TIDMLPX
RNS Number : 5884J
Lipoxen PLC
01 April 2010
+-----------------------------------+-----------------------------------+
| For Immediate Release | 1 April 2010 |
+-----------------------------------+-----------------------------------+
Lipoxen PLC
("Lipoxen" or "the Company")
Final Results for the year ended 31 December 2009
Lipoxen PLC (AIM:LPX), a bio-pharmaceutical company specialising in the
development of high-value differentiated biologicals, vaccines and siRNA
delivery, is pleased to announce its final results for the year ended 31
December 2009.
Key Operational Highlights
· Restructuring programme initiated enabling Lipoxen to focus on delivering
near-term commercial opportunities for its promising platform technologies
· Collaboration agreement signed with Pharmasynthez ZAO, giving Lipoxen human
clinical proof of concept for its ImuXen and PolyXen proprietary technologies
as applied to six vaccine and drug candidates
· Appointed lead member of the grant consortium for the Technology Strategy
Board's controlled-release nanoparticle vaccine research programme, which
includes Lipoxen's influenza vaccine project
· Preclinical feasibility project agreement with PATH Malaria Vaccine
Initiative to apply Lipoxen's ground-breaking ImuXen technology to enhance the
performance of malaria vaccine candidates
Key Financial Highlights
· GBP2.9m Placing completed in May 2009 led by cornerstone investor and
licence partner, Baxter International Inc.
· Turnover of GBP0.5m (2008: GBP1.2m)
· Pre-tax loss of GBP3.6m (2008: GBP3.8m)
· Non-cash component of total pre-tax loss GBP0.6m (2008: GBP2.1m)
· Net cash at period end of GBP1.0m (2008: GBP602k)
· Net asset value at 31st December GBP2.3m (2008: GBP3m)
· Loss per share basic and fully diluted of 2.47p (2008: 2.89p)
· Net asset value per share - basic 1.46p (2008: 2.48p)
· Net asset value per share - fully diluted 1.43p (2008: 2.38p)
Post Period Highlights
· Announced today: GBP1.2 million successful Placing (separate announcement
issued)
· First patients dosed in an FDA/EMEA regulated Indian Phase II trial of
ErepoXen to prevent anaemia caused by chronic renal (kidney) failure or
chemotherapy by Lipoxen's partner Serum Institute
· Patents granted for Polysialylated G-CSF StimuXen(TM) Technology in six
European territories, including the UK, Germany, France, Spain, Italy and
Switzerland
· New US patent granted for PolyXen technology
Commenting on the results, Scott Maguire, CEO of Lipoxen, said:
"FY2009 saw tangible advances in the underlying science for both vaccine and
drug platform technologies. Although the revenues from research and development
work declined in 2009, the Company has a substantial project base that has the
capacity to deliver significant licence fee income going forward, and it is
management's focus to deliver licence deals for both our lead candidates and
technology out-licensing .
"The Directors remain fully confident in Lipoxen's prospects as evidenced by
their further investment in the Company as announced in today's placing. I look
forward to updating shareholders at the time of the Interim Report."
For further information:
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| Lipoxen plc | +44 (0)20 7389 |
| | 5015 |
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| M. Scott Maguire, Chief Executive | |
| Officer | |
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| | |
+------------------------------------------+--------------------+
| Singer Capital Markets (nominated | +44 (0)20 3205 |
| adviser) | 7500 |
+------------------------------------------+--------------------+
| Jeff Keating, Claes Spång | |
+------------------------------------------+--------------------+
| | |
+------------------------------------------+--------------------+
| Buchanan Communications | +44 (0)20 7466 |
| | 5000 |
+------------------------------------------+--------------------+
| Lisa Baderoon, Catherine Breen | |
+------------------------------------------+--------------------+
Notes to Editors
Lipoxen plc is a biopharmaceutical company focused on the development of new and
improved biologic drugs and vaccines. Lipoxen has three proprietary patented
technology platforms:
1) PolyXen - for extending the efficacy and half life of biologic drugs
2) ImuXen - for creating new vaccines and improving existing vaccines
3) SiRNAblate - for the delivery of siRNA
Lipoxen's technology is designed to improve the efficacy, safety, stability,
biological half-life and immunologic characteristics of its products.
Lipoxen has multiple drug and vaccine programmes in development. Two products
are in clinical development, SuliXen, a long acting insulin and ErepoXen, a
long-acting erythropoietin (EPO). Lipoxen's preclinical pipeline includes
vaccines against HIV, influenza and malaria and an exclusive licence deal with
Baxter Healthcare for Factor VIII.
The Company has a low-risk business model and out-licenses its proprietary
technologies to biopharmaceutical companies that have strong manufacturing and
marketing capabilities. Lipoxen currently has commercial agreements with some
of the world's leading biotechnology and pharmaceutical companies including
Baxter, Schering-Plough, the Serum Institute of India Limited, Genentech, and
Genzyme. Furthermore, Baxter, the Company's third largest shareholder, and
management led the GBP2.9 million fundraising that the Company announced in May
2009.
Lipoxen, which was founded in 1997, now trades on the AIM Market of the London
Stock Exchange under the ticker symbol LPX. More information can be found at the
Company's website: www.lipoxen.com.
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31st DECEMBER 2009
The year ended 31st December 2009 was a challenging one for Lipoxen and the
results for the period were disappointing. That said, we are confident that we
have now put the problems of FY2009 behind us and the Board has a positive
outlook for 2010. To underscore such outlook shareholders should note that
Management has invested more than GBP0.5m in equity placings over the last
twelve months such is their commitment and confidence in the Company.
As stated in the Trading Update issued earlier this year, the Company initiated
a restructuring programme in H2-2009 to enable it to focus on delivering the
near-term commercial opportunities for its promising platform technologies. The
Board has:
- re-focused programme development efforts with our key collaborators to
minimise the risk of future programme delays;
- restructured internal scientific operations to enhance speed to
commercialisation of our IP;
- executed a broad licence deal to obtain human proof of concept validation
on accelerated timelines on six products including both orphan drug and
"blockbuster" products;
- developed initiatives to reduce our dependence on third parties; and
- taken steps to increase the Company's direct control of upcoming
programmes and actively to seek out other complementary technologies.
While my last Chairman's Statement served as a major project update, I believe
that, in the circumstances of recent developments, and in consideration of the
Group's refocused strategy going forward, it is appropriate that I clarify the
nature of the Lipoxen business model.
· The Company confines its internal scientific effort (and, therefore, its
operating costs) to providing application support of its IP to third party
collaborators with a view to such partners undertaking the full costs (and
risks) of clinical development of their product under licence of the relevant
technology. It is not the Company's model to fund clinical trials in other than
exceptional circumstances.
· Lipoxen's business model, driven by the nature of its proprietary IP
portfolio, confers a very much lower risk profile than that of most early stage
Life Science companies. Our IP is not indication-specific, rather it is
targeted at a wide spectrum of applications in biologics and vaccines.
· The Lipoxen platform technologies allow us to partner specific applications
and therapeutic areas thereby allowing us to license each technology to many
partners. The potential scope for individual product candidate development far
exceeds the ability of any small cap enterprise such as Lipoxen to contemplate,
which is why the "partnering" model will continue to be a key strategy.
· The economic model is also simple. Feasibility/development studies are "fee
for service"/"level of effort" work for which Lipoxen is paid an agreed Full
Time Equivalent (FTE) rate plus materials; this represents, at best, a cash
contribution which only partially offsets the Company's core costs of operation.
· The work we do is undertaken by highly trained and experienced scientists
with the technical skills and depth of understanding of the proprietary
technologies such that we can work with each collaborator to optimise their
specific product candidate creating the scientific basis for them to take their
product into the clinic under licence.
· It is only at the licensing stage that real shareholder value is generated
and so it is obviously pivotal to Lipoxen's future success that our lead
proprietary product candidates (long-acting EPO and Insulin) move through the
clinic as quickly as possible; the corollary is that any delay in clinical
development serves to lengthen the time before technical validation in
FDA/EMEA-regulated (or at least compliant) clinical trials can be achieved.
Returning to trading in 2009, while the year proved frustrating in our failing
to make the originally planned amount of clinical progress, this was not because
of any scientific difficulties; indeed both Insulin and EPO have already
generated excellent Phase I data and indicated their potential to be genuinely
market-challenging products. Rather, the delays were caused by regulatory and
financial issues wholly external to and uncontrollable by Lipoxen.
Notwithstanding these factors, and against a current position where EPO has now
commenced a Phase II FDA/EMEA compliant trial in India and SuliXen (our
long-acting insulin candidate) is planned to enter Phase II (unregulated) trials
in Russia in Q2-2010, the segueway to any major out-licensing of these products
has almost certainly been put back by several months. Accordingly, your Board
now expects that the first major licensing of these products will occur in 2011.
Licensing is the key driver to enable the Company to reach its "cash inflection
point" defined as the time when income exceeds costs of operation and the
Company becomes a net cash generator.
The consequence of H2-2009 performance was that the Company's revenue
expectations were not met, particularly with regards to the generation of
licence fee income. Lipoxen also encountered delays on certain in-house projects
and, in the absence of new feasibility initiatives (due largely to industry-wide
issues) the level of income for 2009 as a whole fell below expectations. While
operating costs remained tightly controlled and were less than budgeted, the
quantum of cost savings was not enough to offset the drop in revenues;
consequently, our monthly cash "burn" in H2-2009 increased significantly as
compared to previous periods. These various issues combined to leave the Group
with a net cash balance of some GBP1.02 million at 31st December 2009.
I am, however, pleased to announce that the Company has been successful in
raising circa GBP1.2m (before costs) by way of an equity placing of some 17.5
million new ordinary shares at 7.0 pence. This interim funding round closed on
31st March 2010 and leaves the Group with circa GBP1.2m to be added to the cash
balance of circa GBP0.5m as at end-March, being a sum that your Board considers
adequate to fund operations through to the next key development initiative.
Shareholders might care to note that Management contributed circa GBP150k to
this latest Placing, bring their aggregate investment in the last 12 months to
more than GBP0.5m.
Programme Update
A review of the Company's major ongoing projects is set out below:
PSA-EPO ("ErepoXen") Phase II trial in India
Serum Institute of India ("SIIL" or "Serum") is responsible for the Indian
trials and pivotally, in managing arrangements with the Clinical Research
Organisation ("CRO") conducting them.
As previously announced, Serum has elected to expand the initially planned Phase
II(a) trial into a fully integrated Phase II FDA/EMEA compliant trial. This
trial upgrade necessitated the engagement of Clinigene International Limited
("Clinigene") - a large CRO with considerable experience of regulated clinical
trials - to carry out the multi-centre trial in patients. However, this
"upgrading" of the trial meant that new regulatory permissions had to be sought
which caused delays to the programme.
It is important to be clear that this re-scoped trial, while resulting in a
delay to its commencement, is planned to deliver more broadly applicable results
at an earlier date than would otherwise have been possible; the positive impact
of this change is that the promotion of the product candidate towards
marketability has, de facto, been accelerated.
PSA-EPO ("ErepoXen") Canadian Phase I/II(a) trial in patients
This project was first contemplated to be mainly financed by Serum and, to that
end, Serum established a final form contract with a suitable CRO some months
ago. However, as detailed in the recent trading update, Serum now considers
that, following the expansion of the scope of the Indian PSA-EPO Phase II trial
(ante), the originally planned Canadian FDA-regulated trial is no longer
justifiable on such basis.
Your Board, however, considers that such a trial will be highly beneficial to
the development of licensing opportunities for ErepoXen for regulated markets.
To this end Lipoxen's future fundraising plans will include the circa US$800k
needed to fund the trial which we hope to start no later than Q1-2011.
PSA-Insulin ("SuliXen") Phase II trial in Russia
FDS (the Company's Russian counterparty on this project) has advised Lipoxen
that it is unable to commence the Phase II(a) SuliXen trial for purely economic
reasons. In consultation with FDS, the Company is resetting the timelines on
this trial with a view to its initiation in Q2-2010 to be followed by an EMEA
Phase I trial planned to commence directly following the successful completion
of the Russian Phase II(a).
The initial results from the associated programme at the Barbara Davis Institute
have indicated that this study is likely to be extended through Q2-2010, and so
the Company does not expect to be in a position to report finally on this
project until later this year.
