RNS Number : 2707A
Lipoxen PLC
31 July 2008
Lipoxen PLC
("Lipoxen" or "the Company")
Interim report and unaudited accounts for the six months ended 30th June 2008
London, UK, 31st July, 2008 - Lipoxen PLC (AIM:LPX), a bio-pharmaceutical company specialising in the development of high value
differentiated biologicals, vaccines and oncology drugs, announces today its interim report and unaudited accounts for the six months ended
30th June 2008.
Operational Highlights
- The announcement of positive Phase I results with ErepoXen, a long-acting erythropoietin, which demonstrated that the product has
the potential to be administered once per month versus 1-3 times per week for marketed EPOs that generate $9 billion in revenues.
- SuliXen, a long-acting insulin, became Lipoxen*s second product to enter the clinic and initial results demonstrated that the
candidate may be progressing towards a superior formulation, which may be administered on a once-monthly basis, as compared to Lantus
(sanofi-aventis), a $3billion product.
- The Company received a grant from the International Aids Vaccine Initiative (IAVI), the world*s leading HIV-AIDS vaccine
organization, for the research and development of an HIV-AIDS vaccine.
- The Company strengthened its IP position with the granting of two key patents in the US relating to its innovative DNA vaccine
delivery technology
- The technology transfer with Schering-Plough for access to Lipoxen*s unique PolyXen drug delivery technology was completed
Enquiries
Lipoxen PLC
M. Scott Maguire, Chief Executive Officer +44 (0)20 7691 3583
Landsbanki Securities (UK) Limited (nominated adviser)
Shaun Dobson / Claes Spg +44 (0)20 7426 9000
Citigate Dewe Rogerson
David Dible / Heather Keohane +44 (0)20 7638 9571
Notes to Editors
Further information on Lipoxen
Lipoxen PLC (AIM:LPX) is a biopharmaceutical company specializing in the development of high value differentiated biologicals, vaccines
and oncology drugs. Products currently under development include improved formulations of important biologicals such as erythropoietin
(EPO), G-CSF, insulin and Interferon-alpha. Lipoxen has two products in clinical development SuliXen, a long-acting human insulin and
ErepoXen�, long-acting EPO. These novel products, which are based on Lipoxen's proprietary PolyXen� technology, each address markets in
excess of US$1 billion.
Lipoxen's technology is designed to improve the stability, biological half-life and immunologic characteristics of therapeutic proteins
naturally. Lipoxen has two further naturally-derived proprietary delivery technologies, ImuXen� and a related liposomal technology for the
formulation of cytotoxic oncology drugs, which are being developed to enhance the efficacy and safety of various vaccines such as a
multivalent Hepatitis B-E and pneumococcal vaccines, as well as a number of anti-cancer agents like paclitaxel. The Company's proprietary
delivery technologies are attracting significant interest and Lipoxen is currently co-developing products with the Serum Institute of India
Limited (one of the world's leading vaccine companies, India's largest biotech company and a major shareholder in Lipoxen) and has license
agreements in place with Baxter International and InterVet, a leading animal health company.
Lipoxen was admitted to trading on the AIM Market of the London Stock Exchange in January 2006.
This announcement includes 'forward-looking statements' which include all statements other than statements of historical facts,
including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for
future operations (including development plans and objectives relating to the Company's products and services), and any statements preceded
by, followed by or that include forward-looking terminology such as the words 'targets', 'believes', 'estimates', 'expects', 'aims',
'intends', 'will', 'can', 'may', 'anticipates', 'would', 'should', 'could' or similar expressions or the negative thereof. Such
forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that
could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the
environment in which the Company will operate in the future. Among the important factors that could cause the Company's actual results,
performance or achievements to differ materially from those in forward-looking statements include those relating to The Company's funding
requirements, regulatory approvals, clinical trials, reliance on third parties, intellectual property, key personnel and other factors.
These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change
in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are
based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.
CHAIRMAN'S STATEMENT
Dear Shareholder,
I am delighted to be able to update you on Lipoxen's progress this year. The first half of 2008 was a very exciting period for us with
the highlight being the generation of our first human clinical data showing that our platform technology has the ability to enhance the
dosing and performance of the most commercially successful biotherapeutics on the market today. In addition we have further candidates in
the clinic and have strengthened our IP position. Since I last updated you we have continued to drive the business forward and look forward
to announcing more positive news soon.
