Press Centre
Press Releases
Preliminary Results For the Year Ended 30 September 2007
Phynova Group PLC (AIM: PYN), the developer of prescription pharmaceuticals derived from Chinese botanical medicines, is pleased to announce preliminary results for the year ended 30 September 2007.
Financial Highlights
Operational Highlights
- Appointment of experienced entrepreneur Karl E Watkin MBE as a non-executive director and subsequently as Chairman of the Board
- Encouraging results from the pre-clinical research on PYN18, a novel anti-viral drug candidate against hepatitis C and dengue fever
- Completion of acquisition of a minority stake in Botanic Century
- Admission for trading of our Ordinary shares on the PLUS Markets trading platform
Post Year-end Highlights
- Preliminary data from Phase I/II trial of PYN17 successfully confirmed safety and tolerability in chronic hepatitis C (CHC) patients
- Promising pre-clinical results with PYN6 for the treatment of MRSA
- PYN22 for the treatment of fatty liver continuing in successful pre-clinical development, with planned initiation of clinical programme during 2008
- Successfully obtained commitments to provide in excess of £1.1 million through a placing of new ordinary shares at 40 pence per share with existing investors and private investors
- Today announces that in April it will establish an ADR programme on the new US OTCQX trading platform
Commenting on the results Karl Watkin, Chairman of Phynova, said: "This has been a significant year for Phynova. We have substantially progressed our research and development programme, most notably with the successful phase I/II trials of PYN 17 for the treatment of the symptoms of chronic hepatitis C. The completion of our 45% shareholding in Botanic Century has given us a significant footprint for future growth in China, which is the fastest growing pharmaceutical market in the world. We are in a strong position to capitalise on the global demand for botanical drugs and I look forward to updating you."
The audited Annual Report and Accounts will be posted to shareholders on or before 31 March 2008. The Annual General Meeting of the Company will be held on 30 April 2008.
For further information, please contact:
Phynova Group PLC +44 (0) 1993 880700
Robert Miller, Chief Executive Officer www.phynova.com
Nominated Adviser:
Nabarro Wells & Co. Limited +44 (0) 20 7710 7400
Marc Cramsie
Broker:
Evolution Securities China Limited +44 (0) 20 7220 4850
Barry Saint
Media enquiries:
Abchurch Communications +44 (0) 20 7398 7700
Peter Laing/Ashley Tapp/Stephanie Cuthbert
ashley.tapp@abchurch-group.com
www.abchurch-group.com
- ENDS -
Chairman´s Statement
Phynova is on track to achieve its aim of becoming a leading international developer of botanical drugs targeted at areas of significant unmet therapeutic need in major global markets.
2007 was a year of significant achievement and important progress for Phynova, with advances being made on all fronts. Our research and development programme has produced consistently encouraging results whilst business development activity continues to deliver opportunities to grow the business and build shareholder value.
During the period under review, we have delivered on our promise to capitalise on the global potential of botanical drugs and continue to establish a strong presence in China, which is one of the world´s fastest growing pharmaceutical markets and also the source of much of Phynova´s raw material and scientific expertise.
I believe our achievements in 2007 validate our business model, which seeks to reduce the risk inherent in the pharmaceutical drug development process by working with tried and tested medicinal plants with established efficacy and safety profiles, thus potentially also reducing the time and cost traditionally associated with taking drug candidates through the pre-clinical and clinical development stages towards market.
Drug Development Programme
Advances have been made across our development pipeline. The Company is particularly pleased with the progress made with PYN17, Phynova´s lead drug candidate for the treatment of patients with chronic hepatitis C. The US Food & Drug Administration (FDA) approved our Investigational New Drug (IND) application in January 2007. Positive results were reported in November from the subsequent Phase I/II trial. A Phase IIb clinical trial is expected to commence on schedule during the first half of 2008.
Elsewhere in the pipeline we can report good progress. For example, PYN6, which has produced promising pre-clinical results for the treatment of MRSA and as an acne therapy, has attracted considerable commercial attention from potential partners.
Encouraging results continue to emerge from our research to evaluate the effectiveness of PYN18, our novel anti-viral drug candidate against hepatitis C and dengue fever.
