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ReGen Therapeutics (ADI)

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Thursday 20 September, 2007

ReGen Therapeutics

Interim Results

ReGen Therapeutics PLC
20 September 2007



20 September 2007


ReGen Therapeutics Plc


Unaudited Interim Results for the Six Months' to 30 June 2007


CHAIRMAN'S STATEMENT


Summary of key events:


ColostrininTM

   •February 2007 announcement of study showing ColostrininTM increases
    lifespan, neurological and motor performance in mice prone to premature
    ageing.
   •June 2007 Professor Marian Kruzel - Chief Scientific Officer presented
    preclinical and human clinical data showing that ColostrininTM has the
    potential to 'support healthy cognitive function'.
   •July 2007 ColostrininTM successfully launched in its first market
    Australasia.


Zolpidem

   •March 2007 Discovery Channel programme on zolpidem screened in the UK.
   •August 2007 completion of zolpidem trial in South Africa - further
    studies to be undertaken.


Funding

   •February 2007 £1.138m raised.
   •June 2007 £1.348m raised.


Commentary:


This is the first set of results announced under IFRS with comparisons against
the restated 2006 interim results. The first half sales figures of £117,000 up
127% relate entirely to Guildford Clinical Pharmacology Unit Limited (GCPUL)
and, if we take into account the work that GCPUL does for ReGen on zolpidem it
is in fact profitable for the period. We comment later on zolpidem that we have
further research activities planned but this is not immediate and as investors
will be aware there is very considerable competition in the UK Phase I/II
clinical trials market and indeed much business has been moved to Eastern Europe
and further afield. As required by IFRS, we conducted an impairment review of
the goodwill that arose on the acquisition of GCPUL taking in to account these
market conditions. This has resulted in the goodwill being written down by
£349,000 in the Income Statement. I would stress that this is a non-cash item
and all the impairment has been taken in the first half of the year.


The other major item of interest in the Income Statement is the 30% increase in
research and development costs, which shows the Company's rising commitment to
research and development, particularly the cost of the zolpidem clinical trial.
We expect this trend to continue.


ColostrininTM


The successful launch of ColostrininTM in Australasia its first market should be
seen as a validation of the Company's long-term research effort. This launch was
preceded by Professor Marian Kruzel presenting at the 2007 International
Congress on Natural Medicine in Australia. Professor Kruzel presented both
pre-clinical and human clinical data showing that ColostrininTM:


  • Reduces the production of intracellular reactive oxygen species (ROS).
    These increase with old age and are associated with tissue and metabolic
    damage;
  • Prevents the aggregation of beta-amyloid and its consequent
    neurotoxicity. This is a protein associated with Alzheimer's disease;
  • Increases the lifespan of mice prone to premature ageing by around 30%
    when given in the drinking water;
  • Is well-tolerated and without adverse effects; and
  • Had beneficial effects on the cognitive and functional performance of
    around 150 human subjects in clinical trials with mild to moderate
    Alzheimer's disease.


We look forward to the launch in the USA in the fourth quarter of 2007 and the
above comments from Professor Kruzel provide a firm basis for optimism. We
continue to seek licensing partners to enable launch in other markets as soon as
possible.


Our peptide programme continues to develop. We are currently assessing the
results from several activity assays with our peptides and will be putting the
most potent of these through further tests to evaluate their therapeutic
potential.


Zolpidem


A sensitive programme was put out on the Discovery Channel which we felt
reflected well on the potential for the drug and I think showed ReGen in a
favourable light. Anyone who saw the programme or has viewed the video has been
impressed by it and we will be showing it at our Christmas presentation to the
City. Most importantly, however, from our recently completed trial in South
Africa we now have conclusive proof that a 2.5mg sublingual spray is
non-sedating. Consequently we now have enough evidence to take this project a
stage further. I would stress that our estimates of the market size here remain
in excess of £4bn.


