Final Results

RNS Number : 6717S

Phytopharm PLC

24 November 2011

 



24 November 2011

Phytopharm plc

Preliminary Results

Phytopharm plc (PYM: London Stock Exchange) ("Phytopharm" or the "Company") announces today its preliminary results for the year ended 30 September 2011. 

Business highlights

Operational

·    Cogane™ Phase II Parkinson's disease trial (CONFIDENT-PD) on track to complete recruitment in spring 2012 with results around  the end of 2012

·    Positive preclinical results on Cogane™ in Parkinson's disease presented at the Movement Disorders Conference in June 2011

·    Cogane secures Orphan Drug status from US Food & Drug Administration  and the European Commission for the treatment of amyotrophic lateral sclerosis

·    Positive data achieved in preclinical model of ALS with Cogane™. Initiated "gold standard" genetic in vivo model with the financial support of the UK Motor Neurone Disease Association; results anticipated in Q1 2012

·    Encouraging early data reported from the recently initiated programme investigating the effect of Myogane™ in glaucoma. Further results due in Q1 2012

·    Technology Strategy Board provided grant funding to support the development of Myogane™ in glaucoma

·     P61 anti-inflammatory project re-activated, lead compound selected for further development

Financial

·     Loss after tax increased to £7.66 million in line with expectations reflecting increased focus on the development of our pharmaceutical programmes (FY 2010: £3.80 million)

·     Cash and money market investments of £17.57 million (FY 2010: £23.61 million)

Mr Tim Sharpington, CEO commented: "Over the past year we have refocused the business and have made good progress in the development of our pharmaceutical programmes. Our lead programme, Cogane^TM in Parkinson's disease, is on track to complete patient recruitment in its Phase II clinical trial in spring 2012.  We have received encouraging data in our follow-up programmes in both ALS and glaucoma and expect further results in Q1 2012.  Importantly, we also secured Orphan Drug Status for Cogane™ in ALS in both the USA and EU.

Our projects have the potential to be major treatment advances for these indications and have attracted favourable attention from opinion leaders and patient groups involved with the treatment of these diseases. We look forward to receiving the results from our ongoing studies."

Enquiries Phytopharm plc Tim Sharpington, CEO Roger Hickling, R & D Director [phone]

For further information about Phytopharm, please see our website at http://www.phytopharm.com

U.K.  Investor Relations FTI Consulting Limited Ben Atwell John Dineen [phone]

 

Business Review

Strategy

Phytopharm is a development stage pharmaceutical company developing novel treatments targeting diseases with high levels of unmet need. Our lead series of compounds, the Sapogenins (including Cogane™ and Myogane™), has the potential to be a new class of therapy for neurodegenerative diseases including Parkinson's disease,  amyotrophic lateral sclerosis (ALS) and glaucoma.

Phytopharm operates as a virtual company ensuring the majority of our financial resources are focussed on our pharmaceutical pipeline. We utilise a network of scientific and clinical experts to help guide our development projects with our experienced pharmaceutical managers overseeing operations.

Our commercially focused development projects have the potential to produce significant treatment advances in our target areas of neurodegeneration and inflammatory disease. Our products are single chemical entities with novel mechanisms of action protected by strong patent families. Our pipeline has been sourced from our own research activities and from licensing activities, particularly from leading research institutions in China with whom the Company has long-standing relationships. We will consider adding additional products to our pharmaceutical pipeline if suitable candidates are identified.

Our objective is to develop products aimed at major markets with high unmet medical need to key value inflection points before seeking late-stage development and commercial partners as appropriate. We will consider retaining certain rights to products targeting orphan indications.

Overview

We continue to progress our strategy of focusing on our pharmaceutical programmes, specifically on the development of Cogane™ for Parkinson's disease. During the period, we reported recruitment of patients with Parkinson's disease into the multi-national Cogane™ Phase II dose ranging study (CONFIDENT-PD) which commenced in November 2010. The study is being conducted in leading movement disorder centres in North America and Europe.

Pharmaceutical programmes

Neurodegeneration

Neurodegeneration is the umbrella term for the progressive loss of structure, function or death of neurones. Many neurodegenerative diseases including Parkinson's disease, ALS, glaucoma and Alzheimer's disease occur as a result of neurodegenerative processes that exhibit many similarities suggesting that these diseases are related on a sub-cellular level. Because of the similarities in neurodegeneration across this range of diseases, there is hope that therapeutic advances, such as Phytopharm's lead pharmaceutical programmes Cogane^TM and Myogane^TM, could be beneficial in more than one of these diseases.

