TIDMRGT
For immediate release20 May 2010
REGEN THERAPEUTICS PLC
Chairman's Statement and Preliminary Unaudited Results for the year ended 31
December 2009
PRELIMINARY STATEMENT
Highlights of 2009
* Breakeven point of the Company has substantially reduced due to cost
reduction. Administration costs down by 39% and development costs down by
81%.
* Major new licensees appointed.
* Improved balance sheet. Current liabilities reduced by 23% despite credit
crunch.
Financials
We can take some significant positives for the future from 2009 despite showing
a disappointing drop of 39% in sales. In particular these positives were as we
spell out below - a dramatic reduction in costs, bringing the Company's
breakeven point down significantly, an improved balance sheet and further
distributors signed up.
The sales drop was primarily the result of the fact that we had received very
large orders from our North American licensee in the first half of 2008, which
satisfied its demand into 2009. As we then only had Metagenics and Golgi as
distributors, clearly our sales pattern was significantly influenced by this.
Since then, however, we have signed further contracts with new licensees and
this makes us much less dependent on any one single distributor. As sales in
the second half of 2009 were GBP46,000 (the fourth quarter were GBP26,000), and
quarterly sales in the first quarter of 2010 are above that level, we may now
have reached a situation where we have sufficient contracts to even out
quarterly sales.
Most importantly, however, our loss before tax for the year was almost halved
from GBP1.5m to GBP758,000. This was achieved by significant reduction in costs and
allowed the Company to continue to operate on reduced parameters and also
lowered the breakeven point for the Company. I would remind shareholders that
the loss in 2007 was GBP2.6m. This fall in costs reflects the action taken in
early 2008 to enable the Company to survive the very difficult funding
conditions following the severe economic crisis. This continues although
perhaps lessening in severity. In specific terms the items were:
1. Administrative costs reduced by 39% from GBP1,176,224 to GBP719,569. Included
within administrative costs are non-cash items of GBP238,774 so the cash
expenditure on administration was actually GBP480,795. The largest reduction
within this item was staff costs, which in cash terms were reduced from
GBP457,056 to GBP262,271 in 2009.
2. Development costs reduced by 81% from GBP411,938 to GBP79,648. This reflected
the slowing down of our development programme as we seek to exploit it
commercially. As we show under Scientific Development there was actually
some further development work taking place which was of no cost to ReGen.
Turning now to the balance sheet our total current liabilities have been reduced
by 23% from GBP541,491 to GBP416,511. In view of the restricted capital markets
during 2009 we regard this as a significant achievement and have plans in hand
to reduce this still further. During 2009 we raised GBP691,185 and this enabled
the Company to continue rolling out Colostrinin(TM) and improving its balance
sheet to a limited extent.
Commercial development
Colostrinin(TM) roll out widens - New Developments:
Cyprus
The agreement with Golgi Pharmaceuticals Ltd of Cyprus under the brand name
'Cognase' was extended on 25 March 2009 to allow them to distribute
Colostrinin(TM) in Greece and other Balkan countries. On the same day a further
agreement was signed with Golgi to allow them to tablet and package
Colostrinin(TM) in Cyprus. As part of this arrangement Golgi directly invested
GBP28,000 in cash into ReGen in exchange for 700,000 shares priced at 4p per
share. This represented at the time 3.4% of the enlarged share capital of the
Company and was a 33% premium to the previous placing on 2 March 2009.
Poland
Following the test marketing by Tagerr, a professional services and trading
company established in Cologne, Germany, Tagerr has successfully launched
Colostrinin(TM) in Poland and has been slowly increasing its demand.
Turkey
On 29 January 2009 ReGen signed an agreement with Eczacibasi Ilac Pazarlama
A.S., a leading Turkish industrials group, as the exclusive distributor of its
nutraceutical product Colostrinin(TM), under the brand name 'Dyna' in the
Republic of Turkey. Eczacibasi is now launching 'Dyna' in Turkey and has paid
ReGen a $50,000 milestone payment. Net revenues to ReGen from Eczacibasi
pursuant to the minimum annual purchase commitments in the distribution
agreement are estimated to be $52,000 in the first year after regulatory
approval is obtained and $104,000 in the second year.