Grant for H1N1 influenza vaccine
In March 2009 Lipoxen announced positive pre-clinical results on this product
candidate which is being developed as part of the UK Technology Strategy Board
("TSB") funded programme for a novel influenza vaccine. The Company announced
in September 2009 that, pursuant to the commercial demise of the then lead
manager of the project consortium, Lipoxen has been appointed as the project
leader on a renewed TSB programme to take the vaccine candidate through
pre-clinical trials on a timeline that now runs to September 2010.
The renewed project continues to lie at the heart of the Company's early stage
vaccine potential and, while it suffered a delay in its recommencement (with a
concomitant reduction in grant income receivable in H2-2009) its scientific
potential remains wholly intact.
This project is progressing well on its development path and, when the latter
stages of the programme have been successfully attained, Lipoxen expects to seek
a partnering opportunity to move this candidate into the clinic in H1-2011.
ErepoXen and SuliXen licence deals
Licence transactions for these product candidates are governed to a large extent
by the clinical progress being made on them by our collaborative partners. The
status of each candidate has been addressed above and delays in the mainstream
projects have had a knock-on effect on the licence discussions that otherwise
have been ongoing on both products.
I am pleased to report that external interest in the products remains high and
we look forward to updating the market on first licensing opportunities before
the end of FY2010.
Baxter Healthcare, PSA-Factor VIII
Our partnership with Baxter on the PSA-Factor VIII project continues to be
encouraging and we anticipate Baxter's declaration of a Lead Product Candidate
in H1-2010.
Baxter is now the Company's third largest shareholder and, in light of the
excellent scientific progress that has been made in the last 12 months, there is
clear potential for broadening this important collaboration.
HIV and Malaria Vaccine
Both of these programmes are being run in the United States, by, respectively:
- the International AIDS Initiative ("IAVI") - the world's leading HIV
vaccine organisation; and
- PATH, the Malaria Vaccine Initiative ("MVI") and the US National Institute
of Health ("NIH").
Both projects are on track to report in H1-2010 when the Company hopes to have
third party validation of the effectiveness of our liposomal co-delivery vaccine
platform technology to further support the results coming from the H1N1
influenza programme (ante).
siRNA Delivery
In June 2009, Lipoxen entered into an agreement with an undisclosed leading
global pharmaceutical company whereby the effectiveness of combining the
proprietary siRNA with Lipoxen's siRNAblate technology will be evaluated. This
project is ongoing and the Company will provide a further update in the near
future.
Other Projects
As announced in November 2009, Lipoxen entered into a collaboration with
Pharmasynthez ZAO (a leading private Russian research-based pharmaceutical
company) to apply Lipoxen's ImuXen and PolyXen proprietary technologies to a
broad range of six drug and vaccine candidates.
This collaboration is progressing well and, possibly as early as the end of this
year, will provide the Company with human clinical proof of principle data on
Lipoxen's ImuXen (vaccine) platform and deliver further scientific evidence on
our PolyXen (biologic) technology. The strategy behind this program is to allow
the Company to evaluate human data on six novel candidates with minimal resource
input being required from our side. This human data will provide the basis for
the Company's decision whether or not to fund EMEA/FDA regulated trials on any
of the candidates.
Financial Summary
The financial results for the Group in the period under review were:
+--------------------------------------------+---------+---------+
| | 2009 | 2008 |
+--------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+--------------------------------------------+---------+---------+
| Revenue | 469 | 1,160 |
+--------------------------------------------+---------+---------+
| Total pre-tax losses for period | 3,631 | 3,791 |
+--------------------------------------------+---------+---------+
| Non-cash component of total pre-tax loss | 619 | 2,142 |
+--------------------------------------------+---------+---------+
| Net cash as at 31st December | 1,018 | 602 |
+--------------------------------------------+---------+---------+
| Net asset value as at 31st December | 2,248 | 2,973 |
+--------------------------------------------+---------+---------+
| | | |
+--------------------------------------------+---------+---------+
| | P | P |
+--------------------------------------------+---------+---------+
| Loss per share - basic and fully diluted | 2.47 | 2.89 |
+--------------------------------------------+---------+---------+
| Net asset value per share - basic | 1.46 | 2.48 |
+--------------------------------------------+---------+---------+
| Net asset value per share - fully diluted | 1.43 | 2.38 |
+--------------------------------------------+---------+---------+
The following table summarises the broad application of funds in the period:
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| | | | 2009 | 2009 | 2008 | 2008 |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| Cash settled expenses | | | GBP'000 | % | GBP'000 | % |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| R&D expense - cash | | | 2,142 | 61.4 | 2,004 | 69.5 |
| settled | | | | | | |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| Other expenses - cash settled | | 1,349 | 38.6 | 879 | 30.5 |
+--------------------------------------+----------+-----------+-----------+-------------+----------+
| | | --------- | --------- | --------- | -------- |
+--------------------------------------+----------+-----------+-----------+-------------+----------+
| Total expenses - cash settled | | 3,491 | 100.0 | 2,883 | 100.0 |
+--------------------------------------+----------+-----------+-----------+-------------+----------+
| | | | --------- | ======= | --------- | ======= |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| Non cash items | | | | | | |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| Equity settled share | | | 10 | | 94 | |
| option expense | | | | | | |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| Equity settled R&D | | | 312 | | 1,773 | |
| expenses | | | | | | |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| Depreciation | | | 297 | | 275 | |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| | | | --------- | | ----------- | |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
| | | 619 | | 2,142 | |
+--------------------------------------+----------+-----------+-----------+-------------+----------+
| | --------- | | ---------- | |
+-------------------------------------------------+-----------+-----------+-------------+----------+
| TOTAL ADMINISTRATIVE COSTS | 4,110 | | 5,025 | |
+-------------------------------------------------+-----------+-----------+-------------+----------+
| | ======= | | ======= | |
+---------------------------+----------+----------+-----------+-----------+-------------+----------+
Net operating cash outflow in the period - as reported in the consolidated cash
flow statement (post) - was GBP2,194k compared to GBP1,772k in 2008. The
increase over the 12 month period partially masks the negative effect arising
from the commercial reversals in H2-2009 where the monthly "burn" rose sharply
reflecting the three principal economic features of the period, being:
(a) Fee for Service work (mainly from Baxter) largely ceased in Q1-2009 as
Baxter took the Factor VIII project in-house;
(b) New feasibility projects were both fewer in number and delivered
substantially less revenue than had originally been planned; and
(c) Licensing opportunities were unable to be consummated as hoped for due
largely to clinical delays on our major programmes.
In consideration of both the continued tightening of cost controls over the core
costs of operating and the project opportunities now being pursued in terms of
new feasibility studies, Management is confident of being able to mitigate the
net cash burn to provide a sufficient economic "runway" for the Company to be
able to attain its next stage strategic initiatives.
Central to future cost controls is the need to more fully align remuneration
with performance and, to that end the Remuneration Committee is currently
reviewing the entire salary, bonus and equity based remuneration structure
across the Group.
While cash will remain the key constraint until new licence transactions can be
concluded (and milestones on existing licence arrangements attained), the
recently closed Placing has brought in over GBP1.2m (before expenses) of new
capital to add to the pre-Placing cash balance at end-March of some GBP0.5m.
This cash resource will, alongside planned cost reductions, enable operations to
be maintained at a level more appropriate to actual revenue generation.
Going forward
As mentioned in the opening section, Lipoxen has made an absolute commitment to
substantially reduce its pure research activities and concentrate on project
development and fulfilment, both for its proprietary product pipeline as well as
working more closely alongside our current and future collaborative partners.
One important consequence of this step-change in our scientific level of effort
is that we are actively seeking to engage a Chief Scientific Officer (CSO) to
complement the new role of Director of Project Management position that was
created in September and which has been pivotal in helping to restructure our
laboratory operations; both roles have the common aim of maximising at the
earliest possible time the commercial monetisation opportunities in our
extensive IP portfolio.
FY2009 saw tangible advances in the underlying science, especially for the
PolyXen platform and, although the licence deals that we hoped to conclude in
2010 have likely been pushed out to 2011, their potential remains intact. The
Group has a substantial project base that has the capacity to deliver
significant licence fee income going forward, and it is upon that goal that
management is focused.
In particular:
· On Lipoxen's proprietary pipeline, the PolyXen technology has shown its
scientific worth in all of the clinical trials conducted so far with both
ErepoXen (long-acting EPO) and SuliXen (long-acting insulin). PSA-EPO has now
entered FDA compliant Phase II trials in India and PSA-Insulin is planned to
enter similar trials in Russia starting in Q3-2010.
· Baxter is expected to make a Product Declaration on its PSA-Factor VIII
candidate using our PolyXen platform and we are hopeful of that licence being
extended into other related products in the Baxter haematology portfolio.
· Our ImuXen nanoparticle technology lies at the core of our novel H1N1
influenza vaccine programme which, based on the hoped for positive results from
the currently ongoing pre-clinical study (due to complete in Q3 this year), is
expected to go into the clinic in H1-2011.
· We have a growing project pipeline, led currently by the 6 Pharmsynthez
candidates on which we are working, including 3 novel vaccine product candidates
using our ImuXen platform and 3 biologics using our PolyXen technology. These
candidates have a unique blend of orphan drug designation and for $1B+ markets
such as obesity and cancer.
In 2010 we will continue with the refocused level of scientific effort on all of
the projects noted above as well as on a number of others to which resources
have been allocated by our Scientific Sub-Committee.
Alongside current activities, and in line with management's own development
plans, Lipoxen is currently exploring opportunities:
· To acquire new and complementary platform technologies able to sit
alongside and enhance the Group's current solutions;
· To acquire ownership of (or gain exclusive rights over) new product
candidates able to utilise our proprietary IP and bring products to the clinic
in the shortest possible time frame; and
· To gain access to directly contracted or otherwise "captive" infrastructure
capabilities to reduce dependence on third parties.
The Directors remain fully confident in Lipoxen's prospects and I look forward
to reporting to shareholders at the time of the Interim Report.
Brian Richards
Non Executive Chairman
London: 31st March 2010
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31st DECEMBER 2009
The Directors present their report and the financial statements for the year
ended 31st December 2009.
Principal activities
The principal activity of the Company during the year was to act as a holding
company.
The Group is engaged in the development of drug and vaccine delivery systems and
proprietary products in the fields of protein drugs, vaccines and oncology.
Research and development
Research and development is an integral part of the Group's operations and it
intends to maintain this commitment in the future. The Group's research and
development activities are more fully described in the Chairman's statement.
Review of the business
A full review of the business and of future prospects is contained in the
Chairman's Statement which accompanies these financial statements.
The Board considers that the primary key performance indicators ("KPIs") are
non-financial and relate to the progress of the scientific programs which are
discussed in the Chairman's Statement. The most important financial KPIs are the
cash position and the annual net cash spend which are also discussed in the
Chairman's Statement.
The Board considers that the principal risks and uncertainties facing the Group
may be summarised as follows:
(a) that the scientific programmes may not successfully complete clinical trials
and regulatory approval processes;
(b) potential loss of key scientific staff; and
(c) the ability to raise finance in a timely and cost-effective manner.
Results and dividends
The trading results for the year and the Group's financial position at the end
of the year are shown in the attached financial statements.
The Directors do not recommend a dividend.
Financial instruments
The exposure of the Group to financial risk is discussed in Note 18 to the
financial statements.
Given the nature of the Group's activities the main financial asset of the Group
is cash and cash equivalents. The financial risk management objectives and
policies are therefore focussed around ensuring that there are adequate cash and
cash equivalents available to enable the Group to continue with its research and
development activities.
The Group has not entered into any hedge accounting transactions.
Directors and their interests
The Directors who served the Company during the year, together with their
beneficial interests in the shares of the Company, were as follows:
+-----------------------+-----------+-------------+-----------+-----------+
| | Ordinary Shares of | Share options |
| | 0.5p | |
+-----------------------+-------------------------+-----------------------+
| | 2009 | 2008 | 2009 | 2008 |
+-----------------------+-----------+-------------+-----------+-----------+
| Sir Brian Richards | 1,191,177 | 250,000 | 203,486 | 203,486 |
+-----------------------+-----------+-------------+-----------+-----------+
| Scott Maguire | 765,648 | - | 6,200,250 | 6,200,250 |
+-----------------------+-----------+-------------+-----------+-----------+
| Professor Gregory | 4,650,208 | 4,061,973 | 406,974 | 406,974 |
| Gregoriadis | | | | |
+-----------------------+-----------+-------------+-----------+-----------+
| Dr Dmitry D. Genkin | - | - | - | - |
+-----------------------+-----------+-------------+-----------+-----------+
| Colin W. Hill | 1,139,706 | 375,000 | 400,000 | 400,000 |
+-----------------------+-----------+-------------+-----------+-----------+
| Firdaus J. Dastoor | 1,125,000 | 1,175,000 | - | - |
+-----------------------+-----------+-------------+-----------+-----------+
| Igor Nikolaev | 2,900,000 | 400,000 | - | - |
| | | | | |
+-----------------------+-----------+-------------+-----------+-----------+
Directors' indemnities
The Group has purchased insurance to cover its Directors and officers against
liabilities arising against them in that capacity.
