ETX: e-Therapeutics plc: Interim Results for the six months ended 31 July 2012

  ETX: e-Therapeutics plc: Interim Results for the six months ended 31 July
  2012

UK Regulatory Announcement

LONDON

e-Therapeutics plc (AIM: ETX), the drug discovery and development company,
today announces its interim results for the six months ended 31 July 2012.

Highlights
(*Events since the end of the period; **announced today)

Lead cancer drug ETS2101 enters clinic
•  US phase I trial initiated in patients with brain cancer
•   UK phase I trial begins in patients with solid tumours*
•   First data expected Q4 2012; final results from brain cancer trial Q4 2013
    and solid tumour trial Q1 2014**

Focused investment in other development programmes
•   ETS6103 for major depressive disorder: phase IIb trial start expected Q2
    2013; results expected Q2 2014**
•   ETX1153a for MRSA infection: development discontinued**
•   ETX1153c for C. difficile infection: preclinical work progressing

Drug discovery work on track
•   Network Pharmacology Centre opened near Oxford
•   Multiple discovery programmes advancing in oncology and neurology

•   At least one product expected to enter development by end of 2013

Strong balance sheet
    Cash and liquid resources of £11.7 million at 31 July 2012 (31 July 2011:
•   £15.3 million; 31 Jan 2012: £13.9 million) providing working capital
    through mid-2014**
•   Half-year net loss of £1.8 million (2011: loss of £1.5 million) reflects
    increased investment in business

Commenting on the Results, Professor Malcolm Young, CEO of e-Therapeutics,
said: “This has been another period of significant progress. In the past six
months we have advanced our most important product, the cancer drug ETS2101,
into two phase I trials. We have also continued to re-shape our drug pipeline,
with a clear determination to focus investment into the most promising assets
in our discovery and development portfolios. We now look forward to some major
clinical milestones and to new outputs from our unique drug discovery platform
in network pharmacology.”

For more information, please contact:

e-Therapeutics plc
Malcolm Young, CEO / Daniel Elger, CFO
Tel: +44 (0) 7909 915 068
www.etherapeutics.co.uk

Panmure Gordon (UK) Limited
Fred Walsh / Hannah Woodley / Grishma Patel
Tel: +44 (0) 20 7886 2500
www.panmure.com

College Hill
Melanie Toyne Sewell / Stefanie Bacher / Rebecca Caygill
Tel: +44 (0) 20 7457 2020
Email: e-therapeutics@collegehill.com

ComStrat Group (US)
Ted Agne
Tel: (+1) 781 631 3117
Email: edagne@comstratgroup.com

Chairman’s statement

Overview
We are pioneers of a new approach to drug discovery based on network
pharmacology. Our business revolves around monetising drugs resulting from our
discovery programme. Our strategy is to advance the most promising of these
through clinical trials to a point where they can be licensed on attractive
terms to larger companies. We expect this to provide us with revenues in the
form of upfront payments, progress-based milestone payments and royalties on
any sales. During the past six months we have taken our most important product
candidate, the cancer drug ETS2101, forward into two phase I trials. This is a
key step in executing our business plan. We have also continued to build a
broadly based business through work to discover more new drugs at our Network
Pharmacology Centre near Oxford and by selectively advancing other candidates
alongside ETS2101.

Cancer drug enters trials
Our principal objective for 2012 was to move our cancer drug ETS2101 into
clinical trials. The phase I trial programme began in June, when investigators
at the UC San Diego Moores Cancer Center in La Jolla, California, started
enrolling patients with primary or metastatic brain cancer into an
investigator-initiated study. Up to 24 patients will be included in the trial,
which has a dose-escalating design intended to establish a dose for phase II
development, assess safety and tolerability and identify any initial signs of
anti-cancer activity. In September, we started a second phase I trial at two
hospitals in the UK. This will enrol around 45 patients with a variety of
solid tumours. The aims and design of the UK trial are similar to those of the
brain cancer study. First findings from the phase I programme are anticipated
late this year, with further data from both trials available during 2013. We
expect final results from the brain cancer study in Q4 2013 and from the solid
tumour study in Q1 2014.

ETS2101 represents a significant commercial opportunity because of its
potential to address unmet needs in multiple high-value oncology market
segments. An early focus on brain cancers reflects particularly encouraging
preclinical data from brain cancer cell lines and evidence that the drug
crosses the blood-brain barrier, which compromises the effectiveness of many
other cancer drugs in this setting. However, positive findings from other
cancer lines suggest the drug could have wider potential. Our broad phase I
programme is the first step in evaluating which cancer patients might be most
likely to benefit from the product.

