CAMBRIDGE, U.K., Sept. 20, 2004 (PRIMEZONE) -- CeNeS Pharmaceuticals plc (AIM:CEN) ("CeNeS" or "the Company") today announced its unaudited interim financial results for the six months ended 30 June 2004.
Operational highlights
-- M6G successfully completes Phase III trial in post-operative pain
(see separate press release dated today)
-- CNS 5161 for neuropathic pain entered a Phase II trial.
Financial highlights
-- Net loss for the first half of 2004 of GBP2.3m (H1 2003: profit
GBP0.9m including GBP3.2m profit on sale of pharmaceutical
products).
-- Cash balances at end of June 2004 of GBP6.1m (June 2003:
GBP8.2m).
Corporate matters
-- Alan Smith, Chairman of Acambis Plc and Avlar Bioventures Limited
appointed as a Non-executive Director.
-- Piper Jaffray Ltd and Nomura International plc appointed
nominated advisor (NOMAD) and nominated broker respectively.
Commenting on the results, Alan Goodman, Chairman of CeNeS Pharmaceuticals plc, said:
"The Board is delighted to report that CeNeS has continued to successfully meet its key strategic objectives in 2004.
We are particularly pleased with the announcement today of the positive M6G Phase III results in post-operative pain. CeNeS retains all global marketing rights to M6G and is well placed to capture the potential commercial value in this novel, late stage pain product.
Additionally, CNS 5161 has commenced a Phase II trial in neuropathic pain with patient recruitment underway. Furthermore, the Company's pre-clinical short acting sedative and discovery Parkinson's disease programmes are also progressing in line with expectations. CeNeS owns the global rights to all three of these programmes.
There is a significant opportunity for CeNeS in realising the clinical and commercial potential of M6G as an effective analgesic with a good side effect profile. In light of these positive results the Company is considering its financing options for taking this product forward, including equity funding and/ or out-licensing.
Overall, CeNeS is building a balanced, focused pipeline which is being effectively managed by our in-house experts as evidenced by the successful clinical progress we have made. CeNeS is also encouraged by additional novel early stage opportunities that are being identified by our discovery team that fit our focused "risk-reduced" selection criteria.
The Board is confident that the Company's clear strategic focus coupled with the excellent progress made to date in 2004 leaves CeNeS well placed to deliver increased value to shareholders going forward."
Review of the six months ended 30 June 2004
Introduction
CeNeS has made strong progress so far this year. Morphine-6-glucuronide ("M6G") has successfully completed a Phase III trial in post-operative pain and CNS 5161, a potential treatment for neuropathic pain, is currently being evaluated in a Phase II clinical trial. Additionally, our pre-clinical and discovery candidates in sedation and Parkinson's disease have made good progress and we are also excited by additional new, early stage opportunities that have been identified by our in-house discovery team that fit within our focused "risk-reduced" selection criteria.
Clinical development update
M6G -- for the treatment of post-operative pain
CeNeS today announced positive preliminary results in a Phase III clinical trial to assess the efficacy of M6G (morphine-6-glucuronide) as an analgesic in patients suffering from post-operative pain (p less than 0.05). The Phase III study also confirmed the effective dose of M6G and supported the findings of earlier volunteer and Phase II studies that M6G treated patients suffer less nausea and vomiting when compared to patients receiving.
CeNeS is planning to undertake a final Phase III study in Europe in patients suffering moderate and severe post-operative pain following surgical procedures (e.g. hysterectomy and gastrointestinal) carried out under general anaesthetic. The study will compare equipotent regimes of M6G initial dosing and PCA versus morphine initial dosing and PCA and will examine the analgesic efficacy and side effect profile of M6G versus morphine. Treatment groups and dosage will be finalised based upon the results of the completed Phase III study. Following the completion of the second Phase III study in 2005 the Directors expect an initial European product filing for the use of M6G in the treatment of acute pain following surgery could be made in 2006. The Directors expect commercial launch of M6G in Europe may be achieved in 2006/7.
