TIDMDNL
RNS Number : 9083P
Diurnal Group PLC
06 September 2017
6 September 2017
Diurnal Group plc
("Diurnal" or the "Company")
Results for the year ended 30 June 2017
First marketing authorisation expected H2 2017
Diurnal Group plc (AIM: DNL), the specialty pharmaceutical
company targeting patient needs in chronic endocrine (hormonal)
diseases, announces its audited results for the year ended 30 June
2017.
Operational highlights
-- Primary endpoint successfully met in European Phase III
Infacort(R) registration trial in paediatric adrenal insufficiency
(AI)
-- Infacort(R) paediatric use marketing authorisation (PUMA)
submitted to the European Medicines Agency (EMA)
-- First patient dosed in food matrix compatibility study
intended to form part of US Phase III registration package for
Infacort(R) ; expanded global patent estate with first US patent
granted for Infacort(R)
-- Completed first phase of establishing the Company's European
commercial infrastructure and implemented the commercial supply
chain for Infacort(R)
-- Significant progress in the European Phase III trial of
Chronocort(R) in congenital adrenal hyperplasia (CAH), with over
75% of patients enrolled
Financial overview
-- Operating loss of GBP12.1m (2016: GBP7.0m) reflecting
increased investment to support the Group's anticipated
development
-- Cash and cash equivalents and held to maturity financial
assets at 30 June 2017 of GBP19.9m (2016: GBP30.1m)
-- Net cash used in operating activities was GBP10.5m (2016:
GBP5.1m), in line with the Board's expectations
Post-period highlights
-- In line with regulatory evaluation, submitted responses to
"Day 120 questions" received from the EMA following review of the
Infacort(R) PUMA package
-- Submitted a proposed Phase III pivotal US registration study
design and supporting data package for Chronocort(R) to the US Food
and Drug Administration (FDA)
-- Further expanded global patent estate with first US patent granted for Chronocort(R)
Martin Whitaker, PhD, Chief Executive Officer of Diurnal,
commented:
"Diurnal has delivered key milestones this year; notably, we
have successfully completed the registration study and subsequent
regulatory submission of Infacort(R) in Europe, with market
authorisation anticipated towards the end of 2017, and commenced
the build out of the Group's commercial capability in Europe, with
first revenues expected in 2018. Also due in the first half of 2018
is the result of the Chronocort(R) European Phase III trial, with
the potential for marketing authorisation in 2019. With a combined
market for Infacort(R) and Chronocort(R) estimated to be in excess
of 400,000 patients, we believe that the potential for Diurnal over
the next 12 months looks very positive."
For further information, please visit www.diurnal.co.uk
or contact:
+44 (0)20 3727
Diurnal Group plc 1000
Martin Whitaker, CEO
Richard Bungay, CFO
Numis Securities Ltd (Nominated +44 (0)20 7260
Adviser and Joint Broker) 1000
Nominated Adviser: Michael Meade,
Paul Gillam, Freddie Barnfield
Corporate Broking: James Black
Panmure Gordon (UK) Limited (Joint +44 (0) 20 7886
Broker) 2500
Corporate Finance: Freddy Crossley,
Duncan Monteith
Corporate Broking: Tom Salvesen
+44 (0)20 3727
FTI Consulting 1000
Simon Conway
Victoria Foster Mitchell
Notes to Editors
About Diurnal
Founded in 2004, Diurnal is a UK-based specialty pharma company
developing high quality products for the global market for the
life-long treatment of chronic endocrine conditions, including the
orphan diseases Congenital Adrenal Hyperplasia and Adrenal
Insufficiency. Its expertise and innovative research activities
focus on circadian-based endocrinology to yield novel product
candidates in the rare and chronic endocrine disease arena.
For further information about Diurnal, please visit
www.diurnal.co.uk
Forward looking statements
Certain information contained in this announcement, including
any information as to the Group's strategy, plans or future
financial or operating performance, constitutes "forward-looking
statements". These forward-looking statements may be identified by
the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "projects", "expects",
"intends", "aims", "plans", "predicts", "may", "will", "seeks"
"could" "targets" "assumes" "positioned" or "should" or, in each
case, their negative or other variations or comparable terminology,
or by discussions of strategy, plans, objectives, goals, future
events or intentions. These forward-looking statements include all
matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements
regarding the intentions, beliefs or current expectations of the
Directors concerning, among other things, the Group's results of
operations, financial condition, prospects, growth, strategies and
the industries in which the Group operates. The directors of the
Company believe that the expectations reflected in these statements
are reasonable, but may be affected by a number of variables which
could cause actual results or trends to differ materially. Each
forward-looking statement speaks only as of the date of the
particular statement.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future or are beyond
the Group's control. Forward-looking statements are not guarantees
of future performance. Even if the Group's actual results of
operations, financial condition and the development of the
industries in which the Group operates are consistent with the
forward-looking statements contained in this document, those
results or developments may not be indicative of results or
developments in subsequent periods.
