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Xenova Group plc Third Quarter Results
SLOUGH, England, Nov. 6 /PRNewswire-FirstCall/ --
Quarterly Highlights
-- Acquisition of KS Biomedix Holdings plc
-- XR5944: start of Phase I clinical trial of novel DNA targeting agent
-- Cash, short-term deposits and investments 10.6m pounds sterling
($17.5m) at 30 September 2003 (30 September 2002: 10.0m pounds
($16.6m))
Subsequent Events
-- TA-NIC: start of second Phase I clinical trial for anti-smoking
vaccine
-- TA-CD: start of Phase IIb clinical trial for anti-cocaine vaccine
-- Publication of novel findings relating to use of Xenova's OX-40
technology and its potential for the treatment of influenza
David Oxlade, Chief Executive Officer, said: "We have now completed the
acquisition of KS Biomedix and made good progress with the integration of the
business. The acquisition has strengthened our clinical portfolio and helped to
lay the foundations for Xenova to become a broader-based oncology business. In
addition, it has created substantial opportunities for synergies and cost
savings across the enlarged Group which we have already started to exploit."
"By focusing on our key clinical development programmes we believe we will be
able to deliver greater shareholder value and significantly improve the
long-term prospects of the Group."
Notes to Editors
Xenova Group plc's product pipeline focuses principally on the therapeutic areas
of cancer and immune system disorders. Xenova has a broad pipeline of
programmes in clinical development. The Group has a well-established track
record in the identification, development and partnering of innovative products
and technologies and has partnerships with significant pharmaceutical and
biopharmaceutical companies including Celltech, Genentech, Lilly, Millennium
Pharmaceuticals, Nycomed, Pfizer and QLT.
For further information about Xenova and its products please visit the Xenova
website at http://www.xenova.co.uk/
For Xenova: Disclaimer to take advantage of the "Safe Harbor" provisions of the
US Private Securities Litigation Reform Act of 1995. This press release contains
"forward-looking statements," including statements about our ability to
integrate acquired businesses and realize cost savings from integration, and
the discovery, development and commercialization of products. Various risks may
cause Xenova's actual results to differ materially from those expressed or
implied by the forward looking statements, including: unexpected costs and
delays in integrating acquired businesses into our group, adverse results in our
drug discovery and clinical development programs; failure to obtain patent
protection for our discoveries; commercial limitations imposed by patents owned
or controlled by third parties; our dependence upon strategic alliance partners
to develop and commercialize products and services; difficulties or delays in
obtaining regulatory approvals to market products and services resulting from
our development efforts; the requirement for substantial funding to conduct
research and development and to expand commercialization activities; and product
initiatives by competitors. For a further list and description of the risks and
uncertainties we face, see the reports we have filed with the Securities and
Exchange Commission. We disclaim any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
Acquisition of KS Biomedix Holdings plc
On 14 August 2003 Xenova announced a recommended offer to acquire 100% of the
share capital of KS Biomedix Holdings plc, a UK listed drug research and
development group. This transaction became unconditional in all respects on 12
September 2003. The planned integration and rationalisation across the two
businesses is well advanced. The Directors estimate that annualised cost-
savings of approximately 10m pounds will be achieved across both businesses,
based on reductions in headcount, facilities and R&D costs (including Xenova's
restructuring activities commencing in May 2003). The one-off reorganisation
and post acquisition integration cost of achieving these savings is expected to
be approximately 3.3m pounds.
Like Xenova, KS Biomedix was focused on the development of products for the
treatment of cancer, particularly clinical indications where survival prognosis
is poor and there are few, if any, approved products. As a result of this
acquisition, the enlarged Xenova Group now has a broader clinical pipeline with
a total of 12 products in clinical stage development including eight products in
oncology (three in Phase II or Phase III) and four in addiction and immunology.
The table below summarises the Xenova's drug candidates and early development
programmes. Programmes highlighted in bold text have been prioritised for
development.
