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AGI Therapeutics plc (AGI)

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Wednesday 07 September, 2011

AGI Therapeutics plc

Interim Results

RNS Number : 7451N
AGI Therapeutics plc
07 September 2011
 

 

AGI Therapeutics

 

Interim financial results for the six months ended 30 June 2011

 

 

Dublin, Ireland, 7 September 2011 - AGI Therapeutics plc ("AGI" or "the Company") (AIM, ESM: AGI), a speciality pharmaceutical development company, today announces interim financial results for the six months ended 30 June 2011.


Financial summary

 

·     Cash and short-term deposits at 30 June 2011 of $9.3 million (31 December 2010: $10.0 million)

·     R&D spend $0.7 million (2010: $0.9 million)

 

·     G&A spend $0.5 million (2010: $0.6 million)

 

·     Loss per ordinary share $0.015 (2010: $0.046)

 

Operational summary

 

·     During the first six months of 2011 AGI began implementing its new strategy announced in late 2010. The Company has re-focused its research and development efforts in the area of specialty indications with unmet medical needs, with particular focus on treatments which qualify for Orphan drug status.

 

·     The first six months of 2011 were dominated by the pre-clinical evaluation of AGI-350,, a novel presentation of an existing marketed drug which AGI is developing to treat a significant unmet medical need in the critical care setting.

 

·     AGI has completed preliminary development and in-vitro evaluation of a form and formulation of AGI-350 which is specifically designed to provide effective and efficient delivery of the drug to the lung. 

 

·     AGI entered into a technology access agreement with Aerogen Ltd. to provide specialized aerosol technology for the administration and delivery of AGI-350 to ventilated patients in the Intensive Care Unit (ICU) setting. This proprietary technology is being customized for use with AGI-350 in the target patient population and prototypes have been developed for pre-clinical evaluation.

 

·     Furthermore, AGI has initiated a  pre-clinical programme for AGI-350 which is ongoing. A model of the target condition  has been developed and is being employed to characterise AGI-350 and generate key proof of concept data to inform subsequent clinical development. Once this phase of evaluation is completed in H2 2011, AGI will consider the next steps for this programme, which may involve advancing the product into human trials.

 

·     AGI continues to explore other opportunities to develop products for use in the critical care setting. Management believes this is an area that is under-served by currently available products.

 

·     During the first six months AGI continued to exercise vigilance over the use of its existing cash resources. Total cash absorbed by operations was $0.9 million in the first six months of 2011, a decrease of 18% over the same period in 2010. In addition, since 30 June, AGI reported the sale of certain intellectual property assets, no longer regarded as core, to Warner Chilcott for $300,000.  This will result in a gain on disposal of intellectual property of approximately $54,000, which will be recognised in the second half of the year.

 



 

 

 

Commenting on the announcement today, John Devane, CEO of AGI stated; "The first six months of 2011 saw AGI take its first steps to rebuilding the product pipeline and steering the Company towards being a specialist development company with an emphasis on Orphan needs and critical care applications. We are encouraged with our progress to date."

 

- Ends -

 

 

 

 

 

 

 

 

 



Contact Information:

 

AGI Therapeutics plc.

Tel: +353 1 449 3254

David Kelly, Chief Financial Officer




Davy

John Frain

Tel: +353 1 614 8761



 

 

 

About AGI Therapeutics plc

 

AGI is a specialty pharmaceutical company which is focused on the development and commercialisation of differentiated drug products to treat unmet medical needs, including treatments for conditions which qualify for Orphan Drug status.

 

The Company's lead programme, AGI-350, is being developed to treat a significant unmet medical need in the critical care setting, in particular for patients who require ventilation support.

 

AGI's common shares are listed on the Alternative Investment Market of the London Stock Exchange (AIM) and on the Enterprise Securities Market (ESM) of the Irish Stock Exchange as AGI.

 

For further information please see www.agitherapeutics.com.

 

Statements contained within this press release may contain forward-looking comments which involve risks and uncertainties that may cause actual results to vary from those contained in the forward-looking statements. In some cases, you can identify such forward-looking statements by terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or 'continue'. Predictions and forward-looking references in this press release are subject to the satisfactory progress of research which is, by nature, unpredictable. Forward projections reflect management's best estimates based on information available at the time of issue.

 



 

Financial review

For the six months ended 30 June 2011

 

Basis of preparation and International Financial Reporting Standards (IFRS)

The financial information for the six months ended 30 June 2011 has been prepared in accordance with IAS 34 "Interim Financial Statements" (IAS 34) as adopted by the European Union.


