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Alizyme plc Interim Report 2004
ALIZYME plc | Interim Report 2004
Highlights
■ Revenues of £1.6 million (H1 2003: Nil)
■ Loss after tax £1.0 million (H1 2003: £7.1 million)
■ Cash and short term investments at 30 June 2004 of £20.6 million
(2003: £15.4 million)
■ Renzapride (Irritable Bowel Syndrome)
Successful clinical trial in c-IBS patients at Mayo Clinic, USA Initiated regulatory process with FDA for Phase III in USA ■ ATL-962 (Obesity and diabetes)
$3 million paid by Takeda to exercise rights to ATL-962 for Japan Approval for Phase IIb clinical trial in obese diabetics (announced 27 September 2004) Takeda submit IND for Phase I clinical trial in Japanese subjects ■ COLAL-PRED™ (Ulcerative colitis)
Initiated regulatory process with European authorities for Phase III in EU Manufacturing development for Phase III and commercialisation ■ ATL-104 (Mucositis)
Commenced Phase IIa clinical trial in cancer patients ALIZYME plc | Interim Report 2004
Chairman’s and Chief Executive’s statement
Chairman’s and Chief Executive’s statement Overview
peak sales. Zelnorm® has also recently received In the first half of 2004 we continued building on the approval for an additional indication in the USA for the excellent results achieved in 2003, making significant treatment of chronic constipation in women under 65 progress with all four of our products in clinical Renzapride, with its unique mode of action, has Both renzapride (irritable bowel syndrome “IBS”) and potential within the IBS market to treat not only c-IBS COLAL-PRED™ (ulcerative colitis) are in preparation for but also to be first line therapy for mixed symptom IBS Phase III clinical trials. ATL-962 (obesity/type II diabetes) (“m-IBS”). With m-IBS patients making up approximately is about to commence its second Phase IIb clinical trial, 40% of the total IBS population, and with no other and cancer patients are currently being recruited into product either approved or in development for m-IBS, it ATL-104’s (mucositis) Phase IIa clinical trial.
could provide renzapride with a substantial commercialopportunity.
Importantly, our portfolio of products is now at asufficiently late development stage that the products, During the period we continued work in preparation for and in particular renzapride and ATL-962, are being renzapride’s entry into Phase III clinical development increasingly recognised in the global pharmaceutical including a number of preclinical and manufacturing environment as potential competitive products.
activities in preparation for Phase III and registration.
Our strong data package has also allowed us to initiate With the two successful fundraisings in 2003 and discussions with the FDA on the Phase III protocol following the payment by Takeda of an additional design for registration studies in the USA. We anticipate $3 million in January, we have a strong cash position, reaching agreement with the FDA around the end of the with sufficient funds in our current plans to see us year and commencing Phase III clinical development beyond the end of 2006. Our financial position also enables us to continue to negotiate from a position ofstrength in securing collaboration and partnering Following on from the FDA approval we would anticipate agreements for financing the late stage development of entering into a collaboration to provide funding for the RENZAPRIDE
In January 2004 we reported successful results from our In January 2004, Takeda exercised its rights to a licence clinical trial in constipation predominant IBS and development agreement relating to ATL-962 for(“c-IBS”) patients that was carried out at Mayo Clinic in Japan. This followed their detailed review of the data the USA. Data from this trial supported the findings from from our successful European Phase IIb clinical trial in our Phase IIb clinical trial in c-IBS patients that reported clinically obese patients, announced in September 2003.
in 2003, demonstrating that renzapride enhances As a result of this Takeda paid a further $3 million in gastrointestinal motility and symptom relief, compared addition to the $2 million in 2003. The agreement provides for a further potential $37 million in milestonepayments and double digit royalties on sales in Japan.
The IBS market continues to develop. Since its launch in2002, Novartis’ product Zelnorm® approved in a number The collaboration with Takeda is working extremely well.
of countries for the treatment of c-IBS in women, has Takeda has progressed the preclinical development of seen its sales increase quarter on quarter with the latest ATL-962 in Japan and has submitted an IND with the estimates in excess of $300 million for its second full expectation of entering Phase I clinical development in year of sales and projections approaching $1.5 billion for ALIZYME plc | Interim Report 2004
Chairman’s and Chief Executive’s statement
Chairman’s and Chief Executive’s statement(continued) We announced separately today approval to commence product to Abbott’s product Meridia®. Both ATL-962 and a Phase IIb clinical trial in clinically obese diabetic Xenical® are lipase inhibitors and act locally in the gut patients. The multi-centre trial, to be conducted in the United Kingdom, with involvement of up to five otherEuropean countries, will enrol up to 600 clinically obese In a recent report on the global obesity market diabetic patients, with a Body Mass Index above 28, published by Datamonitor, the prescription market for whose diabetes is currently managed with the diabetic obesity alone was forecast to be around $2.5 billion by drug metformin. The objectives of the study are to 2012, of which it was anticipated that ATL-962 would be determine the effect of ATL-962 on weight loss and its the market leader, with sales of $945 million, and safety and tolerability profile in these patients, Acomplia® sales of $829 million, assuming both compared to placebo and also to orlistat (Roche’s products complete development and receive marketing Xenical®). Trial results are expected to be reported approval with the appropriate product profile.
