Preliminary Results
Immupharma PLC
01 May 2007
For Immediate Release 1 May 2007
IMMUPHARMA PLC
PRELIMINARY RESULTS
for the period ended 31st December 2006
ImmuPharma plc (LSE:IMM), the specialist pharmaceutical discovery and
development company is pleased to announce its preliminary results for the
period ended 31st December 2006.
Key Highlights:
• Successful completion of Phase II trial of our lead compound IPP-201101,
for the treatment of Lupus.
• Positive discussions held with FDA and plans for a PhaseII/III
multicentre study in the US and Europe.
• Cash reserves strengthened with a further €7m funds raised.
Dimitri Dimitriou, Chief Executive Officer, said:
'During our first year as a public company we have enjoyed strong share price
performance and continued success in the development of our key asset, compound
IPP-201101, for the treatment of Lupus. The focus for the year ahead will be on
the next phase of trials for IPP-201101, and to advance our analgesic and
antibiotic compounds and to engage in continuing out-licensing dialogue with
large biotech and pharmaceutical companies worldwide.'
For further information please contact:
Immupharma plc:
Richard Warr, Chairman: Telephone +44 20 7152 4080
Dimitri Dimitriou, Chief Executive Officer: +44 20 7152 4080
Buchanan Communications:
Lisa Baderoon/ Rebecca Skye Dietrich +44 20 7466 5000
IMMUPHARMA PLC
The consolidated results for ImmuPharma plc (the 'Company') and its subsidiaries
(collectively the 'Group') cover the period 1st April 2006 to 31st December
2006. During the period, the accounting reference date of the Company was
changed from 31st March to 31st December, in order that all companies within the
Group had co-terminous year-ends.
REPORT FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
We are delighted to report on the company's achievements during the period under
review and are proud to have delivered on our key milestones ahead of time. By
all measures, 2006 has been a record year in our corporate history. During our
first year as a public company we have enjoyed strong share price performance
and continued success in the development of our key asset.
Following the successful completion of phase I clinical trials in healthy
volunteers, where our lead drug candidate for the treatment of Lupus
(IPP-201101) showed an attractive safety profile, we have successfully completed
a phase II study in patients suffering from Lupus. Most importantly, this study
showed statistically significant clinical improvement in the overall symptoms of
the patients.
During our phase II study we held discussions with the Food and Drug
Administration in the United States relating to the development activities
required for the approval of our Lupus drug candidate IPP-201101. As a result of
the feedback from the FDA, we have initiated the work for a phase II/III
multicentre study to take place in the US and Europe. Analysts estimate that
IPP-201101 for the treatment of Lupus has blockbuster sales potential.
We believe that ImmuPharma has an attractive business model. Our focus is on
innovative drugs for niche therapeutic areas with large sales potential but
importantly without the need for a large sales force. This is characterised by
relatively low cost of development and shorter timelines than the norm. Our
progress so far with IPP-201101 for the treatment of Lupus is confirmation that
this can be achieved.
We are particularly pleased to report on the milestone funding for the company
in December 2006. In excess of €7 million was raised from prestigious
institutions including Jupiter, ING Bank and Martin Currie. This has
strengthened our cash reserves and provided the funds to begin the phase II/III
trial for our Lupus drug candidate. During 2006, we have held licensing
discussions with big pharma and biotech companies which are ongoing.
Finally, we have strengthened our management team with three industry
executives. Dr Franco Di Muzio and Dr Ajay Agrawal have joined our Board as
Non-Executive Directors. Dr Di Muzio was appointed in February and has 40 years
experience in companies including Bristol-Myers Squibb, Glaxo Wellcome and Alza
Corporation. Dr Ajay Agrawal was appointed in April and has over 20 years of
experience in the biotech and pharmaceutical industry. He was co-founder of
polyMASC pharmaceuticals plc and has worked with Genovac GmBH (Germany), Qiagen
(Germany), PHT Pharma (Italy), Karo Bio (Sweden), Aldevron (USA) and Jubilant
Biosys. Ms Tracy Weimar joined as Vice-President of Operations and has also been
appointed Company Secretary. She was most recently at GlaxoSmithKline as
Director of Worldwide Business Development which involved numerous corporate
licensing transactions.