The Xenova Directors believe that greater shareholder value will be achieved by
focusing on six key clinical development programmes. Of these six, four
(TransMID(TM), tariquidar, TA-CD, XR11576/XR5944) benefit from external funding
or support, substantially reducing the costs of clinical development to Xenova.
Xenova has deprioritised the majority of its preclinical programmes except where
externally funded, as is the case for the Genentech collaboration on OX-40.
Drug Therapeutic Stage of Partner
Candidates/Programmes area Development
Clinical programmes
TransMID(TM) (XR311) Glioma Phase III Sosei,
Nycomed,
Medison,
Ranbaxy
Tariquidar (XR9576) Cancer Phase II QLT (North
America only)
TA-HPV / TA-CIN Cervical cancer Phase II
TA-CD Cocaine Phase II NIDA*
addiction
XR303 Cancer Phase I
HumaRAD Cancer Phase I
XR11576/XR5944 Solid tumours Phase I Millennium
(North America
only)
DISC-PRO Genital and oro- Phase I
labial herpes
prophylaxis
TA-NIC Nicotine Phase I
addiction
DISC-GMCSF Cancer Phase I
DISC-VET Bovine Herpes Phase I Pfizer
Virus equivalent
Preclinical programmes
Triomics Solid tumours Preclinical Option to acquire
XR11612 Solid tumours Preclinical As XR11576
OX-40 Autoimmune Preclinical Celltech,
disorders Genentech
OX-40L Infectious Preclinical
diseases, anti-
cancer
PAI-1 Cardiovascular Preclinical Lilly
PAI-1 Cancer Preclinical Lilly (Option)**
MRP Cancer and Preclinical
asthma
VP22 (Phogen joint Intra-cellular Preclinical Genencor
venture) delivery system
HIF-1 alpha Cancer Preclinical
MEN-B Meningitis Preclinical
XR304 Ulcerative Preclinical
colitis
XR113 Cancer Preclinical
Ribosome display Cancer targets Preclinical Babraham
(Discerna)
* NIDA provides funding to independent investigators to conduct
certain trials of TA-CD, but has no rights for its commercialisation,
nor is funding required to be repaid by Xenova.
** Lilly has an option to acquire development and commercialization rights
relating to PAI-1 inhibitors in the cancer field.
Product Pipeline Year to Date Update
Clinical Trials
Cancer -- TransMID(TM) treatment for high-grade glioma Following the acquisition
of KS Biomedix, TransMID(TM) is now the most advanced product in Xenova's
pipeline, having already commenced Phase III development and shortly to enter
Phase III clinical trials.
TransMID(TM) is a treatment for high-grade glioma (brain cancer) a disease for
which no efficacious alternatives are currently available and which has a very
poor prognosis. TransMID(TM) is a modified diphtheria toxin conjugated to
transferrin. The diphtheria toxin gains entry to the tumour cell when the
transferrin to which it is attached binds to transferrin receptors on the
surface of the cells. Transferrin receptors are particularly prevalent on
rapidly dividing cells, and the high level of transferrin receptor expression on
glioma cells makes transferrin an ideal targeting mechanism for the diseased
cells. Once inside a cell the diphtheria toxin interferes with protein
synthesis and ultimately kills the cell.
TransMID(TM) is pumped directly into the brain tumour via two catheters using
CED (Convection Enhanced Delivery -- licensed from the National Institute of
Health, US). CED greatly enhances the distribution of drug through the tumour
mass and produces high local concentrations of drug. Since TransMID(TM) is
directly infused into the tumour, it circumvents the usual obstacles presented
to drug delivery to the brain by the blood-brain barrier and reduces systemic
side effects.
Plans to progress TransMID(TM) into Phase III trials in adults with recurrent
and/or progressive non resectable glioblastoma have already been submitted by KS
Biomedix and have been agreed with the FDA. However, following its acquisition
of KS Biomedix Xenova intends to seek FDA approval to change the current Phase
III programme design from one large Phase III trial to two smaller Phase III
trials.
