For For
immediate release
29 March 2006
Proximagen Neuroscience plc
(the "Company")
Preliminary results for the twelve months
ended 30 November 2005
London, UK, 29 March 2006 - Proximagen Neuroscience plc (AIM: PRX), the
specialty drug discovery and development company focused on neurodegenerative
diseases, today announces its audited Preliminary Results for the twelve months
ended 30 November 2005.
Highlights:
* Profit after tax reported for the second successive year
* Substantial progress made on the four proprietary drug development
programmes
* Six service contracts signed
* Successful listing on AIM in March 2005, raising £12.6m (after expenses)
* Net cash as at 30 November 2005 of £13.0m
Commenting on the results, Kenneth Mulvany, Chief Executive of Proximagen, said:
"We made excellent progress in our first year as a publicly traded company
having strengthened our discovery and development assets by hitting key
milestones in each of our four proprietary programmes. I am also delighted to
report strong financial performance during the period. Our contracts with major
pharmaceutical companies have not only consolidated our relationships with
industry partners but have generated valuable revenue which has contributed to
Proximagen being able to record a profit after tax for the second successive
year. With a robust pipeline and a strong cash position, we look to the future
with enthusiasm and confidence."
For further information please contact:
Kenneth Mulvany, Chief Executive Tel: 020 7848 6938
Proximagen Neuroscience plc
Tim Anderson, Mark Court, Mary-Jane Johnson Tel: 020 7466 5000
Buchanan Communications
Chairman's Statement
Introduction
We are pleased to report our first full financial results since Proximagen
Neuroscience plc's successful listing on the London Stock Exchange's Alternative
Investment Market. In 2005, Proximagen made strong progress in drug discovery
and development.
Finance
In March 2005, the Company raised its target of £12.6m of new capital, net of
expenses. This financed a step change in Proximagen's ability to develop its
drug discovery pipeline. Our service business revenue also expanded
considerably during the year so that despite a significant investment in four
research and development programmes, the net cash outflow has been minimal with
none of the capital raised in the initial public offering having been spent.
Our Business
Our principal objective is to bring drugs to market through innovative
discovery, stringent selection criteria and disciplined development. Proximagen
possesses drug discovery capabilities of exceptional strength, including leading
scientific research undertaken by Professor Peter Jenner, the Company's Chief
Scientific Officer. His research facilities at King's College London were
awarded the prestigious National Parkinson Foundation's Centre of Excellence
designation in 2005. This constitutes the gold standard in Parkinson's disease
research.
Proximagen has also enhanced its development capabilities by recruiting key
personnel in project management, chemistry, and bio-analytical techniques.
Discovery and development resources were further enhanced through infrastructure
improvements to support our current size and beyond.
Proximagen's long-term business strategy is centred on its commitment to
innovative research and development as the principal route to creating
shareholder value. We expect our development expenditure to continue to
accelerate rapidly as we invest more heavily in bringing our leading compounds
through pre-clinical and clinical development. The Company intends to retain
ownership of lead drug candidates through to proof-of-concept human clinical
trials before out-licensing them to major pharmaceutical companies in order to
maximise value creation for our shareholders.
The Board
In December 2005, we welcomed Michael Ashton to the Board as a non-executive
director. Michael has over 30 years of experience in the pharmaceutical industry
having worked for Merck Inc., Pfizer Inc., Purepac Inc., Faulding Inc., and
latterly as CEO for SkyePharma PLC. We have also started the process to recruit
another non-executive director to bring additional expertise and experience to
the Board. I would also like to thank George Murlewski who made a very valuable
contribution to Proximagen during its formative period. Mr. Murlewski resigned
in December 2005.
Outlook
Following strong progress in the past months, Proximagen has established firm
foundations, good medium term prospects and significant opportunities for growth
in the longer term. With a pipeline of promising drug candidates and a healthy
balance sheet, we look to the future with confidence.
Bruce Campbell
Chairman
28 March 2006
Chief Executive's Review
Introduction
I am pleased to report that during 2005, Proximagen made major strides towards
reaching our goal of becoming a leader in the discovery, development and
commercialization of innovative drugs for the treatment of age-related
neurodegenerative diseases.
During the past year, we have launched four proprietary programmes and
strengthened our balance sheet through the completion of our IPO and the
continuing provision of services to major pharmaceutical companies.
