7th Nov 2007 07:02
BTG PLC07 November 2007 BTG plc: Interim Results for the Six Months Ended 30 September 2007 London, UK, 7 November 2007: BTG plc (LSE: BGC), the life sciences company,today announces its interim results for the six months ended 30 September 2007. Financial highlights • Revenues of £47.6m (H1 06/07: £20.8m) reflect significant non-recurring transactions and continued steady receipts from royalty income o Total net revenues £27.2m (H1 06/07: £12.5m) o Net recurring royalty revenues £12.1m (H1 06/07: £12.2m) o Net revenues from non-recurring items £15.1m (H1 06/07: £0.3m) • Operating and administrative costs stable at £8.9m (H1 06/07: £9.1m) • Research and development expenditure increased to £4.8m (H1 06/07: £4.5m) o H2 investment expected to be significantly greater • Profit before tax of £15.2m (H1 06/07: £1.7m) and profit after tax £13.4m (H1 06/07: £1.6m) o £1.8m tax charge relates primarily to unrecoverable withholding tax on one-off licensing deal • Cash reserves at £46.6m (31/03/07: £43.0m) Operating highlights • Good progress with internal development programmes o Varisolve(R) Phase II study proceeding as planned, on track to end in H1 08 o BGC20-0166 (sleep apnoea) clinical study completed, results due Q1 08 o BGC20-0582 (head lice) Phase II study enrolment completed, results due Q1 08 o BGC20-1259 (Alzheimer's disease) completed Phase I and preparing to enter Phase IIa study in 2008 o CTAs filed for BGC20-1531 (migraine) and BGC20-0134 (multiple sclerosis) to commence first clinical studies • Strong progress in partnered programmes o Campath(R) approved as 1st-line treatment for chronic lymphocytic leukaemia and two Phase III trials in multiple sclerosis initiated o TRX4 to be developed by Tolerx in collaboration with GlaxoSmithKline for type 1 diabetes and other autoimmune diseases Louise Makin, BTG's Chief Executive Officer, commented: "These excellentfinancial results are supported by strong progress in our internal and licenseddevelopment programmes. We look forward to an exciting second half-year in whichwe anticipate achieving a number of significant development milestones whilecontinuing to seek to strengthen our pipeline by in-licensing or acquiring newprogrammes." For further information contact: BTG Financial DynamicsAndy Burrows, Director of Investor Relations Ben Atwell+44 (0)20 7575 1741; mobile: +44 (0)7990 530605 +44 (0)20 7831 3113Christine Soden, Chief Financial Officer+44 (0)20 7575 1591 About BTG BTG in-licenses, develops and commercialises pharmaceuticals principally in theareas of neuroscience and oncology. The company has a substantial and growingrevenue stream of royalties from out-licensed products and a broad, expandinginternal pipeline of development programmes. BTG operates from offices inLondon, Philadelphia and Osaka. For further information, visit: www.btgplc.com. OVERVIEW The results for the first half of the year demonstrate the increased financialstrength of the Group. Strong recurring royalty revenues together withsignificant revenues from licensing deals and other non-recurring transactionshelped contribute to a post-tax profit of £13.4m for the period compared to£1.6m in the first half of the prior year. The Group generated £3.6m of cash inthe period and will benefit further from the receipt of the deferredconsideration from certain of the licensing deals. With more than £46m in cashand having generated a surplus of £18.3m before external R&D costs in this halfyear, BTG is well placed to continue to progress key clinical programmes and tobuild value in its pipeline and its business. Good progress has been made in BTG's internal development programmes,particularly Varisolve(R), and also by licensees, the highlights of which aredescribed below. In addition to progressing current programmes, BTG has and willcontinue to explore options to further strengthen its development pipelinethrough partnering, licensing or acquisition. RESEARCH & DEVELOPMENT ACTIVITIES During the first half, BTG continued to develop and strengthen its pipeline andclinical development capabilities. The most intense activity has been in advancing Varisolve(R) and managing thecomplex US Phase II safety study. Within the neuroscience programmes, BGC20-0166for sleep apnoea and BGC20-1259 for Alzheimer's disease are in human clinicaltrials, BGC20-1531 for migraine and BGC20-0134 for multiple sclerosis areadvancing towards Phase 1 studies and preclinical work on BTG6001, our painprogramme, is proceeding well. In addition, a Phase 2 study on BGC20-0582, thehead lice programme, is well advanced. Looking at these programmes in a littlemore detail: The US Phase II safety study of Varisolve(R), the microfoam sclerosant forvaricose veins and venous stasis ulcers, is progressing as planned. Fiveclinical centres are now actively treating or screening for patients withvaricose veins who have a patent foramen ovale (PFO) or other cardiac shunt thatwould allow bubbles from the microfoam to move from the venous system into thearterial system. The study ends when 50 patients in whom bubbles are detected inthe middle cerebral artery during treatment with Varisolve(R) have had MRI scans28 days after treatment. The study is on track to finish during the first halfof 2008. Results to date in this