around the end of 2005 and, if successful, willsignificantly increase the commercial opportunity forATL-962, allowing the potential expansion of the COLAL-PREDTM
product labelling to cover not only clinically obese, but The activity in the first half of the year has concentrated also clinically obese diabetic patients.
on preparation for the Phase III registration clinical trialin Europe in patients with active ulcerative colitis. This During the period, we carried out a number of preclinical has included optimising the formulation, scaling up the and manufacturing activities to facilitate Phase III manufacturing process and validating in-process development. In addition, in preparation for this current controls for COLAL-PRED™. In addition we also trial, Alizyme carried out a Phase I drug interaction study undertook regulatory discussions in a number of with metformin and ATL-962, to determine that European countries and anticipate reaching agreement ATL-962 does not adversely affect the therapeutic for the design of the Phase III registration trial with use of metformin. The results of this study also European regulators before the end of the year. We confirmed the acceptable safety and tolerability profile would then expect to commence the Phase III clinical of ATL-962 observed to date in the Phase Ib and Phase trial in 2005 with results reported around the end of The market for obesity management provides Our cash position allows us to conduct this registration substantial opportunity for an effective product with an study using our own financial resources, whilst acceptable side effect profile. During the period continuing dialogue with a number of potential GlaxoSmithKline signed an agreement with Roche with commercialisation partners for COLAL-PRED™.
an initial payment of almost $100 million for the over-the-counter (‘OTC’) rights to Roche’s product Xenical®.
This agreement further demonstrates the demand for effective products in the area of obesity and weight management and the value ascribed to such The Phase IIa proof of concept clinical trial in cancer patients was initiated in the period and continues torecruit patients. We expect to be in a position to report The sanofi-aventis Group currently has a product, the results from this trial around the middle of 2005.
Acomplia®, in Phase III development for the Given successful results, we believe that further management of obesity and smoking cessation. The investment in ATL-104 would be justified and we will mode of action for Acomplia® is a centrally acting, assess the most optimum route for the further appetite suppressant and is likely to be a competitive ALIZYME plc | Interim Report 2004
Chairman’s and Chief Executive’s statement
Financial Review
In the six months ended 30 June 2004, Alizyme made a As we move forward, over the next 12 months, we net loss of £1.0 million (2003: £7.1 million). Cash anticipate a number of value enhancing events which outflow before management of liquid resources and would continue the transformation of the profile of financing, for the period was £1.8 million (2003: £5.0 million). Cash and short-term investments were£20.6 million at 30 June 2004 (£15.4 million at Reaching agreement with both European and US regulatory authorities on the Phase III designs of COLAL-PRED™ and renzapride respectively, will be very In January Takeda paid £1.6 million following their important in validating these products’ development to exercise of rights to a licence and development date as well as opening up the potential route to market agreement relating to ATL-962 for Japan. This income and commercialisation. In turn this will also facilitate has been recognised in full in the period.
collaborations allowing Alizyme to access the financialsupport necessary to complete development and Research and development expenditure was significantly lower at £2.9 million (2003: £7.3 million), reflecting alower level of clinical trial activity than the We also look forward to substantive clinical data from corresponding period in 2003. Management and the ATL-962 Phase IIb trial in clinically obese diabetics administration expenses at £0.5 million remained the and the first proof of principle data from the ATL-104 The low level of net loss in the period exemplifies the The team at Alizyme has again made a significant leverage of the Alizyme outsourcing business model, contribution to the achievements in the period and we and provides a powerful indication of how future take this opportunity to thank everyone for their revenues, combined with a controlled but effective spend on development, could have a dramaticallypositive effect on the financial performance of theCompany.
It is anticipated that the second half of 2004 will showR&D expenditure slightly higher than reported in the Sir Brian Richards CBE
first half, with the main activities being the continued Chairman
recruitment into the Phase IIa ATL-104 clinical trial incancer patients and commencement of recruitment intothe Phase IIb ATL-962 clinical trial in obese diabetics.
Following the two successful fundraisings that werecompleted in 2003, Alizyme continues to retain a strong Dr Richard Palmer
cash position with sufficient funds to complete the Chief Executive Officer
planned Phase III European clinical trial of COLAL-PRED™, the Phase IIb European clinical trial of ATL-962in obese diabetics and the ongoing Phase IIa UK clinical 27 September 2004
ALIZYME plc | Interim Report 2004
Consolidated Profit and Loss Account
Consolidated Profit and Loss AccountFor the six months ended 30 June 2004 Six months
Six months
Twelve months
31 December
£000’s
£000’s
£000’s
Turnover
Operating expenses:
Operating loss
Loss on ordinary activities before taxation
Loss for the period being the retained loss for the period
attributable to the members of Alizyme plc
Loss per share – basic and diluted
There were no recognised gains and losses in any period other than the retained loss for that period.
All amounts relate to continuing activities.
The accompanying notes form an integral part of this Consolidated Profit and Loss Account.