The Sapogenins

Cogane^TM and Myogane^TM are structurally related, small molecule, chemical entities and members of the Sapogenin class of compounds. They are orally bioavailable neurotrophic factor modulators that readily cross the blood-brain barrier. Both compounds have demonstrated neuroprotective effects in a range of preclinical models. Specifically, Cogane^TM and Myogane^TM have been shown to induce and modulate the production of neurotrophic factors.

Both compounds have completed long term toxicology studies, have been formulated as once daily, orally administered therapies and have completed Phase I studies demonstrating good bioavailability and safety profiles.

Cogane^TM is being studied in a Phase II trial of early stage Parkinson's disease. It has also been evaluated for safety and tolerability in patients with Alzheimer's disease.

Additionally, Cogane^TM is being assessed in preclinical models of ALS and Myogane^TM in preclinical models of glaucoma, a neurodegenerative disease of the eye. If results are encouraging, they have the potential to be progressed rapidly into clinical proof of concept studies.

The neuroprotective and neurotrophic actions of Cogane^TM and Myogane™ suggest potential beneficial effects in other orphan neurodegenerative diseases.

Cogane™ in Parkinson's disease

Parkinson's disease is a movement disorder characterised by muscle rigidity, tremor and a slowing of physical movement (bradykinesia) and, in extreme cases, a loss of physical movement (akinesia). The primary symptoms are the result of altered signalling in an area of the brain, the striatum, responsible for the control of movement. This is caused by degeneration of dopaminergic neurones between the substantia nigra and the striatum parts of the brain, leading to insufficient formation and action of dopamine. Parkinson's disease is therefore termed a neurodegenerative disease. The disease is slow in onset and the appearance of symptoms reflects the gradual loss of dopaminergic neurones.

The prevalence of Parkinson's disease is estimated at being 0.3% of the whole population in industrialised countries, rising to 1% in those over 60 years of age and to 4% of the population over 80. The market size for Parkinson's disease was $3.2 billion in 2009 and is forecast to grow to $4.6 billion by 2012.

Mode of action

Glial cell-derived neurotrophic factor ("GDNF") and brain derived neurotrophic factor ("BDNF") are naturally occurring proteins in the brain that have been shown to be effective in re-growing damaged nerves. As they are proteins, they cannot be given orally (in tablet or liquid form) because they are degraded in the stomach and intestine, and also do not readily cross the blood-brain barrier. GDNF and BDNF can work only when injected into, or when produced by, the brain. Direct injection of GDNF into the area of the brain involved in Parkinson's disease has shown evidence of being clinically effective in restoring the control of movement but requires highly complex and difficult surgical procedures.

Cogane™ has the potential to overcome many of the difficulties associated with GDNF administration: In preclinical models, Cogane^TM stimulated the release of GDNF and BDNF in the brain and increased neurite outgrowth. When administered orally in several different preclinical models of Parkinson's disease, Cogane^TM reversed the decrease of neurotrophic factors and reversed the loss of dopaminergic neurones in the striatum, the area of the brain most affected in Parkinson's disease.

Progress to date

The profile of Cogane™ suggests that it will have benefit in both the motor and non-motor symptoms of Parkinson's disease. In addition its effect on restoring damaged neurones to a functioning state implies that it might result in a delay in the progression of disease in recently diagnosed patients.

Data from preclinical models also indicates that Cogane™ when administered in conjunction with L‑DOPA showed additional benefit over L‑DOPA alone. Other data suggests that Cogane™ reduces the side effects associated with L‑DOPA. If these effects of improved efficacy and reduced side effects of L‑DOPA by co-administration of Cogane™ are also observed in patients, this will have significant benefit in the management of patients with more severe disease.

Cogane^TM is currently being evaluated in a 400 patient multi-national Phase II, randomised, double blind, placebo controlled, dose ranging study (CONFIDENT-PD). The study is comparing the safety, tolerability and efficacy of three doses of Cogane^TM and placebo when administered for 28 weeks to untreated patients with early stage Parkinson's disease. The study will assess the efficacy of Cogane™ in the treatment of both motor and non‑motor symptoms of Parkinson's disease. Recruitment into the study is ongoing and expected to be completed in spring 2012, Our target remains to have results from the study available around the end of 2012.

