CAMBRIDGE, United Kingdom, April 20, 2004 (PRIMEZONE) -- CeNeS Pharmaceuticals plc (LSE:CEN) ("CeNeS" or "the Company") today announced its preliminary results for the year ended 31 December 2003.
Key events since January 2003
Financial - Sale of pharmaceutical products in May 2003 for over GBP9 million, generating a profit of GBP3.2 million. - Restructuring of balance sheet completed with conversion of Elan debt to shares. - Turnover GBP1.5 million in 2003 (2002: GBP5.2 million) reflecting the disposal of the pharmaceutical products in May 2003. - Loss for 2003 GBP6.0 million (2002: GBP6.3 million). - Cash resources at period end of GBP7.9 million (2002: GBP0.5 million). Operational - M6G for post-operative pain commenced its first Phase III trial in September 2003. - CNS 5161 for neuropathic pain commenced a second Phase II trial in January 2004. - Acquired TheraSci in November 2003 strengthening the pipeline in development and discovery programmes in sedation/anaesthesia, Parkinson's disease and other CNS disorders. - GlaxoSmithKline takes 5% stake in CeNeS as part of TheraSci transaction. Board appointments - Dr Peter Johnson, Chairman of Oxford BioMedica Plc and Alan Smith, Chairman of Acambis Plc and Avlar Bioventures Limited, appointed Non-executive Directors.
Commenting on the results, Alan Goodman, Chairman of CeNeS Pharmaceuticals Plc said: "I am delighted to report that CeNeS has successfully met all of its key objectives in 2003. We have made significant progress with our later stage clinical projects having commenced Phase III trials for M6G in 2003 and Phase II trials for CNS 5161. Additionally, we ended 2003 with the acquisition of TheraSci Limited which has further strengthened our portfolio - especially the acquisition with TheraSci of CNS 7056X - a short acting sedative development programme from GSK.
The next 18 months will be an exciting time for the Company as our two lead products progress further through their clinical trials and we announce important Phase III results for M6G and Phase II results for CNS 5161 as well as progressing CNS 7056X to the start of its Phase I programme.
Following completion of the restructuring and streamlining of the company and its activities CeNeS now has a clear business focus on lower risk opportunities for the treatment of disorders of the central nervous system including pain and we have established a balanced clinical pipeline. The Board of CeNeS believes that the Company is well placed to move forward and deliver increased value to shareholders."
This news release contains forward-looking statements that reflect the Company's current expectation regarding future events. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of the Company's research strategy, the applicability of the discoveries made therein, the successful and timely completion of clinical studies and the uncertainties related to the regulatory process.
Notes to Editors:
About CeNeS Pharmaceuticals
CeNeS, based in Cambridge, UK, is a biopharmaceutical company focused on the development of drugs for the treatment of CNS disorders including pain and anaesthesia. It has a balanced portfolio of late stage compounds and pre-clinical projects including lead products M6G, an IV analgesic in Phase III trials for moderate to severe post-operative pain, and CNS 5161, in Phase IIa trials for neuropathic pain. The CeNeS management team has a successful track record in developing small molecule drugs from lead optimisation through to Phase III clinical trials and the Company has a small molecule drug discovery capability. The Company's strategy is to develop its compounds to at least clinical proof of concept and then seek partners for regulatory approval and market launch.
Chairman's statement
Business review
I am pleased to report on a year of excellent progress for CeNeS resulting in the completion of the planned restructuring of the Company. CeNeS is now focused on the development of drugs for the treatment of the central nervous system ("CNS") especially lower risk opportunities in pain and anaesthesia. In 2003 we have significantly advanced our lead clinical programme, M6G, which entered its Phase III programme in the second half of the year. In addition CNS 5161 commenced Phase II trials early in 2004.
The acquisition of TheraSci Limited ("TheraSci") in November 2003 has proven to be an important addition bringing with it an experienced and complementary management team and several development and discovery programmes including a short acting sedative pre-clinical programme and a Parkinson's disease discovery. The short acting sedative was initially developed by GlaxoSmithKline ("GSK") and was acquired by CeNeS on completion of the TheraSci transaction. GSK simultaneously became a 5% shareholder in CeNeS - an important validation in the potential of the strategy, team and pipeline that CeNeS has put in place.