ALIZYME plc | Interim Report 2004
Consolidated Balance Sheet
Consolidated Balance SheetAs at 30 June 2004 31 December
£000’s
£000’s
£000’s
Fixed assets
Current assets
Creditors: Amounts falling due within one year
Net current assets
Total assets less current liabilities
Provisions for liabilities and charges
Net assets
Capital and reserves
Equity shareholders’ funds
The accompanying notes form an integral part of this Consolidated Balance Sheet.
ALIZYME plc | Interim Report 2004
Consolidated Cash Flow Statement
Consolidated Cash Flow StatementFor the six months ended 30 June 2004 Six months
Six months
Twelve months
31 December
£000’s
£000’s
£000’s
Net cash outflow from operating activities
Returns on investments and servicing of finance
Net cash inflow from returns on investments
and servicing of finance
Taxation
Research and development tax credit received Net cash inflow from taxation
Capital expenditure and financial investment
Net cash outflow from capital expenditure
and financial investment
Cash outflow before management of liquid
resources and financing
Management of liquid resources
Net cash inflow/(outflow) from management of
liquid resources
Financing
Issue of ordinary share capital (net of expenses) Net cash inflow from financing
Increase/(decrease) in cash in the period
The accompanying notes form an integral part of this Consolidated Cash Flow Statement.
ALIZYME plc | Interim Report 2004
Notes to the financial information
Notes to the financial informationUnaudited 1. Basis of preparation
The interim financial information has been prepared on the basis of the accounting policies set out in the Group’s
statutory financial statements for the year ended 31 December 2003.
These interim financial statements do not constitute statutory financial statements within the meaning of section240 of the Companies Act 1985. Results for the six month periods ended 30 June 2004 and 30 June 2003 have notbeen audited. The results for the year ended 31 December 2003 have been extracted from the statutory financialstatements, which have been filed with the Registrar of Companies and upon which the auditors reported withoutqualification.
Copies of the interim results for the six months ended 30 June 2004 are being sent to all shareholders. Details canalso be found on the Company’s website at www.alizyme.com. Further copies of the interim results and copies ofthe full financial statements for the year ended 31 December 2003 can be obtained by writing to the CompanySecretary, at Alizyme plc, Granta Park, Great Abington, Cambridge CB1 6GX or by sending an electronic mail [email protected].
2. Loss per share
Loss per share is based on the loss of £974,000 for the six months ended June 2004 (six months ended June 2003
– £7,112,000; twelve months ended December 2003 – £10,008,000) and on 144,391,000 ordinary shares (June 2003
– 120,821,000; December 2003 – 130,476,000) being the weighted average number of equity shares in issue during
the period.
The diluted loss per share takes into account the dilutive effect of share options. Ordinary shares which arepotentially issuable are only included in the calculation of diluted earnings per share if their issue would decreasenet profit per share or increase net loss per share. The exercise of share options does not increase the basic lossper share and therefore the basic and diluted loss per share remain the same.
3. Provision for employer’s National Insurance on gains on share options
In accordance with Urgent Issues Task Force abstract 25 (“National Insurance contributions on share option gains”)
the Group has recognised a provision of £181,000 (30 June 2003 – £64,000; 31 December 2003 – £279,000) for
National Insurance contributions that will be payable on gains realised upon the future exercise of share options
issued. The provision calculation is based upon the closing share price of the Company on 30 June 2004, which
was 130.5p (30 June 2003 – 48p; 31 December 2003 – 173p) and calculated at a National Insurance rate of 12.8%
(30 June 2003 – 12.8%; 31 December 2003 – 12.8%). Any provision is allocated over the performance period of each
employee, where the performance period is the period during which the employee must perform the services
necessary to become unconditionally entitled to the options.
4. Reconciliation of operating loss to operating cash flows
Six months
Six months
Twelve months
31 December
£000’s
£000’s
£000’s
Net cash outflow from operating activities
ALIZYME plc | Interim Report 2004
Independent review report to Alizyme plc
Introduction
We have been instructed by the Company to review the financial information for the six months ended
30 June 2004, which comprises the profit and loss account, the balance sheet, the cash flow statement and
related notes 1 to 4. We have read the other information contained in the interim report and considered whether
it contains any apparent misstatements or material inconsistencies with the financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4 issued by the Auditing PracticesBoard. Our work has been undertaken so that we might state to the Company those matters we are required tostate to them in an independent review 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, for our review work, for thisreport, or for the conclusions we have formed.
Directors’ responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the accounting policies and presentation
applied to the interim figures should be consistent with those applied in preparing the preceding annual
accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing
Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group
management and applying analytical procedures to the financial information and underlying financial data and,
based thereon, assessing whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with
United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly,
we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial
information as presented for the six months ended 30 June 2004.
Deloitte & Touche LLP
Chartered Accountants
Cambridge
For further information, please contact:Dr Richard Palmer, Chief Executive OfficerTim McCarthy, Finance DirectorALIZYME plcT +44 (0) 1223 896000F +44 (0) 1223 896001 ALIZYME plc
Granta Park
Great Abington
Cambridge
CB1 6GX
United Kingdom
T +44 (0) 1223 896000F +44 (0) 1223 896001

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