20th Apr 2006 07:01
AGI Therapeutics plc20 April 2006 AGI Therapeutics plc Financial results for the year ended 31 December 2005 Dublin, Ireland, 20th April 2006 - AGI Therapeutics plc ("AGI" or the"Company"), a speciality pharmaceutical company focused on gastrointestinal drugproducts, today reported the audited financial results for AGI TherapeuticsResearch Limited, formerly AGI Therapeutics Ltd, for the year ended 31 December2005. AGI Therapeutics Research Limited is the operating subsidiary of AGITherapeutics plc which was created as a holding entity prior to the Company'srecent flotation. The admission document for AGI Therapeutics plc, issued on 21 February 2006,included audited results for the years ended 31 December 2004 and 2003 andunaudited results for the nine months ended 30 September 2005 for AGITherapeutics Research Limited. AGI's listing on the AIM market of the London Stock Exchange and the IEX marketof the Irish Stock Exchange on 27 February 2006 raised gross proceeds for theCompany of €42.5 million (£29.2 million) through the placing of 33,730,159ordinary shares at €1.26 (86.5p) per ordinary share. 2005 Operating Highlights • Established the formulation, manufacturing methods and sources of supply, and manufactured clinical trial supplies for all six clinical product candidates • Completed enrolment of Phase II trial in 132 patients for AGI-001 (espindolol) in functional dyspepsia • Completed enrolment of Phase II trial in 128 patients for AGI-003 (arverapamil) in non-constipation dominant irritable bowel syndrome • Completed enrolment of Phase II trial in 67 patients for AGI-001 (espindolol) in irritable bowel syndrome • Initiated two further Phase II trials for AGI-004 (mecamylamine) in functional diarrhoea and AGI-006 (arbaclofen) in functional dyspepsia • Grant of US Patent No. 6,849,661 for AGI-003 Post Period End Highlights • Dr Ronan Lambe appointed non-executive Chairman (January 2006) • Successful admission to trading on the AIM market of the London Stock Exchange and the IEX market of the Irish Stock Exchange raising net proceeds of €39.6 million (February 2006) • Completed enrolment of Phase II trial in 82 patients for AGI-004 (mecamylamine) in functional diarrhoea (March 2006) • Positive results in human pharmacokinetics trial of AGI-022 (4-aminosalicylate sodium), confirming the target controlled release and delivery (March 2006) • Preliminary results from human pharmacokinetics and pharmacodynamics trial of AGI-010 (omeprazole) confirming controlled release profile. Profile will now be further optimized to target nocturnal acid breakthrough in gastro-esophageal reflux disease (March 2006) • Mr. David G. Kelly appointed as Chief Financial Officer, effective as of 2 May 2006 (see separate announcement today) Commenting on the 2005 results and on the outlook for 2006, Dr. John Devane,Chief Executive Officer of AGI, said: "This has been a very pleasing period of progress for the Company, highlightedby our successful flotation earlier this year. During the last 12 months, wehave initiated five Phase II clinical trials and a further two humanpharmacokinetics and pharmacodynamics studies on our six clinical stageproducts. During 2006 we expect to complete and report on our five Phase IIclinical trials and we can look forward to a significant stream of clinical newsthrough the remainder of the year." Contact Information: AGI TherapeuticsTel: +353 9064 71455Patrick Ashe, Senior VP, Business Development Financial Dynamics - UKTel: +44 (0) 20 7831 3113Sarah MacLeod Financial Dynamics - IrelandTel: +353 1 663 3607Aisling Garvey For further information please see www.agitherapeutics.com About AGI Therapeutics AGI is a speciality pharmaceutical company which is focused on the developmentand commercialisation of differentiated drug products for gastrointestinal (''GI'') diseases and disorders. The Company has a portfolio of product candidates derived from the KnownMolecular Entity (''KME'') approach to drug re-profiling and development. KME isa re-profiling methodology used by the Company to identify existing therapeuticdrugs which typically have been marketed for a number of years, have establishedsafety profiles and can be developed for new clinical indications or withimproved profiles in their existing clinical indications. In this way, theCompany seeks to reduce the risk, time and cost of new product development ascompared to the development of new chemical entities. AGI has developed a range of product candidates to treat a variety of prevalentGI diseases and disorders, including irritable bowel syndrome, functionaldyspepsia, ulcerative colitis and gastro-esophageal reflux disease. The Companyis targeting areas of the GI therapeutic drug products market for its