Decisions and progress on other candidates
Our second priority in the clinic is to complete a phase IIb trial of ETS6103
in patients with major depressive disorder. We have experienced a delay in the
programme because it took longer than we anticipated to produce tablets that
release the drug over an optimal time period. We now expect to complete a
submission to the UK regulator by the end of this year and to start dosing
patients in Q2 2013. Our phase IIb trial will build on an earlier, small phase
IIa study that produced encouraging results with ETS6103 in comparison with
the approved tricyclic anti-depressant amitriptyline. The forthcoming trial
will compare two doses of ETS6103 with amitriptyline in a randomised protocol
including around 120 patients who have failed prior treatment with an SSRI
anti-depressant. Results are expected in Q2 2014. We regard ETS6103 as a more
modest commercial opportunity than ETS2101 but one that clearly justifies the
limited further investment needed to complete a proof-of-concept trial
designed to demonstrate the product’s value to potential partners.

We have two preclinical programmes targeting infectious diseases. One of
these, ETX1153a, was designed as a topical treatment for MRSA. Final
preclinical tests have reinforced the case that this drug kills a wide range
of MRSA strains at low concentrations and has a good resistance profile, as
predicted by our network pharmacology platform and shown in earlier testing.
However, re-evaluation of development considerations and the commercial
opportunity for the drug has led us to decide that there are better uses of
our resources than pursuing this programme, and it will therefore be
discontinued. Our second anti-infective, ETX1153c, designed for treatment of
C. difficile infection, remains of significant interest. We announced in May
that additional preclinical work was needed to surmount practical issues in
formulating the drug’s two active ingredients in a single tablet. These
ingredients have a synergistic (more than additive) effect against C.
difficile when used in combination. Our preclinical work is ongoing and we
expect to make a decision on whether to advance a candidate into the clinic in
mid-2013.

Discovery – fuelling future growth
At our Network Pharmacology Centre near Oxford, which was opened in February
by UK Prime Minister David Cameron, our scientists are generating a pool of
new drug candidates. We will select the most attractive of these, based on
technical, clinical and commercial criteria, to advance into the clinic. Our
effort is concentrated on complex diseases in which we believe our technology
has particular strengths, principally cancer and nervous system disorders,
although we also have an important research strand in pain. We remain on track
to advance at least one new candidate from discovery into development by the
end of 2013. In addition, we continue to explore opportunities for discovery
collaborations with other companies. Our leading position in network
pharmacology-based drug discovery gained further support in August through the
grant of another European patent.

Strong balance sheet supports investment
Our investment in discovery and development is reflected in an increase in our
first-half net loss to £1.8 million from £1.5 million during the equivalent
period last year. There were no revenues to offset our operating expenses (H1
2012: nil). The income statement shows tax receivable of £0.3 million for the
first half, reflecting our expected receipt of R&D tax credits associated with
qualifying R&D expenditure.

We maintain a strong balance sheet that supports our investment in R&D. At 31
July 2012 we had cash and short-term investments of £11.7 million, compared
with £15.3 million at 31 July 2011 and £13.9 million at 31 January 2012.

The Company’s strategy is to license its products to pharmaceutical companies
for late-stage development and commercialisation. The Company may also enter
discovery collaborations with selected partners. We anticipate continuing
losses until revenues from these sources exceed investment in R&D. Based on
our latest projections, we expect our current funds to support our planned
investment in discovery and development through mid-2014 even in the absence
of any income from partners.

Board enhanced by new appointment
In February we appointed Dr Rajesh Chopra, a senior executive at Celgene
Corporation, as a Non-Executive Director. Raj has brought a wealth of relevant
R&D and clinical experience to our Board.

Outlook
We are now close to reporting our first clinical data since our refinancing in
2011. Initial findings from the cancer programme with ETS2101 will be followed
next year by more extensive data, with final results from the brain cancer
study expected in late 2013 and final results from the solid tumour study
expected in Q1 2014, followed soon afterwards by data from the phase IIb trial
of our antidepressant, ETS6103. Advancing these two drugs rapidly towards
potential partnering deals is our key priority, but we are also very
enthusiastic about applying our unique discovery platform to generate further
new candidates that will fuel long-term growth.

Professor Oliver James
22 October 2012

GROUP INCOME STATEMENT

FOR THE SIX MONTHS ENDED 31 JULY 2012

                                6 months ended   6 months ended   12 months
                                                               ended
                                31 July          31 July
                                                                  31 January
                                2012             2011             2012
                                (un-audited)     (un-audited)     (audited)
                                £000             £000             £000
Revenue                         -                -                -
Cost of sales                   -                -                -
Gross profit                    -                -                -
Research & Development          (1,616)          (1,106)          (2,898)
expenditure
Administrative expenses         (673)            (728)            (1,130)
Operating loss                  (2,289)          (1,834)          (4,028)
Finance expense                 (1)              (26)             (26)
                                                                             
Finance revenue                 127              63               191
Loss before taxation            (2,163)          (1,797)          (3,863)
Taxation                        332              254              621
Loss for the period             (1,831)          (1,543)          (3,242)
Loss per share – basic and      (1.33)p          (1.25)p          (2.47)p
diluted

The results shown above relate entirely to continuing operations. There are no
recognised gains and losses other than those passing through the income
statement.

