit for the period from Continuing Operations		49	10,754	9,409
Profit from Discontinued Operations		-	165	165
Total comprehensive income for the year attributable to equity shareholders		49	10,919	9,574
Basic profit per share	3
Continuing Operations		0.1p	34.9p	29.8p
Discontinued Operations		-p	0.5p	0.5p
Total Operations		0.1p	35.4p	30.3p
Diluted profit per share
Continuing Operations		0.1p	24.3p	19.4p
Discontinued Operations		-p	0.4p	0.3p
Total Operations		0.1p	24.7p	19.7p

 

 Consolidated Balance Sheet

		At 30 June 2010	At 30 June 2009	At 31 December 2009
		£'000	£'000	£'000
		(Unaudited)	(Unaudited) (Restated)	(Audited) (Restated)
Assets
Non current
Property, plant and equipment		18	45	34
Current
Inventories		68	-	-
Trade and other receivables		221	689	226
Cash and Cash equivalents		1,423	2,976	1,428
		1,712	3,665	1,654
Total assets		1,730	3,710	1,688
Liabilities
Current
Trade and other payables	4	(938)	(4,011)	(2,593)
Borrowings	5	-	(869)	-
		(938)	(4,880)	(2,593)
Non-current
Borrowings	5	(3,498)	(1,689)	(2,166)
Total liabilities		(4,436)	(6,569)	(4,759)
Net liabilities		(2,706)	(2,859)	(3,071)
Equity
Share capital	6	443	308	420
Share premium		21,427	20,256	21,166
Other reserves		4,908	4,908	4,908
Convertible loan note reserve	5	224	-	214
Share based payment reserve		1,855	1,936	1,833
Retained deficit		(31,563)	(30,267)	(31,612)
Total equity		(2,706)	(2,859)	(3,071)

 

Consolidated Interim Cash Flow Statement

 

		6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31  December 2009
		£'000	£'000	£'000
		(Unaudited)	(Unaudited)	(Audited)
			(Restated)
Cash flows from operating activities
Profit after taxation		49	10,754	9,409
Profit from discontinued operations		-	165	165
Finance income		(1)	(4)	(4)
Finance costs		189	222	421
Share based payment charge		22	144	41
Depreciation of plant and equipment		16	19	26
Change in inventories		(68)	-	-
Change in trade and other receivables		5	(423)	100
Change in trade and other payables		(1,655)	(178)	(1,657)
Taxation income		(52)	-	(324)
Cash (utilised by)/generated from operations		(1,495)	10,699	8,177
Interest paid		-	(163)	(179)
Income taxes received		52	-	324
Cash flow from operating activities (discontinued operations)		-	16	276
Net cash inflow/(outflows) from operating activities		(1,443)	10,552	8,598
Cash flows from investing activities
Disposal of discontinued operations and repayment of associated indebtedness		-	(273)	(474)
Purchases of property, plant and equipment		-	(17)	(14)
Interest received		1	3	4
Net cash inflow/(outflow) from investing activities		1	(287)	(484)
Cash flows from financing activities
Proceeds from issue of shares		295	-	1,115
Repayment of borrowings		-	(1,979)	(2,848)
Proceeds from receipt of borrowings		1,255	1,000	1,450
Loan costs issue		(102)	-	-
Share issue costs		(11)	-	(93)
Cash used in financing activities (discontinued operations)		-	(6,825)	(6,825)
Net cash inflow/(outflow) from financing activities		1,437	(7,804)	(7,201)
Net (decrease)/increase in cash and cash equivalents		(5)	2,461	913
Cash and cash equivalents at beginning of period		1,428	515	515
Cash and cash equivalents at end of period		1,423	2,976	1,428

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2010

(Unaudited)	Share capital	Share premium	Other reserves	Convertible Loan Note Reserve	Share based payment reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance 1 January 2010	420	21,166	4,908	214	1,833	(31,612)	(3,071)
Profit/total comprehensive income for the period	-	-	-	-	-	49	49
Transactions with owners:
Equity component of convertible loan notes	-	-	-	10	-	-	10
Issue of new shares	23	272	-	-	-	-	295
Cost of issue of new shares	-	(11)	-	-	-	-	(11)
Employee share based compensation	-	-	-	-	22	-	22
Balance at 30 June 2010	443	21,427	4,908	224	1,855	(31,563)	(2,706)

 

