15th Sep 2006 07:00
Stem Cell Sciences plc15 September 2006 Embargoed until 7.00am 15 September 2006 Stem Cell Sciences plc ("Stem Cell Sciences", "SCS", "the Group" or "the Company") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 Stem Cell Sciences plc, the global biotechnology company focused on thecommercialisation of stem cells and stem cell technologies in research andnovel cell-based therapies, is pleased to announce its interim results for thesix months ended 30 June 2006. Highlights • Successful global launch of first novel SC Proven(R) branded product, ESGRO CompleteTM, following an exclusive marketing and distribution agreement with Chemicon International (part of the Millipore Group) • SC Services agreement with Australian company, Biofill Pty Ltd, to facilitate lot selection for production of high performance serum products delivers maiden revenues for SC Services business unit • Increasing interest in SCS technologies and products from leading pharmaceutical and biotechnology companies • Confirmation of proprietary therapeutic cloning technology as most efficient in class* • Global reach and network of academic partners extended and strengthened. Now includes Edinburgh and Cambridge (UK), Kobe (Japan), Melbourne (Australia), Nice (France) and Milan (Italy) • Cash balance of £3.5m at 30 June 2006 * Blelloch at el; Stem Cells May 2006 Peter Mountford, President and CEO of Stem Cell Sciences, said: "Stem Cell Sciences' growth continues on track, with the first half of 2006delivering milestones that span the breadth of the Company's business insourcing, developing and commercialising leading edge stem cell technologies forresearch and the clinic. "SCS' technologies continue to be widely used and trialled by leading academicresearchers. Recent publications in the UK and USA confirm SCS' proprietaryNeural Stem cells as the most efficient tissue-derived cell for therapeuticcloning. "In all, it has been another productive six months for SCS and we look forwardto an exciting second half to the year." - Ends - For further information, please contact: Stem Cell Sciences plc On 15 September: 020 7067 0700Michael Dexter, Chairman thereafter: 0131 662 9829Peter Mountford, Chief Executive Officer Weber Shandwick Square Mile 020 7067 0700Louise Robson/Rachel Taylor Notes to Editors Stem Cell Sciences plc (SCS, AIM: STEM) is a global biotechnology companyproviding products in the burgeoning stem cell research and drug discoverymarkets, in addition to the targeted development of cell-based therapies forneurodegenerative disease and injury. The Company has established a leading intellectual property (IP) and technologyportfolio that provides a single platform of stem cells and stem celltechnologies for both research and clinical application. Revenue streams andtechnology development for the scaled production of stem cells in basic researchand drug discovery, underpin the company's longer term plans to be a leadingprovider of cell-based therapeutics. SCS' principal focus is in neurological disease. Total revenues for the globalneurotech market, including pharmaceuticals, devices and diagnostics, grew 10%in 2005 to US$110 billion*. SCS operates as a global group with laboratories in Scotland, Japan andAustralia, each of which is affiliated with an academic centre of excellence.These include the Institute of Stem Cell Research (ISCR), Edinburgh, UK; RIKENCentre for Development Biology, Kobe, Japan and the Australian Stem Cell Centre,Melbourne, Australia. SCS has four business units focused on key sustainable business strategies. SC Proven(R) provides cell culture media (liquid formulations) and reagents thatenable the growth and differentiation of stem cells. The first commerciallyavailable product, a novel, serum free, stem cell growth medium, has beenexclusively licensed for manufacture and marketing to Chemicon International(part of the Millipore Group). SC Licensing licenses SCS proprietary technologies, such as Internal RibosomeEntry Site (IRES) and Stem Cell Selection, for application in laboratory-basedresearch and discovery. SCS has licensed technology to major pharmaceutical andbiotechnology companies including Pfizer, Sanofi Aventis, GSK, Deltagen Inc andLexicon Genetics Inc. SC Services provides specialised stem cell production for basic research anddrug discovery, including high-throughput applications. SC Therapies goal is to develop safe and effective cell-based therapies forcurrently incurable diseases. SCS is evaluating proprietary technologies inearly stage research for future cell therapy applications. *Neurotech Insights, Volume 2/3 April 30 2006. Chairman's and Chief Executive's Statement During the first half of 2006 we have continued to see a consolidation of StemCell Sciences' position in the market with the Company expanding its revenuebase through maiden revenues in its SC Services business and its firstsignificant inflow of royalties from existing deals. Revenues for the periodwere further complemented by additional payments flowing from the successfulcompletion of product development milestones. Our strategy of expanding our product pipeline and accelerating technologydevelopment by working with specialist academic and commercial organisations isallowing us to progress on all fronts and providing us with opportunities