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REG-Intercytex Group plc Final Results
Released: 18/03/2008
RNS Number:3084Q
Intercytex Group plc
18 March 2008
18th March, 2008
Intercytex Group plc
Positive clinical data continues to be generated across product portfolio
Intercytex Group plc (LSE: ICX) today announces its results for the year ended
31 December 2007. The Company also reports new clinical data on all of its
regenerative medicine products; VAVELTA(R), ICX-PRO, ICX-SKN and ICX-TRC.
Intercytex is the leading developer of regenerative medicine products to restore
skin and hair. The Company uses its fully integrated cell technology platform to
develop living, human cell-based products, at commercially viable scale in
attractive markets.
PRODUCT HIGHLIGHTS
VAVELTA(R) - facial rejuvenation and skin damage
- Positive responses with some exceptional results being generated from field
trials of VAVELTA conducted by the Clinical Practice Group
- High clinician and patient satisfaction scores from three/six month data in
facial rejuvenation and acne scarring Phase II trials - underlines
potential of VAVELTA in rapidly growing markets
- First revenues mid-2008 with commercial roll-out in UK during H2 2008
- Phase II trial in burns contractures open to recruitment
ICX-PRO (cyzact(R)) - chronic wounds
- Phase II data from diabetic foot ulcer trial of ICX-PRO shows very high
healing rates
- Recruitment in Phase III trial in venous leg ulcers on track for completion
in Q2 with over 350 patients randomised to date, in line with previous
guidance.
ICX-SKN - skin grafts for acute wounds
- Data announced in June 2007 highlighted first artificial living skin graft
to demonstrate full, consistent wound integration and persistence - a
landmark in regenerative medicine
- Follow up Phase I extension study shows continued integration of ICX-SKN at
3 months in all 6 subjects, with no evidence of rejection or wound
breakdown
- Phase II trial in basal-cell skin carcinoma excisions to commence in H2
2008
ICX-TRC - hair regeneration
- Three and six month data from Phase II trial shows increase in hair count
- Larger data set available in H2 2008
CORPORATE AND FINANCIAL HIGHLIGHTS
- Placing of new shares in May 2007 raised £12m gross
- Comprehensive supply agreement signed with Baxter Healthcare for use of
Tisseel(R) in ICX-PRO and ICX-SKN
- Milestone payment of US$200,000 received from Bosley under ICX-TRC option
- Loss before tax for the year of £11.63m (2006: £9.23m)
- Cash and cash equivalents and liquid investments at 31 December 2007 of
£12.50m (2006: £10.99m)
Nick Higgins, CEO of Intercytex, commented: "Regenerative medicine, the
restoration and repair of human tissues and organs, has the potential to
revolutionise the treatment of patients. We now have a maturing portfolio of
assets focused on skin and hair all demonstrating exciting clinical efficacy in
large and growing markets. As the data continues to be reported for each of our
products with highly encouraging results, it underscores the potential of our
technology and the value of Intercytex in the rapidly developing field of
regenerative medicine.'"
There will be an analyst meeting to discuss the results today at 9.30am at the
offices of Financial Dynamics at Holborn Gate, 26 Southampton Buildings, WC2A
1PB. For those unable to attend, there will be a live audio conference call,
please call Claire Rowell on 0207 269 7285 for details.
Enquiries
For more information, contact:
Intercytex Group plc
Nick Higgins, Chief Executive Tel: 0161 904 4500
Richard Moulson, Chief Financial Officer Tel: 0161 904 4500
Financial Dynamics
David Yates Tel: 0207 269 7156
Lara Mott Tel: 0207 269 7182
Piper Jaffray Ltd
Will Carnwath Tel: 0203 142 8700
Notes for Editors
Intercytex is a leading regenerative medicine company developing innovative
products to restore skin and hair. Intercytex is using its fully integrated cell
technology platform to develop products that harness the innate ability of human
cells to regenerate and repair the body.
Intercytex has four products in development:
- ICX-PRO, designed to stimulate active repair in chronic wounds - in a
Phase III trial for VLUs and a Phase II trial for DFUs
- ICX-SKN, being developed as a durable and robust skin replacement - in
a Phase I extension trial
- VAVELTA(R), a facial rejuvenation product already introduced to the UK
market
- ICX-TRC, a hair regeneration product - in a Phase II trial
All Intercytex' products are derived from unmodified human cells.