Cogane™ in motor neurone disease / ALS

ALS, also known as Lou Gehrig's disease, is the most prevalent form of motor neurone disease which generally strikes people between 40 and 60 years of age. It is characterised by progressive loss of both lower (spinal cord and brain stem) and upper (cerebral cortex) motor neurones, which leads to severe muscle weakness and wasting, followed by paralysis and death, generally caused by respiratory failure. There is an urgent need for the development of new approaches to treat this devastating condition.

It is estimated that there are over 30,000 patients living with ALS in the seven major markets. ALS is classified as an orphan disease and, as such, offers the potential for expedited development.

Progress to date

ALS is the most common form of motor neurone disease, a neurodegenerative disease with limited treatment options and poor prognosis. Cogane™ has previously shown promising activity in preliminary in vitro and in vivo models of ALS. In a preclinical study using a toxin-induced model of ALS, Cogane™ protected motor neurones and demonstrated anti-inflammatory effects compared to the control animals. A study of Cogane™ in the genetic "gold standard" in vivo model of ALS is ongoing. This study is being performed with the support of the Motor Neurone Disease Association, a UK based charitable organisation which has provided a grant to cover the costs of the study. Results from the study are expected in Q1 2012.

As Cogane™ is already in clinical trials for Parkinson's disease, rapid progression into efficacy indicating trials will be possible, subject to funding, if results from this preclinical study are positive. Furthermore, ALS is an orphan indication, a classification which supports expedited clinical development. Cogane™ has recently been granted Orphan Drug status by both the European Commission and by the US Food & Drug Administration for development in ALS. Orphan status allows significant access to the regulatory authorities for advice and expedited clinical progression as well as providing financial advantages.

Glaucoma

A programme investigating the effect of Myogane™ in glaucoma, a neurodegenerative condition of the eye, has recently been initiated. Current pharmacological treatments for glaucoma are predominantly focussed on reducing the elevated intra ocular pressure ("IOP") in the eye, which is often associated with glaucoma. However, a significant number of patients with glaucoma do not exhibit raised IOP and, in addition, a significant number of patients whose IOP is successfully reduced still experience ongoing neurodegeneration resulting in deterioration of sight. We therefore believe that there is a major unmet need and a commercial opportunity for products which could successfully treat the underlying neurodegenerative process in glaucoma.

There is a growing body of scientific literature describing the neuroprotective effects of neurotrophic factors, specifically brain derived neurotrophic factors (BDNF) and glial-cell derived neurotrophic factors (GDNF) in models of glaucoma. Myogane™ has been shown to modulate the production of neurotrophic factors in a number of cell types and to have beneficial neuroprotective and neurorestorative effects on retinal ganglion cells, the cells which degenerate in glaucoma. Myogane™ is currently being evaluated in an in vivo model of glaucoma; it is expected that results from these studies will be available in Q1, 2012. As Myogane™ has already been tested in standard pre clinical safety studies we believe that, subject to funding, we will be able to progress the project rapidly into Phase II studies if the in vivo models provide positive data.

Alzheimer's disease

Cogane^TM and Myogane^TM protect cortical neurones from glutamate and β-amyloid induced neuronal damage and increase neurite outgrowth in vitro. Cogane^TM and Myogane^TM also increase the density of muscarinic receptors both in vitro and in vivo. In vivo, Cogane^TM and Myogane^TM improve cognition in the aged rat and β-amyloid/ibotenic acid rat model of Alzheimer's disease.

The safety, tolerability and pharmacokinetics of orally administered Cogane™ in patients with Alzheimer's disease have previously been assessed in a 12 week study. Cogane™ was generally well tolerated in this patient group. Further work may be undertaken in this area if additional resources become available.

P61 Programme

During the period we reactivated the P61 programme, which was established to investigate the known pharmacological properties of curcumin and gingerol. P61 is a series of novel new chemical entities ("NCEs") which exhibit anti-inflammatory, anti-remodelling, anti-spasmodic and TRPV1 modulating activities. This range of activity within single molecules could provide attractive therapeutic options for a number of inflammatory diseases including chronic obstructive pulmonary disease, asthma, atopic dermatitis, psoriasis, gastrointestinal inflammatory conditions and pain. A lead compound has been identified and is being characterised to better understand its pharmaceutical potential.