Year ended 31 December 2009

(Audited)	Share capital	Share premium	Other Reserves	Convertible Loan Note Reserve	Share based payment Reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance 1 January 2009	308	20,256	4,908	-	1,792	(41,186)	(13,922)
Profit/total comprehensive income for the period	-	-	-	-	-	9,574	9,574
Transactions with owners:
Equity component of convertible loan notes	-	-	-	214	-	-	214
Issue of new shares	112	1,003	-	-	-	-	1,115
Cost of issue of new shares	-	(93)	-	-	-	-	(93)
Employee share based compensation	-	-	-	-	41	-	41
Balance at 31 December 2009	420	21,166	4,908	214	1,833	(31,612)	(3,071)

 

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2009

(Unaudited)	Share capital	Share premium	Other reserves	Share based payment reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance 1 January 2009	308	20,256	4,908	1,792	(41,186)	(13,922)
Profit/total comprehensive income for the period	-	-	-	-	10,919	10,919
Transactions with owners:
Employee share based compensation	-	-	-	144	-	144
Balance at 30 June 2009	308	20,256	4,908	1,936	(30,267)	2,859

Notes to the Financial Information

1. Basis of Preparation

The interim financial information is unaudited and has not been subject to review by the Company's auditors in accordance with ISRE 2410. This consolidated financial information for the six months ended 30 June 2010 has been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that had been published by 30 June 2010 and endorsed by the European Union ("EU"). The accounting policies adopted are consistent with those of the financial statements for the year ended 31 December 2009.

 

The financial information set out in the interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2009, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006. The interim report was approved by the Board on 6 September 2010.

 

The comparative figures in the balance sheet at 30 June 2009 and 31 December 2009 have been restated. This restatement has reclassified accrued interest as "Borrowings" having previously been classified as "Trade and other payables". The restatement has been adopted to show more clearly the Company's indebtedness and operating trade creditor liabilities. This adjustment has no effect on the profit recorded for the periods nor on the net liabilities at the relevant balance sheet dates.

 

A copy of the interim results for the six months ended 30 June 2010 will be available on the Company's website at www.plethorasolutions.co.uk.

 

2. Going Concern

 

In considering the appropriate basis of the interim financial information the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

 

At 30 June 2010 the Group had £1.4 million of cash and cash equivalents.

 

The directors have prepared cash flow forecasts for the period to 30 September 2011, which show that the Group has adequate working capital for that period. These forecasts are, however, dependent on the achievement of further sales within The Urology Company and the receipt of certain milestone and royalty payments anticipated in relation to PSD502 within the expected timeframe. To the extent that the cash flow from these items is delayed and/or significantly lower than anticipated, then the Group would not have sufficient capital and would then have to seek finance in order to remain as a going concern.

 

3. Profit per share

	6 months ended 30  June 2010	6 months ended 30  June 2009	Year  ended 31  December  2009
	(Unaudited)	(Unaudited)	(Audited)
Profit for the period (£'000)
Continuing operations	49	10,754	9,409
Discontinued operations	-	165	165
Total operations	49	10,919	9,574
Basic weighted average number of shares (number)	42,643,811	30,815,801	31,548,951
Profit per share (pence)
Continuing operations	0.1p	34.9p	29.8p
Discontinued operations	-	0.5p	0.5p
Total operations	0.1p	35.4p	30.3p
Diluted weighted average number of shares (number)	45,797,300	44,195,445	49,148,951
Profit per share (pence)
Continuing operations	0.1p	24.3p	19.4p
Discontinued operations	-	0.4p	0.3p
Total operations	0.1p	24.7p	19.7p

 

4. Trade and other payables

	30 June 2010	30 June 2009	31 December 2009
	(Unaudited)	(Unaudited) Restated	(Audited) Restated
	£'000	£'000	£'000
Trade and other payables	(612)	(3,479)	(2,061)
Other taxation & social security	(82)	(15)	(50)
Other accruals	(244)	(517)	(482)
	(938)	(4,011)	(2,593)

 

 

 

5. Borrowings

	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
	(Unaudited)	(Unaudited) (Restated)	(Audited) (Restated)
	£'000	£'000	£'000
Current borrowings
ETV Capital SA (note i)	-	869	-
	-	869	-
Non current borrowings
Convertible loan notes due 2012 (note ii)	2,303	1,598	1,995
CfE Loan due 2015(note iii)	881	-	-
Interest accrued on convertible loan notes	314	91	171
	3,498	1,689	2,166
Total Borrowings	3,498	2,558	2,166

 

(i) ETV Capital SA

 

In May 2007 the Group entered into a loan with ETV Capital S.A. for £4.0 million, with an original maturity of September 2010. The loan contained a provision to be convertible into ordinary shares. Interest was charged at 13.51% per annum. On 6 August 2009 in accordance with the terms of the loan agreement the Group repaid the remaining balance outstanding on the loan.