togrow the business in line with expectations. SCS remains uniquely positioned as a stem cell company active in all four of itschosen business sectors: • SC Proven(R) - research products business • SC Services - contract research and cell production • SC Licensing - out-licensing of SCS technologies • SC Therapies - stem cell-based regenerative therapies Review of Operations Increasing Government commitments and medical research charity investment instem cell research are expected to fuel further growth for SC Proven(R) productsas well as expanding our overall product pipeline through our network ofcollaborating research institutions. Within our SC Services business unit, our automated cell production facility,which will allow customers to buy stem cells direct, is due to open in Cambridge(UK) later this year. While the specialist nature of the fit out has requiredmore time to complete than originally expected, technology transfer from benchscale to trial systems has run smoothly with no unforeseen problems. The Companybelieves the effect of the slightly delayed commissioning will mean that somerevenues forecast for the second half of 2006 will be delayed into early 2007. SCS' wholly owned Australian operations have emerged as a centre for excellencein the derivation of new human embryonic stem cell lines. The success enjoyed bythe local team has resulted in an extension to its collaborative research anddevelopment programme with the Australian Stem Cell Centre and fuelledadditional plans to expand the range of human stem cell types to be derived bythe Group. With the fit out of its Californian offices, the Company has established itsfoundation for US development. The transfer of SCS proprietary Neural Stem("NS") cell technology under a sponsored research programme has been completed. During the period the Company's joint venture, SCS KK (Kobe), completed thefirst stage of the hMADS cell technology transfer from the University of Niceand successfully completed the second stage of its 2005 financing round inFebruary this year. Further venture capital investment in SCS KK diluted SCS plcownership to 24.8% (from 26.2%) of the company and marginally increased thevalue of SCS plc shareholding to approximately £3m as at the time of closurecompared with a balance sheet carrying value of £0.6m. In line with the development and validation of platform technologies in theCompany's research product and services businesses is an emerging opportunity toevaluate SCS' proprietary cell types for therapeutic application in animalmodels of human disease. The Company has identified leading academic groupsoffering specialist expertise in a number of different therapeutic fields andhas commenced discussions with them. In February this year we launched the first product bearing the Company's SCProven(R) trademark with our manufacturing and distribution partner, Chemicon,and are progressing well in the development of a range of additional SC Proven(R) products that the Company expects will also be marketed by Chemicon. SC Services entered a new agreement with BioFill Pty Ltd (Australia) to utilisethe Company's screening technology for the identification of premium qualityserum products for the biomedical research industry. This alliance is expectedto build on Australia's privileged position as one of a few nations that arefree of diseases such as foot and mouth disease and bovine spongiformencephalopathy ("BSE"). Financial Review For the six months ended 30 June 2006, the Company received revenues of £0.5m(2005: £0.7m), which comprised of £0.2m for SC Services and £0.3m for royaltyand milestones, evidencing the broadening of our revenue base. Deals signed in2005 have already delivered positive royalty flow in the current reportingperiod. Other operating income of £0.2m (2005: £0.06m), represented grant incomefrom UK and European research consortia. Total income was unchanged whencompared to the second half of the year ending 31 December 2005. Administrative expenses have reduced by 20% to £1.0m (2005: £1.3m) whilstresearch and development costs increased to £0.5m (2005: £0.3m), reflectingincreased headcount and associated research expenditure to support plannedexpansion activities. Capital expenditure for the period included an investmentof £0.3m, primarily for development of the new Cambridge facility and associatedSC Services business. Cash balances at 30 June 2006 were £3.5m (31 December2005: £5.2m). Share Based Payments During the period the Company has implemented FRS20 Share Based Payments, whichincreased administrative expenses by £32,000 in the current period, a notionalcharge in respect of employee and director share options (see Note 1 forrestated comparative figures). The notional charge has no impact on net assets,since the charge in the profit and loss account is balanced by a credit inreserves. Group cash flow is also unaffected. Post Period-End Developments Since the half year end, we have had a number of significant developments withinour business. On 26 July 2006 we were delighted to announce the appointment of JeremyScudamore as a Non-executive Director. Jeremy was CEO and later Chairman ofAvecia Group (formerly part of Zeneca) and previously held senior managementpositions in the UK and overseas with ICI and Zeneca. His extensive businessexperience and