Intercytex commenced operations in 2000 and currently employs around 80 staff.
In addition to its head office in Cambridge, UK, it has GMP compliant clinical
production facility plus research and development laboratories in Manchester,
UK. Additional laboratories are located in Boston, US.
Intercytex' shares trade on the Alternative Investment Market of the London
Stock Exchange under the ticker symbol ICX.L and on the Open Market and the
Xetra trading platform of the Frankfurt Stock Exchange under the symbol IGJ.F.
Additional information on the Company can be found at www.intercytex.com
Statements contained within this press release may contain forward-looking
information or statements with respect to the financial condition, results of
operations and business achievements/performance of Intercytex and certain of
the plans and objectives of management of Intercytex with respect thereto. By
their nature, forward-looking statements involve risks and uncertainties that
may cause actual results to vary from those contained in the forward-looking
statements. In some cases, you can identify such forward-looking statements by
terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', '
anticipates', 'believes', 'estimates', 'predicts', 'potential', 'continue' or
similar expressions. A number of factors, including the satisfactory progress
of research and development, could cause Intercytex' actual financial condition,
results of operations and business achievements/performance to differ materially
from the estimates made or implied in such forward-looking statements and,
accordingly, reliance should not be placed on such statements. Forward
projections reflect management's best estimates based on information available
at the time of issue and are not a guarantee of future performance. Other than
as required by applicable law, Intercytex does not undertake any obligation to
update or revise any forward-looking information or statements to reflect events
or circumstances after the date of this release.
The term "Intercytex" refers to Intercytex Group plc and its subsidiary
undertakings.
INTRODUCTION
We made considerable progress in 2007 in all of our programmes, generating
clinical data across the product portfolio in a greatly expanded patient base.
We are seeing very encouraging efficacy which gives us great confidence in the
application of our technology and our commercial prospects.
We prepared VAVELTA, our product for facial rejuvenation and skin damage repair,
for launch, completing the branding and product design process ahead of
schedule. VAVELTA was introduced at FACE (Facial Aesthetic Conference and
Exhibition) in London in June - FACE is the largest conference for aesthetic
doctors in the UK and we have received very positive feedback on the product
from doctors there and at other European conferences where it has been
presented. Since FACE, VAVELTA has been undergoing field trials with an
experienced group of cell therapy specialists. This has been helpful in refining
the positioning and optimum use of the product in a commercial setting as well
as adding to our efficacy data set. The clinical trials of VAVELTA in London and
Birmingham are also generating favourable clinician feedback.
The highlight of the year from a clinical perspective was the data we announced
in May 2007 showing clear evidence that ICX-SKN, our skin replacement product,
had been accepted by and integrated with the host skin during wound healing.
This has been followed up with confirmatory data from a Phase I extension study.
Recruitment to the pivotal trial of ICX-PRO, our second generation product for
chronic wounds, accelerated in the second half of 2007. With over 350 out of 396
patients now randomised we expect to complete recruitment in the second quarter
of 2008 as anticipated. We are also pleased to report data from a Phase II trial
of ICX-PRO in diabetic foot ulcers which underlines the potential of the product
in this indication.
All patients have now been treated in the Phase II trial of ICX-TRC, our hair
regeneration product, and the results so far are promising. We have been
assessing delivery variations in the trial and we have filed a patent
application covering techniques which appear to improve the increase in hair
count observed.
As a company we have achieved much in a short time and with relatively modest
cash resources. This is in large part due to the dedication and
conscientiousness of our staff, to whom the Board is especially grateful.
We have also been fortunate to hire a number of experienced people, amongst them
John Lovelady who joined us as Vice President Operations in April. John's
extensive background in the manufacture of biologicals has helped us to improve
the consistency and reliability of our clinical production.
In our statement accompanying Intercytex' interim results, we commented on the
substantial amount of data anticipated over the next 12 months. We are now
reporting on that data, and the results we are seeing underscore the potential
of our technology and value of Intercytex in the rapidly developing field of
regenerative medicine.
BUSINESS REVIEW: PRODUCTS
VAVELTA(R)
Product description
VAVELTA(R) comprises a suspension of human dermal fibroblasts (HDFs) in cell
storage medium, for injection into the skin. It is intended to repopulate the
skin with active young fibroblasts, replacing those lost by ageing and
supplementing the function of older, less productive cells.
