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Lipoxen PLC (XEN)

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Wednesday 06 May, 2009

Lipoxen PLC

Final Results

RNS Number : 7336R
Lipoxen PLC
06 May 2009
 



For Immediate Release

6 May 2009



Lipoxen PLC

('Lipoxen' or 'the Company')


Final Results for the year ended 31 December 2008


London, UK, 6 May 2009 - Lipoxen PLC (AIM:LPX), a bio-pharmaceutical company specialising in the development of high value differentiated biologicals, vaccines and siRNA delivery, is pleased to announce its final results for the year ended 31 December, 2008.



Key Operational Highlights:

  • Positive Phase I results for ErepoXen, Lipoxen's long-acting erythropoietin candidate

  • Successful Phase I results for Sulixen, Lipoxen's long-acting insulin for the treatment of diabetes

  • Positive pre-clinical studies supporting ImuXen, Lipoxen's vaccine delivery technology

  • Collaboration with Cambridge Biostability Limited to develop Lipoxen's novel vaccine delivery technology

  • Strengthened IP position with the granting of two key patents in the US relating to Lipoxen's innovative DNA vaccine delivery technology

  • Received a grant from IAVI - the leading International AIDS Vaccine Initiative to develop an HIV-AIDS vaccine

  • Dr Peter Laing promoted to Chief Operating Officer in September 

  • Appointment of Mr Igor Nikolaev as a Non-Executive Director in October



Key Financial Highlights:

  • Turnover of £1.1m (2007: £905k)

  • Pre-tax loss of £3.8m (2007: £3.3m)

  • Non-cash component of total pre-tax loss £2.1m (2007: £1.5m)

  • Net cash at period end of £602k (2007: £2.4m)

  • Net asset value at 31st December £3m (2007: 2007: £6.3m)

  • Loss per share basic and fully diluted of 2.89p (2007: 2.78p)

  • Net asset value per share - basic 2.48p (2007: 5.30p)

  • Net asset value per share - fully diluted 2.38p (2007: 5.01p)



Post Period End Highlights:

  • Positive Final Phase I data for ErepoXen, Lipoxen's long-acting erythropoietin candidate (see separate announcement released today).

  • Collaboration with Glide Pharma for the delivery of Lipoxen's long-acting SuliXen (insulin) product using Glide's Solid Dose Injector technology

  • Collaboration with Cambridge Biostability and positive pre-clinical data on novel and enhanced influenza vaccine based on the combination of Lipoxen's novel vaccine delivery system 'ImuXen' and CBL's proprietary VitRIS stabilisation platform



Commenting on the results, M. Scott Maguire, CEO of Lipoxen, said:

'We are extremely pleased with Lipoxen's performance during 2008 and the first quarter of 2009. We have made good progress across all our technology platforms, signing several collaborations with key industry players, and Lipoxen's current R&D portfolio now comprises five clinical and pre-clinical programmes across a range of biotherapeutics and vaccines. 


'In addition to strengthening our IP position and receiving grant from IAVI, a prestigious organisation and a fantastic endorsement of our technology, we look forward to announcing a further grant in the area of malaria in the near future.  The Board believes Lipoxen is now in an exciting position to capitalise on future growth.'



For further information:

Lipoxen PLC

+44 (0)20 7691 3583

M. Scott Maguire, Chief Executive Officer




Singer Capital Markets (nominated adviser)

+44 (0)20 3205 7500

Jeff Keating / Claes Spång 




Noble & Co

+44 (0)20 7763 2200

John Llewellyn-Lloyd / Sam Reynolds




Buchanan Communications

+44 (0)20 7466 5000

Mary-Jane Elliott, Lisa Baderoon, Rebecca Skye Dietrich, Catherine Breen



Notes to Editors

About Lipoxen

Lipoxen plc is a biopharmaceutical company focused on the development of new and improved biologic drugs and vaccines. Lipoxen has three proprietary patented technology platforms:


  • PolyXen - for extending the efficacy and half life of biologic drugs

  • ImuXen - for creating new vaccines and improving existing vaccines

  • SiRNAblate - for the delivery of siRNA


Lipoxen's technology is designed to improve the efficacy, safety, stability, biological half-life and immunologic characteristics of its products.  


Lipoxen has multiple drug and vaccine programmes in development. Two products are in clinical development, SuliXen, a long acting insulin and ErepoXen, a long-acting erythropoietin (EPO). Lipoxen's preclinical pipeline includes Factor XIII and vaccines against HIV and influenza.  


The Company has a low-risk business model and outlicenses its proprietary technologies to biopharmaceutical companies that have strong manufacturing and marketing capabilities. Lipoxen currently has commercial agreements with some of the world's leading biotechnology and pharmaceutical companies including Baxter, Schering-Plough, Sanofi-Aventis, the Serum Institute of India Limited, Genentech, Amgen and Genzyme.  


Lipoxen, which was formed as a spin-out from The School of Pharmacy at the University of London. The Company trades on the AIM Market of the London Stock Exchange under the ticker symbol LPX. More information can be found at the Company's website: www.lipoxen.com.


CHAIRMAN'S STATEMENT


Lipoxen is an innovator in biologics, vaccines and siRNA and it is becoming increasingly clear that our proprietary delivery platforms could have significant potential to improve existing and create new drugs and vaccines. With three important platform technologies at Lipoxen there is growing evidence to suggest that the Company has a potentially significant capability to 'make a difference' by providing key unmet needs in the global healthcare system.  


Notwithstanding that this Chairman's Statement accompanies our audited financial statements for the 12 months ended 31st December 2008, I believe that it is appropriate to report to you on the considerable progress made by the Company, not just in the past 12 months, but over the 3 years since its Admission to AIM in January 2006. In this period, your Company has matured from a novel IP company to one which can now point to success with clinical trials on both of our current lead proprietary biotherapeutic products and to remarkable progress and pre-clinical achievements on our vaccine and siRNA platforms which show great promise to revolutionise the way in which new vaccine and therapies will be developed. Lipoxen has now signed several key collaborations with major industry partners who now use the Company's various technology platforms. These partnerships endorse the Company's technology and de-risk Lipoxen's development pipeline.  