With an experienced management team and a strong financial position, ImmuPharma
is well placed to deliver value from our lead drug candidates and promising
pipeline.
On behalf of the Board we should like to thank all our shareholders for their
continued support.
FINANCIAL REVIEW
The Group continues to adopt International Financial Reporting Standards (IFRS)
as its primary accounting basis.
It is important to note that one of these standards, IFRS2, relating to
share-based payments, has had a significant impact on the results for the Group
for this nine month period. The Group loss before tax would have been £1.2m,
consisting of cash and accrued expenditure on the normal running of the company
and research costs, but has increased to £1.9m as a result of charging the
majority of the assessed 'fair value' to the recipients of the share options
agreed at the time the parent company was floated (16th February 2006),
including a provision for employers' National Insurance.
It should be stressed that this charge of £0.7m does not represent additional
cash expenditure, and is purely a notional amount stipulated by IFRS2 (and
calculated using a statistical model) - which is debited to the Income Statement
and credited to equity - as a measure of the dilution suffered by shareholders,
and hence benefit received by the recipients, as a result of granting the
options.
A further £0.1m is due to be charged in next year's accounts under IFRS2, being
the remainder of the fair value charge.
Results
Including the IFRS2 charge noted above, the loss of the Group for the period
before taxation was £1.9m (prior period loss £2.5m). Basic and diluted loss per
share was 2.72p (prior period 4.16p). No dividend is proposed.
The fact that losses have continued to be made is, at this point of the Group's
development, to be expected, since there is minimal revenue and business
activity is still concerned with clinical trial expenditure and maintaining the
infrastructure of the Group.
In the previous period, the loss of £2.5m included an exceptional item of
£970,000, being mainly a write-off of goodwill resulting from the treatment of
the acquisition of the ImmuPharma business as being a 'reverse takeover' under
the Financial Reporting rules. It represented the difference between the market
value of the acquirer company's shares in issue at the date of the acquisition
and its underlying net asset value (principally cash) at that time. The
Directors believed that this 'premium to cash' was justified at the time in
order to enable the acquisition and subsequent fund-raising and that it was
appropriate to write it off.
Operating Loss
The Operating loss of £1.97m (£1.26m excluding the notional IFRS2 charge noted
above) represents principally the employment cost and overheads of maintaining
the Group together with expenditure on research carried out by Contract Research
Organisations. The timing and extent of the research and development programme
continues to be well controlled - and below original expectations forecast at
the time of float.
Net Funds
At 31st December 2006, the Group had Cash and cash equivalents of £6,460,000
(31st March 2006 £2,693,000).
Cash levels have benefited from additional funds raised in December 2006 when
equity and debt of €7m was raised. These additional funds have enabled the Group
to contemplate the final phases of the Lupus drug development with confidence,
and at the same time to make progress with development of the other main drug
candidates.
OUTLOOK
The focus for the year ahead will be on the next phase of trials for our Lupus
compound IPP-201101; to make further progress advancing our analgesic and
antibiotic compounds, and to engage in dialogue with other pharmaceutical
companies.
With a strong team in place to execute these objectives, we believe we are well
positioned to take the Group forward.
