SOURCE: Protherics PLC

December 07, 2006 12:51 ET

Protherics Plc announces Interim Results for six months ended 30 September 2006

Cheshire, UK -- (MARKET WIRE) -- December 7, 2006 -- INTERIM RESULTS FOR SIX MONTHS ENDED 30 SEPTEMBER 2006

London, UK, Brentwood, TN, 7 December 2006 - Protherics PLC, ("Protherics" or the "Company") the biopharmaceutical company focused on critical care and cancer, today announces its unaudited interim results for the six months ended 30 September 2006.

Three transactions and fundraising announced separately today

GBP38.2 million Cash Placing, Placing and Open Offer (underwritten by Nomura Code Securities Limited and Piper Jaffray Ltd) to fund in- licensing deals with Glenveigh Inc and Advancell, and the acquisition of MacroMed Inc.

Operational Highlights

- CytoFab™

- AstraZeneca to expand global clinical development programme for CytoFab™ in severe sepsis following positive discussions with US and EU regulatory agencies

- Voraxaze™

- Responses to initial questions filed in Europe to support the Marketing Authorisation Application (MAA) submitted in July 2005

- Clinical data package agreed with FDA; BLA to be resubmitted in US following a request from the FDA for additional manufacturing-related information

- Clinical programme initiated in the US to support the planned use of Voraxaze™

- Prolarix™

- Medicines and Healthcare Products Regulatory Agency (MHRA) approval for an improved formulation of caricotamide, one of the two components of Prolarix™, for use in the phase 1 study being undertaken by Cancer Research UK

- Initiation of GMP manufacture and nonclinical programme to allow phase 2 study in primary liver cancer to start in the second half of 2007

- Angiotensin Therapeutic Vaccine

- Rights to promising novel adjuvant acquired in June 2006 from CoVaccine BV for use in new formulation; phase 2 study expected to start in the second half of 2007

- DigiFab™

- Agreement with Roche Pharmaceuticals to replace its digoxin antidote product, Digitalis Antidot®, with DigiFab™

Financial Highlights (for the six months to 30 September 2006)

- Revenues increased to GBP11.3 million (2005: GBP10.7 million) with higher DigiFab™, CytoFab™ and Voraxaze™ revenues, offset by reduced CroFab™ shipments to Fougera

- Gross profit increased to GBP6.2 million (2005: GBP3.0 million including exceptional costs of GBP1.4 million) on product mix and improved manufacturing yields

- R&D increased to GBP7.1 million (2005: GBP2.4 million) with increased investment in CytoFab™ and Voraxaze™

- G&A expenses GBP4.1 million (2005: GBP4.2 million) as investment in sales and marketing continued, offset by benefits on foreign exchange positions

- Loss before tax GBP4.7 million (2005: GBP3.7 million), as expected, following increased CytoFab™ and R&D spending

- Net cash decrease of GBP7.5 million (2005: GBP1.0 million) after increased R&D spending, capital investment and working capital movements

- Strong cash position at end of period of GBP17.9 million (2005: GBP6.3 million) following CytoFab™ upfront payment and equity contribution from AstraZeneca

Commenting on the results, Stuart Wallis, Chairman, said:

"Protherics is entering a period of growth and expansion with a strong cash position, increased revenues and improved gross margins. At the same time, the three transactions announced today strengthen our leadership position in polyclonal antibodies and substantially expand our cancer pipeline."


                                   |  Ends  |

A presentation and conference call for analysts will be held today at 10am UK time. Please call Mo Noonan on +44 (0)20 7269 7116 for further details.

For further information contact:

Protherics PLC                           +44 (0) 20 7246 9950
                                         +44 (0) 7919  480510
Andrew Heath, CEO
Barry Riley, Finance Director
Nick Staples, Corporate Affairs


Protherics Inc                           +1 615 327 1027
Saul Komisar, President

Financial Dynamics
London: David Yates/Ben Atwell           +44 (0) 20 7831 3113
New York: Jonathan Birt/John Capodanno   +1 212 850 5600

Notes for Editors:

About Protherics

Protherics (LSE: PTI, NASDAQ: PTIL) is an integrated biopharmaceutical company focused on the development and marketing of products for critical care and cancer. With headquarters in London, the Company has 227 employees across its operations in the UK, US and Australia.

Protherics' strategy is to use the revenues generated from its marketed products to help fund the advancement of its development pipeline. With a proven track record in drug development, biopharmaceutical manufacturing and regulatory affairs, Protherics' goal is to develop and attract additional cancer and critical care products for its sales and marketing teams to distribute in the US and Europe.

The most advanced products in the Company's portfolio are Voraxaze™, administered when methotrexate blood levels remain dangerously high following high doses for the treatment of cancer, which is expected to be approved in the EU in the first half of 2007 and in the US from the second half of 2008, subject to successful regulatory reviews; and CytoFab™, which is expected to start an additional phase 2 study in severe sepsis in 2007 following its out-license to AstraZeneca in late 2005.

Additional products in development include Prolarix™, a targeted cancer therapy for primary liver cancer and other select tumours, currently in phase 1 with a phase 2a study planned for second half of 2007; and Angiotensin Therapeutic Vaccine for the treatment of hypertension, where encouraging phase 2a results have been obtained and an additional phase 2a study with an improved formulation is planned in the second half of 2007.