Chairman's Statement
It is with great pleasure that I report on the significant
progress Diurnal has made this financial year towards becoming a
world-leading, endocrinology-focused specialty pharma company. Most
notably is the delivery of key milestones towards first commercial
revenues. Through this period of development, Diurnal has
maintained its entrepreneurial and patient-centric approach, which
has enabled the progression of a valuable portfolio of novel
prospects and provides a solid platform for our future
development.
Strategy for success
Diurnal aims to develop and commercialise products to address
unmet patient needs in chronic endocrine (hormonal) diseases,
typically where there is either no licensed medicine or where
current treatment does not sufficiently improve the patients'
health. Diurnal has identified a number of such needs within the
field of endocrinology, which the Group believes represents a
multi-billion dollar combined market opportunity. Diurnal is able
to gain valuable insights into the burden of living with these
diseases through our interaction with physicians and patient
groups. These discussions have helped, and continue to help, shape
the Group's development plans, such that we can deliver products
that not only address important unmet needs and improve patients'
lives but also have a positive impact on healthcare budgets.
Investing for development and value creation
During the year, Diurnal continued to make significant clinical
development progress with its late-stage pipeline products, as well
as establishing commercial operations in anticipation of future
product launches. Infacort(R) and Chronocort(R) are in late-stage
clinical development targeting indications of cortisol deficiency:
Infacort(R) has completed a Phase III clinical trial and has been
submitted for marketing authorisation in Europe and Chronocort(R)
is currently undergoing a Phase III clinical trial in Europe. The
Group has put in place strong commercial infrastructure in Europe
to support the planned launch of Infacort(R) , for which the Group
anticipates receiving market authorisation in Europe towards the
end of 2017, at which stage development costs will begin to be
capitalised in accordance with IAS. The Group plans to leverage its
investment in the commercial team through the timely introduction
of Chronocort(R) following completion of the ongoing European Phase
III clinical trial and regulatory review, expected around the end
of 2019. The Group also remains mindful of external growth
opportunities and continues to assess endocrinology assets that fit
within its disease focus. The US remains a key market for Diurnal
and the Group intends to progress the Phase III development of both
Infacort(R) and Chronocort(R) in this region during the new
financial year, whilst assessing the optimal commercialisation
strategy, in parallel.
As planned, the funds raised at the IPO have allowed the Group
to continue to build its team, and we have been able to attract
highly skilled individuals across the organisation. The agreement
with Ashfield Healthcare, announced during the year, has
facilitated a rapid and efficient build-out of our European
commercial organisation without the need to undertake costly
up-front investment in infrastructure in each of our key
territories. I am pleased to see that the Ashfield team has
integrated seamlessly with Diurnal staff and are rapidly
implementing our launch plans.
Diurnal also continues to invest in its earlier-stage pipeline,
with good progress being made with the Group's oral native
testosterone product, which entered human clinical trials during
the year, as well as our programmes in Cushing's Disease (cortisol
excess) and hypothyroidism.
Board changes and governance
Diurnal strengthened its Board during the year with the
appointment of Richard Bungay as Chief Financial Officer. Richard's
extensive experience in corporate roles within the biotechnology
and pharmaceutical sector, with a particular focus on financing,
investor relations and business development, will be invaluable as
the Group executes its ambitious development plans.
As the Group continues its rapid development, the Board and
Senior Management are focused on maintaining a strong system of
internal controls and appropriate risk management systems, to
ensure that the business is well-controlled. The Group has made
significant investments during the year to ensure that it maintains
the highest standards of quality in its operations. The Board
continues to monitor the potential effects of "Brexit" on the
Group's business and, in particular, any impact on the regulatory
framework for pharmaceutical product development, approval and
commercialisation as well as any trading impact as we prepare to
commercialise Infacort(R) across Europe.
People and culture
I would like to thank our employees for their continued support
and hard work in driving the Group's progress towards
commercialising its first products. Few companies in the UK have
successfully taken their own product into a regulatory review and
on to commercialisation: it is a testament to the Diurnal team that
our key milestones have been met during a period of intense
activity and change. I would also like to thank my fellow Board
members for the progress made this year in overseeing a strategy
that will ensure continued and sustainable growth from our
pipeline.
Finally, I would like to thank our shareholders for their
continued support as Diurnal aims to make a real difference to
patients without effective treatment options for chronic endocrine
diseases.
Peter Allen
Chairman
5 September 2017
Operational Review
The financial year to 30 June 2017 has seen Diurnal continue to
build on the momentum following its Initial Public Offering ("IPO")
in December 2015 through the delivery of key milestones,
contributing towards its vision of becoming a world-leading
specialty pharma company focused on endocrinology. In line with the
Group's strategy set out at the time of the IPO, and supported by
the financial strength provided by the IPO, Diurnal has
successfully completed the registration study and subsequent
regulatory submission of Infacort(R) in Europe, with market
authorisation anticipated towards the end of 2017, and commenced
the build out of the Group's commercial capability in Europe, with
first revenues expected in 2018. The progress the Group has made
over the last year has set the business up for a commercial step
change to drive the next stage of development. Diurnal believes
that it has an opportunity to become one of the few UK
biotechnology companies to successfully take a product from concept
to commercialisation.
