Regulatory Announcements
Biocompatibles Intl. Final Results -6-
18/03/2010
DJ Biocompatibles Intl. Final Results
TIDMBII
BIOCOMPATIBLES INTERNATIONAL PLC
("Biocompatibles" or the "Company")
UNAUDITED PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Farnham, UK, 18 March 2010: Biocompatibles International plc (LSE:BII), the
medical technology company, today announces its unaudited preliminary results
for the year ended 31 December 2009.
Highlights
* Total revenue increase of 50% to GBP26.6m (2008: GBP17.7m). Increase of 29% at
constant currency.
* Bead Products revenue increase of 100% to GBP12.0m (2008: GBP6.0m). Increase of
73% at constant currency.
* Gross profit increase of 48% to GBP20.8m (2008: GBP14.0m).
* Operating loss increase of 141% to GBP7.6m (2008: GBP3.2m). Current year figure
includes an asset impairment charge of GBP2.5m (2008: GBPnil) and prior year
figure includes a significant one-off item of income. Adjusting for these
items, the loss decreased.
* Net funds at 31 December 2009 of GBP30.5m (2008: GBP33.6m).
* CE Mark Approval for Cosmetic Dermal Filler Bead (announced 18 March 2009).
* Five pence per share dividend paid (announced 24 March 2009).
* Eisai licences Drug-Eluting Bead products in Japan (announced 28 July
2009).
* Acquisition of Cancer Diagnostic Product and Related Intellectual Property
(announced 12 November 2009).
* AstraZeneca and Biocompatibles agree to initiate Clinical Trial Programme
(announced 6 December 2009).
* Clinical activity:
+ Clinical Trial in UK in Liver Metastases from Colorectal Cancer
(announced 17 February 2009).
+ Drug-Eluting Bead data presented at ASCO GI (announced 17 February
2009).
+ Update on US Drug-Eluting Bead Cancer Trials (announced 27 April 2009).
+ Positive Data from Combination Therapy Trial in Primary Liver Cancer
(announced 3 November 2009).
Post Period Highlights
* First Volunteer treated in Clinical Trial for Type II Diabetes Drug
(announced 17 February 2010).
* First patient treated in trial in China to support the DC Bead Regulatory
submission.
* Initiation of PARAGON Germany (Drug-Eluting Bead together with Cetuximab),
the third trial to combine Drug-Eluting Bead therapy with a
systemically-delivered drug marketed by a major pharmaceutical company.
* Encouraging start to EU launch of Novabel.
* Financial guidance reaffirmed.
Principal 2010 Operating Goals:
Operating
* Complete recruitment in the CM3(1) Phase I clinical trials in Type 2 Diabetes.
* Commence recruitment in the CM3 Phase II clinical trial.
* File regulatory submission (PMA) for the DC Bead in Japan.
* Complete recruitment in the clinical trial supporting the DC Bead
regulatory submission for China.
* Updates from our principal Drug-Eluting Bead clinical trials, which include
SPACE, PARAGON II and PARAGON Louisville.
Financial
* Revenue in the range GBP28m to GBP32m.
* Pay a dividend of 6.25 pence per share in May.
* Closing cash of GBP25m after payment of the dividend of GBP2.5m.
Ends
An analysts' presentation will be held on 18 March 2010 at 9.30am at the
offices of Piper Jaffray, One South Place, London, EC2M 2RB. For those unable
to attend a dial-in facility is available for analysts, for details please call
Olga Holme at Piper Jaffray on +44 (0)20 3142 8769.
Contact:
Biocompatibles +44 (0)1252 732706
Crispin Simon, Chief Executive
Ian Ardill, Finance Director
Anna Keeble +44 (0)7879 818876
Biocompatibles International plc (www.biocompatibles.com)
Biocompatibles International plc
Biocompatibles International plc is a leading medical technology company in the
field of drug-device combination products.
The Oncology Products Division supplies medical devices from facilities in
Farnham, UK and Oxford, CT. These include Drug-Eluting Bead Products which are
used in more than 40 countries for the treatment of primary liver cancer (HCC),
liver metastases from colorectal cancer, and other cancers; and Brachytherapy
products (Radiation-Delivering Seeds) which are used in the treatment of
prostate cancer. Our distribution partners include AngioDynamics Inc., Terumo
Corporation and Eisai Co. Ltd. We have a clinical collaboration agreement with
Bayer Healthcare Pharmaceuticals Inc.
Our Licensing Division includes CellMed, in Alzenau, Germany, which is
developing a Drug-Eluting Bead product for the treatment of stroke, based on
proprietary stem cell technology; a GLP-1 analogue for the treatment of
diabetes and obesity partnered with AstraZeneca; and a cosmetic Dermatology
Bead partnered with Merz Pharmaceuticals GmbH. We also have a PC Licensing
agreement with Medtronic Inc. in the field of Drug-Eluting Stents.
This news release contains forward-looking statements that reflect
Biocompatibles' current expectation regarding future events. Forward-looking
statements involve risks and uncertainties. Actual events could differ
materially from those projected herein and depend on a number of factors
including the success of Biocompatibles' research strategy, the applicability
of the discoveries made therein, the successful and timely completion of
clinical studies and the uncertainties related to the regulatory and
commercialisation processes.