2008 Highlights
- In early 2008 Lipoxen*s business took significant steps forward with candidates entering the clinic and the announcement of
positive Phase I results with ErepoXen, a long-acting erythropoietin, which demonstrated that the product has the potential to be
administered once per month versus 1-3 times per week for marketed EPOs that generate $9 billion in revenues
- SuliXen, a long-acting insulin, became our second product to enter the clinic and initial results demonstrated that the candidate
may be progressing towards a superior formulation, which may be administered on a once-monthly basis, as compared to Lantus
(sanofi-aventis), a $3billion product
- We received a grant from the International Aids Vaccine Initiative (IAVI), the world*s leading HIV-AIDS vaccine organization, for
the research and development of an HIV-AIDS vaccine. Lipoxen is one of a select few to have received such a grant from IAVI
- We strengthened our IP position with the granting of two key patents in the US relating to our innovative DNA vaccine delivery
technology
- The technology transfer with Schering-Plough for access to our unique PolyXen drug delivery technology was completed
Financial Review
The financial results for the Group in the period under review were:
Six months Six months Year to
to 30/06/08 to 30/06/07 31/12/07
Unaudited Unaudited Audited
�'000 �'000 �'000
Turnover 416 517 905
Total pre-tax losses for period 1,962 1,553 3,291
Non-cash component of total pre-tax loss 894 701 1,455
Net cash at end of period 1,213 3,111 2,446
Net asset value at the end of the period 4,596 7,791 6,336
p p p
Loss per share - basic and fully diluted 1.51 1.30 2.78
Net asset value per share - basic 3.84 6.51 5.30
Net asset value per share - fully diluted 3.65 6.14 5.01
Non-cash component of total pre-tax losses:
�'000 �'000 �'000
Depreciation of owned assets 133 122 263
R&D costs - equity settled 697 230 520
Share option expense - equity settled 64 349 672
-------- -------- ----------
Total principal non-cash items 894 701 1,455
====== ===== =======
Research and development - cash 1,046 866 1,836
settled
Other expenses - cash settled 489 538 1,058
----------- ---------- ----------
Total expenses - cash settled 1,535 1,404 2,894
Total non-cash items 894 701 1,455
---------- ---------- ----------
Total administrative expenses 2,429 2,105 4,349
======= ====== ======
% % %
Research and development - cash settled 68.1 61.7 63.4
Other expenses - cash settled 31.9 38.3 36.6
-------- -------- --------
Total expenses - cash settled 100.0 100.0 100.0
===== ===== =====
With further progress from our two high value differentiated biologics expected later this year and our portfolio of delivery
technologies attracting interest from an ever increasing list of partners, I believe that the coming months should deliver further exciting
progress for the Company and we look forward to updating you on our developments.
Brian Richards, CBE
Non-Executive Chairman
London: 30th July 2008
INDEPENDENT REVIEW REPORT TO THE DIRECTORS OF LIPOXEN PLC
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six
months ended 30th June 2008 which comprises the Group income statement, the Group balance sheet, the Group cash flow statement, the Group
statement of changes in equity and related notes. We have read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for
the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this half-yearly financial report has been prepared using accounting policies
consistent with those to be applied in the next annual financial statements and in accordance with International Accounting Standard 34,
"Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30th June 2008 is not prepared, in all material respects, in accordance with the AIM
Rules of the London Stock Exchange and International Accounting Standard 34 as adopted by the European Union.
Emphasis of Matter - Going Concern
In giving our review conclusion on the financial information, which is not qualified, we have considered the adequacy of the disclosures
in Note 2 "Fundamental accounting concept - going concern". This notes that in order to maintain the level of scientific effort required to
develop the Company's technologies and to commercialise them to such a degree as will be necessary to become a cash-generative business, the
Company will need to access new cash in addition to that available to it at the period end; such new cash will either be generated
internally from, as yet, non-contractual feasibility and licensing sources and/or from the raising of new capital. These conditions, along
with the other matters explained in Note 2 to the financial information, indicate the existence of a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going concern.