open-label study validate the findings frompreclinical studies that treatment using the Varisolve(R) formulation results invery few bubbles being detected in the arterial system. The first two scheduled meetings of the study's Data & Safety Monitoring Board(DSMB) have been held. Upon review of the data the DSMB has recommendedcontinuing the study as planned, with only minor changes to the protocolincluding relaxing the study entry criteria and reducing the number ofpost-treatment MRI scans from three to two, which has been agreed by the FDA. BGC20-0166, a combination of two approved serotonin modulators shown inpreclinical models to improve sleep apnoea, has been assessed in a four-armclinical proof of mechanism study in 39 subjects randomised to receive placebo,one of the agents alone or the combination of agents at high and low doses.Subjects in the study represented the range of apnoea severity observed in thegeneral population. Severity is measured by the apnoea-hypopnea index (AHI). Thestudy primary endpoint is a reduction in AHI score and the secondary endpointsinclude improvements in sleep and blood oximetry. Results are anticipated in Q12008 and will shape subsequent development options. BTG is also developing aproprietary formulation to provide an optimised pharmacokinetic profile of theactive components. Phase I studies of BGC20-1259 were successfully completed in young healthy malevolunteers and elderly male and female volunteers. BGC20-1259, for Alzheimer'sdisease, had an excellent pharmacokinetic profile and was well tolerated in bothpopulations after single and repeat doses. Significant positive effects oncognitive function were found in both populations following repeat dosing. BTGis completing toxicology studies and planning a human positron emissiontomography study to determine the efficacious dose range to take into a PhaseIIa study, which is anticipated to start in H2 2008. The Phase IIa studyobjective will be to show efficacy and tolerability in patients with Alzheimer'sdisease, with improvement in cognitive function as the primary endpoint.Secondary endpoints will include behavioural assessments, particularly on moodand depressive symptoms. An adaptive design will be used to power the studybased on early results. BGC20-1531 is an EP4 receptor antagonist targeted at treating migraineheadaches. Its novel mechanism of action offers the potential of efficacy inmigraine sufferers who cannot take or do not respond to current treatments,primarily triptans and NSAIDs. Preclinical development has been completed and anapplication to commence a Phase I clinical study was submitted in October 2007.Assuming regulatory approval, BGC20-1531 is anticipated to commence a Phase Istudy before the end of 2007. A novel structured lipid, BGC20-0134 is designed to treat multiple sclerosis(MS) by raising levels of the anti-inflammatory and neuroprotective cytokineTGFbeta and reducing pro-inflammatory cytokines that are implicated in theautoimmune attack on myelin proteins during MS episodes. An application tocommence a Phase I clinical study has now been submitted, with study initiationanticipated in Q1 2008. The novel opiate analgesic BTG6001 continued to progress through preclinicalefficacy studies and manufacture for preclinical safety assessment. The targetprofile for this programme will be a product offering excellent pain reliefagainst moderate to severe pain with a significantly improved safety profile. A Phase II study was initiated on BGC20-0582 for head lice in the US in August,with enrolment of 225 subjects completed by the end of October 2007. The studyobjective is to achieve a cure rate (absence of lice after up to twoapplications) of at least 80%. Study results are anticipated early in 2008.Subjects were randomised to receive placebo or one of three concentrations ofBGC20-0582, a compound derived from a natural source that has been designated asgenerally regarded as safe (GRAS) by the FDA. It is anticipated that the productwill initially be approved as prescription-only but with potential for rapiddevelopment and switch from prescription-only to an over-the-counter treatment.Further studies will include comparison with market-leading products andefficacy against insecticide-resistant strains. In addition, BTG has interests in a series of oncology programmes, both internaland licensed, which cover both biologicals and small molecule drugs, andestablished cytotoxic methodologies as well as newer mechanisms of action. Of the established cytotoxic drugs, BTG has two thymidylate synthase (TS)inhibitor programmes, plevitrexed, a broad cytotoxic targeting gastric,pancreatic and ovarian cancer and BGC 945, a selective TS inhibitor which isdesigned to be taken up preferentially by tumour cells and thereby spareshealthy tissue. A partner is being sought for plevitrexed in order to completedevelopment and market the product, which has been granted orphan drug status inthe US for gastric and ovarian cancer. BGC 945 is in late preclinical studiesand BTG is currently reviewing the medical and commercial positioning of thisprogramme. An earlier stage programme works through a newer mechanism of action. BTG6228 isa HIF 1 alpha regulator, which has continued to make good progress throughpreclinical safety studies and is