Our Platform Technologies


Each platform addresses many of the drug and vaccine development problems confronted by large pharmaceutical and biotech companies.  Our platforms are used in development projects by some of the largest firms in the industry including Baxter, Serum Institute of India, Schering-Plough, International AIDS Vaccine Initiative, IAVI, Amgen, Genentech as well as other non-disclosed partners.  


Each of our patent-protected technology platforms is based on the use of materials found naturally in the human body. They each improve the performance of approved biologic drugs, create novel vaccines for the prevention of major diseases and overcome the foremost problem of drug delivery in siRNA applications.  They are described in greater detail below: 


1.  PolyXen

PolyXen is a versatile polymer technology, used to facilitate the creation of 'biosuperior' drugs with improved patient safety and convenience, using less of the 'active' drug material but with enhanced performance, reduced injections, and a reduction of adverse side effects.  The PolyXen platform is being applied to the Company's two current proprietary product candidates, insulin (SuliXen - for the treatment of both Type 1 and Type 2 diabetes) and for EPO (ErepoXen for the treatment of anaemia in cancer patients and those on renal dialysis).  


PolyXen is also offered on a 'paid for research' basis to major pharmaceutical companies for the development of new drug therapies and for 'life cycle management' projects where extant patents are nearing the end of their validity, but may have the opportunity to be extended by reformulating the existing drug on the PolyXen platform. In either case, Lipoxen will seek to out-


licence its technology to individual pharmaceutical companies each for their specific therapeutic area and/or sales territory. In this regard we are currently working with three of the world's six largest biotechnology companies. As PolyXen is broadly applicable to 150 known, approved and marketed biologic drug actives (and around 350 in the clinic and 1,000 in development) the Company will seek to enter into multiple license transactions, a strategy which has the potential to yield significant cash via upfront, milestone and royalty payments.


PolyXen is based on the use of one of the body's natural materials (polysialic acid - a substance that coats most of the cells in the body) to prolong the life of the active drug in the circulation; it is non-toxic, facilitates reduced frequency and amount of dosage, improves the stability of the formulation, preserves the biological activity of the active protein drug, reduces adverse immunes responses and is biodegradable unlike PEG (pegylated ethylene glycol) the currently leading drug delivery system. PEG is used in a number of billion-dollar marketed drugs but has a number of intractable characteristics that make it unsuitable for many of the new generation of drugs coming to the market; the PolyXen platform can now be offered as an alternative - and one with broader applicability.


PolyXen is also expected to allow Lipoxen to play a pivotal role in the emerging market for 'biosuperiors', being therapies using approved 'actives' but which, by virtue of an enhanced delivery system such as PolyXen, offer a superior performance compared to the original product and can be offered to the market on more cost effective - but nevertheless patent-protected terms. Many of the world's largest pharmaceutical companies are actively pursuing the biosuperior route. The ability to bring to market differentiated biotherapeutics with superior performance characteristics will likely be crucial in ensuring their commercial success, in, not only the developed world, but also in the developing world. As their patent-protected position in the developed world is eroded through patent expiry and new governmental and regulatory frameworks, 'Big Pharma' and 'Big Bio' are increasingly turning their attention to the developing world in order to build new long-term markets.


The Company expects that its two current products will first enter the Russian market in early 2011 leading to the foundation of long-term sustainable revenue streams and enabling the further roll-out of these products across the developing world with India representing the next key market opportunity. These two programs are being externally funded through their entire Russian and Indian approval processes.


The potential addressable market for protein and peptide drugs for which PolyXen is widely applicable has been growing at an estimated 10% CAGR since 2002 and is expected to reach US$70 billion next year.


2.  ImuXen

Imuxen is a vaccine liposomal nano-technology which has achieved pre-clinical success both in its ability to significantly improve a vaccine's performance together with the potential to deliver single-shot protective immunity -  a hugely important feature for the distribution of many modern vaccines for preventable diseases such as influenza, and HIV.  


Your Company is building a strong reputation in the field of novel vaccine development and each of these projects demonstrates Lipoxen's desire and commitment to help solve some of the gravest problems afflicting humanity.  The ImuXen platform is the foundation for the creation of new vaccines for the treatment and prevention of major diseases and for reformulating existing vaccines with the potential to deliver protective immunity in a single dose. Further pivotal benefits are that they offer:


  • reduced dosing regimes;
  • reduced side-effects (as the antigens are released slowly into the immune system);
  • the ability to make combination vaccines (for, say, our combined Hepatitis B-E vaccine);
  • the opportunity to make vaccines containing numerous antigens to combat infections such as influenza where protection against multiple strains of the virus has to be achieved;
  • relative ease of manufacture.


Our vaccine technology addresses a currently fast-growing (at around 26% CAGR) market expected to reach circa.$25bn per annum by 2011 and we are currently working with two of the world's largest vaccine companies and on several large humanitarian initiatives, with proof of concept preclinical studies being carried out in externally funded research programs for HIV and influenza:


  • HIV - A proprietary product candidate being funded by the International AIDS Vaccine Initiative (IAVI)) 
  • Influenza - A proprietary product candidate being developed in collaboration and funded by the UK government. 


There is an important 'crossover' aspect to the above-named programs, in that, although they are stand-alone product candidates in their own right, the work done using the Company's ImuXen technology variously on these candidates indicates that ImuXen could have a potentially major impact on the world of vaccine storage and distribution by avoiding any need for refrigeration.

 

In 2007, 2.1 million deaths were attributed to HIV infection. This equates to 4 deaths per minute. The Company is working alongside the International AIDS Vaccine Initiative (IAVI) on the improved delivery of HIV vaccines; IAVI is the world's leading AIDS vaccine organization, and the development of an HIV vaccine highlights the growing interest in Lipoxen's ground-breaking vaccine technology.