The financial information does not reflect any adjustments that would be required to be made if they were to be prepared on a basis
other than the going concern basis.
PKF (UK) LLP
London, UK
30th July 2008
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30th JUNE 2008
Six months Six months Year to
to 30/06/08 to 30/06/07 31/12/07
Unaudited Unaudited Audited
� � �
REVENUE 415,968 517,086 905,273
--------------- ---------------- ---------------
ADMINISTRATIVE EXPENSES
Research and development expenditure 1,743,287 1,095,823 2,355,616
Administrative expenses 685,529 1,009,706 1,993,140
---------------- ---------------- ---------------
Total 2,428,816 2,105,529 4,348,756
---------------- ---------------- ----------------
OPERATING LOSS (2,012,848) (1,588,443) (3,443,483)
Finance income 51,174 75,219 152,751
Finance costs - - -
---------------- ---------------- ----------------
LOSS ON ORDINARY ACTIVITIES BEFORE (1,961,674) (1,513,224) (3,290,732)
TAXATION
Income tax credit 157,916 - -
---------------- ---------------- --------------
LOSS FOR THE PERIOD (1,803,758) (1,513,224) (3,290,732)
============ ============ ==========
Loss per share (pence) - basic (1.51)p (1.30)p (2.78)p
and fully diluted
======= ====== =======
CONSOLIDATED BALANCE SHEET AS AT 30th JUNE 2008
As at As at As at
30/06/08 30/06/07 31/12/07
Unaudited Unaudited Audited
� � �
NON-CURRENT ASSETS
Property, plant and equipment 769,586 960,519 866,552
Goodwill 1,061,476 1,061,476 1,061,476
Other receivables - - 500,000
---------------- --------------- ---------------
1,831,062 2,021,995 2,428,028
--------------- --------------- ---------------
CURRENT ASSETS
Trade and other receivables 1,764,324 3,200,571 1,755,640
Cash and cash equivalents 1,213,476 3,110,503 2,445,936
--------------- --------------- ---------------
2,977,800 6,311,074 4,201,576
CURRENT LIABILITIES
Trade and other payables (212,479) (542,558) (293,733)
-------------- --------------- ----------------
NET CURRENT ASSETS 2,765,321 5,768,516 3,907,843
-------------- --------------- ----------------
NET ASSETS 4,596,383 7,790,511 6,335,871
========= ========= =========
CAPITAL AND RESERVES
ATTRIBUTABLE
TO THE COMPANY'S EQUITY
HOLDERS
Share capital 2,231,468 2,231,468 2,231,468
Share premium account 22,508,165 22,508,165 22,508,165
Reverse acquisition reserve (8,252,127) (8,252,127) (8,252,127)
Retained earnings (11,891,123) (8,696,995) (10,151,635)
---------------- ---------------- ----------------
TOTAL EQUITY 4,596,383 7,790,511 6,335,871
========= ========= ==========
Net assets per share - basic 3.84p 6.51p 5.30p
======== ====== ======
Net assets per share - fully 3.65p 6.14p 5.01p
diluted
======== ====== ======
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 30th JUNE 2008
Six months Six months Year to
to 30/06/08 to 30/06/07 31/12/07
Unaudited Unaudited Audited
� � �
Cash outflow from operating (1,405,932) (614,649) (1,309,836)
activities
Interest received 51,174 75,219 152,751
Taxation received 157,916 - -
-------------------- -------------------- -----------------------
--- ---
Net cash outflow from (1,196,842) (539,430) (1,157,085)
operating activities
-------------------- -------------------- -----------------------
--- ---
Cash flows from investing
activities
Purchase of property, plant (35,618) (112,289) (159,201)
and equipment
-------------------- -------------------- -----------------------
--- ---
Cash flows from financing
activities
Issue of equity share capital - 1,072,000 1,072,000
-------------------- -------------------- -----------------------
--- ---
Net (decrease)/increase in (1,232,460) 420,281 (244,286)
cash and cash equivalents
Cash and cash equivalents at 2,445,936 2,690,222 2,690,222
beginning of period
-------------------- -------------------- -----------------------
--- ---
Cash and cash equivalents at 1,213,476 3,110,503 2,445,936
end of period
============== ============== =============
CONSOLIDATED STATEMENT OF CHANGES IN NET EQUITY
FOR THE SIX MONTHS TO 30th JUNE 2008
Share capital Share premium Reverse acquisition Retained earnings Total
reserve
� � � � �
At 1st January 2007 2,210,718 21,456,915 (8,252,127) (7,532,679) 7,882,827
Loss for six months ended 30th - - - (1,513,224) (1,513,224)
June 2007
Shares issued for cash 20,750 1,051,250 - - 1,072,000
Share-based payments - - - 348,908 348,908