soon to commence testing in preclinicalefficacy models. Licensed Programmes Amongst BTG's licensed programmes are some very promising drugs of which twomonoclonal antibodies, Campath(R) (Genzyme Corporation) and TRX4 (Tolerx, Inc.),are showing good development and commercial progress in a range of therapeuticindications. Three oncology programmes, CB7630 (Cougar Biotechnology, Inc.),AQ4N (Novacea, Inc.) and SymadexTM (Xanthus Pharmaceuticals, Inc) also show goodpromise. In September 2007, the FDA extended the label in the US for the anti-CD52monoclonal antibody, Campath(R), to include first-line treatment of patientswith B-cell chronic lymphocytic leukaemia, and in October the European Committeefor Medicinal Products for Human Use issued a positive opinion to extendtreatment to include first-line treatment in patients for whom fludarabine isnot suitable. These extensions are anticipated to expand significantly thepatient population available for treatment with Campath(R). Three-year data werepresented on the Phase II trial of Campath(R) versus Rebif(R) in MS which showedat least a 73% reduction in risk of relapse and at least a 70% reduction in therisk for progression of disability compared with Rebif(R). There were noadditional cases of idiopathic thrombocytopenic purpura (ITP), the plateletdisorder, for which a patient safety management programme has been established.Thyroid disorders were present in 20% of subjects. Full efficacy and safety datafrom the study are due to be presented in spring 2008. Genzyme and Scheringcommenced two Phase III trials of Campath(R) in MS, the first a head-to-headtrial against Rebif(R), which will include previously untreated patients. Thesecond study will include patients who have relapsed while being treated withother agents. Tolerx continued with a Phase II dose-ranging study of TRX4, the monoclonalantibody that binds to the CD3 receptor on T cells, in preparation for a PhaseIII trial in patients with new-onset type 1 diabetes. In October 2007, Tolerxsigned a worldwide collaboration with GlaxoSmithKline to develop TRX4 for type 1diabetes and a range of other autoimmune diseases including psoriasis. Thiscollaboration will potentially generate significant milestones and royalties forboth Tolerx and BTG should the products move through development and ontomarket. Cougar is progressing the development of CB7630 (abiraterone acetate) as atreatment for prostate cancer and positive data were presented at a number ofscientific meetings. In a Phase I/II study of patients with hormone refractory,chemotherapy naive prostate cancer, 27 patients (61%) experienced reductions inprostate specific antigen (PSA) levels of more than 50%, with 11 patients (25%)showing PSA reductions of over 90%. In a Phase II study in patients who havefailed androgen therapy and do not respond to docetaxel, 14 patients (50%) hadfalls in PSA of over 50% and 5 patients (18%) had PSA reductions of more than90%. Novacea continued with development of AQ4N as a cancer agent targeting a rangeof solid tumours. A Phase II trial was initiated in patients with relapsed orrefractory acute lymphoblastic leukaemia. Novacea aims to enrol 56 patients andwill assess their response rate, duration of response and overall survivalfollowing treatment with AQ4N. Xanthus announced preclinical data showing that SymadexTM may have a role in thetreatment of MS and other autoimmune disorders through its inhibition of FLT3 inaddition to its potential role in breast and colon cancers. FINANCIAL REVIEW Revenues Total revenues for the first half of the year were £47.6m (H1 06/07: £20.8m),reflecting steady performance in recurring royalty revenues and significantone-off licences and other non-recurring transactions. After accounting forrevenue sharing, net revenues, including £15.1m from non-recurring deals, were£27.2m, an increase of £14.7m over H1 06/07. Revenue sharing in the periodrepresented 43% of revenues compared to 40% in the first half of the previousyear, influenced by the terms of the one-off transactions. Underlying growth in the sales of licensed products remained strong but many ofthose sales were US dollar based and the weakness of the dollar resulted in therecurring royalties shown in BTG's results being £12.1m (H1 06/07: £12.2m). 2007/08 2006/07 Underlying growth £m £mBeneFIX(R) recombinant Factor IX (Wyeth) 8.1 8.0 9%Two-part hip cup (various partners) 3.6 3.7 3%Campath(R) (Genzyme) 2.4 2.3 14%Antibody humanisation IP (MRC) 2.5 2.0 undisclosedThree-part knee (various partners) 1.2 1.0 33%Others 2.9 3.3 _____ _____Recurring royalty revenue 20.7 20.3Revenue sharing (8.6) (8.1) _____ _____Net recurring royalties 12.1 12.2 The percentage due on revenue sharing was 41.5% compared to 39.9% in the prioryear, varying with the mix of sales by product, licence and territory. BTG's royalty income due from the MRC (Medical Research Council) on patentsrelating to the humanisation of monoclonal antibodies grew by 15%. Underlyinggrowth in sales of the covered products is not disclosed. In addition to the recurring royalty income from the MRC, BTG has recorded £2.7mgross (£2.3m net) in respect of royalties due on a fully paid up licence securedby the MRC with one of its licensees. Other items on non-recurring revenuesincluded the signature