RNS Number:4271K
EiRx Therapeutics PLC
20 December 2007
EIRX THERAPEUTICS PLC ("the Company")
Annual Results
Cork, Ireland - EiRx Therapeutics plc (AIM: ERX), the drug discovery company
developing targeted therapies for the treatment of cancer, releases its annual
results for the year ended 30th June 2007.
Copies of the accounts have been sent to shareholders and will be available on
the Company's website, www.eirx.com and for a period of one month at 50
Broadway, Westminster LONDON SW1H 0BL.
For further information, please contact:
EiRx Therapeutics plc +353 (0)21 432 0847
Colin Telfer PhD, Chief Executive Officer
Grant Thornton Corporate Finance +44 (0)20 7383 5100
Philip Secrett / Colin Aaronson
CHAIRMAN'S STATEMENT
Highlights:
* cancer collaboration with multinational diagnostics business bioMerieux SA
- July 2006
* efficacy of lead molecule ERX3722 in xenograft model of breast cancer -
September 2006
* change of broker and �0.5M raised by share placement - September 2006
* further �0.5M raised by share placement - January 2007
Post reporting period highlights:
* Euro362,000 grant from Enterprise Ireland's Innovation Partnership programme,
to support a drug development collaboration with noted medicinal chemist
Professor Anita Maguire - September 2007
* Expansion of EnPADTM platform technology and filing of two patents
claiming new cancer drug candidates - October 2007
Financial Review
In preparing these financial statements the Directors have adopted FRS20
relating to share based compensation schemes. The prior year's figures have
been restated to incorporate this accounting standard.
During the financial year, revenues of �79,146 were generated from services
provided to third party research pharmaceutical companies and �48,148 was
received in rental income from the tenant in our Cork premises. Expenditures
totalled �2,727,716 including �1,196,761 of goodwill impairment, �66,506 of
depreciation and amortisation of patents and �32,551 written-off patents against
which grants received of �79,489 have been credited. The net loss for the year
was �2,457,057.
In August 2006 40,568,710 new shares were issued at par value of �81,137 to the
landlord of the Cork premises in settlement of arrears of rent over space that
had been unoccupied until then. In September 2006 the company issued
200,000,000 new shares at a price of 0.25 pence per share, raising �500,000 and
in January 2007 250,000,000 new shares were issued at par of 0.2 pence per share
raising further working capital of �500,000 before costs. During the year
advances were received in the form of Convertible Loans amounting to �61,000
from EiRx Pharma Limited. This amount was added to the previous advances from
EiRx Pharma Limited of �245,000, and the total of �306,000 has been treated as
equity following advice from EiRx Pharma Limited that it intends to convert the
debt to equity.
At the end of the financial year cash at bank and in hand amounted to �188,474.
Key Performance Indicators ("KPI's")
1) Our business KPI is to carry out our research programme in accordance with
plans approved by the Board of Directors.
2) Our financial KPI is to ensure that we have adequate funding in place to
accomplish our business KPI.
Corporate and Product Development Review
In the previous year's annual report I set out your Board's vision for the
creation of shareholder value through a focus on development of novel cancer
drugs. I described the Engineered Pathway Dependence (EnPADTM) technology as
the company's principal asset and source of competitive advantage, explained the
process of drug development through the stages of lead optimisation and
preclinical development, argued that market analysis supports the expectation of
significant value crystallisation from product licensing at the clinical
candidacy boundary and cautioned that our prospects of success would be
determined by our ability to meet the Company's need for cutting edge medicinal
chemistry skills.
I am therefore pleased to report that in the intervening months we have made
important progress towards these goals, expanding our EnPADTM platform
technology in order to widen our scope for successful targeting of cancer cell
signalling and gaining government grant support for a key alliance with a
prestigious and industrially active medicinal chemistry institute.
In September '06 we announced the results of an in vivo efficacy study examining
the effect of the hit compound ERX3722, discovered by EiRx using our proprietary
EnPADTM assay, in a subcutaneous human breast cancer xenograft model. The
Company was pleased to report that the compound, taken straight from screening
and without chemical optimisation, achieved a very significant 50% reduction in
tumour volume with no evidence of systemic toxicity. In recent months ERX3722
has been accepted for evaluation by the Developmental Therapeutics Programme
(the "DTP") of the National Cancer Institute, in Bethesda, Maryland, USA, having
satisfied acceptance criteria that include structural novelty, drug-likeness and
likely suitability to further optimisation. We anticipate that the work
performed by the DTP on ERX3722 (which is conducted at DTP's expense and without
influence on EiRx's ownership or commercial control of the molecule) will
provide an evaluation of the potential clinical uses of optimised molecules
derived from the ERX3722 compound series, and information on its potential
molecular mechanism of action. It is our further intention to progress the
ERX3722 series into medicinal chemistry studies under the Company's Innovation
Partnership with Professor Anita Maguire (see below).
Encouraged by the success of the first EnPADTM screening exercise, EiRx has
instigated a rapid expansion of the cellular screening technology platform.
Cancerous cells typically display overactivity in one or more of the
intracellular signalling pathways that control growth and division (so-called "
gain of function" mutations and amplifications). The expanded EnPADTM platform,
currently numbering 30 engineered screening assays in development or active use,
models many of the most important gain-of-function mutations underlying such
pathway overactivity in major cancer indications, and also incorporates novel
apoptosis pathway targets selected from EiRx's ALIBITM study of the regulatory
mechanisms controlling apoptosis.