Because of the consistency of our cell development process and the absence of
immune responses to allogeneic fibroblasts, the treatment requires neither
patient pre-testing nor biopsy and it has a reasonable shelf life so that its
application can be scheduled in a convenient way.
We expect that by enhancing the skin's own collagen support matrix and
remodelling existing collagen the injected fibroblasts will:
- improve the skin's texture and appearance;
- fill in the pits created by acne scarring and improve the appearance
of such scars; and
- soften and reduce skin contractures caused by burns, thereby
improving mobility and flexibility.
VAVELTA(R) is injected directly into the target area using a fine gauge needle.
It is a straightforward and minimally invasive procedure. The number of
injections given will be determined by the area of the skin being treated. A
local anaesthetic such as lidocaine gel may be administered before the procedure
to prevent any discomfort being experienced.
An aesthetic improvement should be visible once the HDFs have begun to lay down
and/or remodel collagen within the dermis. In this way VAVELTA should provide a
gradual improvement starting within weeks of injection. Repeat procedures may be
given as required.
Clinical development
We have made considerable progress in the clinical development since the start
of the year. Treatment of all subjects in two Phase II trials of VAVELTA has
been completed.
The first study is being conducted in nasolabial folds at the Cranley Clinic for
Dermatology in London with Professor Nicholas Lowe MD FRCP. In this trial 6
subjects received a low dose of product. A second group of 10 subjects was then
treated with a higher dose expected to be used in the final product. All
subjects are being followed out to 6 months post-treatment with the following
results to date:
- In the 6 low dose subjects the average satisfaction scores at 6 months
for the treatment as assessed separately by both patients and the investigator
on a scale of 1-10 (10 being the highest), were 8 and 8 respectively. In
addition, the investigator measured an improvement in wrinkle severity in all
(100%) subjects
- In the 10 high dose subjects the average satisfaction scores at 3
months for the treatment as assessed separately by both subjects and the
investigator were 6 and 7 respectively. In addition, the investigator measured
an improvement in wrinkle severity in 6 (60%) subjects
- No serious adverse events have been observed and the product has been
well tolerated
In the second Phase II study we are investigating the use of VAVELTA in acne
scarring in a study being conducted by Dr David Eccleston. All 10 subjects are
being followed out to 6 months post-treatment with the following results to
date:
- The average satisfaction scores for the treatment at 3 months as
assessed separately by both subjects and the investigator on a scale of 1 -10
were 7 and 6 respectively
- No serious adverse events have been observed and the product has been
well tolerated
Final results of this study will be announced at the FACE conference in June.
A third Phase II trial of VAVELTA, investigating its use in the treatment of
burns scars (including contractures), has received all required regulatory
approvals and is open to recruitment.
Commercial opportunity
VAVELTA currently falls outside the scope of regulations governing the licensing
of medicines in the UK and accordingly we are proceeding with the
commercialisation of the product.
In June we introduced VAVELTA at the Facial Aesthetic Conference and Exhibition
(FACE) held in London. FACE is the largest medical aesthetic conference in the
UK for practitioners and clinics that deliver predominantly non-surgical medical
aesthetic treatments. The product was very well received by delegates, a number
of whom expressed interest in offering VAVELTA to their patients.
VAVELTA is administered by experienced physicians, well trained in intra-dermal
injection such as cosmetic surgeons, dermatologists and other doctors who
specialise in aesthetic medicine. Accordingly we have established a Clinical
Practice Group (CPG) of 6 specialist clinicians who have been using VAVELTA in a
commercial setting and conducting field trials of the product for facial
rejuvenation, acne scarring and contractures.
To date, around 25 patients have been treated for a variety of different skin
imperfections. Feedback from clinicians and patients on the product has been
positive and some patients are already experiencing an improvement in skin tone
and texture. The product has been generally well tolerated with a few patients
observing some transient local events such as redness and swelling.
The product will be rolled out more generally in the second half of 2008 and in
2009 in the UK and we also intend to launch it in a small number of additional
European countries as well, where the regulatory regime is equivalent to that of
the UK. Our current plans are that in this limited number of territories VAVELTA
will be marketed and sold by an in-house team.
Launch in the remainder of Europe and the US will follow completion of the
clinical development programme. We do not intend to establish a US sales force
and accordingly in time will seek a marketing partner to undertake US
distribution.
