20th Sep 2007 07:00
ReGen Therapeutics PLC20 September 2007 20 September 2007 ReGen Therapeutics Plc Unaudited Interim Results for the Six Months' to 30 June 2007 CHAIRMAN'S STATEMENT Summary of key events: ColostrininTM •February 2007 announcement of study showing ColostrininTM increases lifespan, neurological and motor performance in mice prone to premature ageing. •June 2007 Professor Marian Kruzel - Chief Scientific Officer presented preclinical and human clinical data showing that ColostrininTM has the potential to 'support healthy cognitive function'. •July 2007 ColostrininTM successfully launched in its first market Australasia. Zolpidem •March 2007 Discovery Channel programme on zolpidem screened in the UK. •August 2007 completion of zolpidem trial in South Africa - further studies to be undertaken. Funding •February 2007 £1.138m raised. •June 2007 £1.348m raised. Commentary: This is the first set of results announced under IFRS with comparisons againstthe restated 2006 interim results. The first half sales figures of £117,000 up127% relate entirely to Guildford Clinical Pharmacology Unit Limited (GCPUL)and, if we take into account the work that GCPUL does for ReGen on zolpidem itis in fact profitable for the period. We comment later on zolpidem that we havefurther research activities planned but this is not immediate and as investorswill be aware there is very considerable competition in the UK Phase I/IIclinical trials market and indeed much business has been moved to Eastern Europeand further afield. As required by IFRS, we conducted an impairment review ofthe goodwill that arose on the acquisition of GCPUL taking in to account thesemarket conditions. This has resulted in the goodwill being written down by£349,000 in the Income Statement. I would stress that this is a non-cash itemand all the impairment has been taken in the first half of the year. The other major item of interest in the Income Statement is the 30% increase inresearch and development costs, which shows the Company's rising commitment toresearch and development, particularly the cost of the zolpidem clinical trial.We expect this trend to continue. ColostrininTM The successful launch of ColostrininTM in Australasia its first market should beseen as a validation of the Company's long-term research effort. This launch waspreceded by Professor Marian Kruzel presenting at the 2007 InternationalCongress on Natural Medicine in Australia. Professor Kruzel presented bothpre-clinical and human clinical data showing that ColostrininTM: • Reduces the production of intracellular reactive oxygen species (ROS). These increase with old age and are associated with tissue and metabolic damage; • Prevents the aggregation of beta-amyloid and its consequent neurotoxicity. This is a protein associated with Alzheimer's disease; • Increases the lifespan of mice prone to premature ageing by around 30% when given in the drinking water; • Is well-tolerated and without adverse effects; and • Had beneficial effects on the cognitive and functional performance of around 150 human subjects in clinical trials with mild to moderate Alzheimer's disease. We look forward to the launch in the USA in the fourth quarter of 2007 and theabove comments from Professor Kruzel provide a firm basis for optimism. Wecontinue to seek licensing partners to enable launch in other markets as soon aspossible. Our peptide programme continues to develop. We are currently assessing theresults from several activity assays with our peptides and will be putting themost potent of these through further tests to evaluate their therapeuticpotential. Zolpidem A sensitive programme was put out on the Discovery Channel which we feltreflected well on the potential for the drug and I think showed ReGen in afavourable light. Anyone who saw the programme or has viewed the video has beenimpressed by it and we will be showing it at our Christmas presentation to theCity. Most importantly, however, from our recently completed trial in SouthAfrica we now have conclusive proof that a 2.5mg sublingual spray isnon-sedating. Consequently we now have enough evidence to take this project astage further. I would stress that our estimates of the market size here remainin excess of £4bn. GCPUL GCPUL was acquired for two reasons, to help us with our own research work andalso to do outside work. GCPUL has been extremely useful with the zolpidemproject