RNS Number:4164J
VASTox plc
26 September 2006
VASTox plc
("VASTox" or "the Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JULY 2006
Oxford, UK, 26 September 2006 - VASTox plc (AIM: VOX), a leading UK
biotechnology company, announces its interim results for the six months ended 31
July 2006.
Financial Highlights
* Turnover increased 133% to #468,591 (H1 2005/06: #201,156) as a result
of 15 new chemical genomics service contracts
* R&D expenditure increased in-line with expectations to #1.28 million
(H1 2005/06: #0.16 million) primarily to accelerate development of the
lead neuromuscular drug discovery programme in Duchenne muscular
dystrophy (DMD), and to fund two new programmes initiated during the
period
* In-line with expectations, pre-tax losses up to #1.31 million (H1 2005
/06: #0.13 million) with the increased investment in proprietary drug
discovery programmes
* Strengthened cash position following successful placing in February
2006 which raised #10.45 million (gross) - cash and short-term
investments up to #20.2 million at period end (H1 2005/06:
#12.9 million)
Operational Highlights
* Orphan drug designation awarded by European Medicines Agency (EMEA)
for the Company's initial compound for the treatment of DMD following
positive preclinical studies
* Fifth and sixth drug discovery programmes initiated in cancer and stem
cell therapy, respectively, the latter will be funded with a UK
Department of Trade & Industry grant
* Board of Directors and Senior Management strengthened:
o Richard Storer, DPhil appointed Chief Scientific Officer
o Darren Millington, ACMA appointed Chief Financial Officer
o James Taylor appointed Chief Commercial Officer
Today VASTox announces two further Board changes (see separate press release):
o Barry Price, PhD appointed as Non-executive Chairman to replace
Professor Stephen Davies who steps down to Non-executive Director
o Colin Wall appointed Non-executive Director to replace John
Montgomery who has resigned as Non-executive Director
Steven Lee, PhD, CEO of VASTox said: "VASTox has made excellent progress in all
areas of its business to date in 2006. Our internal drug discovery programmes
are advancing rapidly, our services business has grown significantly, and we
have added senior R&D and commercial experience to the management team and
board. Overall, our operations are now well positioned to enable us to deliver
the key elements of our corporate strategy."
Analysts' R&D day
VASTox will be hosting an R&D day for analysts and investors at the Company's
main site in Milton Science Park, Oxfordshire on 6 October 2006. Please contact
Mark Swallow or Valerie Auffray at Citigate Dewe Rogerson on 020 7638 9571 for
further details.
-ends-
For more information please contact:
VASTox
Steven Lee, PhD, Chief Executive Officer Tel: +44 (0)1235 443910
Darren Millington, ACMA, Chief Financial Officer
Citigate Dewe Rogerson
David Dible / Mark Swallow / Valerie Auffray Tel: +44 (0)207 638 9571
About VASTox plc
VASTox is a chemical genomics technology company that discovers and develops
proprietary novel drugs and provides services to the pharmaceutical industry.
The company's most advanced drug development programme is focused on developing
a new treatment for Duchenne muscular dystrophy based on the up-regulation of
utrophin. A second drug development programme for spinal muscular atrophy is
also progressing rapidly. VASTox has four additional programmes focused on
osteoarthritis, cancer, tuberculosis and stem cell therapies, which are expected
to be out-licensed prior to entering the clinic.
The company's technology platform, which uses zebrafish and fruitflies, has the
potential to dramatically decrease the time and cost of drug discovery and
development. This is because using whole organisms allows it to carry out high
volume, high content screening, which delivers data that are highly predictive
of the efficacy and toxicity of potential drug compounds in humans. VASTox is
growing revenues based on marketing its unique technology platform and its
chemistry expertise. The company listed on the AIM market of the London Stock
Exchange in October 2004.
Further information about the company is available at www.vastox.com
This document contains "forward-looking statements" within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as "anticipates", "intends", "plans",
"seeks", "believes", "estimates", "expects" and similar references to future
periods, or by the inclusion of forecasts or projections.
Forward-looking statements are based on the Company's current expectations and
assumptions regarding our business, the economy and other future conditions.