GCPUL


GCPUL was acquired for two reasons, to help us with our own research work and
also to do outside work. GCPUL has been extremely useful with the zolpidem
project and this would have cost us a great deal more if we had done it with an
external CRO. Unfortunately, conditions in the CRO market changed for the worse
over the last year and we have not generated the orders necessary to make the
Company profitable without ReGen business. This is a non-core business and we do
not want to put resources into it, which detract from our mainstream activity -
drug development. Whilst, it continues to serve this purpose it is useful, but
we are reviewing our options.


Summary:


The year so far has been an exciting one for us. The encouraging launch of
ColostrininTM in Australasia, the successful completion of the zolpidem clinical
trial and fundraising of £2.486m has immensely strengthened the Company's
position and I look forward to building on this over the next year.


I would like to thank our shareholders for their continued support.


Percy Lomax
Executive Chairman


A copy of this interim statement is being sent to shareholders and copies are
available from the Company's offices at 73, Watling Street, London EC4M 9BJ or
by visiting our website at www.regentherapeutics.com



For further information contact:


Percy Lomax
ReGen Therapeutics Plc
Executive Chairman
Tel No 020 7153 4920


Roland Cornish
Beaumont Cornish Limited
Tel No 020 7628 3396


Nick Bealer
King & Shaxson Capital Limited
Tel No 020 7426 5986


Andrew Marshall
Greycoat Communications
Tel: 020 7960 6007
Mobile: 07785 297111




ReGen Therapeutics Plc

Interim Results for the Six Months' to 30 June 2007

Consolidated Income Statement
For the six months ended 30 June 2007
                                                           Restated   Restated
                                               Unaudited  Unaudited   Audited
                                                6 months   6 months   Year to
                                                   to         to
                                               30-Jun-07  30-Jun-06  31-Dec-06

                                                 (£000)     (£000)     (£000)

Revenue                                             117         55        405

Cost of sales                                       (31)        (4)      (209)
                                                ---------  ---------  ---------

Gross profit                                         86         51        196

--------------------------------------------------------------------------------
Research and development costs                      467        360        826

Other administrative costs                          880        776      1,673

Impairment of intangible assets                     349         10         20
                                  
--------------------------------------------------------------------------------

Administrative costs                             (1,696)    (1,146)    (2,519)
                                                ---------  ---------  ---------
Operating loss                                   (1,610)    (1,095)    (2,323)

Finance income                                       18         11         36
Finance costs                                        (5)        (5)        (8)
                                                ---------  ---------  ---------

Loss before taxation                             (1,597)    (1,089)    (2,295)

Income tax credit                                    73         40        118
                                                ---------  ---------  ---------

Loss after taxation                              (1,524)    (1,049)    (2,177)
                                                ---------  ---------  ---------

Loss per share (basic and diluted)                (0.18)p    (0.20)p    (0.37)p






ReGen Therapeutics Plc

Consolidated Balance Sheet
                                                      Restated      Restated
                                         Unaudited    Unaudited      Audited
                                           As at        As at         As at
                                         30-Jun-07    30-Jun-06     31-Dec-06
                                           (£000)      (£000)        (£000)

Assets
Non current assets
Goodwill                                      964         1,223         1,313
Intangible assets                             969         1,031           947
Property, plant and equipment                  23            21            26
                                          ---------     ---------     ---------

Total non current assets                    1,956         2,275         2,286
                                          ---------     ---------     ---------

Current assets
Inventories                                    14            11            20
Trade and other receivables                   556           176           230
Tax receivable                                 50            40           115
Cash and cash equivalents                   1,280           617           508
                                          ---------     ---------     ---------

Total current assets                        1,900           844           873

Total assets                                3,856         3,119         3,159
                                          ---------     ---------     ---------

Liabilities
Current liabilities
Trade and other payables                      496           563           632

Non current liabilities
Provisions                                    100             -           100
                                          ---------     ---------     ---------

Total liabilities                             596           563           732
                                          ---------     ---------     ---------

Total net assets                            3,260         2,556         2,427
                                          =========     =========     =========

Equity
Capital and reserves
Share capital - Issued and fully paid       1,026           583           694
                              - Deferred    5,298         5,298         5,298
Share premium                              13,973        11,112        11,992
Other reserves                                266           266           266
Retained earnings                         (17,303)      (14,703)      (15,823)
                                          ---------     ---------     ---------

