Summit Corporation plc
("Summit" or "the Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2009
Oxford, UK, 28 July 2008 - Summit Corporation plc (AIM: SUMM), a UK
drug discovery company, today reports its preliminary results for the
year ended 31 January 2009.
Highlights
Commercial
Establishment of Partnered Product Portfolio
* Worldwide licensing agreements with success based milestones and
royalties signed with BioMarin for Duchenne muscular dystrophy
programme (July 2008) and Evolva for iminosugar programme in
bioterrorism (January 2009)
* Co-development agreements signed with Orient Pharma for sialorrhoea
programme (Sept 2008) and the Lilly TB Drug Discovery Initiative
for tuberculosis programme (Oct 2008)
* No further costs to Summit
Post period
* Three cross-license agreements signed with Orient Pharma for Acne
(SMT D002), glaucoma (SMT D003) and AMD (SMT D004) programmes (May
2009)
Scientific
Advances in iminosugar drug discovery platform:
* Encouraging data generated in therapeutic focus areas of metabolic
diseases (diabetes) and anti-infectives (hepatitis C)
* Expansion of compound collection with increased protection
following patent filings
* Evolva deal followed positive in vivo data against bioterrorism
pathogens
Financial
* $7m equity investment by BioMarin as part of DMD licensing
agreement
* Cash position of £2.7m at 31 January 2009 (31 January 2008: £10.0m)
* Net loss of £22.4m for the year ended 31 January 2009 (2008:
£10.1m) inclusive of non-cash impairment provision of £12.5m
(2007/08: nil)
Post period
Continued refocus on exciting iminosugar platform and instigated plan
towards securing long-term future:
* Additional working capital raised through renegotiation and
divestment of non-core business operations
* Operational cash-burn halved through on-going extensive
restructuring programme
* Additional activities on-going to extend cash life beyond Autumn
2009
Steven Lee, PhD, Chief Executive Officer of Summit, commented on the
results: "It has been a challenging period for the business and one
of mixed fortunes. Whilst there have been major advances in the
development of our iminosugar drug discovery platform, and all our
other programmes were successfully progressed through to commercial
deals, we suffered a fall in services revenue and were unsuccessful
in an equity financing.
"Strategically, the Board recognised the considerable near-term
potential opportunity in iminosugars and within the period instigated
a restructuring programme to focus in this area. This process was
accelerated post-period due to financial difficulties, and continues
to deliver tangible support as part of our efforts towards securing
our long-term future. Summit is now emerging with a valuable product
portfolio, and an innovative and validated technology platform that
is ready to deliver value for our shareholders."
-- ENDS --
For more information, please contact:
Summit plc
Steven Lee, PhD
Richard Pye, PhD
Tel: +44 (0)1235 443951
Panmure Gordon
Andrew Burnett / Rakesh Sharma (Corporate Finance)
Ashton Clanfield (Corporate Broking)
Tel: +44 (0)207 459 3600
About Summit
Summit is a UK based drug discovery company with a major focus on
developing new therapeutics from its iminosugar drug discovery
platform.
Summit believes iminosugars are the key to gaining access to several
disease mechanisms where classical drugs have had little success, and
thus offer a major opportunity for the discovery and development of
new medicines.
Carbohydrates (sugars) play critical roles in maintaining correct
functioning of many normal processes in healthy individuals and
errors in carbohydrate recognition or modification can lead to
malfunction in cells resulting in disease. Iminosugars have the
potential to mimic carbohydrates or to interact with processes which
manipulate carbohydrates to modify activity or to correct aberrant
function. Additionally, the structural features of iminosugars allow
them to have, have important effects when interacting with many other
unexploited therapeutic targets.
Commercially, Summit has a track record of signing programme
agreements and currently has an out-licensed product portfolio
comprising of seven drug programmes with BioMarin, Orient Europharma,
Evolva and the Lilly TB Drug Discovery Initiative. In the future
these programmes may generate success based milestone payments and
royalties for Summit.
In addition, Summit owns Dextra Laboratories a standalone business
unit that offers specialist carbohydrate chemistry services to third
parties on a fee-for-service or collaborative basis.
The company listed on the alternative investment market (AIM) of the
London Stock Exchange in October 2004 - symbol: SUMM. Further
information about the company is available at www.summitplc.com.