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 JULY 2012

                            6 months ended   6 months ended   12 months ended
                                                          
                            31 July          31 July          31 January
                            2012             2011             2012
                            (un-audited)     (un-audited)     (audited)
                            £000             £000             £000
Loss for the period         (1,831)          (1,543)          (3,242)

                                                           

Other comprehensive         -                -                -
income
Total comprehensive         (1,831)          (1,543)          (3,242)
income for the period

GROUP BALANCE SHEET

AT 31 JULY 2012

                                  31 July       31 July       31 January
                                    2012           2011           2012
                            Notes   (un-audited)   (un-audited)   (audited)
                                                                             
                                    £000           £000           £000
ASSETS
                                                                             
Non-current assets
Property, plant and                 163            33             137
equipment
Goodwill                            -              -              -
Intangible assets           2       426            331            337
                                    589            364            474
                                                                             
Current assets
Trade and other                     1,266          878            888
receivables
Fixed-term deposits                 6,050          6,000          7,750
Cash and cash equivalents           5,607          9,296          6,156
                                    12,923         16,174         14,794
Total assets                        13,512         16,538         15,268
                                                                             
LIABILITIES
Current liabilities
Trade and other payables            610            126            544
Long-term liabilities               -              -              -
Total liabilities                   610            126            544
Net assets                          12,902         16,412         14,724
EQUITY
Share capital               3       138            138            138
Share premium account       3       25,552         25,552         25,552
Warrant reserve             3       132            132            132
Retained earnings           3       (12,920)       (9,410)        (11,098)
Capital and reserves
attributable to equity      3       12,902         16,412         14,724
holders

GROUP CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 31 JULY 2012

                                6 months ended   6 months ended   12 months
                                                               ended
                                31 July          31 July
                                                                  31 January
                                2012             2011             2011
                                (un-audited)     (un-audited)     (audited)
                                £000             £000             £000
Cash flows from operating
activities
Loss for the period             (1,831)          (1,543)          (3,242)
Adjustments for:
Depreciation, amortisation      46               22               81
and impairment
Financial income                (127)            (63)             (191)
Financial expenses              1                26               26
Equity-settled share-based      9                -                11
payment expenses
Taxation                       (332)            (254)            (621)
                                (2,234)          (1,812)          (3,936)
                                                                             
(Increase)/ decrease in trade   (42)             (46)             (116)
and other receivables
(Decrease)/increase in trade    66               11               429
and other payables
Tax received                   -                -                386
Net cash from operating        (2,210)          (1,847)          (3,237)
activities
Cash flows from investing
activities
Proceeds from sale of           -                -                -
property, plant and equipment
Interest received               122              59               99
Acquisition of property,        (49)             (24)             (139)
plant and equipment
Acquisition of other            (112)            (74)             (128)
intangible assets
(Increase)/decrease in         1,700            (6,000)          (7,750)
fixed-term deposits
Net cash from investing        1,661            (6,039)          (7,918)
activities
                                                                             
Cash flows from financing
activities
Issue of share capital          -                17,553           17,682
Issue of loan notes             -                (1,049)          (1,049)
Interest paid                  -                (249)            (249)
Net cash from financing        -                16,255           16,384
activities
                                                                             
Net increase/(decrease) in      (549)            8,369            5,229
cash and cash equivalents
Cash and cash equivalents at   6,156            927              927
the beginning of the period
Cash and cash equivalents at   5,607            9,296            6,156
the end of the period

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 JULY 2012

                           Share    Share    Warrant  Retained  Total
                            capital   premium   reserve   earnings
                                                                             
                            £000      £000      £000      £000       £000
As at 1 February 2011       66        7,654     420       (7,867)    273
Total comprehensive
income for the period
Loss for the period         -         -         -         (1,543)    (1,543)
Total comprehensive         -         -         -         (1,543)    (1,543)
income for the period
Transactions with owners,
recorded directly in
equity
Issue of ordinary shares    72        17,610    -         -          17,682
Warrants exercised and      -         288       (288)     -          -
issued
Total contributions by
and distribution to         72        17,898    (288)     -          17,682
owners
As at 31 July 2011          138       25,552    132       (9,410)    16,412
As at 1 August 2011         138       25,552    132       (9,410)    16,412
Total comprehensive
income for the period
Loss for the period         -         -         -         (1,699)    (1,699)
Total comprehensive         -         -         -         (1,699)    (1,699)
income for the period
Transactions with owners,
recorded directly in
equity
Equity-settled
share-based payment         -         -         -         11         11
transactions
Total contributions by
and distribution to         -         -         -         11         11
owners
As at 31 January 2012       138       25,552    132       (11,098)   14,724
As at 1 February 2012       138       25,552    132       (11,098)   14,724
Total comprehensive
income for the period
Loss for the period         -         -         -         (1,831)    (1,831)
Total comprehensive         -         -         -         (1,831)    (1,831)
income for the period
Transactions with owners,
recorded directly in
equity
Equity-settled
share-based payment         -         -         -         9          9
transactions
Total contributions by
and distribution to         -         -         -         9          9
owners
As at 31 July 2012          138       25,552    132       (12,920)   12,902