and this would have cost us a great deal more if we had done it with anexternal CRO. Unfortunately, conditions in the CRO market changed for the worseover the last year and we have not generated the orders necessary to make theCompany profitable without ReGen business. This is a non-core business and we donot want to put resources into it, which detract from our mainstream activity -drug development. Whilst, it continues to serve this purpose it is useful, butwe are reviewing our options. Summary: The year so far has been an exciting one for us. The encouraging launch ofColostrininTM in Australasia, the successful completion of the zolpidem clinicaltrial and fundraising of £2.486m has immensely strengthened the Company'sposition and I look forward to building on this over the next year. I would like to thank our shareholders for their continued support. Percy LomaxExecutive Chairman A copy of this interim statement is being sent to shareholders and copies areavailable from the Company's offices at 73, Watling Street, London EC4M 9BJ orby visiting our website at www.regentherapeutics.com For further information contact: Percy LomaxReGen Therapeutics PlcExecutive ChairmanTel No 020 7153 4920 Roland CornishBeaumont Cornish LimitedTel No 020 7628 3396 Nick BealerKing & Shaxson Capital LimitedTel No 020 7426 5986 Andrew MarshallGreycoat CommunicationsTel: 020 7960 6007Mobile: 07785 297111 ReGen Therapeutics Plc Interim Results for the Six Months' to 30 June 2007 Consolidated Income StatementFor the six months ended 30 June 2007 Restated Restated Unaudited Unaudited Audited 6 months 6 months Year to to to 30-Jun-07 30-Jun-06 31-Dec-06 (£000) (£000) (£000) Revenue 117 55 405 Cost of sales (31) (4) (209) --------- --------- --------- Gross profit 86 51 196 --------------------------------------------------------------------------------Research and development costs 467 360 826 Other administrative costs 880 776 1,673 Impairment of intangible assets 349 10 20 -------------------------------------------------------------------------------- Administrative costs (1,696) (1,146) (2,519) --------- --------- ---------Operating loss (1,610) (1,095) (2,323) Finance income 18 11 36Finance costs (5) (5) (8) --------- --------- --------- Loss before taxation (1,597) (1,089) (2,295) Income tax credit 73 40 118 --------- --------- --------- Loss after taxation (1,524) (1,049) (2,177) --------- --------- --------- Loss per share (basic and diluted) (0.18)p (0.20)p (0.37)p ReGen Therapeutics Plc Consolidated Balance Sheet Restated Restated Unaudited Unaudited Audited As at As at As at 30-Jun-07 30-Jun-06 31-Dec-06 (£000) (£000) (£000) AssetsNon current assetsGoodwill 964 1,223 1,313Intangible assets 969 1,031 947Property, plant and equipment 23 21 26 --------- --------- --------- Total non current assets 1,956 2,275 2,286 --------- --------- --------- Current assetsInventories 14 11 20Trade and other receivables 556 176 230Tax receivable 50 40 115Cash and cash equivalents 1,280 617 508 --------- --------- --------- Total current assets 1,900 844 873 Total assets 3,856 3,119 3,159 --------- --------- --------- LiabilitiesCurrent liabilitiesTrade and other payables 496 563 632 Non current liabilitiesProvisions 100 - 100 --------- --------- --------- Total liabilities 596 563 732 --------- --------- --------- Total net assets 3,260 2,556 2,427 ========= ========= ========= EquityCapital and reservesShare capital - Issued and fully paid 1,026 583 694 - Deferred 5,298 5,298 5,298Share premium 13,973 11,112 11,992Other reserves 266 266 266Retained earnings (17,303) (14,703) (15,823) --------- --------- --------- Total equity 3,260 2,556 2,427 ========= ========= ========= ReGen Therapeutics Plc Consolidated Cash Flow Statement Restated Restated Unaudited Unaudited Audited 6 months to 6 months to Year to 30-Jun-07 30-Jun-06 31-Dec-06 (£000) (£000) (£000) Loss for the financial period (1,524) (1,049) (2,177) Impairment of goodwill 349 10 20Amortisation of intangible assets 13 16 127Depreciation of property, plant andequipment 4 3 8Share option charge 44 - 7Taxation 65 (40) (34) --------- --------- -------- Operating cash flows before movements inworking capital and provisions (1,049) (1,060) (2,049) Changes in inventories 6 (7) (16)Changes in receivables (326) 133 (2)Changes in payables (135) (48) 19 --------- --------- -------- Net cash outflow from operating activities (1,504) (982) (2,048) --------- --------- -------- Cash flows from investing activitiesPurchase of subsidiary, net of cashacquired - (21) (21)Purchase of property, plant and equipment (1) (3) (13)Purchase of intangible assets (36) (68) (92) --------- --------- -------- Net cash used in investing activities (37) (92) (126) --------- --------- -------- Cash flows from financing activitiesProceeds from issue of share capital 2,487 820 1930Expenses paid on share issue (174) (64) (183) --------- --------- -------- Net cash from financing activities 2,313 756 1,747 --------- --------- -------- Net increase/(decrease) in cash and cashequivalents 772 (318) (427) Opening cash and cash equivalents 508 935 935 --------- --------- -------- Closing cash and cash equivalents 1,280 617 508 --------- --------- -------- ReGen Therapeutics Plc Consolidated Statement Of Changes In Equity Share Share Other Retained Capital Premium Reserves Earnings Total (£000) (£000) (£000) (£000) (£000) At 1 January 2006 5,798 10,438 242 (13,653) 2,825 New shares issued 83 674 24 - 781Loss for the period andtotal recognized income andexpenses - - - (1,050) (1,050)Share based charges - - - - - ------- -------- -------- ------- ------- Net increase/(decrease) toshareholders' equity 83 674 24 (1,050) (269) ------- -------- -------- ------- ------- At 30 June 2006 5,881 11,112 266 (14,703) 2,556 New shares issued 111 880 - - 991Loss for the period - - - (1,127) (1,127)Share based charges - - - 7 7 ------- -------- -------- ------- ------- Net increase/(decrease) toshareholders' equity 111 880 - (1,120) (129) ------- -------- -------- ------- ------- At 31 December 2006 5,992 11,992 266 (15,823) 2,427 New shares issued 332 1,981 - - 2,313Loss for the period - - - (1,524) (1,524)Share based charges - - - 44 44 ------- -------- -------- ------- ------- Net increase/(decrease) toshareholders' equity 332 1,981 - (1,480) 833 ------- -------- -------- ------- ------- At 30 June 2007 6,324 13,973 266 (17,303) 3,260 ------- -------- -------- ------- ------- Notes to the Consolidated Financial StatementsSix Months Ended 30 June 2007 1. Basis of preparation ReGen Therapeutics Plc has previously prepared Group financial statements inaccordance with UK Generally Accepted Accounting Practice ("UK GAAP"). From 1January 2007 the Group is required to prepare its consolidated financialstatements under International Accounting Standards and International FinancialReporting Standards (collectively "IFRS") as adopted by the European Union("EU"). The Group's date of transition to IFRS is 1 January 2006 being the startof the previous period that has been presented as comparative information. The financial information presented in this document has been prepared on thebasis of the IFRS in issue that are either endorsed by the EU and effective at31 December 2007 or are expected to be endorsed before the financial statementsare approved and authorised for issue. Based on these adopted and unadoptedIFRS, the directors have made assumptions about the accounting policies expectedto be applied when the first annual IFRS statements are prepared for the yearended 31 December 2007. In addition, the adopted IFRS that will be effective inthe annual financial statements for the year ending 31 December 2007 are stillsubject to change and to additional interpretations and therefore can not bedetermined with certainty. Accordingly, the accounting policies for that annualperiod will be determined finally only when the annual financial statements forthe Group are prepared for the year ending 31 December 2007. The Interim Statement does not constitute statutory accounts as defined insection 240 of the companies Act 1985 has not been audited by the Company'sauditors BDO Stoy Hayward LLP. The comparatives for the full year ended 31December 2006 are not the Company's full statutory accounts for that year. Acopy of the statutory accounts for that year, which were prepared under UK GAAP,have been delivered to the Registrar of Companies. The auditors' report on thoseaccounts was unqualified and included references to going concern which theauditors drew attention to by way of emphasis without qualifying their reportand did not contain a statement under Section 237(2)-(3) of the Companies Act1985. 