The recent current global swine flu epidemic is another example of how Lipoxen's technology could be of significant health benefit in a world crisis.  Our influenza vaccine candidate, currently in the development pipeline uniquely addresses the need for speed of production, distribution and stockpiling of the vaccine. 



3.  Gene silencing siRNA technology

Lipoxen's gene silencing siRNA technology can overcome the single greatest issue in siRNA drug applications being the critical need to deliver the payload intact and directly to the targeted cells by protecting the 'active' such that the body does not excrete it before it can play its role. 'siRNA' is a Nobel prize-winning technology which, by means of 'silencing' unwanted genetic activity (by stopping the production of the proteins that are responsible for the disease), has the potential to more effectively treat or cure a significant number of important therapeutic challenges. In principle, it works by directly targeting the therapeutic agent to a specifically identified genetic sequence, something made possible only by the completion in 2003 of the mapping of the human genome. However, to be effective, the interfering RNAi needs to be delivered intact to the appropriate cells in the body - a crucial feature that has proved hitherto to be something of an intractable problem for the drug developers.


In 2008, Lipoxen generated compelling data on applying its liposomal entrapment technology platform to this delivery problem. In a widely accepted pre-clinical model, our work showed that we are able to eliminate from the circulation the bad cholesterol gene. To date, no technical approach has been able to achieve this 'holy grail' of delivery but our work suggests that Lipoxen may well have achieved this very important goal. Lipoxen's technology may, therefore, be able to solve what may be the biggest hurdle to realising the full therapeutic potential of this Nobel prize winning technology, which, if delivered properly, offers a new paradigm in the treatment of a broad range of diseases.


Our key therapeutic areas and the pipeline

 

1.    Biotherapeutics:

Lipoxen's first two proprietary product candidates in the field of biotherapeutics are:

 

a)   ErepoXen (long acting EPO) 

In early 2008 Lipoxen's business made a major breakthrough when we announced very exciting positive Phase I results with our partner, Serum Institute of India, India's biggest biotech company (and a circa 28% shareholder in the Company), for ErepoXen, our long-acting erythropoietin candidate. ErepoXen is targeting the $9bn market for EPO therapeutics which are used to treat anaemia in renal dialysis and cancer patients.


The trial results, which showed ErepoXen to be safe and well tolerated, long acting and with no adverse clinical events in the trial, have been independently assessed by one of the UK's leading nephrologists who confirms the potential for this product candidate to have a once-per-month dosing regime, compared to the world's leading US$9B per year EPO product which has a one to three times per week dosing profile. 


The final analysis of the entire 64 subject Phase I Indian trial is planned to be published in May 2009. A Phase II Indian trial is expected to start in Q3-2009 contemporaneous with a Russian Phase II/III trial. The Company hopes that our EPO candidate will come to market in Russia in 2011 with India following some time later when the more extensive Indian clinical trial stages have been completed.

b) SuliXen (long-acting insulin)

In the course of FY2008, we announced that in a Phase I study, SuliXen®, a long-acting novel insulin candidate for Types 1 and 2 diabetes, had shown the candidate to be safe and well-tolerated. The trial data also demonstrated that we are progressing towards the goal of having a superior formulation to Sanofi Aventis's Lantus, the world's most-prescribed insulin which generated sales of over US$3.2 billion in 2008. (€2.45B). We expect to further advance this candidate into Phase II clinical studies during the course of 2009. With the World Health Organization expecting over 300m Type 1 diabetes sufferers worldwide by 2025, there is a clear market need for alternative insulin formulations such as SuliXen. 


This is undoubtedly an exciting commercial opportunity for Lipoxen and we plan to begin Phase II clinical studies with SuliXen later this year. SuliXen is targeting a novel insulin market that is currently worth US$13 billion.

 

2. Vaccines:


In 2008 we made significant progress with our second delivery platform, ImuXen, with pre-clinical studies supporting the proposition of our technology being a key factor in the generation of novel vaccines and superior products in the rapidly-growing vaccine market. The progress that we have made is attracting considerable interest from some of the world's leading vaccine companies and research institutions:


  • We strengthened our IP position with the granting of two key patents in the US relating to our innovative DNA vaccine delivery technology. This ground-breaking technology is designed to produce not only novel vaccines for major diseases but ones which can generate a more effective immune response with the potential for single-shot protective immunity with reduced side effects.

  • We received a grant from the International Aids Vaccine Initiative (IAVI), the world's leading HIV-AIDS vaccine organization based in New York, for the research and development of an HIV-AIDS vaccine. Lipoxen is one of only a select few institutions to have received such a grant from IAVI reflecting the potential of our technology platform to help cure or prevent a disease that kills a person every 15 seconds.

  • We also have a novel influenza vaccine in development and recently announced very encouraging data regarding this program. The data is timely given the outbreak of swine flu that has garnered global attention. We will continue with the clinical development of this program either through grants or with a commercial partner.


These projects demonstrate Lipoxen's commitment to humanitarian projects that could provide significant healthcare benefits to people in the developing world.


3. siRNA Delivery:


In 2008, Lipoxen generated its very exciting first data on applying its liposomal entrapment technology platform to the delivery of siRNA, thereby demonstrating an important new step towards solving what is generally recognised as being the biggest problem in this new and massively 'hot button' field of drug therapies based on the ability of our technology to deliver intact the drug 'payload' direct to the targeted cells.


Progress with Collaborations


Establishing collaborations continues to be a key element of Lipoxen's growth strategy as we aim to achieve the broad adoption of our drug and vaccine delivery technologies. These collaborations are also important in helping build the Company's revenue base. We have signed a number of new collaborations with some of the world's largest pharmaceutical and biotech companies and we continue to believe that we are very well positioned to leverage our technology further through additional agreements in the pharmaceutical sector. A brief review on these collaborations is set out below.