Total equity                                3,260         2,556         2,427
                                          =========     =========     =========





ReGen Therapeutics Plc

Consolidated Cash Flow Statement
                                                           Restated    Restated
                                            Unaudited     Unaudited    Audited
                                            6 months to  6 months to   Year to
                                             30-Jun-07    30-Jun-06   31-Dec-06

                                               (£000)       (£000)      (£000)


Loss for the financial period                   (1,524)      (1,049)    (2,177)

Impairment of goodwill                             349           10         20
Amortisation of intangible assets                   13           16        127
Depreciation of property, plant and
equipment                                            4            3          8
Share option charge                                 44            -          7
Taxation                                            65          (40)       (34)
                                               ---------    ---------   --------

Operating cash flows before movements in
working capital and provisions                  (1,049)      (1,060)    (2,049)

Changes in inventories                               6           (7)       (16)
Changes in receivables                            (326)         133         (2)
Changes in payables                               (135)         (48)        19
                                               ---------    ---------   --------

Net cash outflow from operating activities      (1,504)        (982)    (2,048)
                                               ---------    ---------   --------

Cash flows from investing activities
Purchase of subsidiary, net of cash
acquired                                             -          (21)       (21)
Purchase of property, plant and equipment           (1)          (3)       (13)
Purchase of intangible assets                      (36)         (68)       (92)
                                               ---------    ---------   --------

Net cash used in investing activities              (37)         (92)      (126)
                                               ---------    ---------   --------

Cash flows from financing activities
Proceeds from issue of share capital             2,487          820       1930
Expenses paid on share issue                      (174)         (64)      (183)
                                               ---------    ---------   --------

Net cash from financing activities               2,313          756      1,747
                                               ---------    ---------   --------

Net increase/(decrease) in cash and cash
equivalents                                        772         (318)      (427)

Opening cash and cash equivalents                  508          935        935
                                               ---------    ---------   --------

Closing cash and cash equivalents                1,280          617        508
                                               ---------    ---------   --------







ReGen Therapeutics Plc

Consolidated Statement Of Changes In Equity

                                      Share     Share     Other     Retained
                                     Capital   Premium   Reserves   Earnings    Total

                                      (£000)   (£000)     (£000)     (£000)    (£000)

At 1 January 2006                     5,798    10,438        242    (13,653)    2,825

New shares issued                        83       674         24          -       781
Loss for the period and
total recognized income and
expenses                                  -         -          -     (1,050)   (1,050)
Share based charges                       -         -          -          -         -
                                      -------  --------   --------    -------   -------

Net increase/(decrease) to
shareholders' equity                     83       674         24     (1,050)     (269)
                                      -------  --------   --------    -------   -------

At 30 June 2006                       5,881    11,112        266    (14,703)    2,556

New shares issued                       111       880          -          -       991
Loss for the period                       -         -          -     (1,127)   (1,127)
Share based charges                       -         -          -          7         7
                                      -------  --------   --------    -------   -------

Net increase/(decrease) to
shareholders' equity                    111       880          -     (1,120)     (129)
                                      -------  --------   --------    -------   -------

At 31 December 2006                   5,992    11,992        266    (15,823)    2,427

New shares issued                       332     1,981          -          -     2,313
Loss for the period                       -         -          -     (1,524)   (1,524)
Share based charges                       -         -          -         44        44
                                      -------  --------   --------    -------   -------

Net increase/(decrease) to
shareholders' equity                    332     1,981          -     (1,480)      833
                                      -------  --------   --------    -------   -------

At 30 June 2007                       6,324    13,973        266    (17,303)    3,260
                                      -------  --------   --------    -------   -------



Notes to the Consolidated Financial Statements
Six Months Ended 30 June 2007

1. Basis of preparation

ReGen Therapeutics Plc has previously prepared Group financial statements in
accordance with UK Generally Accepted Accounting Practice ('UK GAAP'). From 1
January 2007 the Group is required to prepare its consolidated financial
statements under International Accounting Standards and International Financial
Reporting Standards (collectively 'IFRS') as adopted by the European Union
('EU'). The Group's date of transition to IFRS is 1 January 2006 being the start
of the previous period that has been presented as comparative information.