The global market for aesthetic medicine grew by an estimated16% in 2007 to $6.2
bn. The cosmetic surgery market in the UK reached almost £900m in 2007. Across
the range of potential applications for which VAVELTA may be used the market
opportunity lies in the range £240m - £310m in the EU and the US.
Intellectual Property
Transporting cells at a high density in a confined space for any length of time
is challenging, since actively metabolising cells quickly consume available
glucose and excrete lactic acid into the media, and if left unchecked can kill
cells in a matter of hours. This has been as issue for earlier cell therapy
products where the resulting short shelf life has limited their commercial
utility. Intercytex utilises a special shipping medium based on that used to
transport organs for transplantation. This keeps the cells in a quiescent state
during transit to their final destination and extends shelf life to an
acceptable period for commercial use such that VAVELTA can be stored for at
least eight days at the correct temperature of 2-8degreesC.
During the year we received our first granted patent, which protects the
composition of the media with VAVELTA for transportation and storage, and is
therefore fundamental to its commercial potential.
ICX-PRO
Product description
ICX-PRO is a topical woundcare product designed actively to stimulate wound
healing and closure in persistent chronic wounds. It comprises active,
allogeneic HDFs embedded in a human fibrin gel matrix which is applied to the
wound at regular intervals until healing has occurred. Each unit is a circular
gel of approximately 5.0 cm in diameter and 0.3 cm in depth shipped in medium to
prevent drying. The units are stored and shipped under refrigerated conditions
(2-8degreesc). ICX-PRO comes with a specially designed proprietary holder to
protect the gel during transportation.
ICX-PRO is a second generation product that has been specifically designed to
overcome the shortcomings (storage, preparation and ease of handling) of first
generation cell therapy products that have constrained their commercial success.
HDFs are the principal cell type found in the human dermis and are responsible
for the production of collagen and structural components of skin. It is
generally considered that HDFs are responsible for many events required to
effect good quality wound repair. The HDFs are trapped in the fibrin scaffold
for easy delivery onto the wound bed. The matrix is rapidly broken down by
enzymes found in the chronic wound fluid to release the cells from the matrix.
Once approved, we expect ICX-PRO to be used by primary care physicians,
surgeons, specialist woundcare physicians and plastic surgeons to treat a
variety of chronic wounds including venous leg ulcers (VLUs), diabetic foot
ulcers (DFUs) and pressure ulcers.
Clinical development
As predicted we completed the initial recruitment target of 216 patients for the
Phase III venous leg ulcer trial in March 2007. Around the same time we received
the DSMB advice that the trial should be increased to 396 patients to achieve a
statistically significant result. To meet this increased number various measures
have been taken including the opening of a number of new trial centres and
rationalising of existing ones.
The increase in numbers in the trial has been challenging, as has the trial
design which, as a consequence of ICX-PRO being regulated as a biological, is
the first randomised, blinded, controlled trial for a chronic wound cell therapy
product. Nevertheless, we have currently randomised over 350 patients to the
trial and expect to complete recruitment in the second quarter of this year in
line with previous guidance. This would allow us to file our BLA in the second
half of 2009 with the potential launch around a year later.
Separately, we completed recruitment of the Phase II trial in the UK in patients
with neuropathic diabetic foot ulcers. This trial was designed to assess safety
and efficacy of the product and provide feedback to inform the Phase III trial
design. Nine subjects whose ulcers had not responded to conventional therapy
were treated with ICX-PRO over a 20 week period in association with standard of
care. No product related serious adverse events have been reported to date. Two
patients have withdrawn from the study and four out of the remaining six had
either complete or almost complete closure at around 24 weeks. One patient is
still to be assessed.
Commercial opportunity
ICX-PRO was designed from woundcare physician feedback and, in a market where
price and ease of use are key, will be differentiated from other active wound
stimulants through a competitive pricing structure, long shelf life (21 days),
easy storage (standard refrigeration) and ease of preparation and handling.
Existing cell therapies have made good progress in the chronic ulcer market in
recent years, and are projected to achieve combined revenues of around $100m in
2008. ICX-PRO represents an opportunity to build substantial revenues in the
chronic wound market where:
- effective, convenient, appropriately priced, treatment options still
remain an unmet medical need;
- increasing numbers of diabetics and elderly patients are driving
market growth;
- there is a shift from 'traditional dressings" to middle-tier products
(antimicrobials, moist wound
dressings) and from middle-tier to active (cell therapy, growth factor-based)
products;
- demand is building for cost-effectiveness data, especially limiting
in-patient time; and
- the market is consolidating around specialist chains of woundcare
clinics.