Corporate governance
Although it is not a requirement for AIM-listed companies, the Company seeks
within the practical confines of a smaller company to act in compliance with the
principles of good governance and the code of best practice as set out in the
Combined Code on Corporate Governance. The Audit Committee and the Remuneration
Committee are chaired by Non-executive Directors. The whole Board acts as a
Nomination Committee.
Substantial shareholders
The Directors are aware of the following substantial shareholdings of 3 per cent
or more of the current Issued Ordinary Share Capital of 154,397,230 shares on
28thFebruary 2010:
+--------------------------------+---------------+------------+
| Ordinary Shares of 0.5p each | Number | Percentage |
+--------------------------------+---------------+------------+
| | | |
+--------------------------------+---------------+------------+
| FDS Pharma Ass. and related | 42,455,316 | 27.50% |
| parties | | |
+--------------------------------+---------------+------------+
| Serum Institute of India | 33,566,415 | 21.74% |
| Limited and related parties | | |
+--------------------------------+---------------+------------+
| Pershing Nominees Limited a/c | 7,829,706 | 5.07% |
| AGCLT* | | |
+--------------------------------+---------------+------------+
| Baxter Healthcare SA | 7,325,470 | 4.74% |
+--------------------------------+---------------+------------+
| Professor Gregory Gregoriadis | 4,650,208 | 3.01% |
+--------------------------------+---------------+------------+
*Includes 1,139,706 held by Colin Hill, CFO
Policy for payment of creditors
It is the Company's policy to settle all agreed transactions within the terms
established with suppliers. Trade creditors at the year end amounted to 22 days
(2008 - 23 days) of average supplies.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Directors' report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have, as required by the AIM Rules
of the London Stock Exchange, elected to prepare the Group financial statements
in accordance with International Financial Reporting Standards as adopted by the
European Union and have also elected to prepare the Company financial statements
in accordance with those standards. Under company law the Directors must not
approve the financial statements unless they are satisfied that they are
sufficient to show and explain the Company's transactions and give a true and
fair view of the state of affairs of the Company and the Group and of the profit
or loss of the Group for that period. In preparing these financial statements,
the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether the financial statements have been prepared in accordance with
IFRSs as adopted by the European Union; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company and the Group will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and the
Group and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of the financial
statements and other information included in annual reports may differ from
legislation in other jurisdictions.
Disclosure of information to auditors
The Directors who held office at the date of approval of this Directors' Report
each confirm that, so far as they are aware, there is no relevant audit
information of which the Company's auditors are unaware; and each Director has
taken all the steps that he ought to have taken as a Director to make himself
aware of any relevant audit information and to establish that the Company's
auditors are aware of that information.
Going concern
As an early-stage development life sciences business, the Group has incurred
operating losses in the year under review, notwithstanding that substantial
clinical and technical progress was also made in the continuing successful
development of its proprietary technologies; consequently, the Group was a net
consumer of cash.
In order to maintain the level of scientific effort required to develop the
Group's technologies and to commercialise them to such degree as will be
necessary to become a cash-generative business, the Group will need to access
new cash in addition to that available to it at the year end; such new cash will
either be generated internally from, as yet, non-contractual feasibility and
licensing sources and/or from the raising of new capital.
Since the year end the Company has raised GBP1.2million (before costs) by way of
a share placing.
The Directors have prepared a financial forecast for the period through to 31st
December 2011. The forecast includes assumptions that the Group will generate
cash inflows in this period from:
(a) the ongoing roll-out and licensing of the Group's technologies with its
existing collaborative partners;
(b) the roll-out and licensing of the Group's technologies with new
collaborative partners; and
(c) the raising of new capital.
The Group has successfully completed Phase I trials in both its insulin and EPO
products. These clinical successes have generated an increasing level of
commercial interest in not only protein drug development but also in the Group's
vaccine and gene silencing technologies. Capital markets remain uncertain and
the Company's ability to raise new capital entirely from such sources cannot be
relied upon as it is largely dependent upon market conditions that exist at the
time of raising the funds.
While considering that platform technology applications to known and marketed
drugs confer lower commercial risks than in new drug development, the Directors
recognise that there are uncertainties surrounding these core issues.
If the Group was to prove unable to generate these additional cash inflows, the
cash balance of circa GBP1.0 million as at 31st December 2009 would be
insufficient to fund the Group's activities at their current level for a period
of twelve months from the date of approval of these financial statements.
However, the Directors have a reasonable expectation that these uncertainties
can be managed to successful outcomes, and that, based on that assessment, the
Group will have adequate resources to continue in operational existence for the
foreseeable future. They have therefore prepared the financial information
contained herein on a going concern basis.
The financial statements do not reflect any adjustments that would be required
to be made, with respect to either the Company or the Group, if they were to be
prepared on a basis other than the going concern basis.
Auditors
A resolution to re-appoint PKF (UK) LLP as auditors for the ensuing year will be
proposed at the annual general meeting.
This report was approved by the Board on 31st March 2010 and signed on its
behalf by:
Colin Hill
Director
Company Registration Number 03213174
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LIPOXEN PLC
We have audited the financial statements of Lipoxen Plc for the year ended 31st
December 2009 which comprise the consolidated income statement, the consolidated
balance sheet, the consolidated cash flow statement, the consolidated statement
of changes in equity, the Company balance sheet, the Company cash flow
statement, the Company statement of changes in equity and the related notes. The
financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union and, as regards the Parent Company financial
statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we are
required to state to them in an auditors' report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As explained more fully in the statement of Directors' responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view.
Our responsibility is to audit the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's Ethical
Standards for Auditors.
SCOPE OF THE AUDIT
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the Group's and parent Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall presentation of the
financial statements.
OPINION ON FINANCIAL STATEMENTS
In our opinion:
- the financial statements give a true and fair view of the state of the
Group's and of the Parent Company's affairs as at 31st December 2009 and of the
Group's loss for the year then ended;
- the Group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
- the Parent Company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
EMPHASIS OF MATTER - GOING CONCERN
In giving our opinion on the financial statements, which is not qualified, we
have considered the adequacy of the disclosures in Note 2 "Going concern". This
notes that in order to maintain the level of scientific effort required to
develop the Group's technologies and to commercialise them to such degree as
will be necessary to become a cash-generative business, the Company will need to
access new cash in addition to that available to it at the year end and
subsequently raised; such new cash will either be generated internally from, as
yet, non-contractual feasibility and licensing sources and/or from the raising
of new capital. These conditions, along with the other matters explained in Note
2 to the financial statements, indicate the existence of a material uncertainty
which may cast significant doubt about the Group's and the Company's abilities
to continue as going concerns.
The financial statements do not reflect any adjustments that would be required
to be made if they were to be prepared on a basis other than the going concern
basis.
OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the information given in the Report of the Directors for the
financial year for which the financial statements are prepared is consistent
with the financial statements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the Parent Company, or
returns adequate for our audit have not been received from branches not visited
by us; or
- the Parent Company's financial statements are not in agreement with the
accounting records and returns; or
- certain disclosures of Directors' remuneration specified by law are not
made; or
- we have not received all the information and explanations we require for our
audit.
Nick Whitaker (Senior statutory auditor)
For and on behalf of PKF (UK) LLP, Statutory auditors
London, UK
31st March 2010
+--------------------------------------------+------+----------------------+----------------------+
| |
| CONSOLIDATED INCOME STATEMENT |
| FOR THE YEAR ENDED 31st DECEMBER 2009 |
| |
+-------------------------------------------------------------------------------------------------+
| | | | |
+--------------------------------------------+------+----------------------+----------------------+
| | | 2009 | 2008 |
+--------------------------------------------+------+----------------------+----------------------+
| | Note | GBP | GBP |
+--------------------------------------------+------+----------------------+----------------------+
| | | | |
+--------------------------------------------+------+----------------------+----------------------+
| | | | |
+--------------------------------------------+------+----------------------+----------------------+
| | | | |
+--------------------------------------------+------+----------------------+----------------------+
| REVENUE | 3 | 468,579 | 1,160,324 |
+--------------------------------------------+------+----------------------+----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+------+----------------------+----------------------+
| ADMINISTRATIVE EXPENSES | | |
+---------------------------------------------------+----------------------+----------------------+
| Research and development expenditure | 2,453,526 | 3,776,636 |
+---------------------------------------------------+----------------------+----------------------+
| Administrative expenses | 1,656,649 | 1,247,817 |
+---------------------------------------------------+----------------------+----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+------+----------------------+----------------------+
| Total | | 4,110,175 | 5,024,453 |
+--------------------------------------------+------+----------------------+----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+------+----------------------+----------------------+
| OPERATING LOSS | 4 | (3,641,596) | (3,864,129) |
+--------------------------------------------+------+----------------------+----------------------+
| | | |
+---------------------------------------------------+----------------------+----------------------+
| Finance income | 10,710 | 72,926 |
+---------------------------------------------------+----------------------+----------------------+
| | -------------------- | -------------------- |
+---------------------------------------------------+----------------------+----------------------+
| LOSS BEFORE TAXATION | (3,630,886) | (3,791,203) |
+---------------------------------------------------+----------------------+----------------------+
| | | |
+---------------------------------------------------+----------------------+----------------------+
| Income tax credit | 7 | 173,628 | 332,916 |
+--------------------------------------------+------+----------------------+----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+------+----------------------+----------------------+
| LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY | | (3,457,258) | (3,458,287) |
| HOLDERS OF THE PARENT | | | |
+--------------------------------------------+------+----------------------+----------------------+
| | | ================ | =============== |
+--------------------------------------------+------+----------------------+----------------------+
| | | |
+---------------------------------------------------+----------------------+----------------------+
| Loss per share (pence) - basic and fully | 9 | (2.47)p | (2.89)p |
| diluted | | | |
+--------------------------------------------+------+----------------------+----------------------+
| | | =============== | ================ |
+--------------------------------------------+------+----------------------+----------------------+
For both the Group and Company there are no other items of comprehensive income
and therefore no separate statement has been presented.
The Company has elected to take the exemption under section 408 of the Companies
Act 2006 to not present the Parent Company income statement.