The financial information presented in this document has been prepared on the
basis of the IFRS in issue that are either endorsed by the EU and effective at
31 December 2007 or are expected to be endorsed before the financial statements
are approved and authorised for issue. Based on these adopted and unadopted
IFRS, the directors have made assumptions about the accounting policies expected
to be applied when the first annual IFRS statements are prepared for the year
ended 31 December 2007. In addition, the adopted IFRS that will be effective in
the annual financial statements for the year ending 31 December 2007 are still
subject to change and to additional interpretations and therefore can not be
determined with certainty. Accordingly, the accounting policies for that annual
period will be determined finally only when the annual financial statements for
the Group are prepared for the year ending 31 December 2007.

The Interim Statement does not constitute statutory accounts as defined in
section 240 of the companies Act 1985 has not been audited by the Company's
auditors BDO Stoy Hayward LLP. The comparatives for the full year ended 31
December 2006 are not the Company's full statutory accounts for that year. A
copy of the statutory accounts for that year, which were prepared under UK GAAP,
have been delivered to the Registrar of Companies. The auditors' report on those
accounts was unqualified and included references to going concern which the
auditors drew attention to by way of emphasis without qualifying their report
and did not contain a statement under Section 237(2)-(3) of the Companies Act
1985.

2. Implementation of IFRS

In implementing the transition to IFRS, the Group has followed the requirements
of IFRS 1 'First Time Adoption of International Financial Reporting Standards',
which in general requires IFRS accounting policies to be applied fully
retrospectively in deriving the opening balance sheet at the date of transition.
IFRS 1 contains certain mandatory exceptions and some optional exemptions to
this principal of retrospective application. Where the Group has taken advantage
of the exemptions they are noted below. The adoption of IFRS represents an
accounting change only and does not affect the operations or cash flow of the
Group. The principal areas of impact are described below.

Goodwill and Business Combinations (IFRS 3)
The Group has elected to take the exemption not to apply IFRS 3 retrospectively
to business combinations occurring prior to the date of transition to IFRS.
Goodwill arising on such acquisitions has therefore been retained at its UK GAAP
carrying value of £1,187,000 at 1 January 2006. Under IFRS 3 this goodwill is
subject to impairment reviews and is not amortised.

Research and development (IAS 38)

Research expenditure is recognised in the income statement in the year in which it is incurred.

Development expenditure is recognised in the income statement in the year in
which it is incurred unless it meets the recognition criteria of IAS
38'Intangible Assets'. Regulatory and other uncertainties generally mean that
such criteria are not met. Where, however the recognition criteria are met,
intangible assets are capitalised and amortised on a straight-line basis over
their useful economic lives from product launch. This policy is in line with
industry practise. Previously under UK GAAP all development expenditure was
expensed.


Employee benefits (IAS19)

The Group has complied with the provisions of IAS 19 and has accrued holiday pay
for all staff from the date of transition. A charge of £16,000 has been recorded
in the IFRS income statement for the six months to 30 June 2006.

Reconciliations to previously presented financial statements are set out in 
notes 7 to 11.

4. Taxation

The interim tax credit reflects an estimate of the likely effective tax rate 
for the period.

5. Loss per share

The basic loss per share has been calculated based on the loss on ordinary
activities after taxation of £1,524,000 and the weighted average number of
shares in issue for the period of 829,490,896 (June 2006: 516,834,400) and
(December 2006: 595,192,463)

There are 46,914,285 share options in issue that are currently anti-dilutive.

6. Share Capital

On 6 February 2007, the Company issued 151,841,668 ordinary shares of 0.1p each
at a premium of 0.65p per share for a consideration of £1,138,813.

On 14 June 2007, the Company issued 179,741,600 ordinary shares of 0.1p each at
a premium of 0.65p per share for a consideration of £1,348,062.