We are confident that our focus on lower risk CNS opportunities, one of the largest and fastest growing segments of the pharmaceuticals market, combined with our commercial intelligence on the needs of neurologists, anaesthetists and pain specialists means that CeNeS is well positioned to deliver significant results and returns to our investors. We shall continue to evaluate other opportunities in the sector that may complement this strategy and further enhance shareholder value.
Board appointments I am pleased to report the appointment of Dr Peter Johnson and Mr Alan Smith as Non-executive Directors of CeNeS in October 2003 and January 2004 respectively. Their experience, combined with that of Mr Ronald Irwin, the existing Non-executive Director, covers all aspects of managing drug development, marketing and corporate issues in both big pharmaceutical and fast growing biotechnology companies. Their expertise will assist us in developing and delivering our strategy.
Outlook
CeNeS has an experienced management team that has demonstrated its ability to deliver on its stated goals and develop a clear vision and strategy for the future. This has been achieved against a very difficult market background. The Board is looking forward to increasing investor interest and confidence in CeNeS starting from a sound financial base with a clear strategic and therapeutic focus. It is the Board's view that in the short term increased shareholder value will best be achieved through the Company taking its clinical assets through later stage clinical trials itself.
Chief Operating Officer's review
Strategy CeNeS is a biopharmaceutical company focused on the development of drugs for the treatment of CNS disorders. The strategy we embarked upon to build a biopharmaceutical company focusing on lower risk opportunities in pain, anaesthesia and CNS disorders such as Parkinson's disease has progressed exceptionally well. CeNeS operates a "virtual", low-cost business model, out sourcing certain functions but retaining a core management group of key scientific, commercial and corporate employees.
The acquisition of TheraSci in November 2003, which was following a similar business model to CeNeS, has added a clearly defined set of compounds at pre-clinical development and discovery stages and also further strengthened the management team. CeNeS now has the capability in-house to assess opportunities from discovery through to commercialisation. Additionally, CeNeS now has a clearly defined portfolio review process by which internal discovery and development investment decisions are made. This extensive review is a key element in the "lower risk" approach to CNS drug discovery and development we have adopted.
In the next 12 months we expect M6G, for the treatment of post-operative pain, and CNS 5161, for the treatment of neuropathic pain, to progress through further Phase III and Phase II trials respectively, thereby assembling comprehensive data packages for both these potential drugs. CeNeS is also advancing the pre-clinical development of CNS 7056X, its short-acting sedative, with the aim of filing a Clinical Trials Application ("CTA") in the first half of 2005.
The Board will continue to examine in-licensing opportunities that fit the lower risk selection criteria with the intention of expanding the portfolio if suitable drug candidates and acceptable financial deal structures and clinical investment plans can be agreed.
Development pipeline
M6G - for the treatment of post-operative pain
Morphine formulations are currently the treatment of choice in the control of severe pain. Phase II studies have shown that an active potent metabolite of morphine, morphine-6-glucuronide (M6G) may have clinical advantages over morphine. These studies have shown that M6G, in addition to having an equivalent analgesic effect, may have an improved side effect profile with a reduced tendency to cause respiratory depression, nausea and vomiting. Specifically, Phase II clinical trials have shown that M6G produces equivalent analgesia to morphine to combat post-operative pain. Additional Phase II clinical studies in post-operative nausea and vomiting have also shown that M6G reduced the incidence of nausea and vomiting by more than 50% when compared directly with morphine.
M6G commenced an initial Phase III trial in September 2003 which we anticipate will complete around mid-2004. The trial is seeking to recruit 168 patients in hospitals in three European countries and to date recruitment is 90% complete. The patients being recruited suffer from post-operative pain following knee surgery carried out under spinal anesthesia. The prime objective of the study is to compare the analgesic efficacy and duration of action of a range of doses of M6G (10, 20 and 30mg/70kg) given intravenously, compared with placebo. A further Phase III trial is planned which will be a comparative study of M6G with morphine using bolus and patient controlled analgesia (PCA) administration. It is hoped that analgesic equivalence and the side effects benefits of M6G over morphine will be established. If this is successful it is expected that an initial European product filing could be made in late 2005 with a view to launching the product in the first European countries in 2006/2007. CeNeS is planning to extend the clinical development of M6G into alternative formulations for the management of chronic and/or post-operative pain.
