RNS Number:5675G
Norwood Immunology Ld
30 October 2007
FOR IMMEDIATE RELEASE 30 OCTOBER 2007
NORWOOD IMMUNOLOGY LIMITED
PRELIMINARY RESULTS
For The Year Ended 30 June 2007
Norwood Immunology Limited and its subsidiaries ('Norwood Immunology' or 'the
Group') (AIM:NIM), the group focused on the rejuvenation of the immune system
and the development of virosomal vaccines, today announces its preliminary
consolidated results for the year ended 30 June 2007.
Financial Highlights
* The consolidated loss after tax for the year ended 30 June 2007 was
A$4,863,767 (2006: A$6,714,549), approximately #2 million (2006: #2.8
million).
* Consolidated cash balances as at 30 June 2007 was A$5,720,438 (2006:
A$237,805), approximately #2.2 million (2006: #0.1 million).
* Basic loss per share of -A$0.026 (2006: -A$0.054), approximately -#0.011
(2006: -#0.022).
All amounts expressed in pounds sterling have been converted, on a proforma
basis, at the 30 June 2007 rate of A$1:#0.4235 (2006: A$1:#0.4021).
On 27 November 2006, the Group completed a #6.6m ($16.8m) fundraising before
expenses, with the issue and placement of 55,000,000 ordinary shares. The funds
raised have been used to advance the Group's clinical development plans and as
part consideration for the contemporaneous acquisition (the 'Acquisition') of
all of the issued shares of Bestewil Holding B.V. (Bestewil) and its 100%
subsidiary Virosome Biologicals B.V. ('Virosome Biologicals'), both of which are
incorporated in the Netherlands.
The total consideration for the Acquisition, comprised 48,014,489 ordinary
shares in Norwood Immunology as part consideration and cash of Euro3.7m (A$6.2m),
Euro0.225m (A$0.4m) which was paid prior to completion, Euro3m (A$5m) of paid on
completion and Euro0.5m (A$0.8m) being deferred until 27 May 2008, with rolled up
interest payable on the deferred amount at 6% per annum.
Corporate Development
* In November 2006, the Group completed its first acquisition of Bestewil
and its wholly owned subsidiary Virosome Biologicals.
* Virosome Biologicals is currently developing and commercialising a
proprietary platform technology for vaccines. The technology and associated
intellectual property is based upon the combination of an adjuvant with
virosomes to achieve an enhanced immune response to an antigen challenge and
an improved process for their manufacture.
Commercial Development
* Overall progress in achieving the Group's aims has been slower
than had been hoped during the year, principally as a result of delays in trial
commencement or recruitment, rather than any technology setbacks. Action to
address these delays is being taken by management, as far as this is within the
Company's control.
* Norwood Immunology has a development pipeline with one Phase II pilot
clinical study already completed in Melbourne, two clinical trials in Phase
II and one that it is hoped will enter Phase II in 2008. It also has an
out-licensing deal for each of its core technology platforms; for immune
system rejuvenation with TAP Pharmaceutical Products, Inc. the US market
leader in GnRH analogues; and, in respect of Virosome Biologicals a license
with Solvay to use the virosome adjuvant technology in an intranasal flu
vaccine.
Immunology
* The Group has two Phase II trials ongoing in the US. Firstly, a Phase II
clinical trial in collaboration with The University of Texas MD Anderson
Cancer Center, of Houston. This trial involves GnRH analogue Lupron Depot(R)
being administered as an adjunctive immunology therapy with an experimental
melanoma vaccine, to determine whether an enhanced immune response to that
vaccine can be created. It is expected to involve up to 100 patients (50
treated; 50 control). Recruitment is progressing and interim results of the
first 50 patients are expected in 2008.
* Secondly, a Phase II clinical trial in cancer patients undergoing
autologous (self-derived) BMT in the USA. The trial comprises an 80 patient
double-blind randomized Phase II clinical trial (40 treated; 40 control) at
the University of Texas M D Anderson Cancer Center and the Dana-Farber
Cancer Institute, Harvard Medical School. The aim is to determine whether
there is enhanced immune recovery as a result of using Norwood Immunology's
technology.
* Recruitment in the BMT trial has been progressing slower than
anticipated. Accordingly, in conjunction with our trial partners, we have
taken action to expand the active trial centres and five additional US
centres are being added so as to speed the recruitment process.
* The Group continues to conduct the majority of its research on the
immune system at the laboratories of Professor Richard Boyd, at Monash
University, Melbourne, Australia. Through these laboratories the Group has
sought collaborations with other institutions and grants to maximise the
benefit received from the Group's sponsorship of the Boyd laboratory. This
strategy has enabled the net cost of our research into the immune system to
be significantly reduced, whilst enabling us to continue to benefit from the
intellectual property created as a result of a significantly enhanced total
research budget.
* In 2006 the Group announced a collaborative project with the Australian
Stem Cell Centre ('ASCC'), to form an important new technology platform
combining immune system research with stem cell know-how. This jointly
funded research has been continued for 2007 and the intellectual property
that results will be jointly owned by the ASCC and the Group.
