RNS Number:4938L
Norwood Immunology Ld
03 November 2006
FOR IMMEDIATE RELEASE 3 NOVEMBER 2006
NORWOOD IMMUNOLOGY LIMITED
PRELIMINARY RESULTS
For The Year Ended 30 June 2006
Norwood Immunology Limited ('Norwood Immunology' or 'the Company') (AIM:NIM),
the company focused on the rejuvenation of the immune system, today announces
its preliminary results for the year ended 30 June 2006.
Financial Highlights
* In accordance with permissible accounting standards for AIM, as
set out in AIM Notice 22, the Company has adopted Australian IFRS for ongoing
financial information with effect from the year ended 30 June 2006, this
includes restated prior year comparatives for the year to June 2005.
* The loss after tax for the year ended 30 June 2006 was A$6,714,549
(2005: A$5,228,847), approximately #2.7 million (2005: #2.3 million).
* Cash at 30 June 2006 was A$237,805 (2005: A$6,769,585), approximately
#0.1 million (2005: #2.8 million).
* Basic loss per share of - A$0.054 (2005: - A$0.043), approximately
-#0.022 (2005: -#0.019).
All amounts expressed in pounds sterling have been converted, on a proforma
basis at the 30 June 2006 rate of A$1:# 0.4021 (2005:A$1:#0.442).
In September 2006, the Company entered into a secured facility agreement with
Indus Opportunity Master Fund, Ltd ('Indus') for A$1 million (the "Loan"). The
Loan is a drawdown facility for up to A$1 million repayable within 12 months of
the first drawing of funds and bearing monthly interest. To date A$960,000 has
been drawn down against that facility. On 27 October 2006 the facility was
extended to up to A$2 million and repayment extended to not later than 30 June
2008. At the time the facility was extended, Indus was also granted the option
to convert any or all of the outstanding balance in ordinary shares at an issue
price of #0.12 per share.
The Company has been seeking to raise new capital to fund the development and
commercialisation of its current technology and potentially to progress merger
and acquisition opportunities. On 31 October 2006, the Company announced that it
was proposing to raise approximately #6.6 million (#6.2 million net of expenses)
pursuant to a placement of 55,000,000 ordinary shares in the Company ("Placement
Shares") at an issue price of #0.12 per share to a number of institutional
investors in the United Kingdom and the USA ("Placement"). In order to complete
the Placement, approval of the Company's shareholders is required to issue the
Placement Shares.
Placing commitment letters have been received from proposed placees, addressed
either directly to the Company or to the Company's Nominated Adviser, KBC Peel
Hunt Limited ("KBC") under a Placing Agreement between the Company and KBC. In
order to complete the Placement, approval of the Company's shareholders is
required to issue the Placement Shares and the Company and the placees will need
to meet their respective obligations under the placing commitment letters.
In addition, the Company announced the proposed issue of 48,014,489 ordinary
shares in the Company ("Acquisition Shares") as part consideration for the
proposed acquisition (Acquisition) of all of the issued shares of Bestewil
Holding B.V. (Bestewil) and its 100% subsidiary Virosome Biologicals B.V.
(Virosome Biologicals), both of which are incorporated in the Netherlands. In
order to complete the Acquisition, approval of the Company's shareholders is
required to issue the Acquisition Shares to the shareholders of Bestewil.
As at the date of approval of these financial statements, the Company was in
receipt of irrevocable commitments from Indus and Norwood Abbey Limited to vote
their shares in favour of these resolutions; such votes would be sufficient to
carry the vote to approve the Placement and Acquisition.
Further to the issue of the Acquisition Shares and the Placement Shares, the
Company in due course proposes to issue 1,315,435 ordinary shares ("Third Party
Shares") in the Company as part payment for professional services provided by
third parties in relation to the Acquisition. Shareholder approval for the issue
of the Third Party Shares is not being sought as the issue of these shares will
fall under the Company's general to authority under its constitution to issue
shares representing not more than 10% of its share capital.
As the issue of shares for the Placement and the Acquisition is subject to
shareholder approval at an EGM dated 27 November 2006, the Loan provided by
Indus will in the interim period provide short term working capital funding.
Commercial Development
* November 2005, Phase II trial commenced at University of Texas, M D
Anderson Cancer Center, in Houston, to determine whether an enhanced vaccine
response can be achieved by using the Company's therapy as an adjunctive
immunology therapy for vaccinations. The trial is using a melanoma vaccine
used by M D Anderson to provide this proof of concept.
* December 2005, Preclinical trial commenced at the Massachusetts General
Hospital (MGH), in Boston USA, to determine whether an adult thymus,
reactivated using the Company's therapy, can create an immune system
tolerant to donor tissue, thus enabling a transplanted kidney to be accepted
and survive without the need for long-term immuno-suppressive drugs.
* February 2006, Phase II clinical trial commenced in cancer patients
undergoing autologous (self-derived) bone marrow transplant (BMT) in the
USA. The first of the 80 patients (40 treated; 40 controlled) was enrolled
at University of Texas, M.D. Anderson Cancer Center, of Houston, one of
three centres for the trial. This clinical trial is being undertaken to
determine whether there is enhanced immune recovery as a result of using the
Company's therapy.