Diurnal believes that its strategy of developing novel products
using well-characterised active ingredients to meet significant
unmet medical needs offers a lower risk approach than the
development of new chemical or biological entities whilst enabling
significant in-market protection through both patent filings and
regulatory protection. For example, the active ingredient of both
Infacort(R) and Chronocort(R) , hydrocortisone, is extremely
well-tolerated, with an extensive safety database through over 50
years of clinical use. Diurnal's product candidates are protected
by a wholly owned patent portfolio, benefitting from granted or
pending patents in key jurisdictions, along with strong protection
through Orphan Drug designations.
Significant progress towards commercialisation of Infacort(R) in
Europe
Infacort(R) is Diurnal's most clinically advanced product and is
the first preparation of hydrocortisone (the synthetic version of
cortisol) specifically designed for use in children suffering from
adrenal insufficiency (AI), including the related disease,
congenital adrenal hyperplasia (CAH). Currently there is no
licensed hydrocortisone preparation in Europe or the US
specifically designed to treat these young patients. Infacort(R) is
expected to be the first pharmaceutically defined dose and
consistent formulation of hydrocortisone designed specifically for
children. The patented, immediate-release oral product has been
designed to meet the dosing needs of children and is manufactured
using commercially proven technology in paediatric acceptable doses
to give maximum flexibility to clinicians in tailoring treatment to
children as they develop and grow. Currently, pharmacists often
compound (grind) hydrocortisone tablets to a fine powder and
reconstitute it into individual capsules or sachets to achieve the
lower doses required for children. Compounding is not a licensed
method of producing medicines; it can be highly variable and may
result in inaccurate dosing to patients.
At the start of the financial year, Diurnal announced positive
headline data from the pivotal Phase III clinical trial for
Infacort(R) in Europe for paediatric AI. The study met its primary
endpoint, demonstrating a statistically significant (p<0.0001)
increase in cortisol values following administration of Infacort(R)
compared to the pre-dose values. No serious adverse events were
reported. AI (and CAH) are identified as rare diseases in Europe
where there are estimated to be around 4,000 sufferers younger than
the age of six. Left untreated, the disease is associated with
significant morbidity. Many patients from the Phase III clinical
trial are continuing treatment in the Group's European open-label
safety extension trial of long term safety and biochemical disease
control, which will provide further valuable safety data to support
the registration and commercialisation of Infacort(R) .
Following the positive Phase III results, Diurnal submitted a
paediatric use marketing authorisation (PUMA) application for
Infacort(R) to the European Medicines Agency (EMA) in December
2016. Shortly after the end of the financial year, and in line with
regulatory evaluation, Diurnal provided responses to the questions
("Day 120 questions") received from the EMA following their review
of the PUMA package, and the Group continues to anticipate
recommendation for marketing authorisation approval for Infacort(R)
in Europe towards the end of 2017.
Reflecting a small, focused prescribing base, Diurnal intends to
commercialise Infacort(R) itself in the major European markets,
following regulatory approval, in order to retain the full value of
the product and has made significant progress during the year in
establishing its European commercial operations. Diurnal's small
in-house commercial team has been supplemented through a service
agreement with the respected global contract sales organisation
Ashfield Healthcare ("Ashfield") to support the Group in building
its sales and medical infrastructure in major European territories.
Ashfield, under the direction of the Group's commercial leadership,
has completed the planned first phase of establishing a Europe-wide
team to prepare for the anticipated launch of Infacort(R) in 2018,
with nine individuals currently in place in key European
territories and fully integrated with the Diurnal in-house team.
Outside of its core territories, Diurnal will seek local
distribution arrangements where there is a significant market for
the Group's products and executed the first such agreement early in
2017. During the year, Diurnal has also put in place the commercial
supply chain for the manufacture and packaging of Infacort(R) with
leading global expert service providers.
Continued progress in late-stage product pipeline
Diurnal's second late-stage product candidate, Chronocort(R) ,
provides a drug release profile that the Group believes mimics the
body's natural cortisol circadian rhythm, which current therapy is
unable to replicate. Chronocort(R) is designed to improve disease
control for adults with CAH: clinical data has shown that
approximately two thirds of CAH patients are estimated to have poor
disease control. CAH sufferers, even if treated, remain at risk of
death through an adrenal crisis, suffer from high morbidity and a
poor quality of life. The condition is estimated to affect
approximately 51,000 patients in Europe and 20,000 patients in the
US, with approximately 405,000 patients in the rest of the
world.
Chronocort(R) is currently being assessed in a Phase III trial
in Europe, which is designed to study up to 110 patients in an
open-label six-month treatment protocol. Enrolled patients
currently treated with a single or combination of generic steroids
(standard-of-care) will be randomised to Chronocort(R) on a
twice-daily "toothbrush" regimen or will continue on their
standard-of-care regimen. The primary endpoint of the trial is the
control of androgens (sex hormones) on the same or lower total
daily dose of steroid when treated with Chronocort(R) compared to
standard-of-care treatment. This primary endpoint is identical to
the previous successful Phase II clinical trial for Chronocort(R) .
Secondary endpoints will include an assessment of fatigue levels
and the relative effect of Chronocort(R) on body mass index and
bone turnover, all of which are indicative of clinical benefits.