1. Basis of Preparation

These unaudited interim financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006. The
Company is a public limited company; it is listed on the London Stock
Exchange’s AIM market and is incorporated and domiciled in the United Kingdom.
The address of its registered office is 17 Blenheim Office Park, Long
Hanborough, Oxfordshire, OX29 8LN, UK.

Statutory accounts for the year ended 31 January 2012 were approved by the
Board of Directors on 18 June 2012 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.

This interim statement, which is neither audited nor reviewed, has been
prepared in accordance with the measurement and recognition criteria of
Adopted IFRSs. It does not include all the information required for the full
annual financial statements, and should be read in conjunction with the
financial statements of the Group as at and for the year ended 31 January
2012. It does not comply with International Accounting Standard (IAS) 34
‘Interim Financial Reporting’ as is permissible under the rules of AIM. The
accounting policies applied in preparing these interim financial statements
are the same as those applied in the preparation of the annual financial
statements for the year ended 31 January 2012 (as described in those financial
statements) other than standards, amendments and interpretations which became
effective after 1 February 2012 and were adopted by the Group. These have had
no significant impact on the Group’s result for the period or its equity.

2. Goodwill and Intangible Assets
Group

                                                                     Total
                                            Patents and trademarks
                                                                   
                                            £000
                                                                     £000
Cost
Balance as at 1 February 2011               389                      389
Other acquisitions – internally developed   74                       74
Balance as at 31 July 2011                  463                      463
Other acquisitions – internally developed   54                       54
Balance as at 31 January 2012               517                      517
Other acquisitions – internally developed   112                      112
Balance as at 31 July 2012                  629                      629
                                                                           
Amortisation and impairment
Balance as at 1 February 2011               117                      117
Amortisation and impairment charge          15                       15
Balance as at 31 July 2011                  132                      132
Amortisation and impairment charge          48                       48
Balance as at 31 January 2012               180                      180
Amortisation                                3                        3
Impairment                                  20                       20
Balance at 31 July 2012                     203                      203
                                                                           
Net book value                                                      
As at 31 July 2011                          331                      331
As at 31 January 2012                       337                      337
As at 31 July 2012                          426                      426

As a result of the decision to discontinue development of ETX1153a announced
today, a review of related patent assets for potential impairment will be
carried out and reflected in the second half of the year.

3. Capital and Reserves
Reconciliation of movement in capital and reserves
Group

                             Share     Share     Warrant   Retained   Total

                            Capital  premium  reserve  earnings  equity

                             £000      £000      £000      £000       £000
Balance at 1 February 2011   66        7,654     420       (7,867)    273
Issue of ordinary share      72        17,610    -         -          17,682
capital
Warrants exercised and       -         288       (288)     -          -
issued
Total recognised income      -         -         -         (1,543)    (1,543)
and expense
Balance at 31 July 2011      138       25,552    132       (9,410)    16,412
Balance at 1 August 2011     138       25,552    132       (9,410)    16,412
Share-based payments         -         -         -         11         11
Total recognised income      -         -         -         (1,699)    (1,699)
and expense
Balance at 31 January 2012   138       25,552    132       (11,098)   14,724
Balance at 1 February 2012   138       25,552    132       (11,098)   14,724
Share-based payments         -         -         -         9          9
Total recognised income      -         -         -         (1,831)    (1,831)
and expense
Balance at 31 July 2012      138       25,552    132       (12,920)   12,902

                                           31 July 2012   31 July 2011
Share capital                                          
                                           (un-audited)   (un-audited)
In issue – fully paid
                                           138,126        138,126
(in thousands of shares)
                                                          
                                           31 July 2012   31 July 2011
                                           £000           £000

                                           (unaudited)    (unaudited)
Allotted, called up and fully paid
Ordinary shares of £0.001 each             138            138
                                           138            138
                                                          
Shares classified as liabilities           -              -
Shares classified in shareholders’ funds   138            138
                                           138            138

Contact:

e-Therapeutics plc
 
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