India
On 27 April 2010 ReGen signed a Supply Agreement with an Indian Company based in
Mumbai, India. The ReGen Board regards this as a crucial step for two reasons.
Firstly, it provides entry into the second most heavily populated market in the
world and one where self treatment is an integral part of healthcare. Secondly,
India, along with China, is one of the two major growth drivers of the world
economy. Thus, for these reasons a consumer launch in this market has
significant potential for ReGen's long term profitability.
UK
PRG Nutraceuticals Limited launched 'MemoryAid' in the UK via the internet on
the 1st October 2009.
China
China, with India, is a major potential market for ReGen, both because of its
size and a tradition of self medication. We are currently engaging ICUK (a UK
based British and Chinese Government Consultancy) to introduce us to key players
in the Chinese market.
Existing Licensees
Our major partner is still Metagenics Inc., who were taken over by Alticor
during 2009. This takeover would have contributed to the fact that they did not
reorder active material from us for almost one year. An additional problem was
that for a period of time Colostrinin(TM) fell foul of a review of the
Australian regulations relating to colostrum products which meant it could not
be sold in Australia, by Metagenics's subsidiary company who order through the
US. This problem has now been resolved. We now are led to believe there will be
a relaunch of Colostrinin(TM) in the US in the latter half of 2010.
Scientific development
Although ReGen has cut back its research spending, as it now believes it is time
to capitalise on its research output, some research carried out in prior periods
was reported in 2009. Also some of our former paid collaborators have continued
to produce research out of their own funding.
Colostrinin(TM):
In the autumn of 2007 we announced that a micro array analysis of peptides
derived from Colostrinin(TM) at the University of Texas Medical (UTMB) had shown
that certain peptides had a capacity to change gene expression in areas involved
in obesity and Alzheimer's disease. It was therefore decided to explore certain
peptides further with a view to developing them to the status of pre-clinical
pharmaceutical candidates. On 12 March 2009 we announced the successful
completion of the first stage of this exercise.
Alzheimer's disease:
In an in-vitro study using neuronal cells two synthetic peptides (RG-01 and
RG-018) have shown significant impact on expression of genes involved in
beta-amyloid generation and degradation pathways. Controlling beta-amyloid
generation could have important implications in Alzheimer's disease.
Anti-obesity:
In an in-vivo study on obesity Colostrinin(TM), as well as three peptides in
combination, have been shown to significantly reduce the body weight gain of
mice when fed a high fat diet (HFD).
The obesity data could be used to create another nutraceutical product and
indeed a large European food company is considering doing further work on this.
Backing up the work in Alzheimer's disease Professor Michael Stewart of the Open
University has co-authored a paper showing further evidence of Colostrinin(TM)
activity in reducing cytotoxicity related to Alzheimer's disease. Professor
Stewart said:
"Alzheimer's disease is the most common form of dementia affecting 18 million
people worldwide. It is characterised by extra cellular senile plaques
consisting mainly of aggregated amyloid-beta and intracellular neurofibrillary
tangles containing the cytoskeletal protein tau. A recent study by Froud et al.
in Journal of Alzheimer's Disease[1] has demonstrated that Colostrinin(TM)
significantly relieves amyloid-beta induced cytoxicity".
Zolpidem:
A study confirming the zolpidem effect in brain damage was presented at the 4th
International Congress on Brain and Behaviour on 3 - 6 December 2009 in
Thessaloniki, Greece by Dr Ralf Clauss. 23 of 41 consecutive adult patients, at
least 6 months after brain damage, were selected as neurologically disabled
patients after scoring less than 100/100 on the Barthel Index. Causes of brain
damage included stroke (12 subjects), traumatic brain injury (7 subjects),
anaphylaxis (2 subjects), drug overdose (1 subject) and birth injury (1
subject). The selected 23 patients had a baseline SPECT scan before starting
daily zolpidem therapy and a second within two weeks of therapy, performed 1
hour after receiving 10 mg oral zolpidem. Scans were designated as improved
when at least two of three independent assessors detected improvement after
zolpidem. The rest were designated non-improved.