* In October 2006, Monash University was awarded an A$5.23 million
programme grant through the National Health and Medical Research Council's
Programs scheme to sponsor research that will combine stem cell therapies
with a rebuilding of a key part of the immune system -- the thymus -- to
treat diseases such as autoimmune gastritis, multiple sclerosis and
diabetes. A significant element of this grant will fund work undertaken in
the Boyd laboratory, and the intellectual property arising will have direct
benefit to the Group and its partner, the ASCC.
Virosomal vaccines
* Virosome Biologicals' adjuvanted virosome technology is licensed to
Solvay specifically in the field of intranasal influenza vaccines. Solvay is
responsible for clinical trials and development and commercialising of the
vaccine. It successfully concluded a Phase I clinical trial in 2006. The
vaccine was found to be safe and well tolerated. Solvay has advised that it
intends to progress the vaccine into Phase II clinical trials which the
Group now believes will commence in 2008. The commencement date has been
delayed compared with original expectations. The delay is unfortunately out
of the Company's control given the trial conduct and timetable are the
responsibility of the licence partner.
* Following completion of pre-clinical studies, Virosome Biologicals, are
also currently seeking to enter an out-licensing of both their intramuscular
flu and Respiratory Syncytial virus ('RSV') programs. RSV is a severe
respiratory infection particularly prevalent in the elderly and pre-term
babies.
* During the first 6 months of 2007, Virosome Biologicals has established
a small commercial research laboratory in Lieden to progress its pre-clincal
research development programs including RSV, Herpes strain vaccines and the
use of virosomes for efficient and efficacious delivery of RNAi. Virosome
Biologicals is exploring partnerships with companies in the RNAi field to
seek commercial opportunities for its delivery technology and is currently
undertaking its first pre-clinical research collaboration in the field.
* Virosome Biologicals has also entered into two research collaborations
with leading academic institutions in the Netherlands, which are
substantially supported by grant funding:
- As a member of a consortium supported by Top Institute Pharma, a
Dutch public-private partnership aimed at supporting consortia of industrial and
academic research teams with expertise in the fields of virology, immunology and
vaccine development, Virosome Biologicals is participating in a new and
promising research project developing intervention strategies for RSV infection.
This collaborative research will be undertaken primarily at University Medical
Center Groningen (UMCG) and will be based upon Virosome Biologicals' core
technologies relating to the manufacture and application of adjuvanted virosomes
to the development of a RSV vaccine.
- The second collaboration relates to the development of stable
virosome formulations for vaccination and delivery of nucleic acids, again in
collaboration with UMCG, but in this instance financially supported by The
Netherlands Technology Foundation. Producing vaccines in a stable dry
formulation has significant implications for shelf life, storage and usability
in a commercial context.
- In respect to both these collaborations, the Group has access to, and
rights to acquire, intellectual property that may be developed for commercial
purposes.
Richard Williams, CEO of Norwood Immunology commented: 'The last 12 months have
been another important period for the Group as we have absorbed the activities
of Bestewil and its subsidiary Virosome Biologicals following the Acquisition.
Overall, progress has been slower than expected, largely as a result of delays
in trial commencement and recruitment and corrective action to mitigate this is
being taken wherever possible. The enlarged group now has research capabilities
in Europe and Australia, a joint intellectual property portfolio and a combined
suite of clinical trials, including two currently in Phase II, and one which it
is hoped will commence in 2008, all of which provides the potential for a range
of commercial development and out-licensing opportunities within the field of
immunology, vaccines and RNAi delivery. We are focussed on advancing the
clinical programs working towards milestones and progressing our
commercialisation and associated out-licensing opportunities during 2007/08.'
For further information contact:
Richard Williams, Chief Executive Officer, Norwood Immunology Limited
www.norwoodimmunology.com
+44 (0)7860 295153
Lisa Baderoon, Mark Court, Mary-Jane Johnson, Buchanan Communications
+44 (0)207 466 5000
Capel Irwin, Nicholas Marren, KBC Peel Hunt Ltd
+44 (0)207 418 8900
CHAIRMAN'S STATEMENT
It is with pleasure that we present Norwood Immunology's preliminary results for
the year ended 30 June 2007.
Background
The Norwood Immunology group is focused on creating, manipulating and activating
the immune system. The Group's principle activities are developing and
commercialising technologies and intellectual property associated with the
rejuvenation of the immune system (involving the re-growth of the thymus,
generation of T cells and improved bone marrow function) and the development of
adjuvanted virosomal vaccines. The Group is pursuing these technologies in
research programs, clinical trials and commercial partnerships.
Norwood Immunology has identified a number of clinical contexts in which
rejuvenating the thymus and the immune system could confer significant clinical
benefits on patients, including oncology, therapeutic vaccines and achieving
tolerance of transplanted organs or stem cells; with longer-term plans for viral
diseases, autoimmune diseases and HIV/AIDS.
The Group had previously announced its intention to pursue value enhancing
opportunities through partnering or mergers and acquisitions with projects or
companies to secure development technologies, marketed products and/or marketing
and development companies. These opportunities are focussed on broadening the
technology base in immunology and related therapeutic fields.
Overall progress in achieving the group's aims has been slower than had been
hoped during the year, principally as a result of delays in trial commencement
or recruitment rather than any technology setbacks. Action to address these
delays is being taken by management, as far as this is within the Company's
control.
Corporate Development
During the year, the Group completed the acquisition of Bestewil and its wholly
owned subsidiary Virosome Biologicals.