The majority of the Company's revenues (GBP17.7 million in the year ended 31 March 2006) are derived from two critical care products, CroFab™ (pit viper antivenom) and DigiFab™ (digoxin antidote) which were developed by Protherics and are sold, in the US, through Fougera Inc, a division of Altana Pharma AG.

For further information visit: www.protherics.com

Disclaimer

This document contains forward-looking statements that involve risks and uncertainties including with respect to future growth, technology acquisitions, product sales and regulatory approval of Protherics' products for marketing and distribution. Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time, we can give no assurance that such expectations will prove to be correct. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements due to many important factors, including the market for the Company's products, the timing and receipt of regulatory approvals, the consummation of fundraising and acquisition transactions, the successful integration of acquired businesses and intellectual property, and other factors discussed in Protherics' Annual Report on Form 20-F and other reports filed from time to time with the U.S. Securities and Exchange Commission. We do not undertake to update any oral or written forward-looking statements that may be made by or on behalf of Protherics.

INTERIM STATEMENT

Corporate Development

Protherics' corporate strategy is to build a leading biopharmaceutical company, focused on the development, manufacture and marketing of specialist products in critical care and cancer. The three transactions announced today add a second potential blockbuster to our critical care pipeline, alongside CytoFab™, and doubles the size of our cancer portfolio in indications where we can leverage the sales and marketing infrastructure we are establishing for Voraxaze™.

R & D pipeline update

Voraxaze™ - for the control of high dose methotrexate therapy in cancer

Voraxaze™ (glucarpidase) contains an enzyme that rapidly breaks down methotrexate (MTX). It has been developed to prevent or reduce the serious toxicity that can result when patients receiving high doses of MTX (HDMTX) for the treatment of cancer have difficulty eliminating MTX from the body.

A Marketing Authorisation Application (MAA) for the use of Voraxaze™ as an intervention treatment for patients experiencing or at risk of MTX toxicity from delayed elimination was submitted in the EU in July 2005. Responses to questions raised during an initial review of the MAA have been submitted to the European Medicines Agency (EMEA) and we hope to receive marketing approval in the first half of 2007.

On 15 September 2006, we submitted a Biological License Application (BLA) for Voraxaze™ to the FDA in the US. Protherics announced on 7 November 2006 that it had withdrawn this application in the US following a request from FDA for additional manufacturing-related information, with the intention of resubmitting the application once the additional data has been generated. Approval is expected in the US from the second half of 2008, pending further detailed discussion with the FDA.

Protherics recently initiated a small pilot study with the MD Anderson Centre in Houston, Texas to investigate the planned repeated use of Voraxaze™ in patients with delayed elimination of MTX. This is the first of several pilot studies in a planned use development programme, to expand the indications for Voraxaze™ into the potentially much larger planned repeated use market. A second study is expected to be initiated shortly at University College London Hospitals, UK. We expect preliminary data from these studies in the first half of 2007. The data will allow a pivotal study to be designed with a view to extending the indication for Voraxaze™ to include its routine use on a planned basis.

Voraxaze™ continues to be available in both the US and Europe on a compassionate use basis. In Europe, where it is possible to charge for its supply, revenues for the six months ended 30 September 2006, amounted to GBP0.6 million (GBP0.3 million in 2005).

CytoFab™ - for sepsis resulting from uncontrolled infection

CytoFab™ is an anti-TNF-alpha polyclonal antibody fragment (Fab) product for the treatment of sepsis. On 7 December 2005, we announced the signing of a major licensing agreement for CytoFab™ with AstraZeneca. On 3 November 2006, following consultations with regulators in the US and EU, AstraZeneca announced its intention to expand the clinical development plan for CytoFab™ in severe sepsis, with the addition of a 480 patient phase 2 programme prior to starting phase 3 development. AstraZeneca's goal is to optimise the chances of showing a statistically and clinically meaningful result with CytoFab™, in a single, global phase 3 study, while ensuring an acceptable time to market.

Data from phase 2 will be used to more accurately estimate the number of patients required, and confirm the appropriate dose for the phase 3 study, as well as providing further supporting efficacy and safety data. This may enable a shorter timetable for the phase 3 programme than originally anticipated by AstraZeneca. The phase 2 programme will start in the second half of 2007 and is expected to last up to 21 months. On completion, AstraZeneca intends to initiate a single phase 3 study in the US, Europe and Japan.

Process scale-up is on-going at Protherics' approved manufacturing facility in Wales, and large scale batches are being prepared for processing using the new commercial process. Protherics expects to receive a further milestone payment from AstraZeneca in 2007.

CytoFab™ revenues of GBP1.1 million were recognised in the six months ended 30 September 2006. There were no revenues in the corresponding six months period to 30 September 2005.

Prolarix™ - targeted therapy for liver cancer and certain other solid tumours

Prolarix™ is comprised of a small molecule prodrug, tretazicar, which is converted to a highly cytotoxic agent when administered with a cosubstrate, caricotamide, by an endogenous enzyme, NQO2, which has elevated activity in certain tumours.

