2nd Oct 2007 07:01
Sareum Holdings PLC02 October 2007 For Immediate Release 2 October 2007 SAREUM HOLDINGS PLC ("Sareum" or the "Company") PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2007 Sareum Holdings plc (AIM: SAR), the specialist structure-based drug discoverybusiness, is pleased to announce its results for the twelve month period ended30 June 2007. • Financial highlights: - Revenues increased 67% to £2.5M (2006: £1.5M) plus an increase of £0.31M in deferred revenue (pre-payments to be recognised in current financial year) - Gross profit increased 56% to £0.62M (2006: 0.40M) - Loss on ordinary activities for period (after taxation) reduced 16% to £0.53M (2006: £0.62M) - New equity investments in the Company of £0.70M - Cash in bank increased 25% to £0.66M (2006: £0.53M) • Business highlights: - Patent filings submitted from two in-house drug discovery programmes - Revenue generating collaborations signed with major pharmaceutical companies Johnson & Johnson, Genentech and Roche - Repeat business with Almirall and Lundbeck • Post year end highlights: - Substantial progress with two further in-house drug discovery programmes - Additional repeat business with Lundbeck Dr Paul Harper, Chairman of Sareum Holdings plc, said: "Sareum has producedanother good set of results which further demonstrate the Company's ability toconsistently grow its business. We have increased spending on our internalprogrammes where we are seeing considerable success and feel strongly that it isthis investment that will generate greatest future shareholder value." For further information please contact: Sareum Holdings plc 01223 497700Tim Mitchell, Chief Executive Officer Buchanan Communications 020 7466 5000Tim Anderson, Mary-Jane Johnson Grant Thornton Corporate Finance 0207 383 5100Colin Aaronson, Philip Secrett Results for the twelve months ended 30 June 2007 Chairman's Statement Background The key value creator for Sareum's shareholders is in the development andlicencing of drugs from the Company's in-house drug development pipeline. Recentsuccesses in Sareum's programmes, which focus on novel treatments for cancer,have led to a decision to increase investment in the drug discovery activity,adding new programmes and increasing the resource applied to existingprogrammes. This in turn has led directly to the filing of several patentapplications to protect families of promising compounds developed in two ofSareum's research programmes, including its collaboration with the Institute ofCancer Research and Cancer Research Technology Ltd. Sareum is now engaged in atotal of five in-house cancer drug discovery programmes. Research Since the Company's formation in 2003, Sareum's business is based on itsexpertise in structure-based drug discovery, which is capable of rapidlyproducing novel candidate drug compounds The platform enables a profitablefee-for-service business where collaborations with major pharmaceutical andbiotechnology companies from around the world generate revenues to support ourin-house research and help to build relationships with potential futurelicensees of this research. This is all combined with Sareum's managementknow-how - a team with more than 90 years of pharmaceutical drug developmentexperience. Development Throughout the period Sareum has been pleased to announce advances in itsin-house drug discovery programmes. In August 2006 the Company reported that ithad achieved substantial progress in its joint research programme with CancerResearch Technology Ltd and the Cancer Research UK Centre for CancerTherapeutics at the Institute of Cancer Research with the development of novelcompound series that showed efficacy in cancer cell models. Subsequently, inFebruary 2007, it was announced that patent applications had been filed on novelsmall molecules effective against Checkpoint Kinase 1, a key component of abiochemical pathway responsible for preventing the effectiveness of traditionalcancer therapeutics such as chemotherapy. Drugs that attack this target reduce acell's ability to repair the damage caused by current chemotherapy agents thatare used to treat many forms of cancer. Thus by combining drugs that attackCheckpoint Kinase 1 with other anti-cancer drugs there is the opportunity topotentiate the activity of the chemotherapy and possibly to reduce the dose andtherefore the side effects of the treatment. We are expecting to be able tonominate a compound to enter pre-clinical development in latter half of thecurrent financial year. The Institute of Cancer Research is one of the world'sleading cancer research organisations and thus a prestigious partner forSareum's in-house research. We continue to work on a number of other quality cancer targets in our in-houseprogrammes in addition to the joint venture activities. In April 2007, theCompany announced that it had filed patent applications on further smallmolecule compounds effective in its programme focused on two significant cancerdrug discovery target types, the Aurora and FLT kinases. It is believed that adrug simultaneously able to inhibit the function of both targets will be moreeffective against cancer than one which acts solely on a single target.Additionally, on 2 October 2007, the Company was pleased to announce initialresults from two further cancer drug discovery programmes, targeting PLK1 andB-raf kinases. Partnerships We have continued to make good progress in securing profitable servicecollaborations that generate revenues to support our in-house research. Duringthe year under review, an agreement was reached with Roche, a one-yearmulti-target collaboration was entered into with Genentech and an 18-monthmultidisciplinary