Virosome Biologicals is developing and commercialising a proprietary platform
technology for vaccines. The technology and associated intellectual property is
based upon the combination of an adjuvant with virosomes to achieve an enhanced
immune response to an antigen challenge, and an enhanced process for their
manufacture.
The virosome technology is a proprietary platform technology, principally for
vaccines. Virosomal vaccines are already on the market, but Virosome
Biologicals' technology produces vaccines with significantly greater efficacy,
that are better targeted to the relevant part of the immune system through the
incorporation of an adjuvant into the virosome. The technology is based on
intellectual property relating to a new method of making virosomes as well as
the combination of an adjuvant (immune response stimulator) in the membrane of
the virosome that targets them specifically to antigen presenting cells or B
cells.
The Group believes that this technology will result in a significantly enhanced
immune response to an antigen challenge which may, therefore, offer greatly
improved efficiency in comparison with other existing virosome technologies that
are in the market.
Virosome Biologicals' adjuvanted virosome technology has its first out-license
in the field of intranasal influenza vaccines with Solvay Pharmaceuticals B.V.
("Solvay"), with milestones and royalties payable to Virosome Biologicals as the
clinical development and commercialisation programme progresses. Solvay is
responsible for clinical trials and development and commercialising of the
vaccine. Having successfully completed a phase I trial in May 2006 Solvay are
progressing the program into a Phase II trial, which is now expected to commence
in 2008. This commencement date is a delay compared with original expectations,
which unfortunately is out of the Company's control given the trial conduct and
timetable are the responsibility of its licence partner.
In addition to vaccine applications, Virosome Biologicals has developed
expertise in RNA interference (RNAi). RNAi represents a novel approach to
"silence" disease relevant genes and could generate a completely new class of
therapeutic products. One of the main barriers to the clinical development of
RNAi is the ability to deliver RNAi molecules to the relevant target in the
body. Virosome Biologicals has demonstrated in pre-clinical research the use of
virosomes for efficient and efficacious delivery of RNAi and holds a patent on
RNAi delivery via virosomes. Accordingly, Virosome Biologicals is exploring
partnerships with companies in the RNAi field to seek commercial opportunities
for its delivery technology and is currently undertaking its first pre-clinical
research collaboration in the field.
The enlarged group now has research capabilities in Europe and Australia, a
joint intellectual property portfolio and a combined suite of clinical trials,
all of which provides the potential for a range of commercial development and
out-licensing opportunities within the field of immunology, vaccines and RNAi
delivery.
In the course of the year, the Company evaluated a number of other potential
commercial collaborations, acquisitions and/or mergers, but concluded that none
of these potential commercial opportunities was in the best interests of
shareholders. The Group continues to look for further opportunities to enhance
shareholder value through mergers or acquisitions.
Commercial Development
Norwood Immunology has a strong development pipeline with one Phase II pilot
clinical study already completed in Melbourne, two clinical trials in Phase II
and one that is hoped will enter Phase II in 2008. It already has in place an
out-licensing deal for each of its core technology platforms; for immune system
rejuvenation with TAP Pharmaceutical Products, Inc., the US market leader in
GnRH analogues; and, in respect of Virosome Biologicals a license with Solvay to
use the virosome adjuvant technology in an intranasal flu vaccine.
Immunology
In November 2005, the Group commenced a Phase II clinical trial in collaboration
with The University of Texas M D Anderson Cancer Center, of Houston, to
determine whether an enhanced vaccine response can be achieved by using the
Group's therapy to increase thymic activity and the output and function of
T-cells via sex steroid suppression using the GnRH analogue Lupron Depot(R).
This study is differentiated from the bone marrow transplant ("BMT") work
discussed below, in that the aim is to modify the course of cancer using a
specific vaccine as opposed to looking at general immune system enhancement.
The trial involves Lupron Depot(R) being administered as an adjunctive
immunology therapy with an experimental melanoma vaccine, to determine whether
an enhanced immune response to that vaccine can be created. It is expected to
involve up to 100 patients (50 treated; 50 control). Recruitment is progressing
and interim results of the first 50 patients are expected in 2008.
In February 2006, the Group announced the commencement of a Phase II clinical
trial in cancer patients undergoing autologous (self-derived) BMT in the USA.
The trial comprises an 80 patient double-blind randomized Phase II clinical
trial (40 treated; 40 control) at the University of Texas M D Anderson Cancer
Center and the Dana-Farber Cancer Institute, Harvard Medical School. The trial
is a collaborative effort with a consortium of leading cancer clinicians and
institutes, co-funded by the National Cancer Institute and the National
Institute of Allergy and Infectious Diseases.
The trial is being conducted in patients receiving high dose myeloablative
chemotherapy therapy and autologous haemopoietic stem cell transplants (HSCT),
more commonly referred to as BMT, for the treatment of Hodgkin's disease,
non-Hodgkin's lymphoma or multiple myeloma. The aim is to determine whether
there is enhanced immune recovery as a result of using Norwood Immunology's
technology.
It has been disappointing that recruitment has progressed at a slower rate than
was originally anticipated. In order to endeavour to increase recruitment and
obtain data at the earliest possible opportunity, and in conjunction with our
trial partners, the Group has expanded the number of active trial centres. Five
additional US centres are being added: Duke University, Memorial
Sloane-Kettering, Washington University, Ohio State and University of Florida.