PYN22, our candidate for the potential treatment of fatty liver, is moving forward successfully in pre-clinical development, having produced very encouraging initial screening data during the year. We plan to commence a clinical programme during 2008.
We also expect to commence clinical development during 2008 on PYN9 for the treatment of post-operative ileus (or temporary bowel stasis). This candidate has been developed by our Chinese partner, Botanic Century.
Within the next twelve months, Phynova expects to have three drug candidates undergoing clinical trials (PYN17, PYN22, PYN9) with other candidates progressing closer to clinical development. This is a remarkable achievement for a company of our size. At the same time, our broad pipeline means that we are not over-reliant on any one single project.
Finance
Prudent management of the funds raised in the previous year has enabled the Company to carry out its development programme. We have just obtained commitments to provide £1.1 million from existing investors and new private investors. However, in order to enable the business to fulfil the development programme further fundraising will be necessary in 2008. We continue to take the view that core operational resources should be strengthened within the business whilst we outsource high cost, low-volume services where appropriate.
Despite extremely volatile and challenging market conditions, generally poor share price performance and low liquidity across the entire UK Life Sciences sector, we continue to enjoy strong support from our shareholders.
Operations
Phynova China Ltd, our Hong Kong-based wholly-owned subsidiary established in 2006, continues to make a positive contribution to the business and a range of new opportunities is constantly under consideration. In 2006, we acquired a 45% shareholding in the Beijing-based drug development company Botanic Century. This collaboration gives us a significant "footprint" in China, one which will enable sustained growth in the period ahead.
The Future
I believe three principal underlying factors offer the prospect of sustained future growth:
Firstly, the demand for new and effective therapies continues to be high. The drug candidates in our development pipeline are targeted against global diseases where prevalence is not only increasing but which remain generally poorly treated.
Secondly, we believe that botanical drugs can offer ´big pharma´ companies genuine new and valuable opportunities at a time when conventional drug discovery pipelines are looking thin, and with development costs and the risk of being turned down by the regulators higher than ever. Increasingly, the big players are paying significant premiums for high potential projects with which to re-stock their own development pipelines. This represents a possible lucrative source of revenue as Phynova´s projects move along the development process and has contributed to the widespread increase in interest being expressed in our approach and our pipeline.
Thirdly, Phynova is exceptionally well placed to take advantage of China´s development as the world´s fastest growing pharmaceutical market. Phynova has created an effective East-West bridge, giving the Company the potential to address the needs of the Chinese, as well as Western markets.
People
I would like to thank all members of staff for their expertise, commitment and enthusiasm. It is these attributes which have delivered the considerable progress made this year. My thanks go also to my fellow Board members and our Scientific Advisors for their valuable contribution to the Company. Working together, I look forward to meeting the exciting challenges which lie ahead and fulfilling Phynova´s potential.
Outlook
The Directors remain convinced that the market for pharmaceuticals derived from medicinal plants and developed at relatively low cost is one with enormous potential. Phynova now operates on three continents. With a strong development pipeline and with social and economic trends moving our way, Phynova is uniquely well placed within the industry and we can look forward to the period ahead with confidence.
Chief Executive´s Review
In 2007, Phynova made a number of important advances towards securing its position as one of the world´s leading developers of new drugs sourced from plants used in Chinese medicine. Our research and development portfolio has moved strongly forward and our business development activity has opened up many interesting new opportunities for the Company.
It is said that the 21st century will be China´s century, just as the 20th Century was America´s. Forecasters predict that China will grow from its current position as the world´s ninth largest pharmaceutical market to the fifth by 2010. China is of critical importance to Phynova, not just as the source of many of our pharmaceutical raw materials and scientific expertise, but also as a major marketplace for our development skills and, ultimately, our products. During the year, we have taken important, strategic steps to strengthen our existing presence in the region and we look forward to consolidating these achievements in 2008.
I believe Phynova is ideally placed to act as a bridge between China and the West, developing new therapies for common but hitherto poorly treated diseases in the West whilst helping to introduce western development programmes to China. An enormous opportunity exists for Phynova to develop a range of innovative pharmaceutical products for the global market.