Notes to Editors:
Operational Review
Biocompatibles continued to make very good progress in 2009 - both in financial
performance and progress with our three strategic priorities.
These are: first, delivering consistently strong overall sales growth,
particularly with the flagship Drug-Eluting Bead products; second, progressing
Drug-Eluting Bead clinical trials in new indications, to secure the next phase
of growth; and third, delivering the GLP-1 peptide programme, partnered with
Astra Zeneca. The detail of our progress with these three strategic priorities
is set out below.
The financial highlights were the overall revenue growth rate of 50% (29% in
constant currency) and the growth of the Bead Products' revenue of 100% (73% in
constant currency).
In order to illustrate underlying performance, it is the Group's practice also
to show its revenue growth in terms of constant currency growth. This
represents growth calculated as if the exchange rates used to determine the
revenue in Sterling had remained unchanged from those used in the previous
year.
Oncology Products Division
The Oncology Products Division supplies medical devices from facilities in
Farnham, UK and Oxford, CT. These include Drug-Eluting Bead Products which are
used in more than 40 countries for the treatment of primary liver cancer (HCC),
liver metastases from colorectal cancer, and other cancers; and Brachytherapy
products (Radiation-Delivering Seeds) which are used in the treatment of
prostate cancer. Our distribution partners include AngioDynamics Inc., Terumo
Corporation and Eisai Co. Ltd. We have a clinical collaboration agreement with
Bayer Healthcare Pharmaceuticals Inc.
Sales of Oncology Products, which consists of two business units - Bead
Products and BrachySciences, grew by 66% (42% in constant currency) to GBP18.0m,
including the pre acquisition period in 2008; and included, for the first time,
full year sales of the lower growth Brachytherapy products. The Division traded
at a loss, with BrachySciences' profit offset by the loss in Bead Products as
we continued to implement our investment programmes.
Sales of Bead Products, Bead BlockTM, LC BeadTM, DC BeadTM and PRECISION
BeadTM, grew by 100% (73% in constant currency) in comparison with 2008. This
was led by growth in distributors' sales to hospitals of our flagship DC Bead
and LC Bead products which delivered unit growth of 50% in Europe, 81% in the
US and 40% in RoW - in comparison with the prior year.
To maintain this progress, we will need to deliver on our clinical trial
programme for the Drug-Eluting Beads, which is focused on three key trials -
PARAGON II and PARAGON Louisville in the field of liver metastases from
colo-rectal cancer and one trial in HCC, known as SPACE, in collaboration with
Bayer Pharmaceuticals Inc. PARAGON II has now treated 17 patients out of the
target of 40, the target having been increased from 20 to provide a more
substantial data set. Eight patients out of the pilot safety cohort of 10
patients have been treated in PARAGON Louisville. Shortly after the year end,
final approval was secured for a new trial - the third trial to combine
Drug-Eluting Bead therapy with a systemically-delivered drug marketed by a
major pharmaceutical company. PARAGON Germany consists of the Drug-Eluting Bead
loaded with Irinotecan and combined with a systemically-delivered dose of
Cetuximab; and compares this regimen with a systemically-delivered dose of
Irinotecan plus a systemically-delivered dose of Cetuximab. The question is
therefore how delivery of irinotecan from the DC Bead compares with
intra-venous delivery. Eighty patients will be treated at a number of hospitals
in Germany with a primary end-point of progression-free survival. We hope that
the trial will demonstrate that delivery from the DC Bead offers an improvement
in survival and much better tolerability.
We are keen to develop the therapy of Drug-Eluting Beads in combination with
the systemically-delivered drug regimens that are most commonly used in the
treatment of cancer. This provides a higher profile for our technology to
clinicians and to shareholders, and is expected to provide a clinical benefit
to patients. Both Paragon Louisville and SPACE are of this type and further
such trials are in development.
All these trials are expected to deliver data in the 2010-12 time-frame with
the aim of expanding the use of our Bead Products and are a key element in the
delivery of the next phase of growth.
Our Asian market entry strategies are also important, given the high prevalence
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of HCC in Asia and we are focused on China, Korea and Japan where we are
working with experienced and well-qualified local partners. We have regulatory
approval in Korea but full sales potential will require more local clinical
experience and a good product reimbursement price in the country. We have
initiated plans for the achievement of these requirements. The long regulatory
programme in Japan is now well under way and the first patient has been treated
in the small pilot trial required for China.
We were pleased to be notified that the first Drug-Eluting Bead cases were
successfully completed in Argentina and Saudi-Arabia, thus raising the number
of countries where the therapy is available to over 40.
We define our market as interventional oncology implants - with two competitors
whose results are readily available. The market, thus defined, grew in 2009 by
over 60% from around GBP35m to GBP57m, and our share rose to 33% in 2009 from 26%
in 2008. The current market leader has a 59% global share and it is our
ambition to become the market leader. All these numbers are Biocompatibles'
estimates and state sales of Biocompatibles' products at the sales value as
invoiced by our distribution partners.