We are in discussions with potential distribution partners to assist in the
launch and subsequent sales and marketing of the product in the US and other
markets. Our expectation is that Intercytex will manufacture in-market supplies
from our Manchester facility for at least the early years following launch.
We signed a supply agreement in March 2007 with Baxter Healthcare which assures
our supply of Tisseel(R), a key raw material in the production of ICX-PRO and
ICX-SKN. The agreement contains clauses which fix the price and provide
Intercytex with a period of exclusivity in the use of Tisseel(R) with allogeneic
fibroblast products.
Intellectual Property
Two patent families filed in earlier years, covering the wound healing
characteristics and gene expression profile of ICX-PRO are proceeding through
the international examination phase. In addition, we filed during the year an
additional patent to protect our delivery device which is designed to facilitate
the ease of use and ease of handling attributes of the product.
ICX-SKN
Product description
ICX-SKN comprises allogeneic HDFs set in a strong, stable matrix of natural
human collagen that is produced and assembled by the cells themselves. An
additional layer of human keratinocytes may be included to form an epidermal
layer. ICX-SKN mimics the structure of skin and is intended as a skin graft
replacement.
ICX-SKN is designed to be sufficiently durable to integrate and persist in an
acute wound, thus providing immediate and long-term closure of acute wounds. It
is intended that ICX-SKN will be used by dermatologists, plastic surgeons and
other specialists in hospitals and clinics as a skin graft for acute wounds,
initially in surgical excisions.
Clinical development
In June we announced a clinical breakthrough in regenerative medicine with
release of data from the ICX-SKN Phase I trial. In this trial a full-thickness
skin sample was excised from the upper arm of six volunteers and replaced with
Intercytex' skin graft replacement product. After 28 days both visual and
histological analysis showed that in all volunteers the ICX-SKN grafts were
rapidly vascularised and overgrown with the hosts' own cells, resulting in a
fully integrated skin graft.
We have followed this up with a Phase I extension study in which we have treated
a further 6 subjects with similar excisions and the application of ICX-SKN.
These subjects will be followed for up to 6 months to assess longer term
healing.
The most recent analysis, completed at 3 months post treatment, showed continued
integration of ICX-SKN in all six subjects with no evidence of rejection or
wound breakdown. In addition, two of the subjects received an additional
excision which was allowed to heal without the addition of ICX-SKN; the
intention is to compare the healing of these untreated wounds with those treated
with ICX-SKN at six months.
An open-label Phase II study is planned to commence in H2 2008 among subjects
undergoing elective surgery for the excision of basal-cell skin carcinomas
(BCC). The study is designed to demonstrate efficacy in wounds larger than those
treated in Phase I. Outcome measures will include wound closure, evaluation of
the cosmetic/aesthetic appearance and graft integration.
Commercial opportunity
Market research we have conducted during the year has emphasised the scale of
the opportunity for ICX-SKN, especially in surgical excisions. Each year in the
European Union and North America there are over 2.7m such excisions, of which
the substantial majority are represented by skin cancer removals. We estimate
that the market opportunity for ICX-SKN is in excess of 1 million excisions with
a market value of over $2 billion.
The potential advantages offered by ICX-SKN include:
- immediate closure of the wound, which substantially reduces the cost
of follow up treatments and risk of infection;
- improved aesthetic appearance - a significant factor given that most
skin cancers are on the face and hands and many excision sites carry permanent
scarring; and
- the avoidance of skin grafting in those patients who would otherwise
receive a skin graft.
Other opportunities exist in trauma such as burns and battlefield injury.
It is our intention to seek a partner to commercialise the product, as a minimum
in the US market. This is likely to be achieved after the Phase II data are
available.
Intellectual Property
We filed a patent application in 2006 which protects the manufacturing process
for ICX-SKN. This patent is currently undergoing international examination.
ICX-TRC
Product description
ICX-TRC consists of a suspension of autologous dermal papilla (DP) cells. These
cells are able to stimulate the generation of new hairs when injected into the
scalp in close proximity to the epidermal cells which generate the hair.
It is intended that ICX-TRC will be used by specialists in hair transplant
centres, dermatologists and plastic surgeons to treat patients with hair
thinning or hair loss.