Legacy Products

A cooperation agreement was signed with the Council for Scientific and Industrial Research, South Africa, who will fund the future development and commercialisation of Hoodia gordonii as an appetite suppressant. Phytopharm retains a commercial interest in the project and will receive a proportion of any future commercial milestones and royalties from the project.

The sales and distribution agreement with Intervet/Schering Plough Animal Health for Phytopica®, our canine animal health product, came to an end in December 2010.

Financial review

The financial performance for the year ended 30 September 2011 reflects the Group's ongoing pharmaceutical development activities, particularly the progress of our pharmaceutical development programmes in neurodegenerative diseases.

Following our successful fundraising activities in the previous financial year, we have continued to implement a strategy focused on the progression of our pharmaceutical development programmes. We continue to operate with a lean operational structure whilst also diversifying our development pipeline in a cost efficient manner, with the potential for further programmes to enter the clinic or become licensed in the medium term. Based on our current expectations Phytopharm is financed through to the end of 2013.

Revenue

Following the conclusion of activities on our legacy programmes revenue from continuing operations amounted to £0.07 million (FY 2010: £0.70million).

Research and development expenses

Research and development expenses for the year increased from £4.01 million for the year ended 30 September 2010 to £7.46 million in the current year. This increase in expenditure on research and development activities reflects the progression of Cogane™ into the CONFIDENT-PD clinical study.

Administrative expenses

Our administrative expenses remained fairly constant at £1.15 million compared to £1.12 million in the previous year, in line with our virtual business model.

Finance income

Finance income represents interest received and receivable from our cash balances which amounted to £0.38 million during the year compared to £0.29 million for the year ended 30 September 2010 due to higher average cash balances during the financial year following the fundraising completed during the previous year.

Taxation

The tax credit of £0.51 million for the year represents amounts that are expected to be received under current legislation on research and development tax credits. The increase in the year is due to increased expenditure on our research and development activities primarily in relation to the Cogane™ development programme which is also reflected in the increase in our total loss for the year of £7.66 million (FY2010: £3.80 million).

Balance sheet

Non-current assets

Non-current assets representing property, plant and equipment amounted to £0.08 million at 30 September 2011 compared to £0.11 million in the previous year.

Current assets

Current assets comprise trade and other receivables, tax receivable, money market investments and cash and cash equivalents which decreased to £18.51 million at 30 September 2011 (FY 2010: £24.50 million).

Money market investments and cash and cash equivalents at 30 September 2011 amounted to £17.57 million reflecting net cash outflows from research and development activities. Money market investments represent fixed rate, short term deposits placed with a range of banks at fixed terms with a maturity date of more than three months. Cash and cash equivalents are invested for a period of ninety days or less with a similar range of banks.

Our current tax receivable at 30 September 2011 increased to £0.48 million compared to £0.41 million at 30 September 2010. This increase in the current tax receivable reflects an increase in expenditure on our pharmaceutical programmes; however the current amount reclaimable is capped at the level of PAYE and NIC paid by the Group.

Current liabilities

Current liabilities representing trade and other payables, other taxation and social security, accruals and deferred income and other payables increased from £1.13 million at 30 September 2010 to £2.63 million at the current year end primarily due to the recognition of unbilled costs of research and development activities.

Equity

Share capital and share premium at 30 September 2011 have broadly remained unchanged at £3.47 million and £77.28 million respectively. During the year the Group issued 124,539 new ordinary shares for cash consideration of £0.01 million following the exercise of share options.

Cash flow

Net cash used in operating activities for the year was £6.42 million, an increase from £4.44 million in the previous year reflecting our continued focus on the development of our pharmaceutical programmes.

We expect net cash outflow to continue as we progress the development of our pharmaceutical programmes primarily Cogane™ in the Phase II proof of concept and dose range finding study (CONFIDENT-PD) which commenced recruitment in November 2010. We also continue to maintain our strong relationships with disease specific charities which may result in additional funding being available.

Outlook

Following the start of recruitment onto the CONFIDENT-PD clinical study, we look forward to continuing the development of our pharmaceutical pipeline during the remainder of 2011 and into 2012. This development work will also include the completion of the investigations into the effects of Cogane™ in ALS and Myogane™ in glaucoma; which may, funding dependent, allow us to initiate further efficacy indicating trials in additional indications. We also expect to complete the current phase of the P61 programmes.