________ _________ _________ __________ _________
At 30th June 2007 2,231,468 22,508,165 (8,252,127) (8,696,995) 7,790,511
Loss for six months ended 31st - - - (1,777,508) (1,777,508)
December 2007
Share-based payments - - - 322,868 322,868
________ _________ _________ __________ _________
At 31st December 2007 2,231,468 22,508,165 (8,252,127) (10,151,635) 6,335,871
Loss for six months ended 30th - - - (1,803,758) (1,803,758)
June 2008
Share-based payments - - - 64,270 64,270
________ _________ _________ __________ _________
At 30th June 2008 2,231,468 22,508,165 (8,252,127) (11,891,123) 4,596,383
======= ======== ======== ========= ========
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 30th JUNE 2008
* GENERAL
The interim financial statements for the six months ended 30th June 2008 are unaudited and were approved by the Directors of the Company
on 30th July 2008. The financial information set out above does not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The information given as comparative figures for the year ended 31st December 2007 was extracted from the Company's
audited annual financial statements for that financial year. Those financial statements, which represent the statutory accounts for that
year, and on which the auditors gave an unqualified opinion, have been filed with the Registrar of Companies.
The financial information has been prepared in accordance with IAS 34 "Interim Financial Reporting".
The Company's operations are not subject to seasonality or cyclicality.
* ACCOUNTING POLICIES
The principal accounting policies and methods of computation have remained unchanged from those used in the preparation of the Company's
2007 annual financial statements.
Fundamental accounting concept - going concern
As an early-stage development life sciences business, the Company has incurred operating losses in the period under review,
notwithstanding that substantial clinical and technical progress was also made in the continuing successful development of its proprietary
technologies; consequently, the Company was a net consumer of cash.
In order to maintain the level of scientific effort required to develop the Company's technologies and to commercialise them to such
degree as will be necessary to become a cash-generative business, the Company will need to access new cash in addition to that available to
it at the period end; such new cash will either be generated internally from, as yet, non-contractual feasibility and licensing sources
and/or from the raising of new capital.
The Directors have prepared a financial forecast for the period through to 31st December 2009. The forecast includes assumptions that
the Group will generate cash inflows in this period from:
* the ongoing roll-out and licensing of the Company's technologies with its existing collaborative partners;
* the roll-out and licensing of the Company's technologies with new collaborative partners;
* the contracting of feasibility studies with new partners, based on the successful outcomes of Phase 1 trials in both insulin and
EPO; and
* the raising of new capital.
The above are, variously, dependent upon the timelines related to the successful execution of concomitant pre-clinical and clinical
trials pivotal to the successful continuing development of the Group's technology platforms and the ability to raise finance is dependent
upon market conditions.
While considering that platform technology applications to known and marketed drugs confer lower commercial risks than in new drug
development, the Directors recognise that there are uncertainties surrounding these core issues. If the Group was to prove unable to
generate these additional cash inflows, the cash balance of circa �1.2 million as at 30th June 2008 would be insufficient to fund the
Group's activities at their current level for a period of twelve months from the date of approval of these interim financial statements.
However, the Directors have a reasonable expectation that these uncertainties can be managed to successful outcomes, and that, based on
such assessment, the Group will have adequate resources to continue in operational existence for the foreseeable future. They have therefore
prepared the financial information contained herein on a going concern basis.
The financial information does not reflect any adjustments that would be required to be made if they were to be prepared on a basis
other than the going concern basis.