If CeNeS is able to confirm in Phase III clinical trials that M6G causes fewer side effects than morphine, but has equal analgesic efficacy, then it should represent an attractive alternative for patients and healthcare providers with potentially significant pharmaeconomic benefits including a reduction in the use of anti-emetics, nursing time and length of hospital stay. CeNeS is currently undertaking studies across Europe to determine a pricing and reimbursement strategy that might be adopted in the commercialisation of M6G in the European markets.
CNS 5161 - for the treatment of neuropathic pain
Neuropathic pain represents a significant unmet medical need and a large, growing market opportunity currently worth over $2billion globally. It arises from a range of primary diseases or conditions (including cancer, diabetes, shingles and HIV/AIDS) that can result in nerve damage and subsequently chronic pain. Neuropathic pain is difficult to treat and current analgesics do not provide adequate relief for many patients.
Research studies have previously shown that glutamate (particularly NMDA) receptors are implicated in the induction and maintenance of neuropathic pain and NMDA antagonists have been shown to be effective in models of persistent pain. CNS 5161 is a potent and selective NMDA antagonist.
CeNeS has completed two Phase I studies with CNS 5161 for the potential treatment of neuropathic pain. The first study demonstrated the safety and tolerability of selected doses of CNS 5161 given intravenously. The second study examined the reduction in pain experienced after placebo, morphine and two separate doses of CNS 5161 (0.25mg and 0.5mg), were administered on separate occasions to sixteen volunteers. CNS 5161 at 0.5mg was found to produce a statistically significant reduction in perceived pain compared to either morphine or placebo and notably with minimal side effects.
In 2002 CeNeS completed an initial Phase IIa study in 10 patients with chronic neuropathic pain. This study further demonstrated that CNS 5161 gave statistically significant pain relief following intravenous infusion of 0.25mg of the drug over 24 hours. The drug was well tolerated by the patients with no significant side effects.
CeNeS has commenced an extended Phase II trial with CNS 5161 in Europe. Patient recruitment has started and the results of the trial are expected in H1 2005.
CNS 7056X - short acting sedative
Sedation is required for a wide range of surgical and non-surgical procedures. Given the high cost of overnight hospital stays the trend towards day-case procedures creates a requirement for sedative agents that permit rapid recovery. CNS 7056X has the potential to fit this profile.
CNS 7056X works by a clinically validated mechanism as an agonist at the benzodiazepine site of the GABAA receptor. Agents with a similar mechanism of action have been used for many years as sedatives (e.g. midazolam) but suffer from relatively long and variable durations of sedative effects, primarily due to active metabolites. CNS 7056X has been developed by GSK to potentially have equivalent sedative effects to agents such as midazolam but, uniquely, the compound is designed to be rapidly broken down in the body to an inactive metabolite and consequently it should have a very short duration of action. Following the acquisition of this compound (and several back-up compounds) from GSK in November 2003 the technology transfer is now substantially complete. CeNeS is planning to complete the pre-clinical development work within the next 12 months with the intention of filing a CTA in 2005.
Parkinson's disease
Parkinson's disease is the second most common neurodegenerative disease after Alzheimer's. It affects approximately 2% of the population over the age of 65. The symptoms of Parkinson's disease such as tremor, rigidity and slowness of movement result from the loss of neurones containing the neurotransmitter dopamine in parts of the brain responsible for controlling movement. Many early-stage research efforts are focusing on novel therapies for the treatment of Parkinson's disease such as stem cells or gene therapy.
In line with our stated lower risk approach CeNeS has examined the continuing use of L-DOPA as the main treatment of Parkinson's disease and selected a discovery opportunity that could potentially significantly enhance its effectiveness.
