13th Mar 2006 07:02
Sinclair Pharma PLC13 March 2006 Sinclair Pharma plc Interim Results Godalming, 13 March 2006: Sinclair Pharma plc ("Sinclair" or the "Company"), therapidly growing specialty pharmaceutical company, today announces its interimresults for the six months ended 31 December 2005. Acquisition of Groupe CS Dermatologie SAS ("GCSD") and Vendor Placing o Proposed acquisition transforms dermatology business of Sinclair (see separate announcement) o Vendor Placing of £35 million at 125p per share Financial Highlights o Turnover on continuing operations up 363% to £3.7m (H1 2004/5: £0.8m) • Product revenues up 493% to £3.3m (H1 2004/5: £0.6m) of which £1.1m comes from Sinclair srl (formerly Euroderm) o Operating loss of £2.0m (H1 2004/5: £2.2m loss) o Loss per share of 3.58p (H1 2004/5: 4.29p loss per share) o Cash of £10.7m at 31 December 2005 (31 December 2004: £6.7m) • £7.4m (£7.1m net of expenses) raised via institutional placing at 125p per share in November 2005 o Healthy order book and over 20 planned product launches in the secondhalf underpin positive outlook Operating Highlights o 18 product launches in 14 European countries, including: • AtopiclairTM launched in Italy via Sinclair srl (formerly Euroderm) and Portugal by Dysanovis • Aloclair(R) launched in ten European countries by Sunstar Butler o 13 licensing deals in 7 countries, including: • Decapinol(R) licensed to Pharmbio Co Ltd in Korea • SebclairTM licensed to CVP Inc in the US • All three Aloclair(R) presentations licensed to Sunstar Butler in Mexico o Continued strong regulatory progress: • Decapinol(R) Toothpaste & Gel received EU regulatory approval • FDA extends labelling of Decapinol(R) to include treatment of plaque • Decapinol(R) Rinse filed in US with FDA for "Ethical Product" Status allowing OTC sales • SebclairTM double blind trial provided positive results Steve Harris, Chairman of Sinclair Pharma plc, said: "Product revenues have increased nearly 500%. With underlying organic revenuegrowth of 222% per cent excluding Sinclair srl (formerly Euroderm) over the sameperiod last year, we are satisfied with our financial performance in the firsthalf. Today's transforming acquisition of Groupe CS Dermatologie provides us with asubstantially enlarged product portfolio and pipeline and a direct sales forcein three European markets. We are therefore increasingly optimistic about thefull year." Enquiries: Sinclair Pharma plc Dr Michael Flynn, CEO Tel: (0)1483 426 644Jerry Randall, CFOJohn Barrington-Carver (Corp. Office) Tel: (0) 7831 655 630 Financial Dynamics Ben Atwell/John Gilbert Tel: (0) 207 831 3113 Sinclair Pharma plc: Sinclair Pharma plc, based in Godalming in the UK, is quoted on the London StockExchange's AIM market and has focused on the acquisition and development ofniche patented pharmaceutical products in the fields of oral health anddermatology, and bringing them to the international market place viaout-licensing partners. The Company combines product evaluation, productdevelopment, regulatory and business development expertise to add value to itsacquired and in-house developed products. A key element of the Sinclair businessmodel is to minimise risk and exposure by avoiding involvement in lengthy R&Dprogrammes and rapidly achieving global distribution through a network ofmarketing partners. The Company has already licensed its products fordistribution in over 50 countries around the world. www.sinclairpharma.com Chief Executive's Review Overview The first half this year has further demonstrated the successful realisation ofSinclair's evolving business strategy. First half turnover was up by 363% from£0.8 million to £3.7 million. We have continued to see positive progress on allfronts as Sinclair implements its strategy of becoming an integratedinternational pharmaceutical company with a broad portfolio of on-market nicheproducts in the areas of dermatology and oral health. Our strategy has takenanother major step forward with the announcement today of our fifth and mostsignificant acquisition, of Groupe CS Dermatologie SAS ("GCSD") which, whencompleted, will add a direct sales force in France, Spain and Portugal and morethan twelve further derma products to our portfolio. GCSD had sales in 2005 of€17.7 million (£12.0 million). In the first half we received EU regulatory approval for two Decapinol(R) lineextensions, Toothpaste and Gel, which will expand our market for this importantproduct. In licensing, a