  • With a view to nominating a 'lead product' candidate, our next milestone, in 2010, (probably in Q2), the Company continues to work extensively with Baxter Healthcare (Lipoxen's 'lead' Licensee for our PolyXen technology) on the development of a new Factor VIII product for the treatment of, primarily, haemophilia - a US$1.3 billion per annum market for Baxter. 

  • In October 2008 we joined forces with Cambridge Biostability Limited, the University of Cambridge and the UK Government's Health Protection Agency to develop vaccines that do not require refrigerated distribution. Such vaccines could greatly reduce the number of deaths from preventable infections in the developing world through achieving both improved vaccine efficacy and by eliminating the need for 'cold-chain' distribution. The requirement to keep vaccines at low temperatures from the point of manufacture to the point of administration is the major reason that many people in the developing world do not receive available appropriate protection against a number of infectious diseases. Fundamental to achieving this goal is the development of new vaccine formulations able to circumvent the refrigeration requirement, something that may now be achieved using Lipoxen's proprietary ImuXen technology. We will be reporting data on this project later this year.

  • Our collaboration with the Barbara Davis Centre for Childhood Diabetes will explore whether SuliXen, our long-acting insulin formulation, has the potential to treat or prevent the underlying causes of Type I diabetes. This collaboration is particularly exciting as, not only is the Barbara Davis Center for Childhood Diabetes one of the world's largest diabetes programmes specialising in Type-I diabetes research and care (for both children and adults), but the agreement is also in line with our strategy of maximising the benefits that we could bring to the overall diabetes population. Insulin is a US$13 billion global market. We will be reporting data on this project later this year.
  • In May 2008 we successfully concluded a grant application with the world's leading AIDs vaccine organization (IAVI) which underpins our research into the development of a novel HIV/AIDS vaccine using our ImuXen technology. We will be reporting data on this project later this year.
  • In September 2008 the Company entered into a Materials Transfer Agreement (MTA) with Angel Biotechnology to investigate the potential for Angel's GCSF to be incorporated into our proprietary PolyXen technology for the development of a long-acting GCSF (Granulyte Colony Stimulating Factor). GCSF stimulates the bone marrow to produce more white blood cells. One of the main side effects of chemotherapy drugs is a reduction in the number of white blood cells. GCSF can be given to people in this situation to stimulate the bone marrow to produce new white cells more quickly which can shorten the period during which they are at risk of developing a serious infection. The intention is to develop a polysialic GCSF formulation that will offer patients and treating physicians a formulation with a superior performance to the current GCSF biosimilar products which are already marketed worldwide as treatments for neutropenia and have a market value of US$3.9 billion. 
  • In October 2008 we joined with Nottingham University to work on the improved delivery of antiviral drugs for the treatment of liver disease caused by Hepatitis C. Once we have developed this new formulation we believe we can significantly extend its commercial potential through 2009 and beyond in the of field drug delivery to the liver by taking advantage of the opportunity to resurrect several 'near-miss' new drug candidates from major pharma companies that were being developed for the treatment of HCV infection. We expect to be in a position to report data on this project end of this year.
  • In March 2009 we announced a collaboration with Glide Pharmaceutical Technologies Limited for the delivery of Lipoxen's long-acting SuliXen (insulin) product using the Glide's Solid Dose Injector (SDI) technology. We expect to be in a position to report data on this project Q3 this year.
  • In April 2009, through Lipoxen's collaboration with Cambridge Biostability, Lipoxen announced positive preclinical results for the delivery of a novel and enhanced influenza vaccine based on the combination of Lipoxen's novel vaccine delivery system 'ImuXen' and CBL's proprietary VitRIS stabilisation platform. ImuXen was shown to increase the effectiveness of influenza vaccines by approximately 30-fold and the VitRIS formulation enhances the efficacy of the vaccine by a further 4-fold. The study highlights the potential to radically increase output of vaccine doses from existing manufacturing facilities - projected 10-fold advantage in vaccine production rates and perhaps most importantly there is no requirement for 'cold-chain' of refrigerated trucks, warehouses and fridges.



Summary of the pipeline


The positive data that has been generated by our scientists and collaborators has allowed Lipoxen to make significant progress in implementing its strategy of leveraging the Company's patent-protected delivery technologies and proprietary products while also focusing on building a broad pipeline of research collaborations that could lead to material revenue-generating licence agreements. This progress is reflected in that fact that we now have:


  • 2 proprietary candidates in the clinic (Sulixen and ErepoXen) addressing current markets valued at US$13B and US$9B per annum respectively for Insulin and EPO, each with identified paths to market in Russia and India - both candidates being in programs funded by existing major shareholders; 

  • A pre-clinical vaccine candidate relating to HIV, which, against continuing success in the clinic, will be fully funded externally;

  • A pre-clinical Influenza candidate funded by a UK government program; in early trials this product candidate has demonstrated that our 'ImuXen' technology generates compelling data. The recent current global swine flu epidemic is another example of how Lipoxen's technology could be of significant health benefit in a world crisis. Our influenza vaccine candidate uniquely addresses the need for speed of production, distribution and stockpiling of the vaccine;

  • A considerable pipeline of research collaborations with many of the world's largest pharmaceutical and biotech companies on our three technologies.


Intellectual Property


In 2008 Lipoxen continued to strengthen its IP portfolio following the allowance of two key patents in the US relating to DNA vaccine delivery. Realising that a strong intellectual property position is key to our future success, the allowance of these patents further strengthened the Company's position as a leader in the development of DNA vaccine delivery technology and helped ensure that Lipoxen's advanced ImuXen technology continues to be at the forefront of novel vaccine development. The attractiveness of this technology is already evident from the increasing number of vaccine companies who are approaching us to evaluate the potential of ImuXen delivery.


Board Changes and Management Appointments


In October 2008 we announced the appointment of Mr Igor Nikolaev to the Company's Board, as a Non-executive Director. Mr Nikolaev was formerly Deputy Director of the Russian branch of the international law firm Clyde and Company. Prior to this, he was at Rothman's International in St. Petersburg where he was an in-house lawyer and advised on the merger with British American Tobacco. Mr Nikolaev has also worked at Herbert Smith in London. His practice areas are corporate and commercial law, litigation and privatisation.