+----------------------------------+------+-------------------+------------------------+------------------------+
| CONSOLIDATED BALANCE SHEET |
| AS AT 31st DECEMBER 2009 |
+---------------------------------------------------------------------------------------------------------------+
| | | | |
+----------------------------------+------+--------------------------------------------+------------------------+
| | | 2009 | 2008 |
+----------------------------------+------+--------------------------------------------+------------------------+
| | Note | GBP | GBP | GBP |
+----------------------------------+------+-------------------+------------------------+------------------------+
| | | | | |
+----------------------------------+------+-------------------+------------------------+------------------------+
| NON-CURRENT ASSETS | | | | |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Property, plant and equipment | 10 | | 480,582 | 665,972 |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Goodwill | 11 | | 1,061,476 | 1,061,476 |
+----------------------------------+------+-------------------+------------------------+------------------------+
| | | ---------------------- | ---------------------- |
+-----------------------------------------+-------------------+------------------------+------------------------+
| | | 1,542,058 | 1,727,448 |
+-----------------------------------------+-------------------+------------------------+------------------------+
| | | | ---------------------- |
+-----------------------------------------+-------------------+------------------------+------------------------+
| CURRENT ASSETS | | | | |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Trade and other receivables | 13 | 235,492 | | 1,118,559 |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Cash and cash equivalents | 1,017,890 | | 602,065 |
+-----------------------------------------+-------------------+------------------------+------------------------+
| | ----------------- | | ------------------- |
+-----------------------------------------+-------------------+------------------------+------------------------+
| | 1,253,382 | | 1,720,624 |
+-----------------------------------------+-------------------+------------------------+------------------------+
| CURRENT LIABILITIES | | | | |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Trade and other payables | 14 | 547,717 | | 474,849 |
+----------------------------------+------+-------------------+------------------------+------------------------+
| | | ----------------- | | -------------------- |
+----------------------------------+------+-------------------+------------------------+------------------------+
| NET CURRENT ASSETS | | 705,665 | 1,245,775 |
+-----------------------------------------+-------------------+------------------------+------------------------+
| | ---------------------- | ---------------------- |
+-------------------------------------------------------------+------------------------+------------------------+
| NET ASSETS | 2,247,723 | 2,973,223 |
+-------------------------------------------------------------+------------------------+------------------------+
| | | | ================ | ================ |
+----------------------------------+------+-------------------+------------------------+------------------------+
| | | | | |
+----------------------------------+------+-------------------+------------------------+------------------------+
| | | | | |
+----------------------------------+------+-------------------+------------------------+------------------------+
| EQUITY ATTRIBUTABLE TO EQUITY | | | | |
| HOLDERS OF THE PARENT | | | | |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Share capital | 15 | | 2,405,486 | 2,232,790 |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Share premium account | | | 25,057,700 | 22,508,793 |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Reverse acquisition reserve | | | (8,252,127) | (8,252,127) |
+----------------------------------+------+-------------------+------------------------+------------------------+
| Retained earnings | | | (16,963,336) | (13,516,233) |
+----------------------------------+------+-------------------+------------------------+------------------------+
| | | | ---------------------- | ---------------------- |
+----------------------------------+------+-------------------+------------------------+------------------------+
| TOTAL EQUITY | | | 2,247,723 | 2,973,223 |
+----------------------------------+------+-------------------+------------------------+------------------------+
| | | | ================== | ================== |
+----------------------------------+------+-------------------+------------------------+------------------------+
The financial statements were approved and authorised for issue by the Directors
on 31st March 2010 and were signed on their behalf by:
SCOTT MAGUIRE - Director COLIN
HILL - Director
+---------------------+--------+--------+----------------------+---------------------+
| CONSOLIDATED CASH FLOW STATEMENT |
| FOR THE YEAR ENDED 31st DECEMBER 2009 |
+------------------------------------------------------------------------------------+
| | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | 2009 | 2008 |
+---------------------+--------+--------+----------------------+---------------------+
| | Note | | | GBP |
| | | | GBP | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| Cash | 17 | | (2,378,574) | (2,177,421) |
| flows | | | | |
| from | | | | |
| operating | | | | |
| activities | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| Interest | | | 10,710 | 72,926 |
| received | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| Taxation | | | 173,628 | 332,916 |
| received | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | -------------------- | ------------------- |
+---------------------+--------+--------+----------------------+---------------------+
| Net | | | (2,194,236) | (1,771,579) |
| cash | | | | |
| outflow | | | | |
| from | | | | |
| operating | | | | |
| activities | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | -------------------- | ------------------- |
+---------------------+--------+--------+----------------------+---------------------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| investing | | | | |
| activities | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| Purchase | | | (111,542) | (74,242) |
| of | | | | |
| property, | | | | |
| plant and | | | | |
| equipment | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | -------------------- | ------------------- |
+---------------------+--------+--------+----------------------+---------------------+
| Net | | | (111,542) | (74,242) |
| cash | | | | |
| used | | | | |
| in | | | | |
| investing | | | | |
| activities | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | -------------------- | ------------------- |
+---------------------+--------+--------+----------------------+---------------------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| financing | | | | |
| activities | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| Issue | | | 2,721,603 | 1,950 |
| of | | | | |
| equity | | | | |
| share | | | | |
| capital | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | -------------------- | ------------------- |
+---------------------+--------+--------+----------------------+---------------------+
| | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| Net | | | 415,825 | (1,843,871) |
| increase/(decrease) | | | | |
| in cash and cash | | | | |
| equivalents | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| Cash | | | 602,065 | 2,445,936 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
| at | | | | |
| beginning | | | | |
| of year | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | -------------------- | ------------------- |
+---------------------+--------+--------+----------------------+---------------------+
| Cash | | | 1,017,890 | 602,065 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
| at end of | | | | |
| year | | | | |
+---------------------+--------+--------+----------------------+---------------------+
| | | | =============== | =============== |
+---------------------+--------+--------+----------------------+---------------------+
| | | | | |
| | | | | |
+---------------------+--------+--------+----------------------+---------------------+
+------------------+---------------+----------------+------------------+------------------+-----------------+
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
| FOR THE YEAR ENDED 31st DECEMBER 2009 |
| |
+-----------------------------------------------------------------------------------------------------------+
| | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| | Share | Share | Reverse | Retained | Total |
| | capital | premium | acquisition | earnings | |
| | | | reserve | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| | GBP | GBP | GBP | GBP | GBP |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| At 1st January | 2,231,468 | 22,508,165 | (8,252,127) | (10,151,635) | 6,335,871 |
| 2008 | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| Loss for year | - | - | - | (3,458,287) | (3,458,287) |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| Shares issued | 1,322 | 628 | - | - | 1,950 |
| for cash | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| Share-based | - | - | - | 93,689 | 93,689 |
| payments | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| | ________ | _________ | __________ | __________ | _________ |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| At 31st December | 2,232,790 | 22,508,793 | (8,252,127) | (13,516,233) | 2,973,223 |
| 2008 | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| Loss for year | - | - | - | (3,457,258) | (3,457,258) |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| Shares issued | 172,696 | 2,736,804 | - | - | 2,909,500 |
| for cash | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| Share issue | - | (187,897) | - | - | (187,897) |
| expenses | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| Share-based | - | - | - | 10,155 | 10,155 |
| payments | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| | ________ | _________ | _________ | __________ | _________ |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| At 31st December | 2,405,486 | 25,057,700 | (8,252,127) | (16,963,336) | 2,247,723 |
| 2009 | | | | | |
+------------------+---------------+----------------+------------------+------------------+-----------------+
| | ============= | ============== | ================ | ================ | =============== |
+------------------+---------------+----------------+------------------+------------------+-----------------+
+----------------------------------+------+-----------------+------------------------+----------------------+
| COMPANY BALANCE SHEET |
| AS AT 31st DECEMBER 2009 |
+-----------------------------------------------------------------------------------------------------------+
| | | | |
+----------------------------------+------+------------------------------------------+----------------------+
| | | 2009 | 2008 |
+----------------------------------+------+------------------------------------------+----------------------+
| | Note | GBP | GBP | GBP |
+----------------------------------+------+-----------------+------------------------+----------------------+
| | | | | |
+----------------------------------+------+-----------------+------------------------+----------------------+
| NON-CURRENT ASSETS | | | | |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Property, plant and equipment | 10 | | 320,000 | 480,000 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Investments | 12 | | 9,045,030 | 9,045,030 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Other receivables | 13 | | 6,610,290 | 4,862,481 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| | | ---------------------- | -------------------- |
+-----------------------------------------+-----------------+------------------------+----------------------+
| | | 15,975,320 | 14,387,511 |
+-----------------------------------------+-----------------+------------------------+----------------------+
| | | | -------------------- |
+-----------------------------------------+-----------------+------------------------+----------------------+
| CURRENT ASSETS | | | | |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Trade and other receivables | 13 | 13,291 | | 12,823 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Cash and cash equivalents | 998,225 | | 564,739 |
+-----------------------------------------+-----------------+------------------------+----------------------+
| | --------------- | | ------------------- |
+-----------------------------------------+-----------------+------------------------+----------------------+
| | 1,011,516 | | 577,562 |
+-----------------------------------------+-----------------+------------------------+----------------------+
| CURRENT LIABILITIES | | | | |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Trade and other payables | 14 | 143,191 | | 180,793 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| | | --------------- | | -------------------- |
+----------------------------------+------+-----------------+------------------------+----------------------+
| NET CURRENT ASSETS | | 868,325 | 396,769 |
+-----------------------------------------+-----------------+------------------------+----------------------+
| | ---------------------- | -------------------- |
+-----------------------------------------------------------+------------------------+----------------------+
| NET ASSETS | 16,843,645 | 14,784,280 |
+-----------------------------------------------------------+------------------------+----------------------+
| | ================== | ================ |
+-----------------------------------------------------------+------------------------+----------------------+
| | | | | |
+----------------------------------+------+-----------------+------------------------+----------------------+
| | | | | |
+----------------------------------+------+-----------------+------------------------+----------------------+
| EQUITY ATTRIBUTABLE TO EQUITY | | | | |
| HOLDERS OF THE COMPANY | | | | |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Share capital | 15 | | 2,405,486 | 2,232,790 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Share premium account | | | 25,057,700 | 22,508,793 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| Retained earnings | | | (10,619,541) | (9,957,303) |
+----------------------------------+------+-----------------+------------------------+----------------------+
| | | | ---------------------- | -------------------- |
+----------------------------------+------+-----------------+------------------------+----------------------+
| TOTAL EQUITY | | | 16,843,645 | 14,784,280 |
+----------------------------------+------+-----------------+------------------------+----------------------+
| | | | ================ | =============== |
+----------------------------------+------+-----------------+------------------------+----------------------+
The financial statements were approved and authorised for issue by the directors
on 31st March 2010 and were signed on their behalf by:
SCOTT MAGUIRE - Director COLIN HILL -
Director
+---------------------+--------+--------+--------------------+--------------------+
| COMPANY CASH FLOW STATEMENT |
| FOR THE YEAR ENDED 31st DECEMBER 2009 |
+---------------------------------------------------------------------------------+
| |
+---------------------------------------------------------------------------------+
| | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | 2009 | 2008 |
+---------------------+--------+--------+--------------------+--------------------+
| | Note | | | GBP |
| | | | GBP | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| Cash | 17 | | (547,513) | (173,394) |
| flows | | | | |
| from | | | | |
| operating | | | | |
| activities | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| Interest | | | 7,205 | 71,700 |
| received | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | ------------------ | ------------------ |
+---------------------+--------+--------+--------------------+--------------------+
| Net | | | (540,308) | (101,694) |
| cash | | | | |
| outflow | | | | |
| from | | | | |
| operating | | | | |
| activities | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | ------------------ | ------------------ |
+---------------------+--------+--------+--------------------+--------------------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| investing | | | | |
| activities | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| Loan | | | (1,747,809) | (1,704,125) |
| to | | | | |
| subsidiary | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | ------------------ | ------------------ |
+---------------------+--------+--------+--------------------+--------------------+
| Net | | | (1,747,809) | (1,704,125) |
| cash | | | | |
| used | | | | |
| in | | | | |
| investing | | | | |
| activities | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | ------------------ | ------------------ |
+---------------------+--------+--------+--------------------+--------------------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| financing | | | | |
| activities | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| Issue | | | 2,721,603 | 1,950 |
| of | | | | |
| equity | | | | |
| share | | | | |
| capital | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | ------------------ | ------------------ |
+---------------------+--------+--------+--------------------+--------------------+
| | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| Net | | | 433,486 | (1,803,869) |
| increase/(decrease) | | | | |
| in cash and cash | | | | |
| equivalents | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| Cash | | | 564,739 | 2,368,608 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
| at | | | | |
| beginning | | | | |
| of year | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | ------------------ | ------------------ |
+---------------------+--------+--------+--------------------+--------------------+
| Cash | | | 998,225 | 564,739 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
| at end of | | | | |
| year | | | | |
+---------------------+--------+--------+--------------------+--------------------+
| | | | ============== | ============== |
+---------------------+--------+--------+--------------------+--------------------+
| | | | | |
| | | | | |
+---------------------+--------+--------+--------------------+--------------------+
+----------------------+---------------+-----------------+----------------+----------------+
| COMPANY STATEMENT OF CHANGES IN EQUITY |
| FOR THE YEAR ENDED 31st DECEMBER 2009 |
+------------------------------------------------------------------------------------------+
| | | | | |
+----------------------+---------------+-----------------+----------------+----------------+
| | Share | Share | Retained | Total |
| | capital | premium | earnings | |
+----------------------+---------------+-----------------+----------------+----------------+
| | GBP | GBP | GBP | GBP |
+----------------------+---------------+-----------------+----------------+----------------+
| | | | | |
+----------------------+---------------+-----------------+----------------+----------------+
| At 1st January 2008 | 2,231,468 | 22,508,165 | (9,599,586) | 15,140,047 |
+----------------------+---------------+-----------------+----------------+----------------+
| Loss for year | - | - | (357,717) | (357,717) |
+----------------------+---------------+-----------------+----------------+----------------+
| Shares issued for | 1,322 | 628 | - | 1,950 |
| cash | | | | |
+----------------------+---------------+-----------------+----------------+----------------+
| | ________ | _________ | __________ | _________ |
+----------------------+---------------+-----------------+----------------+----------------+
| At 31st December | 2,232,790 | 22,508,793 | (9,957,303) | 14,784,280 |
| 2008 | | | | |
+----------------------+---------------+-----------------+----------------+----------------+
| Loss for year | - | - | (662,238) | (662,238) |
+----------------------+---------------+-----------------+----------------+----------------+
| Shares issued for | 172,696 | 2,736,804 | - | 2,909,500 |
| cash | | | | |
+----------------------+---------------+-----------------+----------------+----------------+
| Share issue expenses | - | (187,897) | - | (187,897) |
+----------------------+---------------+-----------------+----------------+----------------+
| | ________ | _________ | _________ | _________ |
+----------------------+---------------+-----------------+----------------+----------------+
| At 31st December | 2,405,486 | 25,057,700 | (10,619,541) | 16,843,645 |
| 2009 | | | | |
+----------------------+---------------+-----------------+----------------+----------------+
| | ============= | =============== | ============== | ============== |
+----------------------+---------------+-----------------+----------------+----------------+
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31st DECEMBER 2009
1.INTERNATIONAL FINANCIAL REPORTING STANDARDS
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union.
