TIDMAKT
RNS Number : 9142M
Ark Therapeutics Group PLC
24 August 2011
Ark Therapeutics Group plc
Interim Results for the First Half of 2011
London, UK, 24 August 2011 - Ark Therapeutics Group plc today
announces its interim results for the six months ended 30 June
2011.
HIGHLIGHTS
Wound care -- Completion of the disposal of the Group's
woundcare business for up to GBP2.7 million
------------------- ---------------------------------------------------------
Corporate/ -- Dr David Bloxham appointed as a Non-Executive
Commercial Director -- Russell Banks appointed as Chief
Financial Officer
------------------- ---------------------------------------------------------
Post-period events -- Key US renin-angiotensin system patents granted
triggering significant milestone payments to Ark
under the licence agreement with Boehringer
Ingelheim -- Ark receives EUR0.6 million Finnish
grants for development of lentiviral production
platform using baculoviruses and validation of its
GMP3 manufacturing facility -- Ark led consortium
wins EUR5.3 million EU Framework Programme 7 Grant
-- EUR3.0m working capital loan negotiated in
Finland, to be accessed as manufacturing contracts
secured
------------------- ---------------------------------------------------------
Martyn Williams, CEO of Ark, commented:
"We are pleased to report on a period of real progress in the
Company during which we have not deviated from our previously
expressed mantra - focus, realism and results. By focusing on our
core assets and capabilities and maintaining a realistic approach
to managing costs and deploying resources, we have begun to deliver
results across the business. The sale of the woundcare business,
the late stage discussions with a number of manufacturing partners,
the triggering of the milestone payments from Boehringer Ingelheim
and the award of substantial research grant funding all reflect the
developing strength and momentum now being generated in the
Company."
For further information please contact:
Ark Therapeutics Group Tel: + 44 (0)20 7388 7722
plc
Martyn Williams, CEO
Iain Ross, Chairman
Financial Dynamics Tel: +44 (0)20 7831 3113
Ben Atwell
Susan Quigley
Ark Therapeutics Group plc
Ark Therapeutics Group plc is a specialist healthcare group (the
"Group") addressing high value areas of unmet medical need within
vascular disease and cancer. These are large and growing markets,
where opportunities exist for effective new products to generate
significant revenues.
Ark has an early stage pipeline emanating from collaborations
with University College, London and the AI Virtanen Institute in
Kuopio, Finland, the development of which it intends to progress in
collaboration with pharmaceutical and biotech partners.
In addition Ark has the ability to off-set a proportion of its
R&D costs and to generate sustainable revenues through the
exploitation of its proprietary technology platform, process
development, scale-up and manufacturing capabilities on behalf of
third parties.
Ark has its origins in businesses established in the mid-1990s
by Professor John Martin and Mr Stephen Barker of University
College London and Professor Seppo Yla-Herttuala of the AI Virtanen
Institute at the University of Kuopio, Finland, all of whom remain
consultants on the Company's research and development
programmes.
Ark's shares were first listed on the London Stock Exchange in
March 2004 (AKT.L).
This announcement includes "forward-looking statements" which
include all statements other than statements of historical facts,
including, without limitation, those regarding the Group's
financial position, business strategy, plans and objectives of
management for future operations (including development plans and
objectives relating to the Group's products and services), and any
statements preceded by, followed by or that include forward-looking
terminology such as the words "targets", "believes", "estimates",
"expects", "aims", "intends", "will", "can", "may", "anticipates",
"would", "should", "could" or similar expressions or the negative
thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond the Group's
control that could cause the actual results, performance or
achievements of the Group to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding the Group's present and
future business strategies and the environment in which the Group
will operate in the future. Among the important factors that could
cause the Group's actual results, performance or achievements to
differ materially from those in forward-looking statements include
those relating to Ark's funding requirements, regulatory approvals,
clinical trials, reliance on third parties, intellectual property,
key personnel and other factors. These forward-looking statements
speak only as at the date of this announcement. The Group expressly
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements contained in this
announcement to reflect any change in the Group's expectations with
regard thereto or any change in events, conditions or circumstances
on which any such statements are based. As a result of these
factors, readers are cautioned not to rely on any forward-looking
statement.
INTERIM MANAGEMENT REPORT
Chairman and Chief Executive's Review
We are pleased to report on a period of real progress in the
Company in the first half of this year, following the strategic
review and restructuring which took place in 2010. In the 2010
Annual Report to shareholders we emphasised that our mantra going
forward would be Focus, Realism and Results. Accordingly, during
the period:
-- We have focused on developing and monetising our core assets
namely our therapeutic development programmes, intellectual
property base and our state of the art viral manufacturing
assets.
-- We have taken a realistic and pragmatic approach to a
reduction in our overall cost base and deployment of key
resources.
-- We have achieved results on all fronts, both technical and
commercial, but in particular we have generated significant income
during the period through the sale of our woundcare business. In
the period since the end of June substantial revenues and other
income have been generated from licence agreements and grant
awards.