Clinical development
We have now completed the treatment phase of our Phase II study, being conducted
by Dr Bessam Farjo in Manchester, to optimise the delivery of the DP cells.
In this study, hair counts are obtained by shaving and photographing a small
section of scalp, injecting it and then applying a specialised image analysis
system to provide a total hair count. All 19 subjects in the trial have now been
treated using a range of injection and scalp pre-stimulation techniques; the
first 6 subjects were injected without stimulation of the scalp. In the
remaining 13 the resident hair producing (epithelial) cells were stimulated at
the time of delivery of the DP cells.
11 subjects have now passed the 24-week time point since treatment and
specialised image analysis at this time point showed:
- Of the group of 6 patients without stimulation of the scalp, 3 had an
increased hair count and two had a reduced hair count; one has been lost to
follow-up.
- Of the 5 subjects with pre-treatment scalp stimulation, all had
increased hair count at 12 weeks and the 3 who were evaluable at 24 weeks all
had an increased hair count at that time point.
These data are consistent with the earlier data reported last September and the
hypothesis that new hair production is improved by pre-stimulation of the scalp,
leading to an interaction between the injected cells and the resident hair
producing cells.
24 week data on all subjects in the trial will be available in September 2008
and at the end of the trial photographic data will be analysed from a much
larger area of treated scalp on all subjects at 48 weeks.
Commercial opportunity
ICX-TRC overcomes one of the principal drawbacks of conventional transplants
which is that the outcome is limited by the amount of donor hair available. By
using the Intercytex cell therapy technique almost limitless hair regeneration
is possible in a less invasive procedure. Furthermore, treatment can commence
early on in the hair loss process with retreatment available in subsequent
years. The barrier to commercial success for ICX-TRC is relatively low, being
the ability to increase hair count in transplanted or thinning areas.
We believe the continued development of ICX-TRC would best be carried out in
partnership with a specialist in the aesthetics field. We do not intend to
finance the continuation of clinical and commercial development of ICX-TRC
beyond the current Phase II trial and shall seek to sign a partner when we have
the complete data package from this trial. Intercytex has granted Bosley, the
largest chain of hair transplant clinics in the US, an option to negotiate
distribution rights to the product.
Intellectual Property
We have split our cell delivery patent application into three separate
applications in the US reflecting additional techniques that are being
developed. We have also filed a patent application relating to our observation
that epidermal stimulation pre-treatment appears to enhance hair follicle
formation. Two other previously filed patent applications relating to the method
of culturing the dermal papilla cells have been published and are undergoing
international examination.
OUTLOOK
Over the next year we expect to report sustained strong progress both
commercially and clinically:
- VAVELTA - we expect to start generating revenues from around the
middle of the current year and we will report on our sales progress as the
product is rolled out. We will also report on our progress in obtaining
permission to market the product in other European territories.
- We will report final data on the facial rejuvenation and acne scar
trials, and initial data from the burns contracture study.
- ICX-PRO - full details of the data from the diabetic foot ulcer trial
will be presented at relevant conferences. Recruitment to the pivotal Phase III
venous leg ulcer trial will be completed and the outcome will be announced in H1
2009.
- ICX-SKN - full details of the current Phase I extension trial will be
reported in H2 2008 and the Phase II trial in basal-cell carcinoma excisions
commenced
- ICX-TRC - final data on all evaluable subjects in the current Phase II
trial will be announced in H1 2009
We have seen strong efficacy evidence across our product portfolio during 2007.
Continuation of the efficacy profile that our pipeline has demonstrated to date
will emphasise the value of the regenerative medicine assets that we are
creating.
BUSINESS REVIEW: FINANCIAL REPORT
Basis of preparation
The financial results have been prepared under International Financial Reporting
Standards (IFRS) for the first time; the transition date for IFRS is therefore 1
January 2006. Because the Group had already effectively implemented IFRS 2 in
2006 when FRS 20 was applied, and due to the election regarding business
combinations made under IFRS 1 in respect of first time adoption, the net effect
of presenting the financial statements since transition under IFRS rather than
UK GAAP is small. For the year ended 31 December 2006 no adjustments were made
to the Group's net loss after tax or net assets as a consequence of IFRS
adoption. In addition there is no impact on the Group cash flows previously
reported or the Group opening balance sheet, other than the redefinition of
short-term investments as available-for-sale liquid investments at 1 January
2006.
Cash flow
The net cash outflow from operating activities was £9.99m (2006: £8.52m).