7. Reconciliation Of Loss From UK GAAP To IFRS For The Year Ended 31 December 2006

                                                                                      Effect of
                                                                                      transition
                                                                                          to
                                                          Commentary      UK GAAP        IFRS            IFRS

                                                                           (£000)       (£000)          (£000)

Revenue                                                                      405            -             405

Cost of sales                                                               (209)           -            (209)
                                                                         ---------    ---------       ---------

Gross profit                                                                 196            -             196

---------------------------------------------------------------------------------------------------------------
Research and development costs                                               826            -             826
Other administrative costs                                                 1,673            -           1,673
Goodwill amortisation                                         (a)             96          (96)              -
Impairment of intangible assets                               (a)              -           20              20
---------------------------------------------------------------------------------------------------------------

                                                                         ---------    ---------       ---------
Administrative costs                                                       2,595          (76)          2,519

Operating loss                                                            (2,399)          76          (2,323)

Finance income                                                                36            -              36
Finance costs                                                                 (8)           -              (8)
                                                                         ---------    ---------       ---------

Loss before taxation                                                      (2,371)          76          (2,295)

Income tax credit                                                            118            -             118
                                                                         ---------    ---------       ---------

Loss after taxation                                                       (2,253)          76          (2,177)
                                                                         ---------    ---------       ---------

Loss reported under previous UK                                                                        (2,253)
GAAP
Goodwill amortisation                                                                                      96
Impairment charge                                                                                         (20)
                                                                                                      ---------

Total adjustment to profit                                                                                 76
                                                                                                      ---------

Total loss reported under IFRS                                                                         (2,177)
                                                                                                      ---------




8. Reconciliation Of Loss From UK GAAP To IFRS For The 6 Months Ended 
   30 June 2006

                                                         Effect of
                                                       transition to
                                Commentary  UK GAAP        IFRS          IFRS

                                             (£000)       (£000)        (£000)

Revenue                                          55               -         55

Cost of sales                                    (4)              -         (4)
                                            ---------       ---------  ---------

Gross profit                                     51               -         51

--------------------------------------------------------------------------------
Research and development costs                  360               -        360
Other administrative costs      (b)             760              16        776
Goodwill amortisation           (a)              48             (48)         -
Impairment of intangible assets (a)               -              10         10
                               
--------------------------------------------------------------------------------

Administrative costs                          1,168             (22)     1,146
                                            ---------       ---------  ---------
Operating loss                               (1,117)             22     (1,095)

Finance income                                   11               -         11
Finance costs                                    (5)              -         (5)
                                            ---------       ---------  ---------

Loss before taxation                         (1,111)             22     (1,089)
                                            ---------       ---------  ---------

Income tax credit                                40               -         40

Loss after taxation                          (1,071)             22     (1,049)
                                            ---------       ---------  ---------

Loss reported under previous UK                                         (1,071)
GAAP
Goodwill amortisation                                                       48
Impairment charge                                                          (10)
Employee benefits                                                          (16)
                                                                       ---------

Total adjustment to profit                                                  22
                                                                       ---------

Total loss reported under IFRS                                          (1,049)
                                                                       ---------





9. Reconciliation Of Equity From UK GAAP To IFRS At 1 January 2006

                                                 Effect of transition
                                                          to
                                       UK GAAP           IFRS            IFRS

                                        (£000)          (£000)          (£000)

Assets
Non current assets
Goodwill - carrying value at 31/12/05    1,187                    -      1,187
Intangible assets                          980                    -        980
Property, plant and equipment               21                    -         21
                                       ---------            ---------  ---------

Total non current assets                 2,188                    -      2,188
                                       ---------            ---------  ---------

Current assets
Inventories                                  4                    -          4
Trade and other receivables                227                    -        227
Tax receivable                              82                    -         82
Cash and cash equivalents                  942                    -        942
                                       ---------            ---------  ---------

Total current assets                     1,255                    -      1,255

Total assets                             3,443                    -      3,443
                                       ---------            ---------  ---------

Liabilities
Current liabilities
Trade and other payables                   618                    -        618