"Enhancing our financial position and building sustainable value
through the first half of the year"
In February we announced the sale of the woundcare business to
Crawford Healthcare Ltd, delivering on the first of the short-term
objectives we have identified and providing further cash to enable
the Company to meet its goals. A further objective is to exploit
our live viral manufacturing expertise and we have seen a
significant increase in the number of companies considering Ark as
their manufacturer of choice. Certain of these discussions are now
at an advanced stage.
Furthermore, we were able to announce in July that the US Patent
Office had issued Notices of Allowance for two renin-angiotensin
system patents, formal grant of which triggers significant
milestone payments to Ark under the licence agreement between the
Company and Boehringer Ingelheim. As well as validating the
strength and utility of our intellectual property, these milestone
payments are an important contribution to our achieving our short
and medium term objectives. Further acknowledgement of the value of
the Company's assets and expertise has come in the award of EUR0.6
million Finnish grants for the development of our lentiviral
production platform using baculoviruses and for the validation of
our GMP3 manufacturing facility. This was closely followed by the
news that a consortium led by Ark had received notice of award of a
EUR5.3 million EU Framework Programme 7 Grant to apply cutting edge
biotechnology in the coronary stent area over four years.
In order to underpin further the business we have secured a
EUR3m working capital loan in Finland to support the anticipated
growth of our third party manufacturing business. This cash is
currently restricted but will be made available as we secure
additional contracts.
"Monetising our Manufacturing assets by establishing long-term
manufacturing relationships"
As we have previously stated, a major focus of the Company is to
exploit our world leading cGMP Biosafety level 2 certified
manufacturing facilities in Kuopio Finland. In the first half of
this year, we have seen a rapid increase in the number of companies
approaching Ark, who are interested in using the Company's
bio-manufacturing capability. These relationships take a period of
time to come to fruition whilst the parties concerned consult with
the Ark team on the appropriate process development and regulatory
requirements of their prospective project. As a consequence at the
time of writing, Ark is in discussion with a diverse range of
pharma and biotech companies regarding specific process development
and manufacturing contracts. A number of these discussions are at
an advanced stage. Ark has also established relationships with
selected relevant service providers with a view to co-marketing and
referral of leads.
"Nurturing and developing our early stage product pipeline"
Neuropilin-1 Receptor Antagonists (EG014) - progress has
continued on optimisation of Ark's small molecule antagonists of
VEGF binding to neuropilin-1 (NRP-1), for development as
anti-cancer therapeutics. The chemistry has achieved improvements
in pharmacokinetics and physicochemical properties, ease and
robustness of scaled synthesis and other drug-like properties. New
characterisation assays have been implemented and specificity of
binding to NRP-1 has been demonstrated. Structure-aided design has
been assisted by X-ray crystallographic elucidation of new
structures of antagonists bound to NRP-1. In vivo efficacy has been
observed with different antagonists and tumour models. Academic
collaborators have similarly seen functional effects of Ark's NRP-1
antagonists in their ex vivo tumour and vascular endothelial cell
model systems. Ark has demonstrated that antagonism of the NRP-1
receptor brings about anti-cancer activity by three mechanisms:
directly impairing tumour cell growth, inhibiting the development
of new blood vessels which sustain tumours, and reducing cancer
cell motility. As part of the continuing development of this
programme, post-period Ark has signed an MTA with AstraZeneca who
will provide access to a range of pre-clinical cancer screening
models.
Refractory Angina (EG011) - this programme delivers an
adenovirus encoding VEGF-D to the areas of diseased heart muscle in
order to promote tissue repair through improved perfusion in
patients suffering from refractory angina. An initial academic
clinical study in Finland for safety and proof-of-concept is
progressing well. It is envisaged that the dose-ranging part of the
study will be completed during 2011. The results will be used in
partnering discussions.
Peripheral Vascular Disease (EG016) - this product also uses
Ark's established adenoviral platform to deliver VEGF-D and is
designed to improve the outcome for people undergoing bypass
procedures to overcome blockage of the main blood vessel to the
lower leg. A number of patients have been recruited into an initial
academic clinical study using long form VEGF-D. A regulatory
submission is being prepared to change to Ark's proprietary short
form VEGF-D before completing this study in 2012, the results from
which will be used to form the basis of formal development
programmes with partners.
Foetal Growth Restriction (FGR) (EG013) - this programme
utilises Ark's adenoviral gene therapy platform to deliver a
vascular growth factor to the maternal uterine artery to stimulate
increased blood supply to the otherwise undernourished growth
restricted foetus. Excellent proof-of-concept has been obtained in
a pre-clinical model of the condition. Recently further data from
this model have continued to support these conclusions of efficacy
and clinical potential for the treatment. Ark is investigating ways
to fund the progression of the therapy through full toxicology to
initial clinical trials.
"The Ark patent portfolio has intrinsic value, which will be
realised over time"
Ark continues working towards extended granted patent protection
on its therapeutic products, including those that are priorities
for partnering, and is preparing new patent filings in relation to
its core adenoviral, gene regulation and NRP-1 antagonist
programmes.