2. ACCOUNTING POLICIES
Going concern
As an early-stage development life sciences business, the Group has incurred
operating losses in the year under review, notwithstanding that substantial
clinical and technical progress was also made in the continuing successful
development of its proprietary technologies; consequently, the Group was a net
consumer of cash.
In order to maintain the level of scientific effort required to develop the
Group's technologies and to commercialise them to such degree as will be
necessary to become a cash-generative business, the Group will need to access
new cash in addition to that available to it at the year end; such new cash will
either be generated internally from, as yet, non-contractual feasibility and
licensing sources and/or from the raising of new capital.
Since the year end the Company has raised GBP1.2million (before costs) by way of
a share placing.
The Directors have prepared a financial forecast for the period through to 31st
December 2011. The forecast includes assumptions that the Group will generate
cash inflows in this period from:
(a) the ongoing roll-out and licensing of the Group's technologies with its
existing collaborative partners;
(b) the roll-out and licensing of the Group's technologies with new
collaborative partners; and
(c) the raising of new capital.
The Group has successfully completed Phase I trials in both its insulin and EPO
products. These clinical successes have generated an increasing level of
commercial interest in not only protein drug development but also in the Group's
vaccine and gene silencing technologies. Capital markets remain uncertain and
the Company's ability to raise new capital entirely from such sources cannot be
relied upon as it is largely dependent upon market conditions that exist at the
time of raising the funds.
While considering that platform technology applications to known and marketed
drugs confer lower commercial risks than in new drug development, the Directors
recognise that there are uncertainties surrounding these core issues.
If the Group was to prove unable to generate these additional cash inflows, the
cash balance of circa GBP1.0 million as at 31st December 2009 would be
insufficient to fund the Group's activities at their current level for a period
of twelve months from the date of approval of these financial statements.
However, the Directors have a reasonable expectation that these uncertainties
can be managed to successful outcomes, and that, based on that assessment, the
Group will have adequate resources to continue in operational existence for the
foreseeable future. They have therefore prepared the financial information
contained herein on a going concern basis.
The financial statements do not reflect any adjustments that would be required
to be made, with respect to either the Company or the Group, if they were to be
prepared on a basis other than the going concern basis.
Basis of consolidation
The Group financial statements incorporate the financial statements of the
Parent Company and all of its subsidiary undertakings. The results of subsidiary
undertakings acquired or disposed of during the year are included in the Group
financial statements from, or up to, the date of acquisition or disposal.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of the
reverse acquisition over the net assets of Lipoxen Plc at the date of the
business combination. Goodwill is recognised as an asset and is reviewed for
impairment at least annually. Any impairment is recognised immediately through
the income statement and is not reversed.
Revenue
Revenue shown in the income statement represents the value of services provided
during the year, exclusive of Value Added Tax. For contracts in progress at the
balance sheet date, revenue is recognised based on the degree of completion of
the project and the agreed fee for the total project. Milestone payments
receivable for which the Group has no further contractual duty to perform any
future services are recognised on the date that they are contractually
receivable.
Intangible fixed assets
Intangible assets acquired are capitalised at cost. Intangible assets (excluding
development costs) created within the business are not capitalised and such
expenditure is charged in the income statement in the year in which it is
incurred.
Property, plant and equipment
Depreciation is provided to write off the cost less the estimated residual value
of property, plant and equipment on a straight line basis over their estimated
useful economic lives as follows:
+----------------+--+-------+
| Laboratory | -| 4 |
| equipment | | years |
+----------------+--+-------+
| Computer | -| 4 |
| equipment | | years |
+----------------+--+-------+
| Plant | -| 5 |
| | | years |
+----------------+--+-------+
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a contractual party to the instrument.
Financial assets other than hedging instruments can be divided into the
following categories: loans and receivables, financial assets at fair value
through profit or loss, available-for-sale financial assets and held-to-maturity
investments. Financial assets are assigned to the different categories by
management on initial recognition, depending on the purpose for which the
investments were acquired.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are included
in current assets, except for maturities greater than 12 months after the
balance sheet date which are classified as non-current assets. The Group's loans
and receivables comprise 'trade debtors and other receivables' and 'cash and
cash equivalents' in the balance sheet. The Group has no other financial assets.
Financial liabilities and equity instruments issued by the Group are classified
according to the substance of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest in the assets of
the Group after deducting all of its liabilities. Equity instruments issued by
the Group, other than equity-settled share-based payments which are described
below, are recorded at the proceeds received net of direct issue costs.
Trade receivables
Trade receivables are measured at initial recognition at fair value and are
subsequently measured at amortised cost less impairment losses. Appropriate
amounts for estimated irrecoverable amounts are recognised in the income
statement when there is objective evidence that the asset is impaired.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, bank balances and deposits
repayable on demand.
Trade payables
Trade and other payables are measured at initial recognition at fair value and
are subsequently measured at amortised cost.
Operating lease agreements
Operating lease rentals are charged in the income statement on a straight line
basis over the lease term.
Research and development costs
Research and development costs are written off to the income statement as
incurred, except that development expenditure incurred on an individual project
is carried forward when its future recoverability can be reasonably regarded as
assured. Any expenditure carried forward is amortised in line with the expected
future sales from the related project.
Foreign currencies
Monetary assets and liabilities in foreign currencies are translated into
sterling at the rate ruling at the balance sheet date. Transactions in foreign
currencies are translated into sterling at the rate of exchange ruling at the
date of the transaction. Exchange differences are taken into account in arriving
at the operating loss.
Pension costs
Company contributions to personal pension schemes are written off to the income
statement as incurred.
Share based payments
Share options granted to employees are valued at the date of grant using the
Black-Scholes option pricing model and are charged to the income statement over
the vesting period of the option. A corresponding credit is recognised in the
retained earnings reserve.
Equity
Share capital is determined using the nominal value of shares that have been
issued.
The share premium account includes any premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issue of shares
are deducted from the share premium account, net of any related income tax
benefits.
The reverse acquisition reserve arises on the restatement of the equity
structure shown in the consolidated financial statements from that of Lipoxen
Technologies Limited immediately after the deemed acquisition of Lipoxen Plc to
reflect the equity structure of the legal Parent Company.
Taxation
The tax expense recognised in the income statement represents the sum of the tax
currently payable or receivable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable
profit differs from the profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Tax receivable arises from the UK legislation regarding the treatment of certain
qualifying research and development costs, allowing for the surrender of tax
losses attributable to such costs in return for a tax rebate.
Deferred tax is recognised on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for
all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised.
Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group's accounting policies, management makes
estimates and assumptions that have an effect on the amounts recognised in the
financial statements. Although these estimates are based on management's best
knowledge of current events and actions, actual results may ultimately differ
from those estimates.
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year, are those relating to:
(a) the future recoverability of goodwill, and the corresponding review of
goodwill for impairment (see Note 11);
(b) the percentage of completion by FDS Pharma of its obligations under the
agreement of October 2005 for the provision of manufacturing and clinical
development services (see Note 13); and
(c) the expense recognised in the income statement in respect of share options
granted to employees (see Note 16).
New standards
- IFRS 8: Operating segments
This is mandatory for accounting periods beginning on or after 1st January 2009,
and requires entities to adopt a 'management approach' to report on the
financial performance of their operating segments. The information to be
reported is that which management uses internally for allocating resources to
operating segments. As a result, the Group has identified that it has one
operating segment, the development of drug and vaccine delivery systems and
proprietary products in the fields of protein drugs, vaccines and oncology,
consistent with the business segment identified under IAS 14 in the 2008 Annual
Report.
- IAS 1 (Revised): Presentation of financial statements
This is mandatory for accounting periods beginning on or after 1st January 2009,
and requires the presentation of either one statement (a statement of
comprehensive income) or two statements (a separate income statement and a
statement of comprehensive income) which will include those changes in equity
which arise other than from transactions with shareholders in their capacity as
shareholders. There have been no such transactions and therefore no separate
statement has been presented.
Other standards and interpretations that became effective for the first time
during the year have not had a material impact on the financial statements. No
impact is expected from any other standards or interpretations which have been
endorsed by the European Union and are available for early adoption, but which
have not been adopted.
3.SEGMENTAL ANALYSIS
The revenue and loss before tax are attributable to the one principal
activity of the Group. The net assets of the Group at 31st December 2009 and
31st December 2008 are wholly attributable to the principal activity. The Group
comprises one business segment for reporting purposes.
An analysis of turnover (by location of customer) is given below:
+--------------------------------------------+---------------------+---------------------+
| | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| United States | 270,084 | 1,060,636 |
+--------------------------------------------+---------------------+---------------------+
| Europe | 109,006 | 99,688 |
+--------------------------------------------+---------------------+---------------------+
| Rest of World | 89,489 | - |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 468,579 | 1,160,324 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+--------------------------------------------+---------------------+---------------------+
An analysis of the Group's total assets by location is given below:
+--------------------------------------------+---------------------+---------------------+
| | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| United Kingdom | 1,927,723 | 2,493,223 |
+--------------------------------------------+---------------------+---------------------+
| India | 320,000 | 480,000 |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 2,247,723 | 2,973,223 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+--------------------------------------------+---------------------+---------------------+
The following customers accounted for greater than 10% of the Group's
revenues:
+--------------------------------------------+---------+-----------+
| | 2009 | 2008 |
+--------------------------------------------+---------+-----------+
| | GBP | GBP |
+--------------------------------------------+---------+-----------+
| Customer 1 | 179,492 | 1,060,636 |
+--------------------------------------------+---------+-----------+
| Customer 2 | 89,489 | - |
+--------------------------------------------+---------+-----------+
| Customer 3 | 81,506 | 23,510 |
+--------------------------------------------+---------+-----------+
| Customer 4 | 67,935 | - |
+--------------------------------------------+---------+-----------+
4.OPERATING LOSS
Operating loss is stated after charging/(crediting):
+--------------------------------------------+-----------------+-----------------+
| | 2009 | 2008 |
+--------------------------------------------+-----------------+-----------------+
| | GBP | GBP |
+--------------------------------------------+-----------------+-----------------+
| | | |
+--------------------------------------------+-----------------+-----------------+
| Depreciation of owned property, plant and | 296,932 | 274,822 |
| equipment | | |
+--------------------------------------------+-----------------+-----------------+
| Operating lease payments: | | |
+--------------------------------------------+-----------------+-----------------+
| - land and buildings | 48,000 | - |
+--------------------------------------------+-----------------+-----------------+
| Net loss/(profit) on foreign currency | 7,837 | (87,903) |
| translation | | |
+--------------------------------------------+-----------------+-----------------+
| Research and development costs - cash | 2,141,801 | 2,003,510 |
| settled | | |
+--------------------------------------------+-----------------+-----------------+
| Research and development costs - equity | 311,725 | 1,773,126 |
| settled | | |
+--------------------------------------------+-----------------+-----------------+
| Share option expense - equity settled | 10,155 | 93,689 |
+--------------------------------------------+-----------------+-----------------+
| | =============== | =============== |
+--------------------------------------------+-----------------+-----------------+
The operating lease payments relate to office accommodation. The Company has not
entered into a formal agreement for the use of this accommodation and the
arrangement may be terminated without notice at any time. There are therefore no
future lease payments under non-cancellable operating leases.