Introduction
Summit remains committed to delivering value to shareholders through
the development and commercialisation of early-stage drug discovery
programmes. Over the period under review, your Company has made
progress in delivering this strategy having signed a total of seven
programme deals, including the Company's first major out-licensing
agreement.
However in common with many other businesses in the current economic
climate Summit experienced financial difficulties during the period,
which culminated in an attempted fundraising that was unable to reach
the minimum threshold to proceed, as announced to shareholders in
February 2009. The financial difficulties have been reflected in the
Company's share price performance during the period and as a Board,
we share the concerns and frustration that this will have caused
shareholders. As a consequence, a number of steps were taken,
including implementation of an extensive restructuring programme, as
the business works towards securing its longer-term financial
future.
We remain confident about the underlying potential within the
business. With our focus on developing new therapies in major areas
of unmet medical need from our iminosugar drug discovery platform
and, notwithstanding the current financial difficulties, we believe
that this potential can be realised to create a sustainable business
for the benefit of shareholders.
Strategy
Targeting early stage programme deals
Summit's strategy is to focus on the development of its drug
programmes up to a late preclinical or early clinical stage and then
to seek partners to undertake the more expensive registration studies
and product commercialisation. The point at which individual
programmes will be out-licensed will seek to balance the specific
needs of the programme with extracting maximum value for the benefit
of the business and shareholders,
Since July 2008, Summit has entered into seven programme agreements
that encompass a broad range of therapeutic areas. These programmes
were either the original assets that the business had been developing
since formation or ones that were acquired through M&A activity. As
outlined later, Summit's focus is on developing iminosugar based
therapeutics, it is expected that future programme agreements will
originate from this innovative technology platform.
Our strategy has consistently recognised a developing trend over the
last decade within the pharmaceutical industry of licensing deals
being signed at increasingly early stages of development. Indeed,
Ernst & Young's 2009 global biotechnology report, Beyond Borders,
stated that in 2008, 11 of the 15 largest European deals involved
discovery programmes or assets in preclinical development and further
supported our confidence in our strategy of commercialising
programmes at an early-stage.
Re-focusing and Restructuring of the Business
Over the period, and as part of the Board's continual review of our
R&D programmes, it was decided that the iminosugar drug discovery
platform represented the best opportunity for the business to create
significant future value and to date the Group has refocused its
efforts to concentrate on the development of this innovative
platform. As a result, and in view of the prevailing financial
environment, it was also decided that a controlled restructuring
programme within the business would occur, including the potential
disposal of non-core assets at an appropriate time to extract best
value and control costs.
During the period, Summit attempted to secure additional finance to
provide additional working capital to support the development of the
iminosugar platform. This fundraising coincided with a period of
significant uncertainty in global financial markets, a key factor
that contributed towards falling short of reaching our fundraising
target. Shareholders were updated on these events in February 2009
and the news resulted in a sharp fall in the share price.
As a consequence, the Board stepped up activities around its
restructuring programme as part of our efforts to secure the
financial future of the Company. In summary, this programme has
three objectives: To raise additional working capital; reduce future
expenditure; and accelerate activities within the business to focus
on the development and commercialisation of the iminosugar drug
discovery platform. Progress has been made in all three areas.
To date, the restructuring programme has involved the renegotiation
of the existing licensing agreements and disposal of non-core assets
to raise short-term working capital and reduce research and
development costs of the business. The disposal of the zebrafish
services business resulted in an impairment provision for the period
being recognised. In addition, the leases for the Cambridge and
Wales facilities were terminated, while more favourable terms of rent
for some of the remaining leases were negotiated. Headcount numbers
were also reduced by 50%, a necessary action towards safeguarding the
future of the business, and on behalf of the Board we thank the staff
affected for the hard work and efforts during their time with the
business. In addition the Board, which had already reduced in size
during the period, agreed, after the year end, to cut total
remuneration costs by 35%.
Collectively, these activities have more than halved the operational
cash-burn of the business, a figure that is expected to fall further
during 2009 as the restructuring programme continues.