We believe that Proximagen is well-positioned to play a leadership role in
creating new and much-needed therapies for neurodegenerative diseases. From its
inception, Proximagen has dedicated all of its research and development efforts
to these therapeutic indications, and in particular, to the growing need for
better therapeutics in Parkinson's disease and cognitive decline. Parkinson's
disease alone affects 1 in 100 people over the age of 60 with the severity of
symptoms tending to worsen over time. There are approximately 3 million
sufferers of Parkinson's disease worldwide and that number is expected to double
in the next 10-20 years. Cognitive decline, which in its severest forms
manifests as dementias such as Alzheimer's disease, affects a much broader
proportion of the population with as many as 1 in 10 individuals aged over 65
affected.
Discovery and Development
In 2005, Proximagen made significant progress in our development programmes and
has generated a pipeline of drugs designed to improve the standard of care for
patients with neurodegenerative diseases. Our drug candidate programme PRX1 is
aimed at improving the symptomatic treatment of Parkinson's disease and
represents what we believe could be a major advance in Parkinson's disease
therapy. In pre-clinical studies, we show predictive clinical efficacy with a
reversal of motor deficits. Clinical trials are expected to demonstrate that our
lead compound could provide improved therapeutic value over current treatments
for Parkinson's disease by having better efficacy and a lower side effect
profile.
Our second drug candidate programme was designed as a novel treatment for the
uncontrollable movements that frequently result from the most common treatment
of Parkinson's disease. Once established, these involuntary movements are
produced following dosing of dopaminergic anti-Parkinson's disease medication
and may become the factor significantly limiting current Parkinson's disease
treatment strategies. Our pre-clinical studies indicate that our lead evaluation
series is likely to be safe and well tolerated, and shows indications of
anti-dyskinetic activity. Clinical trials are expected to demonstrate that this
novel treatment strategy could greatly reduce the incidence and severity of
these debilitating involuntary movements.
Our proprietary discovery programme PRX4 is for the prevention and treatment of
a pathological change common in a large number of neurodegenerative diseases,
and represents what we believe to be a groundbreaking approach to addressing the
major unmet medical needs in these collective indications. While this programme
is at an earlier stage than our other development programmes, it is nonetheless
exciting as there are currently no drug treatments on the market which slow or
stop the inevitable progression of age-related neurodegenerative diseases. Our
current studies have shown that PRX4 is implicated in the control of many
mechanisms associated with degeneration of neurons. We have also shown that
even in very low concentrations, PRX4 acts as a highly potent inhibitor of
neurodegeneration in human neuronal cells.
Finally, the PRX5 drug discovery programme aims to improve the lives of patients
with age-related cognitive decline. Many older individuals suffer from cognitive
decline with advancing age, which in its severest forms translates into
dementias such as Alzheimer's disease. The PRX5 programme has been initiated
utilising both traditional medicinal chemistry and computational chemistry in
areas of unique intellectual property. The Group applies biochemical and
pharmacological models which are selective and predictive of activity in human
tissue as part of our screening cascade. Discoveries in this programme have led
to the development of a novel series of dopaminergic compounds.
Intellectual property
During the year, Proximagen continued to pursue its aggressive intellectual
property strategy with four new patent applications filed based upon the Group's
growing pipeline of in-house discovery initiatives.
Post year end, the Group filed further patent applications in February 2006
claiming a series of dopaminergic compounds from the expanded PRX1 programme. A
US application claiming use of PRX4 was continued and an international (PCT)
application claiming use of truncated variants of PRX4 was filed.
Also in February 2006, a second, expanded, patent application was filed for our
programme to treat dyskinsias and an international (PCT) patent application
based on those indications was also filed. In due course the Group will have the
option of filing national applications derived from PCTs in those countries
where protection for the invention appears commercially desirable.
In March 2006, the Group filed for patent protection for the PRX5 series and
their use in dopaminergic signaling deficiency diseases.
Financial performance
Our service business continues to be an important part of the Group's
operations. Our contracts with some of the world's largest pharmaceutical
companies not only consolidate our relationships with industry partners but they
generate valuable revenue. Income from these contracts covered a significant
proportion of our overhead costs and, together with the impact of a tax credit,
contributed to us being able to record a profit after tax for the second
successive year.
In 2005 turnover increased by 51% to £878,000 compared with 2004. The
percentage increase in turnover is explained by a combination of six new
contracts being signed during the year to supplement the contracts already
underway at the beginning of the year and the 2005 trading period being three
months longer than the 2004 trading period.
Gross margin was 54%, compared with 45% for the year to November 2004. This
reflects increased efficiency in our laboratory operations where the escalation
in activity on our internal programmes has enabled us to deploy our resources
more effectively.