Within the market for interventional oncology implants, we see two substantial
opportunities - HCC, where we estimate that the market opportunity is up to
$400m; and hepatic colorectal metastases where we believe the market
opportunity is larger. The strong market growth, described above, together with
the absence of any material sales to date in Asia by any competitor, suggest
that there is a significant market opportunity available to us.
We are coming to the conclusion of the investment phase for the Bead Products
and the high gross margin suggests that we will be able to achieve the high
operating margin that we are committed to achieving for all our business units.
BrachySciences' sales grew by 24% (4% in constant currency) compared with full
year 2008 including the pre acquisition period. Conditions in the Brachytherapy
market remain challenging, with a number of BrachySciences' competitors
reporting declines in sales and one filing for bankruptcy.
In January 2010 the results of a study on AnchorSeed by Dr. Thomas G. Shanahan
of Memorial Medical Center, Springfield, Illinois, were published in the
official Journal of the American Brachytherapy Society(2). The paper concluded
"The report is the first to show the unique "fixity" of AnchorSeed to remain in
position after deployment from the Mick applicator. Minimizing seed drag can
reduce dose to the penile bulb, and maximize radiation coverage to the apex of
the gland". Our internationalisation strategy sustained early successes in
Germany and, over the year as a whole, sales outside the US grew to 11% of the
total. Our strategy is to focus on the development of the Anchorseed
opportunity both within and outside the US and to control cost in operations to
permit further investment in sales and marketing.
BrachySciences traded profitably before intangible amortization and impairment
charges.
In our new field of SIAscopy we made our first sales of the MoleMate product,
which we acquired from Astron Clinica Limited ("Astron") (in administration).
MoleMate is a non-invasive melanoma visualisation, diagnostic and data storage
system that is sold to General Practitioners, Dermatologists and cancer
screening clinics.
Licensing
Our Licensing Division consists of two units, CellMed and PC Licensing.
CellMed, in Alzenau, Germany, is developing a GLP-1 analogue for the treatment
of diabetes and obesity partnered with AstraZeneca, a cosmetic Dermatology Bead
partnered with Merz Pharmaceuticals GmbH and a Drug-Eluting Bead product for
the treatment of stroke, based on proprietary stem cell technology. PC
Licensing's principal relationship is with Medtronic Inc. in cardiovascular
medicine.
Licensing revenues - declined by 9% (21% in constant currency) to GBP8.5m due to
the absence of the one-off PC Licensing milestone received in 2008. The
Division traded profitably with losses at CellMed more than offset by the
profit recorded in PC Licensing as a result of the Medtronic royalties. It is
in the nature of Licensing that sales and profits are likely to remain more
volatile than the results in Oncology Products. We are looking at significant
value opportunities but on the basis of deals with partners whose timing is not
always easy to predict.
Sales at CellMed in Germany grew by 239% (202% in constant currency) to GBP3.9m
in comparison with 2008, the growth driven principally by revenue from the R&D
agreement with AstraZeneca.
We announced in December 2009 that CellMed would be initiating clinical trials
for CM3, our type II diabetes drug, under development with AstraZeneca, in
January 2010. The pre-clinical phase of the programme was completed ahead of
schedule with positive results. The first Phase I study is now under way and a
second Phase I and Phase II studies are expected to start later in 2010.
The agreement for the development of CM3 provides AstraZeneca with an exclusive
option to license relevant patents for further exploitation, at any time during
the course of the development programme, which is expected to be completed in
2012. On the exercise of the option to license, AstraZeneca would pay a licence
fee of EUR25m and would assume financial and management responsibility for the
programme. Further milestones of EUR37.5m would be payable prior to first sale of
product.
After launch, royalties in the single to mid-teens digit range would apply, the
rate depending on the level of sales achieved. In addition there is provision
for sales-related milestones up to a maximum value of EUR256m.
In 2010, 280m people worldwide will have diabetes and it is predicted that, by
2030, more than 430m people worldwide will suffer from this disease. This is an
important programme.
Our development and marketing partner Merz Pharmaceuticals GmbH received CE
Mark approval for the Cosmetic Dermal Filler Bead, now called Novabeltm, and
initiated a limited market launch. We have started a capital investment
programme, largely funded by Merz, to deliver significant capacity for Novabel
manufacture. Merz has reported to us an encouraging start to the European
launch of Novabel.
The CellBeads Stroke trial has now recruited six patients. The safety profile
remains good and we are exploring Licensing opportunities for CellBeads across
a variety of clinical indications.
CellMed traded at a loss due to ongoing research and development expenditure;
the loss was lower than expected.
PC Licensing revenues from Medtronic's Endeavor® Drug-Eluting Stent programme
were lower than those in the corresponding period in 2008. Revenues in 2008
benefited from a one-off milestone received on the US launch of Endeavor®
whilst 2009 saw a full year of competition in the US market from stents from
Abbott and Boston Scientific with related market share decline for Endeavor®.
Biocompatibles has limited activity in PC Licensing and incurs only minimal
manufacturing costs. Profit margins are correspondingly attractive.