A phase 1 study of Prolarix™ is being run under the auspices of Cancer Research UK (CRUK) and 13 patients have been recruited to date. One patient has received all six cycles of treatment with disease stabilisation achieved at a relatively low dose of Prolarix™. The dose of tretazicar is being escalated to determine the maximum tolerated dose (MTD). CRUK has recently received Medicines and Healthcare Products Regulatory Agency (MHRA) approval to use an improved formulation of caricotamide in the study, allowing patient enrollment to recommence. Once the MTD has been determined, an additional cohort of six patients will be treated to evaluate the efficacy of Prolarix™. Further data from the expanded phase 1 study should be available before the end of the first half of 2007, and the study is now expected to report formally in the second half of 2007.

The GMP manufacture of Prolarix™ is ongoing and the necessary supporting non-clinical programme has been initiated, ahead of a planned phase 2 study in primary liver cancer in the second half of 2007.

Angiotensin Therapeutic Vaccine - management of high blood pressure

Protherics' Angiotensin Therapeutic Vaccine is a vaccine designed to induce endogenous antibodies to angiotensin, one of the key hormones involved in the regulation of blood pressure. Encouraging clinical and preclinical results to date suggest that effective neutralisation of angiotensin may cause a clinically significant reduction in blood pressure in hypertensive patients.

A new formulation of Angiotensin Therapeutic Vaccine containing a novel adjuvant called CoVaccine HT, has produced up to a 10-fold improvement in antibody response in preclinical studies. We announced the acquisition of the CoVaccine HT adjuvant from CoVaccine BV in June 2006. Protherics has now completed the non-clinical safety testing of the CoVaccine HT adjuvant required to support clinical use and has commenced manufacturing process development and scale up for both the adjuvant and the vaccine.

Protherics intends to start a phase 2a study with the new formulation in the second half of 2007. The goal of this study will be to confirm that the new formulation increases levels of anti-angiotensin antibodies in hypertensive patients and to establish whether this results in a reduction in blood pressure.

The market for the treatment of high blood pressure is estimated to be in excess of US$30 billion per annum, and with positive phase 2a data, our Angiotensin Therapeutic Vaccine could provide another major out-licensing opportunity for Protherics.

Marketed Products, Business Environment and Financial Update

CroFab™ - pit viper antivenom

CroFab™ is a polyclonal antibody fragment for the management of crotalid (pit viper) envenomations. It is currently the only product marketed for these bites in the US, where there are around 8000 pit viper bites reported each year. We believe that CroFab™ has captured around half of a potential $70-80 million market opportunity.

CroFab™ sales were GBP7.2 million in the half year compared to GBP8.5 million in the corresponding six months to 30 September 2005. A weaker dollar contributed to this decline, but the major factor was a reduction in product shipped to Fougera®, our distributor in the US. This is expected to reverse in the second half of the current financial year, as shipments are planned to be higher than the first half.

DigiFab™ - treatment for digoxin overdose

DigiFab™ is now the market leader in the US digoxin overdose market, estimated to be worth approximately $25 million per annum. DigiFab™ sales to Fougera® increased from GBP1.5 million to GBP1.9 million. Fougera's sales to the wholesale market increased by 46% over the prior period as they continued to gain market share. There was also an increase in product shipped to Fougera®.

We believe the European market can provide a further opportunity to grow DigiFab™ sales and Protherics anticipates receiving marketing approval in the UK in the first half of 2007, with subsequent approvals in Europe over the following six to twelve months. We recently announced an agreement with Roche Pharmaceuticals to replace its niche digoxin antidote product, Digitalis Antidot® with DigiFab™ in those countries where it is currently available. DigiFab™ will be marketed by our licensee Beacon Pharmaceuticals in most mainland European countries, and by Protherics in certain other countries.

ViperaTAb™ - European viper antivenom

ViperaTAb™ sales improved to GBP0.3 million from GBP0.1 million as expected, due to the increased availability of product.

US Derived Revenues

US derived revenues show the underlying sales performance in US dollars and the effects of translating these into Sterling.

Half year to 30 September     2006        2006        2005        2005
(IFRS)                          $m        GBPm          $m        GBPm

CroFab(TM)                    13.3         7.2        15.2         8.5
DigiFab(TM)                    3.5         1.9         2.7         1.5
ViperaTAb(TM)                  0.6         0.3         0.2         0.1

Total                         17.4         9.4        18.1        10.1




Average exchange 
rate ($/GBP)                  1.85        1.79



Voraxaze(TM), CytoFab(TM) and Other Revenues




Half year to 30 September          2006         2005
(IFRS)                             GBPm         GBPm
Voraxaze(TM)                        0.6          0.3
CytoFab(TM)                         1.1            -
BSE                                 0.1          0.2
Other                               0.1          0.1
                                  _____        _____
                                    1.9          0.6
US Derived                          9.4         10.1

                                  _____        _____
Total Revenues                     11.3         10.7

Named patient sales of Voraxaze™ increased to GBP0.6 million in the half year ended 30 September 2006 from GBP0.3 million in the corresponding six month period, as awareness of the product in the medical community continues to build. CytoFab™ revenues of GBP1.1 million for the six months represent a portion of the initial upfront payment of GBP16.3 million received under the licensing agreement with AstraZeneca, which is being recognised under IFRS over the estimated period to product approval. Revenues from BSE testing continue to show the effects of increased competition in Europe, declining to GBP0.1 million from GBP0.2 million.