* June 2006, pilot clinical study in Melbourne, Australia completed in 83
cancer patients (40 treated; 43 control) undergoing chemotherapy and bone
marrow transplantation (BMT). The study was used to determine whether a
luteinising hormone releasing hormone (LHRH) agonist can enhance the renewal
of T cells, which are essential for immune defence mechanisms. Analysis of
the key data shows positive results demonstrating a significant increase in
naive CD4+ T cells and CD4+ TRECs, confirming the interim results reported
previously. The final results of the study are currently being fully
analyzed and a manuscript prepared for submission to a peer reviewed
journal.
* Since 30 June 2005 six additional patents have been granted across the
Company's eight patent families. Currently the Company's patent portfolio
consists of 98 pending applications and 19 granted applications.
Research Agreement
* March 2006, signed a tripartite research agreement with the Australian
Stem Cell Centre (ASCC) and Monash University, to form an important new
technology platform combining immune system research with stem cell
know-how. The research will focus on controlling the immune system to
minimise rejection of stem cell therapies introduced into the body. This may
enable the successful engraftment of stem cells to repair organs and tissues
that are damaged as a result of disease processes. The new research
technology has the potential to add significant value to Norwood
Immunology's and the ASCC's Intellectual Property pipelines.
Corporate Development
* January 2006, entered into a call option ("the Option") to acquire all
the share capital of Netherlands-based Bestewil Holdings B.V. ("Bestewil")
the holding company of Virosome Biologicals B.V. ("Virosome Biologicals").
Virosome Biologicals is developing and commercialising a proprietary
platform enabling technology for vaccines and is currently undertaking a
Phase II trial in intranasal influenza in partnership with Solvay
Pharmaceuticals, having successfully completed a phase I trial in May 2006.
* Subsequent to the year end, on 10 October 2006, the Company allowed the
Option to lapse. Having considered the merits of the acquisition on the
terms set out in the Option ("Terms"), in consultation with certain key
shareholders and potential funders, the Board concluded that the exercise of
the Option and the dilution to existing shareholders that would result made
the acquisition on the Terms not in the best interests of the Company's
shareholders. To date, Euro 725,000 had been paid under the Option (Euro500,000
to 30 June 2006).
* However, as announced, on 31 October 2006, revised terms for the
proposed Acquisition of all of the issued shares of Bestewil and its 100%
subsidiary Virosome Biologicals have been agreed and approval is being
sought from the Company's shareholders at an EGM on 27 November 2006 to
issue the Acquisition Shares to the shareholders of Bestewil.
* Under the revised terms of the Acquisition, the agreed consideration is
paid by the issue of 48,014,489 Acquisition Shares (which is equivalent to
approximately 21.0% of the enlarged share capital of the Company after
completion of the Acquisition and the Placement) and Euro3.5 million being paid
in cash (Euro3 million of which is payable on completion and Euro0.5 million being
deferred until 18 months after completion, with rolled up interest payable
on the deferred amount at 6% per annum). Based on the Company closing share
price of #0.20 on 26 October 2006, and a 0.67 Euro/# exchange rate this is
equivalent to a total consideration of #11.9 million.
On completion of the Acquisition and the Placement the shareholders of
Bestewil will collectively hold approximately 21% of the enlarged issued share
capital of the Company.
* Virosome Biologicals' technology is seen as complementary to the
Company's core technology for rejuvenation of the adult immune system and
may be applicable to a wide range of vaccine applications. Post acquisition,
the new entity will have combined research capabilities, a joint
intellectual property portfolio and a suite of clinical trials; which we
believe will have a range of opportunities for commercial development in the
field of immunology.
Richard Williams, CEO of Norwood Immunology commented: 'The last 12 months have
been an important and challenging period, as the Company has sought to complete
fundraising activities and progress the potential acquisition of Bestewil. We
believe this represents an exciting opportunity for the Company. Furthermore,
the commencement of our US studies during the year has been an important
milestone for Norwood Immunology. 2006/07 should be a significant year in the
development of the Company as we seek to progress all of these activities.'
For further information contact:
Richard Williams, Chief Executive Officer, Norwood Immunology Limited
www.norwoodimmunology.com
+44 (0)7860 295153
Lisa Baderoon, Mark Court, Mary-Jane Johnson, Buchanan Communications
+44 (0)207 466 5000
CHAIRMAN'S STATEMENT
It is with great pleasure that we present Norwood Immunology's preliminary
results for the year ended 30 June 2006.
BACKGROUND
Norwood Immunology is focused on creating, manipulating and activating the
immune system. It is developing and commercialising its technologies, which aim
to rejuvenate and enhance the immune system through the re-growth of the thymus,
improvements in bone marrow function and enhancement of T cell functionality.
The thymus, a gland situated just above the heart, can be considered the core of
the immune system, as it is responsible for the production of the majority of T
cells. However, adults progressively suffer reduced new T cell output as a
result of the thymus atrophying after puberty, predominantly as a result of the
effect of sex steroids on thymic and bone marrow function. The activity of
existing T cells and quantity of naive T cells being produced is central to the
body's ability to fight infections and damaged or abnormal cells, such as
cancers. Paradoxically, many of the therapies for cancer in use today suppress
the immune system thus reducing the body's ability to recover from therapy and
fight residual cancers.
Norwood Immunology has identified a number of clinical contexts in which
rejuvenating the thymus and the immune system could confer significant clinical
benefits on patients, using a class of drugs already in wide clinical use today
(GnRH analogues - principally used in the treatment of prostate cancer and
endometriosis). The new use of this drug for the rejuvenation of the immune
system could potentially provide significant incremental sales opportunities.