In August 2008 Dr Peter Laing was promoted from Director of Business Development to the position of Chief Operating Officer. Dr Laing joined Lipoxen in March 2002 and has played a leading role in developing the Company's R&D and Business Development operations and in the establishment of collaborative and licensing deals with the some of the World's top biotech companies.


Dr Ajay K. Agrawal was appointed Head of Business Development in August 2008. Dr Agrawal has extensive experience in the biotech and pharma industries worldwide. He was a founder of the drug delivery company, polyMASC Pharmaceuticals plc, London in 1995. PolyMASC Pharmaceuticals was the first UK biotech company spun-out from a university (Royal Free HospitalSchool of Medicine) that was directly listed on AIM, and subsequently merged with a NASDAQ-listed company, Valentis Inc (USA) in 1999 to become one of the biggest companies in the delivery of biologics at that time.


Summary and Outlook

 

We have an attractive drug pipeline including two high-value differentiated biotherapeutics, ErepoXen and SuliXen, both of which have shown in the clinic that they have potential advantages over existing billion-dollar products in these high value market opportunities. We also have three novel vaccine candidates funded by external parties targeting HIV, and influenza diseases which each cause millions of deaths per year.


The quality and progress that we have made with our two technology platforms, PolyXen and ImuXen - which are the basis of our own drug pipeline - means that these technologies are now attracting a much higher level of interest from the world's leading pharmaceutical and biotech companies. I am confident that we will be able to capitalise on this interest by signing a number of revenue-generating license deals for Lipoxen in the coming years. I would also hope that over the next year that we will be able to sign our first major licence deal based on our siRNA delivery platform 


In 2009 we will be striving to produce further positive clinical results on both ErepoXen and SuliXen as well as driving our vaccine development programmes towards the clinic. We will also be looking to announce some exciting results from the collaborations we entered into in 2008 as well as looking to enter into more revenue-generating license deals which will take advantage of our proprietary technologies.


2009 is expected to see both SuliXen and ErepoXen move to Phase II clinical trials while our ImuXen (vaccine) and siRNA technologies will be applied to pre-clinical studies across a broad range of therapeutic areas; a Phase I EPO Western trial is also planned to commence in Q3 this year. I am confident that new collaborations based on our PolyXen technology for protein drug applications will be initiated both as to potential proprietary candidate development and for new 'Big Pharma' licensing opportunities



In the first quarter of 2009, I am pleased to report that Company has operated on a 'cash flat' basis ending Q1-09 with the same level of cash as at the end of FY2008.  Of course, in order to further expand our level of effort on the development and optimisation of our technology platforms your Board expects to address the capital markets in the current period as opportunistically as possible in consideration both of the massive progress that Lipoxen can demonstrate it has made since coming to market in January 2006 (being the last date at which institutional (rather than strategic) investors were 'tapped' for new capital), as well as in full recognition of the continuing fragile state of the global equity capital markets. Your Company has worked hard to prudently use its limited capital resources and I am confident that, at such time as new funding is sought, the Lipoxen investment case will be well received. 


The Directors and I would like to thank all of the management and staff for their substantial contribution to our successes in the last year and I look forward to their continuing commitment in the future. 



Brian Richards, CBE

Non-Executive Chairman


London
: 5th May 2009


The financial results for the Group in the period under review were:



2008

2007


£'000

£'000

Turnover

1,160

905

Total pre-tax losses for period

3,791

3,291

Non-cash component of total pre-tax loss

2,142

1,455

Net cash at 31st December

602

2,446

Net asset value as 31st December 

2,973

6,336





P

P

Loss per share - basic and fully diluted

2.89

2.78




Net asset value per share - basic

2.48

5.30

Net asset value per share - fully diluted

2.38

5.01


Analysis of the total administrative expenses included within the income statement reveals that the majority of the cash-settled expenses (69.5%) went into research and development activities. This reflects the Board's continuing commitment to running an efficient company and focus the resources on R&D which proved again to have been well-placed as reflected in the excellent clinical results achieved in the period under review. The year-on-year reduction in core administrative costs of the business of circa 17% also reflects continuing tight cost controls on all 'non science' costs. In circumstances where cash is an absolute resource, the Group has maintained its aggregate cash spend to an amount fractionally less than in 2008 as shown in the following table.





2008

2008

2007

2007

Cash settled expenses



£'000

%

£'000

%

R&D expense - cash settled



2,004

69.5

1,836

63.4

Other expenses - cash settled


879

30.5

1,058

36.6

   


---------

---------

---------

--------

Total expenses - cash settled


2,883

100.0

2,894

100.0




---------

=======

---------

=======

Non cash items







Equity settled share option expense



94


672


Equity settled R&D expenses



1,773


520


Depreciation



275


263





---------


-----------




2,142


1,455



---------


----------


TOTAL ADMINISTRATIVE COSTS

5,025


4,349



=======


=======



Net operating cash outflow in the period - as reported in the consolidated cash flow statement (post) - was £1,772k compared to £1,157k in 2007. It is notable that this net figure was much influenced by the increase in receivables (£636k) at the end of 2008 compared to end-2007 offset somewhat by a £181k increase in current payables. Nevertheless, a modified (as the Group holds no inventories) Quick Assets valuation at the noted period end dates is shown below:


2008

30 Jun 08

2007


£'000

£'000

£'000

Trade and other receivables (excluding prepayments)

772

322

143

Cash

602

1,213

2,446

Current liabilities (including accruals)

(475)

(212)

(294)


---------

---------

---------

Net 'quick assets'

899

1,323

2,295


---------

---------

---------


The above table is intended to demonstrate that, the Group's net 'cash burn' in the second half year reduced to circa £71k pcm compared to the first half when the net 'burn' was closer to circa £162k pcm; this reflects inter alia the increased revenue generated by the Group on paid-for development projects , a feature that has maintained into the current financial year. As a consequence, while it will be necessary to seek additional capital in the new financial year, a continuing lower rate of 'burn' better positions the Group to be flexible as to exactly when the capital markets are approached.


