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Interim Results
Phynova Group plc
("Phynova" or "the Company")
Interim Results For the Six Months Ended 31 March 2007
Phynova Group PLC (AIM: PYN), the developer of prescription pharmaceuticals derived from Chinese botanical medicines, is pleased to announce interim results for the six months ended 31 March 2007.
Highlights
Karl Watkin, Chairman of Phynova, commented:
"We have achieved several significant regulatory, development and corporate milestones over the past six months, which strengthen Phynova´s position as our products progress in development towards commercialisation. In particular the progression of PYN17, our lead candidate, into Phase II development following the earlier necessary regulatory (IND) approval in the United States, demonstrates the ability of our newly enhanced team to tackle head-on the challenges and achieve timely, value-enhancing results. We believe that the next six months will continue to deliver substantial progress and we look forward to updating shareholders on our progress."
These interim results will be posted to shareholders on 28 June 2007 and made available on the Company website on the same day.
For further information, please contact:
Phynova Group PLC
Robert Miller, Chief Executive 01993 880 700
www.phynova.com
Nominated adviser:
Nabarro Wells & Co. Limited
Marc Cramsie/John Wilkes 020 7710 7400
Broker:
J M Finn & Co. Limited
Sam Smith 020 7600 1660
Media enquiries:
Abchurch Communications
Peter Laing/Ashley Tapp/Stephanie Cuthbert 020 7398 7700
Stephanie.cuthbert@abchurch-group.com www.abchurch-group.com
- ENDS -
Chairman´s and Chief Executive´s Review
It gives us great pleasure to present our interim accounts for the six months ended 31 March 2007 and to report on the Company´s progress to date.
Scientific Advances
Recent scientific work has built on the strong foundations established over the last eighteen months. In particular, the appointment of John Efthimiou MD FRCP as Chief Medical Officer has led to significantly increased momentum on the clinical trials process.
PYN17 - Phynova has recently announced the start of a Phase IIa clinical trial in the US for the Company´s lead product, having had its IND to conduct a Phase I/II clinical trial accepted by the FDA in January 2007. This randomised, double-blind, placebo-controlled study, conducted at five sites in the US, will evaluate safety and efficacy in 36 patients suffering with chronic hepatitis C, for whom approved treatments such as pegylated interferon and ribavirin have either failed or are not appropriate. Establishing an IND and clinical activities in the US, one of the world´s largest prescription drug markets, is a significant corporate milestone for Phynova.
PYN22 - a lipid lowering compound for the treatment of obesity and fatty liver, in-licensed by Phynova in 2006. Obesity is a huge medical problem worldwide, particularly in developed countries. One of the increasingly recognized complications of obesity is non-alcoholic fatty liver disease (NAFLD), which can lead to liver cirrhosis and hepatocellular carcinoma. Currently there is no specific treatment for NAFLD and there remains a high unmet medical need. Preclinical data generated by Phynova´s Chinese collaborators shows that PYN22 reduces blood lipids, the percentage of body fat and liver fat. This preclinical data has been confirmed and extended by a leading academic group in the UK who have shown that PYN22 reduces body fat, as well as having some effect on insulin resistance. Phynova expects to commence clinical testing of PYN22 during the first quarter of 2008.
PYN9 - a product developed by Phynova´s collaborators at Botanic Century, Beijing, for the treatment of post-operative ileus (POI), a temporary bowel stasis that is a common consequence of abdominal surgery and often delays release from hospital. There are currently no approved treatments for POI, which affects to some degree up to 10 million surgical patients every year in the US alone. PYN9 will commence clinical trials in China later this year. Following the recent withdrawal from the late-stage development of a competing product for a related indication, opiate-induced ileus, Phynova believes that PYN9 is now one of only three products in clinical development for this condition.
PYN18 - an antiviral in development for the treatment of the hepatitis C virus (HCV). Current treatments for HCV are only partially effective and have significant associated toxicity. PYN18 is a novel, antiviral medicine that Phynova expects to have a better benefit to risk ratio than existing treatments. In addition, as strategies for treating HCV treatments increasingly involve combinations of drugs, Phynova believes that PYN18 will be used alongside existing treatments to enhance their effectiveness.
Phynova has recently demonstrated that PYN18 is also active against dengue virus, the causative agent of Dengue Haemorrhagic Fever (DHF), a common and serious tropical disease that is endemic in much of the Southern Hemisphere. Preclinical studies carried out at the Sirriraj Hospital in Bangkok indicate that PYN18 has a broader spectrum of antiviral activity than previously believed. This provides a clear commercial opportunity for PYN18 in the potential treatment of DHF.