Non current liabilities
Provisions                                   -                    -          -
                                       ---------            ---------  ---------

Total liabilities                          618                    -        618
                                       ---------            ---------  ---------

Total net assets                         2,825                    -      2,825
                                       =========            =========  =========

Equity
Capital and reserves
Share capital - Issued and fully paid      500                    -        500
                           - Deferred    5,298                    -      5,298
Share premium                           10,438                    -     10,438
Other reserves                             242                    -        242
Retained earnings                      (13,653)                   -    (13,653)
                                       ---------            ---------  ---------

Total equity                             2,825                    -      2,825
                                       =========            =========  =========





10. Reconciliation Of Equity From UK GAAP To IFRS At 30 June 2006

                                                            Effect of
                                                            transition
                                                                to
                                      Commentary  UK GAAP      IFRS       IFRS

                                                   (£000)     (£000)     (£000)

Assets
Non current assets
Goodwill                              (a)           1,185         38      1,223
Intangible assets                                   1,031          -      1,031
Property, plant and equipment                          21          -         21
                                                  ---------  ---------  ---------

Total non current assets                            2,237         38      2,275
                                                  ---------  ---------  ---------

Current assets
Inventories                                            11          -         11
Trade and other receivables                           176          -        176
Tax receivable                                         40          -         40
Cash and cash equivalents                             617          -        617
                                                  ---------  ---------  ---------

Total current assets                                  844          -        844

Total assets                                        3,081          -      3,081
                                                  ---------  ---------  ---------

Liabilities
Current liabilities
Trade and other payables              (b)             547         16        563

Non current liabilities
Provisions                                              -          -          -
                                                  ---------  ---------  ---------

Total liabilities                                     547         16        563
                                                  ---------  ---------  ---------

Total net assets                                    2,534         22      2,556
                                                  =========  =========  =========

Equity
Capital and reserves
Share capital - Issued and fully paid                 583          -        583
                           - Deferred               5,298          -      5,298
Share premium                                      11,112          -     11,112
Other reserves                                        266          -        266
Retained earnings                                 (14,725)        22    (14,703)
                                                  ---------  ---------  ---------

Total equity                                        2,534         22      2,556
                                                  =========  =========  =========




11. Reconciliation Of Equity From UK GAAP To IFRS At 31 December 2006

                                                             Effect of
                                                             transition
                                                                 to
                                      Commentary   UK GAAP      IFRS       IFRS

                                                   (£000)      (£000)     (£000)

Assets
Non current assets
Goodwill                              (a)            1,237         76      1,313
Intangible assets                                      947          -        947
Property, plant and equipment                           26          -         26
                                                  ----------  ---------  ---------

Total non current assets                             2,210         76      2,286
                                                  ----------  ---------  ---------

Current assets
Inventories                                             20          -         20
Trade and other receivables                            230          -        230
Tax receivable                                         115          -        115
Cash and cash equivalents                              508          -        508
                                                  ----------  ---------  ---------

Total current assets                                   873          -        873

Total assets                                         3,083          -      3,083
                                                  ----------  ---------  ---------

Liabilities
Current liabilities
Trade and other payables                               632          -        632

Non current liabilities
Provisions                                             100          -        100
                                                  ----------  ---------  ---------

Total liabilities                                      732          -        732
                                                  ----------  ---------  ---------

Total net assets                                     2,351         76      2,427
                                                  ==========  =========  =========

Equity
Capital and reserves
Share capital - Issued and fully paid                  694          -        694
                           - Deferred                5,298          -      5,298
Share premium                                       11,992          -     11,992
Other reserves                                         266          -        266
Retained earnings                                  (15,899)        76    (15,823)
                                                  ----------  ---------  ---------

Total equity                                         2,351         76      2,427
                                                  ==========  =========  =========




12. Commentary on adjustments


(a)  Under IAS 38 goodwill is not amortised and so goodwill previously
     amortised under UK GAAP is reversed. Instead, impairment must be 
     considered.

(b)  Under IAS 19 employee benefits, such as holiday pay, are provided for at 
     the balance sheet.



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