The other major mechanism underlying the loss of growth control seen in tumour
cells is inactivating mutation of so-called "tumour suppressor" genes. Such
genes normally act to hold cellular growth and division in check, and mutations
which render them inactive ("loss of function" mutations) result in a loss of
control over growth. Loss of function mutations in tumour suppressor genes are
extremely common in cancer; two such genes, p53 and PTEN, are amongst the most
commonly mutated in all cancers. The Company is now adapting the EnPADTM system
to include "loss of function" assays that mimic this aspect of cancer. This is
being achieved by the use of "short hairpin RNA" (shRNA) technology, which
enables the generation of cell lines in which a single target gene is
permanently silenced. Such "loss of function" EnPADTM models will allow the
Company to screen its compound library for small molecules whose biological
activity is targeted against the cancerous phenotype induced by inactivating
mutations in tumour suppressor genes.
At the present time EiRx has completed screening of its discovery compound
library in 4 distinct EnPADTM models, and has successfully identified hit
compound series with the specified biological selectivity in three of these four
screens. Results of our work with AKT and Beta-catenin EnPADTM models,
which lead to new patent applications, are further discussed below. The Company
knows of no reason why a high success rate cannot be repeated across the entire
EnPADTM assay battery, delivering an extensive set of active and biologically
targeted hit compound series from which the most promising candidates can be
picked for advancement into lead optimisation and preclinical studies. The EiRx
management team believes the EnPADTM screening effort underpins the future
success of the Company, and is the central feature of our strategic realignment
from a research licensing model to drug development. Expansion of this platform
is undertaken with the intention of broadening the range of hit compound series
available for evaluation against stringent criteria of potency, selectivity,
drug-likeness and ease of derivatisation, ensuring that the Company selects
high-quality starting points for further investment in development and
optimisation.
As part of our drive to reduce operating costs and focus investment on the
EnPADTM drug discovery platform, the Board has made the decision to discontinue
cancer research and drug development activities at the Company's subsidiary
laboratory in Aberdeen. EiRx staff in Aberdeen are now devoting their efforts
to the production and marketing of antibody reagents for use in laboratory
research. The Company has previously enjoyed success in licensing such products
to laboratory supply companies, and we have increased our activity in this area
with the intention of generating increased revenues. EiRx's license to the
ACCRI-BANK tumour tissue collection based in Aberdeen remains in force, and we
plan to continue exploitation of this resource in due course for identification
and validation of biomarkers to support the development of the Company's
targeted cancer therapy candidates.
Significant events occurring after the Financial Year end
Innovation Partnership Grant and Collaboration with Professor Anita Maguire,
ABCRF
On 13th August '07 EiRx announced that Enterprise Ireland has agreed to fund the
Company's development of new cancer medicines through collaboration with
Professor Anita Maguire, Chair of Pharmaceutical Chemistry at University College
Cork ("UCC"), Ireland. The collaboration will establish a medicinal chemistry
team in Cork, under the supervision of Professor Maguire, to optimise compounds
emerging from the Company's EnPADTM drug discovery platform and advance them
towards clinical trials. The tie-up with Professor Maguire, who is Director of
UCC's prestigious Analytical & Biological Chemistry Research Facility ("ABCRF"),
has been awarded Euro362,600 of funding for personnel, materials and overhead costs
through Enterprise Ireland's Innovation Partnership scheme, and will be
reinforced by EiRx with a further Euro139,000 in cash and dedicated personnel
costs.
As a result of the collaboration, EiRx gains access to medicinal chemistry
skills and facilities via employment of two fully-funded postdoctoral chemists
within Professor Maguire's research group at the ABCRF. Professor Maguire will
lead the chemistry aspect of the research programme, and EiRx will contribute
dedicated cancer biology and management input. The collaboration will work on
optimisation of tumour-selective pro-apoptotic molecules identified using
EnPADTM, and any optimised drug candidates resulting will thereafter be advanced
to formal preclinical and clinical evaluation. Novel intellectual property
generated by the collaboration will be jointly held by the partners, and EiRx
will assume responsibility for product development beyond the lead optimisation
stage, paying success-driven development milestones and royalties in return for
exclusive, worldwide rights over UCC's stake in jointly held IP.
Your Board is delighted that a scientist of Professor Maguire's calibre will be
playing a key role in the application of medicinal chemistry to our product
pipeline, and to have gained state financial support to access the cutting-edge
facilities of the ABCRF. We believe this initiative will be the foundation
stone of our own dedicated chemistry capability, and the engine of our progress
towards development of high-value clinical candidates that will drive our
commercial prospects.
Filing of New Patent Applications
On 11th October '07, EiRx filed patent applications covering compound series
isolated from EnPADTM models targeting the PI3K/AKT and Wnt/Beta-catenin
pathways, two of the cell signalling pathways most frequently overactive in a
range of major solid tumour indications.
To generate an EnPADTM screening model targeting the PI3K/AKT pathway, an
intracellular signal transduction mechanism which is overactive in more than 60%
of all cancers, an apoptosis-resistant phenotype was induced by deliberate
overexpression of the AKT protein kinase isoform 2. In laboratory tests,
exemplar compounds from the hit series potently and specifically induced
apoptosis in breast and colorectal cancer cell lines, and have been shown by
EiRx researchers to prevent the activation of AKT, an event which is central to
signal transduction by the targeted pathway.