5.AUDITORS' REMUNERATION
Services provided by the Company's auditors
+---------------------------------------------+-----------------+-----------------+
| | 2009 | 2008 |
+---------------------------------------------+-----------------+-----------------+
| | GBP | GBP |
+---------------------------------------------+-----------------+-----------------+
| Fees payable to the Company's auditors for | 3,500 | 3,000 |
| the audit of the Parent Company and | | |
| consolidated financial statements | | |
+---------------------------------------------+-----------------+-----------------+
| Fees payable to the Company's auditors and | | |
| their associates for other services: | | |
+---------------------------------------------+-----------------+-----------------+
| - audit of the Company's subsidiary | 30,000 | 27,000 |
| pursuant to legislation | | |
+---------------------------------------------+-----------------+-----------------+
| - other services pursuant to legislation | 6,500 | 6,500 |
+---------------------------------------------+-----------------+-----------------+
| | =============== | =============== |
+---------------------------------------------+-----------------+-----------------+
6.PARTICULARS OF EMPLOYEES
The average number of staff employed by the Group during the financial
year was:
+--------------------------------------------+-----------------+-----------------+
| | 2009 | 2008 |
+--------------------------------------------+-----------------+-----------------+
| | No | No |
+--------------------------------------------+-----------------+-----------------+
| Office and management | 4 | 4 |
+--------------------------------------------+-----------------+-----------------+
| Research | 19 | 20 |
+--------------------------------------------+-----------------+-----------------+
| | --------------- | --------------- |
+--------------------------------------------+-----------------+-----------------+
| | 23 | 24 |
+--------------------------------------------+-----------------+-----------------+
| | =========== | =========== |
+--------------------------------------------+-----------------+-----------------+
The aggregate payroll costs of the above (excluding the share option
expense) were:
+--------------------------------------------+---------------------+---------------------+
| Group: | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| Wages and salaries | 1,430,258 | 1,079,012 |
+--------------------------------------------+---------------------+---------------------+
| Social security costs | 169,342 | 126,610 |
+--------------------------------------------+---------------------+---------------------+
| Other pension costs | 74,970 | 60,950 |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 1,674,570 | 1,266,572 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+--------------------------------------------+---------------------+---------------------+
+--------------------------------------------+---------------------+---------------------+
| Company: | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| Wages and salaries | 143,000 | 75,000 |
+--------------------------------------------+---------------------+---------------------+
| Other pension costs | 11,200 | 6,000 |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 154,200 | 81,000 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+--------------------------------------------+---------------------+---------------------+
Key management personnel received compensation as follows:
+--------------------------------------------+---------------------+---------------------+
| Group: | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| Salaries and short-term employment | 1,004,180 | 660,746 |
| benefits | | |
+--------------------------------------------+---------------------+---------------------+
| Post-employment benefits | 57,513 | 45,568 |
+--------------------------------------------+---------------------+---------------------+
| Share-based payments | 2,429 | 87,249 |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 1,064,122 | 793,563 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+--------------------------------------------+---------------------+---------------------+
| | | |
+--------------------------------------------+---------------------+---------------------+
| Company: | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| Salaries and short-term employment | 143,000 | 75,000 |
| benefits | | |
+--------------------------------------------+---------------------+---------------------+
| Post-employment benefits | 11,200 | 6,000 |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 154,200 | 81,000 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
| | | |
+--------------------------------------------+---------------------+---------------------+
Key management comprises the directors of the Company, those Directors of the
subsidiary who are not also Directors of the Parent Company, together with the
Company's senior scientific staff.
The directors' aggregate emoluments in respect of qualifying services
were:
+--------------------------------------------+---------------------+---------------------+
| | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| Salaries and short-term employment | 525,320 | 400,320 |
| benefits | | |
+--------------------------------------------+---------------------+---------------------+
| Company pension contributions to money | 35,200 | 25,200 |
| purchase schemes | | |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 560,520 | 425,520 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+--------------------------------------------+---------------------+---------------------+
+--------------------------------------------+---------------------+---------------------+
| Emoluments of highest paid director: | 2009 | 2008 |
+--------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+--------------------------------------------+---------------------+---------------------+
| Salary and short-term employment benefits | 300,000 | 240,000 |
+--------------------------------------------+---------------------+---------------------+
| Company pension contributions to money | 24,000 | 19,200 |
| purchase schemes | | |
+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+--------------------------------------------+---------------------+---------------------+
| | 324,000 | 259,200 |
+--------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+--------------------------------------------+---------------------+---------------------+
The number of Directors who accrued benefits under Company pension
schemes was as follows:
+--------------------------------------------+-----------------+-----------------+
| | 2009 | 2008 |
+--------------------------------------------+-----------------+-----------------+
| | No | No |
+--------------------------------------------+-----------------+-----------------+
| Money purchase schemes | 1 | 1 |
+--------------------------------------------+-----------------+-----------------+
| | =============== | =============== |
+--------------------------------------------+-----------------+-----------------+
In addition to the above, the Group was charged the following amounts by
Directors or by companies controlled by Directors for the provision of
consultancy services:
+-----------------------------------+---------+-----------------+-----------------+
| | | 2009 | 2008 |
+-----------------------------------+---------+-----------------+-----------------+
| | | GBP | GBP |
+-----------------------------------+---------+-----------------+-----------------+
| Sir Brian Richards | | 60,000 | 60,000 |
+-----------------------------------+---------+-----------------+-----------------+
| Dr Dmitry Genkin | | 3,000 | 3,000 |
+-----------------------------------+---------+-----------------+-----------------+
| Igor Nikolaev | | 3,000 | - |
+-----------------------------------+---------+-----------------+-----------------+
| Dr Tatiana Zhuravskaya | | - | 60,000 |
+-----------------------------------+---------+-----------------+-----------------+
| | | =============== | =============== |
+-----------------------------------+---------+-----------------+-----------------+
7. INCOME TAX CREDIT
(a) Analysis of credit in the period
+-+--------------------------------------------+---------------------+---------------------+
| | 2009 | 2008 |
+----------------------------------------------+---------------------+---------------------+
| | GBP | GBP |
+----------------------------------------------+---------------------+---------------------+
| Current tax: | | |
+----------------------------------------------+---------------------+---------------------+
| | | |
+----------------------------------------------+---------------------+---------------------+
| | UK corporation tax based on the results | (173,628) | (322,916) |
| | for the year at 28% (2008 - 28.5%) | | |
+-+--------------------------------------------+---------------------+---------------------+
| | ------------------- | ------------------- |
+----------------------------------------------+---------------------+---------------------+
| Total current tax | (173,628) | (322,916) |
+----------------------------------------------+---------------------+---------------------+
| | =============== | =============== |
+----------------------------------------------+---------------------+---------------------+
| | | | |
+-+--------------------------------------------+---------------------+---------------------+
(b) Factors affecting the tax credit for the year
The tax assessed for the year does not reflect a credit equivalent to the loss
on ordinary activities multiplied by the standard rate of corporation tax of 28%
(2008 - 28.5%).
+-----------------------------------+---------+----------------------+---------------------+
| | 2009 | 2008 |
+---------------------------------------------+----------------------+---------------------+
| | GBP | GBP |
+---------------------------------------------+----------------------+---------------------+
| | | | |
+-----------------------------------+---------+----------------------+---------------------+
| Loss on ordinary activities | | (3,630,886) | (3,791,203) |
| before tax | | | |
+-----------------------------------+---------+----------------------+---------------------+
| | | ================ | =============== |
+-----------------------------------+---------+----------------------+---------------------+
| | | | |
+-----------------------------------+---------+----------------------+---------------------+
| Loss on ordinary activities | | (1,016,649) | (1,080,493) |
| multiplied by the standard rate | | | |
| of corporation tax | | | |
+-----------------------------------+---------+----------------------+---------------------+
| Effects of: | | | |
+-----------------------------------+---------+----------------------+---------------------+
| Expenses not deductible for tax | | 45 | 497 |
| purposes | | | |
+-----------------------------------+---------+----------------------+---------------------+
| Unrelieved tax losses arising in | | 1,016,604 | 1,079,996 |
| the year | | | |
+-----------------------------------+---------+----------------------+---------------------+
| Surrender of qualifying research | | (173,628) | (332,916) |
| and development costs for tax | | | |
| rebates | | | |
+-----------------------------------+---------+----------------------+---------------------+
| | | -------------------- | ------------------- |
+-----------------------------------+---------+----------------------+---------------------+
| Current tax for the period | | (173,628) | (332,916) |
+-----------------------------------+---------+----------------------+---------------------+
| | | ================ | =============== |
+-----------------------------------+---------+----------------------+---------------------+
The Group has corporation tax losses available for offset against future profits
of the same trade of GBP15,800,000 (2008 - GBP12,500,000). The deferred taxation
asset not provided for in the accounts due to the uncertainty that future
taxable profits will be available to allow recovery of the asset is
approximately GBP4,450,000 (2008 - GBP3,500,000).
8.LOSS ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY
The loss dealt with in the accounts of the Parent Company was GBP662,238
(2008 - GBP357,717).
9. EARNINGS PER SHARE
The calculation of loss per share is based on the loss of GBP3,457,258 (2008 -
GBP3,458,287) and on the number of shares in issue, being the weighted average
number of shares in issue during the period of 140,230,091 ordinary 0.5p shares
(2008 - 119,668,535 ordinary 0.5p shares). There is no dilutive effect of share
options on the basic loss per share.
10.PROPERTY, PLANT AND EQUIPMENT
+----------------------------+------------------+---------------------+-------------------+-------------------+
| Group | Plant | Laboratory | Computer | Total |
| | | equipment | equipment | |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | GBP | GBP | GBP | GBP |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| COST | | | | |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 1st January 2008 | 800,000 | 434,835 | 44,329 | 1,279,164 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| Additions | - | 72,741 | 1,501 | 74,242 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | --------------- | ------------------- | ----------------- | ----------------- |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 1st January 2009 | 800,000 | 507,576 | 45,830 | 1,353,406 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| Additions | - | 82,972 | 28,570 | 111,542 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | ---------------- | ------------------- | ----------------- | ----------------- |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 31st December 2009 | 800,000 | 590,548 | 74,400 | 1,464,948 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | ============ | ============= | ============ | ============= |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | | | | |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| DEPRECIATION | | | | |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 1st January 2008 | 160,000 | 226,982 | 25,630 | 412,612 |
| | | | | |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| Charge for the year | 160,000 | 106,700 | 8,122 | 274,822 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | --------------- | ----------------- | -------------- | ---------------- |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 1st January 2009 | 320,000 | 333,682 | 33,752 | 687,434 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| Charge for the year | 160,000 | 121,996 | 14,936 | 296,932 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | --------------- | ----------------- | --------------- | --------------- |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 31st December 2009 | 480,000 | 455,678 | 48,688 | 984,366 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | ============ | ============= | ============ | ============ |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | | | | |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| NET BOOK VALUE | | | | |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 31st December 2009 | 320,000 | 134,870 | 25,712 | 480,582 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | ============ | ============= | =========== | =========== |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| At 31st December 2008 | 480,000 | 173,894 | 12,078 | 665,972 |
+----------------------------+------------------+---------------------+-------------------+-------------------+
| | ============ | ============= | =========== | =========== |
+----------------------------+------------------+---------------------+-------------------+-------------------+
+-----------------------------+----------------+-----------------+---------------+-----------------+
| Company | Plant | Laboratory | Computer | Total |
| | | equipment | equipment | |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | GBP | GBP | GBP | GBP |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| COST | | | | |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 1st January 2008 | 800,000 | - | - | 800,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| Additions | - | - | - | - |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | -------------- | --------------- | ------------- | -------------- |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 1st January 2009 | 800,000 | - | - | 800,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| Additions | - | - | - | - |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | -------------- | --------------- | ------------- | -------------- |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 31st December 2009 | 800,000 | - | - | 800,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | =========== | =========== | ========== | =========== |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | | | | |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| DEPRECIATION | | | | |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 1st January 2008 | 160,000 | - | - | 160,000 |
| | | | | |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| Charge for the year | 160,000 | - | - | 160,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | -------------- | --------------- | ------------- | -------------- |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 1st January 2009 | 320,000 | - | - | 320,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| Charge for the year | 160,000 | - | - | 160,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | -------------- | --------------- | ------------- | --------------- |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 31st December 2009 | 480,000 | - | - | 480,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | =========== | =========== | ========== | ============ |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| NET BOOK VALUE | | | | |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 31st December 2009 | 320,000 | - | - | 320,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | =========== | =========== | ========== | ============ |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| At 31st December 2008 | 480,000 | - | - | 480,000 |
+-----------------------------+----------------+-----------------+---------------+-----------------+
| | =========== | =========== | ========== | ============ |
+-----------------------------+----------------+-----------------+---------------+-----------------+
11.GOODWILL
+------------------------------------------+----------+----------+------------------+
| Group | | | |
+------------------------------------------+----------+----------+------------------+
| | | | GBP |
+------------------------------------------+----------+----------+------------------+
| COST | | | |
+------------------------------------------+----------+----------+------------------+
| At 1st January 2008, 1st January 2009 | | | 1,061,476 |
| and 31st December 2009 | | | |
+------------------------------------------+----------+----------+------------------+
| | | | ================ |
+------------------------------------------+----------+----------+------------------+
Goodwill arising on consolidation represents the excess of the cost of the
reverse acquisition over the net assets of Lipoxen Plc at the date of the
business combination.