as a member of many industry bodies, including the UK ChemicalsInnovation team for the DTI, the Chemical Industry Association, Chemical andEngineering News (Washington USA), European Chemical News, will be of greatbenefit to Stem Cell Sciences over the coming years. SCS has expanded its access to specialist expertise with the completion of ouragreement with NeuroSolutions Limited, NeuroDiscovery Limited's 100% UK ownedsubsidiary. NeuroSolutions, as a leading provider of electrophysiology services to the biopharmaceutical industry, will add value to the Company's SC Servicesand SC Licensing businesses by functionally characterising the electricalproperties of neurones derived from SCS' NS cells. At the end of July we were pleased to announce the in-licencing of a novel humanstem cell, called the human multi-potent adipocyte-derived stem (hMADS) cell.Discovered in fat tissue and easily grown, hMADS show great promise asbiologically relevant cells to improve drug discovery for diseases such asobesity and osteoporosis. The timing of this licence, which follows on aprevious licence to develop the therapeutic potential of these cells (programmeunder development at SCS KK), will mesh well with the planned commissioning ofthe Company's automated cell production facilities later this year, and expandthe range of cell types available under the SC Services business unit. On 29 August, we announced that SCS will participate in the European Commissionapproved "ESTOOLS" programme, a world leading €12m stem cell research programmeinvolving both academic and commercial researchers. SCS is one of threecommercial partners taking part in this Framework Programme VI initiative, whichis being led by the University of Sheffield. Outlook Stem Cell Sciences continues to build on its core competency in the growth andmanipulation of stem cells and we will continue to deliver improvements inreliability and scale of cell supply needed for industrial and academic researchapplications. At the same time, the products bring the potential clinical use ofstem cells steadily closer to reality. Our new Cambridge cell production facility and Californian office complete ourglobal footprint, giving us operations and alliances in the UK, Australia, Japanand the US, and position SCS for further growth in a rapidly developing market. SCS will continue to develop its multi-tiered business strategy of accessing,developing and commercialising stem cells and stem cell technologies through anetwork of specialist academic and commercial organisations. This "ground-up"approach is fundamental to maintaining our position at the cutting edge of thestem cell industry and remains a core component to the Company's overallbusiness strategy. In line with our strategy, we will look for new opportunities to expand thebusiness through additional in-licensing of new stem cell types; and to improvethe over all performance and prospects of the Company through furtherstrengthening of its Board of Directors in the coming six months. At a recent ceremony sponsored by Deal:Dealmakers, SCS were awarded 'Small/MidSize Company Deal of the Year'. This award acknowledged the sound businessprinciples, team effort and enduring commitment of SCS management and itsadvisers in achieving a successful IPO in a challenging business sector whenchallenging market conditions prevailed. Having met essentially all of the key milestones for the Company's first year onAIM, the Board of Directors looks forward to further strengthening the Company'sposition within the industry and building greater awareness of the Company'son-going development in the market. Michael Dexter Peter MountfordChairman Chief Executive 15 September 2006 Consolidated profit and loss accountfor the six months ended 30 June 2006 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited Restated Restated £'000 £'000 £'000 Turnover 494 681 847 Cost of Sales (159) - - _____ _____ _____ 335 681 847 Administrative expenses (1,031) (1,304) (2,481)Research and development costs (544) (325) (836)Other operating income 235 56 194 _____ _____ _____Group operating loss (1,005) (892) (2,276)Share of operating loss of associate (215) (202) (512) _____ _____ _____Total operating loss (1,220) (1,094) (2,788)Other interest receivable and similar income 100 15 130 _______ ______ ______Loss on ordinary activities before taxation (1,120) (1,079) (2,658) Tax credit on loss on ordinary activities - - 139 _______ ______ ______Loss for the financial period (1,120) (1,079) (2,519) ======= ====== ====== Loss per ordinary share Basic and diluted loss per share (5.0)p (7.0)p (13.6)p ======= ======= ======= Turnover and loss on ordinary activities before taxation for the current andprevious year relate wholly to continuing activities. Consolidated statement of total recognised gains and lossesfor the six months ended 30 June 2006 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited Restated Restated Note £'000 £'000 £'000 Loss for the financial periodGroup (905) (877) (2,007)Share of loss of associate (215) (202) (512) _______ ______ ______Total loss for the financial period (1,120) (1,079) (2,519) Net exchange differences on the retranslation of overseas investments (18) (5) (11)Unrealised gain on dilution of interest in associate 135 338 776 _______ ______ ______ Total recognised