The successful scientific developments achieved in the period under review have been the genesis of significant new collaborations with the world's leading pharmaceutical and biotech companies. These collaborations are the basis for generating license deals that could lead to material upfront, milestone and royalty payments. The imperative to establish (and maintain) such business development initiatives will remain at the core of our activities in 2009.



Colin Hill

Chief Financial Officer


London
: 5th May 2009

  


CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31st DECEMBER 2008




2008

2007


Note

£

£













REVENUE

3

1,160,324

905,273



----------------

----------------

ADMINISTRATIVE EXPENSES



Research and development expenditure

3,776,636

2,355,616

Administrative expenses

1,247,817

1,993,140



----------------

----------------

Total


5,024,453

4,348,756



----------------

----------------

OPERATING LOSS

4

(3,864,129)

(3,443,483)




Finance income

72,926

152,751


----------------

----------------

LOSS BEFORE TAXATION

(3,791,203)

(3,290,732)




Income tax credit

7

332,916

-



----------------

----------------

LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


(3,458,287)

(3,290,732)



==========

==========




Loss per share (pence) - basic and fully diluted

9

(2.89)p

(2.78)p



===========

===========



All of the activities of the Group are classed as continuing.


The Company has elected to take the exemption under section 230 of the Companies Act 1985 to not present the parent company income statement.



CONSOLIDATED BALANCE SHEET

AS AT 31st DECEMBER 2008






2008

2007


Note

£

£

£






NON-CURRENT ASSETS





Property, plant and equipment

10


665,972

866,552

Goodwill

11


1,061,476

1,061,476

Other receivables

13


-

500,000



------------------

------------------



1,727,448

2,428,028




------------------

CURRENT ASSETS





Trade and other receivables

13

1,118,559


1,755,640

Cash and cash equivalents

602,065


2,445,936


------------


------------------


1,720,624


4,201,576

CURRENT LIABILITIES





Trade and other payables

14

474,849


293,733



------------


------------------

NET CURRENT ASSETS


1,245,775

3,907,843


------------------

------------------

NET ASSETS

2,973,223

6,335,871




============

===========











EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT





Share capital 

15


2,232,790

2,231,468

Share premium account



22,508,793

22,508,165

Reverse acquisition reserve



(8,252,127)

(8,252,127)

Retained earnings



 (13,516,233)

(10,151,635)




------------------

------------------

TOTAL EQUITY



2,973,223

6,335,871




============

============


The financial statements were approved and authorised for issue by the directors on 5th May 2009 and were signed on their behalf by:



SCOTT MAGUIRE - Director                    COLIN HILL - Director


 

 

COMPANY BALANCE SHEET

AS AT 31st DECEMBER 2008




2008

2007


Note

£

£

£






NON-CURRENT ASSETS





Property, plant and equipment

10


480,000

640,000

Investments

12


9,045,030

9,045,030

Other receivables

13


4,862,481

3,158,356



----------------

----------------



14,387,511

12,843,386




----------------

CURRENT ASSETS





Trade and other receivables

13

12,823


9,852

Cash and cash equivalents

564,739


2,368,608


---------


----------------


577,562


2,378,460

CURRENT LIABILITIES





Trade and other payables

14

180,793


81,799



---------


----------------

NET CURRENT ASSETS


396,769

2,296,661


----------------

----------------

NET ASSETS

14,784,280

15,140,047


===========

===========









EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY





Share capital 

15


2,232,790

2,231,468

Share premium account



22,508,793

22,508,165

Retained earnings



(9,957,303)

(9,599,586)




----------------

----------------

TOTAL EQUITY



14,784,280

15,140,047




===========

===========


The financial statements were approved and authorised for issue by the directors on 5th May 2009 and were signed on their behalf by:






SCOTT MAGUIRE - Director    COLIN HILL - Director





CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31st DECEMBER 2008



  


2008

2007


Note


   £

£






Cash flows from operating activities

   17


(2,177,421)

(1,309,836)

Interest received



72,926

152,751

Taxation received



332,916

-




--------------------

--------------------

Net cash outflow from operating activities  



(1,771,579)

(1,157,085)




--------------------

--------------------

Cash flows from investing activities





Purchase of property, plant and equipment



(74,242)

(159,201)




--------------------

--------------------

Net cash used in investing activities



(74,242)

(159,201)




--------------------

--------------------

Cash flows from financing activities





Issue of equity share capital 



1,950

1,072,000




--------------------

--------------------






Net decrease in cash and cash equivalents  



(1,843,871)

(244,286)






Cash and cash equivalents at beginning of year



2,445,936

2,690,222




--------------------

--------------------

Cash and cash equivalents at end of year



602,065

2,445,936




===============

===============








COMPANY CASH FLOW STATEMENT

FOR THE YEAR ENDED 31st DECEMBER 2008



  


2008

2007


Note

   

  £

£   






Cash flows from operating activities

17


(173,394)

(364,018)

Interest received



71,700

147,216




-------------------

-------------------

Net cash outflow from operating activities  



(101,694)

(216,802)




-------------------

-------------------

Cash flows from investing activities





Loan to subsidiary



(1,704,125)

(1,114,425)




-------------------

-------------------

Net cash used in investing activities



(1,704,125)

(1,114,425)




-------------------

-------------------

Cash flows from financing activities





Issue of equity share capital 



1,950

1,072,000   




-------------------

-------------------






Net decrease in cash and cash equivalents  



(1,803,869)

(259,227)






Cash and cash equivalents at beginning of year



2,368,608

2,627,835




-------------------

-------------------

Cash and cash equivalents at end of year



564,739

2,368,608




==============

==============










  NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31st DECEMBER 2008


3.    SEGMENTAL ANALYSIS


    The revenue and loss before tax are attributable to the one principal activity of the group. The net assets of the Group at 31st December 2008 and 31st December 2007 are wholly attributable to the principal activity. The Group comprises one primary business segment for reporting purposes. There is no secondary reporting segment.