The Group continues to conduct the majority of its research on the immune system
at the laboratories of its Chief Scientific Officer (Immunology), Professor
Richard Boyd, at Monash University, Melbourne, Australia. Under the terms of an
agreement between Monash and the Group, relevant intellectual property developed
in the Boyd laboratory at Monash is assigned to the Group.
The Group has continued our strategy of seeking collaborations with other
institutions and of applying for grants to maximise the benefit received from
the Group's sponsorship of the Boyd laboratory. This strategy has enabled the
net cost of our research into the immune system to be significantly reduced,
whilst enabling us to continue to benefit from the intellectual property created
as a result of a significantly enhanced total research budget at the Boyd
laboratory.
In 2006 the Group announced a collaborative project with the Australian Stem
Cell Centre ('ASCC'), to form an important new technology platform combining
immune system research with stem cell know-how. The research focuses on
controlling the immune system to minimise rejection of stem cell therapies
introduced into the body. Immune rejection stands as one of the major hurdles
facing stem cell researchers in developing potential clinical treatments and
hence this research may enable the successful engraftment of stem cells to
repair organs and tissues that are damaged as a result of disease processes.
This collaborative, jointly funded research has been continued for 2007; the
intellectual property that results from the work will be jointly owned by the
ASCC and the Group.
In October 2006, Monash University was awarded an A$5.23 million programme grant
through the National Health and Medical Research Council's Programs scheme to
sponsor research that will combine stem cell therapies with a rebuilding of a
key part of the immune system -- the thymus -- to treat diseases such as
autoimmune gastritis, multiple sclerosis and diabetes. A significant element of
this grant will fund work undertaken in the Boyd laboratory, and the
intellectual property arising will have direct benefit to the Group and its
partner, the ASCC.
The ability to attract these grants is a testament to the innovative research
being pursued at Monash and the high regard in which the Boyd laboratory is held
by the scientific community.
Virosomal Vaccines
Virosome Biologicals' adjuvanted virosome technology is licensed to Solvay
specifically in the field of intranasal influenza vaccines, with milestones and
royalties payable to Virosome Biologicals as the clinical development and
commercialisation programme progresses. Solvay is responsible for clinical
trials and development and commercialising of the vaccine. It successfully
concluded a Phase I clinical trial with the intranasal influenza vaccine,
triggering a milestone payment of Euro500,000 (approximately A$834,168) to Virosome
Biologicals in 2006. The vaccine was found to be safe and well tolerated. Unlike
certain other nasal flu vaccines, this trial does not use live influenza virus.
Solvay previously advised that they planned to progress the vaccine into Phase
II clinical trials. These trials have not commenced as quickly as originally
envisaged but are expected to commence in 2008 a year later than had originally
been hoped at the time of acquisition.
Following completion of pre-clinical studies, Virosome Biologicals, are also
currently seeking to enter an out-licensing of both their intramuscular flu and
Respiratory Syncytial virus ('RSV') programs.
During the first 6 months of 2007 Virosome Biologicals has established a small
commercial research laboratory in Lieden to progress its pre-clincal research
development programs. These include RSV, Herpes strain vaccines and the use of
virosomes for efficient and efficacious delivery of RNAi, a technology over
which it also has intellectual property. Virosome Biologicals is already
exploring partnerships with companies in the RNAi field to seek commercial
opportunities for its delivery technology and is currently undertaking its first
pre-clinical research collaboration in the field.
Furthermore, during 2007, Virosome Biologicals has entered into two research
collaborations with leading academic institutions in the Netherlands, which are
substantially supported by grant funding. The ability to attract grant funding
in furtherance of its development program allows it to leverage its core
intellectual property and expertise in the field of virosomal vaccines with
financial and resource input from other leaders in the field.
As a member of a consortium supported by Top Institute Pharma, a Dutch
public-private partnership aimed at supporting consortia of industrial and
academic research teams with expertise in the fields of virology, immunology and
vaccine development, Virosome Biologicals is participating in a new and
promising research project developing intervention strategies for RSV infection.
RSV is a severe respiratory infection particularly prevalent in the elderly and
pre-term babies. This collaborative research will be undertaken primarily at
University Medical Center Groningen (UMCG) and will be based upon Virosome
Biologicals' core technologies relating to the manufacture and application of
adjuvanted virosomes to the development of a RSV vaccine.
The second collaboration relates to the development of stable virosome
formulations for vaccination and delivery of nucleic acids, again in
collaboration with UMCG, but in this instance financially supported by The
Netherlands Technology Foundation. The ability to produce vaccines in a stable
dry formulation has significant implications for shelf life, storage and
usability in a commercial context and could hold important benefits for the
Group's vaccine development strategy.
In respect to both these collaborations, the Group has access to, and rights to
acquire, intellectual property that may be developed for commercial purposes.
INTELECTUAL PROPERTY DEvELOPMENT
Immunology
Since 30 June 2006, 3 additional patents have been granted across the Group's 13
patent families. Currently, the Group's patent portfolio consists of 22 granted
applications and 87 pending applications.
The granted patents comprise 4 granted patents in the "Improvement of T cell
immunity" patent family and 4 granted patents in the "Treatment of T cell
disorder" patent family. We have also received grant of patents in Singapore,
New Zealand and South Africa in a number of our patent families.