further 13 deals have been concluded in 7 countriescovering 8 of our products. Furthermore, the successful integration of lastyear's Euroderm acquisition in Italy (now Sinclair srl) has enabled the Companyto launch AtopiclairTM using its own sales force, the first launch of a Sinclairproduct by its own sales force. In the period under review, our licensees havealso justified our selection strategy by achieving 18 further launches involving7 products. During the first half our products Decapinol(R) and SebclairTM both receivedencouraging endorsements, respectively from the FDA and from a clinical trial.The FDA has allowed an important change to the labelling of Decapinol(R) toinclude 'treatment of plaque' which further underlines the uniqueness of thisproduct. Also received in the first half were positive results for SebclairTM,the Group's non-steroidal cream for the treatment of seborrheic dermatitis. Aloclair(R), our product for mouth ulcers, continues to provide a significantpart of total revenues. However, sales income from core products such asAtopiclairTM and Decapinol(R) is growing as further launches take place. Product launches during the half year to 31 December 2005 can be expected tocontinue to boost revenues as will more than 20 further launches anticipated inthe second half, six of which have already been achieved post-period. Financial Highlights This is the first period in which we report our results under InternationalFinancial Reporting Standards (IFRS). The interim figures for the six monthsended 31 December 2004 and the year ended 30 June 2005 have been restated as setout in the Group's IFRS transition document published today, which is availableon our website, www.sinclairpharma.com. With the increasing sales from our growing stable of on-market products,turnover in the first half to 31 December 2005 was up 363% at £3.7 millionagainst the first half of 2004/5 of £0.8 million. Underlining the transformationof our revenue streams, our product revenues increased 493% to £3.3 million,which included £1.1 million received from Sinclair srl, acquired in January2005. Revenue from licence fees, milestones and royalties increased by 79% to£0.4 million, from £0.2 million last year, as a result of increased royaltiesreceipts. The operating loss for the period of £2.0 million (H1 2004/5: £2.2 million loss)is slightly lower than in the previous half year. Whilst revenues have grownthere was significant investment in Sinclair's operating infrastructure in thesecond half of the last financial year, and the first half of the currentfinancial year has felt a full charge of these costs. Under IFRS,administrative expenses no longer include a charge for goodwill amortisation,although a charge for share options issued to employees and directors of £0.4million has been made in the period (H1 2004/5: £0.4 million). Sinclair has actively pursued acquisition opportunities since 2000 to strengthenits product portfolio and with the aim of building a specialty pharmaceuticalsales force. It has successfully completed and integrated four acquisitions todate in addition to the proposed acquisition of GCSD announced today. InNovember 2005, the Company raised £7.4 million before expenses through aninstitutional placing. The net proceeds of £7.1 million from the placing hasprovided the Company with additional flexibility to make selective and timelyacquisitions as further opportunities arise. As a consequence of the placingour cash balance at 31 December 2005 stood at £10.7 million (2004: £6.7million). LICENSING AND PRODUCT LAUNCHES Sinclair continues to enter licensing agreements with partners whom Sinclairbelieves are the most appropriate to bring a particular product rapidly tomarket in the licensee's territory. This half-year Sinclair has completed 13licensing agreements in 7 countries for 8 of its products. Sinclair now haslicensing agreements in place in over 50 countries around the world. Productlaunch activity has been equally brisk with 18 launches in the period and afurther 6 launched post period. Licensing during the period o SebclairTM for Seborrheic Dermatitis CVP Inc has licensed SebclairTM, Sinclair's treatment for seborrheic dermatitisin the USA. This follows the licensing to CVP Inc last year and the US launchin June 2005 of Sinclair's core derma product AtopiclairTM, for the treatment ofatopic and contact dermatitis. o XclairTM for Radiation Dermatitis Licensed to Pharmis Group in Portugal and Brazil and to Anabiosis in Greece. o SalinumTM for Severe Dry Mouth Syndrome Licensed to SSM in Turkey and Anabiosis in Greece. o SSTTM for Dry Mouth Syndrome Licensed to SSM in Turkey. o Aloclair(R) Rinse, Gel and Spray for Mouth Ulcers and Oral Lesions All three presentations were licensed to Sunstar Butler in Mexico. SunstarButler is a major licensee of these products with agreements in place in manycountries including the USA. AloclairTM Rinse and Gel were also licensed to SSM in Turkey. o Decapinol(R) Rinse for Gingivitis Pharmbio Korea has become our distributor in South Korea for Decapinol(R). 