productcandidates where there are currently unmet medical needs or where theeffectiveness of existing drug therapies can be further improved. The Company has six clinical stage product candidates which are either isomersor new drug delivery formulations of existing approved drugs, and which haveestablished safety and tolerability profiles in their currently approvedclinical indications. These product candidates are all in clinical development,including five Phase II trials. AGI intends to complete its ongoing clinical trials and, dependent on theresults of these trials, the Company will initiate Phase III development of alead product candidate and will also seek to enter into licensing anddevelopment agreements with pharmaceutical companies so as to enhance the globalmarket reach for its products and achieve optimal revenue and valueopportunities for the Company. Statements contained within this press release may contain forward-lookingcomments which involve risks and uncertainties that may cause actual results tovary from those contained in the forward-looking statements. In some cases, youcan identify such forward-looking statements by terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or 'continue'. Predictions andforward-looking references in this press release are subject to the satisfactoryprogress of research which is, by nature, unpredictable. Forward projectionsreflect management's best estimates based on information available at the timeof issue. Chief Executive's Statement Since we established AGI in 2003 to specifically focus on the development of abroad and balanced portfolio of products targeting the gastroenterology market,we have made significant progress both in advancing our current products fromconcept stage into human clinical trials and in strengthening the financial andoperational capabilities of the company. In 2004, we raised €9.5 million in an initial private funding. We sought thisfunding to allow us to undertake clinical trials for our six product candidatesand establish their clinical profiles in a range of gastrointestinal clinicalindications. During 2005, we successfully initiated five Phase II clinicaltrials and two human pharmacokinetic and pharmacodynamic studies on our sixproduct candidates, along with undertaking all of the important formulation,manufacturing and regulatory work which was required to carry out these trials.Our clinical trials have progressed well and we expect they will be completed onschedule and within budget. AGI's business model involves the use of third party providers to augment ourinternal capabilities, and we have established relationships and agreements witha number of high quality clinical research organisations (CROs) and othersuppliers in support of our programmes. During 2005, we deemed it was desirable that AGI would itself have thecapability to continue to advance at least one of its lead products beyond thecurrent stage of development in order to realise for the Company the significantadded value which can accrue through late-stage clinical development, and wedetermined, with the support of our Board and shareholders, that the Companyshould seek to raise further capital to pursue this objective. In the secondhalf of 2005, we began the process of planning for an AIM and IEX admissiontogether with an institutional fundraising, which we successfully completed inFebruary 2006, raising net proceeds of €39.6 million. We are continuing to look to expand our intellectual property portfolio and toadd new product candidates to our pipeline. During 2005, we also filed two newpatent applications relating to the use of the KME drugs to treat constipation.We will continue to try to identify new KMEs with potential utility ingastrointestinal diseases and disorders which may themselves become clinicalcandidates in the future. We are also continuing to seek to strengthen both our management team and ourBoard. We were fortunate in having Dr. Ronan Lambe join our Board last year,initially as an independent non-executive Director in December 2005 andsubsequently as non-executive Chairman in January 2006. Dr. Lambe has providedexcellent stewardship during our AIM and IEX admission process and we lookforward to his continuing leadership and guidance as we seek to grow and furtherestablish our business. We also appointed Paul Donnelly as interim ChiefFinancial Officer of the company in preparation for our admission. Paul'sfinancial knowledge and experience was invaluable to us during this process. Wehave subsequently been able to announce the appointment of David Kelly as ourpermanent Chief Financial Officer, and we expect to announce further additionsto our management team and Board during 2006 and into 2007. We currently have six