RNS Number:6067C
VASTox plc
09 May 2006
VASTOX PLC
("VASTox" or "the Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2006
Oxford, UK, 9 May 2006 - VASTox plc (AIM: VOX), a leading chemical genomics
company, today announces its preliminary results for the year ended 31 January
2006.
Operational Highlights
* Lead series of compounds selected that demonstrate in vivo efficacy in
Duchenne muscular dystrophy (DMD) models
* Two new drug discovery programmes initiated in spinal muscular atrophy
and osteoarthritis
Financial Highlights
* Revenues up from #113,000 to #531,000 for the full year
* R&D investment up from #268,000 to #1.0 million for the full year
* Cash and short term deposits at year-end of #12.6 million (prior year:
#14.2 million)
Post Year-end Events
* #10.5 million (gross) raised in secondary placing to accelerate DMD
programme
* Appointment of Richard Storer, DPhil FRSC as director and Chief
Scientific Officer
* Initiation of fifth proprietary drug discovery programme in cancer
Announced today
* Appointment of Darren Millington, ACMA as director and Chief Financial
Officer (see separate announcement)
Commenting on the results, Steven Lee, CEO of VASTox plc, said: "We have made
great strides in our first full year as a public company. In addition to the
achievements highlighted above in terms of commercial and technical successes,
we have established real corporate strength and a reputation in the
pharmaceutical industry as leading the way in chemical genomics for drug
discovery. Strengthening of the management team will enable us to deliver
further success in the coming year."
For more information please contact:
VASTox
Steven Lee, PhD, Chief Executive Officer Tel: +44 (0)1235 443910
Darren Millington, Chief Financial Officer
Citigate Dewe Rogerson
David Dible / Mark Swallow / Valerie Auffray Tel: +44 (0)207 638 9571
Chairman's Statement
Review
Our first full year as a public company has seen VASTox make great strides in
all areas of the business. Our chemical genomics services business is growing
rapidly and we are finding increasing industry acceptance of the use of
zebrafish and fruitflies in early drug discovery. Our proprietary drug research
programmes are also progressing well.
In January 2006 we announced a breakthrough in our lead programme for Duchenne
muscular dystrophy (DMD). This devastating genetic disease affects over 30,000
patients in the developed world and is generally fatal by the age of 30. We
announced that VASTox had identified a series of small molecules that induce the
production of increased amounts of utrophin in a validated in vivo model for
DMD. Utrophin is a naturally-produced protein that can compensate for a lack of
dystrophin observed in DMD patients and has been the focus of co-founder
Professor Kay Davies' academic research for over 15 years. VASTox has brought
commercial skills and resources to accelerate this programme, focusing on those
steps that bring us closer to finding an effective drug; in vivo proof of
principle of utrophin up-regulation is an important first step. The
significance of our results is that this is the first time up-regulation of
utrophin has been shown using drug-like compounds. These compounds offer the
most promising starting points to create a safe and efficacious medicine.
VASTox retains all relevant intellectual property, including patents and
exclusive licences.
In February 2006, VASTox announced a successful secondary placing of shares.
The Company raised #10 million net of expenses and has pledged to use this
capital to accelerate our DMD programme. We are committed to begin Phase I
clinical trials as soon as possible.
Chemical genomics
Our services business continues to expand well, and I am delighted to see VASTox
develop the chemical genomics platform for customers and our own programmes.
When I founded the Company in 2003, I recognised that effective drug discovery
will always require a rigorous understanding of both the biology and chemistry
of living systems. My belief that chemical genomics is the most promising
bridge between these two disciplines is now being realised. VASTox is now
demonstrating the value of this approach in using zebrafish and fruitflies to
predict, with a high level of accuracy, the potential efficacy and side effects
of drugs in people. We and our customers recognise that getting safer drugs to
market faster makes both commercial and ethical sense. Our chemical genomics
platform will help achieve this.
Board and employees
The Company made two Board changes during the year as we reviewed the skills
necessary to lead a dynamic and fast-growing company. Sir Brian Richards was
appointed as Non-executive Director on 7 October 2005 and brings to VASTox a
distinguished track record in the life sciences industry. Dr Andrew Mulvaney
stepped down as Operations Director on 7 October 2005 to focus full-time on
business development. On behalf of the Board I would like to thank Andy for his
valuable contribution to VASTox to date.
After the year end we announced two further appointments to the Board; Richard
Storer, DPhil FRSC as Chief Scientific Officer and Darren Millington, ACMA as
Chief Financial Officer. Richard will bring to the Company vast experience in
drug discovery and a track record of developing successful drugs. Darren has
made a significant contribution to the Company's growth to date and will now add
his financial expertise to the Board. I would like to warmly welcome both to
the Board.
The success of any company relies on the quality of its employees, and VASTox is
no exception. On behalf of the Board, I thank our staff for their hard work and
dedication over the past year. We have achieved a great deal since our
flotation in October 2004. I believe our shareholders can have confidence that
we are building a team of scientists and managers that will create both
significant value for investors and effective treatments for patients.