After four months of daily zolpidem therapy, the clinical condition of subjects
was rated on the Tinetti Falls Efficacy Scale (TFES) before and after zolpidem.
The TFES ratings of all subjects and scan improvers and non-improvers were
compared statistically.
Mean overall improvement after zolpidem on TFES was 11.3% from 73.4/100 (SD
25.4) to 62.1/100 (SD 28.8) (p=0.0006). 10/23 (43%) improved on SPECT scan
after zolpidem. Their mean TFES improvement was 19.4% (SD 16.75) compared with
5.17% (SD 5.167) in 13/23 non improvers (p=0.0081).
Summary
The Company has survived the credit crunch by implementing a severe cost
reduction programme, but as my review of the year shows the business side has
been expanded despite this. We still continue to believe that during 2010 the
Company will move to sustainable profitability.
I would like to thank the shareholders and in particular our funders during
2009 for their very significant support at a time when money was very difficult
to raise.
Date: 20 May 2010
Percy W Lomax
Further information:
Percy Lomax
ReGen Therapeutics Plc
Tel: 020 7153 4920
Roland Cornish/Felicity Geidt
Beaumont Cornish Limited
Tel: 020 7628 3396
Nick Bealer/David Scott
Alexander David Securities Limited
Tel: 020 7448 9820
REGEN THERAPEUTICS PLC
Consolidated income statement for the year ended 31 December 2009
2009 2008
GBP GBP
(Unaudited) (Audited)
Continuing operations
Revenue 56,055 91,716
Cost of sales 11,034 20,447
________ ________
Gross Profit 45,021 71,269
+------------------------------------------------------------------------------+
|Research and development costs 79,648 411,938|
| |
|Other administrative costs 719,569 1,176,224|
+------------------------------------------------------------------------------+
Administrative expenses 799,217 1,588,162
________ ________
Operating loss (754,196) (1,516,893)
Finance income 46 10,308
Finance costs (4,138) (3,436)
________ ________
Loss before taxation (758,288) (1,510,021)
Taxation 28,350 80,590
________ ________
Loss after taxation for continuing activities (729,938) (1,429,431)
________ ________
Discontinued operations
Loss after taxation from discontinued operations - (33,936)
________ ________
Loss after taxation for the
year (729,938) (1,463,367)
_________ _________
Basic and diluted loss per Note 6 (2.67p) (12.27p)
share
Basic and diluted loss per share on continuing (2.67p) (11.98p)
operations
Basic and diluted loss per share on discontinued - (0.28p)
operations
Consolidated statement of comprehensive income for the year ended 31 December
2009
2009 2008
GBP GBP
(Unaudited) (Audited)
Loss for the year (729,938) (1,463,367)
Other comprehensive income for the year - -
________ ________
Total comprehensive income for the year (729,938) (1,463,367)
_________ _________
Attributable to:
Equity holders of the parent (729,938) (1,463,367)
_________ _________
Consolidated Statement Of Changes In Equity
for the year ended 31 December 2009
Share Share Other Retained
capital premium reserves earnings Total
GBP GBP GBP GBP GBP
Audited
At 1 January 2008 6,323,835 13,969,394 265,745 (18,118,878) 2,440,096
Loss for the year - - - (1,463,367) (1,463,367)
________ ________ ________ ________ ________
Total comprehensive
income for the year - - - (1,463,367) (1,463,367)
Issue of share
capital 281,168 395,970 - - 677,138
Share issue costs - (218,151) - - (218,151)
Share based
payments/(credits) - - - (95,532) (95,532)
________ ________ ________ ________ ________
Closing equity as at
31 December 2008 6,605,003 14,147,213 265,745 (19,677,777) 1,340,184
Unaudited
Loss for the year - - - (729,938) (729,938)
________ ________ ________ ________ ________
Total comprehensive
income for the year - - - (729,938) (729,938)
Issue of share
capital 2,163 689,022 - - 691,185
Share issue costs - (88,340) - - (88,340)
________ ________ ________ ________ ________
Balance at 31 6,607,166 14,747,895 265,745 (20,407,715) 1,213,091
December 2009
________ ________ ________ ________ ________
Consolidated statement of financial position as at 31 December 2009
2009 2009 2008 2008
GBP GBP GBP GBP
(Unaudited) (Unaudited) (Audited) (Audited)