fee received of £1.4m gross (£1.1m net) when Novaceagained worldwide rights to AQ4N and the revenues from two fully paid up licencesto the patents relating to storage capacity in semiconductor chips generating£22.4m gross and £11.7m net. Certain withholding tax charges were incurred onthese licences resulting in a tax charge of £1.7m in the period. In addition the Group generated £0.2m of net gains from sales of assets. Looking forward, the approval of Campath(R) as a first line treatment for CLLwould lead us to expect continued growth in this product. Sales of the patentedhip and knee products show solid growth as do the various products attractingroyalties under the MRC patents. Sales of BeneFIX(R) remain strong, although the earlier distribution dealwhereby Baxter marketed the product in Europe has now ceased and Wyeth will pickup sales activities in the territory. This might lead to a temporary reductionin sales in the second half of the year although underlying product demand isnot anticipated to decline. The second half of the year will also benefit from the milestone payment due toBTG from Tolerx following its licensing deal with GlaxoSmithKline which shouldgenerate net one off income of £2.4m to BTG and significant future revenuesthrough BTG's right to 50% of any potential development and sales milestonesreceived by Tolerx. Expenses Operating and administrative expenses of £8.9m (H1 06/07: £9.1m) are expected toremain around this level and include the costs of BTG's internal R&D staff. Research and development investment, which increased slightly to £4.8m (H1 06/07: £4.5m), included Varisolve(R) costs of £1.8m (H1 06/07: £1.7m), otherinternal development of £2.7m (H1 06/07: £2.4m) and BTG's share of the resultsof its associate companies of £0.3m (H1 06/07: £0.4m). The R&D expenses areexpected to increase in the second half of the year as more treatment centresare initiated in the Varisolve(R) US Phase II safety study and as BGC20-1531(migraine) and BGC20-0134 (MS) enter their first clinical studies. Operating Surplus, Pre-R&D Profit and Profit After Tax The Group generated an operating surplus, being net recurring revenues lessoperating and admin costs, of £3.2m for the period (H1 06/07: £3.1m). Thepre-tax profit was £15.2m compared to £1.7m in the first half of the prior year.Adding back the external R&D costs gives a pre-R&D profit before tax of £20.0m(H1 06/07: £6.2m). Maximising this figure is a key performance measure for theGroup in order to allow increasing investment in building the developmentpipeline. Financial income for the period was £1.5m (H1 06/07: £0.7m), being interest andsimilar income plus certain unrealised exchange gains on forward contracts. The tax charge for the first half of the year was £1.8m of which £1.7m relatesto transaction-related withholding taxes. Overall, the profit after tax for the period was £13.4m (H1 06/07: £1.6m) andthe earnings per share were 9.0p (H1 06/07: 1.1p). At the period end there wereapproximately 151m ordinary shares in issue. Cash At the period end cash and cash equivalents were £46.6m, compared with £43.0m atthe start of the period. Of the profit after tax of £13.4m, some £1.9m ofcharges related to non-cash items and these were broadly offset by additions tointangible assets and other investments of £0.9m, a reduction in provisions of£0.6m and accelerated contributions to the defined benefit pension scheme of£1.1m. The principal reason that the cash generated of £3.6m is not nearer the£13.4m profit is the large movement in working capital. In particular, of thenet proceeds from the one-off transactions some £7m net has yet to be received. Balance Sheet Fixed assets are unchanged over the period at a net book value of £8.7m withadditions of £0.5m offset by depreciation charges. The major item within fixedassets is the Varisolve(R) secondary manufacturing plant in North Wales valuedat £7.5m and which, as an asset in the course of construction, is yet to bedepreciated. Additions to intangible assets of £1.4m have been offset byamortisation charges and disposals increasing the carrying value of intangibleassets from £7.6m to £8.0m over the six months to 30 September 2007. Of the£1.4m additions to intangible assets, £0.8m is goodwill recognition relating toa change in the status of BTG's investment in Senexis Ltd from associate tosubsidiary, as BTG's investment increased to more than 50% during the period.Investments in associates and other investments reduced from £6.2m at the startof the period to £5.6m with expenditure on investments of £0.7m offset byoperating losses within the businesses and venture funds and the change instatus of the investment in Senexis described above. Trade and other receivables increased from £10.5m at the start of the period to£25.9m, with the impact of certain one-off transactions near the period end anddeferred payment terms on the major semi-conductor patent sales increasing thereceivables. The £13.3m unpaid on these patent sales is due to be received instages by December 2009. Trade and other payables (current and non-current) total £28.3m, an increase of£7m and largely reflect the revenue sharing payments due on the receivablesdiscussed above. Provisions against restructuring costs and other items reduced from £1.7m