 

(ii) Convertible loan notes due 2012

 

On 26 September 2008, Merlin Biosciences Fund III LP and Merlin Biosciences Fund III (2007) LP (together "Merlin Biosciences") entered into a two year convertible loan which was repayable/convertible on 25 September 2010. The total principal drawn under this loan was £750,000 and the loan bore interest at 13.5% payable at maturity. As a part of this agreement Merlin Biosciences was granted a warrant to acquire up to 520,833 new ordinary shares in the Company at an exercise price of 36p. On 7 December 2009 the economic terms of the loan were amended to become identical to those of the new loan notes issued on that date.

 

On 16 February 2009, following shareholder approval, the Company issued 1,000,000 £1 loan notes to certain institutional investors which was repayable/convertible on 15 February 2011. The loan notes bore interest at the rate of 4% per annum payable at maturity of the loan. As part of the agreement holders were granted warrants to acquire up to 1,333,332 new ordinary shares in the Group at an exercise price of 33p per share. On 7 December 2009 the economic terms of the loan were amended to become identical to those of the new loan notes issued on that date.

 

On 7 December 2009, following shareholder approval, the Company issued £450,000 under a £1 million convertible loan note facility to certain institutional shareholders. On the same date the terms of the previous £750,000 and £1 million convertible loan notes due 2010 and 2011 respectively were brought onto common economic terms. The principal terms of the new convertible loan notes (and amended terms of the existing notes) include: maturity 31 December 2012; coupon 13% per annum, accrued until maturity; convertible into new ordinary shares at 12.5p per share; secured by first charge over the company's assets; repayable by the Company at any point post issuance; convertible by the Company after 31 December 2010 provided the Company's share price is 25% greater than the conversion price for the preceding 60 days prior to conversion.

 

Immediately following this issue the Company had £2,200,000 of convertible loan notes due 31 December 2012. In addition, the instrument provided for the issuance of a further £550,000 of convertible loan notes.

 

On 10 May 2010 the Company completed a placing, part of which included the issuance of a further tranche of £255,000 of the unissued proportion of the convertible loan notes due 31 December 2012. These were issued on the same terms as those previously issued. At the same time the Company announced a placing to raise a further £295,000 in equity on a non-pre-emptive basis and the board of directors resolved that no further amounts would be issued under the convertible loan note facility.

 

Under IFRS a proportion of the convertible loan notes are regarded as equity and are recorded in the convertible loan note reserve. In addition, amounts were recorded as notional interest and as a loss on the restructuring of the convertible loan notes due 2010 and 2011. The following non-IFRS disclosure shows the effect of the accounting treatment.

 

Convertible loan notes due 2012	30 June 2010	30 June 2009	31 December 2009
	£’000	£’000	£’000
Amount recorded in liabilities	2,303	1,750	1,995
Amount recorded in equity	224	-	214
	2,527	1,750	2,209
Add: loan arrangement costs set against liability	64	-	92
Less: notional interest and deemed loss on extinguishment	(136)	-	(101)
Principal amount of loan notes	2,455	1,750	2,200

  

As at 30 June 2010 a total of £315,000 of interest had been accrued in respect of the loan notes. This amount will be paid either in cash or by conversion to equity at 12.5p per share at maturity (namely 31 December 2012).

 

(iii) CfE Loan due 2015

 

On 29 June 2010 the Company entered into a £1 million, five year secured term loan ("CfE Loan") with Capital For Enterprise Fund A L.P. ('CfE Fund'). The CfE Loan will be repayable by 29 June 2015. However, the Company may at its option repay part or all of the loan ahead of the maturity date. Interest accrues on the loan at 10% per annum. The loan agreement provides for the Company to pay a premium on repayment of the loan. This premium is fixed at either 20% of any amounts repaid in the first 3 years or 25% in years 4 or 5 or at maturity. The CfE Fund has also been granted a warrant to acquire new ordinary shares in the Company at nominal value. The number of shares issuable under the warrant is the lower of 3% of the Company's fully diluted share capital, or such number of shares as equals £500,000 at the then prevailing market price. The warrant is only exercisable at an Exit Event, as defined in the loan agreement.

 

6. Share Capital

	30 June 2010	30 June 2009	31 December 2009
Allotted, issued & fully paid shares of 1p each
Number	44,325,800	30,815,800	41,965,800
Nominal value (£'000)	443	308	420

 

On 10 May 2010 the Company completed a placing of 2,360,000 new ordinary shares at 12.5p per share to raise £295,000 before expenses. This was part of a larger placing to raise £550,000 before expenses and included the issue of £255,000 of convertible loan notes (see Note 5).

 

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