The trial continues to progress well with over 75% of patients
recruited at the end of the financial year and is scheduled to
complete in the first half of 2018, implying a potential market
authorisation in Europe could be forthcoming around the end of
2019.
An open-label safety extension trial of long-term safety,
efficacy and tolerability of Chronocort(R) in patients with CAH,
previously enrolled in the Phase III registration trial, commenced
in August 2016 and is intended to provide further valuable safety
data to support the registration and commercialisation of
Chronocort(R) .
The Company continues to progress discussions with the US Food
and Drug Administration (FDA) regarding the requirements for the
registration programme for Infacort(R) and Chronocort(R) in the US.
Clinical study design requirements for CAH differs between the US
and Europe, meaning that a separate clinical programme will be
required for registration of these two products in the US. In June
2017, the Group dosed the first patient in a food matrix
compatibility study for Infacort(R) in healthy volunteers, which is
intended to support the planned US registration package for
Infacort(R) for the treatment of paediatric AI. Diurnal is
continuing discussions with the FDA to finalise additional
requirements for the planned US registration package for
Infacort(R) . After the end of the financial year Diurnal submitted
a proposed Phase III pivotal US registration study design and
supporting data package for Chronocort(R) to the FDA and, subject
to their agreement, expects to commence this study around the end
of 2017.
Building a novel early-stage endocrinology pipeline
During the year, the Group has continued to build on its strong
platform in underserved endocrinology diseases such as those
associated with the gonads, pituitary and thyroid.
In late 2016, the Group announced dosing of the first patient
with its native oral testosterone product, DITEST, for the
treatment of male hypogonadism in a Phase I clinical study designed
to evaluate pharmacokinetics, safety and tolerability in male
patients with hypogonadism. Following a review of data from the
first cohort of this study, in which the pharmacokinetics of DITEST
were compared to testosterone undecanoate in patients following a
meal, DITEST will progress to the second cohort of the study, which
will compare its pharmacokinetics in a fed state and fasted state.
The results from this study are expected in the first half of
2018.
During the year, the Group initiated studies to assess the
potency of different formulations of its oligonucleotide (siRNA)
therapy, targeted to the pituitary gland, for the potential
treatment of Cushing's Disease (cortisol excess). If successful,
these studies would facilitate preclinical efficacy and safety
studies, ahead of potentially entering a product candidate into
human clinical development.
Following a review of the current market for treatments for
hypothyroidism, the Group has concluded that the needs of patients
for replacement of T4 (thyroxine) are being met adequately with
recently introduced products to the market. Accordingly, the Group
has ceased work on its Tri4Combi(TM) formulation and is currently
finalising plans for the development of a modified-release T3
(triiodothyronine) product, where there remains a significant unmet
medical need.
Maximising the commercial value of the product pipeline
As highlighted above, the Group has made excellent progress
during the year in assembling a European sales and marketing force
that is able to commercialise Infacort(R) and subsequently
Chronocort(R) and other pipeline products. The environment for the
successful introduction of novel healthcare products in the US
remains challenging, in particular with regards to ensuring that
market access is optimised for a product launch. Accordingly,
Diurnal is likely to capitalise on the strong interest in its
programmes and seek a US partner for commercialisation of its
late-stage pipeline products at an appropriate time. Diurnal will
also seek local distribution arrangements for territories outside
the US and Europe where there is a significant market for the
Group's products. In March 2017, Diurnal announced a distribution
agreement with Medison Pharma Limited ("Medison") for Israel.
Medison is a leader in the marketing of specialist-focused products
in Israel and will help Diurnal optimise the value of Infacort(R)
and Chronocort(R) in this territory, subject to approval in Europe
and subsequently in Israel. Diurnal continues to assess
opportunities for similar agreements, addressing selected
high-value markets.
In March 2017, the Group announced a partnership with Clinigen
Group plc's IDIS Managed Access division to launch a Patient Access
programme in Europe for Infacort(R) and Chronocort(R) to ensure
that patients with cortisol deficiency but no other treatment
options can access these medicines as efficiently as possible ahead
of anticipated European approval and commercial launch.
Extensive in-market protection
Diurnal continues to protect its product candidates through an
extensive patent portfolio, benefitting from a number of granted or
pending patents in key jurisdictions. During the year, the Group
received notification of the grant of three US Infacort(R) patents,
of which two key patents have been granted: a composition of matter
patent for the product formulation and a method of treatment patent
for all forms of adrenal insufficiency. These granted patents
provide in-market protection for Infacort(R) to 2034. The Group
expects to continue to expand patent coverage for its pipeline
products in the future.
In addition to the strong and growing patent protection for its
pipeline products, the FDA has granted Chronocort(R) Orphan Drug
Designation in the treatment of both CAH and AI and has granted
Infacort(R) Orphan Drug Designation in the treatment of paediatric
AI. Diurnal has applied for a PUMA for Infacort(R) in Europe,
whilst Chronocort(R) already benefits from orphan drug designations
for CAH and AI in Europe. These orphan drug designations mean
Infacort(R) and Chronocort(R) have the potential to be granted
market and data exclusivity for 10 years in Europe and seven years
in the US post market authorisation.