The mainstay of treatment in Parkinson's disease replacement therapy uses the precursor of dopamine, L-DOPA combined with a dopa-decarboxylase inhibitor (carbidopa or benserazide). Catechol-O-methyltransferase (COMT) is a key enzyme that metabolises catecholamines such as L-DOPA and causes a significant depletion of L-DOPA in the brain and periphery, limiting its efficacy. COMT inhibitors smooth out the pharmacokinetics of L-DOPA, giving patients a longer 'on' or functional time each day. However, existing COMT inhibitors have significant problems including liver toxicity, poor brain penetration and poor oral bioavailability. The problems associated with the current generation of COMT inhibitors are thought to result from the nitrocatechols chemical class to which they belong.
Working from our leading edge understanding of the chemistry of Parkinson's disease CeNeS has identified a novel series of COMT inhibitors which are not nitrocatechols and which have the potential to provide a significantly superior profile compared with current agents. This programme is now in the lead optimisation phase.
Other discovery and development programs CeNeS has other discovery and development assets whose progression is currently on hold due to funding restrictions. For instance, CeNeS is considering the development of M6G for chronic pain and is undertaking certain preliminary studies for this indication. CeNeS also has rights to a novel dopamine D1 receptor antagonist CEE 03-320, which is ready to enter Phase I clinical trials and is indicated for substance abuse and sleep disorders. In addition CeNeS has a novel series of neuromuscular blocking compounds with the programme focused on identifying new, short acting agents for use in surgical procedures.
Out-licensing
Retaining ownership of programmes for longer has the potential to significantly increase the income generated from out-licensing transactions and we continue to review our commercial discussions with this in mind whilst following our stated strategy of adopting a lower risk approach to drug development.
Corporate activities in 2003
Pharmaceutical products sale The improved cash position of CeNeS was achieved principally by the sale of its pharmaceutical products Diconal, Cyclimorph and Valoid for a consideration of over GBP9 million in May 2003.
Elan Joint Venture In June 2003 CeNeS terminated its collaboration with Elan and retrieved all rights to M6G. As part of this process CeNeS successfully negotiated the termination of its joint venture with Elan and also, in August 2003, the conversion into shares of Elan's convertible loan stock and subsequent placing with institutional investors.
TheraSci acquisition In November 2003 CeNeS strengthened and broadened its CNS focused pipeline by acquiring the UK biotechnology company TheraSci Limited for up to GBP3.7 million in shares. Simultaneous with the acquisition of TheraSci GlaxoSmithKline assigned to TheraSci all rights to their programme developing novel short-acting sedatives for the use in day case procedures. In addition the TheraSci transaction provided CeNeS with discovery and development programmes focused on the development of drugs for the treatment of Parkinson's disease, substance abuse and sleep disorders. The acquisition also provided CeNeS with an additional net cash balance of GBP1.1 million.
One of the funds managed by Avlar Bioventures Limited was a significant shareholder in TheraSci and consequently now has a 10% shareholding in CeNeS. Alan Goodman, the Chairman of CeNeS, is also a director of Avlar Bioventures Limited. As a result, the TheraSci acquisition was treated as a related party transaction (as defined in the AIM Rules). The other directors of CeNeS at the time of the transaction, Neil Clark, Ronald Irwin and Dr Peter Johnson, were not treated as related parties and after appropriate consultations with advisors considered that the terms of the acquisition were fair and reasonable insofar as the Company's shareholders are concerned.
Portfolio of carried interests
CeNeS out licensed a number of non-core product candidates but has retained interests and partnerships in these programmes. This portfolio could generate significant milestones plus royalty streams if various targets are achieved. CeNeS management will continue to monitor the progress of these interests.
Advisors
In January 2004 CeNeS appointed Piper Jaffray Ltd as nominated financial advisor (NOMAD) and Nomura International plc as sole broker and joint financial advisor.