product candidates in clinical development, each of whichwe believe could address unmet medical needs in gastrointestinal diseasecategories where there are either few or no existing approved drug therapies orwhere the effectiveness of existing approved drug therapies can be improved.Our primary objective is to now complete all our ongoing clinical trials duringthe course of 2006 and, dependent on the results of these trials, to identifyand select a lead product candidate which we will further develop by undertakinga Phase III clinical programme. We will also seek to enter into commercialpartnering agreements for our product candidates and anticipate that we will beable to enter into some such partnerships by the end of 2006. AGI's product candidates in clinical development are: AGI-001 (espindolol) - Functional Dyspepsia AGI-001 is an oral dosage form of the S-isomer of pindolol (espindolol) which isbeing developed for the treatment of functional dyspepsia, a functional disorderof the upper GI tract, in both men and women. Functional dyspepsia, also referred to as non-ulcer dyspepsia or NUD, is acluster of chronic or recurrent upper GI symptoms, including early satiety,abdominal distension and fullness and discomfort and pain, not associated withany known structural abnormality. Estimates as to the prevalence of functional dyspepsia vary, with some studiessuggesting that it affects up to 25 per cent of the US population annually andaccounts for up to 5% of all visits to primary care physicians, while otherstudies report a prevalence of between 10 and 20 per cent of the population inthe US and Europe. The incidence of functional dyspepsia in men and women issimilar. No prescription therapeutic drug products have been found to have ahigh success rate in the treatment of functional dyspepsia and there are as yetno therapeutic drug products approved for its treatment in the US. The Company has developed a solid oral dosage form of AGI-001 and a Phase IIclinical trial evaluating the efficacy of AGI-001 in the treatment of functionaldyspepsia is currently ongoing. This trial is a randomised, double-blind,placebo-controlled, parallel group, dose escalation trial conducted at multiplesites in Europe in a total of 132 functional dyspepsia patients. The trial isfully enrolled and the treatment phase is now complete. It is expected thatpreliminary results of this trial will be available in Q2, 2006. AGI-003 (arverapamil) - diarrhoea-predominant Irritable Bowel Syndrome ("d-IBS") AGI-003 is an oral dosage form of the R-isomer of verapamil (arverapamil) whichis being developed by AGI for the treatment of diarrhoea-predominant irritablebowel syndrome ("d-IBS") in both men and women. IBS is a functional disorder (i.e. an abnormality or disturbance of normalfunction which cannot be directly attributed to anatomical or biochemicaldefects) that comprises a cluster of gastrointestinal symptoms which are likelyto be life long and can include diarrhoea, constipation, abdominal pain anddistension, which vary in intensity. Altered intestinal motility is a majorcomponent of IBS and patients are diagnosed and sub-typed according to theirpredominant symptom of bowel disturbance as either "d-IBS",constipation-predominant ("c-IBS") or mixed/alternating symptoms of diarrhoeaand constipation ("m-IBS"). The prevalence of IBS has been estimated in US population-based studies atbetween 10 and 20 per cent and surveys conducted in Europe estimate a similarrange of IBS prevalence there. It is estimated that there is an approximateequal prevalence of each of the d-IBS, c-IBS and m-IBS sub-types. IBS isreported to be about twice as prevalent in women as in men. While an estimated75 per cent or more of current sufferers remain undiagnosed and untreated, IBSremains the most common diagnosis made by gastroenterologists and leads to asubstantial reduction in quality of life, accompanied by considerablesocio-economic and psychological consequences. AGI-003 is being targeted to compete in the diarrhoea-predominant segment of theIBS market, which is estimated to account for approximately one third of all IBSpatients. The annual market for prescription therapeutic drug products for IBSin the US was estimated at more than US$350 million in 2003 and is predicted togrow rapidly to more than US$1 billion by 2010. These sales are currentlylargely for products treating the c-IBS component, and whose use is currentlyrestricted to women only. A solid oral dosage form of AGI-003 has been developed by the Company and aPhase II clinical trial evaluating the efficacy of AGI-003 in the treatment ofnon-constipation predominant irritable bowel syndrome is currently ongoing. Thistrial is a randomised, double-blind, placebo-controlled, parallel