Outlook
The Group is well-positioned for its anticipated transformation
into a fully-integrated, world-leading, endocrinology-focused
speciality pharma company with the approval of its first product,
Infacort(R) , which Diurnal continues to expect in H2 2017.
Together with its other late-stage product, Chronocort(R) , Diurnal
has the opportunity to build a life-long adrenal franchise,
providing critical medicine in underserved diseases of cortisol
deficiency. With the European Chronocort(R) pivotal trial on track
to read out in the first half of 2018 and with over 75% of patients
already recruited by the end of the financial year, the Group
believes that a marketing authorisation in Europe could be
forthcoming around the end of 2019. Reflecting a combined market
size estimated at over 400,000 patients in Europe and the US alone
for Infacort(R) and Chronocort(R) , the Board believes that the
potential for Diurnal looks very positive.
Martin Whitaker
Chief Executive Officer
5 September 2017
Financial Review
Operating income and expenses
Operating expenses are in a growth phase, reflecting the
increased clinical and development activities together with
investment in headcount and business infrastructure to support the
transition of the business to a fully-integrated speciality pharma
organisation with product origination, development and
commercialisation capabilities. This continued investment in the
business will support its anticipated growth and development in the
coming years.
Research and development expenditure for the year was GBP8.3m
(2016: GBP3.9m). Expenditure on product development and clinical
costs increased in the period as the Group submitted the
Infacort(R) PUMA application to the EMA and continued to progress
Chronocort(R) in a Phase III registration trial in Europe. The
Group also recruited the first patients from the Chronocort(R)
Phase III trial into a long-term follow-on study and commenced a
Phase I study with its native oral testosterone product in
hypogonadal patients. Staff-related expenditure also increased as a
result of the appointment of new staff and the full impact of the
implementation of a new remuneration policy, comprising annual
bonus and long-term incentive schemes in H2 2015, following the
IPO. The Group has not capitalised development costs for
Infacort(R) during the new financial year following the successful
Phase III trial in Europe since a key element of the in-market
protection for Infacort(R) is the exclusively afforded by the PUMA,
which only takes effect once the product is approved by the EU. The
Group intends capitalising Infacort(R) development costs under
IAS38 following the anticipated approval of the PUMA.
Administrative expenses for the year were GBP3.7m (2016:
GBP3.1m). A substantial increase in pre-commercialisation expenses,
as the Group prepares for the anticipated launch of Infacort(R) in
2018, along with the appointment of new staff and the full impact
of the implementation of a new remuneration policy in the prior
period was offset by costs of GBP0.6m in the prior period relating
to fees paid in connection with the AIM admission.
Operating loss
Operating loss for the year increased to GBP12.1m (2016:
GBP7.0m), reflecting the increased operating expenses outlined
above.
Financial income and expense
Financial income in the period was GBP182k (2016: GBP63k), due
to the higher average cash balances during the year: the funds from
the IPO fundraising and the convertible loan were received in late
December 2015 and consequently only had an impact for half of the
prior year. Financial expense for the period was GBP272k (2016:
GBP133k), being the financial expense of the convertible loan. No
interest is payable in cash on this loan, the financial expense
representing the effective interest required under accounting
standards to charge the transaction costs and equity element of the
loan to the income statement over the term of the loan.
Loss on ordinary activities before tax
Loss before tax for the period was GBP12.2m (2016: GBP7.1m).
Tax
The current year includes Research & Development tax credits
relating to the year ended 30 June 2016 of GBP911k, received in
August 2017, as well as the estimated claim in respect of the year
ended 30 June 2017 of GBP1,819k, which has not yet been submitted
to HMRC. The prior year includes a credit in respect of the
approval by HMRC of the R&D tax credit claim for the period
ended 30 June 2015. The Group has not recognised any deferred tax
assets in respect of trading losses arising in either the current
financial period or accumulated losses in previous financial
years.
Earnings per share
Loss per share was 18.0 pence (2016: 15.0 pence). Loss per share
has increased due to the higher operating costs explained
above.
Cash flow
Net cash used in operating activities was GBP10.5m (2016:
GBP5.1m), driven by the planned increase in investment in R&D
and business infrastructure during the year. Net cash from
investing activities was GBP3.2m (2016: net cash used in investing
activities GBP14.0m) reflecting a net movement from longer-dated
held to maturity financial assets to short-dated cash and cash
equivalents. Net cash generated by financing during the prior
period of GBP29.1m reflects the net proceeds of the issue of shares
in the IPO and funds received from issue of the convertible loan in
December 2015.
Balance sheet
Total assets decreased to GBP23.9m (2016: GBP30.7m), largely
reflecting the utilisation of cash in operating activities
highlighted above. Held to maturity financial assets were GBP11.0m
(2016: GBP14.0m) and cash and cash equivalents were GBP8.9m (2016:
GBP16.1m). Total liabilities increased to GBP6.9m (2016: GBP4.7m),
reflecting an increase in trade payables and accruals at the
year-end associated with the increased level of operating
activities. Net assets were GBP17.1m (2016: GBP25.9m).