The main areas where development efforts are currently being focused include
oncology, therapeutic vaccines and enhancing the treatment of tolerance of
transplanted organs or stem cells; with longer-term plans for viral diseases,
autoimmune diseases and HIV/AIDS.
COMMERCIAL DEVELOPMENT
We are pleased to report that progress has been made in advancing our US
clinical trials during the year with Norwood Immunology announcing the
commencement of a number of its US based clinical trials.
In November 2005, the Company commenced its Phase II clinical trial in
collaboration with The University of Texas M D Anderson Cancer Center, of
Houston, to determine whether an enhanced vaccine response can be achieved by
using the Company's therapy to increase thymic activity and the output and
function of T-cells via sex steroid suppression using Lupron Depot(R). The
trial, which has as its principal investigator, Dr Patrick Hwu, of the
Department of Melanoma Medical Oncology at the M D Anderson Cancer Center, will
involve Lupron Depot(R) being administered as an adjunctive immunology therapy
with an experimental melanoma vaccine used by Dr Hwu, to determine whether an
enhanced immune response to that vaccine can be created. It is expected to
involve up to 100 patients (50 treated; 50 controlled).
In December 2005, Norwood commenced the preclinical trial at Massachusetts
General Hospital (MGH), in Boston USA, to examine whether using the Company's
therapy, the immune system can be manipulated so that a transplanted donor
kidney can be accepted as "self" and survive without the need for long-term
immuno-suppressive drugs. This trial will test whether the thymus, having been
reactivated by the Company's technology can create a new immune system that is
tolerant to that donor, particularly in the presence of donor haemopoietic stem
cells (the stem cells that form blood and immune cells). This proof of concept
study should determine whether tolerance to donated organ and tissue transplants
can be established without the need for prolonged immuno-suppressants.
In February 2006, Norwood announced the commencement of the Phase II clinical
trial in cancer patients undergoing autologous (self-derived) bone marrow
transplant (BMT) in the USA. This double blind randomized Phase II clinical
trial, which has been accepted by the U.S. Food and Drug Administration (FDA),
is being undertaken to determine whether there is enhanced immune recovery as a
result of using the Company's technology. It is being conducted in patients
receiving standard of care high dose myeloablative chemotherapy therapy and
autologous bone marrow transplant (also known as haematopoietic stem cell
transplant) for the treatment of Hodgkin's disease, non-Hodgkin's lymphoma or
multiple myeloma. Adult patients normally have very poor immune recovery
following such intense chemotherapy treatment.
The primary endpoint of the trial is T cell response to a neo-antigen vaccine,
as an indicator of enhanced immune response. Secondary endpoints include
responses to 3 common vaccines and extensive analysis of T cells and other
immune cells in the blood. The first of the 80 patients (40 treated; 40
controlled) was enrolled at University of Texas, M.D. Anderson Cancer Center, of
Houston, and will be randomized to receive either Lupron Depot(R) or placebo.
The study Chairperson, Professor Richard Champlin, Professor and Chair, Blood
and Marrow Transplantation Department at M.D. Anderson Cancer Center, has
developed this study in a collaborative effort with a consortium of other
leading clinicians and pre-eminent institutions in the field of cancer,
including both the Dana-Farber Cancer Institute and the University of Minnesota.
This consortium, co-funded by the National Cancer Institute and the National
Institute of Allergy and Infectious Diseases is led by Dr Lee Nadler, Senior
Vice President, Experimental Medicine, Dana Farber Cancer Institute and
Professor of Medicine, Harvard Medical School.
Our second US BMT trial in allogeneic (donor-derived) BMT patients has a similar
protocol and is planned to follow the autologous trial in due course.
In June 2006, the Company announced the completion of its pilot clinical study
in Melbourne, Australia in cancer patients undergoing chemotherapy and bone
marrow transplantation (BMT). The study was used to determine whether a
luteinising hormone releasing hormone (LHRH) agonist can enhance the renewal of
T cells, which are essential for immune defence mechanisms.
This non-randomized, open labelled study was initiated to explore whether the
Company's technology was safe and well tolerated could enhance immune recovery
in immunosuppressed patients, and so confirm the effects previously demonstrated
pre-clinically and in prostate patients, by the Company. A major problem for BMT
patients is that the standard of care chemotherapy also causes permanent damage
to the immune system. While children recover adequate immunity from
approximately 6 months post BMT, adults rarely regain specific immune defence
mechanisms.
The study was conducted in 83 patients, aged 18 years or older, with either
leukaemia, lymphoma or multiple myeloma (40 treated; 43 control). It was carried
out for approximately 13 months in male or female patients at the Alfred
Hospital and Peter MacCallum Cancer Institute in Melbourne. Patients received
standard of care cancer high-dose myeloablative chemotherapy, with or without a
course of an LHRH agonist and either autologous (self-derived) or allogeneic
(from a donor) BMT.
The primary endpoint was to determine whether the LHRH agonist could induce
renewed thymic function and output of new naive CD4+ T cells (which are required
for all immune responses), compared to similar patients not receiving the LHRH.
Secondary endpoints included extensive analysis of other immune cells in the
blood.
Analysis of the additional data shows positive results and a significant
increase in naive CD4+ T cells and further supports the interim results as
previously announced at the American Haematology Society conference in December
2003. The results of the study are currently being fully analyzed and a
manuscript prepared for submission to a peer reviewed journal.
INTELECTUAL PROPERTY DEvELOPMENT
Since 30 June 2005, six additional patents have been granted across the
Company's eight patent families. Currently, the Company's patent portfolio
consists of 98 pending applications and 19 granted applications.