In line with our virtual operational structure, we will continue to outsource the majority of our operations to specialist external organisations enabling us to operate with a low headcount and minimal infrastructure. This lean operational structure confers substantial cost and technical benefits as the nature and range of our activities change as our programmes progress through the various stages of development. Efficiency and cost control continue to be a key focus.

Forward looking statements

Certain information included in these statements is forward looking and involves risk and uncertainties that could cause results to differ materially from those expressed or implied by the forward looking statements.

Forward looking statements include, without limitation, projections relating to results of operations and financial conditions, market estimates, the Company's plans and objectives for future operations, including future revenues, financial plans and expected expenditures and divestments. All forward-looking statements in this report are based on information known to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.

It is not reasonably possible to itemise all of the many factors and specific events that could cause the Company's forward looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of the Company.

Principal risks and uncertainties

The nature of pharmaceutical development is such that there are significant inherent risks due to the long and complex development process.

Below are those principal risks and uncertainties that the Board considers could have a material impact on the Group's operational results, financial condition and prospects. These risks are not in any particular order of priority and there may be other risks that are either currently unknown or not considered material which could have a similar impact on the Group's business in the future.

The Board reviews each area of the business at least annually to identify material risks and the controls in place to manage these risks.

Industry risk

In common with other research and development stage businesses, Phytopharm's business risks relate principally to the success of its development programmes and to the need to fund its operations through these. The success of the Groups programmes depends upon the quality of the design and the implementation of each programme. The progress of the development programmes therefore represents the best indicator of the Group's performance. 

Financial risk

The Group expects to continue to make losses until it is able to increase its revenues sufficiently. Additional funds such as charitable income, collaboration deals and/or further financing may be required to allow further scope for product development. The availability and timing of such additional external funds represent a material uncertainty, although the Group currently has sufficient funds to finance its operational activities for at least the next twelve months.

Clinical and regulatory risk

Successful commercialisation of the Group's products is likely to depend on successful progress through clinical studies and registration. Development of product candidates involves a lengthy and complex process, and products may not meet the necessary requirements in terms of toxicity, efficacy or safety, or the relevant regulators may not agree with the conclusions of the Group's research and may require further testing or withhold approval altogether.

Competition risk

The Group's success depends on acceptance of the Group's products by the markets, including physicians and third party payers, and consequently the Group's progress may be adversely affected if it is unable to achieve market acceptance of its products. Factors which may affect the rate and level of market acceptance of any of the Group's products include the existence or entry on to the market of superior competing products or therapies and the price of the Group's products compared to competing products and overall cost effectiveness of the product.

Intellectual property risk

The Group's success depends in part on its ability to obtain and maintain protection for its intellectual and proprietary information, so that it can stop others from making, using or selling its inventions or proprietary rights. The Group's patent applications may not be granted and its existing patent rights may be successfully challenged and revoked.

Counterparty risk

The Group relies on third party organisations to conduct its clinical trials and to manufacture its products. If the relationship with, or performance of, any of these partners is adversely affected, the Group's results or operations may be adversely impacted.

The Group also derives revenue or financial support from its collaborators and expects to derive additional support from partnering with certain charitable organisations. If these relationships are adversely affected, or if the products involved fail to continue to make satisfactory progress, the Group's results or operations may be adversely impacted.

Foreign exchange risk

The Group records its transactions and prepares its financial statements in sterling. Where possible the Group maintains natural hedges by matching foreign currency income with foreign currency expenditure. The Group incurs expenditure in foreign currency relating principally to clinical trials which may exceed any revenues in foreign currencies. To the extent that income and expenditure in foreign currencies are not matched, fluctuations in exchange rates between sterling and foreign currencies, principally USD and EUR, may result in realised or unrealised foreign exchange gains and losses. Where there is certainty of the amount and timing of expenditure of foreign currencies, the Group may purchase financial instruments to minimise any foreign exchange gains or losses. Where the timing and / or the amount to be received is uncertain, risk management is more difficult and the Group will use financial instruments wherever possible. To the extent that financial instruments are not utilised, any fluctuations in foreign exchange movements may have a material adverse impact on the results from operating activities.