Operating performance

 

Revenue

 

AGI did not record any revenue in the six months ended 30 June 2011. For the six months to 30 June 2010 AGI recognised $67,200 relating to license fees for access to certain intellectual property. 

 

Research and development expenses

 

Total Research and Development (R&D) expenses for the six months to 30 June 2011, were $0.7 million (2010: $0.9 million).  R&D costs in this period arose primarily on the pre-clinical investigation of AGI-350.

 

General and administrative expenses

 

General and Administrative (G&A) expenses in the first six months of 2011 were $0.5 million (2010: $0.6 million).  This decrease is attributable to continued efforts by AGI to reduce its cost base.

 

Interest income and other income / (expense)

 

The Company earned interest on its cash balances amounting to $12,000 in the first six months of 2011 (2010: $33,000).  Interest income has fallen as cash balances have reduced and interest rates for cash deposits declined in 2011 compared to 2010.  Other income/(expense) relates to an unrealised gain of $176,000 in 2011 (2010: $546,000 loss) arising from the translation of certain cash balances, which AGI still holds in euro, into dollars at the period end.

 

Intangible asset impairment charge

 

A charge of $1.1 million was recognised in the first half of 2010 primarily relating to the write off of intellectual property associated with Rezular. No impairment charge arose in the same period in 2011.

 

Taxation

 

The Company has incurred losses to date and continues to incur losses. Because of these losses no charge for tax arose in the first six months of 2011 or 2010.

 

Share based compensation expense


The Company accounts for the fair value of option grants as a charge in the income statement, using the Black-Scholes option-pricing model.  A charge of $0.2 million was expensed during the first half of 2011 (2010: $0.3 million) in respect of share based compensation expense, split between R&D and G&A expenses.

 

Operating cash flow

 

Net cash outflow from operating activities in the six-month period ended 30 June 2011, was $0.9 million (2010: $1.1 million), which consisted principally of the loss from operations and changes in working capital balances.  At 30 June 2011, AGI had cash and short-term deposits of $9.3 million, (31 December 2010: $9.9 million). The Directors have considered the Company's cash position and are satisfied that it is sufficient to meet the Company's financial obligations for at least the coming twelve months.

 

Post balance sheet events

 

On 27 July 2011, the Company completed the divestment of a portfolio of patents to Warner Chilcott for consideration of approximately $0.3 million.  This will result in a gain on disposal of intellectual property of approximately $54,000, which will be recognised in the second half of the year. 



 

UNAUDITED CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

For the six months ended 30 June 2011





Notes


  Period ended

 30 June  2011

$'000

Period

ended

 30 June  2010

$'000

Revenue - continuing operations






-

67









Operating expenses

Research and development expenses

  (share based payment charge of $108,000 (2010: $148,000))






687

891

General and administrative expenses

  (share based payment charge of $98,000 (2010: $131,000))






523

618

Impairment and other restructuring charges




4


-

1,129

Total operating expenses






(1,210)

(2,638)

Loss from operating activities - continuing operations 






(1,210)

(2,571)









Finance income and expense

Interest income






12

33

Other income/(expense)






176

(546)

Net finance income/(expense)






188

(513)









Loss before income tax






(1,022)

(3,084)

Income tax






-

-

Net loss for the period - all attributable to equity holders of the company






(1,022)

(3,084)









Basic and diluted loss per ordinary share:








Basic and diluted loss per share (US$ cents)




5


(1.5)

(4.6)

 

 

The accompanying notes are an integral part of these interim financial statements

 


UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2011







  Period ended

 30 June  2011

$'000

Period

ended

 30 June  2010

$'000









Net loss for the period






(1,022)

(3,084)

 

Total comprehensive loss for the period - all attributable to equity holders of the company






(1,022)

(3,084)









 

The accompanying notes are an integral part of these interim financial statements



UNAUDITED CONDENSED CONSOLIDATED INTERIM BALANCE SHEET    

As at 30 June 2011

 



Notes

30 June

2011

$'000

31 December

 2010
$'000

Non-current assets





Intangible assets


4

241

271

Total non-current assets



241

271






Current assets





Other current assets



32

38

Cash and cash equivalents



9,251

9,965

Total current assets



9,283

10,003

 

Total assets



9,524

10,274

 





Shareholders' equity





Share capital



992

992

Share premium



75,194

75,194

Share-based compensation reserve



5,720

5,514

Retained deficit



(72,690)

(71,668)

Total shareholders' equity



9,216

10,032

 





Current liabilities





Trade and other payables



308

242

Total current liabilities



308

242

Total liabilities



308

242

 

Total shareholders' equity and liabilities



9,524

10,274

 





 

The accompanying notes are an integral part of these interim financial statements

 


UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

For the six months ended 30 June 2011

 






  Period ended

 30 June  2011

$'000

Period

ended

 30 June  2010

$'000

Loss for the period


(1,022)

(3,084)

Adjustments to reconcile loss to net cash used in operating activities:




Depreciation of property, plant and equipment


-

1

Amortisation and write off of intangible assets


30

1,246

Interest income


(12)

(33)

Foreign currency (gain)/loss


(176)

546

Share-based payment expense


206

280

Operating cash outflow before changes in working capital


(974)

(1,044)

Increase in other current assets


(6)

(7)

Increase/(decrease) in trade and other payables


66

(44)

Cash absorbed by operations


(914)

(1,095)

Interest received


24

44

Net cash outflow from operating activities


(890)

(1,051)

Cash and cash equivalents at the beginning of period


9,965

11,972

Effect of foreign exchange rate changes


176

(546)

Cash and cash equivalents at the end of the period


9,251

10375









 

The accompanying notes are an integral part of these interim financial statements

 

 


 

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the six months ended 30 June 2011

 


Number
of Shares

 

 

Ordinary Share
Capital

$'000

 

 

Share
Premium

$'000

Share Based Compensation Reserve

$'000

Retained Deficit

$'000

Total
Amount
$'000

67,412,783

992

75,194

4,994

(68,066)

13,114

Comprehensive income:

  Loss for the period

-

-

-

-

(3,084)

(3,084)

  Total comprehensive loss






(3,084)

Transactions with owners recognised directly in equity:







Share-based compensation

-

-

-

279

-

279

Balance at 30 June 2010

67,412,783

992

75,194

5,273

(71,150)

10,309

Comprehensive income:

  Loss for the period

-

-

-

-

(518)

(518)

  Total comprehensive loss






(518)

Transactions with owners recognised directly in equity:







Share-based compensation

-

-

-

241

-

241

Balance at 31 December 2010

67,412,783

992

75,194

5,514

(71,668)

10,032

Comprehensive income:

  Loss for the period

-

-

-

-

(1,022)

(1,022)

  Total comprehensive loss






(1,022)

Transactions with owners recognised directly in equity:







 

Share-based compensation

-

-

-

206

-

206

Balance at 30 June 2011

67,412,783

992

75,194

5,720

(72,690)

9,216








 

The accompanying notes are an integral part of these interim financial statements

 


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS

For the six months ended 30 June 2011

 

1BASIS OF PREPARATION

These unaudited condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance with IAS 34, "Interim Financial Reporting" (IAS 34) as adopted by the European Union (EU).  The interim financial statements do not include all of the information required for full annual financial statements.

These interim financial statements are presented in US dollars rounded to the nearest thousand, being the functional currency of the parent company and the group companies. They are prepared on the historical cost basis, except for share based payments, which are stated at fair value.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results could differ materially from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying our accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2010.

The comparative amounts included for the year ended 31 December 2010 do not constitute statutory financial statements of the Company within the meaning of Regulation 40 of the European Communities (Companies: Group Accounts) Regulations, 1992.  Statutory financial statements for the year ended 31 December 2010 have been filed with the Companies Office.  The auditor's report on those financial statements was unqualified and did not contain an emphasis of matter paragraph.

 

2SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies applied in these interim financial statements are the same as those applied in the consolidated financial statements as at and for the year ended 31 December 2010, as set out on pages 29 to 33 of the 2010 Annual Report, except for the impact of the standards described below.

The following new interpretations and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2011.

·     IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments.

·     Revised IAS 24: Related Party Disclosures.

·     Amendment to IFRIC 14: Prepayments of a Minimum Funding Requirement.

·     Amendment to IAS 32: Financial Instruments: Presentation: Classification of Rights Issues.

·     The IASB's third annual improvement project, Improvements to IFRS (issued 2010).

 

The adoption of these amendments to standards and interpretations did not impact on the Company's financial position or results from operations.  





 

3OPERATING SEGMENTS

The Group is managed as a single business unit engaged in the development of pharmaceutical products.  Accordingly, the Group operates in one reportable segment.  Dr. John Devane has been identified as the Chief Operating Decision Maker.  There were no changes in the basis of segment reporting during the interim period ended 30 June 2011.  

 

4IMPAIRMENT AND OTHER RESTRUCTURING CHARGES

There were no impairment or restructuring charges in the first six months of 2011. A charge of $1.1 million was recognised in the first half of 2010 (2009: $0.4 million), primarily relating to the write off of intellectual property associated with Rezular. In 2010 AGI wrote off the carrying value of its intangible assets associated with Rezular and other programmes, which resulted in a non-cash impairment charge of $1.1 million in the six-month period to 30 June 2010.  The remaining intangible assets, associated with ongoing early stage development programmes, amounted to $0.2 million at 30 June 2011.