The earliest and broadest grants are those in the "Improvement of T cell
immunity" patent family, where patents have been issued for use of a compound
such as the GnRH analogue, Lupron Depot(R), to increase T-cells in a patient.
These patents are particularly relevant for treating cancer, infection such as
HIV or herpes, immune dysfunction (such as allergies and autoimmune diseases),
and achieving transplant tolerance. In total 4 patents have been granted in this
family. Those patents will expire in 2020.
In another important patent family "Treatment of T cell disorder", a patent has
granted in Singapore in the past year. This family concerns the use of compounds
such as GnRH analogues, used with BMT or haemopoietic stem cells transplants.
These patents are also important in the treatment of the diseases listed above,
but involve a more sophisticated treatment regime. Four Patents have now been
granted in this family in total. These patents will expire in 2021. We have
received grant of patents in Singapore and New Zealand in a number of our patent
families during the year.
RESEARCH AGREEMENT
In March 2006, the Company signed a tripartite research agreement with the
Australian Stem Cell Centre (ASCC) and Monash University, to form an important
new technology platform combining immune system research with stem cell
know-how.
The research will focus on controlling the immune system to minimise rejection
of stem cell therapies introduced into the body. The immune system will usually
only accept cells that it recognises as its own. Foreign cells and tissues are
routinely rejected posing significant difficulties when a patient undergoes a
transplant procedure. Immune rejection stands as one of the major hurdles facing
stem cell researchers in developing potential clinical treatments. This
technology may enable the successful engraftment of stem cells to repair organs
and tissues that are damaged as a result of disease processes.
The agreement signed between Norwood Immunology and the ASCC proposes that the
research will take place at the Monash Immunology and Stem Cell Laboratories at
the Clayton campus in Melbourne with access to the ASCC's specialised research
facilities in the same building. The research will be funded jointly by the ASCC
and Norwood Immunology and the intellectual property that results from the work
will be jointly owned by the ASCC and Norwood Immunology.
Combining immunology with stem cell research builds upon foundation technologies
established by both the ASCC and Norwood Immunology. The new research technology
has the potential to add significant value to both Norwood Immunology's and the
ASCC's Intellectual Property pipelines.
CORPORATE DEVELOPMENT
The Company has previously announced its intentions to pursue value enhancing
opportunities through partnering or mergers and acquisitions with projects or
companies to secure development technologies, marketed products and/or marketing
and development companies. These opportunities are focussed on broadening of the
Company's technology base and bring products in both immunology and related
therapeutic fields.
In January 2006 the Company announced that it entered into a call option (the
"Option") to acquire all the share capital of Netherlands-based Bestewil Holding
B.V. ("Bestewil"). Bestewil is the 100% owner of Virosome Biologicals B.V.
("Virosome Biologicals").
Virosome Biologicals is developing and commercialising a proprietary platform
enabling technology for vaccines. The technology is based on intellectual
property concerning a new method of making virosomes as well as the combination
of an adjuvant (immune response stimulator) in the membrane of the virosome that
targets them specifically to antigen presenting cells or B cells.
Virosome Biologicals believe that this technology will result in a significantly
enhanced immune response to an antigen challenge which may therefore offer
greatly improved efficiency in comparison with other existing virosome
technologies that are in the market. The adjuvant specifically interacts with
Toll-like Receptors (TLRs). Pre-clinical studies undertaken by Virosome
Biologicals with their technology have shown an immune response to influenza
(flu) vaccines up to 150 times greater than traditional non-adjuvanted virosome
delivery technology.
Virosome Biologicals' adjuvanted virosome technology is licensed to Solvay
Pharmaceuticals in the field of intranasal influenza vaccines. Solvay is
responsible for clinical trials and development and commercialising of the
vaccine. Solvay Pharmaceuticals successfully concluded a Phase I clinical trial
with the intranasal influenza vaccine in May 2006, triggering a milestone
payment to Virosome Biologicals. The vaccine was found to be safe and well
tolerated. Solvay Pharmaceuticals will continue to test the vaccine in Phase II
clinical trials. Unlike certain other nasal flu vaccines, this trial does not
use live influenza virus.
Given the potential role of virosomes in prophylactic and therapeutic vaccines,
and their ability to achieve enhanced immune responses, the Company believe that
the potential commercial applications for this technology are significant. In
particular, there is significant opportunity to increase the number of
commercial licensing arrangements - such as in the field of influenza and mass
vaccination campaigns - where the possible emergence of pandemic strains of flu
and the threat of bio-terrorism are major concerns at the present time. We
believe Virosome Biologicals' proprietary technology could therefore be a
vitally important part of many vaccine programmes.
Virosome Biologicals' technology is seen as complementary to the Company's core
technology for rejuvenation of the adult immune system and may be applicable to
a wide range of vaccine applications. Post acquisition, the enlarged group will
have combined research capabilities, a joint intellectual property portfolio and
a suite of clinical trials all of which we believe will have a range of
opportunities for commercial development in the field of immunology.
The consideration for the granting of the Option was a subscription in newly
issued Bestewil Shares of up to Euro950,000 in monthly tranches over the course of
2006. Under the Option the agreed consideration for the transaction was up to
Euro25 million (Euro20 million in Company ordinary shares and Euro5 million in cash),
subject to achieving certain milestones.