to£1.1m as £0.6m was utilised in the period. The provision for the Group's definedbenefit pension plan deficit reduced from £5.7m at the beginning of the periodto £3.1m at the period end with total cash payments of £1.4m and actuarial gains- largely from improved bond yields - of £1.7m being offset by the pensionscheme ongoing income statement charge of £0.5m. Overall, shareholders' equity increased by £14.9m from £47.3m at the start ofthe period to £62.2m, with the £13.4m profit after tax and the £1.7m actuarialgains offset mainly by foreign exchange differences on consolidation of foreignsubsidiaries. Risks and Uncertainties Facing the Business The key business risks facing the BTG Group remain unchanged from those set outin the Annual Report & Accounts for the year ended 31 March 2007. As an R&Dbased company, development risks and regulatory risks are significant andfailure of products in BTG's pipeline or in licensees' hands could result in aloss of future revenues to BTG. Competition and reimbursement risks exist withrespect to marketed products on which BTG earns royalties and to the value ofdrugs in the development pipeline. Failure to maintain or renew key patentscould result in significant loss of revenue and the costs of defending anypatent infringement suits could be significant. The weakening of the US dollarin currency markets has and could continue to adversely impact results. SUMMARY AND OUTLOOK BTG has made a strong start to the current year both financially and in relationto the progress made in its internal and licensed development programmes.Further progress is anticipated in the second half year and through 2008, withexciting programmes for migraine and multiple sclerosis expected to start theirfirst clinical studies, completion of the Varisolve(R) Phase II safety study,the results from the head lice Phase II trial and the sleep apnoea clinicalproof of mechanism study, and the initiation of a Phase II study in Alzheimer'sdisease. The licensing in October by Tolerx of its TRX4 programme to GlaxoSmithKlineenhances BTG's financial position in the short term and offers significantupside in the future and progress with our key licensed programmes lookspromising. Overall, BTG is well positioned to continue to make further clinical andfinancial progress and to build its pipeline and create shareholder value. CONSOLIDATED INCOME STATEMENTfor the six months ended 30 September 2007 Six months ended Year ended Note 30 September 30 September 31 March 2007 2006 2007 £m £m £mRevenue 2 47.6 20.8 45.7Revenue sharing (20.4) (8.3) (18.9) _____ _____ _____Revenue net of revenue sharing 27.2 12.5 26.8Operating expenses 3 (8.9) (9.1) (17.9)Research and development expenses 4 (4.8) (4.5) (9.7)Profit on disposal of assets and investments 5 0.2 2.3 2.7Amounts written off research associates and 7 - - (1.0)investments _____ _____ _____Operating profit 2 13.7 1.2 0.9Financial income 1.5 0.7 1.8Financial expenses - (0.2) (0.1) _____ _____ _____Profit before tax 15.2 1.7 2.6Tax 8 (1.8) (0.1) (0.2) _____ _____ _____Profit after tax for the period 13.4 1.6 2.4 _____ _____ _____ Basic & diluted earnings per share 9 9.0p 1.1p 1.6p _____ _____ _____ The profit after tax in each period is all attributable to the equity holders of the parent. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the six months ended 30 September 2007 Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 £m £m £mForeign exchange translation differences (0.4) (0.7) (0.7)Actuarial gain on pension liabilities 1.7 1.7 2.0Change in fair value of equity securities (0.1) - (0.3)available-for-sale _____ _____ _____Net income recognised directly in equity 1.2 1.0 1.0Profit after tax for the period 13.4 1.6 2.4 _____ _____ _____Total recognised income and expense for the period 14.6 2.6 3.4attributable to equity holders of the parent _____ _____ _____ CONSOLIDATED BALANCE SHEETas at 30 September 2007 Note 30 September 2007 30 September 31 March 2006 2007 £m £m £mNon-current assetsIntangible assets 10 8.0 6.8 7.6Property, plant & equipment 8.7 9.2 8.7Investments in research associates 10 0.4 2.4 1.2Other investments 5.2 5.1 5.0 _____ _____ _____ 22.3 23.5 22.5 _____ _____ _____ Current assetsTrade and other receivables 11 25.9 10.2 10.5Cash and cash equivalents 46.6 43.0 43.0 _____ _____ _____ 72.5 53.2 53.5 _____ _____ _____ Total assets 94.8 76.7 76.0 _____ _____ _____ EquityShare capital 12 15.1 15.1 15.1Share premium account 12 187.0 186.9 187.0Other reserves 12 (1.4) (0.6) (0.9)Retained earnings 12 (138.5) (155.6) (153.9) _____ _____ _____Total equity attributable to equity holders of 12 62.2 45.8 47.3the parent _____ _____ _____ Non-current liabilitiesTrade and other payables 3.3 0.5 0.7Employee benefits 3.1 6.9 5.7Provisions 13 0.2 1.9 0.4 _____ _____ _____ 6.6 9.3 6.8 _____ _____ _____ Current liabilitiesTrade and other payables 25.0 20.0 20.6Taxation 0.1 - -Provisions 13 0.9 1.6 1.3 _____ _____ _____ 26.0 21.6 21.9 _____ _____ _____ Total liabilities 32.6 30.9 28.7 _____ _____ _____ Total equity and liabilities 94.8 76.7 76.0 _____ _____ _____ CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 30 September 2007 Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 £m £m £mProfit before tax for the period 15.2 1.7 2.6Profit on disposal of