Virosomal Vaccines
Bestewil has 6 patent families with 8 granted applications.
With respect of the core lipopeptide patent, Bestewil first patent has been
granted in the field of virosome vaccination, in South-Africa. The patent
derives from PCT patent family "Functionally reconstituted viral membranes
containing adjuvant".
The South-African patent office has granted the patent with 15 claims, relating
to the production of virosomes containing adjuvant. The main claims concern
virosomes containing antigens from viruses or other pathogens, combined with
adjuvants that are an integral part of the virosome membrane. The other granted
patents comprise 7 granted for the "Virosome mediated delivery of therapeutic
agents" in Europe.
Financial review
The consolidated loss after tax for the year ended 30 June 2007 was A$4,863,767
(2006: A$6,714,549), approximately #2 million (2006: #2.8 million). Consolidated
cash balances as at 30 June 2007 was A$5,720,438 (2006: A$237,805),
approximately #2.2 million (2006: #0.1 million). All amounts expressed in pounds
sterling have been converted, on a proforma basis, at the 30 June 2007 rate of
A$1:#0.4235 (2006: A$1:#0.4021).
In September 2006, the Group entered into a secured facility agreement with
Indus Opportunity Master Fund, Ltd ('Indus') for A$1 million (the "Loan") to
fund the Group whilst a new capital raising was completed. On 27 October 2006
the facility was extended to up to A$2 million with repayment by no later than
30 June 2008. At the time the facility was extended, Indus was also granted the
option to convert any or all of the outstanding balance in ordinary shares at an
issue price of #0.12 per share. As at 30 June 2007 the loan had been repaid, no
further funds have been drawn down against that facility up to the date of the
accounts.
On 27 November 2006 the Group completed a #6.6m ($16.8m) fundraising before
expenses, with the issue and placement of 55,000,000 ordinary shares.
The funds raised at the time of our admission to AIM, and from the subsequent
issue of shares, have been used to advance the Group's clinical development
plans and as part consideration for the acquisition (the 'Acquisition') of all
of the issued shares of Bestewil Holding B.V. (Bestewil) and its 100% subsidiary
Virosome Biologicals B.V. ('Virosome Biologicals'), both of which are
incorporated in the Netherlands. The total consideration for the Acquisition,
comprised 48,014,489 ordinary shares in Norwood Immunology ("Acquisition
Shares") as part consideration and cash of Euro3.7m (A$6.2m), Euro0.225m (A$0.4m)
which was paid prior to completion, Euro3m (A$5m) of paid on completion and Euro0.5m
(A$0.8m) being deferred until 27 May 2008, with rolled up interest payable on
the deferred amount at 6% per annum.
In accordance with permissible accounting standards for AIM, as set out in AIM
Notice 22, the Group has adopted Australian IFRS for ongoing financial
information with effect from the year ended 30 June 2006.
Summary and Outlook
The Board is disappointed at the delay in the commencement of the Solvay Phase
II clinical study re the virosomal vaccine for intra nasal influenza, and also
at the slow rate of recruitment of patients in respect to its Phase II BMT/
cancer study in the U.S. Nevertheless, the Company has been encouraged by
progress with respect to its Lupron/vaccination Phase II clinical trial in the
U.S., and is hopeful of being in a position to release a report detailing
interim results in the first half of 2008.
Finally, the Board would like to express its appreciation to all our
shareholders for their continued support throughout this period and we look
forward to progressing the Group's clinical development and commercialisation in
2007/08.
Peter Hansen
Chairman
30 October 2007
Consolidated Income Statement
Year ended 30 June 2007
------ --------- ---------
Note 2007 2006
A$ A$
------ --------- ---------
Other income/(expense) 349,554 191,847
Depreciation and amortization expense (23,444) (27,653)
Employee benefits expense (1,473,436) (1,220,998)
Finance costs (202,791) (42,911)
Insurance (83,859) (104,463)
Investor relations (230,829) (184,276)
Legal costs (146,872) (480,391)
Net foreign exchange loss (245,827) -
Former parent entity management fees (80,000) (490,000)
Patent costs (53,946) (18,725)
Professional fees (275,115) (457,969)
Travel expenses (268,342) (307,053)
Research and development costs immediately
expensed (1,044,293) (2,582,211)
Impairment of non-current assets (637,641) -
Change in fair value of financial assets
classified fair value through profit and
loss - (810,630)
Other expenses from ordinary activities (446,926) (179,116)
--------- ---------
Loss before tax (4,863,767) (6,714,549)
Income tax expense - -
--------- ---------
Loss for the year (4,863,767) (6,714,549)
========= =========
Loss per share
Basic 3 (0.026) (0.054)
Diluted 3 (0.026) (0.054)
========= =========
All activities derive from continuing operations.
There are no recognised gains and losses for the current financial year and
preceding financial year other than as stated in the profit and loss account.