Comparative information
The Group has applied the principles of reverse acquisition
accounting under IFRS 3 'Business Combinations' in the presentation
of consolidated shareholders' equity for the prior period. These
comparative periods show the results of the accounting acquirer
(Diurnal Limited) along with the share capital structure of the
parent company (Diurnal Group plc). As a result, the consolidated
share capital and share premium presented for comparative periods
is that which was in existence immediately following the share for
share exchange which occurred on 1 December 2015, and which is
explained further in Note 2 to the financial statements.
Richard Bungay
Chief Financial Officer
5 September 2017
Consolidated income statement
for the year ended 30 June 2017
Year Year
ended ended
30 Jun 30 Jun
2017 2016
Note GBP000 GBP000
Research and development
expenditure (8,340) (3,886)
Administrative expenses (3,734) (3,106)
Other operating income 9 -
--------- --------
Operating loss (12,065) (6,992)
Financial income 4 182 63
Financial expense 5 (272) (133)
Loss before tax (12,155) (7,062)
Taxation 6 2,730 491
Loss for the year (9,425) (6,571)
--------- --------
Basic and diluted
loss per share (pence
per share) 7 (18.0) (15.0)
--------- --------
All activities relate to continuing operations.
Consolidated statement of comprehensive income
for the year ended 30 June 2017
Year Year
ended ended
30 Jun 30 Jun
2017 2016
GBP000 GBP000
Loss for the year (9,425) (6,571)
-------- --------
Consolidated balance sheet
as at 30 June 2017
2017 2016
Note GBP000 GBP000
Non-current assets
Intangible assets 4 6
Property, plant and
equipment 18 3
-------- --------
22 9
Current assets
Trade and other receivables 8 4,025 530
Held to maturity financial
assets 9 11,000 14,000
Cash and cash equivalents 10 8,881 16,114
-------- --------
23,906 30,644
Total assets 23,928 30,653
Current liabilities
Trade and other payables 11 (3,341) (1,480)
-------- --------
(3,341) (1,480)
Non-current liabilities
Loans and borrowings 12 (3,511) (3,239)
-------- --------
(3,511) (3,239)
Total liabilities (6,852) (4,719)
Net assets 17,076 25,934
-------- --------
Equity
Share capital 13 2,616 2,610
Share premium 23,675 23,632
Consolidation reserve (2,943) (2,943)
Other reserve 1,458 1,458
(Accumulated losses)/Retained
earnings (7,730) 1,177
-------- --------
Total equity 17,076 25,934
-------- --------
Consolidated statement of changes in equity
for the year ended 30 June 2017
(Accumulated
losses)/
Share Share Consolidation Other Retained
capital premium reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 30
June 2015 15,351 - (2,943) - (6,367) 6,041
Loss for the
year and total
comprehensive
loss for the
year - - - - (6,571) (6,571)
Equity settled
share based payment
transactions - - - - 490 490
Reduction of
capital (12,107) - - - 12,107 -
Issue of shares
for cash 884 24,465 - - - 25,349
Costs charged
against share
premium - (833) - - - (833)
Equity component
of convertible
loan - - - 1,486 - 1,486
Issue expenses
of convertible
loan - - - (28) - (28)
Repurchase of
deferred shares (1,518) - - - 1,518 -
Total transactions
with owners recorded
directly in equity (12,741) 23,632 - 1,458 14,115 26,464
--------- --------- -------------- --------- ------------- --------
Balance at 30
June 2016 2,610 23,632 (2,943) 1,458 1,177 25,934
Loss for the
year and total
comprehensive
loss for the
year - - - - (9,425) (9,425)
Equity settled
share based payment
transactions - - - - 518 518
Issue of shares
for cash 6 43 - - - 49
--------- --------- -------------- --------- ------------- --------
Total transactions
with owners recorded
directly in equity 6 43 - - (8,907) (8,858)
--------- --------- -------------- --------- ------------- --------
Balance at 30
June 2017 2,616 23,675 (2,943) 1,458 (7,730) 17,076
--------- --------- -------------- --------- ------------- --------
Consolidated cash flow statement
for the year ended 30 June 2017
Year ended Year ended
30 Jun 2017 30 Jun 2016
Note GBP000 GBP000
Cash flows from operating
activities
Loss for the year (9,425) (6,571)
Adjustments for:
Depreciation, amortisation
and impairment 7 6
Share-based payment 518 490
Financial income 4 (182) (63)
Finance expenses 5 272 133
Taxation 6 (2,730) (491)
Increase in trade and
other receivables (771) (135)
Increase in trade and
other payables 1,861 1,081
------------ ------------
Cash used in operations (10,450) (5,550)
Interest paid - -
Tax received 7 - 491
------------ ------------
Net cash used in operating
activities (10,450) (5,059)
------------ ------------
Cash flows from investing
activities
Additions of property, (20) -
plant and equipment
Purchases of held to
maturity financial assets (11,000) (14,000)
Disposal of held to maturity 14,000 -
financial assets
Interest received 189 44
------------ ------------
Net cash from / (used
in) investing activities 3,169 (13,956)
------------ ------------
Cash flows from financing
activities
Net proceeds from issue
of share capital 48 24,516
Repayment of borrowings - (24)
Net proceeds from issue
of borrowings - 4,564
------------ ------------
Net cash generated by
financing activities 48 29,056
------------ ------------
Net (decrease) / increase
in cash and cash equivalents (7,233) 10,041
Cash and cash equivalents
at the start of the year 16,114 6,073
------------ ------------
Cash and cash equivalents
at the end of the year 8,881 16,114
------------ ------------
Notes to the consolidated financial statements
1 Corporate information
Diurnal Group plc (the "Company" or the "parent") is a public
limited company incorporated and domiciled in the United Kingdom,
and registered in England (registered number: 09846650), whose
shares are publicly traded. The registered office is located at
Cardiff Medicentre, Heath Park, Cardiff CF14 4UJ.