Cost of Sales and Gross Profit

Cost of sales for the six month period was GBP5.0 million against GBP7.7 million in the corresponding period, which included exceptional costs of GBP1.4 million relating to a planned shutdown undertaken during the expansion of manufacturing facilities. Excluding the exceptional costs, the figure for the corresponding six month period was GBP6.3 million.

Gross margins on manufactured products (excluding milestone and royalty revenues with no associated manufacturing cost) are shown in the table below:

Half year to 30 September           2006          2005
(IFRS)                              GBPm          GBPm
Revenues*                           10.0          10.4
Cost of Sales 
(excluding exceptional costs**)      5.0           6.3

                                   _____          ____
Gross Profit 
(before exceptional costs)           5.0           4.1
                                    ____         _____

Gross Margin 
(on manufactured products 
before exceptional costs)            50%         39.4%


*Revenues include sales of CroFab™, DigiFab™, ViperaTAb™ and Voraxaze™

**Cost of Sales in the six months to 30 September 2005 excludes exceptional costs of GBP1.4 million associated with the major shutdown incurred to gain regulatory qualification for the Company's expanded manufacturing facility in Wales.

Margins have improved over the corresponding six month period due to a higher proportion of DigiFab™ sales (a higher margin product) and a reduced level of CroFab™ shipments, coupled with improved yields in the manufacturing process.

Research and Development

As planned, R&D expenditure has increased significantly to GBP7.1 million in the half year from GBP2.4 million as work is well under way on developing and scaling up the CytoFab™ manufacturing process. In addition, spending continued on Voraxaze™ to support regulatory filings, and on Prolarix and Angiotensin Therapeutic Vaccine.

General and Administrative Expenses

General and administrative expenses show a decrease to GBP4.1 million from GBP4.2 million after adjustments under IFRS for currency effects and charges on employee options. Movements in the fair value of currency contracts and gains on inter-group balances have produced a benefit of GBP0.7 million against a cost of GBP0.4 million in the corresponding six month period. This is offset by an increase in option charges of GBP0.2 million between the two periods. Underlying general and administrative expenses are therefore increasing in line with expectations as additional resources in sales and marketing and regulatory capability have been added.

Finance Income and Costs

Finance income has increased to GBP0.5 million from GBP0.1 million in line with the increased cash balances, while costs have remained stable at GBP0.2 million as increased lease financing costs have been offset by conversions of the Convertible Loan Notes issued at the time of the Enact Pharma acquisition.

Results Before and After Tax

Tax credits of GBP0.2 million on R&D expenditure are slightly higher than the corresponding period, resulting in a loss before tax of GBP4.7 million and after tax of GBP4.5 million, compared to corresponding pre and post tax losses of GBP3.7 million and GBP3.6 million.

Balance Sheet

Investment in property, plant and equipment over the period has increased non-current assets to GBP20.7 million from GBP18.6 million at 31 March 2006 and GBP17.7 million at 30 September 2005. Inventory levels have increased, following the planned shutdown in the summer of 2005.

Current assets at 30 September 2006 were GBP34.1 million, which shows a decrease from GBP41.6 million at the end of the last financial year, but up from GBP20.2 million at 30 September 2005, following the licensing deal with AstraZeneca announced in December 2005. Total assets were GBP54.8 million against GBP60.1 million at 31 March 2006, a net result of continued spending on fixed assets and working capital movements, and up from GBP37.9 million a year earlier.

Total liabilities decreased from GBP33.8 million at 31 March 2006 to GBP31.7 million at 30 September 2006. Obligations under finance leases increased with the investment in plant and equipment, while deferred income was released to the income statement as licensing revenue was recognised. Trade payables declined as payments were made for materials and equipment purchased for CytoFab™ process scale-up and development. Major changes from the GBP14.1 million total liabilities at 30 September 2005 relate to the deferment of the majority of the initial GBP16.3 million licensing payments received from AstraZeneca.

Total equity was GBP23.1 million at the half year, compared to GBP26.4 million at 31 March 2006, but similar to the GBP23.7 million recorded at 30 September 2005.

Cash Flow

Net cash outflow from operations was GBP6.0 million in the six month period, compared to an outflow of GBP0.3 million in the corresponding half year. This is a result of increased losses and working capital movements, when inventories were increased following the planned shutdown, and liabilities for materials and equipment purchased for the CytoFab™ development project were settled. Cash and cash equivalents at the end of the period were GBP17.9 million, down from GBP25.4 million over the six months, but up from GBP6.3 million at 30 September 2005, following the subsequent GBP7.5 million share issue to AstraZeneca and receipt of the initial GBP16.3 million under the licensing agreement.