Cancer -- tariquidar multi-drug resistance (MDR) programme
In June 2002, tariquidar entered two pivotal Phase III clinical trials as an
adjunctive treatment in combination with first-line chemotherapy for non- small
cell lung cancer (NSCLC) patients. On 12 May 2003, QLT announced that the Phase
III trials would be stopped following a recommendation from the independent Data
and Safety Monitoring Committee (DSMC) which had just completed the unblinded
interim review of the data for the two ongoing trials. A detailed review of the
unblinded clinical data on the patients in the Phase III trials is continuing.
On 23 July 2003, QLT announced that enrolment in the Phase IIb trial for
patients with chemo-refractory breast cancer, which is being carried out at the
MD Anderson Centre, Texas, had been sufficiently completed at 17 patients. QLT
will not be enrolling new patients in this trial.
Cancer -- Therapeutic Vaccines
On 14 April 2003, the Company announced the results of an open label,
physician-sponsored Phase II 'prime-boost' study, targeting the treatment of
human papillomavirus (HPV) associated ano-genital intraepithelial neoplasia
(AGIN) using a combination of Xenova's TA-CIN and TA-HPV candidate therapeutic
vaccines.
The results of this study indicated that a prime boost strategy, using a
combination of Xenova's TA-CIN and TA-HPV candidate therapeutic vaccines, was
both safe and well tolerated and demonstrated clear clinical responses, even in
women with long-standing disease. Of the 26 patients meeting the entry
requirements of the study, 15 (58%) showed evidence of symptomatic improvement,
one (4%) had a complete response (confirmed by histological examination and
viral clearance) and in addition, five (19%) showed a partial response (defined
as a lesion area reduction of 50% or greater), for an overall response rate in
this study of 23%. Five patients (19%) were HPV16 negative at the end of the
study.
Cancer -- Novel DNA Targeting Agents
On 3 July 2003, Xenova announced the start of a Phase I clinical trial of
XR5944, the second of three novel DNA targeting agents that are the subject of a
licence agreement with Millennium Pharmaceuticals Inc. The first of these
compounds XR11576, entered Phase I clinical trials in February 2002. The third,
XR11612 is in preclinical development.
The XR5944 Phase I clinical trial is being conducted at three centres in the
United Kingdom and will include approximately 40 patients. In preclinical
studies, XR5944 has demonstrated a high level of anti-tumour activity against a
number of human tumour models, causing both partial and complete regression of
large established tumours. Recent data published in the Proceedings for the
2003 Annual Meeting of the American Association for Cancer Research, suggest
that XR5944 acts through a novel mechanism of action distinct from other current
cytotoxic agents. Further exploration into the mechanism of action of XR5944 is
ongoing.
Vaccines of Addiction
On 15 January 2003, Xenova announced that it had reached an agreement with
ImmuLogic Pharmaceutical Corporation Liquidating Trust ("ImmuLogic") to buy out
all ImmuLogic's remaining rights to future milestone and royalty payments
relating to two of Xenova's therapeutic vaccines; TA-CD for the treatment of
cocaine addiction and TA-NIC for nicotine addiction.
TA-CD
The start of a Phase IIa cocaine administration trial was announced on 14 April
2003. The ten-patient open label trial is being conducted in the United States
and is designed to evaluate the effect of TA-CD on behavioural changes
associated with cocaine administration.
The results of a second Phase IIa dose escalation trial were reported on 17 June
2003. This study, which started in April 2002, was designed to evaluate the
safety and immunogenicity of TA-CD using 4 or 5 dose vaccination schedules. The
trial involved the enrolment of 13 subjects, all of whom were cocaine abusers
seeking help with their addiction at the start of the trial. Patients were
treated with up to five injections of the vaccine over a twelve week period
using doses up to 360 µg each. Of the thirteen enrolled, twelve subjects
completed the 12 month evaluation period to assess safety, immune response and
cocaine usage.
As for the previous study, the results showed the vaccine to be safe and well
tolerated with a dose-related immune response. Of those 16 patients in the two
Phase IIa studies who used cocaine at any time following vaccination, 14
reported a reduction of the usual euphoric effect normally associated with
cocaine use, providing further anecdotal evidence of the vaccine's proposed mode
of action.