3. SEGMENTAL ANALYSIS
The revenue and loss before tax are attributable to the one principal activity of the group. The net assets of the Group at 30th
June 2008, 31st December 2007 and 30th June 2007 are wholly attributable to the principal activity. The Group comprises one primary business
segment for reporting purposes. There is no secondary reporting segment.
An analysis of turnover (by location of customer) is given below:
Six months Six months Year to
to 30/06/08 to 30/06/07 31/12/07
Unaudited Unaudited Audited
� � �
United States 339,790 426,641 745,165
Europe 76,178 90,445 160,108
-------------------- ------------------------- --------------------------
------- --
415,968 517,086 905,273
================ =============== ===============
4. RECONCILIATION OF LOSS BEFORE TAXATION TO
CASH OUTFLOWS FROM OPERATING ACTIVITIES
Six months Six months Year to
to 30/06/08 to 30/06/07 31/12/07
Unaudited Unaudited Audited
� � �
Loss before taxation (1,961,674) (1,513,224) (3,290,732)
Adjustments for:
Equity-settled share options 64,270 348,908 671,776
Equity-settled research and 697,257 229,514 520,037
development
Depreciation 132,584 122,435 263,314
Investment income (51,174) (75,219) (152,751)
---------------- ---------------- ----------------
(1,118,737) (887,586) (1,988,356)
(Increase)/decrease in (205,941) (1,501) 652,907
receivables
(Decrease)/increase in (81,254) 274,438 25,613
payables
---------------- ---------------- ----------------
Cash outflow from operating (1,405,932) (614,649) (1,309,836)
activities
========== ========= =========
5. INCOME TAX CREDIT
The income tax credit of �157,916 recognised in the six months ended 30th June 2008 represents the amount received in the period
following the surrender of certain corporation tax losses arising in prior years. These losses relate to qualifying research and development
expenditure, which under current UK legislation may be surrendered in return for a tax rebate.
6. LOSS PER SHARE
Six months Six months Year to
to 30/06/08 to 30/06/07 31/12/07
Unaudited Unaudited Audited
� � �
Weighted average number of 119,593,552 116,483,112 118,370,247
ordinary shares in issue
-------------------- -------------------- ----------------------------
-------- --------
Loss after taxation 1,803,758 1,513,224 3,290,732
-------------------- -------------------- ----------------------------
-------- --------
1.51p 1.30p 2.78p
================ ================== ==================
There is no dilutive effect of share options on the basic loss per share.
7. OTHER RECEIVABLES
In October 2005, Lipoxen Technologies Limited entered into an agreement with its then major shareholder, FDS Pharma Ass (FDS), under
which 15,000,000 ordinary shares were allotted in consideration for the provision by FDS of manufacturing and clinical development services.
As per a Novation Agreement between FDS, Lipoxen Technologies Limited and the Company dated 16th January 2006, the agreement provides for
the allotment of up to 10,174,340 ordinary shares in Lipoxen Plc upon achievement of certain future milestones to the financial value of
US$2,670,764 as approved by shareholders at the Extraordinary General Meeting of the Company held on 16th January 2006. An amount of
�697,257 (6 months to 30/06/07 - �229,514; year to 31/12/07 -�520,037) has been written off to the income statement in the period in respect
of services provided by FDS. An amount of �1,387,594 (30/06/07 - �2,375,374; 31/12/07 - �2,084,851) is included in the balance sheet under
other receivables in respect of services still to be provided under the agreement, which are expected to be provided within one year from the balance sheet date (31/12/07 - �500,000 in more than
one year from the balance sheet date).
8. NET ASSET VALUE PER SHARE
The "basic" net asset value per share figures are calculated on the basis of the net assets attributable to equity shareholders
divided by the number of ordinary shares in issue at the relevant dates.
The "fully diluted" net assets per share figures are calculated by adjusting the number of ordinary shares on the assumption of the
exercise in full of all options and warrant instruments extant as at the relevant dates where the exercise price of any such instrument is
less than the "basic" net asset value per share.
9. Copies of the interim report are available to the public free of charge from the Company at London Bioscience Innovation Centre, 2
Royal College Street, London, NW1 0NH during normal office hours, Saturdays and Sundays excepted, for 14 days from today.
This information is provided by RNS
The company news service from the London Stock Exchange
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