Assets
Non current assets
Property, plant and 177 1,017
equipment
Intangible assets 1,564,205 1,759,250
________ ________
1,564,382 1,760,267
Current assets
Inventories 38,219 28,571
Trade and other receivables 80,573 87,090
Tax receivable 16,043 80,590
Cash and cash equivalents 30,385 25,157
________ ________
Total current assets 165,220 221,408
________ ________
Total assets 1,729,602 1,981,675
________ ________
Liabilities
Current liabilities
Trade and other payables 367,805 489,699
Loans and borrowings 48,706 51,792
________ ________
Total current liabilities 416,511 541,491
Non current liabilities
Provisions 100,000 100,000
________ ________
Total liabilities 516,511 641,491
________ ________
Total net assets 1,213,091 1,340,184
________ ________
Equity
Share capital Note 5 6,607,166 6,605,003
Share premium 14,747,895 14,147,213
Other reserves 265,745 265,745
Retained earnings (20,407,715) (19,677,777)
________ ________
Total equity 1,213,091 1,340,184
________ ________
Consolidated statement of cash flows for the year ended 31 December 2009
2009 2009 2008 2008
GBP GBP GBP GBP
(Unaudited) (Unaudited) (Audited) (Audited)
Loss after tax from continuing (729,938) (1,429,431)
activities
Loss after tax from discontinued
activities - (33,936)
________ ________
Loss after tax for the financial
year (729,938) (1,463,367)
Amortisation of intangible 237,934 298,256
assets
Depreciation of property, plant 840 1,656
and equipment
Share option credit - (95,532)
Finance costs 4,138 7,830
Finance income (46) (10,311)
Taxation credit (28,350) (80,590)
Taxation received 92,897 145,833
________ ________
Operating cash flows before
movements in working capital and
provisions (422,525) (1,196,225)
Increase in inventories (9,648) (21,922)
Decrease in receivables 6,517 125,689
(Decrease)/increase in payables (121,894) 178,064
________ ________
Net cash flows from operating (547,550) (914,394)
activities
________ ________
Net cash flows from investing
activities
Interest received 46 10,311
Purchase of intangible assets (42,889) (110,947)
________ ________
Net cash flows used in investing (42,843) (100,636)
activities
________ ________
Cash flows from financing
activities
Proceeds from issue of share 691,185 677,138
capital
Expenses paid on share issue (88,340) (218,151)
Interest paid (4,138) (7,830)
________ ________
Net cash from financing 598,707 451,157 _
activities
________ ________
Net increase/(decrease) in cash
and cash equivalents 8,314 (563,873)
Opening cash and cash (26,635) 537,238
equivalents
________ ________
Closing cash and cash (18,321) (26,635)
equivalents Note 7
________ ________
Notes forming part of the financial statements for the year ended 31 December
2009
1Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs and IFRIC interpretations)
issued by the International Accounting Standards Board (IASB) as adopted by
European Union ("adopted IFRSs") and with those parts of the Companies Act 2006
applicable to companies preparing their accounts under IFRS.
The financial information contained in this announcement does not constitute
statutory financial statements for the years ended 31 December 2009 and 31
December 2008 but is derived from them. The 2008 financial statements have been
filed with the Registrar of Companies; their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985. It
did contain, however, an explanatory paragraph dealing with a material
uncertainty relating to going concern. Whilst the auditors have not reported on
the financial statements for the year ended 31 December 2009, they
anticipate issuing an unqualified report which will not contain statements under
section 498(2) or (3) of the Companies Act 2006 but anticipate, however,
including an explanatory paragraph dealing with a material uncertainty relating
to going concern. The statutory accounts for the year ended 31 December
2009 will be finalised on the basis of the financial information presented by
the Directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting. The
financial information set out in this announcement was approved by the Board of
Directors on 19 May 2010.