Outlook
CeNeS management is excited by the opportunities that are presenting themselves to the Company in its new format and also by the clinical trials news flow that is planned from our later stage programmes in the next twelve months. The Board, whilst remaining acutely aware of the risks involved in drug development and the unpredictability of the biotechnology sector, believes that the Company can now move forward and build a strong discovery and development pipeline with the capacity to deliver significant shareholder value.
Financial Review
Results of operations The loss for the year ended 31 December 2003 was GBP6.0 million (2002: GBP6.3 million). The cash balance and short term deposits at 31 December 2003 were GBP7.9 million (2002: GBP0.5 million). Turnover decreased to GBP1.5 million in the year to 31 December 2003 compared to GBP5.2 million in the previous financial year. Revenues from the sales of pharmaceutical products decreased to GBP1.4 million in 2003 (2002: GBP4.5 million) as a result of the disposal of the pharmaceutical products in May 2003. Turnover from out-licensing activities was GBP0.1 million in the year ended 31 December 2003 (2002: GBP0.8 million) reflecting the out-licensing activity undertaken by the Company in 2002 as part of its restructuring process. Gross profits have also decreased as a result of the disposal of the pharmaceutical products. The discontinued turnover and gross profit figures relate to the disposal of pharmaceutical products in May 2003.
Research and development costs decreased to GBP2.9 million (2002: GBP3.5 million). Research and development costs in continuing operations have increased to GBP2.9 million (2002: GBP2.0 million) principally as a result of GBP0.9m of amortisation arising on the immediate write-off of the short acting sedative compound acquired from GSK as part of the TheraSci transaction. CeNeS accounting policy is to amortise licenses acquired in full if the product is at an early stage of development. Research and development expenditure incurred by discontinued operations in 2003 was less than GBP0.1million (2002: GBP1.5 million) reflecting the completion of the restructuring process.
Administrative expenses in total have decreased to GBP4.5 million (2002: GBP7.9 million) and include exceptional goodwill write downs of GBP0.4 million (2002: GBP1.7 million). Administrative costs for continuing operations remained level at GBP2.3 million for the year ended 31 December 2003 (2002: GBP2.3 million) including goodwill amortisation of GBP0.7 million (2002: GBP0.8 million).
Administrative costs relating to discontinued activities, excluding exceptional goodwill write downs of GBP0.4 million (2002: GBPnil), were GBP1.7 million (2002: GBP3.9 million). Included within these numbers is the amortisation of the pharmaceutical products, which were disposed of in May 2003, of GBP0.7 million (2002: GBP2.1 million).
Other operating income of GBP0.4 million (2002: GBP1.6 million) reflects the write off of loans payable by CeNeS (Bermuda) Limited to Elan on termination of the joint venture. In 2002 CeNeS reclaimed cash of GBP1.6 million relating to development spend under the CeNeS/Elan joint venture arrangements.
Net interest payable increased to GBP3.5 million (2002: GBP0.4 million). Interest payable of GBP3.6 million arose as part of the agreement with Elan, in August 2003, to convert all outstanding convertible loan notes including interest rolled up to the term for each loan note.
A profit on disposal of GBP3.2 million was made on the disposal of the pharmaceutical products. Other interest receivable and similar income of GBP0.3 million (2002: GBP1.2 million) relates to the gain on foreign currency translation made on conversion of the dollar denominated long term convertible debt with Elan.
CeNeS has estimated that the research and development tax credit claim for 2003 will be GBP275,000. This amount has yet to be agreed with the Inland Revenue. The amount receivable for 2002, which has yet to be agreed by the Inland Revenue, is estimated to be GBP85,000. The increase reflects the clinical trials in M6G and CNS 5161 which were started in 2003.
Fixed assets The decrease in intangible assets to GBP8.5 million (2002: GBP13.3 million) is a result of the disposal of the pharmaceutical product licences amounting to GBP5.2 million, goodwill amortisation of GBP1.3 million and the acquisition of TheraSci. Goodwill arising on the acquisition of TheraSci Limited was GBP1.7 million.
Tangible fixed assets have decreased to GBP3,000 (2002: GBP43,000).
Stocks Stocks reduced to GBPnil (2002: GBP888,000) due to the disposal of the pharmaceutical products in May 2003.