On 24 October 2003, Xenova announced the start of the first randomised, placebo
controlled Phase IIb clinical trial for TA-CD. The primary objective of this new
study is to determine the efficacy of TA-CD in addicts seeking treatment for
cocaine abuse, and to determine appropriate end-points for a Phase III study.
Up to 132 subjects, all of whom are methadone-dependent cocaine addicts being
treated for drug dependency are being recruited into this clinical study. Half
the subjects will be treated with active TA-CD and half will be given a placebo.
Subjects will be monitored three times a week to assess cocaine usage,
including testing for cocaine metabolites in urine, for a period of 20 weeks.
Patients will also undergo medical examinations and blood tests for anti-cocaine
antibodies to assess the immunogenicity of the dosing schedule. The trial is
expected to last up to two years (depending upon the rate of recruitment) and
will allow an objective assessment of the efficacy of the TA-CD vaccine against
placebo.
The TA-CD investigations are being supported by the National Institute on Drug
Abuse (NIDA) which recognises cocaine abuse to be a major problem in the U.S.
NIDA has also supported earlier clinical work as part of this programme.
TA-NIC
Xenova announced the start of a second clinical trial for TA-NIC on 8 October
2003. This second Phase I study builds upon the findings of a previous Phase I
trial which were announced in June 2002. The results of this first study, which
was the first evaluation of an anti-nicotine vaccine in man, showed that the
vaccine generated a specific anti-nicotine response and that it was safe and
well tolerated both systemically and locally.
In the new Phase I study approximately 60 smokers are being recruited into a
double-blind, randomised, placebo-controlled trial which is being run at a
European clinical centre experienced in testing smoking related therapies. The
objective of the trial is to further establish safety and tolerability, and to
determine the vaccination dose and schedule required to induce the optimal
anti-nicotine antibody response. Three different doses of the vaccine will be
evaluated. The impact of vaccination on nicotine-induced changes in heart rate
and skin temperature will also be monitored.
Preclinical Programmes
OX-40
On 20 October 2003 novel findings relating to a research collaboration,
involving Xenova's OX40 technology and its potential for the treatment of
influenza, were published by Imperial College, London.
Pre-clinical studies conducted by Imperial College demonstrated that
down-regulation of the immune response, through blocking the OX40-OX40 ligand
interaction, could alleviate the symptoms of influenza, without affecting the
ability to clear the virus. This new research suggests that the down- regulation
of OX40 signaling may play an important role in the fight against the symptoms
of influenza and perhaps other diseases similarly characterised by excessive
immune response.
OX40 is a platform technology capable of producing multiple drug candidates
targeting cancer, autoimmune and other diseases where the immune system is
involved. Xenova's rights to the OX40 technology include rights relating to the
up-regulation of the immune system which may be used for the development of
novel treatments for cancer and infectious disease. Xenova's rights to
down-regulate the immune system have been the subject of development and licence
agreements entered into with Celltech and Genentech.
Contract Manufacture
On 5 June 2003, Xenova announced the signing of a two-year Manufacturing,
Development and Clinical Supply Agreement with Pharmexa A/S (CSE:PHARMX) for the
contract manufacture of clinical supplies of a vaccine targeting the human HER-2
protein. Manufacture will take place at Xenova's Clinical Trial Manufacturing
Facility in Cambridge.
On 8 September 2003 Xenova received notification that its Clinical Trials
Manufacturing Facility (CTMF) in Cambridge has been successfully inspected by
the Medicines and Healthcare products Regulatory Agency (MHRA). The inspection
took place under the Voluntary Scheme for Inspection of Manufacturers. Xenova
has received a letter from the MHRA confirming that its operations are in
compliance with EU Good Manufacturing Practices.
Xenova's CTMF has been manufacturing clinical trial supplies since 1995 and
recently announced that it is offering the facility and its supporting
Development organisation for contract manufacturing. Accreditation by the MHRA
will enable Xenova to continue to provide contract manufacturing services in
full compliance with the forthcoming Clinical Trials Directive into 2004 and
beyond.