As announced on 10 October 2006, having re-considered the merits of the
acquisition on the terms set out in the Option ("Terms") given the circumstances
of the Company, in consultation with certain key shareholders and potential
funders, the Board concluded that the exercise of the Option, and the dilution
to existing shareholders that would result, made the acquisition on the Terms
not in the best interests of the Company's shareholders. To the date of this
announcement, Euro 725,000 in total had been paid under the Option.
As announced on 31 October 2006, revised terms for the proposed Acquisition of
all of the issued shares of Bestewil and its 100% subsidiary Virosome
Biologicals have been agreed and approval is being sought from the Company's
shareholders at an EGM on 27 November 2006 to issue the Acquisition Shares to
the shareholders of Bestewil.
Under the terms of the Acquisition, the agreed consideration is paid by the
issue of 48,014,489 Acquisition Shares (which is equivalent to approximately 21%
of the enlarged share capital of the Company after completion of the Acquisition
and the Placement) and Euro3.5 million being paid in cash (Euro3 million of which is
payable on completion and Euro0.5 million being deferred until 18 months after
completion, with rolled up interest payable on the deferred amount at 6% per
annum). Based on the Company closing share price of #0.20 on 26 October 2006,
and a 0.67 Euro/# exchange rate this is equivalent to a total consideration of
#11.9 million.
On completion of the Acquisition and the Placement the shareholders of Bestewil
will collectively hold approximately 21% of the enlarged share capital of the
Company.
The Acquisition Shares are subject to lock-in restrictions which expire in
relation to one third of the shares 6 months after completion on 28 May 2007, in
relation to a further one third of the shares on 28 November 2007 and in
relation to the remaining one third of the shares on 28 May 2008. An orderly
market provision shall apply throughout the lock-in period and for a further 6
months thereafter.
FINANCIAL REVIEW
In accordance with permissible accounting standards for AIM, as set out in AIM
Notice 22, the Company has adopted Australian IFRS for ongoing financial
information with effect from the year ended 30 June 2006.
The loss after tax for the year ended 30 June 2006 was A$6,714,549 (2005:
A$5,228,847), approximately #2.7 million (2005: #2.3 million). Cash at 30 June
2006 was A$237,805 (2005: A$6,769,585), approximately #0.1 million (2005: #2.8
million). All amounts expressed in pounds sterling have been converted, on a
proforma basis, at the 30 June 2006 rate of A$1:# 0.4021 (2005: A$1:#0.442).
We have used the funds raised at the time of our admission to AIM, and from the
subsequent issue of shares relating to the exercise of options, to advance the
Company's clinical development plans. In September 2006, the Company entered
into a secured facility agreement with Indus Opportunity Master Fund, Ltd
('Indus') for A$1 million (the "Loan"). The Loan is a drawdown facility for up
to A$1 million repayable within 12 months of the first drawing of funds and
bearing monthly interest. To date A$960,000 has been drawn down against that
facility. On 27 October 2006 the facility was extended to up to A$2 million and
repayment extended to not later than 30 June 2008. At the time the facility was
extended, Indus was also granted the option to convert any or all of the
outstanding balance in ordinary shares at an issue price of #0.12 per share.
The Company has been seeking to raise new capital to fund the development and
commercialisation of its current technology and potentially to progress merger
and acquisition opportunities. On 31 October 2006, the Company announced that it
was proposing to raise approximately #6.6 million (#6.2 million net of expenses)
pursuant to a placement of 55,000,000 Placement Shares at an issue price of
#0.12 per share to a number of institutional investors in the United Kingdom and
the USA.
Placing commitment letters have been received from proposed placees, addressed
either directly to the Company or to the Company's Nominated Adviser, KBC Peel
Hunt Limited ("KBC") under a Placing Agreement between the Company and KBC. In
order to complete the Placement, approval of the Company's shareholders is
required to issue the Placement Shares and the Company and the placees will need
to meet their respective obligations under the placing commitment letters.
In addition, the Company announced the proposed issue of 48,014,489 Acquisition
Shares as part consideration for the proposed acquisition of all of the issued
shares of Bestewil and its 100% subsidiary.Virosome Biologicals. In order to
complete the Placement and the Acquisition, approval of the Company's
shareholders is required to issue the Placement Shares and the Acquisition
Shares. As announced on 31 October 2006 approval is being sought from the
Company's shareholders at an EGM on 27 November 2006 to issue the Placement
Shares and the Acquisition Shares.
As at the date of approval of these financial statements, the Company was in
receipt of irrevocable commitments from Indus and Norwood Abbey Limited to vote
their shares in favour of these resolutions; such votes would be sufficient to
carry the vote to approve the Placement and Acquisition.
Further to the issue of the Acquisition Shares and the Placement Shares, the
Company in due course proposes to issue 1,315,435 Third Party Shares in the
Company as part payment for professional services provided by third parties in
relation to the Acquisition. Shareholder approval for the issue of the Third
Party Shares is not being sought as the issue of these shares will fall under
the Company's general authority under its constitution to issue shares
representing not more than 10% of its share capital.
As the issue of shares for the Placement and the Acquisition is subject to
shareholder approval at an EGM dated 27 November 2006, the Loan provided by
Indus will in the interim period provide short term working capital funding.
SUMMARY AND OUTLOOK
Finally, The Board would like to express its appreciation to all our
shareholders for their continued support throughout this period and to the
employees of the Company for their dedication. 2006/2007 promises to be a busy
year for Norwood Immunology, as we advance our clinical trials and make further
progress towards our key milestones.