CNS 5161 -- for the treatment of neuropathic pain
CeNeS is currently undertaking a Phase II, 48 patient, European multi centre, double blind, crossover, dose escalating, preliminary safety and efficacy study comparing a single exposure of CNS 5161 to placebo in patients with intractable chronic neuropathic pain. The study is intended to establish the effective analgesic dose of CNS 5161. Patient recruitment is continuing and results of this Phase II trial are expected in the first half of 2005.
Pre-clinical development update
CNS 7056X for sedation
The compound CNS 7056X was acquired from GlaxoSmithKline in November 2003. CeNeS is completing the pre-clinical development work on CNS 7056X and the Company intends to file an investigational new drug ("IND") application with the Food and Drug Administration in the United States in 2006 given the United State's position as the largest market for sedative/hypnotic products. The Company is planning that the clinical proof of concept for CNS 7056X will be evaluated in Phase I trials in the United States with the onset and offset of sedation of CNS 7056X examined and compared to midazolam, a leading sedative product.
COMT inhibitors for Parkinson's Disease
L-DOPA (the precursor of dopamine) is the main treatment of Parkinson's disease.
Catechol-O-Methyl transferase ("COMT") is an important enzyme that metabolises L-DOPA and dopamine and causes a significant depletion of L-DOPA limiting its efficacy. COMT inhibitors enhance the effectiveness of L-DOPA giving patients a longer functional time each day.
CeNeS has identified several novel series of COMT inhibitors that do not contain the problematic nitrocatechol group (that can lead to absorption and metabolism problems) and potentially have a significantly superior profile when compared to current drugs. This programme is now in the lead optimisation phase.
Interim results
As a result of the group restructuring, completed in August 2003, the overall results for the six months to 30 June 2004 are not comparable with the results for the six months to 30 June 2003.
Revenues for the period were GBP13,000 (H1 2003: GBP1.4m). Revenues in H1 2003 were mainly attributable to the group's pharmaceutical products which were disposed of in May 2003.
Research and development costs increased to GBP1.2m (H1 2003: GBP0.5m) reflecting the further development of the group's late stage clinical programme and specifically the costs of the Phase III clinical trial for M6G and the ongoing Phase II clinical trial for CNS 5161.
Administrative expenses from continuing operations remained consistent with the first half of 2003 at GBP1.4m (H1 2003: GBP1.5m) reflecting the group's continued focus on maintaining a low cost base in line with its "virtual" business model. Amortisation of goodwill, included within administrative expenses, has increased to GBP0.5m (H1 2003: GBP0.3m) following the acquisition of TheraSci Limited in November 2003.
Other operating income of GBP0.1m includes rental income. In H1 2003 other operating income reflected the profit made as a result of terminating the Elan joint venture arrangement.
The loss after tax for the period was GBP2.3m (H1 2003: profit of GBP0.9m).
The improvement in the group's net assets to GBP13.1m (H1 2003: GBP4.6m) was primarily the result of the settlement of the Elan loan agreements in August 2003 which converted all unsecured loan stock (2003: GBP9.8m) into shares. Net cash as at 30 June 2004 was GBP6.1m (H1 2003: GBP8.2m) held in liquid short term investments and cash.
Net cash outflow of GBP1.8m (H1 2003: inflow of GBP7.7m) was primarily the result of a net cash outflow from operating activities, predominantly research and development expenditure and administrative expenses. This cash outflow was funded mainly by the group's short term deposits.