The directors do not recommend the payment of a dividend for the year.
2Events after the balance sheet date
On 14 January 2010, the Company issued 8,333,333 ordinary shares of 0.01p each
at a premium of 1.49p per share for a consideration of GBP125,000.
On 30 March 2010, the Company issued 5,000,000 ordinary shares of 0.01p each at
a premium of 1.49p per
share for a consideration of GBP75,000.
On 10 May 2010, the Company issued 11,550,000 ordinary shares of 0.01p each at a
premium of 1.99p per share for a consideration of GBP231,000.
3Going concern
The financial statements have been prepared on a going concern basis. However,
the Group's ability to continue as a going concern is reliant upon successfully
obtaining funds as it moves towards self sustainability and to finance its
ongoing development. In considering the appropriateness of this basis of
preparation the directors have reviewed the Company's working capital forecasts.
They believe that the funds raised recently, including new equity funds of
GBP431,000 in aggregate raised between the balance sheet date and the date of
approval of these financial statements, together with further options being
considered and taken in conjunction with revenues from licensing, will be
sufficient for the Group's purposes for a minimum of 12 months from the date of
the approval of the financial statements. If the Group was unable to secure
sufficient funding to enable it to continue on a going concern basis then
adjustments would be necessary to write down assets to their recoverable
amounts, reclassify fixed assets and long term liabilities as current and
provide for additional liabilities.
4 Accounting policies
The financial information has been prepared in accordance with the accounting
policies adopted by the Group which are consistent with those adopted in the
financial statements for the year ended 31 December 2008 as well as applying the
following key accounting policies.
Business combinations
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the consolidated balance sheet, the
acquiree's identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date. The results
of the acquired operations are included in the consolidated income statement
from the date on which control is obtained.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
interest in the fair value of the identifiable assets, liabilities and
contingent liabilities acquired. Cost comprises the fair values of assets given,
liabilities assumed and equity instruments issued, plus any direct costs of
acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying
value being charged to the consolidated income statement. Where the fair value
of identifiable assets, liabilities and contingent liabilities exceed the fair
value of consideration paid, the excess is credited in full to the consolidated
income statement on the acquisition date.
Research and development
Research expenditure is recognised in the income statement in the year in which
it is incurred. Development expenditure is recognised in the income statement in
the year in which it is incurred unless it meets the recognition criteria of IAS
38 "Intangible Assets". Regulatory and other uncertainties generally mean that
such criteria are not met. Where, however the recognition criteria are met,
intangible assets are capitalised and amortised on a straight-line basis over
their useful economic lives from product launch. This policy is in line with
industry practise.
5. Share Capital
On 5 January 2009, the Company issued 350,000 ordinary shares of 0.01p each at a
premium of 3.99p per share for a consideration of GBP14,000.
On 15 January 2009, the Company issued 400,000 ordinary shares of 0.01p each at
a premium of 3.49p per share for a consideration of GBP14,000.
On 18 February 2009, the Company issued 2,171,834 ordinary shares of 0.01p each
at a premium of 2.99p per share for a consideration of GBP65,155.
On 18 February 2009, the Company issued 100,000 ordinary shares of 0.01p each at
a premium of 9.99p per share for a consideration of GBP10,000.
On 19 February 2009, the Company issued 1,751,666 ordinary shares of 0.01p each
at a premium of 2.99p per share for a consideration of GBP52,550.
On 25 March 2009, the Company issued 700,000 ordinary shares of 0.01p each at a
premium of 3.99p per share for a consideration of GBP28,000.
On 7 April 2009, the Company issued 2,149,332 ordinary shares of 0.01p each at a
premium of 3.99p per share for a consideration of GBP64,480.
On 15 April 2009, the Company issued 800,000 ordinary shares of 0.01p each at a
premium of 2.99p per share for a consideration of GBP24,000.
On 24 April 2009, the Company issued 2,000,000 ordinary shares of 0.01p each at
a premium of 2.99p per share for a consideration of GBP60,000.