Debtors Debtors due after more than one year of GBP0.3 million (2002: GBP2.1 million) include deferred consideration owed following the disposal of Cambridge Cognition Limited in 2002 and the loan note due following the disposal of the Channelworks division in 2002. Debtors due within one year are lower at GBP1.1 million (2002: GBP1.2 million) mainly because of lower trade debtors following the disposal of the pharmaceutical products offset by a higher tax debtor in respect of the research and development tax credit.
Creditors Creditors due within one year are GBP1.9 million (2002: GBP2.1 million). Creditors due after more than one year are significantly lower at GBP0.5 million (2002: GBP10.5 million). In August 2003, CeNeS removed all long-term convertible debt from its balance sheet after agreeing with Elan to the early conversion of its convertible debt.
A provision of GBP0.9 million (2002: GBP0.9 million) was made in 2002 for the expected liability relating to the leases of premises in Scotland that are no longer required by the group. Of this provision, GBP0.6 million (2002: GBP0.6 million) is included in creditors due after more than one year and GBP0.3 million (2002: GBP0.3 million) is included in creditors due within one year.
The share of net liabilities of the joint venture, between CeNeS and Elan, of GBPnil (2002: GBP1.8 million) reflects the termination of the agreement with Elan in August 2003. CeNeS acquired Elan's minority shareholding in CeNeS (Bermuda) Limited as part of the agreement.
Cash resources Net cash outflow for the year ended 31 December 2003 was GBP0.3m (2002: GBP1.7m). Cash at bank and in hand at 31 December 2003 was GBP0.2m (2002: GBP0.5m). Short-term deposits at 31 December 2003 were GBP7.7m (2002: GBPnil).
Convertible debt In August 2003 CeNeS and Elan agreed to convert the outstanding convertible loan notes of US$21.7 million (approx. GBP13.5 million) into approximately 20 million CeNeS ordinary 1 pence shares at an average price of $1.10 (GBP0.68) per ordinary share. CeNeS agreed that as part of the transaction the outstanding loan notes for the purposes of the conversion would include interest rolled up to the term for each of the loan notes. All the shares issued were placed with a group of institutional investors at 3.875 pence per share. As a result, since August 2003, the CeNeS balance sheet has been free from any convertible debt. Concurrent with the placing of the Elan stock CeNeS raised GBP675,000 before expenses through a placing with investors of 17,441,296 ordinary shares of 1 pence each at a price of 3.875 pence per share.
Acquisition of TheraSci
On 21 November 2003 CeNeS acquired TheraSci for a consideration of up to GBP3.7 million to be satisfied by the issue of up to 45,726,209 ordinary 1 pence shares in CeNeS. Included with the assets of TheraSci was a simultaneous transaction under which, GSK assigned to TheraSci all rights to their programme developing novel short-acting sedatives ("the sedative programme") for use in day case procedures.
At the date of acquisition TheraSci had net assets of approximately GBP1.2 million, including net cash of GBP1.1 million. The fair value of the sedative programme of GBP0.9 million has been amortised in full on acquisition due to the early stage of the programme. Goodwill arising on the acquisition of TheraSci is GBP1.7 million and is being amortised over a period of five years.
Subdivision of ordinary shares
On 11 August 2003 each of the issued ordinary shares of 10 pence each (174,412,968) in the capital of the Company was sub-divided and converted into one ordinary share of 1 pence and one deferred share of 9 pence and each unissued ordinary share of 10 pence each in the capital of the Company was subdivided into 10 ordinary shares of 1 pence each. The Company is not permitted for legal reasons to issue shares at a price which is less than their nominal value and for the 30 day period prior to this sub-division of ordinary shares of 10 pence the average market price was 4.1 pence. Each resulting ordinary share of 1 pence, effectively, has the same rights (including voting and dividend rights and rights on return of capital) as the ordinary shares of 10 pence. The deferred shares of 9 pence each are required to be created for legal reasons in order to maintain the aggregate nominal value of the Company's share capital. All of the deferred shares of 9 pence in issue were acquired promptly by the Company for nil consideration after sub-division of the ordinary shares and then immediately cancelled.