The Wnt/Beta-catenin signal pathway is known to be overactive in >85% of
late-stage colorectal cancers as well as in breast cancers, and is now though to
play a role in both melanoma and leukaemia. To target this pathway, EiRx
engineered overexpression of the Beta-catenin protein, in both its normal
form and a mutated form commonly seen in colorectal cancers. Compounds isolated
from screening of this EnPADTM model exhibit potent and specific induction of
apoptosis in breast and colorectal cancer cell lines, and the Company has
recently generated evidence that certain of these compounds interfere with the
cell cycle mechanism controlling cell division and replication, which becomes
dysregulated in cancer.
These successes further demonstrate the EnPADTM technology's ability to
deliberately focus the selection of biologically active compounds against a
chosen aspect of tumour cell biology. Compounds from both the AKT and Beta
-catenin signal inhibitor series will now be advanced to further
mechanism-of-action ("MOA"), toxicology and in vivo efficacy studies. Once in
vivo activity and MOA have been confirmed, it is anticipated that these compound
series will be the subject of an optimization effort conducted as part of the
Company's medicinal chemistry collaboration with the ABCRF.
Update on progress of R&D Collaborations
All EiRx's active R&D collaborations are subject to confidentiality agreements
with our partners, but it is our intention, wherever possible, to provide
guidance on the progress and prospects of these initiatives.
bioMerieux SA
In July '06 the Company entered into an agreement with bioMerieux SA, the
leading international diagnostics group headquartered in France. Under the
terms of the collaboration both companies are undertaking research into the
expression of genes and proteins within tumour samples from colorectal cancer
patients, aiming to identify biomarkers associated with the development and
progression of the disease. Under the collaboration, bioMerieux has been
exploring the potential diagnostic utility of proteins from EiRx's cancer
biomarker panel, whilst EiRx has used its siRNA-driven functional validation
platform to explore the utility of certain targets from bioMerieux's colorectal
biomarker panel as targets for new drug therapies. Shareholders will be
notified if and when this ongoing joint effort results in a further commercial
arrangement between the parties.
MGI Pharma, Inc.
The US biotech company MGI Pharma (NASDAQ: MOGN) is developing a cancer vaccine
(ZYC300) based on IP licensed from EiRx's Auvation subsidiary. In September '06
MGI Pharma initiated a second Phase I/IIa trial of ZYC300, this time combining
it with a second agent that it is hoped will enhance the favourable immune
response. At the time of writing, this trail is ongoing and has completed full
recruitment of patients in line with the study protocol. EiRx stands to earn
milestone payments and royalties on the successful development of ZYC300, and we
will advise EiRx shareholders of progress as news becomes available.
Almac Diagnostics
In March 2006 EiRx entered into a collaborative research agreement with the
applied genomics specialist Almac Diagnostics of Craigavon, Northern Ireland.
The collaboration, which is part-funded by the InterTrade Ireland INNOVA
Collaborative R&D program, aims to model the molecular events underlying the
early development of colorectal cancer. The active technical programme began in
May '06 and is now generating intriguing results that the partners are
subjecting to further analysis and testing. Funding for this work will run
until May '08, after which EiRx anticipates being able to draw scientific
conclusions and provide investors with an indication of the proposed route to
further development and commercialisation of the study output.
Prospects
As discussed in previous communications to shareholders, the Board continues to
seek maximum value creation through development of novel drug products at least
as far as clinical candidacy before seeking to strike licensing and development
deals with the major Pharmaceutical companies. Considerable development work
remains ahead, but we believe the Company's EnPADTM technology platform provides
many advantages over conventional drug discovery approaches. Hit compounds
generated by the EnPADTM approach have so far proven to be more potent than
generally would be expected of hits from standard high-throughput screening or
target-driven rational design approaches. This allows EiRx to begin the lead
optimisation process from a more favourable position part-way down the
development path from unoptimised hit to optimised lead. This elegant and
efficient approach enables EiRx to compete in the cancer drug discovery field
whilst more modestly financed than most of our competitors. The inherent
ability to focus on intracellular signalling pathways without the need to
prejudge the most effective or tractable target for intervention is a further
benefit of the EnPADTM approach, leaving open the potential to discover new
mechanisms of action.
We believe that the EnPADTM technology, combined with the medicinal chemistry
expertise now available to us through our Innovation Partnership with the ABCRF,
provides the foundation for our future success. The Company must now ensure it
is sufficiently well funded to progress its cancer therapy products through the
process of lead optimisation and preclinical development to the point of
clinical candidacy, where we believe commercial and financial success can be
realised. In line with our drug development business model, EiRx currently
generates limited revenue and needs to raise funds to support its operations.
Careful control of expenditure and greater than anticipated grant income has
allowed us to operate from September '06 to October '07 on share placement
proceeds of �1M before costs, but the Company is presently utilising a bank
overdraft facility of �200,000, which will fund operations until the end of
January '08. Expressions of interest in a further share placing have been
received, and due to the current low market price of the Company's shares an EGM
was held on 5th December where shareholder approval was obtained for a share
capital reorganisation to lower the nominal value of the Company's stock and
enable this placing to proceed. It is envisaged that this placing will raise
sufficient funds for the group's operations for a period of 6 - 9 months. The
directors are confident that further funds will be available at that time to
enable the group to continue trading.
If the placing is successful, the funds raised will provide working capital to
enable the Company to continue its drug development programme and its business
development activities. In this regard, we are greatly encouraged by the
continuing expansion of the EnPADTM drug discovery platform, the recent patent
filings disclosing potential new cancer drug candidates targeted at major cancer
cell pathways, and the support received from Enterprise Ireland for our
collaboration with Professor Maguire and the ABCRF. We believe these positive
developments are a further validation of EiRx's ability to develop new and
improved cancer drugs, and seek the support of new and existing investors alike
in charting our course towards success.