Iminosugars
Summit's focus for creating future value is our proprietary
iminosugar drug discovery platform. It is our belief that this
innovative technology platform provides a major opportunity for the
discovery of new medicines and has application in a number of major
therapeutic areas with major unmet medical needs. Iminosugars now
represent our sole area of investment with our internal research and
development currently concentrated in the therapy areas of metabolic
diseases and anti-infectives, both of which represent multi-billion
dollar markets.
The decision to focus on iminosugars occurred during the last 18
months as the Board recognised the assets and activities around the
platform represented the best immediate opportunity for creating a
sustainable business that will generate future value for our
shareholders. The Company was founded with two technology platforms
in carbohydrate chemistry and zebrafish biology respectively. It was
from within the carbohydrate platform that the diversity and broad
application of iminosugars, small molecules that mimic carbohydrates,
has emerged. Over the last three years, the iminosugar platform has
evolved under the guidance of our Chief Scientific Officer, Dr
Richard Storer. The substantial level of investment that has already
been made into the development of this technology means that the
platform is now approaching a stage where we believe it can begin to
generate significant value through commercial agreements with
partners in the pharmaceutical and life sciences industries.
This belief was supported by the signing of the first iminosugar
programme licensing agreement with Evolva Biotech in January 2009.
The details of the agreement will be discussed later, but its signing
provided important validation of the potential of the platform. Our
target over the coming months is to generate significant value from
this platform through the signing of new licensing agreements within
our focus areas of metabolic diseases and anti-infectives.
Importantly, we are already generating encouraging data from the
programmes in these areas and we hope to be able to report on their
continued progress over the coming months. In addition, we will seek
collaborations in the many other disease areas where iminosugars are
expected to find utility.
Product Portfolio
During the period, Summit entered into a number of programme
agreements, including the Company's first major licensing agreement,
with partners in the pharmaceutical industry. The establishment of
these commercial agreements fulfilled a key objective for the
business and the progress made exceeded our targets set at the start
of the period with seven agreements being signed. Together, these
agreements now form our Product Portfolio that could generate future
value from contractual success based milestone and royalty payments
but requires no further investment by Summit.
Licensing of SMT C1100 for Duchenne muscular dystrophy to BioMarin
In July 2008, Summit entered into an exclusive worldwide licensing
agreement with the US biotechnology company BioMarin Pharmaceuticals
Inc. for our preclinical candidate SMT C1100. This candidate is
under development to treat Duchenne muscular dystrophy (DMD), a fatal
genetic disease for which there is currently no cure.
On signature, BioMarin made a $7 million equity investment in Summit
at a 25% premium to the share price at that time. The total
development and commercialisation milestones payable by BioMarin
amounted to $136 million, in addition to which Summit would receive
tiered royalties on sales that rise to a low teen percentage.
In March 2009, this license agreement with BioMarin was renegotiated
as part of Summit's restructuring programme. Under the terms of the
restructured deal, BioMarin acquired full ownership of the DMD
programme, including the preclinical candidate SMT C1100. In
particular, BioMarin assumed all future preclinical and nonclinical
development costs for SMT C1100 that were to be borne by Summit under
the original licensing agreement. This was in exchange for a
clinical development milestone of $1 million that was anticipated to
be payable in 2010. The changes to the agreement provided Summit
with a short term cash advantage, although the overall effect on the
Company's financial position is broadly neutral.
Summit now remains eligible to receive success-based development and
regulatory milestones of up to $50 million plus sales milestones of
$85 million and tiered royalty payments rising to a low-teen
percentage.
Agreement with Orient Pharma for SMT D001 for sialorrhoea
The sialorrhoea programme was also subject of two separate agreements
during the period under review. As with the DMD programme, the
second agreement formed part of the Company's post-period
restructuring activities.
In September 2008, Summit entered into a co-development agreement
with Taiwan based Orient Pharma (Orient). Under the terms of this
agreement, Orient gained commercial rights over SMT D001 in
Asia-Pacific and Australasia and were responsible for future clinical
development, manufacturing and distribution costs of SMT D001 in
these territories. Summit retained commercial rights in the world's
major territories including North America and Europe and would have
access to all clinical data generated by Orient.