Neil Clark -- Chief Operating Officer and Financial Director
20 September 2004
Consolidated Profit and Loss Account
For the six months to 30 June 2004
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Turnover -- continuing 13 96 61
-- discontinued -- 1,329 1,395
-------- -------- --------
13 1,425 1,456
-------- -------- --------
Cost of
sales -- continuing -- -- --
-- discontinued -- (683) (683)
-------- -------- --------
-- (683) (683)
-------- -------- --------
Gross
profit -- continuing 13 96 61
-- discontinued -- 646 712
-------- -------- --------
13 742 773
-------- -------- --------
Research and
development
costs -- continuing (1,192) (454) (2,861)
-- discontinued -- (63) (80)
-------- -------- --------
(1,192) (517) (2,941)
-------- -------- --------
Administrative
expenses -- continuing (1,358) (1,494) (2,892)
-- discontinued -- (972) (1,182)
-- exceptional
goodwill
write down
in discontinued -- (413) (413)
operations
-------- -------- --------
(1,358) (2,879) (4,487)
-------- -------- --------
Other operating income 122 422 422
-------- -------- --------
Operating
loss -- continuing (2,415) (1,430) (5,270)
-- discontinued -- (802) (963)
-------- -------- --------
(2,415) (2,232) (6,233)
-------- -------- --------
Profit on disposal of
discontinued operation -- 3,171 3,171
Interest receivable/
(payable)(net) 136 (245) (3,483)
Other interest
receivable and similar
income -- 245 283
-------- -------- --------
(Loss)/profit on
ordinary activities
before taxation (2,279) 939 (6,262)
Taxation 17 -- 275
-------- -------- --------
(Loss)/profit after tax (2,262) 939 (5,987)
-------- -------- --------
(Loss)/profit per
ordinary share 4 (0.9p) 0.5p (3.1p)
-------- -------- --------
Consolidated statement of total recognised gains and losses
For the six months to 30 June 2004
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------- -------- --------
(Loss)/profit for the
period (2,262) 939 (5,987)
Gain on foreign
currency translation -- (11) (3)
-------- -------- --------
Total recognised
gains/(losses) for the
period (2,262) 928 (5,990)
-------- -------- --------
Consolidated Balance Sheet
As at 30 June 2004
30 June 30 June 31 December
2004 2003 2003
Notes (Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Fixed assets
Intangible assets 2 8,011 7,188 8,487
Tangible assets 4 7 3
-------- -------- --------
8,015 7,195 8,490
Current assets
Debtors -- amounts falling due
after more than one year 148 148 253
Debtors -- amounts falling due
within one year 758 977 1,064
Short term investments 5,750 7,500 7,700
Cash at bank and in hand 345 677 195
-------- -------- --------
7,001 9,302 9,212
-------- -------- --------
Creditors
Creditors -- amounts falling
due within one year (1,333) (1,413) (1,898)
-------- -------- --------
Net current assets 5,668 7,889 7,314
-------- -------- --------
Total assets less current
liabilities 13,683 15,084 15,804
Creditors -- amounts falling
due after more than one year
5% convertible unsecured
exchangeable loan stock 2009 -- (7,994) --
7% convertible unsecured
exchangeable loan stock 2007 -- (1,818) --
Other creditors (549) (632) (549)
-------- -------- --------
Net assets 13,134 4,640 15,255
-------- -------- --------
Capital and reserves
Called up share capital 7 2,579 17,441 2,505
Share capital to be issued 4,279 5,219 5,802
Share premium account 104,025 86,235 102,435
Profit and loss account (123,842) (114,662) (121,580)
Other reserves 26,093 10,407 26,093
-------- -------- --------
Total capital employed 7 13,134 4,640 15,255
-------- -------- --------
Consolidated Cash Flow Statement
For the six months to 30 June 2004
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Notes (Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Net cash outflow from
operating activities (2,140) (1,219) (3,429)
Returns on investments
and servicing
of finance
Interest received 136 30 152
Interest paid -- (16) (11)
Interest element
of finance
lease rental payments -- -- (2)
-------- -------- --------
Net cash inflow
from returns
on investment and
servicing of
finance 136 14 139
Taxation
Research and
development tax
credit 102 -- (22)
-------- -------- --------
Capital expenditure
and financial
investments
Payment to
acquire tangible
fixed assets (1) -- --
Receipts from
sale of tangible
fixed assets -- 1 2
-------- -------- --------
Net cash
(outflow)/inflow
from capital
expenditure (1) 1 2
and financial investment
Acquisitions and disposals
Proceeds from sale of
pharmaceutical products -- 8,939 8,939
Net cash acquired with
subsidiary -- -- 1,169
-------- -------- --------
Net cash inflow from
acquisitions and
disposals -- 8,939 10,108
-------- -------- --------
Cash (outflow)/inflow
before use of liquid
resources and
financing (1,903) 7,735 6,798
Decrease/(increase)
in short
term deposits 6 1,950 (7,500) (7,700)
-------- -------- --------
Net cash
inflow/(outflow)