John Pool, Chairman
18 December 2007
Consolidated Profit & Loss Account
Note 2007 2006
Restated
� �
Turnover 2 79,146 26,780
Administrative expenses (2,648,227) (1,847,459)
Other operating income - rent receivable 48,148 23,769
Operating loss (2,520,933) (1,796,910)
Net interest 3 (5,904) (4,033)
Loss on ordinary activities before taxation 2 (2,526,837) (1,800,943)
Taxation 5 69,780 (19,818)
Loss on ordinary activities after taxation for the year 18 (2,457,057) (1,820,761)
Basic and diluted loss per share 7 (0.0881) p (0.0900) p
All operations are continuing.
Consolidated statement of total recognised gains and losses
2007 2006
Restated
� �
Loss for the financial period (2,457,057) (1,820,761)
Currency difference on foreign currency net investments 83,519 (81,917)
Total recognised gains and losses for the period (2,373,538) (1,902,678)
Consolidated Balance Sheet
Note 2007 2006
Restated
� �
Fixed assets
Intangible assets
Goodwill 8 3,917,024 5,113,786
Patents 8 106,405 167,576
4,023,429 5,281,362
Tangible assets 9 170,429 192,637
4,193,858 5,473,999
Current assets
Stocks 11 16,563 20,965
Debtors 12 98,362 167,820
Cash at bank and in hand 188,474 297,674
303,399 486,459
Creditors: amounts falling due within one year 13 (328,945) (778,003)
Net current liabilities (25,546) (291,544)
Total assets less current liabilities 4,168,312 5,182,455
Creditors: amounts falling due in more than one year 14 - (433)
Net assets 4,168,312 5,182,022
Capital and reserves
Called up share capital 17 5,951,486 4,970,348
Convertible debt 17 306,000 -
Share based compensation reserve 18 123,615 100,925
Share premium account 18 1,587,542 1,537,542
Merger reserve 18 2,999,768 2,999,768
Exchange translation reserve 18 63,816 (19,703)
Profit and loss account 18 (6,863,915) (4,406,858)
Shareholders' funds 4,168,312 5,182,022
The financial statements were authorised for issue and approved by the Board of
Directors on 18 December 2007.
Company Balance Sheet
Note 2006
2007 Restated
� �
Fixed assets
Investments 10 3,683,794 4,507,584
Current assets
Debtors 12 66,422 2,579,275
Cash at bank and in hand 115,751 273,000
182,173 2,852,275
Creditors: amounts falling due within one year 13 (129,356) (430,482)
Net current assets 52,817 2,421,793
Total assets less current liabilities 3,736,611 6,929,377
Capital and reserves
Called up share capital 17 5,951,486 4,970,348
Convertible debt 17 306,000 -
Share based compensation reserve 18 123,615 100,925
Share premium account 18 1,587,542 1,537,542
Merger reserve 18 2,171,712 2,171,712
Profit and loss account 18 (6,403,744) (1,851,150)
Shareholders' funds 3,736,611 6,929,377
Consolidated Cash Flow Statement
Note 2007 2006
� �
Net cash outflow from operating activities 20 (1,231,447) (1,085,270)
Returns on investments and servicing of finance
Interest received 11,613 4,688
Interest paid (17,517) (8,721)
Net cash outflow from returns on investments and servicing of (5,904) (4,033)
finance
Taxation
Corporation tax (2,875) (18,203)
R & D tax credit 71,698 -
68,823 (18,203)
Capital expenditure
Investment in patents (9,890) (63,763)
Acquisitions of tangible assets (1,103) (426)
Net cash outflow from capital expenditure (10,993) (64,189)
Financing
Issue of shares 1,081,138 1,300,365
Expenses paid in connection with share issues (50,000) (105,138)
Convertible loan drawn down 48,750 257,250
Finance lease and hire purchase repayments (6,863) (10,802)
Net cash inflow from financing 1,073,025 1,441,675
(Decrease)/increase in cash 21 (106,496) 269,980
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the period ended 30 June 2007 but is derived
from those accounts. Statutory accounts for the period will be delivered to
Companies House following the Company's next Annual General Meeting. The Group's
auditors have reported on these accounts; their report was unqualified and did
not contain statements under section 237(2) or (3) of the Companies Act 1985.
Their report did contain an emphasis of matter statement concerning the
disclosure in note 1 below concerning the group's ability to continue as a going
concern.
The financial statements have been prepared in accordance with applicable United
Kingdom accounting standards
under the historical cost convention and on the going concern basis (see note
1). As this is the first year that FRS 20
has been adopted, prior year figures have been restated. The principal
accounting policies of the group, remain unchanged from the previous year other
than the adoption of FRS 20.
Notes to the Consolidated Financial Statements
1 Basis of preparation
These financial statements have been prepared on the going concern basis, which
assumes that the company will continue in operational existence for the
foreseeable future.
The directors have produced forecasts for 12 months from the date of signing
these accounts. These forecasts show a requirement for a �0.8m fundraising in
January 2008, in order to continue scientific and product development.
The directors have entered into discussions with brokers and potential investors
who have indicated that funds will be able to be raised, in January 2008 which
will allow the groups to operate for a period of 6 - 9 months. The directors are
currently investigating sources of funding for that time and as a result of
current discussions are confident that such funds as the group requires to
continue trading will be available. As with any future fund raising the outcome
of these events is uncertain.
On this basis, the directors believe that it is appropriate for the accounts to
be prepared on the going concern basis. The accounts do not include any
adjustments that would result should the company be unable to raise sufficient
funding.