group, doseescalation trial conducted at multiple sites in Europe in a total of 128non-constipation predominant IBS patients. This study is fully enrolled and thetreatment phase is now complete. It is expected that preliminary results of thistrial will be available in Q2, 2006. AGI-001 (espindolol) - Irritable Bowel Syndrome AGI-001 is also being developed by the Company for the treatment of irritablebowel syndrome in both men and women. The Company has developed a solid oral dosage form of AGI-001 and a Phase IIclinical trial evaluating the efficacy of AGI-001 in the treatment of irritablebowel syndrome is currently ongoing. This is a randomised, double-blind,placebo-controlled, parallel group, dose escalation trial conducted overmultiple sites in Ireland in a total of 67 patients. This study is fullyenrolled and the treatment phase is now complete. It is expected thatpreliminary results of this trial will be available in Q2/Q3, 2006. AGI-004 (mecamylamine) - diarrhoea-predominant Irritable Bowel Syndrome("d-IBS") AGI-004 is a controlled release transdermal patch containing mecamylamine whichis being developed by AGI for the treatment of diarrhoea-predominant irritablebowel syndrome ("d-IBS") in both men and women. AGI-004 is a controlled release form of mecamylamine with a lower peak-to-troughdrug exposure profile which, coupled with a reduction in daily dosage, hasdemonstrated marked GI effects and a reduction of the traditional non-GIganglion blocking effects. AGI has developed a controlled-release transdermaldosage form of AGI-004 and a Phase II clinical trial evaluating the efficacy ofAGI-004 in the treatment of functional diarrhoea is currently ongoing. Thistrial is a randomised, double-blind, placebo-controlled, parallel group, doseescalation trial conducted at multiple sites in the US and Israel in a total of82 functional diarrhoea patients. This study is fully enrolled and thetreatment phase is ongoing. It is expected that preliminary results of thistrial will be available in Q3/Q4, 2006. AGI-006 (arbaclofen) - Functional Dyspepsia AGI-006 is an oral dosage form of the R-isomer of baclofen (arbaclofen) which isbeing developed by AGI for the treatment of functional dyspepsia in both men andwomen. A solid oral dosage form of AGI-006 has been developed and a Phase II clinicaltrial evaluating the efficacy of AGI-006 in the treatment of functionaldyspepsia in both men and women is currently ongoing. This is a randomised,double-blind, placebo-controlled, parallel group, dose escalation trialconducted at multiple sites in Europe. Completion of enrollment is targeted forQ2/Q3 2006 and it is expected that preliminary results will be available in Q42006/Q1 2007. AGI-022 (4-aminosalicylate sodium) - Ulcerative Colitis AGI-022 is a delayed/controlled release oral formulation of 4-aminosalicylatesodium ("4-ASA-Na"), which AGI believes will be effective in the treatment ofulcerative colitis. AGI-022 is designed to release 4-ASA-Na in the lowergastrointestinal tract and so optimise the delivery of the drug to the affectedsites in ulcerative colitis. Ulcerative colitis is a chronic, recurrent, relapsing and remitting inflammatorydisease of the colon and/or rectum, and its prevalence is estimated at almost 1million patients across the seven major pharmaceutical markets (US, Japan,Germany, UK, France, Italy and Spain) and the incidence of new cases in thesecountries is estimated at 50,000 per annum. The aminosalicylate class ofanti-inflammatory drugs is used to treat ulcerative colitis and many of thosecurrently marketed are presented as modified release oral formulations. 4-ASA isan aminosalicylate drug which is not currently available in an oral modifiedrelease form for the treatment of ulcerative colitis. Global annual sales ofaminosalicylate drug products used to treat inflammatory bowel diseases such asulcerative colitis are currently estimated to be at least US$700 million. AGI has completed a human pharmacokinetics study in 16 healthy human subjectsdesigned to characterise the in-vivo drug release profiles of three delayedrelease/controlled release formulations of AGI-022 compared with a referencesolution of 4-ASA-Na. The study demonstrated delayed in-vivo release profilesthat correlated with the different in-vitro release patterns of the threeformulations of AGI-022. In addition, the AGI-022 formulations achievedmarkedly reduced peak plasma levels (Cmax), and a reduced ratio of parent ASA ton-Acetyl metabolite levels, confirming the controlled release profiles of theformulations. Based on the plasma level and urinary excretion profiles observed in this study,one of the current formulations has been selected as optimal and will be thebasis of future clinical development. AGI believes