Because forward-looking statements relate to the future, by their nature, they
are subject to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. The Company's actual results may differ materially
from those contemplated by the forward-looking statements. The Company cautions
you therefore that you should not rely on any of these forward-looking
statements as statements of historical fact or as guarantees or assurances of
future performance. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include (factors
included in this presentation) and regional, national, global political,
economic, business, competitive, market and regulatory conditions.
Chief Executive's statement
Introduction
In the year to date we have continued to make excellent progress in all areas of
the business. Our own drug discovery programmes are advancing rapidly, our
services business has grown significantly, and we have added senior R&D and
commercial experience to the management team and board. Overall, our operations
are now well positioned to enable us to deliver the key elements of our
corporate strategy.
Our expenditure and R&D investment for the first six months of the year is in
line with our budget and the Company's cash position remains strong having been
bolstered significantly by the successful placing undertaken in February 2006,
which raised #10.45 million in gross proceeds. This money has been ring-fenced
specifically to accelerate our lead drug discovery programme: the development of
innovative and effective new products to treat Duchenne muscular dystrophy
(DMD).
Operational Highlights
Lead programme in Duchenne Muscular Dystrophy accelerated
Considerable progress has been made in our lead drug discovery programme during
2006. The exciting progress we made in preclinical studies enabled us to raise
more than #10 million in a secondary placing with new and existing investors to
accelerate the development of this programme. The preclinical studies, announced
in January 2006, resulted in the identification of a novel lead series of
compounds that up-regulate utrophin production to reverse the effects of the
defective dystrophin production mechanism that causes DMD. Preliminary
toxicology assessment of this lead series of compounds has also been conducted
using our proprietary zebrafish models.
Both this progress and the clear medical need for an effective treatment for DMD
have supported our application for orphan drug designation for clinical
candidates that emerge from the programme. Consequently, in June 2006, VASTox
was awarded orphan drug status by the European Medicines Agency (EMEA) for the
Company's initial compound.
This designation provides an important validation of VASTox's approach to the
treatment of DMD. From a commercial perspective, orphan status provides a
quicker and cheaper route to market as the drug's development is fast-tracked
through the EU's regulatory stages.
During the first half of 2006, VASTox also became a key commercial partner in a
five-year, EU-wide network of leading researchers, clinicians and charities
involved in the development of new treatments for neuromuscular dystrophies
(NMD). The TREAT-NMD network, as it is called, involves 21 organisations from 11
countries and is funded by a Euro10 million grant from the EU.
Two new drug discovery programmes initiated
VASTox's approach for identifying new drug discovery programmes aims to
capitalise on attractive academic research programmes where a clear rationale
for the treatment of a particular disease has already been developed. To date in
2006, we have initiated two new drug discovery programmes in the areas of cancer
and stem cell therapy based on this approach. The Company now has six drug
discovery programmes in both niche neuromuscular diseases, such as DMD and
spinal muscular atrophy, as well as more common diseases such as tuberculosis,
osteoarthritis and cancer.
The fifth programme initiated in April 2006 in cancer is focused on the Wnt
signalling pathway. This pathway is active during embryonic development and
inactive in adults. It appears to be re-activated in certain types of cancer and
leads to uncontrolled cell growth. VASTox has developed a whole organism
screening programme in fruitflies in order to model the Wnt pathway and
potentially identify compounds that can affect the pathway safely and
effectively for development into therapeutics.
The sixth drug discovery programme, announced in September 2006, is focused on
stem cell therapies and, initially, is part of a #910,000 collaborative
programme that will be jointly funded by VASTox, the UK Department of Trade &
Industry and the Medical Research Council. As part of the programme, entitled
Understanding Molecular Activation of Stem Cells ('UNMASC'), VASTox will screen
small molecules in zebrafish and fruitfly models to identify compounds that
affect stem cell behaviour. Promising compounds can then be developed for use in
a wide range of regenerative therapies for diseases. Any intellectual property
generated that relates to potential drugs will reside exclusively with VASTox.