Consolidated Balance Sheet
As at 30 June 2007
Note 2007 2006
A$ A$
------ ----------- -----------
Current assets
Cash and cash equivalents 5,720,438 237,805
Trade and other receivables 82,488 18,233
Other 156,359 107,085
----------- -----------
Total current assets 5,959,285 363,123
Non-current assets
Other financial assets 4 11,176 -
Plant and equipment 247,632 7,052
Goodwill 5 2,100,000 -
Other intangible assets 6 22,732,609 5,008,423
----------- -----------
Total non-current assets 25,091,417 5,015,475
----------- -----------
----------- -----------
Total assets 31,050,702 5,378,598
----------- -----------
Current liabilities
Trade and other payables 1,248,147 935,326
Other financial liabilities 7 821,439 1,223,793
Provisions 39,828 76,760
----------- -----------
Total current liabilities 2,109,414 2,235,879
----------- -----------
Non-current liabilities
Provisions 46,762 -
----------- -----------
Total non-current liabilities 46,762 -
----------- -----------
----------- -----------
Total liabilities 2,156,176 2,235,879
----------- -----------
----------- -----------
Net assets 28,894,526 3,142,719
=========== ===========
Equity
Issued capital 8 57,842,753 27,227,179
Other reserve - -
Accumulated losses 8 (28,948,227) (24,084,460)
----------- -----------
Total equity 28,894,526 3,142,719
=========== ===========
Consolidated Cash flow Statement
for the financial year ended 30 June 2007
Note 2007 2006
A$ A$
------ --------- ---------
Cash flows from operating activities
Receipts from customers 123,683 -
Payments to suppliers and employees (3,810,493) (5,418,258)
Interest and other costs of finance paid (175,002) (42,911)
--------- ---------
Net cash used in operating activities 9 (3,861,812) (5,461,169)
--------- ---------
Cash flows from investing activities
Interest received 207,030 154,555
Payment for plant and equipment (256,556) (1,655)
Payment for intangible assets (109,165) (412,881)
Purchase of business 10 (5,242,599) -
Purchase of other financial assets (11,176) -
Payment for investment securities - (810,630)
--------- ---------
Net cash used in investing activities (5,412,466) (1,070,611)
--------- ---------
Cash flows from financing activities
Payment for share issue costs (537,330) -
Proceeds from issue of shares 16,805,945 -
Repayment of borrowings (1,223,793) -
--------- ---------
Net cash provided by financing activities 15,044,822 -
--------- ---------
Net decrease in cash and cash equivalents 5,770,544 (6,531,780)
Cash and cash equivalents at the beginning of
the year 237,805 6,769,585
Effects of exchange rate changes on the
balance of cash held in foreign currencies (287,911) -
--------- ---------
Cash and cash equivalents at the end of the
year 5,720,428 237,805
--------- ---------
NOTES TO THE FINANCIAL INFORMATION
1 Basis of preparation
The figures and financial information for the year ended 30 June 2007 do not
constitute the statutory financial statements within the meaning of section 240
of the Companies Act 1985 but are derived from the audited financial statements.
The financial information for both the years ended 30 June 2007 and 30 June 2006
has been extracted from the audited financial statements for the year ended 30
June 2007. The auditor's report on those accounts was unqualified.
In accordance with permissible accounting standards for AIM, as set out in AIM
Notice 22, the Group has adopted Australian IFRS for ongoing financial
information with effect from the year ending 30 June 2006.
The financial information in this announcement has been prepared on the basis of
Australian IFRS and the accounting policies as set out in the most recently
published set of annual financial statements. The preliminary results and prior
year comparative results have been prepared using accounting policies consistent
with those adopted in the audited financial statements for the year to 30 June
2007. This includes prior year comparatives for the year to June 2006.
The audited statutory financial statements for the year ended 30 June 2007 are
being distributed to shareholders from tomorrow, 31 October 2007, and will be
available from the Group's website www.norwoodimmunology.com. This preliminary
announcement was approved by the board of Norwood Immunology Limited on 29
October 2007.
2 Going concern
The financial report has been prepared on the going concern basis, which assumes
continuity of normal business activities and the realisation of assets and the
settlement of liabilities in the ordinary course of business.
To continue as a going concern the Group requires the continued support of its
lenders and/or shareholders or to raise new facilities or equity from other
parties.
The Group is an emerging pharmaceutical business and as such expects to be cash
absorbing until its technologies are commercialised. For the financial year
ended 30 June 2007 the consolidated entity incurred a net loss of $4,863,767
(Company: $4,201,901) and experienced negative cash flows from operations of
$3,861,812 (Company: $3,664,563).
Whilst there are uncertainties as to the exact timing and form of additional
fund raising necessary to fund the current level of activities of the Group for
at least the next 12 months, the directors have a reasonable expectation that it
can raise additional cash resources during the period for this purpose. These
financial statements have therefore been prepared on a going concern basis which
contemplates the continuity of normal business activities and the realisation of
assets and settlement of liabilities in the ordinary course of business.
The directors believe the going concern basis of preparation to be appropriate
given the following reasons:
* The Group entered into a loan agreement with Indus in 2006 raising a
working capital facility of up to $2,000,000. This facility remains in place
until June 2008 and was wholly unutilised at 30 June 2007;
* During its lifetime, the Group has been able to attract funds in the
form of equity capital and debt to advance development programs; and
* The Group's expected equity raising and/or extension of its debt
facilities are expected to provide sufficient funding to allow the Group to
pay its debts as and when they become due and payable;
Having carefully assessed the uncertainties relating to the likelihood of
securing additional funding and the Group's ability to effectively manage its
expenditures and cash flows from operations, the directors believe that the
Group will continue to operate as a going concern for the foreseeable future and
therefore it is appropriate to prepare the financial statements on a going
concern basis.