Admission of shares to be traded on AIM On 8th August 2003 CeNeS shares moved from the Official List and began trading on the Alternative Investments Market (AIM) in London, UK. The Board believes that it is more appropriate and cost efficient for the Company's shares to be traded on the AIM market.
Consolidated Profit and Loss Account
For the year ended 31 December 2003
Unaudited Audited
Notes 2003 2002
GBP'000 GBP'000
Turnover - continuing 61 754
- discontinued 3 1,395 4,478
1,456 5,232
Cost of sales - continuing - -
- discontinued 3 (683) (1,802)
(683) (1,802)
Gross
profit - continuing 61 754
- discontinued 3 712 2,676
773 3,430
Research and development costs - continuing (2,861) (2,058)
- discontinued 3 (80) (1,478)
(2,941) (3,536)
Administrative
expenses - continuing (2,332) (2,332)
- exceptional goodwill write - (1,731)
down in continuing operations
- discontinued 3 (1,742) (3,856)
- exceptional goodwill write 3 (413) -
down in discontinued operations
(4,487) (7,919)
Other operating income 422 1,574
Operating loss - continuing (4,710) (3,793)
- discontinued 3 (1,523) (2,658)
(6,233) (6,451)
Share of operating loss of joint venture - (1,391)
Profit on disposal of discontinued operations 3,171 553
Net interest payable (3,483) (445)
Other interest receivable and similar income 283 1,186
Loss on ordinary activities before taxation (6,262) (6,548)
Taxation 275 226
Loss on ordinary activities after taxation (5,987) (6,322)
Minority interest - 64
Loss for the year (5,987) (6,258)
Loss per ordinary share - basic and diluted 2 (3.1p) (3.7p)
Consolidated statement of total recognised gains and losses
For the year ended 31 December 2003
Unaudited Audited
2003 2002
GBP'000 GBP'000
Loss for the year (5,987) (6,258)
(Loss)/gain on foreign currency translation (3) 18
Total recognised gains and losses for the year (5,990) (6,240)
Consolidated Balance Sheet
As at 31 December 2003
Unaudited Audited
Notes 2003 2002
GBP'000 GBP'000
Fixed assets
Intangible assets 8,487 13,309
Tangible assets 3 43
8,490 13,352
Current assets
Stocks - 888
Debtors - amounts falling due
after more than one year 253 2,142
Debtors - amounts falling due
within one year 1,064 1,247
Short term investments 7,700 -
Cash at bank and in hand 195 480
9,212 4,757
Creditors - amounts falling due
within one year (1,898) (2,145)
Net current assets 7,314 2,612
Total assets less current
liabilities 15,804 15,964
Creditors - amounts falling due
after more than one year
5% convertible unsecured
exchangeable loan stock 2009 - (7,995)
7% convertible unsecured loan stock 2007 - (1,801)
Other creditors (549) (663)
Share of gross and net
liabilities of joint venture - (1,793)
Net assets 15,255 3,712
Capital and reserves
Called up share capital 2,505 17,441
Share capital to be issued 5,802 5,219
Share premium account 102,435 86,235
Profit and loss account (121,580) (115,590)
Other reserves 26,093 10,407
Equity shareholders' funds 6 15,255 3,712
Consolidated Cash Flow Statement
For the year ended 31 December
2003
Unaudited Audited
Notes 2003 2002
GBP'000 GBP'000
Net cash outflow from operating
activities 4 (3,429) (5,005)
Returns on investments and
servicing of finance
Interest received 152 49
Interest paid (11) (15)
Interest element of finance lease
rental payments (2) (8)
Net cash inflow from returns on 139 26
investment
and servicing of finance
Taxation
Research and development tax (22) 962
credit
Capital expenditure and financial
investment
Payment to acquire tangible fixed - (16)
assets
Payment to acquire intangible - (1,000)
fixed assets
Receipts from sale of tangible 2 354
fixed assets
Net cash inflow/(outflow) from 2 (662)
capital expenditure
and financial investment
Acquisitions and disposals
Proceeds from sale of 8,939 -
pharmaceutical products
Proceeds from sale of subsidiary - 488
undertaking
Net cash acquired with subsidiary 1,169 -
Net cash inflow from acquisitions 10,108 488
and disposals
Cash inflow/(outflow) before use 6,798 (4,191)