VASTox continues to deliver on its commitments to progress all of its drug
programmes using its in-house drug discovery expertise. The Company has now put
in place an enlarged team of medicinal chemists and biologists who can use
VASTox's unique chemical genomics platform to produce good quality drug
candidates.
Services business continues to grow
During the first six months of this financial year VASTox has worked with 20
life sciences organisations, 15 of which are new. Each contract is profitable,
increases our expertise in chemical genomics and makes our service offerings
more valuable both for customers and our own drug programmes. We have
pro-actively managed the services division to ensure that we can increase the
size of customer contracts that we sign as well as to increase the gross margin
that we earn.
Furthermore, our services offering, particularly in carbohydrate chemistry was
enhanced during 2006 by the appointment of Professor George Fleet as specialist
consultant. Professor Fleet is at the University of Oxford and is widely
acknowledged as one of the world's foremost experts on carbohydrate chemistry
and has consulted for many of the leading pharmaceutical and biotechnology
companies.
New appointments strengthen development and commercial capabilities
VASTox has made positive steps forward during the first half of 2006 to bring in
experienced industry professionals to its senior management team and board in
order to maximise the potential of both its drug discovery and development, and
its commercial capabilities.
Today, VASTox is very pleased to announce the appointment of Barry Price, PhD as
Non-executive Chairman. Barry brings a wealth of industry experience and is
currently Chairman of the Boards of Biowisdom Limited and Antisoma plc, and a
Non-executive Director of Shire plc, one of the UK's largest life sciences
companies. Professor Stephen Davies will step down as Chairman and remain as a
Non-executive Director. Professor Davies has been Chairman since he founded
VASTox in January 2003 and has guided the Company through a successful flotation
in October 2004 and a growth phase that sees it now employing 50 scientists and
managers. Professor Davies is stepping down as Chairman to focus more time on
his new role as Waynflete Professor and Chairman of Chemistry at the University
of Oxford, one of the most prestigious academic posts in UK science. We thank
Steve for his contribution as Chairman and look forward to his continuing
involvement as a Non-executive Director.
The Company also announces today the appointment of Colin Wall as Non-executive
Director. Colin has significant public company experience and will act as the
Company's senior independent Non-executive Director. He replaces John Montgomery
as Non-executive Director. John is a co-founder of the Company and has been a
director since its formation in 2003. We would like to thank John for his
contributions to VASTox during his time as a director and at the same time
welcome Barry and Colin to the board.
Earlier in 2006, VASTox added significant R&D and commercial experience to the
executive management team. In April, Richard Storer, DPhil joined the board as
Chief Scientific Officer. Richard has more than 30 years' R&D experience within
the pharmaceutical industry and will oversee the development of VASTox's
preclinical programmes with a key objective of advancing the most promising
candidates into clinical trials. A major focus will be to accelerate the
Company's DMD programme, from which we anticipate advancing a compound in
clinical development during early 2007.
In May, Darren Millington, ACMA was appointed to the Board as Chief Financial
Officer and Company Secretary. Darren has eight years' of financial and
consulting experience and previously worked with IP2IPO Group plc (now IP Group
plc), Arthur Andersen and Deloitte & Touche. Darren has worked with VASTox
since the Company's successful flotation in October 2004.
In July, VASTox appointed James Taylor to the board as Chief Commercial Officer
with responsibility to grow the services business and to lay the platform for
commercial progress with our own proprietary drug programmes. James has more
than 20 years' business experience in the life science industry with a track
record of delivering successful commercial deals. The majority of his career
was spent at AstraZeneca and most recently, he was Vice President of Business
Development at Cellzome, where he was responsible for commercialising its
complex drug discovery technology as well as licensing early-stage drug
programmes.
These significant appointments complete the senior management team and will
provide VASTox with the experience needed to accelerate the growth of the
business.
Financial Review
Turnover during the first half of 2006 increased 133% to #468,591 (H1 2005/06:
#201,156) as a result of 15 new chemical genomics service contracts. In
addition to revenue growth, the gross margins of the services business have
increased to 67% (H1 2005/06: 62%).
R&D expenditure increased in line with budget to #1.28 million (H1 2005/06:
#0.16 million) primarily to accelerate development of our DMD drug discovery
programme, and to fund additional programmes initiated during period in cancer
and stem cell therapy.