In the event that the Group is unable to raise sufficient funds as set out
above, there is uncertainty whether the Group can continue as a going concern.
If the Group is unable to continue as a going concern, it may be required to
realise its assets and extinguish its liabilities other than in the normal
course of business and at amounts different to those stated in the financial
statements.
No adjustments have been made to the financial report relating to the
recoverability and classification of the asset carrying amounts or the
classification of liabilities that might be necessary should the Group not
continue as a going concern.
3 Basic and diluted loss per ordinary share
The calculations of earnings per share are based on the following losses and
numbers of shares.
--------- --------
2007 2006
A$ A$
--------- --------
Retained loss for the financial year: (4,863,767) (6,714,549)
========= ========
No. No.
Weighted average number of shares:
For basic earnings per share 185,362,472 123,911,463
Exercise of share options - -
--------- --------
For diluted earnings per share 185,362,472 123,911,463
========= ========
EPS has been prepared using Australian IFRS results but consistent with UK GAAP
under FRS 14, presentation of diluted EPS is required when a company could be
called upon to issue shares that would decrease net profit or increase net loss
per share. The loss and weighted average number of ordinary shares for the
purpose of calculating the diluted earnings per ordinary share are identical to
those used for the basic earnings per ordinary share, as the exercise of share
options would have the effect of reducing the loss per ordinary share and is
therefore not dilutive.
4 Other non-current financial assets
--------- ---------
2007 2006
A$ A$
--------- ---------
Other 11,176 -
--------- ---------
11,176 -
========= =========
At 30 June 2007 the directors consider that the carrying amount of financial
assets and financial liabilities recorded in the financial statements
approximates their fair values.
5 Goodwill
--------- ---------
2007 2006
A$ A$
--------- ---------
Gross carrying amount:
Balance at beginning of financial year - -
Additional amounts recognized from business combinations
occurring during the period 2,100,000 -
--------- ---------
Balance at end of financial year 2,100,000 -
--------- ---------
Net book value
As at 30 June 2006 - -
--------- ---------
As at 30 June 2007 2,100,000 -
========= =========
The arms length transaction to acquire Virosome Biologicals was only 7 months
prior to year end and there has been no erosion of value in the 7 months post
purchase. As such, fair value (acquisition cost) less cost to sell is still
appropriate valuation method to test impairment. Management therefore believes
that at 30 June 2007 there has should be no impairment to the carrying value of
the goodwill and the in process research and development projects.
6 Other intangible assets
--------- -------- ---------
Gross carrying value In-process R&D Patents Total
A$ A$ A$
--------- -------- ---------
Balance at 1 July 2005 - 4,619,735 4,619,735
Additions from internal developments - 412,880 412,880
Net revaluation increments/(decrements) - - -
--------- -------- ---------
Balance at 30 June 2006 - 5,032,615 5,032,615
Additions from internal developments - 109,165 109,165
Net revaluation increments/(decrements) - - -
Increase through business combinations 18,258,031 - 18,258,031
--------- -------- ---------
Balance at 30 June 2007 18,258,031 5,141,780 23,399,811
========= ======== =========
Accumulated amortisation In-process R&D Patents Total
A$ A$ A$
--------- -------- ---------
Balance at 1 July 2005 - - -
Amortisation expense - 24,192 24,192
--------- -------- ---------
Balance at 30 June 2006 - 24,192 24,192
Amortisation expense - 5,369 5,369
Impairment losses charged to profit (i) - 637,641 637,641
--------- -------- ---------
Balance at 30 June 2007 - 667,202 667,202
========= ======== =========
Net book value In-process R&D Patents Total
A$ A$ A$
--------- -------- ---------
As at 30 June 2006 - 5,008,423 5,008,423
--------- -------- ---------
As at 30 June 2007 18,258,031 4,474,578 22,732,609
========= ======== =========
(i) Management has assessed the stage of development and time to complete
clinical studies associated with IP for certain NIM technologies, principally
autoimmune and diagnostic. Management believes that a prudent application of
AASB 136 leads to a write down of certain patents as an impairment.
Due to the extended timeline of those projects there is greater ambiguity over
how the intangible asset will generate future economic benefits due to the
potential availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset to create
future economic benefits. However, management continues to believe that there
is still potential for successful development of this intellectual property and
expect the recovery of a future economic benefit from its ultimate
commercialization.
7 Current borrowings
--------- ---------
2007 2006
A$ A$
--------- ---------
Unsecured
Deferred consideration (i) 821,439 -
Loans from parent entity (ii) - 1,223,793
--------- ---------
821,439 1,223,793
========= =========
(i) On 27 November 2006 the Consolidated entity completed the acquisition of all
of the issued shares of Bestewil. As part of the consideration for the
acquisition a payment of Euro0.5 million (A$838,082) is deferred until 27 May 2008,
the balance above is discounted to present value using an interest rate of 6%
per annum.
(ii) Management fees payable to Norwood Abbey Limited on 31 December 2006.
Interest calculated at an average of 6.33% p.a. (2006: 5.75% p.a.)