Drug Development Programme
Our development programme made excellent progress in 2007 and continues to show considerable commercial potential. We received recognition of this fact during the year when the Company was nominated in the category "Innovation in Discovery and Drug Development" at the prestigious "UK Bioentrepreneur of 2007" awards. Our approach and pipeline projects are fully compliant with the FDA´s Botanical Drug Guidelines published in 2004.
PYN17
Our lead candidate for the treatment of the symptoms of chronic hepatitis C (CHC) received its first patent in July 2006. Following the FDA´s acceptance early in 2007 of our IND (Investigational New Drug) application, a Phase I/II clinical trial commenced on schedule in May 2007 in five hepatology centres in the US. Positive results were received in November 2007 from this double-blind, placebo-controlled study, confirming the safety profile of this product in patients with CHC. A Phase IIb trial is expected to commence on schedule in the first half of 2008. PYN17 remains the only product currently in clinical development specifically aimed at treating the debilitating symptoms of hepatitis C. It targets a hepatitis C market currently dominated by antiviral drugs that is forecast to grow from its current level of around $3.0bn to around $12.0bn by 2015.
PYN18
An anti-viral candidate for the treatment of the hepatitis C virus. Screening data has also confirmed the potential for PYN18 to be developed as a treatment for Dengue Fever which infects between 50 and 100 million people each year, mainly across Asia, Africa and South America and for which there is currently no approved medication or vaccine. Work will continue in 2008 on both potential indications with development partners in Europe and Thailand. This novel compound was discovered by Phynova´s own scientists and is attracting significant interest from ‘big pharma´ companies.
PYN22
A candidate for the treatment of the increasingly recognised condition of non-alcoholic fatty liver disease, which is part of the metabolic syndrome that includes obesity. Initial pre-clinical tests to investigate the efficacy and toxicology produced encouraging results during the course of the year. This project is expected to move into the clinic during 2008. There remains a high unmet therapeutic need in this area and we believe this drug candidate has significant commercial potential.
PYN6
This drug candidate is a novel anti-bacterial in-licensed from Botanic Century. Pre-clinical studies continue to yield positive results on the product´s activity against a number of important human pathogens. In particular, work with the University of East London has demonstrated promising levels of inhibition against clinical isolates of Methicillin Resistant Staphylococcus aureus ("MRSA"). The results show that PYN6 compares very favourably with mupirocin, the topical antibiotic currently routinely used for the treatment of skin infections involving MRSA. Moreover, continuous culture over three weeks in the presence of PYN6 failed to produce PYN6-resistant strains of MRSA – a finding that could be clinically significant. PYN6 also has shown activity against the bacterium that is associated with acne and this indication has attracted considerable interest from potential pharmaceutical partners during the year. Studies designed to strengthen the PYN6 pre-clinical package will continue during 2008.
PYN7
Compounds potentially useful in the treatment of cancer were obtained in early 2007 through our relationship with the Hong Kong Jockey Club Institute of Chinese Medicine. Mode-of-action studies carried out on Phynova´s behalf during 2007 at the Institute of Cancer Studies at the University of Birmingham and at the Hong Kong University of Science and Technology confirm Phynova´s initial view of the promise of these compounds. Further work to underpin these studies is planned for 2008. It is anticipated that a commercially attractive data package to support the out-licensing of PYN7 will be built up during the year.
PYN9
Developed by Botanic Century for the treatment of post-operative ileus, temporary bowel stasis associated with abdominal surgery. Positive results continue to emerge from this high potential drug candidate. Currently, there are no approved treatments for the condition which is estimated to affect up to 10 million surgical procedures every year in the USA alone. We are expecting to commence clinical trials in China in 2008 to produce safety and efficacy data. This will be followed by a new drug approval application to the SFDA, the Chinese drug registration agency. If successful, PYN9 could be marketed in China in 2010. Botanic Century has already signed a distribution agreement which has the potential to generate significant near-term revenues in China. Simultaneously, Phynova has commenced pre-clinical work in the UK and Europe with a view towards completing future global development.
Finance
The results for the year ended 30 September 2007 show a post tax loss of £2.9 million (2005/6: £1.6 million). As an early stage biopharmaceutical company involved in the development of pharmaceuticals, Phynova expects to incur an operating loss for a number of years. The cash balance as at 30 September 2007 was £1.4 million compared with £2.7 million at 31 March 2007 and £2.0 million at 30 September 2006.