Financial Review
The loss for the year ended 31 December 2009 was GBP5.8m (2008: GBP0.5m).
Revenue increased by 50% to GBP26.6m in 2009 (2008: GBP17.7m); this was ahead of
our expectations at the start of the year. Sales of Bead Products grew by 100%
to GBP12.0m (2008: GBP6.0m). BrachySciences sales grew by 161% to GBP6.1m (2008: GBP
2.3m); if we had owned BrachySciences for all of 2008, the growth would have
been 24%. PC Licensing revenue decreased by 44% to GBP4.6m (2008: GBP8.3m) due to
the absence of the one-off milestone received in H1 2008. CellMed revenue grew
by 239% to GBP3.9m (2008: GBP1.1m), as a result of the revenue recognised on the
AstraZeneca Agreement. Movements in exchange rates impacted the growth rates
significantly and the constant currency analysis is shown in the Operational
Review.
Gross profit increased by 48% to GBP20.8m (2008: GBP14.0m) as a result of the
growth in Drug-Eluting Bead sales, the full year impact of the acquisition of
BrachySciences and the AstraZeneca Agreement, offset by the milestone payment
received in 2008 which did not repeat in 2009.
Operating expenses increased by 63% to GBP28.6m in 2009 (2008: GBP17.6m). Selling
and marketing costs increased by 215% to GBP9.4m (2008: GBP3.0m) driven by the full
year effect of the acquisition of, additional sales and marketing expenditure
by and the impairment of the intangible assets of BrachySciences. Selling and
marketing expenditure behind the Bead Products also increased significantly.
Research and development costs increased by 22% to GBP14.5m (2008: GBP11.9m),
mainly due to CellMed's additional costs in support of the AstraZeneca
Agreement and further investment into clinical activities. Administrative
expenses increased by 73% to GBP4.7m (2008: GBP2.7m), driven by foreign exchange
losses and again by the full year effect of the acquisition of BrachySciences.
The Group has recognised an impairment charge of GBP2.5m (2008: GBPnil) on the
intangible assets arising from the BrachySciences' acquisition in 2008.
Although the business has grown its sales and trading profit (operating profit
before intangible amortisation and impairment), it is not achieving the
financial results anticipated at acquisition. The Group has also released GBP3.3m
(2008: GBPnil) of contingent consideration against the BrachySciences' goodwill
of GBP2.8m; the balance of GBP0.5m being recognised in the statement of
comprehensive income. This contingent consideration has been released as it is
not believed that it will become payable.
Overall, the operating loss increased to GBP7.6m in 2009 (2008: GBP3.2m).
Interest receivable has decreased to GBP0.6m (2008: GBP2.0m), the previous year
being characterised by higher interest rates, a higher cash balance and
interest received on a significant reclaim of VAT from prior years.
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The Group has recognised Research and Development tax credits of GBP1.0m (2008: GBP
0.6m), which are receivable from HM Revenue & Customs.
At the year-end the Group had 164 employees (2008: 152).
The Group generated net cash of GBP1.4m from operating activities (2008: GBP0.9m).
Net cash used in investing activities was GBP17.5m (2008: GBP11.0) and included GBP
0.3m in relation to the acquisition of BrachySciences (2008: GBP2.9m) and the
purchase of GBP15.1m of held to maturity financial assets (2008: GBP7.7). Purchases
of property, plant and equipment were GBP1.6m (2008: GBP0.5m) as CellMed commenced
its investment in its Novabel manufacturing facility; this high level of
capital expenditure will continue in 2010. The Company paid a dividend of GBP2.0m
(2008: GBPnil) in May and received GBP2.5m (2008: GBPnil) from borrowings from
CellMed's licencee to part-fund the capital expenditure mentioned above. The
Group has recognised a financial liability of GBP2.5m (2008: GBPnil) in relation to
these borrowings.
Net assets at 31 December 2009 were GBP39.1m (2008: GBP48.3m) which included cash,
cash equivalents and held to maturity financial assets of GBP33.0m (2007: GBP33.6m)
and goodwill and intangible assets arising from the acquisitions of CellMed and
BrachySciences of GBP10.3m (2008: GBP17.1m).
Guidance
The Company expects to achieve consolidated revenue for 2010 in the range of GBP
28m to GBP32m, the mid point of which represents growth of 13% over 2009 (21% at
constant currencies). This growth is expected to be generated by the Oncology
Products Division. In addition to unfavourable foreign exchange impacts, the
Company's overall growth rate is held back by flat revenues from the lower
growth components of our sales mix, namely the Medtronic ENDEAVOR® Drug-Eluting
Stent royalty and revenues recognised from the AstraZeneca development
agreement.
The Company expects cash, cash equivalents and held to maturity financial
assets to be around GBP25m at 31 December 2010. The outflow of GBP8.0m results from
an expected operating utilisation of GBP5.5m and the proposed dividend payment of
GBP2.5m. The operating utilisation includes capital expenditure of around GBP3.5m,
a significant part of which is for the Novabel manufacturing facility at
CellMed. The majority of this expenditure is funded by our marketing partner,
Merz Pharmaceuticals GmbH, the cash having been received in 2009.