that AGI-022 may offercertain advantages compared with currently marketed 5-aminosalicylate ("5-ASA")therapies, including a superior tolerability profile, a more reliable andtargeted delivery to the affected sites in ulcerative colitis and a moreefficient therapy with potential dose-sparing versus currently marketed 5-ASAtherapies. Based on its controlled release profile, it is anticipated thatAGI-022 would be dosed twice daily. AGI is now seeking to enter into licensing agreements for AGI-022 withpharmaceutical marketing partners in order to complete development andregistration of the product. AGI-010 (omeprazole) - Gastro-Esophageal Reflux Disease (Nocturnal AcidBreakthrough) AGI-010 is a delayed/controlled release formulation of the proton pump inhibitordrug ("PPI"), omeprazole, which AGI believes will be effective in treatingnocturnal acid breakthrough ("NAB"), a prevalent aspect of gastro-esophagealreflux disease ("GERD"). GERD is the most common of the major gastrointestinal disorders and itsprevalence in the general population is estimated to range from 20 to 40 percent. Proton pump inhibitors are commonly used drugs in the treatment of GERDand are one of the largest selling drug classes with global annual sales inexcess of US$20 billion. NAB is estimated to occur in more than 70 per cent ofh.pylori-negative and in up to 50 per cent of h.pylori-positive patients on PPItherapy and modification of the dosage regime of existing PPIs has only hadlimited success in controlling the symptoms of NAB despite improving acidsuppression. AGI has developed CHRONAB, an approach to the formulation of PPIs, tospecifically address NAB. AGI's lead CHRONAB product candidate is AGI-010,which is a delayed/controlled release formulation of omeprazole, one of the mostcommonly prescribed PPI drugs. AGI-010 is designed to be taken once-daily atnight-time and align PPI drug exposure with the period of NAB (typicallymidnight to 6am). AGI has completed a combined human pharmacokinetics and pharmacodynamics studyin 16 healthy human subjects to characterise the in-vivo drug release and theintra-gastric pH profiles of three delayed release/ controlled release CHRONABformulations of AGI-010 compared to marketed omeprazole (PrLosec(R)). Eachstudy formulation was dosed for five consecutive days. Preliminary data fromthe study demonstrates that each of the three AGI-010 formulations achieved adelayed/controlled release profile with a marked delay in the time-course ofin-vivo release resulting in peak drug exposure (Tmax) at 7.8 hrs, 7.6 hrs and8.6 hrs respectively post-dosing. Based on these results, AGI believes that the time course of drug release fromthe current formulations is over-extended and the release profile of AGI-010will now be optimised to achieve a better alignment of drug release andabsorption with the target NAB period (12 midnight to 6am). The Company plansto complete the optimisation of a lead formulation and a confirmatory humanpharmacokinetics and pharmacodynamics study by the end of 2006. Outlook During 2006, AGI expects to complete and report on five Phase II clinical trialsand the Company looks forward to a significant stream of clinical news throughthe remainder of the year. AGI is seeking in these trials to identify leadproduct candidates which can progress to further development for each of theimportant gastrointestinal clinical indications of functional dyspepsia andirritable bowel syndrome. The Company has two products in Phase II developmentfor functional dyspepsia, AGI-001 (espindolol) which we expect to report in Q2,2006 and AGI-006 (arbaclofen) which we expect to report in Q4, 2006/Q1, 2007,while there are three Phase II trials underway in irritable bowel syndrome, withAGI-003 (arverapamil) expected to report in Q2, 2006, AGI-001 (espindolol)expected to report during Q2/Q3, 2006 and AGI-004 (mecamylamine) resultsexpected in Q3/Q4, 2006. Anticipated News Flow for Remainder of 2006 Q2 2006 Preliminary results from Phase II trial for AGI-001 (espindolol) in functional dyspepsia Q2 2006 Preliminary results from Phase II trial for AGI-003 (arverapamil) in non-constipation dominant irritable bowel syndrome Q2/Q3 2006 Preliminary results from Phase II trial for AGI-001 (espindolol) in irritable bowel syndrome Q3/Q4 2006 Preliminary results from Phase II trial for AGI-004 (mecamylamine) in functional diarrhea Q4 2006/Q1 2007 Results from human pharmacokinetics and pharmacodynamics study on optimized CHRONAB formulation of AGI-010 (omeprazole) Q4 2006/Q1 2007 Preliminary Results from Phase II trial for AGI-006 (arbaclofen) in functional dyspepsia Extracts from 31 December 2005 Financial Statements INCOME STATEMENT 2005 2004For the year ended 31 December 2005 (as restated) Notes • • Turnover Revenue - -Cost of sales - - _____ _____ GROSS PROFIT - - _____ _____ Research and development costs (4,369,045) (2,341,497)Administration expenses (230,583) (361,867) _____ _____ OPERATING LOSS FROM CONTINUING OPERATIONS (4,599,628) (2,703,364) Finance revenue 104,723 140,000Finance costs (705,322) (558,069) _____ _____ LOSS FROM CONTINUING OPERATIONSBEFORE TAXATION (5,200,227) (3,121,433) Tax expense - - _____ _____ LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (5,200,227) (3,121,433) RETAINED LOSS BROUGHT FORWARDAs previously stated (3,439,032) -Prior year adjustments 2 317,599 - _____ _____ RESTATED LOSS BROUGHT FORWARD (3,121,433) - _____ _____ RETAINED LOSS CARRIED FORWARD (8,321,660) (3,121,433) _____ _____ All recognised gains and losses have been included in the financial statements. Extracts from 31 December 2005 Financial Statements BALANCE SHEET 2005 2004As at 31 December 2005 (as restated) Notes • • NON-CURRENT ASSETSProperty, plant and equipment 2,383 3,692Intangible assets 1,521,081 1,555,199 _____ _____ TOTAL NON-CURRENT ASSETS 1,523,464 1,558,891 _____ _____ CURRENT ASSETSOther receivables 3 110,473 99,526Cash and short-term deposits 2,914,765 6,782,011 _____ _____ TOTAL CURRENT ASSETS 3,025,238 6,881,537 _____ _____ TOTAL ASSETS 4,548,702 8,440,428 _____ _____ CURRENT LIABILITIESTrade payables and accruals 4 723,983 129,126Other liabilities 4 11,017 16,888 _____ _____ TOTAL CURRENT LIABILITIES 735,000 146,014 _____ _____ NON-CURRENT LIABILTIESConvertible redeemable preference shares 5 7,942,941 7,237,943 _____ _____ SHAREHOLDERS' EQUITYIssued capital 1,100 1,100Share premium 4,167,126 4,167,126Other reserves 24,195 9,678Retained losses (8,321,660) (3,121,433) _____ _____ TOTAL SHAREHOLDERS' EQUITY 6 (4,129,239) 1,056,471 _____ _____ TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 4,548,702 8,440,428 _____ _____ Extracts from 31 December 2005 Financial Statements CASHFLOW STATEMENTFor the year ended 31 December 2005 Notes 2005 2004 • •Operating activities :Cash generated from operations 7 (4,564,147) (2,676,508)Increase in accounts payable 594,857 129,126(Decrease) / increase in accrued and other liabilities (5,871) 16,888Decrease / (increase) in other current assets 10,947 (70,426)Fair value of shares issued to director over service 14,517 9,678period _____ _____ Net cash outflow from operating activities (3,949,697) (2,591,242) _____ _____ Investing activities :Interest received 82,829 111,000Purchase of equipment (378) (4,747) _____ _____ Net cash inflow from investing activities 82,451 106,253 _____ _____ Financing activities :Net proceeds from the issue of ordinary shares - 5,000Net proceeds from the issue of preference shares - 9,262,000 _____ _____ Net cash inflow from financing activities - 9,267,000 _____ _____ Net (decrease) / increase in cash and cash equivalents (3,867,246) 6,782,011 _____ _____ Opening balance in cash and cash equivalents 6,782,011 - _____ _____ Closing balance in cash and cash equivalents 2,914,765 6,782,011 _____ _____ Extracts from 31 December 2005 Financial Statements Notes to the Financial Information 1. BASIS OF PREPARATION The financial information has been prepared in Euro ("•") in accordance with theaccounting policies below which are based on IFRS in issue and adopted by theEU. The preparation of financial statements requires the directors to make estimatesand assumptions that affect the reported amounts of assets and liabilities aswell as disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses duringthe reporting period. Actual outcomes could differ from those estimates. 2. PRIOR YEAR ADJUSTMENT Year Ended 31 Year Ended 31 December December 2005 2004 • • Reversal of transaction costs 238,000 -Reversal of amortisation on intangible assets 79,599 - _____ _____ 317,599 - _____ _____ 2.1 The financial statements have been adjusted to reflect the correction of an error made in the financial statements for the year end 31 December 2004, which has lead to the restatements of the 2004 results. This arose due to an amount of €238,000 being charged to the Income Statement rather than the reduction of the share premium arising on issue of A Ordinary preference shares. 2.2 The financial statements have been restated in order to reverse amounts amortised in-process research and development, which were incorrectly amortised in the prior year. This results in a reversal of €79,599 against administration expenses in the Income Statement. 