Unaudited consolidated statement of comprehensive income
For the year ended 30 September 2011

		2011		2010
		Unaudited		Audited
	Note	£		£
Revenue	2	66,659		696,854
Cost of sales		-		(87,447)
Gross profit		66,659		609,407
Other income		-		17,120
Operating expenses	3	(8,613,800)		(5,129,037)
Operating loss		(8,547,141)		(4,502,510)
Finance income		375,685		289,825
Loss before taxation		(8,171,456)		(4,212,685)
Taxation	4	513,126		411,171
Loss and total comprehensive income for the year		(7,658,330)		(3,801,514)
Basic and diluted loss per ordinary share (pence)	5	(2.2)		(1.3)

All revenues and expenses shown above were generated from continuing operations.

Unaudited consolidated balance sheet
As at 30 September 2011

		2011		2010
		Unaudited		Audited
	Note	£		£
Assets
Property, plant and equipment		83,646		112,904
		83,646		112,904
Non-current assets
Trade and other receivables	6	459,954		480,974
Current tax receivable		479,229		411,171
Money market investments		14,500,000		22,500,000
Cash and cash equivalents		3,074,476		1,108,171
Current assets		18,513,659		24,500,316
Total assets		18,597,305		24,613,220
Liabilities and equity
Trade and other payables	7	2,633,307		1,134,915
Current liabilities		2,633,307		1,134,915
Equity attributable to owners of the parent
Ordinary shares	8	3,468,019		3,466,774
Share premium		77,273,731		77,278,113
Merger reserve		(204,211)		(204,211)
Accumulated loss		(64,583,541)		(57,062,371)
Total shareholders' equity		15,963 998		23,478,305
Total liabilities and equity		18,597,305		24,613,220

Unaudited consolidated statement of changes in equity
For the year ended 30 September 2011

		Unaudited ordinary shares	Unaudited share premium		Unaudited merger reserve		Unaudited accumulated losses		Unaudited Total
		£		£	£		£	£
Balance at 1 October 2009		945,484	55,709,052		(204,211)	(53,312,914)			3,137,411
Comprehensive income
Loss attributable to owners of the parent		-	-		-	(3,801,514)			(3,801,514)
		-	-		-	(3,801,514)			(3,801,514)
Transactions with owners:
Issue of ordinary shares		2,521,920	21,569,061		-	-			24,090,351
Purchase of shares in Phytopharm plc		-	-		-	(3,885)			(3,8851)
Credit in respect of share options		-	-		-	55,942			55,942
Transactions with owners		2,521,290	21,569,061		-	52,057			24,142,408
Balance at 30 September 2010		3,466,774	77,278,113		(204,211)	(57,062,371)			23,478,305
Balance at 1 October 2010		3,466,774	77,278,113		(204,211)	(57,062,371)			23,478,305
Comprehensive income
Loss attributable to owners of the parent		-	-		-	(7,658,330)			(7,658,330)
Transactions with owners:
Issue of ordinary shares		1,245	5,618		-	-			6,863
Purchase of shares in Phytopharm plc		-	-		-	(373)			(373)
Credit in respect of share options		-	-		-	137,533			137,533
Transactions with owners		1,245	5,618		-	137,160			144,023
Balance at 30 September 2011		3,468,019	77,283,731		(204,211)	(64,583,541)			15,963,998

Unaudited consolidated cash flow statement

For the year ended 30 September 2011

	Unaudited		Audited
	2011		2010
	£		£
Cash flow from operating activities
Operating loss	(8,547,141)		(4,502,510)
Depreciation	49,804		67,198
Impairment of intangible asset	-		99,400
Gain on disposal of property, plant and equipment	(24,743)		(4,108)
Share option charge	137,533		55,942
	(8,384,547)		(4,284,078)
Changes in working capital
Decrease/(increase) in trade and other receivables	17,054		(90,254)
Increase/(decrease) in trade and other payables	1,498,392		(611,905)
Decrease in inventories	-		249,474
Cash used in operations	(6,869,101)		(4,736,763)
Taxation received	445,068		294,855
Net cash used in operating activities	(6,424,033)		(4,441,908)
Cash flows from investing activities
Purchase of property, plant and equipment	(20,800)		(85,128)
Sale of property, plant and equipment	24,997		11,500
Investment in shares of Phytopharm plc	(373)		(3,885)
Interest received	379,651		127,124
Net cash generated from investing activities	383,475		49,611
Cash flows from financing activities
Issue of shares	6,863		25,212,904
Share issue costs	-		(1,122,553)
Movement in money market investments	8,000,000		(22,500,000)
Net cash generated from financing activities	8,006,863		1,590,351
Movements in cash and cash equivalents in the year	1,966,305		(2,801,946)
Cash and cash equivalents at the beginning of the year	1,108,171		3,910,117
Cash and cash equivalents at end of the year	3,074,476		1,108,171
Money market investments at the end of the year	14,500,000		22,500,000
Total cash, cash equivalents and money market investments	17,574,476		23,608,171