8 Statement of Changes in Equity for the Financial Year Ended 30 June 2007
2007 2006
------- -------- ------- ------- -------- -------- ------ --------
Issued Accumulated Other Total A$ Issued Accumulated Other Total A$
losses A$ losses A$
capital reserves capital reserves
A$ A$ A$ A$
------- -------- ------- ------- -------- -------- ------ --------
Opening
balance 27,227,179 (24,084,460) - 3,142,719 27,227,179 (17,369,911) 291,000 10,148,268
Loss for
the - (4,863,767) - (4,863,767) - (6,714,549) - (6,714,549)
period
Reversal of
share-based
payments - - - - - - (291,000) (291,000)
------- -------- ------- ------- -------- -------- ------ --------
Total
recognized
income/
(expens 27,227,179 (28,948,227) - (1,721,048) 27,227,179 (24,084,460) - 3,142,719
e)
Issue of
shares 31,152,904 - - 31,152,904 - - - -
Share issue
costs (537,330) - - (537,330) - - - -
------- -------- ------- ------- -------- -------- ------ --------
Closing
balance 57,842,753 (28,948,227) - 28,894,526 27,227,179 (24,084,460) - 3,142,719
======= ======== ======= ======= ======== ======== ====== ========
---------
Issued capital No.
---------
Number at 1 July 2006 123,911,463
Shares issued during period 104,329,924
---------
Number at 30 June 2007 228,241,387
=========
Fully paid ordinary shares carry one vote per share and carry the right to
dividends.
9 Reconciliation of loss from ordinary activities after related income tax to
net cash flows from operating activities
----------- -----------
2007 2006
A$ A$
----------- -----------
Loss for the year (4,863,767) (6,714,549)
Depreciation 24,442 27,653
Net unrealised foreign exchange loss/(gain) 245,827 (37,292)
Interest received (207,030) (154,554)
Non-cash interest 27,789 -
Impairment of non-current asset 637,641 810,630
Reversal of share-based payments - (291,000)
Decrease/(increase) in current receivables (60,746) 14,054
Increase in current prepayments 177,698 56,243
Increase/(decrease) in current payables 146,504 815,837
Increase in provisions 9,830 11,809
----------- -----------
Net cash used in operating activities (3,861,812) (5,461,169)
=========== ===========
10 Acquisition of businesses
--------------- ----------- --------- ---------- -----------
Name of Principal Date of Proportion of Cost of
business activity acquisition shares acquired acquisition
acquired (%)
A$
--------------- ----------- --------- ---------- -----------
Bestewil
Holdi
ng B.V. Developing and 27/11/2006 100 21,263,154
commercializing
a proprietary
platform
technology for
vaccines
Net assets Book value Fair value adjustment Fair value on acquisition Total fair value on acquisition
acquired ----------- --------- ---------- -----------
---------------
Current
assets
Cash & cash
equivalent 835,514 - - 835,514
Current trade
and other
receivables 3,509 - - 3,509
Other 226,972 - - 226,972
Non-current
assets
Patents 13,212 (13,212) - -
Plant &
equipment 2,099 - - 2,099
In process R&D - - 18,258,031 18,258,031
Current
liabilities
Trade & other
payables (162,971) - - (162,971)
----------- --------- ---------- -----------
918,335 (13,212) 18,258,031 19,163,154
=========== ========= ==========
Goodwill onacquisition 2,100,000
-----------
21,263,154
===========
Consideration
Cash & cash equivalents 5,431,343
Transaction costs capitalized 646,770
Ordinary shares 14,346,959
Deferred purchase consideration 838,082
-----------
21,263,154
===========
The assets and liabilities acquired are stated at their fair values, using an
exchange rate at the date of acquisition of A$1:Euro 0.5994. Fair values are
equal to the carrying value in the books of the acquirer immediately prior to
the acquisition with the exception of identifiable intangibles which have been
subject to a separate valuation.
Identifiable intangibles have been valued using a discounted cash flow model,
based on the following:
* Tax rate of 29.1% (the corporate tax rate in the Netherlands),
* Expected life of the In process R&D is based on 20 years (determined by
the availability of patent protection).
* Expected probability-adjusted future cash flows
* WACC - 25%
Goodwill arose in the business combination due to benefits of expected synergies
and the highly skilled workforce in place, including its technical expertise.
11 Contingent liabilities
On 1 August 2005, the Company signed a contract research agreement with The
General Hospital Corporation (Massachusetts General Hospital), in terms of the
agreement the Company is contracted for a total AUD 1, 660,000 ( USD 1,212,000)
of which AUD388,618 (approximately USD289,000) has been either paid or accrued
to 30 June 2007. The funding commitment is staggered and based on a number of
specific stages and sub-stages, at each of these stages the Company has to
sign-off the commencement of the next phase. This gives the Company the
opportunity to halt the trial and limit funding commitment. The agreement can be
terminated at any time at the request of either party.
Other then the items disclosed, there has been no other change in contingent
liabilities since the interim statement date.
12 Events after the balance sheet date
There has not been any other matter or circumstance, other than that referred to
in the financial statements or notes thereto, that has arisen since the end of
the financial period, that has significantly affected, or may significantly
affect, the operation of the Group, the results of those operations, or the
state of affairs of the Group in the future financial periods.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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