Capital expenditure and finance lease payments on capital equipment were £0.54m
(2006: £0.48m). The net proceeds from the fundraising amounted to £11.44m and as
a consequence cash, cash equivalents and liquid resources totalled £12.50m at
the year end (2006: £10.99m), an increase of £1.51m.
Revenues
In the year ended 31 December 2007, revenue was £111k (2006: £83k), representing
receipt of the fourth milestone from Bosley under the ICX-TRC option agreement.
Other operating income represents further receipts under our DTI grant (£373k).
This is a substantial increase over grant income in 2006 of £51k, when the
project had just commenced.
Operating expenses
Research & development R&D costs rose to £9.62m (2006: £8.57m) as a result of
the expanded clinical trial programme, and in particular as a consequence of the
increase in patient numbers in the Phase III VLU trial of ICX-PRO, where during
the year we treated around 50 extra patients compared with 2006 . In total,
seven trials were initiated and/or progressed during the year, representing the
highest level of clinical activity in our history.
R&D costs accounted for 81% of net operating expenses (2006: 88%) and include:
- personnel associated with research and development activities;
- clinical trials;
- manufacturing, quality assurance, quality control and shipping
activities;
- regulatory affairs; and
- an allocation of facility costs.
General and administrative (G&A) expenses for the year to 31 December 2007
increased to £2.68m (2006: £1.26m) including non-cash charges arising from IFRS
2 share-based payments of £0.30m (2006: £0.25m). These costs consist primarily
of personnel costs for executive and administrative staff including finance,
business development and human resources. Other significant administrative
expenses includes an allocation of facilities costs, HR costs and legal/
accounting/professional fees. The increase is attributable to the creation of a
commercial department to support the VAVELTA(R) launch and enhanced Programme
Management activities.
Net operating expenses increased by 22% to £11.93m (2006: £9.78m), resulting in
an operating loss of £11.82m (2006: £9.69m).
Finance revenue and costs
Finance revenue, which represents income received from and crystallised gains on
the Group's cash and liquid resources, was £0.23m (2006: £0.53m). A further
£0.38m of uncrystallised gains in the Group's money fund investments was taken
to reserves. Finance costs, which relate to interest payable on leased assets,
amounted to £40k, the reduction against 2006 (£67k) reflects the expiry of a
number of leases entered into when the Company moved into its current premises.
Taxation
Taxation comprises tax credits booked against research and development
expenditure of £1.07m (2006: £1.05m) tax payable on our US activities of £20k
(2006: £23k) together with the deferred tax credit on unrealised investment
gains of £83k (2006: £nil). The tax credit for the year ended 31 December 2007
has yet to be submitted to HMRC. The claim submitted for 2006 of £1.05m was
received in May 2007.
Loss for the period
Mainly as a consequence of the increase in R&D and G&A costs the resulting net
loss for the period increased to £10.50m (2006: £8.21m).
Intercytex Group plc
Consolidated income statement
For the year ended 31 December 2007
Note 2007 2006
£'000 £'000
Restated
Licensing & option income 2 111 83
______ ______
Revenue 111 83
Research and development costs (9,619) (8,566)
General and administrative costs (2,684) (1,260)
Other operating income: grants receivable 373 51
______ ______
(11,930) (9,775)
Operating loss (11,819) (9,692)
Finance revenue 233 525
Finance costs (40) (67)
______ ______
Loss before taxation (11,626) (9,234)
Taxation 1,128 1,029
______ ______
Loss for the year attributable to equity holders (10,498) (8,205)
______ ______
Loss per share:
Basic and diluted 3 (15.1p) (15.0p)
______ ______
All results are from continuing activities.