This agreement was superseded in May 2009 with the signing of a new
agreement that saw Orient take full ownership of the programme. The
terms of this agreement involved Orient making an equity investment
in Summit shares of $500,000 as a price of 13.5 pence, which was
approximately 2.5 times the share price at that time. In addition,
Summit is eligible to receive undisclosed royalties on worldwide
sales of the product.
Co-development agreement with Lilly TB Drug Discovery Initiative
In October 2008, Summit entered into a co-development agreement with
the Lilly TB Drug Discovery Initiative, (the Initiative), a
public-private partnership created by the pharmaceutical company Eli
Lilly to fund the discovery and development of new tuberculosis (TB)
drugs. Summit provided to the Initiative novel compounds that have
shown in vitro cell-killing activity against Mycobacterium
tuberculosis, the bacteria that causes TB. The Initiative is
responsible for all future R&D costs worldwide and has commercial
rights to the compounds in the developing world for the treatment of
respiratory diseases. Summit has exclusive access to the data
generated and retains commercial rights to these compounds in all
indications for the developed world.
Licensing of SMT 14400 for bioterrorism to Evolva
In January 2009, Summit entered into an exclusive worldwide license
with Evolva Biotech for SMT 14400, and it preferred isomer SMT 15000,
two iminosugars being developed as a potential treatment for
infectious diseases associated with bioterrorism.
Under the terms of the agreement, Summit received an undisclosed
payment on signature and will receive additional payments throughout
preclinical development, a milestone payment at filing of an IND and
further future success based development and regulatory milestone
payments. Evolva is responsible for all development costs. On
successful commercialisation, Summit is eligible to receive tiered
royalties, rising to a low-teen percentage, and sales related
milestone payments.
SMT 14400 originated from our iminosugar drug discovery platform and
the licensing agreement provides validation of the potential of our
second generation iminosugars. The compound is an immunomodulator, a
compound that works by selectively boosting aspects of the human
immune system. The deal followed evaluation of the compound by
Evolva in in vivo preclinical studies that has shown it to be active
against viral and bacterial pathogens, and is well tolerated. Evolva
has a strong capability in this area and has attracted significant
funding from the Defense Threat Reduction Agency (DTRA), a US-federal
body developing technologies to counter the threat of biological
agents.
Co-development agreement with Orient Pharma for acne (SMT D002),
glaucoma (SMT D003) and AMD (SMT D004) programmes
The final three agreements were in May 2009 with Orient and cover
Summit's clinical and preclinical programmes in acne (SMT D002),
glaucoma (SMT D003) and wet age-related macular degeneration (AMD)
(SMT D004). The agreements provide Orient with exclusive development
and commercialisation rights in Asia-Pacific and Australasia and they
will be responsible for all development, manufacturing and
distribution costs associated with the products within its
territories. Summit retains valuable rights to the products in North
America, Europe and the rest of the world and has rights to access
data generated by Orient. Our intention is to use these data, which
will include clinical trial results, to secure future commercial
agreements within our territories.
Financial Review
A critical feature of the period under review was not being able to
secure additional equity funding, which has led to increased
activities around our restructuring programme. This programme to
date has resulted in a number of one-off charges and impairments as
the Company works towards reconstructing its finances.
Prior to the restructuring activities, the fee-for-service operations
had a difficult trading period as a consequence of the difficult
economic climate with revenues lower at £1.8 million (2007/08: £3.0
million). Following our financial year end, Summit sold its
zebrafish services division in May 2009 to Evotec AG for the
consideration of £500,000 cash to leave only one services business,
Dextra Laboratories. With our focus on the development of the
iminosugar drug discovery platform, this standalone business now
represents a potential future divestment opportunity, which the Board
is actively marketing.
In the Balance Sheet, an impairment provision of £12.5 million
(2007/08: nil) was recognised during the period. The sale of the
zebrafish business was the principal reason for this impairment that
resulted in a £8.4 million goodwill provision. In addition, a £1.4
million goodwill provision for Dextra Laboratories was recognised
following a review of the fair value of the assets by the management
while a £2.6 million intangible assets provision was recognised.
Research and development investment was lower at £5.8 million
(2007/08: £7.7 million) and reflected the reduced levels of research
activity outside of iminosugars but this figure was off-set by the
drop in revenue and grant income. Excluding impairments, the
operating loss for the period was £11.8 million (2007/08: 11.7
million).