 



30 June 2011

$000


30 June 2010

$000






Impairment of intangible assets


-


1,129






Total impairment charges


-


1,129











 



5LOSS PER SHARE

Basic loss per share is computed by dividing the loss for the period available to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.  Diluted loss per share is computed by dividing the loss for the period, by the weighted average number of ordinary shares outstanding and, when dilutive, adjusted for the effect of all potentially dilutive shares, including stock options, warrants, and convertible debt securities on an as-if-converted basis. 

The following table sets forth the computation for basic and diluted loss per share for the six months ended 30 June 2011 and 2010:

 



30 June 2011

$000


30 June 2010

$000

Numerator:





Loss attributable to ordinary shareholders


(1,022)


(3,084)






Denominator:





Denominator for basic-weighted average number of shares


67,412,783


67,412,783






Basic and diluted loss per share:





Basic and diluted loss per share (US$ cents)                                   


(1.5)


(4.6)






 

Potentially dilutive instruments, such as share options have not been treated as dilutive as the Company made a loss in both periods.

 

6RELATED PARTY TRANSACTIONS

 

Transactions with founding members and shareholders

 

 

Frank Kenny, John O'Sullivan and Peter Sandys are Directors of the Company and are board nominees of Delta Partners, ACT Venture Capital and Seroba Bioventures respectively.  Fees of $11,000 annually are paid by the Company to each of Delta, ACT and Seroba in respect of their nominees' appointments.

 

 

7SUBSEQUENT EVENTS

 

On 27 July 2011, the Company completed the divestment of a portfolio of patents to Warner Chilcott for consideration of approximately $0.3 million.  This will result in a gain on disposal of intellectual property of approximately $54,000, which will be recognised in the second half of the year. 

 

 

8APPROVAL

 

The unaudited condensed consolidated interim financial statements were approved by the directors on 6 September 2011.

 



Directors' Responsibility Statement

For the six months ended 30 June 2011

 

Statement of the directors in respect of the interim financial report:

 

Each of the directors, whose names and functions are listed on page 12 of our 2010 Annual Report, confirms that, to the best of our knowledge and belief:

 

 

a)

the unaudited condensed consolidated interim financial statements, comprising the condensed consolidated interim income statement, the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim balance sheet, the condensed consolidated interim statement of cash flows, the condensed consolidated interim statement of changes in shareholders' equity and the related notes thereto, have been prepared in accordance with IAS 34 - Interim Financial Reporting ("IAS 34"), as adopted by the EU.

 

b)

the interim management report includes a fair review of the following information:

 


 (i)

an indication of important events that have occurred during the six months ended 30 June 2011 and their impact on the condensed consolidated interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

 


 (ii)

related party transactions that have taken place in the six months ended 30 June 2011 and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the 2010 Annual Report that could do so.

 

 













On behalf of the Board
















Dr. John Devane

David Kelly

Director

Director

6 September 2011

 

 



Independent Auditor's Review Report to AGI Therapeutics, plc

 

Introduction

We have been engaged by AGI Therapeutics, plc (the "company") to review the condensed consolidated interim financial statements for the six months ended 30 June 2011, which comprise the condensed consolidated interim income statement, the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim balance sheet, the condensed consolidated interim statement of cash flows, the  condensed consolidated interim statement of changes in shareholders' equity and the related notes thereto. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

 

This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 

Directors' responsibilities

The half-yearly financial report, including the condensed consolidated interim financial statements contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half yearly financial report in accordance with the ESM Rules for Companies as issued by the Irish Stock Exchange and the AIM Rules for Companies as issued by the London Stock Exchange.

 

As disclosed in note 1 - basis of preparation, the annual consolidated financial statements of the company are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU").  The directors are responsible for ensuring that the condensed consolidated interim financial statements included in this half-yearly financial report have been prepared in accordance with IAS 34 - Interim Financial Reporting, ("IAS 34"), as adopted by the EU.

 

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the half-yearly financial report, based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in Ireland and the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently, does not enable us to obtain assurance that we would not become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements in the half-yearly financial report for the six months ended 30 June 2011 are not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the ESM Rules for Companies as issued by the Irish Stock Exchange and the AIM Rules for Companies as issued by the London Stock Exchange.

 

 

Sean O'Keefe

For and on behalf of,

KPMG

Chartered Accountants, Statutory Audit Firm

1 Stokes Place, St. Stephen's Green, Dublin 2, Ireland

6 September 2011

 


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