Notes to the unaudited financial information

For the year ended 30 September 2011

1.     General information, accounting policies and basis of preparation

Phytopharm plc is a public limited company incorporated in England and Wales and domiciled in the UK with a listing on the London Stock Exchange under the symbol PYM. The address of its registered office is Lakeview House, 2 Lakeview Court, Ermine Business Park, Huntingdon, Cambridgeshire PE29 6UA.

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to both years presented, unless otherwise stated. 

Basis of preparation

This condensed consolidated financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared on a historical cost basis.

The results shown for 2011 are unaudited. The results shown for 2010 are audited. The consolidated financial information contained in this announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts of the Company in respect of the year ended 30 September 2010 were approved by the Board of directors on 21 December 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph nor any statement under Section 498 of the Companies Act 2006.

Going concern

At 30 September 2011, the Group had cash resources (being cash and cash equivalents and money market investments) of £17,574,476.

After making enquiries and taking into account management's estimate of future expenditure, the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operation for the foreseeable future.

Accounting policies

The results for 2011 reflect the accounting policies as stated in Note 1 to the financial statements in the Annual Report and Accounts filed with Companies House in the United Kingdom for the financial year ended 30 September 2010, except for those matters relating to the adoption of new standards as set out below.

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 October 2010.

Current financial year

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 October 2010.

Annual Improvements 2009 (those improvements effective 1 January 2010);

Annual improvements 2010 (those improvements effective 1 July 2010);

Amendment to IFRS1, 'First time adoption on additional exemptions' (effective 1 January 2010);

Amendment to IFRS1, 'First time adoption on Financial instrument disclosures' (effective 1 July 2010);

Amendment to IFRS2, 'Share based payments' on group cash settled share-based payment transactions (effective 1 January 2010);

Amendment to IAS 32, 'Financial instruments Presentation' on classification of rights issues (effective 1 February 2010);

IFRIC 15, 'Agreements for construction and real estates' (effective 1 January 2009 but EU endorsed from 1 January 2010); and

IFRIC 19, 'Extinguishing financial liabilities with equity instruments' (effective 1 July 2010).

Future financial years

The following standards and interpretations to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 October 2011.

Annual improvements 2010 (those improvements effective 1 January 2011);

Amendment to IFRS 7, 'Financial instrument disclosures' enhancing disclosures about transfers of financial assets (effective 1 July 2011);

IFRS 9, 'Financial instruments' on 'classification and measurement' (effective 1 January 2013);

IFRS 10, 'Consolidated financial statements' (effective 1 January 2013);

IFRS 11, 'Joint arrangements' (effective 1 January 2013);

IFRS 12, 'Disclosure of interests in other entities' (effective 1 January 2013);

IFRS 13, 'Fair value measurement' (effective 1 January 2013);

Amendment to IAS 24, 'Related party (effective 1 January 2011);

Amendment to IAS 19, 'Employee benefits' resulting from post employment benefits (effective 1 January 2013); and

Amendment to IAS 27, 'Consolidated and separate financial statements' reissued as 'separate financial statements' (effective 1 January 2013).

The Directors do not anticipate that the adoption of these standards will have a significant impact on the financial statements of the Group when they come into effect for periods commencing on or after 1 October 2011

The following standards and interpretations to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 October 2011 and are not expected to be relevant to the Group.

Amendment to IFRS1, 'First time adoption' on hyperinflation and fixed dates (effective 1 July 2011);

Amendment to IAS 12, 'Income taxes' relating to recovery of underlying assets (effective 1 January 2012);

IAS 28, 'Investments in associates' reissued as 'Investments in associates and joint ventures' (effective 1 January 2013);

Amendment to IAS 1, 'Presentation of financial statements' (effective 1 July 2012); and

Amendment to IFRIC 14, 'Prepayments of minimum funding requirement' (effective 1 January 2011).