The Group is a clinical stage specialty pharmaceutical business
targeting patient needs in chronic endocrine (hormonal)
diseases.
To facilitate its IPO in December 2015, the Company was
incorporated as Project Dime Limited on 28 October 2015, acquired
the entire issued share capital of Diurnal Limited under a share
for share exchange on 1 December 2015 and reregistered as a public
company and changed its name to Diurnal Group plc on 4 December
2015. The Company has applied the principles of reverse acquisition
accounting in the preparation of the consolidated financial
information.
2. Basis of preparation
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 30 June 2017 or 2016
but is derived from those accounts. Statutory accounts for 2016
have been delivered to the registrar of companies, and those for
2017 will be delivered in due course. The auditor has reported on
those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
The consolidated financial information has been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union, IFRIC interpretations and the
Companies Act 2006. The financial information contained in these
financial statements have been prepared under the historical cost
convention, and on a going concern basis.
The accounting policies used in the financial information are
consistent with those used in the prior year. The following adopted
IFRSs have been issued but have not been applied by the Group in
these financial statements. Their adoption is not expected to have
a material effect on the financial statements unless otherwise
indicated:
-- IFRS 2 Share-based Payment Amendments to clarify the
classification and measurement of share-based payment transactions
effective 1 January 2018
-- IFRS 9 Financial Instruments effective 1 January 2018
-- IFRS 15 Revenue from Contracts with Customers effective 1 January 2018
-- IFRS 16 Leases effective 1 January 2019
-- IFRS 17 Insurance Contracts effective 1 January 2021
-- IAS 1 Presentation of Financial Statements Amendments as
result of the Disclosure initiative effective 1 January 2017
-- IAS 7 Statement of Cash Flows Amendments as result of the
Disclosure initiative effective 1 January 2017
-- IAS 12 Income Taxes Amendments regarding the recognition of
deferred tax assets for unrealised losses effective 1 January
2017
-- IAS 40 Investment Property Amendments to clarify transfers or
property to, or from, investment property effective 1 January
2018
The preparation of financial information in conformity with IFRS
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual events ultimately may differ from those
estimates.
3. Segmental information
The Board regularly reviews the Group's performance and balance
sheet position for its operations and receives financial
information for the Group as a whole. As a consequence, the Group
has one reportable segment, which is Clinical Development.
Segmental profit is measured at operating loss level, as shown on
the face of the Consolidated Income Statement. As there is only one
reportable segment whose losses, expenses, assets, liabilities and
cash flows are measured and reported on a basis consistent with the
financial statements, no additional numerical disclosures are
necessary.
4. Finance income
Year ended Year ended
30 Jun 30 Jun
2017 2016
GBP000 GBP000
Interest receivable on cash and
cash equivalents and term deposits 182 63
Total finance income 182 63
----------- -----------
5. Finance expenses
Year ended Year ended
30 Jun 30 Jun
2017 2016
GBP000 GBP000
Total interest payable on loans 272 133
Total finance expense 272 133
----------- -----------
6. Taxation
The Group is entitled to claim tax credits in the United Kingdom
under the UK research and development (R&D) small or
medium-sized enterprise (SME) scheme, which provides additional
taxation relief for qualifying expenditure on R&D activities,
and includes an option to surrender a portion of tax losses arising
from qualifying activities in return for a cash payment from HM
Revenue & Customs (HMRC). The tax credit included in the Income
Statement for the year ended 30 June 2016 reflected the approval by
HMRC of the R&D tax credit claim in respect of the 13-month
period ended 30 June 2015. With effect from the year ended 30 June
2017, the Group will reflect R&D tax credits on an accruals
basis since it has established a track record of agreeing claims
with HMRC. Consequently, the Income Statement for the year ended 30
June 2017 reflects the R&D tax credit claim for the year ended
30 June 2016, which was approved by HMRC in July 2017, along with
the estimated claim for the year ended 30 June 2017. The amount in
respect of the year ended 30 June 2017 has not yet been agreed with
HMRC, although there is no reason to believe that this claim will
be rejected.