A research and development tax credit of £750,000 (2007/08: £720,000)
was recognised during the 12 months under review and the Company
expect's to receive this credit in the second half of 2009.
The cash outflow for the 12 months to 31 January 2009 was £7.3
million and compared to a cash outflow of £8.2 million over the
previous 12 month period. The Company received £3.9 million in the
period from the issue of new shares, of which £3.5 million was in
respect of shares issued to BioMarin. At 31 January 2009, the Group
had cash reserves of £2.7 million (2007/08: £10.0 million)
Working Capital
As already discussed, the business increased activities in its
restructuring programme after the financial year end as part of the
efforts towards securing the future of the business. This programme
has already extended the cash life of the business into the Autumn of
2009 and significantly reduced the operating cash-burn of the Group.
The Group will, however, need to raise additional sources of finance
to secure the longer-term future of the Group. The Board and
management are actively marketing the diabetes and hepatitis C
iminosugar programmes as out-licensing opportunities and the Dextra
business unit for sale. They are also in discussion with the Group's
financial advisers regarding sources of additional capital and other
strategic transactions. The timing and amount of any funds that may
be realised through asset disposals or a new fund-raise, however,
represent a material uncertainty. The Board are confident that its
plans will allow the Group to continue its operations for the
foreseeable future. Based on this assessment, the Board have
prepared these statements on a going concern basis.
Proposed Capital Reorganisation
The Company is also proposing to shareholders a capital
reorganisation. The closing mid market price of an Ordinary share in
Summit on 24 July 2009 was 5.0 pence meaning Summit's share price is
below the nominal value of an Ordinary share of 10p. The effect of
this is to restrict the ability of the business to raise further
equity finance, since in order for the Company to comply with the
regulations, any further shares would have to be used at price at or
above the nominal value. In order to assist the Company with its
on-going and future activities, the Board will proposes a
reorganisation of the share capital that will involve each issued
ordinary share of 10 pence currently held being replaced with one
having a nominal value of 1 pence. The proposal will be put to
shareholders at this year's Annual General Meeting (AGM) with full
details of the reorganisation being set out in the Notice of AGM.
Board Changes
The Board underwent a number of changes during the period that
included the departure of Darren Millington as Chief Financial
Officer and Colin Wall as a Non-executive Director. On behalf of the
Board, we would like to thank Darren and Colin for their efforts
during the time with the Company. Anthony Weir was appointed Chief
Financial Officer in November 2008 and subsequently left the Company
in March 2009 by mutual consent. As already mentioned, total Board
remuneration fell by 35% since the end of the period under review.
Summary
The past 18 months has been a period of mixed fortunes; good progress
was made in developing and commercialising our internal drug
discovery programmes but the progress made within this side of the
business was accompanied by considerable efforts towards
restructuring the business to overcome its current financial
difficulties.
The Company continues to take necessary and decisive action and is
making good progress towards securing the long term financial future
of the business. We remain confident that these immediate financial
issues can be resolved and believe, through our iminosugar drug
discovery platform and Product Portfolio, that the business is well
equipped to generate value in the future for our shareholders.
We would like to thank shareholders for their continuing support and
we will provide updates on the progress being made within the
business over the coming months. Finally, we would like to thank all
our staff who have endured a difficult few months for their continued
dedication and loyalty as we all strive towards achieving our
ambition of developing Summit into a successful and sustainable
business.