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2006
1 April 13 January
Notes 2006 to 2005
31 December to 31 March
2006 2006
£ £
Continuing operations
Revenue 1 44,818 25,409
Research and development expenses (568,139) (679,091)
Administrative expenses (1,447,998) (880,074)
Operating loss 2 (1,971,319) (1,533,756)
Exceptional costs arising from - (970,524)
reverse acquisition
Finance costs (7,739) (8,045)
Investment revenues 64,307 28,759
Loss before taxation (1,914,751) (2,483,566)
Tax 54,713 788
Loss for the period (1,860,038) (2,482,778)
(Loss) per ordinary share
Basic and diluted 3 (2.72)p (4.16)p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE PERIOD ENDED 31 DECEMBER 2006
1 April 13 January
2006 to 2005
31 December to 31 March
2006 2006
£ £
Exchange differences on translation of (4,143) 8
foreign operations
(Loss) for the financial period (1,860,038) (2,482,778)
Total recognised income and expense for (1,864,181) (2,482,770)
the period
Attributable to:
Equity holders of the parent company (1,864,181) (2,482,770)
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006
31 December 31 March
2006 2006
Note £ £
Non-current assets
Property, plant and equipment 11,503 12,020
Intangible assets - goodwill - -
Intangible assets - other 748,878 765,004
Total non-current assets 760,381 777,024
Current assets
Trade and other receivables 103,801 157,572
Cash and cash equivalents 6,459,918 2,692,900
Total current assets 6,563,719 2,850,472
Current liabilities
Financial liabilities - borrowings 192,987 277,898
Trade and other payables 747,615 845,618
Provisions 94,218 -
Total current liabilities 1,034,820 1,123,516
Net current assets 5,528,899 1,726,956
Non-current liabilities
Financial liabilities - borrowings 403,634 -
Net assets 5,885,646 2,503,980
EQUITY
Ordinary shares 7,277,615 6,813,815
Share premium 3,558,340 1,607,990
Merger reserve 106,148 106,148
Other reserves (713,641) (3,541,195)
Retained earnings (4,342,816) (2,482,778)
Total equity 4 5,885,646 2,503,980
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2006
31 December 31 March
2006 2006
£ £
Cash flows from operating
activities
Cash flows used in operations (1,236,598) (871,552)
Interest paid (7,739) (8,045)
Net cash used in operating (1,244,337) (879,597)
activities
Investing activities
Purchase of property, plant and (2,389) (17,130)
equipment
Acquisition of intangibles assets - (337,274)
Cash on reverse acquisition - 975,961
Cash on acquisition of subsidiaries - 17,773
Reverse acquisition expense - (59,561)
Subsidiary acquisition expense - (2,342)
Interest received 64,307 28,759
Tax received - 788
Net cash generated from investing 61,918 606,974
activities
Financing activities
Net proceeds from share issues - ImmuPharma - 1,397,976
(UK) Limited
Net proceeds from share issue - Company 2,609,150 1,569,802
Increase in bank overdraft 2,556 12
New loans 384,754 -
Loan repayments (68,586) (2,267)
Equity shares to be issued 2,021,563 -
Net cash generated from financing 4,949,437 2,965,523
activities
Net increase in cash and cash 3,767,018 2,692,900
equivalents
Cash and cash equivalents at 2,692,900 -
beginning of period
Cash and cash equivalents at end of 6,459,918 2,692,900
period
NOTES
1. The financial information set out in this announcement does not
comprise the Group's statutory accounts for the period ended 31 December 2006.
The financial information for the period ended 31 March 2006 is derived from the
statutory accounts for the period which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under either Section 237 (2) or Section 237 (3)
of the Companies Act 1985.
The statutory accounts for the period ended 31 December 2006 will be finalised
on the basis of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
The accounting policies are consistent with those applied in the preparation of
the statutory audited accounts for the period ended 31 December 2006 which have
been prepared in accordance with International Financial Reporting Standards
('IFRS').
The financial information is for the period from 1 April 2006 to 31 December
2006 and the comparatives are for the period from 13 January 2005 to 31 March
2006. The comparatives were prepared using reverse acquisition accounting and
therefore represent a continuation of the financial statements of ImmuPharma
(UK) Limited, the legal subsidiary acquired.
The Group's financial statements incorporate the financial statements of
ImmuPharma plc, ImmuPharma (UK) Limited and other entities controlled by the
company ('the subsidiaries') comprising ImmuPharma AG and ImmuPharma (France)
SA. Control is achieved where the company has the power to govern the financial
and operating policies of an investee entity so as to obtain benefits from its
activities.