18 Product Launches during the period AtopiclairTM - First Launch by a Sinclair sales force Sinclair launched AtopiclairTM in Italy through Sinclair srl. This is Sinclair'sfirst product launch through its own sales force. This route to market gives usgreater control over our product as well as higher margins. Up until now, ourstrategy has been to appoint licensing partners to commercialise our products.Having our own sales force represents a significant step in the evolution of theCompany's distribution strategy and will lead to a substantially improved marginfor the product. AtopiclairTM contains no corticosteroids and is expected to be welcomed for usein the paediatric market. In Italy, Sinclair srl has signed a one yearco-promotion deal there with the Madaus Group's Italian subsidiary, Madaus Srl(Madaus). Madaus will promote AtopiclairTM to the Italian paediatric market.AtopiclairTM is the first of our growing portfolio of approved products that wewill sell directly in Italy. AtopiclairTM was also launched in Portugal by Dysanovis, appointed by theCompany in February 2005. Aloclair(R) Aloclair(R) is now being marketed in three presentations: Rinse in60ml and 120ml bottles; Gel and Spray o Aloclair(R) Rinse launched in Finland, Sweden, Norway, Denmark and Holland by Sunstar Butler o Aloclair(R) Gel launched in Holland by Sunstar Butler o Aloclair(R) Spray launched in Holland and a further 3 Central European countries by Sunstar Butler, in Italy by Recordati and in Turkey by SSM. XclairTM - launched in the UK by Crawford Pharmaceuticals. SalinumTM - launched in Austria by Novopharm Bio, in the UK by CrawfordPharmaceuticals and in Germany by ORCA. REGULATORY AND CLINICAL PROGRESS Decapinol(R) Line extension approvals in EU In early July 2005 Sinclair's Decapinol(R) line extensions, Decapinol(R)Toothpaste (a toothpaste for treating gingivitis) and Decapinol(R) Gel (aproduct for the intensive professional treatment of gum infections) obtained EUregulatory approval. These products are based on the technology behind Decapinol(R) and the registrations significantly increase the addressable market forDecapinol(R). US Extension of labelling by FDA Following Decapinol(R)'s US registration approval in April 2005, the Company, inOctober 2005, secured the agreement of the FDA to an important change to thelabelling of the product to include treatment of plaque. The Group sees therevised labelling as an important advance and one that will assist inestablishing the platform for Decapinol(R). In the US approximately 80 percent of the adult population are estimated to have some degree of guminflammation, resulting in a US prescription market for mouthwashes that mayexceed US$100 million. OTC mouthwash brands contribute to a several fold largertotal market. The FDA approved Decapinol(R) last year as a medical device which may be sold onprescription. This approval has encouraged Sinclair in addition to file withthe FDA for "OTC Product" status for Decapinol(R) Rinse. When granted thiswould allow Decapinol(R) OTC sales to address a much larger market. We believethat Decapinol(R) has the potential to become a viable contender in this marketsince clinical trials have proved Decapinol(R) to be well tolerated andeffective with clear unique advantages. SebclairTM Positive US Trial In November the Company was pleased to receive the positive results of a 60patient double-blind SebclairTM trial. The study was carried out in twocentres, in the United States (Texas Dermatology Research Institute - TDRI) andin Italy (European Dermatology Institute - IDE). The primary endpoint was theInvestigators' Global Assessment (IGA). 40 patients were allocated to SebclairTMand 20 allocated to vehicle control. Preliminary information on the trialresults was very positive with a highly statistically significant difference(Fisher's exact test: p < 0.0001) being observed for the primary endpoint. 