Barry Price, PhD Steven Lee, PhD
Chairman Chief Executive Officer
27 July 2009
Consolidated Income Statement
For the year ended 31 January 2009
Year ended Year ended
31 January 2009 31 January
2008
(Restated)
£000s £000s
Revenue 1,831 3,030
Cost of sales (1,058) (1,264)
Gross profit 773 1,766
Other operating income 315 1,079
Administrative expenses
Research and development (5,754) (7,712)
General and administration (4,031) (3,676)
Sales and marketing (1,079) (1,091)
Depreciation and amortisation (1,894) (1,650)
Impairment (12,464) -
Share based payment (212) (486)
Total administrative expenses (25,434) (14,615)
Operating loss (24,346) (11,770)
Finance income 304 775
Finance cost (85) (38)
Loss before taxation (24,127) (11,033)
Taxation 1,724 911
Loss for the year attributable to
equity shareholders of the parent (22,403) (10,122)
Basic and diluted loss per ordinary
share 41.96p 21.13p
Consolidated balance sheet
For the year ended 31 January 2009
31 January 2009 31 January
2008
(Restated)
£000s £000s
ASSETS
Non-current assets
Goodwill - 9,767
Intangible assets 4,820 8,131
Property, plant and equipment 3,714 4,268
8,534 22,166
Current assets
Inventories 391 337
Trade and other receivables 1,495 1,581
Current tax 805 719
Cash and cash equivalents 2,717 10,088
5,408 12,725
Total assets 13,942 34,891
LIABILITIES
Current liabilities
Trade and other payables (1,732) (3,129)
Borrowings (135) (188)
Total current liabilities (1,867) (3,317)
Non-current liabilities
Deferred income (141) (97)
Provisions (1,180) (1,180)
Borrowings (1,181) (1,222)
Deferred tax (1,020) (1,879)
Total non-current liabilities (3,522) (4,378)
Total liabilities (5,389) (7,695)
Net assets 8,553 27,196
EQUITY
Share capital 5,597 4,967
Share premium account 25,785 22,750
Shares to be issued - 1,443
Share based payment reserve 1,176 964
Merger reserve 12,654 11,328
Retained earnings (36,659) (14,256)
Total equity attributable to the
equity shareholders of the Parent 8,553 27,196
Consolidated cash flow statement
For the year ended 31 January 2009
Year ended Year ended
31 January 31 January
2009 2008
£000s £000s
Cash flows from operating activities
Loss before tax (24,127) (11,033)
Adjusted for:
Finance income (304) (775)
Finance cost 85 38
Foreign exchange loss 2 -
Depreciation 1,182 766
Amortisation of intangible fixed assets 718 884
Loss on disposal 198 -
Impairment loss 12,464 -
Share based payment 212 486
Adjusted loss from operations before changes (9,570) (9,634)
in working capital and provisions
(Increase)/decrease in trade and other
receivables 86 (189)
(Increase) in inventories (54) (79)
Increase/(decrease) in trade and other
payables (1,489) 1,376
Cash used by operations (11,027) (8,526)
Taxation Received 898 454
Net cash used in operating activities (10,129) (8,072)
Investing activities
Acquisition of businesses net of cash
acquired - 406
Purchase of property, plant and equipment (997) (1,846)
Purchase of intangible assets (150) (97)
Interest received 304 775
Net cash used in investing activities (843) (762)
Financing activities
Proceeds from issue of share capital 3,900 142
Proceeds from receipt of loan - 600
Repayment of debt during the period (204) (71)
Repayment of finance lease costs (10)
Interest paid (85) (38)
Net cash generated from financing activities 3,601 633
Net (decrease)/increase in cash and cash
equivalents (7,371) (8,201)
Cash and cash equivalents at beginning of
period 10,088 18,289
Cash and cash equivalents at end of year 2,717 10,088
Notes to the financial statements for the year ended 31 January 2009
1. Basis of accounting
The financial information for the year ended 31 January 2009 is
prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards (IFRSs)
as endorsed by the European Union and implemented in the UK.
The financial information set out above is derived from but does not
constitute the Company's statutory accounts for the years ended 31
January 2009 or 2008. Statutory accounts for 2008 have been delivered
to the Registrar of Companies. The statutory accounts for 2009 will
be delivered to the Registrar of Companies following the Company's
Annual General Meeting. The auditors have reported on the 2009 and
2008 accounts; their reports were unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985. Due
to the ongoing financial uncertainty for the Company, as discussed
below, the auditors have included an emphasis of matter paragraph
regarding the adequacy of the Company's disclosure in this respect in
their report.