intangible assets and (0.2) (2.3) (2.7)investmentsAmounts written off research associates and - - 1.0investmentsInvestment income (1.5) (0.7) (1.8)Interest expense - 0.2 0.1Amortisation and impairment of intangible assets 1.0 1.0 1.9Depreciation on property, plant & equipment 0.5 0.4 0.9Share-based payments 0.4 0.2 0.8Pension contributions (0.9) (1.1) (1.9)Increase in debtors (15.9) (0.1) (0.4)Increase/(decrease) in creditors 6.6 (1.6) (0.8)Decrease in provisions (0.6) (1.1) (2.9)Share of research associates' losses 0.3 0.4 0.7Other (0.3) (0.2) (0.3) _____ _____ _____Cash used in operations 4.6 (3.2) (2.8) Interest expense - (0.1) (0.1)Taxation paid (1.0) (0.1) (0.2) _____ _____ _____Net cash from operating activities 3.6 (3.4) (3.1) _____ _____ _____ Investing activitiesInterest received 1.5 0.9 2.0Purchases of intangible assets (0.5) (0.9) (2.5)Purchases of property, plant & equipment (0.5) - -Proceeds on disposal of intangible assets 0.5 4.7 5.0Payments made in relation to disposal of (0.2) (9.5) (10.0)intangible assetsInvestment in research associates (0.3) (0.1) (0.2)Expenditure on investments (0.4) (0.1) (0.6)Proceeds on disposal of investments 0.2 0.1 0.9 _____ _____ _____Net cash from investing activities 0.3 (4.9) (5.4) _____ _____ _____ Cash flows from financing activitiesProceeds of share issues - 0.7 0.8 _____ _____ _____Net cash from financing activities - 0.7 0.8 _____ _____ _____ Increase/(decrease) in cash and cash equivalents 3.9 (7.6) (7.7)Cash and cash equivalents at start of period 43.0 51.0 51.0Effect of exchange rate fluctuations on cash held (0.3) (0.4) (0.3) _____ _____ _____Cash and cash equivalents at end of period 46.6 43.0 43.0 _____ _____ _____ NOTES TO THE ACCOUNTS 1. Basis of preparation and accounting policies The unaudited financial statements for the six months ended 30 September 2007have been prepared in accordance with International Financial Reporting StandardIAS 34 - Interim Financial Reporting as adopted by the EU and were approved bythe Board on 6 November 2007. Details of the accounting policies applied areset out in the Group's 2007 annual report and accounts. These interim financialstatements do not include all the information required for full annual financialstatements and should be read in conjunction with the consolidated financialstatements of the Group for the year ended 31 March 2007. These interim financial statements do not constitute statutory accounts of theGroup within the meaning of section 435 of the Companies Act 2006. Statutoryaccounts for the year ended 31 March 2007, prepared in accordance withInternational Financial Reporting Standards as adopted by the EU ('AdoptedIFRSs'), have been reported on by the Group's auditors and delivered to theRegistrar of Companies. The report of the auditors was (i) unqualified, (ii) didnot include a reference to any matters to which the auditors drew attention byway of emphasis without qualifying their report, and (iii) did not contain astatement under section 498 of the Companies Act 2006. 2. Summary segmental analysis Segmental information is presented in respect of the Group's business andgeographical segments. The primary format, business segments, is based on theGroup's management and internal reporting structure. The Group comprises the following main business segments: Life sciences: The acquisition, development and commercialisation of pharmaceutical and other medical technologies.Technology commercialisation: The commercialisation of technology outside the life sciences area. Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 £m £m £mRevenue by business segmentLife sciences 25.1 20.3 45.0Technology commercialisation 22.5 0.5 0.6Unallocated - - 0.1 _____ _____ _____Revenue 47.6 20.8 45.7 _____ _____ _____ Operating profit/(loss) by business segmentLife sciences 4.5 1.4 5.0Technology commercialisation 11.1 1.1 (1.4)Other operating costs (1.9) (1.3) (2.7) _____ _____ _____Operating profit 13.7 1.2 0.9 _____ _____ _____ The business is split geographically. The life sciences and technologycommercialisation segments are managed on a worldwide basis, but operate in fourprincipal geographical areas, USA, UK, Europe (excluding UK) and Asia. Inpresenting information on the basis of geographical segments, revenue is basedon the geographical location of customers. Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 £m £m £mRevenue by geographic segmentUSA 16.0 16.6 32.8UK 8.1 3.3 6.8Europe 0.8 0.4 4.8Asia 22.4 0.2 0.2Other 0.3 0.3 1.1 _____ _____ _____Revenue 47.6 20.8 45.7 _____ _____ _____ 3. Operating expenses Six months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £m £m £mPatent amortisation, renewal fees and litigation 1.3 1.2 2.4expensesAdministrative expenses 7.7 7.9 16.2Exchange loss 0.1 - 0.3 _____ _____ _____ 9.1 9.1 18.9Restructuring:Reduction in provision for onerous leases (note 12) (0.2) - (1.0) _____ _____ _____ 8.9 9.1 17.9 _____ _____ _____ 4. Research and development expenses Six months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £m £m £mVarisolve(R) development 1.8 1.7 3.5Other development programmes 2.7 2.4 5.5 _____ _____ _____ 4.5 4.1 9.0Share of results of research associates 0.3 0.4 0.7 _____ _____ _____ 4.8 4.5 9.7 _____ _____ _____ 5. Profit on disposal of assets and investments Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 £m £m £mProfit on disposal of intangible assets* 0.1 2.3 2.1Profit on disposal of investments 0.1 - 0.6 _____ _____ _____ 0.2 2.3 2.7 _____ _____ _____ \* The profit for the period ended 30 September 2007 is net of £0.1m shared withthe inventive source (H1 06/07: £1.6m; 06/07: £1.6m). Loss relief is expected to absorb the tax due in respect of the profit ondisposal. 