Dividend
The company paid its first dividend of 5 pence per share in May 2009. The Board
intends to increase the dividend by 25% to 6.25 pence per share, to be paid in
May 2010. The Board will meet in March and plans to approve the payment of the
dividend based on the Biocompatibles International plc audited 2009 accounts.
The Company will then publish the details of the dividend, including the record
date.
Unaudited Consolidated Statement of Comprehensive Income
For the year ended 31 December
Notes 2009 2008
GBP000 GBP000
Revenue 2 26,562 17,685
Cost of sales (5,759) (3,657)
Gross profit 20,803 14,028
Selling and marketing costs (9,411) (2,992)
Research and development costs (14,531) (11,885)
Administrative expenses (4,691) (2,712)
Other operating income 207 400
Operating loss (7,623) (3,161)
Finance income 611 2,032
Finance costs (186) (60)
Finance income - net 425 1,972
Loss before income tax (7,198) (1,189)
Tax credit 1,349 732
Loss for the year attributable to (5,849) (457)
ordinary shareholders
Currency translation differences (797) 2,459
Total comprehensive (loss)/income for (6,646) 2,002
the year attributable to ordinary
shareholders
Loss per share (basic & diluted) 3 (15.2)p (1.2)p
Unaudited Consolidated Balance Sheet
At 31 December
2009 2008
GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 2,572 1,415
Goodwill 2,776 5,495
Intangible assets 8,030 11,793
13,378 18,703
Current assets
Inventories 999 945
Current income tax assets 1,502 1,232
Trade and other receivables 10,454 7,886
Held to maturity financial assets 22,734 7,662
Cash and cash equivalents 10,313 25,964
46,002 43,689
Total assets 59,380 62,392
EQUITY
Capital and reserves attributable to
equity holders
Ordinary shares 8,467 8,417
Share premium 2,523 2,366
Shares to be issued 228 2,121
Merger reserve 12,243 12,089
Other reserves 49,781 49,781
Retained losses (34,142) (26,432)
Total equity 39,100 48,342
LIABILITIES
Non-current liabilities
Borrowings 2,534 -
Deferred income tax liabilities 1,326 1,781
Provisions for other liabilities and 275 220
charges
4,135 2,001
Current liabilities
Trade and other payables 15,848 11,725
Provisions for other liabilities and 297 324
charges
16,145 12,049
Total liabilities 20,280 14,050
Total equity and liabilities 59,380 62,392
Unaudited Consolidated Statement of Changes in Equity
Ordinary Share Shares Merger Other Retained Total
shares premium to be reserve reserves losses equity
issued
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January 8,053 49,781 50 20,789 47,800 (85,751) 40,722
2008
Comprehensive - - - - - (457) (457)
income:
- Loss for the year
Other comprehensive - - - - - 2,459 2,459
income:
- Currency
translation
differences
Total comprehensive - - - - - 2,002 2,002
income
Transactions with
owners:
- New share capital 111 316 - - - - 427
issued
- Acquisition of - - - - - (43) (43)
treasury shares
- Shares in respect 8 - 114 46 - - 168
of acquisition of
subsidiary
- Shares in respect 245 1,507 1,952 - - - 3,704
of acquisition of
trade and net assets
- Revaluation of - - 5 - - - 5
consideration
- Refunded of share - 543 - - - - 543
issue costs
- Capital reduction - (49,781) - (8,746) 1,981 56,546 -
- Share based
schemes:
- value of employee - - - - - 814 814
services
Transactions with 364 (47,415) 2,071 (8,700) 1,981 59,319 7,620
owners
Balance at 1 January 8,417 2,366 2,121 12,089 49,781 (26,432) 48,342
2009
Comprehensive - - - - - (5,849) (5,849)
income:
- Loss for the year
Other comprehensive - - - - - (797) (797)
income:
- Currency
translation
differences
Total comprehensive (6,646) (6,646)
loss
Transactions with
owners:
- New share capital 35 157 - - - - 192
issued
- Shares in respect 15 - 59 154 - - 228
of acquisition of
subsidiary
- Contingent - - (1,952) - - - (1,952)
consideration
release
- Dividend paid - - - - - (1,950) (1,950)
- Share based
schemes:
- value of employee - - - - - 886 886
services
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Transactions with 50 157 (1,893) 154 - (1,064) (2,596)
owners
Balance at 31 8,467 2,523 228 12,243 49,781 (34,142) 39,100
December 2009
Unaudited Consolidated Statement of Cash Flows
For the year ended 31 December
Notes 2009 2008
GBP000 GBP000
Cash flows from operating activities
Cash generated from/(used in) operations 5 472 (1,362)
Interest received 186 1,636
Tax credit received 756 670
Taxation paid (1) (71)
Net cash generated from operating 1,413 873
activities
Cash flows from investing activities
Acquisition of subsidiary (102) (44)
Acquisition of trade and net assets, net (303) (2,817)
of cash received
Purchase of intangible assets (837) (124)
Purchases of property, plant and (1,564) (508)
equipment
Purchases of held to maturity financial (15,072) (7,662)
assets
Interest received 412 162
Net cash used in investing activities (17,466) (10,993)
Cash flow from financing activities
Proceeds from the issue of ordinary 192 384
shares
Refund of share issue costs - 543
Interest received on refund of share - 311
issue costs
Repayment of borrowings arising on - (406)
acquisition of trade and net assets
Dividend paid (1,950) -
Proceeds from borrowings 2,454 -
Net cash generated from financing 696 832
activities
Net decrease in cash and cash (15,357) (9,288)
equivalents
Cash and cash equivalents at beginning 25,964 34,346
of year
Exchange (losses)/gains on cash and cash (294) 906
equivalents
Cash and cash equivalents at end of year 10,313 25,964
Notes to the consolidated financial statements
1. Significant Accounting Policies
The preliminary results for the year ended 31 December 2009 have been prepared
using the accounting policies set out in the financial statements for the year
ended 31 December 2008.