Peter Hansen
Chairman
3 November 2006
Income Statement
Year ended 30 June 2006
------ -------------------------
Note 2006 2005
A$ A$
------ -------------------------
Other income/(expense) 191,847 (10,905)
Depreciation and amortization expense (27,653) (2,737)
Employee benefits expense (1,220,998) (1,452,759)
Finance costs (42,911) (25,395)
Insurance (104,463) (100,140)
Investor Relations (184,276) (181,788)
Legal costs (480,391) (92,798)
Marketing - (49,850)
Professional fees (457,969) (361,660)
Parent entity management fees (490,000) (600,000)
Travel expenses (307,053) (372,839)
Research and development costs immediately
expensed (2,582,211) (1,737,526)
Change in fair value of financial assets
classified fair value through profit and
loss 4 (810,630) -
Other expenses from ordinary activities (197,841) (240,450)
-------------------------
Loss before income tax expense (6,714,549) (5,228,847)
Income tax expense - -
-------------------------
Loss for the period attributable to members
of the entity (6,714,549) (5,228,847)
=========================
Loss per share
Basic 3 (0.054) (0.043)
=========================
Diluted 3 (0.054) (0.043)
-------------------------
All activities derive from continuing operations.
There no recognised gains and losses for the current financial year and
preceding financial year other than as stated in the profit and loss account.
Balance Sheet
As at 30 June 2006
------ --------------------------
Note 2006 2005
A$ A$
------ --------------------------
Current assets
Cash and cash equivalents 237,805 6,769,585
Trade and other receivables 18,233 32,287
Other 107,085 163,328
--------------------------
Total current assets 363,123 6,965,200
Non-current assets
Other financial assets 4 - -
Plant and equipment 7,052 8,858
Other intangible assets 5 5,008,423 4,619,735
--------------------------
Total non-current assets 5,015,475 4,628,593
--------------------------
Total assets 5,378,598 11,593,793
--------------------------
Current liabilities
Trade and other payables 935,326 720,574
Other financial liabilities 1,223,793 660,000
Provisions 76,760 64,951
--------------------------
Total current liabilities 2,235,879 1,445,525
--------------------------
Total liabilities 2,235,879 1,445,525
--------------------------
Net assets 3,142,719 10,148,268
==========================
Equity
Issued capital 6 27,227,179 27,227,179
Other reserve - 291,000
Accumulated losses 6 (24,084,460) (17,369,911)
--------------------------
Total equity 3,142,719 10,148,268
==========================
Cash flow Statement
for the financial year ended 30 June 2006
------ -------------------------
Note 2006 2005
A$ A$
------ -------------------------
Cash flows from operating activities
Receipts from customers - -
Payments to suppliers and employees (5,418,258) (5,395,068)
Interest and other costs of finance paid (42,911) (8,212)
Government Grants - 134,504
-------------------------
Net cash used in operating
activities 7 (5,461,169) (5,268,776)
-------------------------
Cash flows from investing activities
Interest received 154,555 307,286
Payment for plant and equipment (1,655) (7,014)
Payment for intangible assets (412,881) (490,087)
Payment for investment securities (810,630) -
-------------------------
Net cash used in investing activities (1,070,611) (189,815)
-------------------------
Cash flows from financing activities
Payment for share issue costs - (853,633)
Proceeds from issue of shares - 2,319,336
-------------------------
Net cash provided by/(used in)
financing activities - 1,465,703
-------------------------
Net decrease in cash and cash
equivalents (6,531,780) (3,992,888)
Cash and cash equivalents at the
beginning of the year 6,769,585 11,086,439
Effects of exchange rate changes on
the balance of cash held in foreign
currencies - (323,966)
-------------------------
Cash and cash equivalents at the
end of the year 237,805 6,769,585
-------------------------
NOTES TO THE FINANCIAL INFORMATION
1 Basis of preparation
The figures and financial information for the year ended 30 June 2006 do not
constitute the statutory financial statements within the meaning of section 240
of the Companies Act 1985 but are derived from the audited financial statements.
The financial information for both the years ended 30 June 2006 and 30 June 2005
has been extracted from the audited financial statements for the year ended 30
June 2006. The auditor's report on those accounts was unqualified.
In accordance with permissible accounting standards for AIM, as set out in AIM
Notice 22, the Company has adopted Australian IFRS for ongoing financial
information with effect from the year ending 30 June 2006.
The financial information in this announcement has been prepared on the basis of
Australian IFRS and the accounting policies as set out in the most recently
published set of annual financial statements. The preliminary results and prior
year comparative results have been prepared using accounting policies consistent
with those adopted in the audited financial statements for the year to 30 June
2006. This includes restated prior year comparatives for the year to June 2005.
The audited statutory financial statements for the year ended 30 June 2006 are
being distributed to shareholders from today, 3 November 2006, and are available
from the Company's website www.norwoodimmunology.com.
This preliminary announcement was approved by the board of Norwood Immunology
Limited on 2 November 2006.
2 Going concern
The Company is an emerging pharmaceutical business and as such expects to be
cash absorbing until its technologies are commercialized.
The Company does not have sufficient cash resources to fund its current level of
activities for at least the next 12 months, but the directors have a reasonable
expectation that the Company can raise additional cash resources for this
purpose during the next 12 months. These financial statements have therefore
been prepared on a going concern basis which contemplates the continuity of
normal business activities and the realisation of assets and settlement of
liabilities in the ordinary course of business.