6. Share-based payments In accordance with IFRS 2, a charge of £0.4m (H1 06/07: £0.2m; 06/07: £0.8m),relating to the fair value of share-based schemes granted since 7 November 2002,is included within administrative expenses. 7. Amounts written off associates and investments Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 £m £m £mAmounts written off associates - - 1.0 _____ _____ _____ - - 1.0 _____ _____ _____ The amount written off associates represents the reduction in value ofassociates, taken direct to the income statement, following an impairmentreview. 8. Tax Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 £m £m £mUK corporation tax charge 0.1 0.1 0.1Less: double tax on royalties - (0.1) (0.1)Foreign tax paid - - 0.1Overseas tax on royalties 1.7 0.1 0.1 _____ _____ _____ 1.8 0.1 0.2 _____ _____ _____ Tax for each six-month period has been provided on the basis of the anticipatedeffective rate for the full year. Overseas tax on royalties relates towithholding tax deductible from foreign income that is not capable of beingoffset. 9. Earnings per share Basic earnings per share is calculated by dividing the profit attributable toordinary shareholders of £13.4m (H1 06/07: £1.6m; 06/07: £2.4m) by the weightedaverage of ordinary shares outstanding during the period of 149.7m (H1 06/07:149.3m; 06/07: 149.5m). Diluted earnings per share is calculated using aweighted average of ordinary shares outstanding during the period, adjusted foroutstanding share options, of 149.8m (H1 06/07: 149.8m; 06/07: 149.9m). The weighted average number of ordinary shares outstanding used in thecalculations excludes the shares held by the BTG Employee Share Trust. Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007Profit attributable to ordinary shareholders (£m) 13.4 1.6 2.4Earnings per share (p)Basic & diluted 9.0 1.1 1.6 _____ _____ _____ Number of shares (m)Weighted average number of shares - basic 149.7 149.3 149.5Effect of share options in issue 0.1 0.5 0.4 _____ _____ _____Weighted average number of shares - diluted 149.8 149.8 149.9 _____ _____ _____ 10. Intangible assets On 21 August 2007 the status of BTG's investment in Senexis Ltd changed from anassociate to a subsidiary as BTG's shareholding increased from 38% to 61%. BTGhas recognised £0.8m in goodwill in relation to this acquisition, whichrepresents the cost that is not capable of being attributed in accounting termsto identifiable assets and liabilities acquired and is underpinned by the corescientific capabilities and knowledge base of the company. 11. Trade and other receivables 30 September 2007 30 September 2006 31 March 2007 £m £m £mDue within one yearRevenues receivable, net of provisions 18.0 8.1 7.9Other debtors 0.8 0.6 0.9Prepayments and accrued income 1.3 0.9 1.3 _____ _____ _____ 20.1 9.6 10.1Due after more than one yearRevenues receivable, net of provisions 5.8 0.6 0.4 _____ _____ _____ 25.9 10.2 10.5 _____ _____ _____ As at 30 September 2007 the provision for revenues receivable was £6.9m (H1 06/07: £7.0m; 06/07 £6.7m) The fair value of derivatives included in the accounts is £0.4m (H1 06/07: Nil;06/07: £0.1m) and is included in 'Other debtors' above. At 30 September 2007the Group held forward contracts to sell a total of US$36.1m in the period toAugust 2008 (H1 06/07: US$10.0m in the period to February 2007; 06/07: US$20.0min the period to February 2008). These forward contracts have not beenaccounted for as cash flow hedges. The Group had no other derivative financialinstruments at the above balance sheet dates. 12. Equity Share Share Other Retained Total capital premium reserves earnings equity £m £m £m £m £mAt 1 April 2007 15.1 187.0 (0.9) (153.9) 47.3 Foreign exchange translation differences - - (0.4) - (0.4)Actuarial gain on pension liabilities - - - 1.7 1.7Change in the fair value of equity securities - - (0.1) - (0.1)available-for-saleProfit after tax for the period - - - 13.4 13.4 _____ _____ _____ _____ _____Total recognised income and expense - - (0.5) 15.1 14.6 Movement in shares held by the Trust - - - (0.1) (0.1)Share-based payments - - - 0.4 0.4 _____ _____ _____ _____ _____At 30 September 2007 15.1 187.0 (1.4) (138.5) 62.2 _____ _____ _____ _____ ____ Other reserves are analysed as follows: Translation Fair value Total other reserve reserve reserves £m £m £mAt 1 April 2007 (0.9) - (0.9)Total recognised income and expense (0.4) (0.1) (0.5) _____ _____ ____At 30 September 2007 (1.3) (0.1) (1.4) _____ _____ _____ 13. Provisions 30 September 2007 30 September 2006 31 March 2007 £m £m £mAt 1 April 1.7 4.6 4.6Provisions made during year - 0.1 -Provisions utilised during year (0.4) (1.2) (1.8)Provisions released during year (0.2) - (1.0)Difference on exchange - - (0.1) _____ _____ _____At period end 1.1 3.5 1.7 _____ _____ _____ Balance due within one year 0.9 1.6 1.3Balance due after more than one year 0.2 1.9 0.4 _____ _____ _____ 1.1 3.5 1.7 _____ _____ _____ These provisions relate to onerous leases and represent the net present value offuture obligations, not covered by income from tenants, both in the UK and USoffices of the Group. The release of part of the provision in each period hasfollowed a reassessment of the future income stream and costs relating to eachoffice. 