 

2.     Business and geographical segments

The Group's development and other functions operating across all the Group's research programmes are managed centrally and are reported internally as a single business. This also applies to the Group's marketed products. The chief operating decision-maker has been identified as the Executive Directors of Phytopharm plc. The Executive Directors review the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segment based on these reports. Accordingly, the Directors consider that there is only one reporting segment.

Revenue by final destination of the sale is as follows:

	2011		2010
	Unaudited		Audited
Revenue	£		£
South Africa	61,898		-
Europe	4,761		566,717
Asia	-		130,137
	66,659		696,854
Other income
USA (i)	-		17,120
	66,659		713,974

(i)            Represents grant income received

 

All non-current assets are located in the United Kingdom (2010: all).

3.     Operating expenses

	2011		2010
	Unaudited		Audited
	£		£
Research and development	7,461,246		4,013,486
Administrative expenses	1,152,554		1,115,551
	8,613,800		5,129,037

 

4.     Taxation

	2011		2010
	Unaudited	Audited
	£		£
Current tax credit:
UK corporation tax
Current UK corporation tax credit on loss for the year	479,229		411,171
Adjustment in respect of prior year	33,897		-
Total current tax credit	513,126		411,171

No corporation tax liability arises on the results for the year due to the loss incurred (2010: £nil). The Company has taken advantage of the research and development corporation tax credits introduced in the Finance Act 2000 whereby a company may surrender corporation tax losses incurred on research and development expenditure for a corporation tax refund.

5.     Loss per ordinary share

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year after the deduction of the weighted average number of the ordinary shares held by the employee benefit trust during the year.

For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion for all dilutive potential ordinary shares. The Company has no dilutive potential ordinary shares in issue because it is loss making.

	2011		2010
	Unaudited	Audited
Attributable loss (£)	(7,658,330)		(3,801,514)
Weighted average number of shares in issue	346,619,213		284,234,443
Basic and diluted loss per ordinary share (pence)	(2.2)		(1.3)

6.     Trade and other receivables

	2011		2010
	Unaudited		Audited
	£		£
Trade receivables	5,581		-
Other receivables	86,395		59,926
Prepayments and accrued income	367,978		421,048
	459,954		480,974

 

7.     Trade and other payables

	2011		2010
	Unaudited		Audited
	£		£
Trade payables	665,109		354,219
Other payables	37,945		11,502
Other taxation and social security	10,662		36,364
Accruals and deferred income	1,919,591		732,830
	2,633,307		1,134,915

 

8.     Ordinary shares

	2011		2010
	Unaudited		Audited
	£		£
Issued and fully paid up
346,801,972 (2010: 346,677,433) ordinary shares of 1 pence each	3,468,020		3,466,774

In the year ended 30 September 2011 the Company issued 124,539 new Ordinary Shares of one pence each for a total cash consideration of £6,863 following the exercise of share options. The nominal value of these shares was £1,245.

In the year ended 30 September 2010 the Company issued 252,129,042 new Ordinary Shares of one pence each for a total cash consideration of £24,090,351 after the expenses of issue. The nominal value of these shares was £2,521,290.

Netted against the accumulated loss are purchases of shares in Phytopharm plc, which relate to the Phytopharm Share Incentive Plan 2007, under which the Company issued one "Matching Share" for every one "Partnership Share" purchased by the employee. All shares are held by the scheme Trustees until the shares vest unconditionally with the employee. During the year ended 30 September 2011 the Group purchased 5,171 Ordinary Shares of one pence (2010: 39,296) at a total cost of £373 (2010: £3,885).

9.     Post balance sheet events

A number of changes to the UK corporation tax system were announced in the March 2011 Budget Statement. Certain of these tax changes were substantively enacted in the Finance Act 2011 in July 2011. The impact of this has been reflected in the unrecognised potential deferred tax asset.

Certain other changes are expected to be enacted in future Finance Acts, including further reductions in the main rate of corporation tax by 1% per annum to 23% by April 2014. As at 30 September 2011, there is an unrecognised deferred tax asset of £12,957,785. If these changes were applied to this the impact would be to reduce the potential deferred tax asset by £1,036,000 (being £518,000 recognised in the year ending 30 September 2012 and £518,000 recognised in the year ending 30 September 2013).

10.   Related party transactions

There are no material related party transactions.

 

END

 

 

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