As detailed earlier in my report, we have invested heavily in the development of
our own drug candidates, which is reflected by the level of expenditure on R&D
in the year. This increase will continue to accelerate as we progress our
development programmes.
Operating costs have also increased as the Group has recruited high-calibre
staff to fulfil key roles within the organisation. We continue to monitor
expenditure closely to ensure that our resources are channeled into areas, such
as R&D, where we believe we are most likely to see the best return on
investment.
Net assets at the year end total £13.2m, an increase of £12.8m due primarily to
the net proceeds of the IPO in March 2005.
The Group's cash position improved considerably during the year, from £0.3m to
£13.0m. The main contributory factors were firstly the funds raised from the
IPO and secondly from the management of working capital which enabled the Group
to post net cash outflows from operating activities of £196,000 despite an
operating loss of £489,000.
We expect investment in capital equipment to increase from current levels but we
continue to be mindful of the need to ensure that such investment allows us to
develop our programmes faster and cheaper than outsourcing would otherwise do.
Conclusion
We believe that 2006 will be an important year for Proximagen as we look forward
with enormous enthusiasm to the challenges and opportunities that lie ahead. We
are able to leverage truly world-class scientific capabilities to advance our
discovery and development programmes, while laying the foundation for
later-stage development and future commercialization activities from the value
generated in our pipeline.
I would like to thank our team at Proximagen for their hard work and dedication
and congratulate them on the outstanding contribution that they have made to our
progress this past year. I would also like to thank you, our shareholders, for
your steadfast support.
Kenneth Mulvany
Chief Executive Officer
28 March 2006
Proximagen Neuroscience plc
Consolidated profit and loss account
For the year ended 30 November 2005
Year ended 30 Year ended 30
November 2005 November 2004
Note
£ £
Turnover
Service revenue 877,310 581,270
Other revenue 1,000 -
878,310 581,270
Cost of sales (405,798) (319,367)
Gross profit 472,512 261,903
Research & development costs (329,842) -
Other administrative expenses (632,087) (248,008)
Net operating costs (961,929) (248,008)
Operating (loss)/profit (489,417) 13,895
Interest receivable 410,432 6,491
Interest payable - (4)
Net interest receivable 410,432 6,487
(Loss)/profit before tax (78,985) 20,382
Corporation Tax 83,597 (7,947)
Profit after tax 4,612 12,435
Profit transferred to reserves 4,612 12,435
Earnings per share
Basic (pence) 2 0.03 0.12
Diluted (pence) 2 0.03 0.12
No separate statement of Total Recognised Gains and Losses has been presented
since all such gains and losses have been dealt with in the profit and loss
account.
As explained in Note 1 the profit and loss account has been prepared using
merger accounting principles and is presented as if the Group had been in
existence throughout the current and prior periods.
All group activities relate to continuing operations.
Proximagen Neuroscience plc
Consolidated balance sheet
At 30 November 2005
At 30 November At 30 November 2004
2005
Note £ £
Fixed assets
Tangible fixed assets 87,437 -
Current assets
Debtors 678,530 551,819
Cash at bank and in hand 3 13,027,699 315,164
13,706,229 866,983
Creditors: amounts falling due within one year (618,140) (453,648)
Net current assets 13,088,089 413,335
Net assets 13,175,526 413,335
Capital and reserves
Called up share capital 200,356 102,000
Share premium account 12,659,223 -
Merger reserve 298,900 298,900
Profit and loss account 17,047 12,435
Equity shareholders' funds 4 13,175,526 413,335
Proximagen Neuroscience plc
Company balance sheet
At 30 November 2005
At 30 November
2005
Note £
Fixed assets
Investments 102,000
Current assets
Debtors 450,467
Cash at bank and in hand 12,763,848
13,214,315
Creditors: amounts falling due within one year (52,541)
Net current assets 13,161,774
Net assets 13,263,774
Capital and reserves
Called up share capital 200,356
Share premium account 12,659,223
Profit and loss account 404,195
Equity shareholders' funds 4 13,263,774
Proximagen Neuroscience plc
Consolidated cash flow statement
For the year ended 30 November 2005
Year ended 30 Year ended 30
November 2005 November 2004
Note
£ £
Cash flow from operating activities 5 (195,875) (92,223)
Returns on investment 244,707 6,487
Capital expenditure (93,877) -
Management of liquid resources (12,600,000) -
Financing 12,757,580 400,900
Increase in cash 112,535 315,164
Notes
1. Accounting policies
a. Basis of accounting
The financial information contained in this report has been prepared under the
historical cost convention and in accordance with applicable accounting
standards.