As well as its own CTMF facility in Cambridge, Xenova acquired additional
manufacturing facilities in Edmonton, Canada though the acquisition of KS
Avicenna a wholly-owned subsidiary of KS Biomedix. KS Avicenna manufactures KS
Biomedix products for clinical trials.
Changes to the Xenova Board
On 13 August 2003, Research Director and Chief Scientific Officer Michael Moore,
and Medical Director, John St Clair Roberts resigned from the Company and the
Xenova Board. Further changes to the Xenova Board were announced, as planned,
following the acquisition of KS Biomedix: on 12 October 2003 John Rennocks and
Dr Michael Young, non executive directors of KS Biomedix, joined the Board of
Xenova as non executive directors. Howard Wachtler and Gerard Fairtlough
resigned their positions as non executive directors of Xenova on 17 October
2003.
Financial Summary
Operating Performance
In the nine months to 30 September 2003, Xenova's continuing revenues from
licensing agreements, strategic partnerships and manufacturing outsourcing were
6.9m pounds ($11.4m) (2002: 10.7m pounds ($17.7m)).
In accordance with Xenova's revenue recognition policy, of the 6.9m pounds
($11.5m) received from QLT in 2001 as part of the tariquidar licensing
agreement, 2.1m pounds ($3.5m) was included in the nine months to 30 September
2003, with a further 1.7m pounds ($2.9m) being deferred to future periods.
Following the payment of the first milestone of 0.7m pounds ($1.2m) in the
period, in respect of the OX40 programme with Genentech, 1.3m pounds ($2.2m)
(2002: 0.6m pounds ($1.0m)) of the total upfront licence fee and milestone of
3.5m pounds ($5.8m) have been recognised in the first nine months, with a
further 1.3m pounds ($2.1m) being deferred to future periods. Contract
development revenue of 2.6m pounds ($4.3m) (2002: nil pounds) was recognised in
the first nine months in respect of the ongoing Millennium collaboration on the
novel DNA targeting agents. Other revenue included 0.8m pounds ($1.4m) (2002:
0.4m pounds ($0.7m)) in respect of ongoing contract manufacturing.
Net operating expenses from continuing operations in the period to 30 September
2003 were 17.2m pounds ($28.6m). Excluding the exceptional reorganisation costs
of 2.3m pounds ($3.9m), the net operating expenses in the period to 30 September
2003 of 14.9m pounds ($24.7m) declined 13.4% compared to the same period in 2002
(17.2m pounds ($28.5m)). This was as a result of the initial cost savings from
the reorganisations implemented in the first half of 2003.
Continuing operations research and development expenditure for the nine months
to 30 September 2003 was 11.5m pounds ($19.1m), lower than the same period in
2002 (13.3m pounds ($22.1m)). The development costs under the Millennium
licence agreement of 2.6m pounds ($4.3m) have been recovered. Other expenditure
was incurred in respect of the Vaccines of Addiction programme; including the
completion of a Phase II dose escalation study with TA-CD, the start of a Phase
IIa cocaine administration trial with TA-CD, and completion of a Phase I study
in TA-NIC.
Total continuing operations administrative expenditure for the nine months to 30
September 2003 of 6.1m pounds ($10.1m) (2002: 4.2m pounds ($7.0)) included 2.3m
pounds ($3.8m) in respect of exceptional reorganisation costs and 0.9m pounds
($1.5m) in respect of goodwill amortisation arising on the acquisition of Cantab
Pharmaceuticals plc in 2001. Administrative expenses, excluding both exceptional
reorganisation expenses and the amortisation of goodwill, were 2.9m pounds
($4.7m) which reflected cost savings made since 2002 (2002: 3.4m pounds
($5.6m)). The subletting of excess facility space further reduced net expenses
in the period by 0.3m pounds ($0.4m) (2002: 0.4m pounds ($0.7m)).