The financial information presented is unaudited and does not constitute the
Company's statutory accounts for the year ended 31 December 2009. The auditors
reported on the 31 December 2008 financial statements and their report was
unqualified and did not contain a statement under either Section 237(2) or
Section 237(3) of the Companies Act 1985.
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 31 December 2008,
as described in those annual financial statements.
Deposits that have an original maturity greater than three months are now
classified as held to maturity financial assets, having previously been
classified as short-term deposits.
The following new standards, amendments to standards or interpretations are
mandatory for the first time for the financial year beginning 1 January 2009.
* IAS 1 (Revised), `Presentation of financial statements'. The revised
standard requires non-owner changes in equity to be presented in a
performance statement separately from owner changes in equity. Entities can
choose whether to present one performance statement (the statement of
comprehensive income) or two statements (the income statement and statement
of comprehensive income). The Group has elected to present a single
statement of comprehensive income. The financial statements have been
prepared under the revised disclosure requirements.
* IFRS 8, `Operating segments'. IFRS 8 replaces IAS 14, `Segment reporting',
and requires a `management approach', under which segment information is
presented on the same basis as that used for internal reporting purposes.
The reported segments have been changed to reflect the management approach
and reporting adopted in 2009. BrachySciences is now a reported segment
having previously been included within Oncology Products. The old segment
of Drug delivery has been separated into the new PC licensing segment with
the Bead R&D and manufacturing activities now included within the Bead
Products segment.
2. Segmental Reporting
The chief operating decision-maker has been identified as the Group Executive
Committee. This Committee is responsible for allocating resources, monitoring
performance and instigation of any corrective actions. Management has
determined the operating segments based on financial reports to the Committee.
The Committee monitors the performance of the operating segments based on
adjusted operating profit (operating profit before exchange gains and losses
and intangible amortisation and impairment) and contribution to R&D (adjusted
operating profit before research and development costs and other operating
income). Contribution to R&D is used as a measure internally to monitor the
profitability of segments while the Group is making significant investments in
research and development. Interest income and costs are not included as the
treasury function is managed on a group-wide basis.
The segment information provided to the Group Executive Committee for the
reportable segments for the year ended 2009 and 2008 is as follows:
Oncology Products Licensing
Bead Brachy-Sciences PC CellMed All other Total
Products Licensing segments Group
GBP000 GBP000
GBP000 GBP000 GBP000 GBP000
Year ended 31
December 2009
Total Segment 12,736 6,064 4,649 3,850 39 27,338
Revenue
Inter-segment (776) - - - - (776)
Revenue
Revenue from 11,960 6,064 4,649 3,850 39 26,562
external customers
Contribution to R&D 5,328 493 4,304 2,036 (295) 11,866
Adjusted operating (4,720) 203 4,290 (1,324) (295) (1,846)
(loss)/profit
Depreciation 208 39 5 77 - 329
Impairment of 289 2,530 - - - 2,819
intangible fixed
assets
Year ended 31
December 2008
Total Segment 6,398 2,325 8,249 1,136 - 18,108
Revenue
Inter-segment (423) - - - - (423)
Revenue
Revenue from 5,975 2,325 8,249 1,136 - 17,685
external customers
Contribution to R&D 2,238 210 7,781 464 - 10,693
Adjusted operating (6,687) 116 7,770 (1,348) - (149)
(loss)/profit
Depreciation 166 10 - 82 - 258
Impairment of - - - - - -
intangible fixed
assets
Total Assets
31 December 2009 4,212 1,530 2,124 6,091 - 13,957
31 December 2008 3,253 1,405 1,284 4,304 - 10,246
A reconciliation of adjusted operating loss to loss before income tax is
provided as follows:
2009 2008
GBP000 GBP000
Operating loss before amortisation, (1,846) (149)
impairment and exchange gains and losses
Unallocated overheads (2,115) (2,901)
Exchange gains and losses (436) 682
Amortisation of intangible assets (1,235) (793)
Release of contingent consideration 539 -
Impairment of intangible assets (2,530) -
Operating loss (7,623) (3,161)
Finance income 611 2,032
Finance costs (186) (60)
Loss before income tax (7,198) (1,189)
Reportable segments' assets are reconciled to total assets as follows:
2009 2008
GBP000 GBP000
Total segment assets 13,957 10,246
Goodwill 2,776 5,495
Intangible assets 8,030 11,793
Current income tax assets 1,502 1,232
Cash, cash equivalents and 33,047 33,626
held-to-maturity financial assets
Unrealised profit on forward currency 68 -
deals
Total assets 59,380 62,392
3. Loss per share
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The calculation of basic loss per ordinary share has been based on the loss of
GBP5,849,000 (2008: GBP457,000) and on 38,471,738 (2008: 37,305,862) ordinary
shares, being the weighted average number of ordinary shares in issue.