As at 30 June 2006 the group had an accumulated loss of A$24,084,460 and
incurred negative cash flows from operations of A$5,461,169 in the financial
year and current liabilities exceed current assets by $1,872,756. The Directors
believe the going concern basis of preparation to be appropriate. Subsequent to
year end the Company has entered into a loan agreement with Indus Opportunity
Master Fund Ltd ('Indus'), raising a working capital facility of up to
$2,000,000 and announcing a placing of ordinary shares as set out below.
On 31 October 2006, the Company announced that it was proposing to raise
approximately #6.6 million (gross) pursuant to a placement of 55,000,000
ordinary shares in the Company at an issue price of #0.12 per share to a
number of institutional investors in the United Kingdom and the USA. Placing
commitment letters have been received from proposed placees, addressed either
directly to the Company or to the Company's Nominated Adviser, KBC Peel Hunt
Limited ("KBC") under a Placing Agreement between the Company and KBC. In
order to complete the Placement, approval of the Company's shareholders is
required to issue the Placement Shares and the Company and the placees will
need to meet their respective obligations under the placing commitment
letters. As at the date of approval of these financial statements, the
Company was in receipt of irrevocable commitments from Indus and Norwood
Abbey Limited to vote their shares in favour of this resolution; such votes
would be sufficient to carry the vote to approve the Placement.
As the issue of shares for the Placement is subject to shareholder approval
at an EGM dated 27 November 2006 and successful placement with institutional
investors, the Loan provided by Indus will in the interim period provide
short term working capital funding.
Having carefully assessed the uncertainties relating to the likelihood of
securing additional funding and the Company's ability to effectively manage
their expenditures, the directors believe that the Company will continue to
operate as a going concern for the foreseeable future and therefore that it is
appropriate to prepare the financial statements on a going concern basis.
In the event that the placees do not complete the placement as set out above or
the Company is unable to raise sufficient alternative funds, there is
significant uncertainty whether the Company could continue as a going concern.
If the Company is unable to continue as a going concern it may be required to
realize its assets and extinguish its liabilities other than in the normal
course of business and at amounts different to those stated in the financial
statements.
No adjustments have been made to the financial report relating to the
recoverability and classification of the asset carrying amounts or the
classification of liabilities that might be necessary should the Company not
continue as a going concern.
3 Basic and diluted loss per ordinary share
The calculations of earnings per share are based on the following losses and
numbers of shares.
2006 2005
A$ A$
Retained loss for the financial year: (6,714,549) (5,228,847)
=============================
No. No.
Weighted average number of shares:
For basic earnings per share 123,911,463 121,979,956
Exercise of share options - -
-----------------------------
For diluted earnings per share 123,911,463 121,979,956
=============================
EPS has been prepared using Australian IFRS results but consistent with UK GAAP
under FRS 14, presentation of diluted EPS is required when a company could be
called upon to issue shares that would decrease net profit or increase net loss
per share. The loss and weighted average number of ordinary shares for the
purpose of calculating the diluted earnings per ordinary share are identical to
those used for the basic earnings per ordinary share, as the exercise of share
options would have the effect of reducing the loss per ordinary share and is
therefore not dilutive.
4 Other non-current financial assets
2006 2005
A$ A$
Shares at fair value (i) - -
==========================
(i) The directors consider that the carrying amount of financial assets and
financial liabilities recorded in the financial statements approximates their
fair values.
In January 2006 the Company announced that it had entered into a call option to
acquire all the share capital of Netherlands-based Bestewil Holding B.V.
("Bestewil"). The consideration for the granting of the option was a
subscription in newly issued Bestewil Shares of up to Euro950,000 in monthly
tranches over the course of 2006. On 10 October 2006, having re-considered the
acquisition on the terms set out in the option and the dilution to existing
shareholders that would result, the option was allowed to lapse. In total
Euro500,000 (AUD 810,630) had been paid under the option to 30 June 2006, which
equates to a 3% holding of the share capital of Bestewil.
As announced on 31 October 2006, revised terms for the proposed acquisition of
all of the issued shares of Bestewil have been agreed and approval is being
sought from the Company's shareholders at an EGM on 27 November 2006 to issue
the Acquisition Shares to the shareholders of Bestewil. However, given that the
option has lapsed and the acquisition on revised terms is still subject to
shareholder approval ,the directors have considered it prudent to record an
impairment against the option payments of AUD 810,630 to reflect the fair value
at the date of the account.