In March 2008, despite challenging and volatile market conditions, Phynova successfully obtained commitments to provide in excess of £1.1 million through a placing of new ordinary shares at 40 pence per share with existing investors and private investors. We continue to manage our development spend in a controlled and consistent way and deliver results from our pipeline in accordance with expectations. In order to enable the business to fulfil its current development program, Phynova intends to raise further funds during 2008. Negotiations are also progressing with a number of potential partners for several of our products, on terms that could include funding of development programmes or out-licensing. Phynova´s unique, cost-efficient approach to drug development should mean that it incurs less cost taking drugs to market than that required by traditional drug development models.
Business development and M&A activity
We continue to put increased resources into our business development activity. Based in Europe with a major presence in China and, to a lesser degree, in the US, Phynova is well placed to take advantage of its particular expertise in the development of botanical drugs in order to deliver them into markets throughout the world.
Our focus is increasingly turning to the commercialisation of our work. Phynova´s profile in China and the Far East was boosted by the strategic establishment last year of Phynova China Ltd, based in Hong Kong, which has led to a very positive response from Chinese pharmaceutical and biotech companies, with whom we are reviewing a range of high potential collaborative business development opportunities.
We are finding that our message is being well received by major international pharmaceutical manufacturers and marketing companies. At any time, a range of high potential drug development opportunities are under review within the Company with a view to possible future collaborations, in-licensing or acquisitions.
The acquisition of a 45% stake in Botanic Century in November 2006 and the consequent in-licensing of PYN6 have helped establish a remarkably close and effective working relationship between the two companies. The partnership immediately gave Phynova access to a number of potential new drug candidates being taken forward by Botanic Century, whilst our Chinese partners can expect Phynova to introduce their projects to wider audiences and markets outside China.
People
I am delighted to take this opportunity to thank all members of the Phynova team. We are fortunate to have so many talented and experienced people who, working together, make up a formidable and committed resource, easily capable of meeting the challenges of delivering Phynova´s full potential in the years ahead.
Conclusion
During 2007, Phynova has achieved several important milestones. We have demonstrated that we can take projects into the clinic and make swift progress in the clinical trials process. Our broad development pipeline means that we are not over-reliant on any one particular project. We have made successful product acquisitions as well as mutually beneficial strategic alliances with organisations such as the Hong Kong Jockey Club Institute of Chinese Medicine. Considerable interest in our projects and our capabilities has been generated from other, much larger, companies in the industry. We have a growing presence on three continents and have particularly deep roots now in the fastest growing pharmaceutical market in the world, China.
I believe Phynova is a company which punches above its weight. Since its inception it has worked hard to deliver on its promise of creating novel and cost effective new drug opportunities from plant based medicines. I am confident that the year ahead will be a transformational one for the Company in which we will begin to see the commercial realisation of that promise.
Unaudited Consolidated Profit and loss account for the year ended 30 September 2007
All amounts relate to continuing activities.
Unaudited Consolidated Balance sheet at 30 September 2007
Unaudited Consolidated Cash Flow Statement for the year ended 30 September 2007
1. Basis of preparation
The financial information has been prepared in accordance with accounting policies as presented in the Financial Statements as at 30 September 2006 as amended for the adoption of the following standards:
FRS 9: Associates and Joint Ventures
FRS 20: Share Based Payments,
The financial information on the Group set out above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Information relating to the period ended 30 September 2006 is derived from the statutory accounts for that year, which have 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) or (3) of the Companies Act 1985.
The financial information above has been derived from the draft unaudited financial statements of Phynova Group Public Limited Company for the year ended 30 September 2007. The financial information does not constitute the Group´s full financial statements for the year ended 30 September 2007. The statutory accounts for 2007 will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the Registrar of Companies following the Company´s Annual General Meeting.
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 calculation are set out below:
At 30 September 2007, the Company had 5,690,920 share options outstanding, representing 22.6% 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.
3. Audited Annual Report and Accounts
The audited Annual Report and Accounts will be posted to shareholders on or before 31 March 2008.
4. Fixed Asset Investments
The principal undertakings, in which the Company´s interest in the year is 20% or more, are as follows:
* Undertakings held indirectly by the Company
28/03/2008
<< Back | See all current Press releses