     An analysis of turnover (by location of customer) is given below:


2008

2007


£

£

United States

1,060,636

745,165

Europe

99,688

160,108


----------------

----------------


1,160,324

905,273


===========

===========

     

    An analysis of the Group's total assets by location is given below:


2008

2007


£

£

United Kingdom

2,493,223

5,695,871

India

480,000

640,000


----------------

----------------


2,973,223

6,335,871


===========

===========


4.    OPERATING LOSS


    Operating loss is stated after charging/(crediting):



2008

2007


£

£




Depreciation of owned property, plant and equipment

274,822

263,314

Operating lease costs:



 - land and buildings

-

1,517

Net (profit)/loss on foreign currency translation

(87,903)

13,765

Research and development costs - cash settled

2,003,510

1,835,579

Research and development costs - equity settled

1,773,126

520,037

Share option expense - equity settled

93,689

671,776


===========

==========


  

7.    INCOME TAX CREDIT


    (a) Analysis of charge in the period


2008

2007


£

£

Current tax:



UK corporation tax based on the results for the year at 28.5% (2007 - 30%)

(332,916)


-


Adjustment in respect of prior periods

-

-


----------------

----------------

Total current tax 

(332,916)

-


===========

===========


    (b) Factors affecting the tax charge for the year

    

The tax assessed for the year does not reflect a credit equivalent to the loss on ordinary activities multiplied by the standard rate of corporation tax of 28.5% (2007 - 30%).


2008

2007


£

£





Loss on ordinary activities before tax


(3,791,203)

(3,290,732)



==========

===========





Loss on ordinary activities multiplied by the standard rate of corporation tax


(1,080,493)

(987,220)

Effects of:




Expenses not deductible for tax purposes


497

1,816

Fixed asset timing differences


50,208

44,087

Share options timing differences


20,361

91,283

Unrelieved tax losses arising in the year


1,009,427

850,034

Surrender of qualifying research and development costs for tax rebates


(332,916)

-



----------------

----------------

Current tax for the period


(332,916)

-



===========

===========

    

The Group has corporation tax losses available for offset against future profits of the same trade of £12,500,000 (2007 - £11,280,000). The deferred taxation asset not provided for in the accounts due to the uncertainty that future taxable profits will be available to allow recovery of the asset is approximately £3,500,000 (2007 - £3,000,000).    

 

9. EARNINGS PER SHARE

The calculation of loss per share is based on the loss of £3,458,287 (2007 - £3,290,732) and on the number of shares in issue, being the weighted average number of shares in issue during the period of 119,668,535 ordinary 0.5p shares (2007 - 118,370,247 ordinary 0.5p shares). There is no dilutive effect of share options on the basic loss per share. 





10.    PROPERTY, PLANT AND EQUIPMENT


Group

 Plant

Laboratory equipment

Computer equipment

Total


£

£

£

£

COST





At 1st January 2007

800,000

289,763

30,200

1,119,963

Additions  

-

145,072

14,129

159,201


 

---------------

----------------

----------------

--------------

At 1st January 2008

800,000

434,835

44,329

1,279,164

Additions

-

72,741

1,501

74,242


 

----------------

----------------

----------------

--------------

At 31st December 2008

800,000

507,576

45,830

1,353,406


 

===========

===========

===========

==========






DEPRECIATION





At 1st January 2007  

-

131,707

17,591

149,298

Charge for the year 

160,000

95,275

8,039

263,314


 

---------------

----------------

--------------

--------------

At 1st January 2008

160,000

226,982

25,630

412,612

Charge for the year

160,000

106,700

8,122

274,822


 

---------------

----------------

---------------

--------------

At 31st December 2008

320,000

333,682

33,752

687,434


===========

===========

===========

==========






NET BOOK VALUE





At 31st December 2008

480,000

173,894

12,078

665,972


 

===========

===========

===========

==========

At 31st December 2007

640,000

207,853

18,699

866,552


 

===========

===========

===========

==========




10.    PROPERTY, PLANT AND EQUIPMENT (continued)


Company
Plant
Laboratory equipment
Computer equipment
Total
 
£
£
£
£
COST
 
 
 
 
At 1st January 2007
800,000 
-  
800,000 
Additions       
-  
 
--------------
--------------
---------------
--------------
At 1st January 2008
800,000 
800,000 
Additions
 
--------------
---------------
---------------
--------------
At 31st December 2008
800,000 
-  
800,000 
 
===========
===========
===========
===========
 
 
 
 
 
 
DEPRECIATION
 
 
 
 
At 1st January 2007               
-  
-   
Charge for the year
160,000 
-  
-   
160,000 
 
--------------
---------------
---------------
--------------
At 1st January 2008
160,000 
-  
-   
160,000 
Charge for the year
160,000 
-  
-   
160,000 
 
--------------
---------------
---------------
---------------
At 31st December 2008
320,000 
-  
-   
320,000 
 
===========
===========
===========
============
NET BOOK VALUE
 
 
 
 
At 31st December 2008
480,000
-  
-  
480,000
 
===========
===========
===========
============
At 31st December 2007
640,000
-  
640,000
 
===========
===========
===========
============
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 





11.    GOODWILL


Group







£

COST




At 1st January 2007, 1st January 2008 and 31st December 2008



1,061,476




===========


Goodwill arising on consolidation represents the excess of the cost of the reverse acquisition over the net assets of Lipoxen Plc at the date of the business combination.


The reverse acquisition of Lipoxen Plc provided Lipoxen Tehnologies Limited with access to the AIM market to enable it to raise funds to finance the ongoing development of its technology. This access to capital markets does not satisfy the criteria for separate recognition as an intangible asset as set out in IAS 38: Intangible assets, and is therefore treated as goodwill in these financial statements.


The Group tests annually for impairment or more frequently if there are indications that goodwill might be impaired. The impairment review has been carried out on the Group as a whole.