2. Implementation of IFRS In implementing the transition to IFRS, the Group has followed the requirementsof IFRS 1 "First Time Adoption of International Financial Reporting Standards",which in general requires IFRS accounting policies to be applied fullyretrospectively in deriving the opening balance sheet at the date of transition.IFRS 1 contains certain mandatory exceptions and some optional exemptions tothis principal of retrospective application. Where the Group has taken advantageof the exemptions they are noted below. The adoption of IFRS represents anaccounting change only and does not affect the operations or cash flow of theGroup. The principal areas of impact are described below. Goodwill and Business Combinations (IFRS 3)The Group has elected to take the exemption not to apply IFRS 3 retrospectivelyto business combinations occurring prior to the date of transition to IFRS.Goodwill arising on such acquisitions has therefore been retained at its UK GAAPcarrying value of £1,187,000 at 1 January 2006. Under IFRS 3 this goodwill issubject to impairment reviews and is not amortised. Research and development (IAS 38) Research expenditure is recognised in the income statement in the year in which it is incurred. Development expenditure is recognised in the income statement in the year inwhich it is incurred unless it meets the recognition criteria of IAS38"Intangible Assets". Regulatory and other uncertainties generally mean thatsuch criteria are not met. Where, however the recognition criteria are met,intangible assets are capitalised and amortised on a straight-line basis overtheir useful economic lives from product launch. This policy is in line withindustry practise. Previously under UK GAAP all development expenditure wasexpensed. Employee benefits (IAS19) The Group has complied with the provisions of IAS 19 and has accrued holiday payfor all staff from the date of transition. A charge of £16,000 has been recordedin the IFRS income statement for the six months to 30 June 2006. Reconciliations to previously presented financial statements are set out in notes 7 to 11. 4. Taxation The interim tax credit reflects an estimate of the likely effective tax rate for the period. 5. Loss per share The basic loss per share has been calculated based on the loss on ordinaryactivities after taxation of £1,524,000 and the weighted average number ofshares in issue for the period of 829,490,896 (June 2006: 516,834,400) and(December 2006: 595,192,463) There are 46,914,285 share options in issue that are currently anti-dilutive. 6. Share Capital On 6 February 2007, the Company issued 151,841,668 ordinary shares of 0.1p eachat a premium of 0.65p per share for a consideration of £1,138,813. On 14 June 2007, the Company issued 179,741,600 ordinary shares of 0.1p each ata premium of 0.65p per share for a consideration of £1,348,062. 7. Reconciliation Of Loss From UK GAAP To IFRS For The Year Ended 31 December 2006 Effect of transition to Commentary UK GAAP IFRS IFRS (£000) (£000) (£000) Revenue 405 - 405 Cost of sales (209) - (209) --------- --------- --------- Gross profit 196 - 196 ---------------------------------------------------------------------------------------------------------------Research and development costs 826 - 826Other administrative costs 1,673 - 1,673Goodwill amortisation (a) 96 (96) -Impairment of intangible assets (a) - 20 20--------------------------------------------------------------------------------------------------------------- --------- --------- ---------Administrative costs 2,595 (76) 2,519 Operating loss (2,399) 76 (2,323) Finance income 36 - 36Finance costs (8) - (8) --------- --------- --------- Loss before taxation (2,371) 76 (2,295) Income tax credit 118 - 118 --------- --------- --------- Loss after taxation (2,253) 76 (2,177) --------- --------- --------- Loss reported under previous UK (2,253)GAAPGoodwill amortisation 96Impairment charge (20) --------- Total adjustment to profit 76 --------- Total loss reported under IFRS (2,177) --------- 8. Reconciliation Of Loss From UK GAAP To IFRS For The 6 Months Ended 30 June 2006 Effect of transition to Commentary UK GAAP IFRS IFRS (£000) (£000) (£000) Revenue 55 - 55 Cost of sales (4) - (4) --------- --------- --------- Gross profit 51 - 51 --------------------------------------------------------------------------------Research and development costs 360 - 360Other administrative costs (b) 760 16 776Goodwill amortisation (a) 48 (48) -Impairment of intangible assets (a) - 10 10 -------------------------------------------------------------------------------- Administrative costs 1,168 (22) 1,146 --------- --------- ---------Operating loss (1,117) 22 (1,095) Finance income 11 - 11Finance costs (5) - (5) --------- --------- --------- Loss before taxation (1,111) 22 (1,089) --------- --------- --------- Income tax credit 40 - 40 Loss after taxation (1,071) 22 (1,049) --------- --------- --------- Loss reported under previous UK (1,071)GAAPGoodwill amortisation 48Impairment charge (10)Employee benefits (16) --------- Total adjustment to profit 22 --------- Total loss reported under IFRS (1,049) --------- 9. Reconciliation Of Equity From UK GAAP To IFRS At 1 January 2006 Effect of transition to UK GAAP IFRS IFRS (£000) (£000) (£000) AssetsNon current assetsGoodwill - carrying value at 31/12/05 1,187 - 1,187Intangible assets 980 - 980Property, plant and equipment 21 - 21 --------- --------- --------- Total non current assets 2,188 - 2,188 --------- --------- --------- Current assetsInventories 4 - 4Trade and other receivables 227 - 227Tax receivable 82 - 82Cash and cash equivalents 942 - 942 --------- --------- --------- Total current assets 1,255 - 1,255 Total assets 3,443 - 3,443 --------- --------- --------- LiabilitiesCurrent liabilitiesTrade and other payables 618 - 618 Non current liabilitiesProvisions - - - --------- --------- --------- Total liabilities 618 - 618 --------- --------- --------- Total net assets 2,825 - 2,825 ========= ========= ========= EquityCapital and reservesShare capital - Issued and fully paid 500 - 500 - Deferred 5,298 - 5,298Share premium 10,438 - 10,438Other reserves 242 - 242Retained earnings (13,653) - (13,653) --------- --------- --------- Total equity 2,825 - 2,825 ========= ========= ========= 10. Reconciliation Of Equity From UK GAAP To IFRS At 30 June 2006 Effect of transition to Commentary UK GAAP IFRS IFRS (£000) (£000) (£000) AssetsNon current assetsGoodwill (a) 1,185 38 1,223Intangible assets 1,031 - 1,031Property, plant and equipment 21 - 21 --------- --------- --------- Total non current assets 2,237 38 2,275 --------- --------- --------- Current assetsInventories 11 - 11Trade and other receivables 176 - 176Tax receivable 40 - 40Cash and cash equivalents 617 - 617 --------- --------- --------- Total current assets 844 - 844 Total assets 3,081 - 3,081 --------- --------- --------- LiabilitiesCurrent liabilitiesTrade and other payables (b) 547 16 563 Non current liabilitiesProvisions - - - --------- --------- --------- Total liabilities 547 16 563 --------- --------- --------- Total net assets 2,534 22 2,556 ========= ========= ========= EquityCapital and reservesShare capital - Issued and fully paid 583 - 583 - Deferred 5,298 - 5,298Share premium 11,112 - 11,112Other reserves 266 - 266Retained earnings (14,725) 22 (14,703) --------- --------- --------- Total equity 2,534 22 2,556 ========= ========= ========= 11. Reconciliation Of Equity From UK GAAP To IFRS At 31 December 2006 Effect of transition to Commentary UK GAAP IFRS IFRS (£000) (£000) (£000) AssetsNon current assetsGoodwill (a) 1,237 76 1,313Intangible assets 947 - 947Property, plant and equipment 26 - 26 ---------- --------- --------- Total non current assets 2,210 76 2,286 ---------- --------- --------- Current assetsInventories 20 - 20Trade and other receivables 230 - 230Tax receivable 115 - 115Cash and cash equivalents 508 - 508 ---------- --------- --------- Total current assets 873 - 873 Total assets 3,083 - 3,083 ---------- --------- --------- LiabilitiesCurrent liabilitiesTrade and other payables 632 - 632 Non current liabilitiesProvisions 100 - 100 ---------- --------- --------- Total liabilities 732 - 732 ---------- --------- --------- Total net assets 2,351 76 2,427 ========== ========= ========= EquityCapital and reservesShare capital - Issued and fully paid 694 - 694 - Deferred 5,298 - 5,298Share premium 11,992 - 11,992Other reserves 266 - 266Retained earnings (15,899) 76 (15,823) ---------- --------- --------- Total equity 2,351 76 2,427 ========== ========= ========= 12. Commentary on adjustments (a) Under IAS 38 goodwill is not amortised and so goodwill previously amortised under UK GAAP is reversed. Instead, impairment must be considered. (b) Under IAS 19 employee benefits, such as holiday pay, are provided for at the balance sheet. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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