gains and losses relating to the financial period (1,003) (746) (1,754) ______ ______Prior year adjustment 1 (138) _______ Total recognised gains and losses recognised since last annual report (1,141) ======= Consolidated balance sheetat 30 June 2006 As at At at As at 30 June 30 June 31 Dec 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000Fixed assetsTangible assets 410 102 115Investment in associate 545 606 710 _____ _____ _____ 955 707 825 Current assetsDebtors 448 122 322Cash at bank and in hand 3,500 498 5,227 _____ _____ _____ 3,948 620 5,549 Creditors: amounts falling due within one year (325) (522) (737) _____ _____ _____Net current assets 3,623 98 4,812 _____ _____ _____ Total assets less current liabilities 4,578 805 5,637 _____ _____ _____Net assets 4,578 805 5,637 ===== ===== =====Capital and reservesCalled up share capital 11,151 7,657 11,151Share premium account 2,297 - 2,297Foreign exchange reserve (131) 9 (25)Merger reserve (1,248) (1,248) (1,248)Profit and loss account (7,491) (5,613) (6,538) ______ ______ ______Total shareholders' funds - equity 4,578 805 5,637 ====== ====== ====== Consolidated cash flow statementfor the six months ended 30 June 2006 Note 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000 Cash flow statement Cash outflow from operating activities 4 (1,477) (496) (1,797)Returns on investments and servicing of finance 5 100 15 130Taxation - - 102Capital expenditure and financial investment 5 (332) (18) (34) ______ ______ _______ Cash outflow before financing (1,709) (499) (1,599) Financing 5 - - 5,809 ______ ______ _______Increase/(decrease) in cash in the period (1,709) (499) 4,210 ====== ====== ======= Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in the period (1,709) (499) 4,210 Foreign exchange movements (18) (17) 3 _______ _______ ______Movement in net funds in the period (1,727) (516) 4,213 Net funds at the start of the period 5,227 1,014 1,014 _______ _______ ______ Net funds at the end of the period 3,500 498 5,227 ======= ======= ====== Notes to the Interim Results Announcement 1 BASIS OF PREPARATION The interim financial information has been prepared applying the accountingpolicies and presentation that were applied in the preparation of the Company'spublished consolidated accounts for the year ended 31 December 2005 except forthe implementation of FRS20 (Share Based Payment). The financial information isunaudited. The comparative figures for the financial year ended 31 December2005 are not the Company's statutory accounts for that financial year. Thoseaccounts have been reported on by the company'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 237(2) or (3) of the Companies Act 1985. FRS20 (Share-based Payment) has been adopted in the current period. As a resultof the introduction of FRS20, a prior year adjustment has been made in respectof the share based charge in the loss for the financial period of £32,000 (June2005; £106,000; December 2005 £138,000). There is a corresponding credit to theprofit and loss reserves, and accordingly there is no net effect on net assetsat the end of any of the periods. This interim report was approved by the board of directors on 14 September 2006. 2 TAXATION At 30 June 2006, the Group has significant tax losses that will be carriedforward for utilisation against future taxable profits. 3 LOSS PER SHARE Loss per share is calculated as follows: 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000 Basic (1,120) (1,079) (2,519) ======= ======= ======= Diluted (1,120) (1,079) (2,519) ======= ======= ======= The weighted average number of shares used in each calculation is as follows: 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited Average number of shares in issue during the period 22,301,194 15,315,000 18,470,017 ========== ========== ========== Basic and diluted loss per share (5.0)p (7.0)p (13.6)p ========== ========== ========== The loss attributable to ordinary shares and the number of ordinary shares forthe purposes of calculating the diluted earnings per share are identical tothose used for basic earnings per share. The exercise of share options wouldhave the effect of reducing the loss per share and consequently is not takeninto account in the calculation for diluted loss per share. 4 RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000 Group operating loss (1,005) (892) (2,276)Depreciation 34 15 30(Increase)/decrease in debtors (126) 8 (171)Increase/(decrease) in creditors (412) 267 482Charge in respect of share-based payments 32 106 138 _______ ______ _______ Net cash outflow from operating activities (1,477) (496) (1,797) ======= ====== ======= 5 ANALYSIS OF CASH FLOWS 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000 Net cash inflow from returns on investments and servicing of financeInterest received 100 15 130 ====== ====== ======Net cash outflow from capital expenditure and financial investmentPurchase of tangible fixed assets 332 18 34 ====== ====== ======Net cash inflow from financingIssue of ordinary share capital - - 5,809 ====== ====== ====== 6 ANALYSIS OF NET FUNDS At beginning Cash flow At end of period of period £'000 £'000 £'000 Cash in hand and at bank 5,227 (1,727) 3,500 ====== ====== ====== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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