2 Turnover and loss on ordinary activities before taxation
The turnover is attributable to contract research and licence fees in regard to
out licensing of intellectual property all from within the European Union.
Further analysis is not provided because the directors consider disclosure to be
seriously prejudicial to the interests of the group.
The loss on ordinary activities before taxation is stated after: 2007 2006
� �
Research and development:
Current year expenditure including depreciation and amortisation of patents,
hire of equipment and operating lease rentals 750,848 923,299
Grants receivable in respect of research and development (79,489) (93,073)
Auditors' remuneration:
Audit services - parent company and consolidation 16,000 12,000
Audit services - subsidiaries 12,000 11,493
Non-audit services - tax compliance services - 2,378
Non-audit services - nominated advisor 22,221 17,846
Redundancy payment to former director 45,970 46,886
Depreciation and amortisation:
Goodwill 370,280 370,281
Other intangible fixed assets - patents 34,330 34,086
Tangible fixed assets, owned 29,837 45,343
Tangible fixed assets, leased 2,339 2,389
Impairment of goodwill 826,480 -
Provisions for diminution in value:
Provision for permanent diminution in value of fixed assets - patents 32,551 -
Foreign currency losses (93,323) 80,140
Hire of equipment - 1,607
Other operating lease rentals 163,621 150,723
3 Net interest
2007 2006
� �
Interest receivable on bank deposits 11,613 4,688
Interest payable on Convertible Loan Notes (15,300) -
Interest payable on bank overdrafts (2,217) (8,721)
(5,904) (4,033)
4 Directors and employees
Staff costs during the period were as follows:
2007 2006
� �
Wages and salaries 332,481 354,361
Social security costs 43,781 46,460
Other pension costs 11,790 19,875
388,052 420,696
The average number of employees by category was as follows:
2007 2006
Number Number
Research staff 10 14
Administrative staff 3 4
Management 2 3
15 21
Remuneration in respect of directors was as follows:
2007 2006
� �
Emoluments 76,728 144,968
Pension contributions to money purchase pension schemes 1,604 5,046
78,332 150,014
Payments to third parties for directors' services 83,665 151,421
161,997 301,435
During the period one (2006: two) directors participated in defined money
purchase pension schemes.
During the period no directors exercised share options.
The amounts set out above include remuneration in respect of the highest paid
director as follows:
2007 2006
� �
Emoluments 76,728 71,683
Pension contributions to money purchase pension schemes 1,604 -
78,332 71,683
5 Taxation
There is a charge to taxation of �1,918 on income received and a subsidiary
company received a research & development tax credit of �71,698.
Unrelieved tax losses of approximately �4.6 million (2006: �4.3 million) remain
available to offset against future taxable trading profits of the company's
subsidiary company.
Factors affecting the tax charge for the period.
The tax assessed for the period is higher than the standard rate of corporation
tax in the UK of 30%.
The differences are explained as follows: 2007 2006
Restated
� �
Loss on ordinary activities before taxation (2,526,837) (1,800,943)
Loss on ordinary activities multiplied by standard rate of corporation tax at (758,051) (540,283)
30%
Effect of:
Expenses incurred not deductible for tax purposes 375,189 121,966
Overprovision brought forward 302 21
Overseas income not relieved against losses at 12.5% - 2,971
Differential rates on overseas unrelieved income - 4,160
Income not chargeable for tax purposes (23,847) (27,922)
Research & development tax credit 71,698 -
Tax losses carried forward on UK operating loss at 30% 134,134 188,875
Tax losses carried forward on overseas operating loss at 12.5% 112,648 101,952
Lower tax rates on overseas loss 157,707 146,667
Adjustment in respect of prior years - (18,225)
Current tax credit/charge for period 69,780 (19,818)
6 Loss for the financial period
The parent company has taken advantage of section 230 of the Companies Act 1985
and has not included its own profit and loss account in these financial
statements. The parent company's loss for the period was �4,552,594 (2006 (as
restated): �230,401).
7 Loss per share
The calculation of the basic earnings per share is based on the loss
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the period.
Reconciliation of the earnings and weighted average number of shares used in the
calculations are set out below.
2007
Weighted average Per share
Loss number of amount
� shares pence
Basic and Diluted Earnings per share
attributable
to ordinary shareholders (2,457,057) 2,787,776,650 (0.0881)
7 Loss per share (continued)
2006
Per share
Loss Weighted average Amount
restated number of restated
� shares pence
Basic and Diluted Earnings per share (1,820,761) 2,022,624,077 (0.0900)
attributable to ordinary shareholders
There is no dilutive effect on the loss per share as a result of the issue of
options and consequently this has not been shown.
8 Intangible fixed assets
The group Goodwill on
consolidation Patents Total
� � �
Cost
At 1 July 2006 7,402,923 243,408 7,646,331
Additions - 9,890 9,890
Disposals (79,202) (79,202)
Foreign exchange differences - (6,150) (6,150)
At 30 June 2007 7,402,923 167,946 7,570,869
Amortisation/impairment
At 1 July 2006 (2,289,137) (75,832) (2,364,969)
Amortisation in the year (370,280) (34,330) (404,610)
Impairment during the year (826,482) - (826,482)
Written back on disposals - 46,651 46,651
Foreign exchange differences - 1,970 1,970
At 30 June 2007 (3,485,899) (61,541) (3,547,440)
Net book amount at 30 June 2007 3,917,024 106,405 4,023,429
Net book amount at 30 June 2006 5,113,786 167,576 5,281,362
The impairment of �826,480 noted above represents an impairment in respect of
Auvation Limited of �2,076,480 and a reversal of previous impairments of
�1,250,000 in respect of EiRx Therapeutics Limited. The impairment has been
reversed as a result of scientific developments during the year and the
partnership with Professor Anita Macguire which have resulted in increased
forecast cash flows.