Outlook

Protherics is undergoing a period of growth and expansion following the CytoFab™ licensing deal with AstraZeneca and as we prepare to undertake our first product launch in-house, with Voraxaze™. On completion of the fundraising, and the three proposed corporate transactions announced today, Protherics will have greatly expanded its pipeline, gaining additional products to develop in-house (or with potential licensees). The products will also have the potential to leverage the Voraxaze™ sales force which is currently being recruited. We continue to anticipate the receipt of milestone payments from AstraZeneca in line with the need for Protherics to invest in the manufacture of CytoFab™. We expect to make significant progress in our pipeline in both the near and mid term to deliver value for our shareholders.

Protherics PLC
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
for the six months ended 30 September 2006



 
                                     Six months       Six       Year
                                       ended 30    months   ended 31
                                      September  ended 30      March
                                           2006 September       2006
                                                     2005           
                               Notes    GBP'000   GBP'000    GBP'000
                                                                    
Revenue                            2     11,251    10,686     17,709
Cost of sales                                                       
Cost of sales excluding                 (5,046)   (6,299)    (9,930)
exceptional closedown costs                                         
Exceptional closedown costs                   -   (1,362)    (1,362)
Total cost of sales                3    (5,046)   (7,661)   (11,292)
                                                                    
                                          _____     _____      _____
Gross profit                              6,205     3,025      6,417
                                                                    
Administrative expenses                                             
Research and development                (7,054)   (2,374)    (6,747)
General & administrative                (4,110)   (4,241)    (9,203)
                                                                    
                                          _____     _____      _____
Total administrative expenses          (11,164)   (6,615)   (15,950)
                                                                    
                                          _____     _____      _____
                                                                    
Operating loss                     2    (4,959)   (3,590)    (9,533)
                                                                    
Finance income                              472       103        401
Finance costs                             (199)     (230)      (431)
                                                                    
                                          _____     _____      _____
Loss before tax                         (4,686)   (3,717)    (9,563)
Tax                                5        165       148         75
                                                                    
                                          _____     _____      _____
Loss for the period,                    (4,521)   (3,569)    (9,488)
attributable to equity                                              
shareholders                              _____     _____      _____
                                                                    
                                                                    
                                          Pence     Pence      Pence
Loss per share                                                      
Basic and diluted                  4      (1.7)     (1.5)      (3.8)
                                                                    

All revenue and results arose from continuing operations.

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED)

for the six months ended 30 September 2006


 
                                Six months Six months       Year
                                  ended 30   ended 30   ended 31
                                 September  September      March
                                      2006       2005       2006
                                   GBP'000    GBP'000    GBP'000
                                                                
Exchange differences on                351       (29)      (158)
translation of foreign                                          
operations                           _____      _____      _____
Net income / (expense)                 351       (29)      (158)
recognised directly in equity                                   
                                                                
Loss for the period                (4,521)    (3,569)    (9,488)
                                                                
                                     _____      _____      _____
Total recognised expense for       (4,170)    (3,598)    (9,646)
the period                                                      
                                     _____      _____      _____

All recognised income and expense is attributable to equity shareholders.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

at 30 September 2006



 
                            30 September 30 September   31 March
                                    2006         2005       2006
                                 GBP'000      GBP'000    GBP'000
Non-current assets                                              
Goodwill                           9,199        9,199      9,199
Other intangible assets            1,265        1,102      1,060
Property, plant and               10,009        6,933      8,109
equipment                                                       
Deferred tax assets                  179          461        206
                                                                
                                   _____        _____      _____
                                  20,652       17,695     18,574
                                                                
                                   _____        _____      _____
                                                                
Current assets                                                  
Inventories                       11,404        9,641     10,887
Financial assets                     172            -          -
Tax receivables                      604          491        717
Trade and other receivables        4,024        3,793      4,520
Cash and cash equivalents         17,921        6,255     25,438
                                                                
                                   _____        _____      _____
                                  34,125       20,180     41,562
                                                                
                                   _____        _____      _____
                                                                
Total assets                      54,777       37,875     60,136
                                                                
Current liabilities                                             
Trade and other payables          13,803        7,896     15,722
Current tax liabilities              272          217        278
                                                                
Financial liabilities                                           
Obligations under finance            859          586        623
leases                                                          
Bank overdrafts, loans and            34           32         37
other borrowings                                                
Derivative instruments                 -          363        136
                                                                
                                   _____        _____      _____
                                  14,968        9,094     16,796
                                                                
                                   _____        _____      _____
                                                                
Non-current liabilities                                         
Trade and other payables          12,170          595     13,081
Financial liabilities                                           
Borrowings                           198          252        222
Convertible loan notes             2,233        2,943      2,469
Obligations under finance          2,153        1,258      1,216
leases                                                          
                                   _____        _____      _____
                                  16,754        5,048     16,988
                                                                
                                   _____        _____      _____
                                                                
Total liabilities                 31,722       14,142     33,784
                                                                
                                   _____        _____      _____
                                                                
Net assets                        23,055       23,733     26,352
                                                                
                                   _____        _____      _____
                                                                
Equity                                                          
Share capital                      5,216        4,898      5,186
Share premium account             87,315       78,528     86,770
Merger reserve                    51,163       51,163     51,163
Equity reserve                       266          317        263
Cumulative translation               160         (62)      (191)
reserve                                                         
Retained earnings              (121,065)    (111,111)  (116,839)
                                                                