3. OTHER RECEIVABLES Year Ended 31 Year Ended 31 December December 2005 2004 • • Prepayments 24,803 54,015VAT 36,359 17,144DIRT recoverable 49,311 28,367 _____ _____ 110,473 99,526 _____ _____ Extracts from 31 December 2005 Financial Statements 4. CURRENT LIABILITIES Year Ended 31 Year Ended 31 December 2005 December • 2004 • Trade creditors and accruals 723,983 129,126Payroll taxes 11,017 12,384Other creditors - 4,504 _____ _____ 735,000 146,014 _____ _____ 5. NON-CURRENT LIABILITIES Year Ended 31 Year Ended 31 December 2005 December • 2004 • Debt component of convertible A Ordinary preference shares 7,237,943 6,851,523Accrued interest 664,610 527,778Transaction costs - (171,649)Amortisation of transaction costs 40,388 30,291 _____ _____ 7,942,941 7,237,943 _____ _____ On 18 March 2004 the authorised share capital of the company was changed to€1,005,000 divided into 100,000,000 Ordinary shares of €0.01 each and 500,000 AOrdinary preference shares of €0.01 each. The convertible A Ordinary preference shares are shown net of transaction costsarising on the issue of the shares. The transaction costs allocated to the debtcomponent of the A Ordinary preference shares amounted to €171,649 and are beingamortised to the income statement over the term of the debt. Amortisationamounted to €40,338 (2004: €30,291) and is included as part of interest expensein the income statement. The A Ordinary preference share capital and share premium is a compoundfinancial instrument having both a debt component as the preference shares areredeemable at the option of the holders 4 years and 90 days after issue, and anequity component as the holders also have a right to convert the shares intoOrdinary shares. The company's contractual obligation to make future paymentsto the shareholders of the A Ordinary preference shares remains outstandinguntil it is extinguished through conversion or redemption. The A Ordinary preference share capital and share premium have been split intotheir respective debt and equity components on the basis of their fair values onthe issue date. The fair value on the debt component was determined using amarket interest rate for an equivalent non-convertible debt instrument and hasbeen determined at €6,851,523. The equity component was then determined bydeducting the fair value of the debt component from the Extracts from 31 December 2005 Financial Statements 5. NON-CURRENT LIABILITIES (Continued) consideration received on issue of the A Ordinary preference shares whichamounted to €9,500,000. The total equity component amounted to €2,648,477. Interest is accrued on the debt component of the A Ordinary preference share atthe market rate of interest at the date of issue for an equivalentnon-convertible debt instrument. This amounted to €664,610 (2004 : €527,778) forthe year ended 31 December 2005 6. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' EQUITY Year Ended 31 Year Ended 31 December 2005 December 2004 (as restated) • • Total recognised losses for the year (5,200,227) (3,121,433)Shares issued (including share premium) - 4,168,126Fair value of shares issued to director 14,517 9,678 _____ _____ Net (decrease) / increase in shareholders' funds (5,185,710) 1,056,371Opening shareholders' equity 1,056,471 100 _____ _____Closing shareholders' equity (4,129,239) 1,056,471 _____ _____ 7. CASHFLOWS FROM OPERATING ACTIVITIES Cashflows from operating activities are those derived from the company's primaryactivities. This is calculated by the indirect method, adjusting the company'soperating profit for any operating income and expenses that are not cashflows inorder to derive the cash generated from operations. Cash generated from operations Year ended Year ended 31 31 December December (as restated) 2005 2004 • •Loss for the year (5,200,227) (3,121,433)Interest received (104,723) (140,000)Interest expense 704,998 558,069 _____ _____Operating loss (4,599,952) (2,703,364) Depreciation of equipment 1,687 1,055Amortisation of intangible assets 34,118 25,801 _____ _____Cash generated from operations (4,564,147) (2,676,508) _____ _____ Extracts from 31 December 2005 Financial Statements 8. POST BALANCE SHEET EVENTS Re-organisation of the company On 20 January 2006, the company underwent a re-organisation by virtue of whichthe company's shareholders in their entirety exchanged their shares in thecompany for shares in AGI Therapeutics plc at a ratio of one share in thecompany for 125 shares in AGI Therapeutics plc. Conversion of A ordinary preference shares To achieve the re-organisation, all the shareholders of the company entered intoa share exchange agreement dated 20 January 2006 under which the shareholders ofthe Company agreed to exchange collectively a total of 146,153 A Ordinarypreference shares and 110,000 A Ordinary shares in exchange for the allotmentand issue of 18,269,125 A Ordinary Preference shares of €0.01 each and 13,749,900 Ordinary shares of €0.01 each incapital of AGI Therapeutics plc. 9. TRANSITION TO IFRS For all periods up to and including the