27out of 40 patients using SebclairTM were clear or almost totally clear ofsymptoms and signs on IGA versus two out of 18 patients in the control groupafter four weeks of treatment. The Company is very encouraged by these results,which confirm the efficacy of SebclairTM in seborrheic dermatitis and supportthe results obtained from earlier studies. SebclairTM is already registered inthe EU and has been filed with the FDA for registration in the US. The first EUlaunch of SebclairTM is planned during the current financial year. MANAGEMENT Alexis Prenn, who has been a non-executive director for more than five years,decided not to propose himself for re-election at this year's AGM. He has nowresigned and the Board and I would like to thank him for his valuablecontribution to Sinclair. POST PERIOD Change of Adviser In January 2006 the Company announced that Nomura International plc was nolonger acting as joint broker to the Company. Piper Jaffray Ltd. who wereappointed as nominated advisor and joint broker to the Company in September 2005will continue in this role along with joint broker Bridgewell SecuritiesLimited. Board Change The Board was very pleased to welcome Penny Freer as Non-executive Director inJanuary 2006. Penny has been involved in small and mid-cap investment bankingfor almost 20 years, most recently as Head of Equities in London for Robert WBaird, the US investment bank. Penny was previously responsible for CreditLyonnais' small and mid-cap equities activities. Product launches Sinclair's licensing strategy is to grant licences to those companies who theCompany believes are best suited to getting its products to market as rapidlyand effectively as possible. At the end of June 2005 Align Pharmaceuticals werelicensed to distribute XclairTM, SalinumTM and SSTTM in US and Canada. Allthree of these products were launched in the US in January 2006. Decapinol(R) Rinse was launched in Spain by Inibsa in January 2006. Aloclair(R) rinse was launched by Sunstar Butler in Spain and Aloclair(R) Sprayby Vicis in Hungary also in January. ANNOUNCED TODAY Acquisition of Groupe CS Dermatologie SAS In a separate announcement, the Company today announced the acquisition of theprivate French pharmaceutical company Groupe CS Dermatologie SAS for an initialconsideration of €51m (£35.3m) financed as to £35m by a Vendor Placing at 125pper share with the balance of £0.3 m, together with a further €2.1m (£1.5m)payable 20 business days after completion, being met out of the Company's cashresources. Further performance related deferred consideration of up to €25m ispayable over a period of four years. The proposed acquisition will strengthenSinclair's financial position by adding significant revenues and will providecritical mass to Sinclair's existing commercial activities. GCSD has twelveon-market dermatology products which in 2005 had total sales revenues of €17.7million (£12.0 million). Sinclair today announced that its US AtopiclairTM licensee Chester ValleyPharmaceuticals Inc ("CVP") has enlarged its sales force to sell AtopiclairTM,Sinclair's product for the treatment of atopic and contact dermatitis. CVP hasalso entered into a US marketing co-operation agreement with LupinPharmaceutical Inc ("Lupin") to target the paediatric atopic dermatitis market. Sinclair has also in-licensed from a US inventor, Dr Mark Bogart, the rights topatents for a new product to treat onychomycosis, a refractory chronic fungalinfection that causes the toenails to thicken, discolour, disfigure, and split. OUTLOOK Sinclair's existing order book continues to be strong and following completionof the proposed acquisition, this will be augmented by orders from the newlyacquired GCSD product portfolio. We expect more than 20 launches of Sinclairproducts prior to the fiscal year-end in June 2006, of which six have beenachieved in January. These launches, should generate further orders, as ourproducts establish themselves in these new markets. The anticipated completion of the GCSD acquisition brings with it an enlargedproduct portfolio and increased revenues. Combined with Sinclair's strongcurrent trading position and growing order book, the Company remains optimisticabout prospects for the full year and approaches the fiscal 2006 year-end withconfidence. Dr. Michael Flynn Chief Executive Officer This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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