After the end of the period, we were notified that the US Patent
Office had issued Notices of Allowance in respect of two
renin-angiotensin patents for Boehringer Ingelheim's compound,
Telmisartan, for the prevention and treatment of stroke and the
prevention of myocardial infarction related heart damage. Following
formal grant which took place earlier this month, significant
milestone payments are now due to Ark under the licence agreement
concluded in 2005 with Boehringer Ingelheim. Prosecution of the
wider stroke patent continues in the USA. In Europe, last year's
opposition to this patent was upheld by the European Patent Office
(EPO). The Company filed an expedited appeal and, at a hearing at
the end of the first half, the EPO dismissed the Company's appeal.
The Company is still to receive a written decision, explaining the
reasons for the refusal to allow the appeal.
Board and Management
As announced in February, David Bloxham was appointed
Non-Executive Director to the Board in March. Also in March we
announced that Russell Banks had joined the Company as Chief
Financial Officer.
Financial Review
Revenues from continuing operations totalled GBP0.4m for the six
months ended 30 June 2011 (six months ended 30 June 2010: GBP0.4m)
arising from our contract manufacturing operations. With a number
of potential manufacturing contrats in late stage discussions, we
expect revenues to increase accordingly.
Expenditure on research and development for the period totalled
GBP4.3m (six months ended 30 June 2010: GBP6.1m). The decrease in
the period was principally due to the cessation of clinical trial
activity on Cerepro(R), Trinam(R) and Vitor(TM) during 2010, and
the reduction in headcount and operational support expenditure as a
result of the restructuring measures announced last year. We have
maintained, and in some cases increased, investment in our
early-stage research programmes, as we recognise their vital
importance to the future of the Company.
Selling, marketing and distribution costs for the period were
negligible for the period compared to GBP0.1m for the six months
ended 30 June 2010, due to the cessation of all pre-commercial
activity relating to Cerepro(R) in early 2010.
Other administrative expenses for the period totalled GBP1.8m
(six months ended 30 June 2010: GBP2.9m) reflecting the impact of
restructuring efforts made in the last 12 months, and primarily due
to the reduction in headcount, and the relocation of UK operations
to more appropriate premises.
Share-based compensation charge for the period was GBP48,000
(six months ended 30 June 2010: GBP85,000). This decrease again
reflects the overall reduction in headcount.
Other income comprising exchange differences and income
recognised from EU and Government grants for the period to 30 June
2011 totalled GBP0.6m, compared to net expenses of GBP0.9m for the
six months ended 30 June 2010.
The profit recognised from the sale of the woundcare business in
March 2011 amounted to GBP0.4m and has been disclosed under
discontinued operations. The operational loss for the woundcare
business for the period to 30 June 2010 was GBP0.3m, and for the
year to 31 December 2010 was also GBP0.3m. Please see note 5 for
more detail on this disposal.
Total net assets decreased from GBP26.1m at 30 June 2010 to
GBP14.6m at 30 June 2011, principally due to the decrease in cash
and cash equivalents and money market investments (GBP5.4m at 30
June 2011 versus GBP14.1m at 30 June 2010). This cash and cash
equivalents balance excludes the EUR3m restricted cash referred to
above, which is disclosed under Trade and other receivables.
Property, plant and equipment at 30 June 2011 totalled GBP8.4m (30
June 2010: GBP9.9m).
Net cash outflow from operating activities for the period was
GBP5.7m (six months ended 30 June 2010: GBP7.4m).
Risks and Uncertainties
There are a number of potential risks and uncertainties that
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The risks which were identified and outlined in the Annual Report
and Accounts 2010 in the Directors' Report on pages 26 and 27,
which does not form part of this interim statement, and which
include industry risk, clinical and regulatory risk, competition
and intellectual property risk, and economic, financial and
counterparty risk, have not changed and therefore remain relevant
for the remaining six months of 2011.
Summary and Outlook
In the first six months of 2011, intensive efforts were focused
on implementing the new business strategy and tangible evidence
that these efforts have begun to bear fruit has been produced with
the disposal of the woundcare business and, after the end of the
period, the allowance of the US patents and the grants awarded to
the Company.
We hope to be able to report further success in securing third
party partnerships in manufacturing in the second half of 2011,
taking the Company a long way towards its goal of building a viable
and cash-generative manufacturing business. We also look forward to
being able to report on the conclusion of discussions to secure a
collaboration on one of our in-house programmes and the completion
of patient recruitment into the dose-ranging part of the initial
academic study for Refractory Angina (EG011).
We ended the period with GBP5.4m of cash reserves (excluding
EUR3m of restricted cash) but have maintained a very strong focus
on the use of cash and have continued to reduce the cost base where
this has been necessary. With the milestone payments now due from
Boehringer Ingelheim we believe the Company has sufficient cash to
be able to deliver its short term objectives. Even as we deliver on
these objectives, we continue to assess opportunities to create
value both through organic growth and relevant M&A
opportunities.
Iain Ross, Chairman Martyn Williams, Chief Executive Officer
24 August 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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