Award Nomination
In April 2007, the Oxfordshire Bioscience Network selected Phynova as its Regional Nomination for the UK Bioentrepreneur of the Year 2007 Awards in the ‘UK Innovation in Drug Discovery and Development´ category. The award, sponsored by UK Trade and Investment (an organisation sponsored by the Department of Trade and Industry and the Foreign & Commonwealth Office), recognises the contribution a company makes to the dominant position in the development of innovative new medicines. The awards ceremony will be held at the Foreign & Commonwealth Office in London on 4 July.
Business Development
Phynova has recently increased its focus on monetising its product portfolio with the appointment of Tony Mills PhD as Director of Business Development. Tony has a strong track record of successfully licensing biotech products to big pharma and as Phynova´s pipeline of botanical drugs moves closer to market, he will be vital in maximising global potential.
Financial Review
In the six months ended 31 March 2007, Phynova recorded a pre-tax loss of £1,310,000, which is in line with the Company´s expectations.
Cash outflow before financing was £1,795,000 reflecting the loss for the period and acquisition of 45% of Botanic Century (£592,000) in November 2006. Our cash position remains strong and at 31 March 2007 was £2.7 million. We are pleased to confirm that we continue to make good use of cash resources and that we remain firmly committed to our budget.
Strategy
We have established a business model which seeks to reduce the risks, the high cost and the time taken to develop pharmaceuticals by selecting drug candidates which are not only derived from existing medicines with proven safety and efficacy in clinical use in China but also target large therapeutic markets in the West where current therapies are either inadequate or non existent. We aim to licence our intellectual property to pharmaceutical companies in return for revenue in the form of upfront payments and royalties.
Summary and Prospects
As you will have seen from reading all of the above news, Phynova´s management team has been working very hard to create value and has achieved several important milestones since coming to AIM sixteen months ago. Although small by industry standards, Phynova has already achieved an impressive list of accomplishments and is definitely ‘punching above its weight´. With the team we now have in place both here in the UK and in China, the Company is well positioned to start out-licensing a number of its drug candidates and enter into commercial collaborations with pharmaceutical companies.
Karl Watkin MBE Robert Miller
Chairman Chief Executive Officer
Glossary of Terms
FDA - The US Food and Drug Administration, the regulatory body charged with approval of pharmaceuticals for the US market
IND - Investigational New Drug - gives permission for a new drug to be used in clinical trials in the US.
CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2007
All amounts relate to continuing operations.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 31 March 2007
CONSOLIDATED SUMMARISED BALANCE SHEET AS AT 31 MARCH 2007
CONSOLIDATED SUMMARISED CASH FLOW STATEMENT AS AT 31 MARCH 2007
PHYNOVA GROUP PLC
NOTES TO THE INTERIM STATEMENT
For the six months ended 31 March 2007
1. BASIS OF PREPARATION
The consolidated interim financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention. The principal accounting policies of the group have remained unchanged from those set out in Phynova Group plc 2006 financial statements except for the adoption of FRS9 "Associates and Joint Ventures" and FRS 20 "Share-based Payments". Under FRS9 the Company is accounting for its investment in associated undertakings using the equity method of accounting and any goodwill arising is amortised over a useful economic life of 20 years. FRS 20 has been applied for the financial year ending 30 September 2007 but in accordance with the transitional provisions of the standard it has not been applied to grants of share options or other equity instruments granted after 7 November 2002 that had vested prior to 1 October 2006.
2. LOSS PER SHARE
The calculation of the basic and diluted loss per share is based on the loss on ordinary activities after tax and on the weighted average number of ordinary shares in issue during the period. The loss and weighted average number of shares used in the calculations are set out below:
At 31 March 2007, the Company had 6,954,520 share options and warrants outstanding, representing 27% of the Company´s enlarged share capital, on the basis of all the share options being exercised before expiration. The share options have not been included in the calculation of the diluted loss per share as they would dilute a loss.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS´ FUNDS/ (DEFICIT)
3. RECONCILIATION OF OPERATING LOSS TO NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES
4. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
5. FINANCIAL COMPARATIVES
The financial information set out in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.
The comparatives for the full year ended 30 September 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.
6. DIVIDENDS
The directors do not recommend the payment of an interim dividend.
Interim Results For the Six Months Ended 31 March 2007 (463kb)
28/06/2007
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