9 Tangible fixed assets
The group Leasehold Laboratory Office
property equipment equipment Total
� � � �
Cost
At 1 July 2006 212,479 360,999 61,202 634,680
Additions - 354 749 1,103
Foreign exchange differences (5,698) (1,743) (1,642) (9,083)
At 30 June 2007 206,781 359,610 60,309 626,700
Depreciation
At 1 July 2006 (51,655) (335,602) (54,786) (442,043)
Provided in the period (8,280) (21,160) (2,738) (32,178)
Foreign exchange differences 1,394 15,084 1,472 17,950
At 30 June 2007 (58,541) (341,678) (56,052) (456,271)
Net book amount at 30 June 2007 148,240 17,932 4,257 170,429
Net book amount at 30 June 2006 160,824 25,397 6,416 192,637
Included above are assets held under finance lease with a net book value of
�3,699 (2006: �6,196). Depreciation changed in respect of such assets amounted
to �2,337 (2006: �2,389)
The company holds no intangible fixed assets.
10 Fixed asset investments
The company Shares in Loan to
subsidiary subsidiary
companies company Total
� � �
Cost
At 1 July 2006 and 30 June 2007 6,511,149 1,300,797 7,811,946
Amounts written off
At 1 July 2006 3,304,362 - 3,304,362
Impairment in the year 823,790 - 823,790
At 30 June 2007 4,128,152 - 4,128,152
Net book amount
At 30 June 2007 2,382,997 1,300,797 3,683,794
At 30 June 2006 3,206,787 1,300,797 4,507,584
The investments in EiRx Therapeutics Limited and Auvation Limited have been
impaired to the directors' estimate of market value.
10 Fixed asset investments (continued)
The loan to the subsidiary company is governed by loan notes issued by the
subsidiary that carry interest at 4% per annum and are redeemable either by the
company at any time after 2 January 2009 or by the subsidiary on 2 January
2014.
At 30 June 2007 the group held 20% or more of the allotted share capital of the
following:
Subsidiary undertaking Country of Class of share Proportion Nature of
capital held
incorporation held business
Auvation Limited Scotland Ordinary shares 100% Research into drugs
EiRx Therapeutics Limited Ireland Ordinary shares 98.4% Research into
apoptosis
11 Stocks
2007 2006
� �
Research materials and consumable stores 16,563 20,965
12 Debtors
The group The company
2007 2006 2007 2006
� � � �
Amounts due on calls on shares 50,000 100,000 50,000 100,000
Amount due from subsidiary undertakings - - - 2,443,811
Trade debtors 10,175 2,666 - -
Other debtors - 18,694 - 18,694
Corporation tax recoverable 659 - - -
VAT recoverable 7,134 31,067 2,608 10,286
Prepayments and accrued income 30,394 15,393 13,814 6,484
98,362 167,820 66,422 2,579,275
In the company, �nil (200 6:�2,443,811) of amounts due from subsidiary
undertakings is considered to be due after more than one year.
13 Creditors: amounts falling due within one year
The group The company
2007 2006 2007 2006
� � � �
Bank overdraft - 2,704 - -
Other loan - 257,250 - 257,250
Trade creditors 148,922 321,824 37,306 86,667
Corporation tax payable - 1,616 - -
Social security and other taxes 27,341 38,105 32 -
Accruals 152,117 149,509 92,018 86,565
Amounts due under finance leases 565 6,995 - -
328,945 778,003 129,356 430,482
14 Creditors: amounts falling due in more than one year
The group The company
2007 2006 2007 2006
� � � �
Amounts due under finance leases - 433 - -
15 Commitments under finance leases and hire purchase agreements
Future commitments under finance leases and hire purchases agreements are as
follows:
The group The company
2007 2006 2007 2006
� � � �
Amounts payable within 1 year 565 6,995 - -
Amounts payable between 1 and 2 years - 433 - -
565 7,428 - -
16 Share-based payments
Equity-settled share-based payments
The Group has a share option scheme for all employees (including directors).
Options are exercisable at a price equal to the average market price of the
company's shares on the date of grant. The vesting period is 3 years. The
exercise of options is also dependent on eligible executives meeting performance
criteria. The options are settled in equity once exercised.
If the options remain unexercised after a period of 10 years from the date of
grant, the options expire. Options are forfeited if the employee leaves the
company before the options vest.
Details of the number of share options and the weighted average exercise price
(WAEP) outstanding during the year are as follows:
2007 2006
WAEP WAEP
No � No �
Outstanding at the beginning of the year 2,585,561 - 5,904,305 0.07
Forfeited during the year - - (3,318,744) 0.07
Outstanding at the end of the year 2,585,561 0.07 2,585,561 0.07
Exercisable at the year end 2,585,561 0.07 2,585,561 0.07
No options were granted, exercised or expired in the current or prior year.
The fair values were calculated using the Black-Scholes Pricing Model. The
inputs into the model were as follows:
2005:
During the year the following options were granted:
Date of Weighted Weighted
issue Weighted average average
average exercise Expected fair
Number share price Expected Expected Risk free dividend value at
granted price volatility life rate yield grant date
No. � � % Years % % �
19 Jan 04 5904305 0.07 0.07 70 6.5 4.709 - 0.04781
Expected volatility was determined by calculating the historical volatility of
the company's share price over the previous 5 years. The expected life used in
the model has been adjusted, based on the management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural
considerations.