year ended 31 December 2004, the companyprepared its financial statements in accordance with Irish generally acceptedaccounting practice (Irish GAAP). These financial statements, for the yearended 31 December 2005, are the first the company has opted to prepare inaccordance with International Financial Reporting Standards (IFRSs) as adoptedby the European Union (EU). Accordingly, the company has prepared financial statements which comply withIFRSs applicable for periods beginning on or after 1 January 2005 and thesignificant accounting policies meeting those requirements are described in note1. In preparing these financial statements, the company has started from anopening balance sheet as at 1 January 2004, the company's date of transition toIFRSs, and made those changes in accounting policies and other restatementsrequired by IFRS 1 for the first-time adoption of IFRSs. This note explains theprincipal adjustments made by the company in restating its Irish GAAP balancesheet as at 1 January 2004 and its previously published Irish GAAP financialstatements for the year ended 31 December 2004. The adjustments to IFRSs areclassified below under two headings: 'reclassifications' and 'remeasurements'. Reconciliation of equity as Irish GAAP Reclassifications Remeasurements IFRSs at 1 January 2004 Notes • • • • Current assetsTrade and other receivables 100 - - 100 _____ _____ _____ _____ Total assets 100 - - 100 _____ _____ _____ _____ Capital and reservesEquity share capital 100 - - 100 _____ _____ _____ _____ Total equity 100 - - 100 _____ _____ _____ _____ Extracts from 31 December 2005 Financial Statements 9. TRANSITION TO IFRS (Continued) Reconciliation of equity Irish GAAP Reclassifications Remeasurements IFRSsas at 31 December 2004 (as restated) Notes • • • •Non-current assetsProperty, plant and equipment 3,692 - - 3,692Intangible assets 1,555,199 - - 1,555,199 _____ _____ _____ _____ 1,558,891 - 1,558,891 _____ _____ _____ _____Current assetsTrade and other receivables 99,526 - - 99,526Cash and short-term deposits 6,782,011 - - 6,782,011 _____ _____ _____ _____ 6,881,537 - - 6,881,537 _____ _____ _____ _____Total assets 8,440,428 - - 8,440,428 _____ _____ _____ _____ Current liabilitiesTrade and other payables 129,126 - - 129,126Accruals 16,888 - - 16,888Total liabilities 146,014 - - 146,014 Non-current liabilitiesConvertible redeemable preference shares - 6,679,874 558,069 7,237,943 _____ _____ _____ _____ Capital and reservesEquity share capital a 2,562 (1,462) - 1,100Share premium a,c 10,845,538 (6,678,412) - 4,167,126 _____ _____ _____ _____Other reserves 9,678 - - 9,678Retained losses b,d (2,563,364) - (558,069) (3,121,433) _____ _____ _____ _____ Total shareholders' equity 8,294,414 (6,679,874) (558,069) 1,056,471 _____ _____ _____ _____Total shareholders' equity and 8,440,428 - - 8,440,428liabilities _____ _____ _____ _____ Extracts from 31 December 2005 Financial Statements 9. Transition to IFRSs (Continued) Reconciliation of profit and Irish GAAP Reclassifications Remeasurements IFRSsloss for the period ended 31 December (as restated)2004 Notes • • • • Revenue - - - -Cost of sales - - - - _____ _____ _____ _____Gross profit - - - - _____ _____ _____ _____ Research and development (2,341,497) - - (2,341,497)Administrative expenses (361,867) - - (361,867) _____ _____ _____ _____Operating loss from continuing (2,703,364) - - (2,703,364)operations Finance revenue 140,000 - - 140,000Finance costs b,d - - (558,069) (558,069) _____ _____ _____ _____Loss from continuing operations (2,563,364) - (558,069) (3,121,433)before taxation Tax expense - - - - _____ _____ _____ _____Loss for the year (2,563,364) - (558,069) (3,121,433) _____ _____ _____ _____ Adjustments required to Irish GAAP financial information for the year end 31December 2004 to comply with IFRS: a. Reclassification of debt component of A Ordinary preference shares - €6,850,061 Reclassification of the fair value of the debt component of the A Ordinary preference shares to non-current liabilities. b. Accrual of interest on fair value of debt component of A Ordinary preference shares - €527,778. Reclassification of the fair value of the debt component of the A Ordinary preference shares to non-current liabilities. c. Allocation of transaction costs on issue of A Ordinary preference shares between debt and equity components - €171,649. Transaction costs related to the element of the A Ordinary preference shares are offset against the debt rather the share premium. d. Amortisation of transaction costs allocated to debt component of A Ordinary preference shares - €30,291. Transaction costs related are amortised to the Income Statement over the term of the debt. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Potentially Ai