5 Other intangible assets
Gross Carrying Value Patents Total
$ $
Balance at 1 July 2004 4,334,561 4,334,561
Additions 285,174 285,174
Disposals - -
-----------------------
Balance at 30 June 2005 4,619,735 4,619,735
Additions 412,880 412,880
Disposals - -
-----------------------
Balance at 30 June 2006 5,032,615 5,032,615
=======================
Accumulated Amortisation Patents Total
$ $
Balance at 1 July 2004 - -
Amortisation expense - -
-----------------------
Balance at 30 June 2005 - -
Amortisation expense 24,192 24,192
-----------------------
Balance at 30 June 2006 24,192 24,192
=======================
Net Book Value
As at 30 June 2005 4,619,735 4,619,735
=======================
As at 30 June 2006 5,008,423 5,008,423
=======================
6 Statement of Changes in Equity for the Financial Year Ended 30 June 2006
2006 2005
Issued Other Issued Other
capital Accumulated reserves capital Accumulated reserves
A$ losses A$ A$ Total A$ A$ losses A$ A$ Total A$
-------------------------------------------------- -------------------------------------------------
Opening
balance 27,227,179 (17,369,911) 291,000 10,148,268 24,975,784 (12,141,064) 291,000 13,125,720
Loss for
the
period - (6,714,549) - (6,714,549) - (5,228,847) - (5,228,847)
Reversal of
share-based
payments - - (291,000) (291,000) - - - -
-------------------------------------------------- -------------------------------------------------
Total
recognized
income/
(expense) 27,227,179 (24,084,460) - 3,142,719 24,975,784 (17,369,911) 291,000 7,896,873
Issue of
shares - - - - 2,319,336 - - 2,319,336
Share issue
costs - - - - (67,941) - - (67,941)
-------------------------------------------------- -------------------------------------------------
Closing
balance 27,227,179 (24,084,460) - 3,142,719 27,227,179 (17,369,911) 291,000 10,148,268
=================================================== =================================================
7 Reconciliation of loss from ordinary activities after related income tax to
net cash flows from operating activities
2006 2005
A$ A$
Loss from ordinary activities after related income
tax (6,714,549) (5,228,847)
Depreciation 27,653 2,737
Net unrealised foreign exchange loss/(gain) (37,292) 452,695
Interest received (154,554) (307,286)
Impairment of non-current asset 810,630 -
Reversal of share-based payments (291,000) -
Decrease/(increase) in current receivables 14,054 57,875
Increase in current prepayments 56,243 (129,406)
Increase/(decrease) in current payables 815,837 (133,694)
Increase in provisions 11,809 17,150
----------- -----------
Net cash used in operating activities (5,461,169) (5,268,776)
=========== ===========
8 Contingent liabilities
On 1 August 2005, the Company signed a contract research agreement with The
General Hospital Corporation (Massachusetts General Hospital), in terms of the
agreement the Company is contracted for a total A$ 1, 660,000 (USD 1,212,000) of
which A$388,618 (approximately USD289,000) has been either paid or accrued to 30
June 2006. The funding commitment is staggered and based on a number of specific
stages and sub-stages, at each of these stages the Company has to formally
approve the commencement of the next phase. This gives the Company the
opportunity to halt the trial and limit funding commitment. The agreement can be
terminated at any time at the request of either party.
Other then the items disclosed above and in the subsequent events note, there
has been no other change in contingent liabilities since the Annual Report date.
9 Events after the balance sheet date
In September 2006, the Company entered into a secured facility agreement with
Indus for A$1 million (the "Loan") to provide short term working capital funding
while the Company continues to seek new capital for the business. The Loan is a
drawdown facility for up to A$1 million repayable within 12 months of the first
drawing of funds and bearing monthly interest. To date A$960,000 has been drawn
down against that facility. On 27 October 2006 the facility was extended to up
to A$2 million and repayment extended to not later than 30 June 2008. At the
time the facility was extended, Indus was also granted the option to convert any
or all of the outstanding balance in ordinary shares at an issue price of #0.12
per share.
On 31 October 2006, the Company announced that it was proposing to raise
approximately #6.6 million (#6.2 million net of expenses) pursuant to a
placement of 55,000,000 Placement Shares at an issue price of #0.12 per share to
a number of institutional investors in the United Kingdom and the USA. In order
to complete the Placement, approval of the Company's shareholders is required to
issue the Placement Shares.
In addition, the Company announced proposing to issue 48,014,489 Acquisition
Shares as part consideration for the proposed acquisition of all of the issued
shares of Bestewil and its 100% subsidiary Virosome Biologicals. In order to
complete the Acquisition, approval of the Company's shareholders is required to
issue the Acquisition Shares to the shareholders of Bestewil.
Further to the issue of the Acquisition Shares and the Placement Shares, the
Company in due course proposes to issue 1,315,435 Third Party Shares in the
Company as part payment for professional services provided by third parties in
relation to the Acquisition. Shareholder approval for the issue of the Third
Party Shares is not being sought as the issue of these shares will fall under
the Company's general authority under its constitution to issue shares
representing not more than 10% of its share capital.
There has not been any other matter or circumstance, other than that referred to
in the financial statements or notes thereto, that has arisen since the end of
the financial period, that has significantly affected, or may significantly
affect, the operation of the Company, the results of those operations, or the
state of affairs of the Company in the future financial periods.
10 UK GAAP Reconciliation
The financial information in this announcement has been prepared on the basis of
Australian IFRS and the accounting policies as set out in the most recently
published set of annual financial statements. In accordance with permissible
accounting standards for AIM, as set out in AIM Notice 22, the Company has
adopted the Australian IFRS for ongoing financial information with effect from
the year ending 30 June 2006. This includes restated prior year comparatives for
the year to June 2005.
In prior years the Company has previously reported financial statements under UK
GAAP with net assets at 30 June 2005 of A$5,528,533. Under A-IFRS the net assets
at 30 June 2005 are reported as A$10,148,268. The difference of A$4,619,735
entirely comprises intangible assets - patents recognised in the financial
statements prepared under A-IFRS.
Under A-IFRS patent costs have been captialised and recorded at the cost of
acquisition. Amortisation of the intellectual property begins upon the
commercialisation of the related project and continues over the periods in which
the corresponding benefits are expected to arise. The directors regularly review
the carrying value of the intellectual property and patents to ensure its
carrying value does not exceed its recoverable amount, based on the cashflow
forecast and advancement of project milestones.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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