The Group has applied the requirements of IFRS2 share based payments for the
first time during the current period. The Group issues equity-settled share
based payments to certain employees. These are measured at fair value at the
date of grant. The fair value determined at the grant date is expensed on a
straight line basis over the vesting period, based on the Group's estimate of
shares that will eventually vest and adjusted for the effect of non market-based
vesting conditions. Fair value is measured by use of the Binomial model. The
expected life used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
2 OPERATING LOSS
Period ended Period ended
31 December 31 March
2006 2006
£ £
Operating loss is stated after charging/
(crediting):
Foreign exchange gains (25,167) -
Research and development costs
- current period expenditure 568,139 679,091
Share based payments charge 615,134 -
Employers National Insurance provision in 94,218 -
respect of share based payments charge
Depreciation of property, plant and
equipment
- owned 2,906 10,081
Amortisation of intangible assets
- patents 16,126 5,140
Impairment of goodwill - 970,524
Services provided by Company auditors:
- Audit services 55,538 15,000
- Other services (split between):
- The auditing of accounts of associates of
the company pursuant to legislation - 10,000
- Other services relating to taxation 12,584 5,000
- Services relating to recruitment and 13,630 -
remuneration
- All other services 29,871 17,025
- Audit services provided by other auditors 11,860 9,000
* Included within the 'Audit services' figure of £55,538 is £14,413 relating to
the period ended 31 March 2006. Included within the 'All other services' figure
of £29,871 is £19,425 relating to the period ended 31 March 2006.
3 EARNINGS PER SHARE Period Period ended
ended 31 31 March
December
2006 2006
£ £
Earnings
Earnings for the purposes of basic earnings
per share being net loss attributable to
equity shareholders (1,860,038) (2,482,778)
Number of shares
Weighted average number of ordinary shares for
the purposes of basic earnings per share 68,388,353 59,663,827
Basic and diluted loss per share (2.72)p (4.16)p
The Group has granted share options and warrants in respect of equity
shares to be issued, the details of which are disclosed in Notes 20 and
21 of the full set of accounts. As a result of the net loss for the
period, there is no dilutive effect of these options and warrants.
4 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share Share Merger Other Retained Total
capital premium reserve reserves* Earnings equity
£ £ £ £ £ £
At
incorporation - - - - - -
Exchange
differences
on
translating
foreign
operations - - - 8 - 8
Loss for the
period ended
31 March 2006 - - - - (2,482,778) (2,482,778)
Total
recognised
income and
expense for
the period - - - 8 (2,482,778) (2,482,770)
Equity share
capital of
the Company
prior to
reverse
acquisition 420,000 557,003 - - - 977,003
Reverse
acquisition
of the
Company 5,875,000 - - (3,541,203) - 2,333,797
New issue of
equity share
capital 518,815 1,686,148 - - - 2,204,963
Less:
expenses of
new share
issue - (635,161) - - - (635,161)
Acquisition
of
subsidiaries - - 106,148 - - 106,148
At 1 April
2006 6,813,815 1,607,990 106,148 (3,541,195) (2,482,778) 2,503,980
Exchange
differences
on
translating
foreign
operations - - - (4,143) - (4,143)
Loss for the
period ended
31 December
2006 - - - - (1,860,038) (1,860,038)
Total
recognised
income and
expense for
the period - - - (4,143) (1,860,038) (1,864,181)
Equity shares
to be issued - - - 2,021,563 - 2,021,563
Share based
payments - (195,000) - 810,134 615,134
New issue of
equity share
capital 463,800 2,305,200 - - - 2,769,000
Less:
expenses of
new share
issue - (159,850) - - - (159,850)
At 31
December
2006 7,277,615 3,558,340 106,148 (713,641) (4,342,816) 5,885,646
* Other reserves as at 31 December 2006 comprises a reverse acquisition reserve £
(3,541,203), a translation reserve £(4,135) and equity shares to be issued of £2,831,697.
5. DIRECTORS' REPORT AND ACCOUNTS
Copies of the report and accounts will be posted to shareholders in early May
2007.
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