Following the announcement of the cessation of Phase III trials of tariquidar,
the Group has undertaken a further cost saving reorganisation, which included a
headcount reduction and project prioritisation.
Included in administrative expenses, within exceptional reorganisation costs, is
2.3m pounds ($3.8m) (2002: nil pounds) in respect of severance payments and a
vacant leasehold provision. Total exceptional reorganisation costs are 3.3m
pounds ($5.5m), including 1.0m pounds ($1.7m) in respect of the acquired KS
Biomedix business. As a result of the above reorganisation, surplus facilities
have become available at the main Cambridge site. The Group is currently in
negotiations to sublet or surrender the remaining 20 year lease on this
property. The charge made reflects a vacant leasehold provision which has been
calculated based upon management's expectations of future subletting
opportunities and surrender payments, discounted at a rate of 4% per annum.
The company continues to explore licensing opportunities for its pipeline
products to maximise value for shareholders and reduce cash outflow.
The net loss per share from continuing operations in the nine months to 30
September 2003 was 5.2p (2002: 4.7p).
Treasury
Cash, short-term deposits and investments at 30 September 2003 totalled 10.6m
pounds ($17.5m) (31 December 2002: 19.2m pounds ($31.9m)). Of this balance, cash
was 3.9m pounds ($6.5m) and short-term deposits and investments were 6.7m pounds
($11.1m) at 30 September 2003 (31 December 2002: cash 2.6m pounds ($4.4m),
short-term deposits and investments 16.6m pounds ($27.6m)).
Included in short-term deposits and investments is an investment in Cubist
Pharmaceuticals Inc., which at 30 September 2003 is valued at 0.4m pounds
($0.7m) (31 December 2002: 0.3m pounds ($0.6m)).
On 16 September 2003, 23,500 of the 88,668 Cubist Pharmaceutical Inc. shares
were sold for 0.2m pounds. During the quarter 0.2m pounds ($0.3m) of surplus
fixed assets were sold at net book value.
Share capital
The number of shares in issue stood at 243.7 million as at 30 September 2003 (31
December 2002: 139.1 million).
The Directors do not propose an interim dividend for 2003 (2002: nil).
Acquisition of KS Biomedix Holdings Plc
On 12 September the Group announced the successful acquisition of KS Biomedix
Holdings plc. Under the terms of the offer made to KS Biomedix shareholders,
1.0714 shares in Xenova Group plc have been issued in exchange for each share
held in KS Biomedix. An additional contingent deferred consideration of 10p per
KS Biomedix share held will be paid in Xenova Group plc shares upon the
commercial sale of the KS Biomedix TransMID(TM) product in either the US or
European markets before 14 August 2011. Based upon a Xenova Group plc closing
share price of 15.25 pence on 11 September this values KS Biomedix at 17.0m
pounds ($28.3m) including the contingent deferred consideration payable in
respect of TransMID(TM) of 6.5m pounds ($10.7m).
In the provisional calculation of the fair values of the assets and liabilities
acquired, there have been no accounting policy adjustments made to the balance
sheet values stated at 11 September. Intangible fixed assets acquired of 5.6m
pounds ($9.3m) comprised goodwill in respect of the acquisition by KS Biomedix
of KS Avicenna Inc in 2001, which has not been capitalised separately from the
goodwill arising on the acquisition of KS Biomedix by Xenova. The provisional
fair value of the assets and liabilities acquired is 7.2m pounds ($11.9m). The
consideration totalling 17.6m pounds ($29.2m) (including 0.6m pounds ($0.9m) of
acquisition expenses) generates goodwill upon acquisition of 10.4m pounds
($17.2m).The goodwill arising has been capitalised and amortised over the 10
year estimated useful life of the acquired business. In addition to the 0.6m
pounds ($0.9m) of acquisition expenses, share issue costs of 0.6m pounds ($1.1m)
were incurred.
In addition to acquiring 100% of KS Biomedix Holdings plc, Xenova acquired 100%
of KS Canada Holdings Inc, KS Canada Inc and KS Avicenna Inc, as well as a 50%
share in Discerna Ltd, a joint venture with Babraham Biosciences Technology
Limited.