drug discovery collaboration started with PIramed. Inaddition, following the successful completion of initial programmes, repeatbusiness was secured with Almirall and Lundbeck. Our existing collaborationscontinue to progress well, and success milestone payments have been receivedfrom our multi-disciplinary drug discovery collaborations with Organon andIdenix. The announcement in January of a research collaboration with Johnson andJohnson Pharmaceutical R&D added a further major global pharmaceutical companyto Sareum's growing list of blue chip collaborators. Operations The overall increase in activity on both our in-house programmes and fee forservice activities has resulted in the need for Sareum to create additionalcapacity and resource. We are currently upgrading our operations in Cambridge toaccommodate additional equipment, create new facilities and make space foradditional staff. Fundraisings and Investment The placing of £312,000 in October 2006 was made to augment the cash availablefrom our own activities, to fund investment in the business. The cash positionwas further underpinned by an investment of £400,000 by Mr and Mrs LeonardLicht, announced in January 2007 Sareum's Board was delighted to receive theinvestment and endorsement from such an experienced investor. Financial Review During the period, revenues amounted to almost £2.5 million which is a 67%increase on the previous year, plus a £307,000 increase in deferred income thatwill be recognised during the current financial year. Gross profit increased 56%to £618,000, reflecting the increased investment on in-house development. Theresultant loss after taxes of £527,000 is a 16% improvement on the previous yearand represents a loss per share of 0.12p. The cash position increased 25% to£660,000 following new investment of £698,000 net. Summary Sareum's business model is maturing and the Company has now demonstrated that itis able to progress its in-house research by advancing programmes according toplan and invest in strategic alliances to develop candidate drug molecules. Inaddition the Company has generated a significant increase in revenues fromfee-for-service activity and, together with new investment, is now able tosubstantially increase its spending on in-house programmes. This is a creditable performance and one that reflects the professionalism andcommitment of the entire team to excellence and to generating shareholder value.Sareum will continue to build on this position via expansion of its facilitiesand advancement of its exciting in-house anti-cancer drug pipeline. Outlook The combination of a world-class technology platform and a skilled and committedresearch team has resulted in a number of patent filings during the period underreview. We expect to be able to nominate a pre-clinical candidate in the currentfinancial year. In parallel, we are actively seeking licencing partners for atleast one of our in-house programmes during the current financial year. Fee for service activities remain a vital part of our business model providingvaluable relationships, new learning and substantial revenues for investment inour own programmes. Dr Paul HarperChairman Sareum Holdings plc Chief Executive's Review Strategy and Business Model Sareum's strategy continues to be focused on advancing its own in-house researchprogrammes into novel cancer therapies whilst generating revenues through theprovision of specialist drug discovery services to the pharmaceutical industry. Our business model comprises two main components: 1) Investment in proprietary research into novel cancer therapeutics togenerate drug candidates for partnering with pharmaceutical companies at theearly clinical or pre-clinical trials stage 2) Generation of revenues through the provision of specialist drug discoveryservices to pharmaceutical company customers. Our collaboration with the Cancer Research UK Centre for Cancer Therapeutics atthe Institute of Cancer Research enables us to share the risks involved in drugdiscovery and to access specialist biology capabilities from one of the world'sleading cancer research organisations. This collaboration has led to thediscovery of, and filing of patent applications on, a number of novel compoundseries that are effective in cancer cell models. These compounds targetCheckpoint Kinase 1, a key component of a biochemical pathway responsible forpreventing the effectiveness of traditional cancer therapeutics such aschemotherapy. We have also filed patent applications on novel small molecule compounds whichshow promising activity against the Aurora and FLT kinases, two significantcancer drug discovery target types which are believed to be key to theregulation of cell division and proliferation, and control different stages inthe development of a tumour. Additionally, we have initiated two furtherresearch programmes which target the cancer drug targets Polo-like kinase andB-raf kinase. Reducing the levels of Polo-like kinase activity has been shown toinduce cell death of many types of tumour cell and over-activity of B-raf kinaseis observed in many cancers, particularly skin cancer. We continue to apply our unique and innovative structure-based approaches inthese programmes to rapidly optimise the selected lead compounds with the aim ofselecting a candidate for pre-clinical scale-up and toxicology studies in thecurrent financial year. During this period we continued or expanded our existing collaborations inEurope with Organon, Lundbeck, UCB, Almirall and Idenix and received successmilestone payments in all cases. In addition we have signed new collaborationswith PIramed, a UK biotechnology company, and three major internationalpharmaceutical companies, namely Roche, Genentech and Johnson & Johnson. 