The company recognised total expenses of �23,000 (2006: credit of �35,000)
related to equity-settled share-based payment transactions during the year.
17 Share capital
2007 2006
� �
Authorised
5,000,000,000 ordinary shares of 0.2 pence each 10,000,000 10,000,000
Allotted, called up and fully paid
2,975,742,760(2006: 2,485,174,050) ordinary shares of 0.2 pence each 5,951,486 4,970,348
Convertible debt considered to be equity 306,000 -
On 31 August 2006, 40,568,710 shares were issued and allotted to the landlord of
the Group's Cork premises at a price of 0.2 pence per share in settlement of
rent arrears on space that had been vacant until that date. The shares issued
amounted to �81,137.
On 31 October 2006, a placing of shares resulted in the issue and allotment of
200,000,000 shares at of 0.25 pence per share. The funds raised amounted to
�500,000 and expenses of the issue of �25,000 were charged against the Share
Premium account.
On 4 January 2007, a placing of shares resulted in the issue and allotment of
250,000,000 shares at par value of 0.2pence per share. The funds raised amounted
to �500,000 and expenses of the issue of �25,000 were charged against the Share
Premium account.
The Company has issued Convertible Loan Notes to EiRx Pharma Limited totalling
�306,000. The Company has been informed by EiRx Pharma Limited that it intends
to convert the principal amount of the loan into equity at the time and price at
which the next issue and allotment of shares is made by the Company. As a
result the directors consider that the debt element of the convertible loan
notes is not material. The directors have therefore treated the whole amount as
equity, and transferred the amount from creditors during the year. Interest is
payable on the loan at a rate of 5% per annum beginning on 1 July 2006 with the
first interest payment due on 31 December 2007.
18 Share premium account and reserves
The group Share Share based Exchange Profit and
premium Merger compensation Translation loss
account reserve reserve Reserve account
� � � � �
Restated Restated
At 1 July 2006 1,537,542 2,999,768 100,925 (19,703) (4,406,858)
Retained loss for the year - - - - (2,457,057)
Exchange differences - - - 83,519 -
Premium on allotments during the year 100,000 - - - -
Issue costs (50,000) - - - -
Share options amortisation - 22,690 - -
Transfer to profit and loss account - - - - -
At 30 June 2007 1,587,542 2,999,768 123,615 63,816 (6,863,915)
18 Share premium account and reserves (continued)
The company Share Share based Profit and
premium Merger compensation loss
account reserve reserve account
� � � �
Restated Restated
At 1 July 2006 1,537,542 2,171,712 100,925 (1,851,150)
Retained loss for the year - - - (4,552,594)
Premium on allotments during the year 100,000 - - -
Issue costs (50,000) - - -
Share options amortisation - - 22,690 -
Transfer to profit and loss account - - - -
At 30 June 2007 1,587,542 2,171,712 123,615 (6,403,744)
19 Reconciliation of movements in shareholders funds
2007 2006
� �
Restated
Loss for the financial year (2,457,057) (1,820,761)
Other recognised gains and losses 83,519 (81,917)
Share based payments 22,690 (35,449)
Convertible loan notes, recognised as equity 306,000 -
Issue of shares, net of costs 1,031,138 1,195,227
Net reduction in shareholders' funds (1,013,710) (742,900)
Shareholders' funds at 30 June 2006 5,182,022 5,924,922
Shareholders' funds at 30 June 2007 4,168,312 5,182,022
20 Net cash outflow from operating activities
2007 2006
� �
Restated
Operating loss (2,520,933) (1,796,910)
Exchange differences 78,832 (93,024)
Depreciation, amortisation and write-off of patents 66,508 452,099
Loss on sale of patents 32,551 -
Impairment of goodwill 1,196,762 -
Share based compensation costs 22,690 (35,449)
Decrease/(increase) in stock 4,402 (159)
Decrease in debtors 68,799 431,434
Decrease in creditors (181,058) (43,261)
Net cash outflow from operating activities (1,231,447) (1,085,270)
21 Reconciliation of net cash flow to movement in net funds
2007 2006
� �
Restated
Net cash (outflow)/inflow for the year (106,496) 269,980
Repayment of finance leases and hire purchase agreements 6,863 10,802
Cash inflow in respect of convertible loan (48,750) (257,250)
Movement in net funds from cash flows (148,383) 23,532
Transfer of convertible loan to equity 306,000 -
Movement in net funds for the year 157,617 23,532
Net funds at 1 July 2006 30,292 6,760
Net funds at 30 June 2007 187,909 30,292
22 Analysis of changes in net funds
At 1 July Non-cash At 30 June
2006 Cash flow items 2007
� � � �
Cash at bank and in hand 297,674 (109,200) - 188,474
Bank overdraft (2,704) 2,704 - -
Finance leases (7,428) 6,863 - (565)
Convertible loan (257,250) (48,750) 306,000 -
Net funds 30,292 (148,383) 306,000 187,909
23 Financial instruments
The group uses financial instruments, other than derivatives, comprising
borrowings, cash on deposit and in current accounts and other items, such as
trade debtors, trade creditors, etc. that arise directly from its operations.
The main purpose of these financial instruments is to raise finance for the
group's operations.
The group also enters into derivatives transactions such as forward rate
agreements and forward foreign currency contracts. The purpose of such
transactions is to manage the currency risks arising from the group's operations
and its sources of finance.