14. Posting of interim accounts The announcement is being sent to all shareholders on the register on 16November 2007 and further copies are available from the Company's registeredoffice: 10 Fleet Place, Limeburner Lane, London EC4M 7SB. Responsibility statement of the directors in respect of the interim financialreport We confirm that to the best of our knowledge: • the condensed set of financial statements has been prepared inaccordance with IAS 34 Interim Financial Reporting as adopted by the EU; • the interim management report includes a fair review of theinformation required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indicationof important events that have occurred during the first six months of thefinancial year and their impact on the condensed set of financial statements;and a description of the principal risks and uncertainties for the remaining sixmonths of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the entity during that period; and any changes in the relatedparty transactions described in the last annual report that could do so. By order of the Board Dr Louise Makin Chief Executive OfficerChristine Soden Chief Financial Officer 6 November 2007 Independent Review Report to BTG plc Introduction We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30September 2007 which comprises the Group income statement, balance sheet, cashflow statement and the statement of recognised income and expense and therelated explanatory notes. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the Disclosureand Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the DTR of the UK FSA. As disclosed in note 1, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the EU. The condensed set offinancial statements included in this half-yearly financial report has beenprepared in accordance with IAS 34 Interim Financial Reporting as adopted by theEU. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequently does notenable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 September 2007 is not prepared, in allmaterial respects, in accordance with IAS 34 as adopted by the EU and the DTR ofthe UK FSA. KPMG Audit PlcChartered Accountants8 Salisbury SquareLondon EC4Y 8BB 6 November 2007 Shareholder information Financial calendarAnnouncement of interim results for the six months ended 30 September 2007 7 November 2007Preliminary announcement of annual results for year ended 31 March 2008 May 2008 Capita share dealing services A quick and easy share dealing service is available from Capita Registrars, toeither buy or sell more shares. An online and telephone dealing facility isavailable providing shareholders with an easy-to-access and simple-to-useservice. For further information on this service, or to buy and sell shares,please contact: www.capitadeal.com (online dealing) or 0870 458 4577 (telephonedealing). Shareholder change of address The Company offers the facility, in conjunction with Capita Registrars, ourRegistrars, to conduct a number of routine matters via the web including theability to notify any change of address. If you are a shareholder and areeither unable or would prefer not to use this facility, please do not send thenotification to the Company's registered office. Please write direct to CapitaRegistrars, at their address shown below, where the register is held. Relating to beneficial owners of shares with 'information rights' Please note that beneficial owners of shares who have been nominated by theregistered holder of those shares to receive information rights under section146 of the Companies Act 2006 are required to direct all communications to theregistered holder of their shares rather than to the Company's registrar, CapitaRegistrars, or to the Company directly. Addresses for correspondence Registered office and head office RegistrarsBTG plc Capita Registrars10 Fleet Place Northern HouseLimeburner Lane Woodsome ParkLondon Fenay BridgeEC4M 7SB HuddersfieldTel 4 (0)20 7575 0000 West YorkshireFax 4 (0)20 7575 0010 HD8 0LA Tel +44 (0)870 162 3100 Registered number 2670500 Cautionary statement regarding forward-looking statements This interim report may contain forward-looking statements based on currentexpectations of, and assumptions and forecasts made by, Group management.Various known and unknown risks, uncertainties or other factors could lead tosubstantial differences between the actual future results, financial situationdevelopment or performance of the Group and the estimates and historical resultsgiven herein. Undue reliance should not be placed on forward-looking statementswhich speak only as of the date of this document. The Group accepts noobligation to publicly revise or update these forward-looking statements oradjust them to future events or developments, whether as a result of newinformation, future events or otherwise, except to the extent legally required. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BTG