Intercytex Group plc
Consolidated balance sheet
As at 31 December 2007
Group
Note 2007 2006
£'000 £'000
Restated
ASSETS
Non-current assets
Property, plant and equipment 881 672
______ ______
881 672
______ ______
Current assets
Inventories 114 27
Trade and other receivables 622 572
Current tax asset 1,042 970
Available-for-sale liquid investments 4 11,959 8,681
Cash and cash equivalents 4 538 2,306
______ ______
14,275 12,556
______ ______
TOTAL ASSETS 15,156 13,228
______ ______
LIABILITIES
Non-current liabilities
Obligations under finance leases 205 165
______ ______
205 165
______ ______
Current liabilities
Trade and other payables 1,852 1,487
Obligations under finance leases 155 172
______ ______
2,007 1,659
______ ______
TOTAL LIABILITIES 2,212 1,824
______ ______
NET ASSETS 12,944 11,404
______ ______
Share capital 5 794 561
Share premium 32,500 21,289
Capital redemption reserve 229 229
Merger reserve 18,902 18,902
Profit and loss account (39,775) (29,577)
Unrealised gains and losses reserve 294 -
TOTAL EQUITY 12,944 11,404
______ ______
Intercytex Group plc
Consolidated cash flow statement
For the year ended 31 December 2007
Group
2007 2006
£'000 £'000
Restated
Operating activities
Total operating loss (11,819) (9,692)
Non cash:
Depreciation of property, plant and equipment 348 377
Share-based payments expense 302 252
Working capital adjustments:
Decrease in trade and other receivables 26 -
(Increase)/decrease in inventories (87) 22
Increase/(decrease) in trade and other payables 264 (197)
Net cash flows from operations (10,966) (9,238)
Net income tax received 977 723
______ ______
Net cash flows from operating activities (9,989) (8,515)
Investing activities
Purchase of property, plant and equipment (321) (213)
Grants received in relation to capital items 100 65
Return from available-for-sale liquid investments 60 -
Interest received 96 446
Net cash flows used in investing activities (65) 298
______ ______
Management of liquid resources
Increase in available-for-sale liquid investments (2,901) (8,681)
Financing activities
Proceeds from issue of shares 12,000 15,177
Transaction costs of issue of shares (558) (1,326)
Payment of finance lease liabilities (215) (267)
Interest paid on finance leases (40) (67)
Net cash flows used in financing activities 11,187 13,517
______ ______
Net decrease in cash and cash equivalents (1,768) (3,381)
Cash and cash equivalents at 1 January 2,306 5,687
Cash and cash equivalents at 31 December 538 2,306
______ ______
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2007
1. Basis of preparation and accounting policies
These preliminary financial statements for the year ended 31 December 2007 are
the first annual financial statements that comply with IFRS as adopted by the
European Union as they apply to the financial statements of the Group. The
Group's date of transition is 1 January 2006. The comparative figures have been
prepared on the same basis and are therefore restated for the impact of IFRS
from those previously reported under UK GAAP.
The financial information disclosed in this announcement does not constitute the
Group's statutory financial statements. The financial information for the year
ended 31 December 2006 has been extracted from the statutory accounts of
Intercytex Group plc for that year, which have been delivered to the Registrar
of Companies. The auditors' report on those accounts was unqualified and did
not contain any statement under sections 237(2) or (3) of the Companies Act
1985.
The financial statements in respect of the year end 31 December 2007 will be
delivered to the Registrar of Companies in due course and will also be sent to
shareholders. This preliminary statement was approved by the Board on 17 March
2006.
2. Revenue represents a milestone payment under the option agreement with
Bosley Medical.
3. Loss per share
The calculations of loss per ordinary share are based on the following losses
and weighted average number of shares in issue during the period:
Year to Year to
31 December 2007 31 December 2006
Restated
Loss for the period (£'000) (10,498) (8,205)
Weighted average number of ordinary shares (basic
and diluted) ('000) 69,325 54,595
Loss per share (15.1p) (15.0p)
4. Available-for sale liquid investments and cash and cash equivalents
The Group's liquid investments comprise holdings in a money market fund and
investment grade short term debt instruments. These investments may be
liquidated on 24 hours notice and are traded in highly liquid markets.
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand
and short term deposits with an original maturity of three months or less.
The holdings in the money market fund are accumulation units which are re-priced
daily to reflected income accrued by the fund. Unrealised gains at the year end
on this investment of £0.38m were taken to reserves.
5. Share issues
In April 2007 the Company allotted and issued 291,182 fully paid new ordinary
shares to the Intercytex Group plc Employee Benefit Trust in order to satisfy
conditional share awards made to employees under the Intercytex Group plc Share
Incentive Plan (an HMRC approved all employee share purchase plan adopted by the
Company on 20th June 2006).
In May 2007 the Company placed 23,076,924 new ordinary shares. The shares were
issued to new and existing shareholders fully paid at a price of 52p per share
raising £12m gross. Net proceeds after all issue expenses were £11.44m.
This information is provided by RNS
The company news service from the London Stock Exchange
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