                                   _____        _____      _____
Total equity                      23,055       23,733     26,352
                                                                
                                   _____        _____      _____

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)


 
                                  Share      Share    Merger
                                capital    premium   reserve
                                GBP'000    GBP'000   GBP'000
                                                            
Balance at 1 April 2005           4,844     77,881    51,163
                                                            
Currency translation                  -          -         -
adjustments                                                 
                                  _____      _____     _____
Net expense recognised                -          -         -
directly in equity                                          
Loss for the period                   -          -         -
                                                            
                                  _____      _____     _____
Total recognised loss for the         -          -         -
period                                                      
                                  _____      _____     _____
                                                            
New share capital subscribed          4         60         -
Conversion of convertible            50        587         -
loan notes                                                  
Employee share option scheme:         -          -         -
- value of services provided                                
                                  _____      _____     _____
Balance at 30 September 2005      4,898     78,528    51,163
                                                            
                                  _____      _____     _____
                                                            
Balance at 1 October 2005         4,898     78,528    51,163
                                                            
Currency translation                  -          -         -
adjustments                                                 
                                  _____      _____     _____
Net expense recognised                -          -         -
directly in equity                                          
Loss for the period                   -          -         -
                                                            
                                  _____      _____     _____
Total recognised loss for the         -          -         -
period                                                      
                                  _____      _____     _____
                                                            
New share capital subscribed        245      7,794         -
Conversion of convertible            43        448         -
loan notes                                                  
Employee share option scheme:         -          -         -
- value of services provided                                
                                  _____      _____     _____
Balance at 31 March 2006          5,186     86,770    51,163
                                                            
                                  _____      _____     _____
                                                            
Balance at 1 April 2006           5,186     86,770    51,163
                                                            
Currency translation                  -          -         -
adjustments                                                 
                                  _____      _____     _____
Net income recognised                 -          -         -
directly in equity                                          
Loss for the period                   -          -         -
                                                            
                                  _____      _____     _____
Total recognised gain /               -          -         -
(loss) for the period                                       
                                  _____      _____     _____
                                                            
New share capital subscribed          2         46         -
Issue of convertible loan             -          -         -
notes                                                       
Conversion of convertible            28        499         -
loan notes                                                  
Employee share option scheme:         -          -         -
- value of services provided                                
                                  _____      _____     _____
Balance at 30 September 2006      5,216     87,315    51,163
                                                            
                                  _____      _____     _____

 

 
                            Equity  Cumulative  Retained   Total
                           reserve translation  earnings        
                                       reserve                  
                           GBP'000     GBP'000   GBP'000 GBP'000
                                                                
Balance at 1 April 2005        378        (33) (107,662)  26,571

Currency translation             -        (29)         -    (29)
adjustments                                                     
                             _____       _____     _____   _____
Net expense recognised           -        (29)         -    (29)
directly in equity                                              
Loss for the period              -           -   (3,569) (3,569)
                                                                
                             _____       _____     _____   _____
Total recognised loss for        -        (29)   (3,569) (3,598)
the period                                                      
                             _____       _____     _____   _____
                                                                
New share capital                -           -         -      64
subscribed                                                      
Conversion of convertible     (61)           -         -     576
loan notes                                                      
Employee share option            -           -       120     120
scheme: - value of                                              
services provided            _____       _____     _____   _____
Balance at 30 September        317        (62) (111,111)  23,733
2005                                                            
                             _____       _____     _____   _____
                                                                
Balance at 1 October 2005      317        (62) (111,111)  23,733
                                                                
Currency translation             -       (129)         -   (129)
adjustments                                                     
                             _____       _____     _____   _____
Net expense recognised           -       (129)         -   (129)
directly in equity                                              
Loss for the period              -           -   (5,919) (5,919)
                                                                
                             _____       _____     _____   _____
Total recognised loss for        -       (129)   (5,919) (6,048)
the period                                                      
                             _____       _____     _____   _____
                                                                
New share capital                -           -         -   8,039
subscribed                                                      
Conversion of convertible     (54)           -         -     437
loan notes                                                      
Employee share option            -           -       191     191
scheme: - value of                                              
services provided            _____       _____     _____   _____
Balance at 31 March 2006       263       (191) (116,839)  26,352
                                                                
                             _____       _____     _____   _____
                                                                
Balance at 1 April 2006        263       (191) (116,839)  26,352
                                                                
Currency translation             -         351         -     351
adjustments                                                     
                             _____       _____     _____   _____
Net income recognised            -         351         -     351
directly in equity                                              
Loss for the period              -           -   (4,521) (4,521)
                                                                
                             _____       _____     _____   _____
Total recognised gain /          -         351   (4,521) (4,170)
(loss) for the period                                           
                             _____       _____     _____   _____
New share capital                            -                48
subscribed                                                      
Issue of convertible loan       30                            30
notes                                                           
Conversion of convertible     (27)           -               500
loan notes                                                      
Employee share option            -           -       295     295
scheme: - value of                                              
services provided            _____       _____     _____   _____
Balance at 30 September        266         160 (121,065)  23,055
2006
                             _____       _____     _____   _____