50% ofour income during the period originated from top-50 ranked pharmaceuticalcompanies and approximately 90% of income was received from longer-termcollaborations of 12 months plus duration, evidence that we continue to attractlonger-term partnerships with larger pharmaceutical customers. Sareum has demonstrated that through its unique technology platforms andexperienced scientific staff, it is able to considerably advance its in-houseresearch by developing programmes to plan whilst at the same time investing instrategic alliances to develop candidate drug molecules. Objectives for the coming year We look forward to successfully progressing on the developments achieved in ourthird trading year. Our primary objective remains as the advancing of our in-house drug discoverypipeline to deliver drug candidates positioned to attract lucrative partneringdeals with pharmaceutical companies. We will continue to advance theseprogrammes, and have filed further drug patent applications during the year toprotect our Intellectual Property portfolio. We expect to develop drugcandidates for pre-clinical studies during the current financial year and areactively seeking licencing partners with the aim of achieving a high-valuelicencing deal on at least one of our five current in-house programmes. We also continue to advance our global research services business to generaterevenues and cash flow to support our drug discovery pipeline. In addition tocontinuing to secure repeat business from our current customers, we will seek tosign further longer-term collaborations, potentially including clinicaldevelopment milestones, with major international pharmaceutical companies. Welook forward to announcing successful results from these existing and developingrelationships. Dr Tim MitchellCEO Sareum Holdings plc CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2007 2007 2006 £ £ Turnover 2,470,676 1,475,792Cost of sales 1,852,626 1,080,278Gross profit/(loss) 618,050 395,514Administrative expenses 1,352,636 1,145,792Operating loss (734,586) (750,278)Interest receivable 28,712 10,478Interest payable (16,953) (12,586) 11,759 (2,108)Loss on ordinary activities (722,827) (752,386)before taxationTax on loss on ordinary activities (195,441) (128,040)Loss on ordinary activities (527,386) (624,346)after taxationBasic and diluted earnings per share (0.0012) (0.0018) The loss on ordinary activities before taxation arises from the Group'soperations all of which are continuing. There are no recognised gains or losses other than as stated in the profit andloss account. CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 2007 2006 £ £Fixed assetsIntangible assets 30,681 17,499Tangible fixed assets 1,014,835 792,072 1,045,516 809,571Current assetsDebtors 837,179 436,982Cash at bank 660,326 528,476 1,497,505 965,458Creditors: amounts 1,017,165 517,010falling due within one year Net current assets 480,340 448,448Total assets less current 1,525,856 1,258,019liabilitiesCreditors: amounts 159,965 62,702falling due after morethan one yearNet assets 1,365,891 1,195,317 Capital and reservesCalled up share capital 114,952 93,187Share premium account 3,764,303 3,088,108Merger reserve 27 27Profit and loss account (2,513,391) (1,986,005)Equity shareholders' 1,365,891 1,195,317funds Creditors: amount falling due within one year includes £389,000 of deferredrevenue, which will be recognised during the next period (2006: £82,000) COMPANY BALANCE SHEET AS AT 30 JUNE 2007 2007 2006 £ £Fixed assetsInvestment in subsidiary 30,000 30,000DebtorsLong term debt - 3,539,458 2,958,387subsidiaryNet current assets 3,539,458 2,958,387Net assets 3,569,458 2,988,387 Capital and reservesCalled up share capital 114,952 93,187Share premium account 3,764,303 3,088,108Profit and loss account (309,797) (192,908)Equity shareholders' 3,569,458 2,988,387funds CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 2007 2006 £ £Net cash outflow from operating (370,084) (362,664)activitiesReturns on investment and servicing of 11,759 (2,108)financeTaxation 128,040 119,796Capital expenditure (518,199) (66,145)Cash flow before financing (748,484) (311,121)Financing 880,334 398,162Increase in cash 131,850 87,041 NOTES TO THE FINANCIAL STATEMENTS 1 General The financial information set out above does not constitute the company'sstatutory accounts within the meaning of section 240 of the Companies Act 1985. The 2007 figures are based on unaudited accounts for the year ended 30 June2007. The statutory accounts will be finalised on the basis of the financialinformation presented by the directors in the preliminary announcement and whichwill be delivered to the Registrar of Companies following the company's annualgeneral meeting. The 2006 comparatives are derived from the statutory accounts for 2006 whichhave been delivered to the Registrar of Companies and received an unqualifiedaudit report and did not contain a statement under the Companies Act 1985, s237(2) or (3). This statement will be made available online at www.sareum.co.uk 2 Basis of accounting The financial statements have been prepared under the historical cost conventionand in accordance with applicable UK accounting standards. 3 Earnings per share The basic and diluted earnings per share is calculated on the loss after tax of£527,386 and a weighted average number of shares of 431,571,725 (2006:359,403,542). The calculation of diluted earnings per share takes account ofshare options that have vested. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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