Professor Stephen Davies
Chairman
Chief Executive Officer's Review
Introduction
Since our listing on AIM in October 2004 we have been focused on achieving rapid
progress in our chemical genomics services business and our in-house drug
discovery programmes.
Our financial and operational results to date prove that we are delivering on
our targets to both grow profitable revenues and make breakthroughs in our drug
programmes.
Drug programmes
VASTox currently runs in-house drug discovery programmes in Duchenne muscular
dystrophy (DMD), Spinal muscular atrophy (SMA), multi-drug resistant infection,
osteoarthritis and cancer.
We began our SMA and osteoarthritis programmes in the year after rigorous
assessment of both the commercial opportunities and the ability of our chemical
genomics platform to add value.
The Company's strategy is to distinguish our drug discovery programmes as either
'niche' or 'large patient population' diseases. DMD and SMA are both niche
diseases each affecting 30,000 and 50,000 patients respectively. This
relatively small population size makes them unattractive research areas for
large pharmaceutical companies but allows smaller drug discovery and development
companies such as VASTox the opportunity to aggressively develop a treatment
where there is currently no effective therapy. We will work towards orphan drug
designation for these programmes, giving the Company regulatory and financial
incentives to develop a marketable drug. Following the Company's successful
secondary placing announced in February 2006, we now have the resources to
progress our DMD programme to phase II trials.
We look to generate income from our 'large patient population' programmes at an
earlier stage of development. Our programmes in multi-drug resistant infection
and osteoarthritis will be of interest to large pharma and we would look to
out-license these therapies as we produce promising chemical leads.
Chemical genomics services
Our services business generated revenues of #531,361 (2005: #112,718) during the
period. VASTox has worked with nine customers during the financial year and our
sales pipeline for the 2006/07 financial year is already looking healthy.
As we increase our sales and marketing efforts, we find a wider acceptance of
the chemical genomics concept and, in particular, the value of using zebrafish
and fruitflies in early drug discovery. Using zebrafish and fruitfly models at
the earliest stages of drug discovery allows customers to discard toxic drug
candidates promptly and focus energies on their safest compounds. Not only does
this approach make economic sense for the drug industry, it also helps the
industry in its aim to implement the '3 Rs' in pharmaceutical research; that is,
to Reduce, Refine and Replace the use of higher animals in drug research.
During the coming financial year we look to increase both the level of revenues
and the range of customers we work with.
Outlook
VASTox is now maturing into an exciting drug discovery and development company
that offers the prospect of rapidly developing successful drugs for currently
incurable diseases, whilst remaining disciplined in its use of capital. I
believe that VASTox now has the facilities, the people and the investors to
bring significant rewards for both patients and the Company's stakeholders.
Steven Lee, PhD
Chief Executive Officer
9 May 2006
Consolidated Profit and Loss Account
For the year ended 31 January 2006
Restated
2006 2005
Note # #
Turnover 531,361 112,718
Cost of sales (233,444) (90,200)
Gross profit 297,917 22,518
Research and development (1,025,683) (267,533)
General, management and administration (1,005,366) (40,348)
Total administrative costs (2,031,049) (307,881)
Operating loss (1,733,132) (285,363)
Interest receivable 582,868 215,368
Loss on ordinary activities before taxation (1,150,264) (69,995)
Tax on loss on ordinary activities 155,437 24,321
Loss on ordinary activities after taxation (994,827) (45,674)
Basic and diluted loss per ordinary share 3 3.18p 0.19p
All amounts relate to continuing activities.
Statement of recognised gains and losses
There were no recognised gains and losses other than the losses above, and
therefore no separate statement of total recognised gains and losses is
presented. A prior year adjustment to exclude the non-cash charge of #453,351
for expensing of share options in 2005 has increased the opening balance of the
profit and loss account reserve by the same amount.