 

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

for the six months ended 30 September 2006



 
                Six months to     Six months to       Year ended 31
            30 September 2006 30 September 2005       31 March 2006
             GBP'000  GBP'000  GBP'000  GBP'000   GBP'000   GBP'000
                                                                   
Cash flows                                                         
from                                                               
operating                                                          
activities                                                         
Cash                  (6,302)             (248)              12,609
generated                                                          
from                                                               
operations                                                         
Income tax                  -              (10)                (50)
paid                                                               
Income tax                290                 -                   5
received                                                           
                        _____             _____               _____
Net cash              (6,012)             (258)              12,564
(outflow) /                                                        
inflow from             _____             _____               _____
operating                                                          
activities                                                         
                                                                   
Investing                                                          
activities                                                         
Interest         472               103                401          
received                                                           
Proceeds on        -                 -                 52          
disposal of                                                        
property,                                                          
plant and                                                          
equipment                                                          
Purchases    (1,201)             (279)            (1,989)          
of                                                                 
property,                                                          
plant and                                                          
equipment                                                          
Purchases      (293)                 -                  -          
of other                                                           
intangible                                                         
non-current                                                        
assets                                                             
Capital            -                 -                250          
grants                                                             
received       _____             _____              _____          
Net cash              (1,022)             (176)             (1,286)
used in                                                            
investing               _____             _____               _____
activities                                                         
                                                                   
Financing                                                          
activities                                                         
Interest        (94)             (134)              (257)          
paid                                                               
Interest        (88)              (73)              (133)          
paid on                                                            
finance                                                            
leases                                                             
Repayment       (12)             (270)              (171)          
of                                                                 
borrowings                                                         
Repayments     (317)             (155)              (582)          
of finance                                                         
leases                                                             
Issue of          78                70              8,049          
shares                                                             
               _____             _____              _____          
Net cash                (433)             (562)               6,906
(used in) /                                                        
from                    _____             _____               _____
financing                                                          
activities                                                         
                                                                   
Net                   (7,467)             (996)              18,184
(decrease)                                                         
/ increase                                                         
in cash and                                                        
cash                                                               
equivalents                                                        
                                                                   
Cash and               25,438             7,242               7,242
cash                                                               
equivalents                                                        
at the                                                             
beginning                                                          
of period                                                          
                                                                   
Effect of                (50)                 9                  12
foreign                                                            
exchange                _____             _____               _____
rate                                                               
changes                                                            
Cash and               17,921             6,255              25,438
cash                                                               
equivalents             _____             _____               _____
at the end                                                         
of period                                                          



 

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

for the six months ended 30 September 2006

Reconciliation of operating loss to net cash outflow from operating activities


 
                                    Six months Six months       Year
                                      ended 30   ended 30   ended 31
                                     September  September      March
                                          2006       2005       2006
                                       GBP'000    GBP'000    GBP'000
                                                                    
Operating loss                         (4,959)    (3,590)    (9,533)
                                                                    
Adjustments for:                                                    
Change in fair value of derivatives      (308)        439        531
Deferred grant income                     (55)       (71)       (78)
Share-based payment costs                  295        120        311
Depreciation of property, plant and        576        710      1,391
equipment                                                           
Amortisation of intangible fixed            66         55        114
assets                                                              
Loss on disposal of property, plant         50         61        108
and equipment                                                       
                                         _____      _____      _____
Operating cash flows before            (4,335)    (2,276)    (7,156)
movements in working capital                                        
                                                                    
(Increase) / decrease in                 (628)      3,288      1,903
inventories                                                         
Decrease / (increase) in                   282       (93)    (1,135)
receivables                                                         
(Decrease) / increase in payables      (1,621)    (1,167)     18,997
                                                                    
                                         _____      _____      _____
Net cash flows from operating          (6,302)      (248)     12,609
activities                                                          
                                         _____      _____      _____
                                                                    

Analysis of net debt

                        1 April    Cash Exchange    Other         30
                           2006    flow movement non-cash  September
                                                  changes       2006
                        GBP'000 GBP'000  GBP'000  GBP'000    GBP'000
                                                                    
Cash at bank and in      25,438 (7,467)     (50)        -     17,921
hand                                                                
Overdraft                     -       -        -        -          -
                                                                    
                          _____   _____    _____    _____      _____
Cash and cash            25,438 (7,467)     (50)        -     17,921
equivalents                                                         
Loans - amounts            (37)       2        1        -       (34)
falling due in less                                                 
than one year
Loans - amounts           (222)      10       14        -      (198)
falling due in more
than one year                                                       
Obligations under       (1,839)     317        5  (1,495)    (3,012)
finance lease and hire                                              
purchase obligations      _____   _____    _____    _____      _____
                         23,340 (7,138)     (30)  (1,495)     14,677
                                                                    
                          _____   _____    _____    _____      _____



 

NOTES TO THE INTERIM STATEMENT

 

1. General information

The interim financial statements, which have been approved by the Directors on 7 December 2006, are unaudited and do not constitute full financial information as defined in Section 240 of the Companies Act 1985 (as amended).