Pre-tax losses during the period were #1.31 million, up from #0.13 million in H1
2005/06, as we continued to increase investment in advancing our drug discovery
programmes. Recognising an R&D tax credit for the period has resulted in a
post-tax loss of #1,143,290 (loss of #128,920 for H1 2005/06).
In February 2006, the Company raised #10m after expenses by issuing a further
5,903,955 ordinary shares in a successful secondary placing. This fund-raising
was supported by existing and new investors and the money has been ring-fenced
for the DMD programme, for which it is expected to fund development until
mid-2008.
The Company continues to make careful use of investors' funds and at 31 July
2006, VASTox had a strong cash position of #20.2m, compared to #12.9m on 31 July
2005 and #12.6m on 31 January 2006).
FRS 20 Restatement
All quoted UK companies are required to implement accounting standard FRS 20 - '
Share based payment' for financial periods commencing on or after 1 January
2006. This standard requires recognition of the fair value of issued share
options and is made retrospectively, leading to a restatement in prior periods.
It is important to note that in the six month period to 31 July 2006, the charge
due to the implementation of FRS 20 is #155,588; this compares to a charge of
#7,200 for the six month period to 31 July 2005.
Summary and outlook
In the remainder of the current financial year, we expect to continue making
good progress with our in-house drug programmes and remain on track to select
our first clinical candidate from our lead DMD programme early in 2007.
In addition, we expect our services business to continue growing as our chemical
genomics capabilities improve and expand, and our reputation for high quality
and value-creating services is enhanced.
We believe that VASTox has had a strong first half of 2006/07 and through the
development of its management and business is well placed to build on its rapid
growth and deliver value for investors. None of this progress is possible
without a team of committed scientists and managers; we thank them for their
hard work and dedication.
Steven Lee, PhD
Chief Executive Officer
Consolidated profit and loss account
for the six months ended 31 July 2006
Unaudited Restated Restated
Six months unaudited Year
ended Six months ended
31 July ended 31 January
2006 31 July 2006
2005
# # #
Turnover 468,591 201,156 531,361
Cost of sales ( 154,828 ) ( 75,894 ) ( 233,444 )
Gross profit 313,763 125,262 297,917
Research and development ( 1,284,466 ) ( 159,069 ) ( 1,025,683 )
Other ( 733,539 ) ( 400,435 ) ( 1,071,992 )
Total administrative costs ( 2,018,005 ) ( 559,504 ) ( 2,097,675 )
Operating loss ( 1,704,242 ) ( 434,242 ) ( 1,799,758 )
Interest receivable 414,324 305,322 582,868
Interest payable ( 20,175 ) - -
Loss on ordinary activities before ( 1,310,093 ) ( 128,920 ) ( 1,216,890 )
taxation
Tax on loss on ordinary activities 166,803 - 155,437
Loss on ordinary activities after ( 1,143,290 ) ( 128,920 ) ( 1,061,453 )
taxation
Basic loss per ordinary share 3.21p 0.41p 3.39p
Consolidated balance sheet
at 31 July 2006
Unaudited Restated Restated
31 July unaudited 31 January
2006 31 July 2006
2005
# # #
Fixed assets
Intangible assets 57,977 35,000 28,016
Tangible assets 1,847,593 1,139,645 1,261,082
1,905,570 1,174,645 1,289,098
Current assets
Stock 29,207 - 27,000
Debtors 855,864 429,687
541,300
Cash on short term deposits 16,700,796 12,900,000 11,593,626
Cash at bank 3,512,585 19,730 1,039,690
21,098,452 13,349,417 13,201,616
Creditors: amounts falling due within one (315,269) (555,886) (704,833)
year
Net current assets 20,783,183 12,793,531 12,496,783
Creditors: amounts falling due after more (610,442) - (690,812)
than one year
Net assets 22,078,311 13,968,176 13,095,069
Capital and reserves
Called up share capital 3,721,707 3,131,311 3,131,311
Share premium account 22,327,396 12,946,848 12,946,848
Other reserves (1,942,589) (1,942,589) (1,942,589)
Profit and loss account (2,028,203) (167,394) (1,040,501)
Equity shareholders' funds 22,078,311 13,968,176 13,095,069
Consolidated cash flow statement
for the six months ended 31 July 2006
Unaudited Unaudited
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2006 2005 2006