Year ended Year ended
30 Jun 30 Jun
2017 2016
GBP000 GBP000
Current tax:
- UK corporation tax on losses
of year - -
- Research and development tax
credit receivable for the current
year (1,819) -
- Prior year adjustment in respect
of research and development tax
credit (911) (491)
Deferred tax:
- Origination and reversal of
temporary differences - -
----------- -----------
Tax on loss on ordinary activities (2,730) (491)
----------- -----------
Reconciliation of total tax expense
The tax assessed for the year varies from the small company rate
of corporation tax as explained below:
Year ended Year ended
30 Jun 30 Jun
2017 2016
GBP000 GBP000
Loss on ordinary activities before
tax (12,155) (7,062)
----------- -----------
Tax at the standard rate of UK
corporation tax rate of 19.75%
(2015/16: 20%) (2,401) (1,412)
Effects of:
Expenses not deductible for tax 1 -
purposes
Depreciation in excess of capital (3) -
allowances
Enhanced research and development (741) -
relief
Share based payments 102 104
Prior year adjustments (911) (491)
Tax losses carried forward 1,223 1,308
----------- -----------
Current tax credits for the year (2,730) (491)
----------- -----------
The standard rate of UK corporation tax was reduced from 20% to
19% with effect from 1 April 2017, giving rise to an effective rate
of tax for the year ended 30 June 2017 of 19.75%.
7. Loss per share
Year ended Year ended
30 Jun 30 Jun
2017 2016
Loss for the year (GBP000) (9,425) (6,571)
Weighted average number of shares
(000) 52,235 43,746
Basic and diluted loss per share
(pence per share) (18.0) (15.0)
----------- -----------
The diluted loss per share is identical to the basic loss per
share in all years, as potentially dilutive shares are not treated
as such since they would reduce the loss per share.
8. Trade and other receivables
2017 2016
GBP000 GBP000
VAT recoverable 300 37
Prepayments 705 345
Other debtors 290 148
R&D tax credit claims receivable 2,730 -
------- -------
4,025 530
------- -------
9. Held to maturity financial assets
2017 2016
GBP000 GBP000
Bank term deposits 11,000 14,000
------- -------
The effective interest rate on bank deposits was 0.64% and these
deposits had a weighted average maturity of 7 months. The Group's
treasury policy requires that deposits are held with financial
institutions having a minimum credit rating of A- (from Moody's
S&P or Fitch), that individual counterparty exposure is no more
than GBP8m and that the maximum term is 12 months. The Group's
deposits are in line with this policy.
10. Cash and cash equivalents
2017 2016
GBP000 GBP000
Cash at bank and on hand 8,881 16,114
------- -------
The Group holds its cash and cash equivalents with its clearing
bank and in a AAA rated Liquidity fund providing same day access to
its cash. Although the Liquidity fund balance exceeds the Group's
GBP8m counterparty limit, the Board is satisfied that the
individual counterparty risk within the fund is significantly below
this amount.
11. Trade and other payables
2017 2016
GBP000 GBP000
Trade payables 1,724 235
Other tax and social security 65 36
Accrued expenses and deferred income 1,552 1,209
------- -------
3,341 1,480
------- -------
12. Loans and borrowings
2017 2016
GBP000 GBP000
Non-current loans and borrowings
Convertible Loans 3,511 3,239
------- -------
IP Group convertible loan
On 24 December 2015 the Company received GBP4.7m from IP2IPO
Limited, a wholly owned subsidiary of IP Group plc under a
convertible loan agreement. The convertible loan facility is
interest-free and unsecured with a maturity date of 24 December
2020 (or such other date as the parties may agree) at which point
the Company may either repay the principal amount outstanding in
full or convert such amount into non-voting shares at a lower
nominal value to that of the Ordinary Shares to ensure that IP2IPO
Limited did not have control of the Company. IP2IPO Limited may
convert the principal outstanding in whole or in parts exceeding
GBP0.1m into ordinary shares calculated at the IPO share price of
GBP1.44 per share conditional on it not having control of the
Company resulting from the conversion.
The convertible loan note is a compound financial instrument
containing a host financial liability and an equity component as
there is a contractual obligation to deliver a fixed number of
shares at the IPO price if the loan note is converted.
At 30 June 2017, the amount outstanding comprised:
2017 2016
GBP000 GBP000
Loan amount brought forward 3,239 -
Face value of convertible loan
issued on 24 December 2015 - 4,651
Equity Component - (1,486)
Issue costs relating to the liability
element - (59)
Accrued interest 272 133
Liability component at year end 3,511 3,239
Less amount included in current
liabilities - -
Included in non-current liabilities 3,511 3,239
------- --------
13. Share capital
2017 2017 2016 2016
Number GBP000 Number GBP000
Ordinary shares of GBP0.05
each 52,320,759 2,616 52,210,759 2,610
----------- ------- ----------- -------
The Group has applied the principles of reverse acquisition
accounting under IFRS 3 'Business Combinations' in the presentation
of consolidated shareholders' equity for comparative periods. These
comparative periods show the results of the accounting acquirer
(Diurnal Limited) along with the share capital structure of the
parent company (Diurnal Group plc). As a result, the consolidated
share capital and share premium presented for comparative periods
is that which was in existence immediately following the share for
share exchange which occurred on 1 December 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCGDCSUGBGRU
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September 06, 2017 02:00 ET (06:00 GMT)
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