The financial information on the Group set out above does not constitute
'statutory accounts' within the meaning of section 240 of the Companies Act
1985. The financial information for the year ended 30 November 2005 has been
extracted from the Group's audited consolidated statutory accounts, which will
be delivered to the Registrar of Companies for England and Wales following the
Company's Annual General Meeting on 23 May 2006. The report of the auditors on
these accounts was unqualified and did not contain a statement under Section 237
(2) or (3) of the Companies Act 1985.
The financial information for the year ended 30 November 2004 is derived from
the statutory accounts for that year for Proximagen Limited, which have been
delivered to the Registrar of Companies. The auditors reported on those accounts
and their report was unqualified.
Comparative figures are for the period ended 30 November 2004 on the basis set
out in Note 1b.
The annual report will be posted to shareholders in April 2006 and will be laid
before shareholders at the AGM on 23 May 2006. The financial information set out
in this preliminary announcement was approved by the Board on 28 March 2006.
The statutory accounts for the year ended 30 November 2005 have been prepared
following accounting policies consistent with those set out in the financial
statements of the subsidiary company for the period ended 30 November 2004.
b. Basis of consolidation
Acquisition
Proximagen Neuroscience plc was incorporated on 14 January 2005 and on 9 March
2005 the Company acquired the entire share capital of Proximagen Limited by way
of a share for share exchange. In accordance with the principles set out in
Financial Reporting Standards ("FRS") 6 "Acquisitions and Mergers", 100% of the
shares acquired have been accounted for under merger accounting. Consequently,
although Proximagen Neuroscience plc was not incorporated until 14 January 2005
and the combination did not take place until 9 March 2005, the financial
information is presented as though the merged businesses had always been a
single group.
Basis of comparative information
The comparative consolidated profit and loss account has been presented as if
the merger took place on the first day of each financial period presented and as
though the Group, as presently constituted, had been in existence throughout
these periods. The figures for the year to 30 November 2004 have been extracted
from the audited Proximagen Limited accounts adjusted for the shares issued by
the Company as consideration as if they had always been in issue. Any
difference between the nominal value of the shares acquired by the Company and
those issued by the Company to acquire them is taken to reserves.
2. Basic and diluted earnings per ordinary share
The calculations of basic and diluted earnings per ordinary share are based on the following
results and numbers of shares:
Year ended 30 Year ended 30
November 2005 November 2004
£ £
Profit for the year 4,612 12,435
2005 2004
Number Number
of shares of shares
Weighted average number of shares
For basic earnings per share 16,790,695 10,199,800
Dilutive effect of share options 833,718 -
For diluted earnings per share 17,624,413 10,199,800
The comparative figures are proforma based on the number of shares that would have been in issue
had the capital structure of the new parent company always been in place.
3. Reconciliation of net cash flow to movement in net funds
Year ended 30 Year ended 30
November 2005 November 2004
£ £
Increase in cash in the year 112,535 315,164
Cash held on deposit 12,600,000 -
Change in net funds resulting from cash flows 12,712,535 315,164
Movement in net funds in the year 12,712,535 315,164
Net funds at beginning of year 315,164 -
Net funds at end of year 13,027,699 315,164
4. Reconciliation of movement in shareholders' funds
Year ended 30 Year ended 30
November 2005 November 2004
Group £ £
Opening shareholders' funds 413,335 -
Shares issued during the year 98,356 102,000
Premium on shares issued during the year (net of 12,659,223 -
expenses)
Creation of merger reserve - 298,900
Profit for the year 4,612 12,435
Closing shareholders' funds 13,175,526 413,335
Year ended 30
November 2005
Company £
Opening shareholders' funds -
Shares issued during the year 200,356
Premium on shares issued during the year (net of 12,659,223
expenses)
Profit for the year 404,195
Closing shareholders' funds 13,263,774
5. Reconciliation of operating profit to operational cash flow
Year ended 30 Year ended 30
November 2005 November 2004
£ £
Operating (loss)/profit (489,417) 13,895
Depreciation 6,441 -
Decrease/(increase) in debtors 114,663 (551,819)
Increase in creditors 172,438 445,701
Net cash outflow from operating activities (195,875) (92,223)
6. Notice of AGM
The Annual General Meeting will be held at 11am on 23 May 2006 at Buchanan
Communications Ltd, 45 Moorfields, London EC2Y 9AE