# # #
Net Cash flow from operating activities (1,934,163) (371,110) (1,447,680)
Return on investments and servicing of finance 276,410 305,322 507,652
Taxation: R&D tax credit received - - 29,041
Capital expenditure (652,964) (1,175,734 (1,373,553)
Cash outflow before management of liquid (2,310,717) (1,241,522) (2,284,540
resources and financing
Management of liquid resources
Decrease (increase) in short term deposits (5,107,170) 900,000 2,206,374
Financing
Issue of share capital 9,970,944 - -
(Repayment) increase in debt during the year (80,162) - 756,604
9,890,782 - 756,604
Increase (decrease) in cash in the period 2,472,895 (341,522) 678,438
Reconciliation of operating loss to net cash flow from operating activities
Unaudited Unaudited Restated
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2006 2005 2006
# # #
Operating loss (1,704,242) (434,242) (1,799,758)
Depreciation charge 108,771 18,645 127,520
Amortisation of intangible fixed assets 4,409 3,797 7,767
FRS 20 charge for fair value of share options 155,588 7,200 66,626
Increase in debtors (30,022) (336,547) (246,547)
Increase in stock (2,207) - (27,000)
(Decrease) increase in creditors (466,460) 370,037 423,712
Net cash outflow from operation (1,934,163) (371,110) (1,447,680)
activities
Notes to the interim results
1. Basis of preparation
The results for the half-year are unaudited and do not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. They have
been prepared on the basis of the accounting policies expected to apply for the
financial year to 31 January 2007.
The results shown for the full year ended 31 January 2006 are not the company's
full statutory accounts for that year. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies. The auditors'
report on those accounts was unqualified and did not contain a statement under
section 237 (2) - (3) of the Companies Act 1985.
FRS 20 Restatement
All quoted UK companies are required to implement accounting standard FRS 20 - '
Share based payment' for financial periods commencing on or after 1 January
2006. This standard affects all companies that issue share options and results
in a non-cash charge to the profit and loss statement to reflect the 'fair
value' of issued share options. The fair value of VASTox share options is
calculated using the Black-Scholes formula. In common with the implementation
of all accounting standards, prior year results must be restated as if the
accounting standard had always been in force. In the six month period to 31
July 2006 the charge due to the implementation of FRS 20 is #155,588 (six month
period to 31 July 2005: #7,200; year to 31 January 2006: #66,626). This
restatement has had no impact on the net assets in the periods presented in
these interim results.
2. Loss per share calculation
The loss per share has been calculated by dividing the loss for the period of
#1,143,290 (for the period ended 31 July 2005: restated loss of #128,920; for
the year ended 31 January 2006: restated loss of #1,061,453) by the weighted
average number of 35,577,079 shares in issue during the six month period to 31
July 2006 (for the six month period ended 31 July 2005: 31,313,111; for the year
ended 31 January 2006: 31,313,111).
Since the group has reported a net loss, diluted loss per share is equal to
basic loss per share.
3. Analysis of changes in net funds
Unaudited Unaudited Year
Six months Six months ended
ended ended 31 January
31 July 31 July 2006
2006 2005 #
# #
Increase (decrease) in cash in the period 2,472,895 (341,522) 678,438
Increase (decrease) in short term deposits 5,107,170 (900,000) (2,206,374)
Cash (inflow) outflow from loan finance 80,162 - (756,604)
Opening net funds 11,876,712 14,161,252 14,161,252
Closing net funds 19,536,939 12,919,730 11,876,712
4. Interim report
Copies of this interim report are being sent to all shareholders. Copies are
also available at the Registered Office of the Company: VASTox plc, 91 Milton
Park, Abingdon, Oxfordshire, OX14 4RY and at the Company's website:
www.vastox.com.
The interim results were approved by the Board of Directors on 25 September
2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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