The financial information in these financial statements has been
prepared on a going concern basis which assumes that the Group will
continue in operational existence for the foreseeable future. The
Directors have reviewed the working capital requirements of the Group
over the next 12 months and have identified a number of steps that
need to be taken to manage the cash position to ensure it can
continue in operation for the foreseeable future. These actions
include managing and reducing research and overhead costs and raising
finance from other sources. The Directors have identified a number of
areas where costs may be reduced including the restriction of R&D
projects to core projects, premises lease costs, staff costs and
Directors' fees. The Group has provided confidential information on
its preclinical diabetes and Hepatitis C programmes to a number of
prospective major pharmaceutical and biotech partners that have
expressed interest with a view to the negotiation and completion of
an out-licence deal. We are discussing fund-raising options with our
financial advisors and we are also in a process that may lead to the
sale of one of the Group's wholly owned subsidiaries, Dextra
Laboratories Limited. The Group's future as an independent entity
will depend upon managements' ability to complete at least one of the
above fund-raising options in the Autumn of 2009 with a likelihood of
needing to complete a second in Spring 2010. The Directors are
confident that this can be achieved. The timing and extent of such
transactions required to remain as a going concern however represent
a material uncertainty and therefore the Group may be unable to
realise it's assets and discharge it's liabilities in the normal
course of business. No adjustments have been provided in these
accounts to reflect any loss in the value of assets or increase in
liabilities that would arise should the Group be unable to continue
as a going concern.
2. Impairments
As required by the relevant IFRS's, the Group carried out a review of
the carrying value of its main assets that resulted in a non-cash
impairment provision of £12,464k being recognised. Following the
transfer of the trade and assets from Summit (Cambridge) Limited to
Summit (Oxford) Limited during the year, and in light of the
subsequent sale of the zebrafish business in May 2009, a goodwill
provision of £8,389k was recognised. In addition, a £1,378k goodwill
provision associated with Dextra Laboratories Limited was recognised
with the Management having assessed the fair value of Dextra
Laboratories net assets as an individual entity on both a value in
use and a fair value less costs to sell basis, and have concluded on
the latest available evidence that the recognition of an impairment
provision against the goodwill is required. An intangible assets
provision of £2,597k was also recognised in respect of the
sialorrhoea and seborrhoea programmes following the licensing deals
that were signed which affected both of them.
3. Shareholders' funds and statement in changes in shareholders'
equity
For the year ended 31 January 2009
Share
Share Shares based
Share premium to be payment Merger Retained
capital account issued reserve reserve earnings Total
Group £000s £000s £000s £000s £000s £000s £000s
At 1
February
2008 4,967 22,750 1,443 964 11,328 (14,256) 27,196
Loss for
the year - - - - - (22,403) (22,403)
Total
recognised
income and
expense for
the year - - - - - (22,403) (22,403)
New share
capital
issued 630 3,035 (117) - - - 3,548
Share based
payment - - - 212 - - 212
Share issue
eligible
for merger
relief - - (1,326) - 1,326 - -
At 31
January
2009 5,597 25,785 - 1,176 12,654 (36,659) 8,553
For the year ended 31 January 2008
Share
Share Shares based
Share premium to be payment Merger Retained
capital account issued reserve reserve earnings Total
Group £000s £000s £000 £000s £000s £000s £000s
At 1
February
2007 3,722 22,327 - 478 (1,943) (4,134) 20,450
Loss for
the year - - - - - (10,122) (10,122)
Total
recognised
income and
expense for
the year (10,122) (10,122)
New share
capital
issued 1,245 423 - - - - 1,668
Share based
payment - - - 486 - - 486
New shares
to be
issued 1,443 1,443
Merger
Relief - 13,271 13,271
At 31
January
2008 4,967 22,750 1,443 964 11,328 (14,256) 27,196
4. Restated comparatives
Following a review of operations it was agreed that overhead costs
within general and administration would not be allocated to cost of
sales and that depreciation would not be allocated to research and
development expenditure. The prior year amounts have been adjusted as
follows; cost of sales has been reduced by £359,000, research and
development by £695,000 with a corresponding credit to general and
administration of £1,054,000. An adjustment has also been made to
correctly reflect the split between current and non- current
liabilities for the deferred income resulting from the contributions
made from a landlord of one of the premises occupied towards
refurbishment costs. This adjustment resulted in an increase to
non-current liabilities of £97,000 and a subsequent decrease to
current liabilities of the same amount.
5. Annual General Meeting
The Annual General Meeting is due to be held at 10.00am on 20 August
2009 at the Company's registered office, 91 Milton Park, Abingdon,
Oxfordshire, OX14 4RY.
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This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.