The comparative figures for the financial year ended 31 March 2006 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

The financial information has been prepared using accounting policies consistent with International Financial Reporting Standards as adopted by the European Union (IFRS), and in accordance with those disclosed in the financial statements for the year ended 31 March 2006.

2. Segment information

As at 30 September 2005, the Group is organised into two operating segments, the sale, manufacture and development of pharmaceutical products and out-licensed product royalties.

 
Six months ended 30                Sale, Out-licensed Consolidated
September 2006               manufacture      product             
                                     and    royalties             
                          development of                          
                          pharmaceutical                          
                                products                          
                                 GBP'000      GBP'000      GBP'000
Revenue                                                           
External sales                    11,124          127       11,251
Inter-segment sales                    -            -            -
                                                                  
                                   _____        _____        _____
Total revenue                     11,124          127       11,251
                                                                  
                                   _____        _____        _____
                                                                  
Operating (loss) / profit        (5,086)          127      (4,959)
                                                                  
Finance income                                                 472
Finance costs                                                (199)
                                                                  
                                                             _____
Loss before tax                                            (4,686)
Tax                                                            165
                                                                  
                                                             _____
Loss for the period,                                       (4,521)
attributable to equity                                            
shareholders                                                 _____
                                                                  
Six months ended 30                                               
September 2005                                                    
Revenue                                                           
External sales                    10,462          224       10,686
Inter-segment sales                    -            -            -
                                                                  
                                   _____        _____        _____
Total revenue                     10,462          224       10,686
                                                                  
                                   _____        _____        _____
                                                                  
Operating (loss) / profit        (3,812)          222      (3,590)

Finance income                                                 103
Finance costs                                                (230)
                                                                  
                                                             _____
Loss before tax                                            (3,717)
Tax                                                            148
                                                                  
                                                             _____
Loss for the period,                                       (3,569)
attributable to equity                                            
shareholders                                                 _____
                                                                  
Year ended 31 March 2006                                          
                                                                  
Revenue                                                           
External sales                    17,269          440       17,709
Inter-segment sales                    -            -            -
                                                                  
                                   _____        _____        _____
Total revenue                     17,269          440       17,709
                                                                  
                                   _____        _____        _____
                                                                  
Operating (loss) / profit        (9,961)          428      (9,533)
                                                                  
Finance income                                                 401
Finance costs                                                (431)
                                                                  
                                                             _____
Loss before tax                                            (9,563)
Tax                                                             75
                                                                  
                                                             _____
Loss for the period,                                       (9,488)
attributable to equity                                            
shareholders                                                 _____

Interim measurement

A significant proportion of the Group's expected revenues arise from its CroFab™ rattlesnake antivenom treatment and is subject to seasonal fluctuations, with peak demand in the first six months of the Group's financial year caused by the hibernation patterns of such snakes. In the year ended 31 March 2006, 74% of CroFab™ revenues arose in the six months ended 30 September 2005.

3. Cost of sales

During the six months ended 30 September 2005, the Group completed a major facility upgrade and expansion of its manufacturing facility in Wales. During this phase of the work, the facility was shutdown for a substantial part of the financial period therefore incurring GBP1,362,000 of expenditure which, under normal circumstances would have been absorbed into stock manufactured during the period. These costs had no effect on the tax credit for the period.

4. Loss per share

The calculation of the basic and diluted loss per share is based on the following data:

 
                                   Six months  Six months        Year
                                     ended 30    ended 30    ended 31
                                    September   September       March
                                         2006        2005        2006
                                      GBP'000     GBP'000     GBP'000
Loss                                                                 
Loss for the purposes of basic        (4,521)     (3,569)     (9,488)
loss per share being net profit                                      
attributable to equity                                        
shareholders of the parent                                           
Effect of dilutive potential                -           -           -
ordinary shares                                                      
                                        _____       _____       _____
Loss for the purposes of diluted      (4,521)     (3,569)     (9,488)
loss per share                                                       
                                        _____       _____       _____
                                                                     
Number of shares                                                     
Weighted average number of shares 260,425,531 242,960,097 246,854,698
for the purposes of basic loss                                       
per share                                                            
Effect of dilutive potential                                         
ordinary shares:                                                     
Share options                               -           -            
                                                                     
                                        _____       _____       _____
Weighted average number of        260,425,531 242,960,097 246,854,698
ordinary shares for the purposes                                     
of diluted loss per share               _____       _____       _____

5. Taxation

                                       Six Six months       Year
                                    months   ended 30   ended 31
                                  ended 30  September      March
                                 September       2005       2006
                                      2006                 
                                   GBP'000    GBP'000    GBP'000
Current tax:                                                    
UK current tax                         185        150        325
Foreign tax                              -        (2)        (3)
Deferred tax                          (20)          -      (247)
                                     _____      _____      _____
                                       165        148         75
                                     _____      _____      _____

Tax credits of GBP185,000 arose in the period to 30 September 2006 as a result of research and development expenditure claimed under the Finance Act 2000 (2005: GBP150,000).

6. Other

Copies of this statement are being sent to all shareholders and will be available to the public at the Company's registered office at The Heath Business and Technical Park, Runcorn, Cheshire, WA7 4QX.

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