The reverse acquisition of Lipoxen Plc provided Lipoxen Technologies Limited
with access to the AIM market to enable it to raise funds to finance the ongoing
development of its technology. This access to capital markets does not satisfy
the criteria for separate recognition as an intangible asset as set out in IAS
38: Intangible assets, and is therefore treated as goodwill in these financial
statements.
The Group tests annually for impairment or more frequently if there are
indications that goodwill might be impaired. The impairment review has been
carried out on the Group as a whole.
As primarily a research and development Group, the use of discounted cash flow
or similar tools is not appropriate given the inherent risks and uncertainties
in the sector and the long timespans involved. Instead the Board look at longer
term indicators of impairment.
Since the date of the previous impairment review the Group has made further
technical progress in the development of its PSA biopolymer and nanoparticle
technologies in both preclinical and clinical trials. The revenue generating
capacity of the Group has been enhanced through this progress.
Consequently, it is the view of the Board that no impairment of the carrying
value of the Group's goodwill or other assets has occurred during the year.
12.INVESTMENTS
+----+------------------------------------------------------+------------------+
| | Company | Group |
| | | companies |
+----+------------------------------------------------------+------------------+
| | GBP |
+-----------------------------------------------------------+------------------+
| | COST | |
+----+------------------------------------------------------+------------------+
| | At 1st January 2008, 1st January 2009 and 31st | 9,045,030 |
| | December 2009 | |
+----+------------------------------------------------------+------------------+
| | | ================ |
+----+------------------------------------------------------+------------------+
| | | |
+----+------------------------------------------------------+------------------+
The Company owns the whole of the issued share capital of Lipoxen Technologies
Limited, a company incorporated in England and Wales engaged in research into
drug delivery systems.
It is the view of the Board that no impairment of the carrying value of the
Company's investment has occurred during the year.
13.TRADE AND OTHER RECEIVABLES
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | Group | Company |
+--------------------------+---------------------------------------------+----------------------------------------------+
| | 2009 | 2008 | 2009 | 2008 |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | GBP | GBP | GBP | GBP |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Due in more than one | | | | |
| year: | | | | |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Receivables from | - | - | 6,610,290 | 4,862,481 |
| subsidiaries | | | | |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Provision for impairment | - | - | - | - |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | __________ | __________ | ___________ | __________ |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | | | | |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | - | - | 6,610,290 | 4,862,481 |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | ================ | ================ | ================== | ================ |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Due within one year: | | | | |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Trade receivables | 94,789 | 704,738 | - | - |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Provision for impairment | - | - | - | - |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | ________ | ________ | ________ | __________ |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | | | | |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | 94,789 | 704,738 | - | - |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Other receivables | 54,806 | 66,763 | 10,148 | - |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| Prepayments and accrued | 85,897 | 347,058 | 3,143 | 12,823 |
| income | | | | |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | -------------------- | -------------------- | ---------------------- | ------------------- |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | 235,492 | 1,118,559 | 13,291 | 12,823 |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
| | ================ | ================ | ================== | ================ |
+--------------------------+----------------------+----------------------+------------------------+---------------------+
In October 2005, Lipoxen Technologies Limited entered into an agreement with its
then major shareholder, FDS Pharma Ass, under which 15,000,000 ordinary shares
were allotted in consideration for the provision by FDS of manufacturing and
clinical development services. As per a Novation Agreement between FDS Pharma
Ass, Lipoxen Technologies Limited and the Company dated 16th January 2006, the
agreement provides for the allotment of up to 10,174,340 ordinary shares in
Lipoxen Plc upon achievement of certain future milestones to the financial value
of US$2,670,764 as approved by shareholders at the Extraordinary General Meeting
of the Company held on 16th January 2006. An amount of GBP311,725 (2008 -
GBP1,773,126) has been written offto the income statement in the year in respect
of services provided in the year by FDS. An amount of GBPNil (2008 - GBP311,725)
is included in the balance sheet under prepayments in respect of services still
to be provided under the agreement.
The carrying amount of the trade receivables is denominated in currencies as
follows:
+--------------------------------------------+------------------+-----------------+
| | 2009 | 2008 |
+--------------------------------------------+------------------+-----------------+
| | GBP | GBP |
+--------------------------------------------+------------------+-----------------+
| Pounds sterling | 94,789 | 23,510 |
+--------------------------------------------+------------------+-----------------+
| US dollars | - | 681,228 |
+--------------------------------------------+------------------+-----------------+
| | __________ | _________ |
+--------------------------------------------+------------------+-----------------+
| | | |
| | | |
| | | |
+--------------------------------------------+------------------+-----------------+
| | 94,789 | 704,738 |
+--------------------------------------------+------------------+-----------------+
| | ================ | =============== |
+--------------------------------------------+------------------+-----------------+
Trade receivables are considered to be impaired if they are more than three
months overdue at the date of approval of the financial statements. At 31st
December 2009 trade receivables of GBPNil (2008 - GBPNil) were impaired and
provided against. Movements on the provision for impairment of trade receivables
are as follows:
+--------------------------------------------+------------------+-----------------+
| | 2009 | 2008 |
+--------------------------------------------+------------------+-----------------+
| | GBP | GBP |
+--------------------------------------------+------------------+-----------------+
| At 1st January 2009 | - | 11,902 |
+--------------------------------------------+------------------+-----------------+
| Unused amount reversed | - | (11,902) |
+--------------------------------------------+------------------+-----------------+
| | __________ | _________ |
+--------------------------------------------+------------------+-----------------+
| | | |
+--------------------------------------------+------------------+-----------------+
| At 31st December 2009 | - | - |
+--------------------------------------------+------------------+-----------------+
| | ================ | =============== |
+--------------------------------------------+------------------+-----------------+
The maximum exposure to credit risk at the reporting date is the carrying value
of each class of receivable mentioned above. Neither the Group nor the Company
holds any collateral as security.
It is the view of the Board that no impairment of the carrying value of the
Company's other receivables has occurred during the year.
14.TRADE AND OTHER PAYABLES
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | Group | Company |
+--------------------------+---------------------------------------------+---------------------------------------------+
| | 2009 | 2008 | 2009 | 2008 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | GBP | GBP | GBP | GBP |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Trade payables | 109,099 | 129,672 | 20,468 | 72,530 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Social security and | 43,002 | 45,706 | - | 513 |
| other taxes | | | | |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Other payables | 200 | 7,963 | 200 | - |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Accrued expenses | 387,868 | 216,024 | 122,523 | 107,750 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Deferred income | 7,548 | 75,484 | - | - |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | -------------------- | -------------------- | -------------------- | -------------------- |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | 547,717 | 474,849 | 143,191 | 180,793 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | ================ | ================ | ================ | ================ |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
15.SHARE CAPITAL
Authorised share capital:
+--------------------+----------------+---------------------+---+----------------------+-----------+-------------------+
| | 2009 | 2008 |
+---------------------------------------------------------------+----------------------+-------------------------------+
| | GBP | GBP |
+---------------------------------------------------------------+----------------------+-------------------------------+
| 673,300,000 Ordinary shares of 0.5p each | 3,366,500 | 3,366,500 |
+---------------------------------------------------------------+----------------------+-------------------------------+
| 16,335,000,000 Deferred shares of 0.01p each | 1,633,500 | 1,633,500 |
+---------------------------------------------------------------+----------------------+-------------------------------+
| | -------------------- | -------------------- |
+---------------------------------------------------------------+----------------------+-------------------------------+
| | 5,000,000 | 5,000,000 |
+---------------------------------------------------------------+----------------------+-------------------------------+
| | ================ | ================ |
+---------------------------------------------------------------+----------------------+-------------------------------+
| Allotted, called up and fully paid: | |
+-----------------------------------------------------------+----------------------------------------------------------+
| | 2009 | 2008 |
+--------------------+--------------------------------------+----------------------------------------------------------+
| | No | GBP | | GBP |
| | | | No | |
+--------------------+----------------+---------------------+--------------------------------------+-------------------+
| Ordinary shares of | 154,397,230 | 771,986 | 119,858,085 | 599,290 |
| 0.5p each | | | | |
+--------------------+----------------+---------------------+--------------------------------------+-------------------+
| Deferred shares of | 16,335,000,000 | 1,633,500 | 16,335,000,000 | 1,633,500 |
| 0.01p each | | | | |
+--------------------+----------------+---------------------+--------------------------------------+-------------------+
| | | ------------------- | | ----------------- |
+--------------------+----------------+---------------------+--------------------------------------+-------------------+
| | | 2,405,486 | | 2,232,790 |
+--------------------+----------------+---------------------+--------------------------------------+-------------------+
| | | ============== | | ============== |
+--------------------+----------------+---------------------+--------------------------------------+-------------------+
| | | | | | | |
+--------------------+----------------+---------------------+---+----------------------+-----------+-------------------+
On 29th May 2009 the Company issued 34,200,000 ordinary shares of 0.5p each by
way of a placing at a price of 8.5p per share, raising cash of GBP2,907,000
(before expenses of issue of GBP187,897).
Following the exercise of share options, 52,000 ordinary shares of 0.5p each
were issued on 7th September 2009 for cash of GBP383, 100,000 ordinary shares of
0.5p each were issued on 1st October 2009 for cash of GBP738, and a further
187,145 ordinary shares of 0.5p each were issued on 10th November 2009 for cash
of GBP1,379.
Since the balance sheet date, a further 17,516,546 ordinary shares of 0.5p each
have been allotted by way of a placing at a price of 7p per share, raising cash
of GBP1,225,000 before expenses.
The rights attached to the deferred shares are as follows:
(a) no entitlement to any dividend;
(b) on a winding-up, an entitlement to receive an amount equal to the nominal
value of each share, but only after an amount of GBP50,000,000 per share has
been paid to the holders of the issued and fully paid ordinary 0.5p shares;
(c) no right to attend or vote at a general meeting; and
(d) an obligation to permit the Company to transfer the shares to such person as
the Company may determine, without receiving any payment.
16.SHARE OPTIONS AND WARRANTS
Movements in the number of share options in issue during the year were as
follows:
+--------------------------+---------------------+----------+----------------------+----------+
| | Number | Weighted | Number | Weighted |
| | | average | | average |
| | | exercise | | exercise |
| | | price | | price |
+--------------------------+---------------------+----------+----------------------+----------+
| | 2009 | 2009 | 2008 | 2008 |
+--------------------------+---------------------+----------+----------------------+----------+
| | | | | |
+--------------------------+---------------------+----------+----------------------+----------+
| At 1st January | 9,833,030 | 6.7910p | 10,399,695 | 7.4197p |
+--------------------------+---------------------+----------+----------------------+----------+
| Exercised | (339,145) | 0.7371p | (264,533) | 0.7371p |
+--------------------------+---------------------+----------+----------------------+----------+
| Expired | (316,666) | 34.5750p | (302,132) | 33.7311p |
+--------------------------+---------------------+----------+----------------------+----------+
| | ------------------- | | -------------------- | |
+--------------------------+---------------------+----------+----------------------+----------+
| At 31st December | 9,177,219 | 6.0565p | 9,833,030 | 6.7910p |
+--------------------------+---------------------+----------+----------------------+----------+
| | ================ | | ================ | |
+--------------------------+---------------------+----------+----------------------+----------+
No share options were granted in the year.