The main risk arising from the group financial instruments is currency risk.
The board reviews and agrees policies for managing each of these risks and they
are summarised below.
All transactions in derivatives, principally forward foreign currency contracts,
are undertaken to manage the risks arising from underlying business activities
and no transactions of a speculative nature are undertaken.
It is and has been throughout the period under review, the group policy that no
trading in financial instruments shall be undertaken.
23 Financial instruments (continued)
Interest rate risk
The group has financed its operations to date from cash raised from issues of
shares. Cash surplus to immediate requirements is placed on interest bearing
deposit with the group's bankers.
The table below shows the extent to which the group had cash on deposit and in
current accounts and the rates of interest applicable to deposits at 30 June
2007.
At 30 June 2007
Deposit at 30 day Current
Functional currency of operation call deposits accounts Total
� � � �
Sterling (note 1) 99,470 - 56,687 156,157
Euro (note 2) 1 - 32,286 32,287
99,471 - 88,973 188,444
At 30 June 2006
Deposit at 30 day Current
Functional currency of operation call deposits accounts Total
� � � �
Sterling (note 1) 274,991 - - 274,991
Euro (note 2) 22,683 - - 22,683
297,674 - - 297,674
Note 1: As at 30 June 2006 & 2007, the sterling deposit at call was at a rate of
1% being LIBOR minus 3.5%. Deposit interest rates depend on both LIBOR and the
value of funds on deposit.
Note 2: As at 30 June 2006 & 2007, the Euro 30-day deposit was at a rate of
1.68% being 30 day EURIBOR minus 0.4%. The rate of interest depends on both
EURIBOR and the value of funds on deposit.
Liquidity risk
The group seeks to manage financial risk by ensuring sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably.
Currency risk
The group does not hedge its exposure of foreign investments held in foreign
currencies.
The group is exposed to translation and transaction foreign exchange risk. In
relation to translation risk, assets held in foreign currency are currently left
exposed. Transaction exposures are hedged when known, mainly using the forward
hedge market.
The group seeks to hedge its exposures using a variety of financial instruments,
with the objective of minimising fluctuations in exchange rates on future
transactions and cash flows.
23 Financial instruments (continued)
The table below shows the extent to which group companies had monetary assets
and liabilities in currencies other than their local currency. Foreign exchange
differences on retranslation of these assets and liabilities are taken to profit
and loss account of the group companies and the group.
At 30 June 2007
Functional currency of operation Sterling US Dollar Euro Total
� � � �
Sterling - - - -
Euro 3,618 9,105 - 12,723
3,618 9,105 - 12,723
At 30 June 2006
Functional currency of operation Sterling US Dollar Euro Total
� � � �
Sterling - - 446 446
Euro 1,800 24,065 - 25,865
1,800 24,065 446 26,311
The fair value of the financial instruments is not considered to be materially
different from the book values shown.
24 Leasing commitments
Land and buildings
2007 2006
� �
Between two and five years 440,040 478,332
In five years or more 1,407,752 1,793,744
1,847,792 2,272,076
25 Capital commitments
Neither the group nor the company had any capital commitments at 30 June 2007 or
30 June 2006.
26 Contingent liabilities
There were no contingent liabilities at 30 June 2007 or 30 June 2006.
27 Retirement benefits
Defined Contribution Pension Scheme
The group operates a defined contribution pension scheme for the benefit of the
employees and full-time executive directors of EiRx Therapeutics Limited. The
assets of the scheme are administered by trustees in a fund independent from
those of the group.
The contributions of the company and its subsidiary undertakings and employees
will remain at 7% and 5% of earnings respectively.
28 Post balance sheet events
Since the year-end the Company has arranged an overdraft facility with its
bankers in the amount of �200,000 to fund working capital pending a proposed
issue and allotment of new shares. The overdraft facility is secured on the
assets of the group and repayment is guaranteed by Peter Hoskins, a significant
shareholder in the Company.
On 5 December 2007, an extraordinary general meeting was held at which
shareholders approved the reorganisation of the companies share capital
including the division of each issued EiRx Therapeutics plc ordinary share of
0.2p each into one ordinary share of 0.001p and one deferred share of 0.199p and
the division of each unissued share of 0.2p into 200 ordinary shares of 0.001p.
The redesignated ordinary shares were re-admitted to AIM on 6 December 2007.
29 Transactions with directors and other related parties
Included in directors' remuneration in note 4 to the financial statements are
payments to third parties as follows:
(i) 28,000 (2006: �31,050) was paid to Wellbeach Associates, a partnership in
which John
Pool has an interest.
(ii) 23,265 (2006: �29,607) was paid for scientific consultancy to Prof.
Thomas Cotter.
(iii) �32,400 (2006: �22,662) was paid to Nicholas Strong Consulting Limited,
a business in
which Nicholas Strong is the owner, for financial consultancy.
(iv) Nil (2006: �68,102) was paid to Prof. Michael Fowler for his services as
Executive Deputy Chairman.
In each case, the directors are responsible for their own tax and national
insurance in respect of such fees and have indemnified the company and its
subsidiary accordingly.
Except as disclosed above, no director or other related party had a loan from
the company at any time during the year.
30 Ultimate holding company
No other corporate entity holds a majority of the issued shares in the capital
of this company. Therefore, the largest and smallest entity in which the
company's results are consolidated is that represented by these financial
statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FEMFISSWSEIE
Grafico Azioni Eirx Therapeutics (LSE:ERX)
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Da Mag 2024 a Giu 2024
Grafico Azioni Eirx Therapeutics (LSE:ERX)
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