before financing 47 235 (902)
-------- -------- --------
Financing
Issue of ordinary share
capital 142 -- 686
Repayment of loans 6 (39) (30) (61)
Capital element of
finance
lease rentals -- (8) (8)
-------- -------- --------
Net cash inflow/
(outflow) from
financing 103 (38) 617
-------- -------- --------
Increase/(decrease)
in cash 6 150 197 (285)
-------- -------- --------
Reconciliation of Net Cash Flow to Movement in Net Funds/(Debt)
For the six months to 30 June 2004
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Increase/(decrease) in
cash in the period 150 197 (285)
Cash outflow due to
changes in debt and
finance leasing 39 38 69
Movements in deposits (1,950) 7,500 7,700
-------- -------- --------
Change in net funds/(debt)
resulting from cash flows (1,761) 7,735 7,484
Non-cash items -- (15) 9,796
-------- -------- --------
Movement in net
funds/(debt) (1,761) 7,720 17,280
-------- -------- --------
Net funds/(debt) brought
forward 7,777 (9,503) (9,503)
-------- -------- --------
Net funds/(debt) carried
forward 6 6,016 (1,783) 7,777
-------- -------- --------
Notes to the Interim Financial Statements For the six months to 30 June 2004
1. Accounting policies
Basis of preparation
These interim statements have been prepared on a consistent basis with the financial statements for the year ended 31 December 2003.
These interim statements do not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985. Results for the six month periods ended 30 June 2004 and 30 June 2003 have not been audited. The results for the year ended 31 December 2003 have been extracted from the statutory financial statements that have been filed with the Registrar of Companies and upon which the auditors reported without qualification.
2. Intangible fixed assets
Intangible assets of GBP8.0m comprise goodwill arising on the acquisitions of CeNeS Limited and TheraSci Limited of GBP6.6m and GBP1.4m respectively
3. Creditors
Creditors include a provision of GBP0.9m against future lease costs in respect of property leased by CeNeS Drug Delivery Limited of which GBP0.5m is included in creditors due after more than one year.
On 8 August 2003 CeNeS and Elan Corporation agreed to convert the whole of the outstanding convertible exchangeable loan stock of $21.7m (approx. GBP13.5m) into 19,815,259 ordinary shares at approximately $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 included interest rolled up to term for each of the loan notes. As a result there is no long term debt at 30 June 2004 (30 June 2003: GBP9.8m).
4. (Loss)/profit per ordinary share
The basic and diluted (loss)/profit per share is based on losses of GBP2.3m (H1 2003: profit of GBP0.9m) and the weighted average number of shares in issue during the half year of 256,068,860 shares (H1 2003: 174,412,968).
5. Reconciliation of operating loss to net cash outflow from operating activities
Six months Six months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Operating loss (2,415) (2,232) (6,233)
Depreciation -- 13 20
Amortisation of
intangible assets 476 996 2,274
Loss on sale of
tangible fixed
assets 5 3 3
Impairment of goodwill -- 413 413
Decrease in stocks -- 44 44
Decrease in debtors 326 690 880
Decrease in creditors (532) (1,146) (830)
-------- -------- --------
Net cash outflow from
operating activities (2,140) (1,219) (3,429)
-------- -------- --------
6. Analysis and reconciliation of net funds
1 January 30 June
2004 Cash flow 2004
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 195 150 345
Debt due within one year (118) 39 (79)
Short term deposits 7,700 (1,950) 5,750
-------- -------- --------
Net funds 7,777 (1,761) 6,016
-------- -------- --------
7. Capital and reserves
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. Each resulting ordinary share of 1 pence, effectively, have 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. The rights attaching to the deferred ordinary shares, which will not be listed or freely transferable, will render them effectively valueless. 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.
As the company is required to maintain its capital before and after the acquisition of its own shares, a transfer of GBP15,697,000 has been made to a capital redemption reserve.
Independent review report to CeNeS Pharmaceuticals plc
Introduction
We have been instructed by the company to review the financial information which comprises the profit and loss account, balance sheet, cash flow statement, statement of total recognised gains and losses and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the requirement that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2004.
PricewaterhouseCoopers LLP
Chartered Accountants
Cambridge
20 September 2004
Notes:
(a) The maintenance and integrity of the CeNeS Pharmaceuticals plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
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