Potential ordinary shares are not treated as dilutive as their conversion to
ordinary shares does not increase the net loss per ordinary share from
continuing operations.
4. Business combinations
CellMed AG
On 7 March 2005, the Group acquired 100% of the share capital of CellMed AG, a
medical technology company developing medical device and drug delivery products
in Germany. The remaining element of the purchase consideration for the
acquisition of CellMed AG is as follows:
Contingent Consideration
The total consideration included contingent consideration, which may become
payable in shares and cash, calculated on cash received from the
commercialisation of certain intellectual property. The Company has valued an
element of this consideration based on cash that has been received or the
receipt of which is probable. It continues not to value the consideration that
is uncertain because it is not able to measure the consideration reliably. The
maximum contingent consideration payable is EUR3,608,000 in cash and the issue of
2,418,823 shares. The Company has accounted for 94,880 (2008: 70,405) shares to
be issued in 2010, valued at GBP228,000 (2008: GBP172,000) and GBP127,000 (2008: GBP
102,000) of cash to be paid in 2010.
BrachySciences
On 1 August 2008, the Group acquired the trade and net assets of BrachySciences
Inc. and its affiliated companies. The remaining elements of the purchase
consideration for the acquisition of BrachySciences included the following:
Conditional Consideration
The total consideration included conditional consideration which may become
payable in cash in the event of positive outcomes on specific warranties and
indemnities. The maximum conditional consideration payable is US$1.0m with
US$0.5m outstanding at the end of 2009 (2008: US$1.0m).
Contingent Consideration
The total consideration included contingent consideration which may become
payable in shares and cash calculated on the achievement of individual EBIT and
sales targets in each of the financial years 2009-2011. Management believes
that the likelihood of payment of the consideration is remote and therefore no
longer carries such contingent consideration on its balance sheet. The release
of the contingent consideration in 2009 first reduced goodwill by GBP2.8m with a
resulting credit to the statement of comprehensive income of GBP0.5m. The maximum
contingent consideration payable is $4.2m in cash and the issue of 2.5m shares.
Impairment Charge
The Group performed an impairment review of the BrachySciences goodwill and
assets as at 31 December 2009. Although the business has grown its sales and
trading profit (operating profit before intangible amortisation and
impairment), it is not achieving the financial results anticipated at
acquisition. As a result, the Group has recognised an impairment charge of GBP
2.5m (2008: GBPnil) on the intangible assets arising from the BrachySciences
acquisition in 2008. The charge is partly offset by the release of GBP0.5m of the
contingent consideration to the statement of comprehensive income.
5. Cash generated from operations
2009 2008
GBP000 GBP000
Continuing operations
Loss for the year after tax (5,849) (457)
Adjustments for:
Tax (1,349) (732)
Depreciation 329 258
Amortisation and impairment 4,054 793
Loss on disposal of machinery and equipment - 7
Share-based schemes: value of employee 886 814
services
Finance income (611) (2,032)
Finance costs 186 60
Net exchange losses/(gains) 273 (743)
Fair value gains on foreign forward contracts 51 121
Changes in working capital:
Increase in inventories (95) (209)
Increase in trade and other receivables (2,664) (3,860)
Increase in trade and other payables 4,909 4,563
Increase in provisions 352 55
Cash generated from /(used in) operations 472 (1,362)
Glossary of Terms:
Arteriovenous A knot of distended blood vessels often overlying and
malformation compressing the surface of the brain.
Bead Block This product has a CE Mark and 510k clearance from the
FDA. Bead Block is intended for the embolisation of
hypervascularised tumors and arteriovenous malformations.
Brachytherapy The implantation of "seeds" that deliver radiation for
the treatment of prostate cancer.
CE Mark A European standard for medical devices, a CE Mark
indicates that a device meets the requirements of the
Medical Device Directive and appropriate Quality System
standards.
CellBeadsTM Stem Cells encapsulated in alginate microspheres,
designed to deliver a therapeutic protein when implanted
in a patient's body. CellMed's stem cells were derived
from a single adult bone marrow donor and are stored and
processed in a GMP-certified facility.
Chemoembolisation Embolisation incorporating a chemotherapy drug.
CIRSE The Cardiovascular and Interventional Radiological
Society of Europe.
CM3 An investigational drug in the GLP-1 class; unique
because it contains the complete human amino acid
sequence of GLP-1 in its primary structure.