On 4 June 2009, the Company issued 1,000,000 ordinary shares of 0.01p each at a
premium of 2.99p per share for a consideration of GBP30,000.
On 12 June 2009, the Company issued 500,000 ordinary share of 0.01p each at a
premium of 2.99p per share for a consideration of GBP15,000.
On 22 June 2009, the Company issued 1,000,000 ordinary shares of 0.01p each at a
premium of 2.99p per share for a consideration of GBP30,000.
On 20 August 2009, the Company issued 3,200,000 ordinary shares of 0.01p each at
a premium of 2.99p per share for a consideration of GBP96,000.
On 2 September 2009, the Company issued 3,000,000 ordinary shares of 0.01p each
at a premium of 3.99p per share for a consideration of GBP120,000.
On 30 October 2009, the Company issued 2,500,000 ordinary shares of 0.01p each
at a premium of 2.99p per share for a consideration of GBP75,000.
On 6 October 2008 a resolution was passed at a General Meeting of the Company
whereby a sub-division of Share Capital was effected so that every Existing
Ordinary Share in issue was sub-divided and reclassified into one new ordinary
share having a nominal value of 0.01 pence ("New Ordinary Shares") and one
deferred B share having a nominal value of 9.99 pence ("Deferred B Share") (the
"Sub-division").
The number of New Ordinary Shares in issue following the Sub-division equated to
the number of Existing Ordinary Shares previously in issue. The Sub-division did
not affect the rights attaching to the Existing Ordinary Shares, other than to
alter their nominal value and, in particular, did not affect the voting rights
of the holders of Existing Ordinary Shares. As all Existing Ordinary Shares were
sub-divided, each Shareholder's percentage holding in the issued share capital
of the Company immediately before and after the implementation of the
Sub-division remained unchanged.
The issued shares rank pari passu with existing shares.
6Loss per share
2009 2008
GBP GBP
Numerator
Loss for the year 729,938 1,463,367
________ ________
Denominator
Weighted average number of shares 27,331,695 11,926,992
________ ________
The Company has instruments that could potentially dilute basic earnings per
share in the future, but that have not been included in the calculation of
diluted earnings per share because they are antidilutive for the periods
presented.
7Note supporting cash flow statement
Cash and cash equivalents comprises:
2009 2008
GBP GBP
(Unaudited) (Audited)
Cash available on demand 29,406 7,682
Short-term deposits 979 17,475
________ ________
Cash and cash equivalents 30,385 25,157
Overdraft (48,706) (51,792)
________ ________
(18,321) (26,635)
________ ________
8Taxation
2009 2008
GBP GBP
(Unaudited) (Audited)
UK corporation tax credit in respect of current period 16,043 66,065
Adjustment in respect of prior years 12,307 14,525
________ ________
Total current tax credit 28,350 80,590
________ ________
The Group has unrecognised tax losses of approximately GBP14,000,000 (2008 -
GBP13,500,000) for offset against future profits.
The rate of corporation tax changed to 28% with effect from April 2008.
The tax for the year differs from the standard rate of corporation tax in the
UK. The differences are explained below:
2009 2008
GBP GBP
Loss before tax 758,288 1,543,957
________ ________
Loss at the standard rate of corporation tax in the UK of
28% (2008 - 28.5%) 212,321 440,028
Effects of:
Expenses not deductible for tax purposes (1,152) 17,408
Expenditure qualifying for enhanced tax relief 13,751 46,990
Depreciation in excess of capital allowances 288 60
Difference in tax rate applying to R&D tax credit (16,043) (58,703)
Tax losses for which no deferred tax asset recognised (193,122) (379,718)
Adjustment to prior year tax charge 12,307 14,525
________ ________
Total tax credit for the year 28,350 80,590
________ ________
The annual report and financial statements for the year ended 31 December 2009
will be sent to all shareholders in due course and copies will be available on
the web site www.regentherapeutics.com <http://www.regentherapeutics.com/> and
from the company's business address at 73 Watling Street, London, EC4M 9BJ.
[HUG#1417377]
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