As primarily a research and development Group, the use of discounted cash flow or similar tools is not appropriate given the inherent risks and uncertainties in the sector and the long timespans involved. Instead the Board look at longer term indicators of impairment. 


Since the date of the previous impairment review the Group has demonstrated strong technical success in the development of its PSA technologies and its preclinical liposomal entrapment, both in vivo and in vitro. The revenue generating capacity of the Group has been enhanced through this progress.


Consequently, it is the view of the Board that no impairment of the carrying value of the Group's goodwill or other assets has occurred during the year.



13.    TRADE AND OTHER RECEIVABLES


Group

Company


2008

2007

2008

2007


£

£

£

£

Due in more than one year:





Prepayments

-

500,000

-

-

Receivables from subsidiaries

-

-

   4,862,481

3,158,356


   

__________

_________

___________

__________



-

500,000

  4,862,481

3,158,356


===========

===========

=========

===========

Due within one year:





Trade receivables

704,738

111,523

-

-

Provision for impairment

-

(11,902)

-

-


________

________

________

__________


 

 

 


704,738

99,621

-

-

Other receivables

66,763

43,788

-

2,468

Prepayments

347,058

1,612,231

  12,823

7,384


----------------

----------------

------------------

----------------


1,118,559

1,755,640

12,823

9,852


===========

===========

============

===========


In October 2005, Lipoxen Technologies Limited entered into an agreement with its then major shareholder, FDS Pharma Ass, under which 15,000,000 ordinary shares were allotted in consideration for the provision by FDS of manufacturing and clinical development services. As per a Novation Agreement between FDS Pharma Ass, Lipoxen Technologies Limited and the Company dated 16th January 2006, the agreement provides for the allotment of up to 10,174,340 ordinary shares in Lipoxen Plc upon achievement of certain future milestones to the financial value of US$2,670,764 as approved by shareholders at the Extraordinary General Meeting of the Company held on 16th January 2006. An amount of £1,773,126 (2007 -£520,037) has been written off

to the income statement in the year in respect of services provided in the year by FDS. An amount of £311,725 (2007 - £2,084,851) is included in the balance sheet under prepayments in respect of services still to be provided under the agreement, of which £Nil (2007 - £500,000) is expected to be provided in more than one year from the balance sheet date.


    The carrying amount of the trade receivables is denominated in currencies as follows:


2008

2007


£

£

Pounds sterling

23,510

5,131

US dollars

681,228

94,490

   

__________

_________





704,738

99,621


===========

===========


Trade receivables are considered to be impaired if they are more than three months overdue at the date of approval of the financial statements. At 31st December 2008 trade receivables of £Nil (2007 - £11,902) were impaired and provided against. Movements on the provision for impairment of trade receivables are as follows:


2008

2007


£

£

At 1st January 2008

11,902

95,893

Unused amount reversed

(11,902)

(83,991)


__________

_________


 

At 31st December 2008

-

11,902


===========

===========

    

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security. The Directors consider that the carrying value of each class of receivable approximates to its fair value.


14.    TRADE AND OTHER PAYABLES


Group

Company


2008

2007

2008

2007


£

£

£

£

Trade payables

129,672

117,020

72,530

5,934

Social security and other taxes

45,706

36,873

513

-

Other payables

7,963

9,319

-

-

Accrued expenses

216,024

130,521

107,750

75,865

Deferred income

75,484

-

-

-


----------------

----------------

----------------

----------------


474,849

293,733

180,793

81,799


===========

===========

===========

===========


  

15.    SHARE CAPITAL

    

    Authorised share capital:


2008

2007


£

£

673,300,000 Ordinary shares of 0.5p each

3,366,500

   3,366,500

16,335,000,000 Deferred shares of 0.01p each

1,633,500

   1,633,500


----------------------

---------------------


5,000,000

   5,000,000


=============

=============

Allotted, called up and fully paid:



2008  

2007  


No

£

   No 

£

Ordinary shares of 0.5p each

119,858,085

599,290

   119,593,552

597,968

Deferred shares of 0.01p each

16,335,000,000

1,633,500

  16,335,000,000

1,633,500



-----------------


--------------



2,232,790


2,231,468



===========


==========


Following the exercise of share options, 128,875 ordinary shares of 0.5p each were issued on 19th August 2008 for cash of £949 and a further 135,658 ordinary shares of 0.5p each were issued on 17th October 2008 for cash of £1,001.


The rights attached to the deferred shares are as follows:


    (a) no entitlement to any dividend;

(b) on a winding-up, an entitlement to receive an amount equal to the nominal value of each share, but only after an amount of £50,000,000 per share has been paid to the holders of the issued and fully paid ordinary 0.5p shares;

(c) no right to attend or vote at a general meeting; and

(d) an obligation to permit the Company to transfer the shares to such person as the Company may determine, without receiving any payment.


17.    RECONCILIATION OF LOSS BEFORE TAXATION TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES


Group

2008

2007


£

£

Loss before taxation

(3,791,203)

(3,290,732)

Adjustments for:



Equity-settled share options

93,689

671,776

Equity-settled research and development

1,773,126

520,037

Depreciation

274,822

263,314

Investment income

(72,926)

(152,751)


----------------

----------------


(1,722,492)

(1,988,356)

(Increase)/decrease in receivables

(636,045)

652,907

Increase in payables

181,116

25,613


----------------

----------------

Net cash outflow from operating activities

(2,177,421)

(1,309,836)


===========

===========



Company

2008

2007


£

£

Loss before taxation

(357,717)

(428,284)

Adjustments for:



Depreciation

160,000

160,000

Investment income

(71,700)

(147,216)


----------------

----------------


(269,417)

(415,500)

(Increase)/decrease in receivables

(2,971)

9,664

Increase in payables

98,994

41,818


----------------

----------------

Net cash outflow from operating activities

(173,394)

(364,018)


===========

===========



This information is provided by RNS
The company news service from the London Stock Exchange
 
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