of liquid resources and financing
Increase in short term deposits (7,700) -
with banks
Net cash outflow before financing (902) (4,191)
Financing
Issue of ordinary share capital 686 1,005
Repayment of loans (61) (61)
Issue of convertible loan note - 1,794
Capital element of finance lease (8) (228)
rentals
Net cash inflow from financing 617 2,510
Decrease in cash (285) (1,681)
Reconciliation of Net Cash Flow to
Movement in Net Funds
2003 2002
GBP'000 GBP'000
Decrease in cash in the period (285) (1,681)
Cash inflow/(outflow) due to 69 (1,505)
changes in debt and finance
leasing
Movements in deposits 7,700 -
Change in net debt resulting from 7,484 (3,186)
cash flows
Non-cash items 9,796 715
Movement in net funds/(debt) 17,280 (2,471)
Net debt brought forward (9,503) (7,032)
Net funds/(debt) carried forward 7,777 (9,503)
Notes to preliminary results for the year ended 31 December 2003
1. Basis of Preparation
These preliminary results have been prepared in accordance with UK GAAP on the basis of the accounting policies set out in the group's 2002 statutory accounts.
The financial information set out in the preliminary statement does not comprise the Company's statutory accounts within the meaning of section 240 of the Companies Act 1985.
The financial information for the year ended 31 December 2003 is unaudited, and has been prepared in accordance with the accounting policies set out in the Annual Report for the year ended 31 December 2002. The auditors have not yet reported on the accounts for the year ended 31 December 2003, nor have any such accounts been delivered to the Registrar of Companies for Scotland. The financial information for the year ended 31 December 2002 has been extracted from the full report and accounts for that year which have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2003 will be sent to shareholders with the notice of the Annual General Meeting and filed with the Registrar of Companies in due course.
Loss per share
The loss per share is based on losses of GBP6.0m (2002: GBP6.3m) and the weighted average number of shares in issue during the year of 193,855,058 shares (2002: 170,361,713).
3. Discontinued operations and acquisitions
In the consolidated profit and loss account, discontinued activities refer to the pharmaceutical products that were sold in May 2003 and the drug delivery division based in Scotland whose operations were discontinued in 2001. The post-acquisition loss before tax of TheraSci Limited was GBP80,000. This has been included within continuing operations rather than shown separately on the face of the profit and loss account as the amounts are not material.
4. Reconciliation of operating loss to net cash outflow
from operating activities
Unaudited Audited
2003 2002
GBP'000 GBP'000
Operating loss (6,233) (6,451)
Depreciation 20 184
Release of grant - (96)
Amortisation of intangible assets 2,275 3,819
Loss/(profit) on sale of tangible fixed 3 (207)
assets
Impairment of goodwill 413 1,731
Decrease/(increase) in stocks 44 (460)
Decrease/(increase) in debtors 879 (1,559)
Decrease in creditors (830) (1,966)
Net cash outflow from operating activities (3,429) (5,005)
5. Accounting for joint venture arrangement
CeNeS acquired Elan's minority shareholding in CeNeS (Bermuda) Limited in August 2003 as part of an agreement with Elan to terminate the joint venture arrangement. CeNeS (Bermuda) Limited has been accounted for as a subsidiary in the 2003 financial statements.
6. Reconciliation of movements in group shareholders' funds
Unaudited Audited
2003 2002
GBP'000 GBP'000
Loss for the financial year (5,987) (6,258)
(Loss)/gain on foreign currency translation (3) 18
Movement in share option reserve (11) (14)
Share capital to be issued 583 (43)
Issue of shares 16,961 1,057
Net increase/(decrease) in shareholders' 11,543 (5,240)
funds for the year
Opening shareholders' funds 3,712 8,952
Closing shareholders' funds 15,255 3,712
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