Options outstanding at 31st December 2009 were exercisable as follows:
+-----------+-------------------+-----------+---------------------------------+
| | Number | Exercise | Exercise period |
| Effective | granted | price | |
| date of | | | |
| grant | | | |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 48,837 | 22.1145p | Until 23/12/11 |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 71,904 | 41.7226p | Until 28/07/12 |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 406,974 | 0.7371p | Until 25/05/14 |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 759,684 | 0.7371p | Until 25/10/14 |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 101,743 | 0.7371p | Until 11/05/15 |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 141,084 | 0.7371p | Until 29/09/15 |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 6,200,250 | 1.0000p | Until 15/01/16 |
+-----------+-------------------+-----------+---------------------------------+
| 17/01/06 | 205,000 | 1.0000p | Until 17/01/16 |
+-----------+-------------------+-----------+---------------------------------+
| 24/03/06 | 175,000 | 29.5000p | Until 23/03/16 |
+-----------+-------------------+-----------+---------------------------------+
| 24/03/06 | 175,000 | 29.5000p | Between 17/01/09 and 23/03/16 |
+-----------+-------------------+-----------+---------------------------------+
| 24/03/06 | 25,000 | 29.5000p | Until 29/02/16 |
+-----------+-------------------+-----------+---------------------------------+
| 24/03/06 | 25,000 | 29.5000p | Between 01/03/09 and 29/02/16 |
+-----------+-------------------+-----------+---------------------------------+
| 17/10/06 | 101,743 | 0.7371p | Until 17/10/16 |
+-----------+-------------------+-----------+---------------------------------+
| 15/03/07 | 107,500 | 35.0000p | Until 14/03/17 |
+-----------+-------------------+-----------+---------------------------------+
| 15/03/07 | 42,500 | 35.0000p | Between various dates in 2009 |
| | | | and 14/03/17 |
+-----------+-------------------+-----------+---------------------------------+
| 15/03/07 | 65,000 | 35.0000p | Between various dates in 2010 |
| | | | and 14/03/17 |
+-----------+-------------------+-----------+---------------------------------+
| 19/03/07 | 12,500 | 35.7500p | Until 18/03/17 |
+-----------+-------------------+-----------+---------------------------------+
| 19/03/07 | 12,500 | 35.7500p | Between 19/03/10 and 18/03/17 |
+-----------+-------------------+-----------+---------------------------------+
| 31/07/07 | 400,000 | 47.7500p | Until 08/08/17 |
+-----------+-------------------+-----------+---------------------------------+
| 09/08/07 | 50,000 | 46.6000p | Until 08/08/17 |
+-----------+-------------------+-----------+---------------------------------+
| 09/08/07 | 50,000 | 46.6000p | Between 25/12/10 and 08/08/17 |
+-----------+-------------------+-----------+---------------------------------+
| | ----------------- | | |
+-----------+-------------------+-----------+---------------------------------+
| | 9,177,219 | | |
+-----------+-------------------+-----------+---------------------------------+
| | ============= | | |
+-----------+-------------------+-----------+---------------------------------+
17.RECONCILIATION OF LOSS BEFORE TAXATION TO NET CASH OUTFLOW FROM OPERATING
ACTIVITIES
+--------------------------------------------+----------------------+----------------------+
| Group | 2009 | 2008 |
+--------------------------------------------+----------------------+----------------------+
| | GBP | GBP |
+--------------------------------------------+----------------------+----------------------+
| Loss before taxation | (3,630,886) | (3,791,203) |
+--------------------------------------------+----------------------+----------------------+
| Adjustments for: | | |
+--------------------------------------------+----------------------+----------------------+
| Equity-settled share options | 10,155 | 93,689 |
+--------------------------------------------+----------------------+----------------------+
| Equity-settled research and development | 311,725 | 1,773,126 |
+--------------------------------------------+----------------------+----------------------+
| Depreciation | 296,932 | 274,822 |
+--------------------------------------------+----------------------+----------------------+
| Investment income | (10,710) | (72,926) |
+--------------------------------------------+----------------------+----------------------+
| | -------------------- | -------------------- |
+--------------------------------------------+----------------------+----------------------+
| | (3,022,784) | (1,722,492) |
+--------------------------------------------+----------------------+----------------------+
| Decrease/(increase) in receivables | 571,342 | (636,045) |
+--------------------------------------------+----------------------+----------------------+
| Increase in payables | 72,868 | 181,116 |
+--------------------------------------------+----------------------+----------------------+
| | -------------------- | -------------------- |
+--------------------------------------------+----------------------+----------------------+
| Net cash outflow from operating activities | (2,378,574) | (2,177,421) |
+--------------------------------------------+----------------------+----------------------+
| | ================ | ================ |
+--------------------------------------------+----------------------+----------------------+
+--------------------------------------------+----------------------+----------------------+
| Company | 2009 | 2008 |
+--------------------------------------------+----------------------+----------------------+
| | GBP | GBP |
+--------------------------------------------+----------------------+----------------------+
| Loss before taxation | (662,238) | (357,717) |
+--------------------------------------------+----------------------+----------------------+
| Adjustments for: | | |
+--------------------------------------------+----------------------+----------------------+
| Depreciation | 160,000 | 160,000 |
+--------------------------------------------+----------------------+----------------------+
| Investment income | (7,205) | (71,700) |
+--------------------------------------------+----------------------+----------------------+
| | -------------------- | -------------------- |
+--------------------------------------------+----------------------+----------------------+
| | (509,443) | (269,417) |
+--------------------------------------------+----------------------+----------------------+
| Increase in receivables | (468) | (2,971) |
+--------------------------------------------+----------------------+----------------------+
| (Decrease)/increase in payables | (37,602) | 98,994 |
+--------------------------------------------+----------------------+----------------------+
| | -------------------- | -------------------- |
+--------------------------------------------+----------------------+----------------------+
| Net cash outflow from operating activities | (547,513) | (173,394) |
+--------------------------------------------+----------------------+----------------------+
| | ================ | ================ |
+--------------------------------------------+----------------------+----------------------+
18. FINANCIAL INSTRUMENTS
Financial assets and liabilities were held as follows:
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | Group | Company |
+--------------------------+---------------------------------------------+---------------------------------------------+
| | 2009 | 2008 | 2009 | 2008 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Assets | GBP | GBP | GBP | GBP |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Loans and receivables: | | | | |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Receivables from | - | - | 6,610,290 | 4,862,481 |
| subsidiaries | | | | |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Trade receivables | 94,789 | 704,738 | - | - |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Cash and cash | 1,017,890 | 602,065 | 998,225 | 564,739 |
| equivalents | | | | |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | -------------------- | -------------------- | -------------------- | -------------------- |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Total financial assets | 1,112,679 | 1,306,803 | 7,608,515 | 5,427,220 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | ================ | ================ | ================ | ================ |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Liabilities | | | | |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Financial liabilities | | | | |
| measured at amortised | | | | |
| cost: | | | | |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Trade payables | 109,099 | 129,672 | 20,468 | 72,530 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Accrued expenses | 387,868 | 216,024 | 122,523 | 107,750 |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Deferred income | 7,548 | 75,484 | - | - |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | -------------------- | -------------------- | -------------------- | -------------------- |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| Total financial | 504,515 | 421,180 | 142,991 | 180,280 |
| liabilities | | | | |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
| | ================ | ================ | ================ | ================ |
+--------------------------+----------------------+----------------------+----------------------+----------------------+
The Group is engaged in the development of drug delivery systems and
proprietary products in the fields of protein drugs, vaccines and oncology.
Whilst it is therefore exposed to some financial risk this is significantly less
than a trading company which has significant receivables, payables and
inventories.
The Directors consider that the carrying value of the financial assets and
financial liabilities approximates their fair value.
The credit risk and foreign currency risk of trade receivables are considered in
Note 13.
Cash and cash equivalents comprise cash on hand of GBP424 and balances at bank
of GBP1,017,466, of which GBP379,447 is held in a US dollar denominated account.
Whilst the bank balances are held with a reputable financial institution, the
maximum exposure to credit risk is the carrying value of the balances as
disclosed above.
The trade payables are considered to have a maturity date of 3 months or less.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash
flows associated with it will fluctuate due to changes in market interest rates.
The Group has financial assets in the form of trade receivables and cash and
cash equivalents. These are considered to be short term liquid assets and as a
result the exposure to interest rate risk is not considered to be significant.
On this basis no sensitivity analysis has been prepared on the grounds that
there would not be a material impact on either the carrying values of the
respective assets, the net loss for the year or the equity at the end of the
period.
Liquidity risk
The Group maintains sufficient cash and cash equivalents. Management reviews
cashflow forecasts to determine whether the Group has sufficient cash reserves
to continue with its research and development activities.
The Group has no significant financial liabilities and no borrowings.
Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern and to provide a means of attracting
investors. The Group has no debt and does not therefore have a strategy in terms
of maintaining a certain debt to equity ratio. Rather capital is managed with a
view to generating further cash and cash equivalents which can be used in the
furtherance of the Group's aims and objectives.
19. RELATED PARTY TRANSACTIONS
FDS Pharma ("FDS") - substantial shareholder
In October 2005, Lipoxen Technologies Limited entered into an agreement with its
then major shareholder, FDS Pharma Ass, under which 15,000,000 ordinary shares
were allotted in consideration for the provision by FDS of manufacturing and
clinical development services. The agreement provides for certain milestone
payments which may be settled either by the issue of further shares in Lipoxen
Plc or by specified cash amounts. An amount of GBP311,725 (2008 - GBP1,773,126)
has been written off to the income statement in the year in respect of services
provided in the year by FDS. An amount of GBPNil (2008 - GBP311,725) is included
in the balance sheet under prepayments in respect of services still to be
provided under the agreement.
Sales of services to FDS Pharma in the year amounted to GBP89,489.
Directors
The Group was charged the following amounts by Directors or by companies
controlled by Directors for the provision of consultancy services:
+-----------------------------------+---------+---------+---------+
| | | 2009 | 2008 |
+-----------------------------------+---------+---------+---------+
| | | GBP | GBP |
+-----------------------------------+---------+---------+---------+
| Sir Brian Richards | | 60,000 | 60,000 |
+-----------------------------------+---------+---------+---------+
| Dr Dmitry Genkin | | 3,000 | 3,000 |
+-----------------------------------+---------+---------+---------+
| Igor Nikolaev | | 3,000 | - |
+-----------------------------------+---------+---------+---------+
| Dr Tatiana Zhuravskaya | | - | 60,000 |
+-----------------------------------+---------+---------+---------+
Included in the above amounts are the following amounts borne by the Company:
+-----------------------------------+---------+---------+---------+
| | | 2009 | 2008 |
+-----------------------------------+---------+---------+---------+
| | | GBP | GBP |
+-----------------------------------+---------+---------+---------+
| Sir Brian Richards | | 60,000 | 60,000 |
+-----------------------------------+---------+---------+---------+
| Dr Dmitry Genkin | | 3,000 | 3,000 |
+-----------------------------------+---------+---------+---------+
| Igor Nikolaev | | 3,000 | - |
+-----------------------------------+---------+---------+---------+
| Dr Tatiana Zhuravskaya | | - | 3,000 |
+-----------------------------------+---------+---------+---------+
Lipoxen Technologies Limited - subsidiary
The Company charged a management charge of GBP120,000 (2008 - GBP120,000) to the
subsidiary during the year. The Company continued to advance monies to the
subsidiary during the year to fund the ongoing development of the Group's
technology. The balance receivable from the subsidiary at 31st December 2009 was
GBP6,610,290 (2008 - GBP4,862,481).
20. GENERAL INFORMATION
Lipoxen Plc and its subsidiary, Lipoxen Technologies Limited, are principally
engaged in the development of drug delivery systems and proprietary products in
the fields of protein drugs, vaccines and oncology. Lipoxen Plc, a public
limited company incorporated and domiciled in England and Wales, is the Group's
ultimate parent company. The address of the registered office and the principal
place of business is The London BioScience Innovation Centre, 2 Royal College
Street, London NW1 0NH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JBMBTMBJJTBM
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