Consolidated Balance Sheet
At 31 January 2006
Restated
31 January 31 January
Note 2006 2005
# #
Fixed assets
Intangible assets 28,016 20,000
Tangible assets 1,261,082 1,353
1,289,098 21,353
Current assets
Stock 27,000 -
Debtors 541,300 93,140
Cash on short term deposits 11,593,626 13,800,000
Cash at bank 1,039,690 361,252
13,201,616 14,254,392
Creditors: amounts falling due within one year (704,833) (185,849)
Net current assets 12,496,783 14,068,543
Creditors: amounts falling due after more than (690,812) -
one year
Net assets 13,095,069 14,089,896
Capital and reserves
Called up share capital 3,131,311 3,131,311
Share premium account 12,946,848 12,946,848
Other reserves (1,942,589) (1,942,589)
Profit and loss account (1,040,501) (45,674)
Equity shareholders' funds 4 13,095,069 14,089,896
Company Balance Sheet
At 31 January 2006
Restated
31 January 31 January
Note 2006 2005
# #
Fixed assets
Investments 2,020,198 2,020,198
Current assets
Debtors - due after more than one year 14,225,887 423,662
Debtors - due within one year - 17,056
14,225,887 440,718
Cash on short term deposits - 13,800,000
14,225,887 14,240,718
Creditors: amounts falling due within one year - (5,000)
Net current assets 14,225,887 14,235,718
Net assets 16,246,085 16,255,916
Capital and reserves
Called up share capital 3,131,311 3,131,311
Share premium account 12,946,848 12,946,848
Profit and loss account 167,926 177,757
Equity shareholders' funds 4 16,246,085 16,255,916
Consolidated Cash Flow Statement
For the year ended 31 January 2006
Restated
2006 2005
# #
Net cash outflow from operating activities (1,447,680) (184,863)
Returns on investments and servicing of finance
Interest received 507,652 215,368
Taxation
R&D tax credit received 29,041 -
Capital expenditure
Purchase of tangible fixed assets (1,357,770) (1,803)
Purchase of intangible fixed assets (15,783) (5,000)
(1,373,553) (6,803)
Cash (outflow) inflow before management of liquid resources and (2,284,540) 23,702
financing
Management of liquid resources
Decrease (increase) in short term deposits 2,206,374 (13,800,000)
Financing
Issue of ordinary share capital (net of expenses) - 14,057,959
Increase in debt during the year 756,604 -
756,604 14,057,959
Increase in cash 678,438 281,661
Reconciliation of operating loss to net cash outflow from operating activities
Restated
2006 2005
# #
Operating loss (1,733,132) (285,363)
Depreciation charge 127,520 450
Amortisation charge 7,767 5,000
Increase in debtors (246,547) (68,615)
Increase in stock (27,000) -
Increase in creditors 423,712 163,665
Net cash outflow from operating activities (1,447,680) (184,863)
Notes
1. Accounting policies
Basis of preparation
The financial information has been prepared under the historic cost convention
and in accordance with applicable United Kingdom accounting standards.
The accounting policies used in preparing the financial statements have been
applied consistently throughout all periods presented.
Basis of consolidation
The consolidated accounts incorporate the financial statements of the Company
and its subsidiary.
Following the group restructuring in the prior year, the Group prepare
consolidated accounts using merger accounting principles as set out in Financial
Reporting Standard 6.
No profit and loss account is presented for the Company as permitted by Section
230 of the Companies Act 1985. The Company's loss for the year was #9,831
(2005: profit of #177,757).
Restatement
The directors have reviewed the accounting treatment of share options in the
accounts for the year to 31 January 2005 in relation to UITF 17. The directors
have concurred that the share options were priced at the market value at the
date of grant. These accounts have therefore been restated to exclude the
non-cash charge of #453,351 for expensing of share options. This restatement
has had no effect on net assets or equity shareholders' funds.
The directors have also reviewed the allocation of operating expenses between
cost of sales and research and development. After enquiries, the Board has
agreed to reallocate #189,021 from cost of sales for the year ended 31 January
2005 to research and development. The Board agree that this allocation of
expenditure more fairly reflects the level of activities during the prior year.
This restatement has had no effect on operating profit.
Statutory financial statements
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 January 2006 or 2005, but is derived
from those accounts. Statutory accounts for 2005 have been delivered to the
Registrar of Companies and those for 2006 will be delivered following the
Company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under the
Companies Act 1985, sections 237(2) or (3).
2. Fundraising
On 27 February 2006 the Group announced an equity placing of 5,903,955 ordinary
shares at a price of 177 pence. These shares rank pari passu with the existing
shares. The equity placing raised gross proceeds of #10.45 million (#9.97
million net of expenses).
3. Earnings per ordinary share
The basic and diluted earnings per share is based on a loss of #994,827 for the
year ended 31 January 2006 (Restated 2005: loss of #45,674 ) and the weighted
average number of shares in issue during the year of 31,313,111 shares (2005:
23,464,765 shares).
4. Reconciliation of movement in Group shareholders funds
Restated
2006 2005
# #
Group
Opening shareholders' funds 14,089,896 -
Shares issued during the year - 3,131,311
Share premium on issued shares (net of expenses) - 12,946,848
Merger reserve - (1,942,589)
Loss for the financial year (994,827) (45,674)
Closing shareholders' funds 13,095,069 14,089,896
Company
Opening shareholders' funds 16,255,916 -
Shares issued during the year - 3,131,311
Share premium on issued shares (net of expenses) - 12,946,848
(Loss) profit for the financial year (9,831) 177,757
Closing shareholders' funds 16,246,085 16,255,916
5. Availability of information
Copies of the Report and Accounts for the year ended 31 January 2006 will be
posted to shareholders shortly and thereafter may be obtained from the company's
website: www.vastox.com.
6. Notice of Annual General Meeting
The Annual General Meeting will be held at 9am on 9 June 2006 at the Company's
registered office, 91 Milton Park, Abingdon, Oxfordshire, OX14 4RY.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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