Conventional Trans-Arterial Chemo-Embolisation - a procedure whereby a
chemotherapeutic agent is mixed into a slurry and
TACE injected via a catheter, locally at a tumour site.
Cosmetic Dermal This product is an alginate bead for use as a dermal
Filler Bead filler to address facial wrinkles.
DC BeadTM This product has a CE Mark. In Europe, DC Beads are
intended to be loaded with doxorubicin for the purpose
of:
- Embolisation of vessels supplying malignant
hypervascularised tumour(s),
- Delivery of a local, controlled, sustained dose of
doxorubicin to the tumour(s).
DEBIRI Treatment involving the Drug-Eluting Bead with
Irinotecan.
Doxorubicin A widely used chemotherapeutic agent for the treatment of
a large number of cancers. It is a powerful cytotoxic
drug that is not cell cycle specific.
Drug-Eluting Beads Polymer embolisation microspheres designed to load and
elute drugs.
Drug-Eluting Stent A small metal scaffold coated with a drug which is placed
(DES) in a blood vessel following angioplasty to keep the
vessel open.
Embolisation The introduction of material to reduce or completely
obstruct bloodflow.
Endeavor® Stent Manufactured by Medtronic, the Endeavor® Drug-Eluting
Stent is coated with phosphorylcholine (PC), sub-licensed
from Biocompatibles, and ZotarolimusTM, licensed from
Abbott.
Endovascular Endovascular Delivery accesses treatment sites via major
delivery blood vessels.
FDA The United States Food and Drug Administration, which
regulates drugs and medical devices.
FOLFIRI A chemotherapy regimen for the treatment of colorectal
cancer, made up of the drugs FOLinic Acid (Leucovorin), F
luorouracil (5-FU) and IRInotecan (Camptosar).
GLP-1 Glucagon-like peptide-1, a protein that helps the
pancreas' ß-cells produce insulin and has been shown to
induce weight loss in overweight Type II diabetes
patients. It also has shown strong anti-apoptotic effects
that enable it to reduce programmed cell death.
HCC Hepatocellular Carcinoma, primary tumour of the liver.
Hepatic colo-rectal Colo-rectal cancer that has spread to the liver.
metastases
Hypervascular A growth of tissue with an abnormally increased blood
tumour supply which may be malignant or benign.
IDE Investigational Device Exemption - The approval by the US
Food and Drug Administration (FDA) to carry out a
clinical trial in the US with an unapproved device.
Interventional Interventional oncology is the treatment of cancer and
Oncology cancer-related problems using minimally invasive,
targeted treatments performed under imaging guidance.
Irinotecan A widely used chemotherapeutic agent for the treatment of
colorectal cancer. It is a topoisomerase I inhibitor that
interferes with DNA replication during cell division,
leading to cell death.
LC BeadTM This product has 510k clearance from the FDA. LC Bead is
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intended for the embolization of hypervascularised tumors
and arteriovenous malformations.
mCRC Metastatic colo-rectal cancer is cancer of the colon or
rectum that has spread, or metastasised to other parts of
the body, such as the liver or lung.
Metastatic disease The spread of a cancer from its original site (primary)
to other locations within the body (secondary). In the
case of colorectal cancer, the liver is the most common
site of secondary tumours.
MoleMatetm A non-invasive melanoma visualisation, diagnostic and
data storage system.
Nexavar® Nexavar is an oral multikinase inhibitor for the
(sorafenib) treatment of two common types of cancer, hepatocellular
carcinoma (HCC) and advanced renal cell carcinoma (RCC)
Non-vascular Non-vascular delivery accesses treatment sites by means
delivery other than endovascular delivery. These will include
direct access in a surgical site and percutaneous, or
through the skin, injection.
PARAGON BeadTM Biocompatibles' proprietary irinotecan HCl, Drug-Eluting
Bead.
PMA Pre-Marketing Approval
PRECISION BeadTM Biocompatibles' proprietary Drug-Eluting Bead product
containing doxorubicin.
PRECISION Clinical A family of clinical trials sponsored by Biocompatibles
Trials for the evaluation of the Drug-Eluting Bead with
Doxorubicin.
PRECISION TACE The use of either PRECISION Bead or DC Bead in the TACE
procedure. PRECISION TACE results in a lower systemic
drug exposure and more drug at the tumour site.
Pre-loaded Bead A Drug-Eluting Bead incorporating a drug which has been
loaded into the Bead in Biocompatibles' facility.
SIAscopy Assists in the diagnosis and management of skin cancer by
producing Siascans which use multi-spectral images and
clinically-based software to produce an optical biopsy on
skin.
SIMSYS Skin Image Management System enabling Dermatologists to
capture and organise images of any skin lesion. SIAscopy
is also part of SIMSYS for capturing dermascopic and
Siascopic images.
Systemic Treatment with anticancer drugs that travel through the
chemotherapy bloodstream, reaching and affecting cells all over the
body.
(1) CM3 is a GLP-1 drug for Type 2 diabetes which is under development with
AstraZeneca
(2) Published by Elsevier Inc.
END
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