As part of the restructuring activities following completion of the acquisition
approximately 26 positions have been lost across both head office and the
research and development functions. Included within administration expenses for
the period to 30 September 2003 is 0.7m pounds in respect of severance payments
regarding the acquired business. The net operating loss included in the
financial statement in respect of KS Biomedix for the period from acquisition to
the 30 September 2003 is 1.5m pounds ($2.4m).
Consolidated Profit and Loss Account (unaudited)
for the periods ended 30 September 2003
Three months ended Nine months ended
30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept
2003 2003 2002 2003 2003 2002
$000 000 000 $000 000 000
pounds pounds pounds pounds
Turnover
(including
share of
joint venture)
Continuing
operations 4,527 2,725 4,025 11,435 6,883 10,939
Less: share
of joint
venture
revenue (5) (3) (123) (13) (8) (274)
Acquisitions 17 10 -- 17 10 --
Turnover 4,539 2,732 3,902 11,439 6,885 10,665
Operating expenses
Research and
development costs
Continuing
operations (5,604) (3,373) (4,902) (19,068) (11,477) (13,326)
Acquisitions (419) (252) -- (419) (252) --
(6,023) (3,625) (4,902) (19,487) (11,729) (13,326)
Administrative expenses
Continuing
operations (1,359) (818) (1,096) (4,738) (2,852) (3,351)
Continuing
operations:
exceptional
reorganisation
costs (482) (290) -- (3,865) (2,326) --
Continuing
operations
expenses:
amortisation
of
goodwill (485) (292) (293) (1,455) (876) (879)
(2,326) (1,400) (1,389) (10,058) (6,054) (4,230)
Acquisitions (415) (250) -- (415) (250) --
Acquisitions:
exceptional
reorganisation
costs (1,710) (1,029) -- (1,710) (1,029) --
Acquisitions
amortisation
of goodwill (71) (43) -- (71) (43) --
Total
administrative
expenses (4,522) (2,722) (1,389) (12,254) (7,376) (4,230)
Other operating
income
Continuing
operations 219 132 107 548 330 380
Total net
operating
expenses (10,326) (6,215) (6,184) (31,193) (18,775) (17,176)
Group operating
loss
Continuing
operations (3,188) (1,919) (2,282) (17,155) (10,326) (6,511)
Acquisitions (2,599) (1,564) -- (2,599) (1,564) --
(5,787) (3,483) (2,282) (19,754) (11,890) (6,511)
Continuing
operations:
share of
operating
(loss)/profit
of joint
venture (128) (77) 28 (317) (191) 63
Total operating
loss: Group
and share
of joint
venture (5,915) (3,560) (2,254) (20,071) (12,081) (6,448)
Interest (net) 110 66 130 545 328 464
Share of
interest
of joint
venture -- -- 2 5 3 5
Amounts
written
back
on/(off)
investments 60 36 (256) 269 162 (1,893)
Loss on
ordinary
activities
before
taxation (5,745) (3,458) (2,378) (19,252) (11,588) (7,872)
Tax on loss
on ordinary
activities 402 242 420 912 549 1,291
Loss on
ordinary
activities
after
taxation (5,343) (3,216) (1,958) (18,340) (11,039) (6,581)
Loss per
share
continuing
operations
(basic
and diluted) (1.4c) (0.9p) (1.4p) (8.7c) (5.2p) (4.7p)
Loss per
share
(basic
and diluted) (2.7c) (1.6p) (1.4p) (10.1c) (6.1p) (4.7p)
Shares used
in computing
net loss per
share
(thousands) 197,596 197,596 139,057 182,221 182,221 139,057
US Dollar amounts have been translated at the closing rate on 30 September
2003 (1.00 pound: $1.6614) solely for information.
Condensed Consolidated Balance Sheet (unaudited)
as at 30 September 2003
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 December
2003 2003 2002
$000 000 000
pounds pounds
Cash, short-term
deposits and investments 17,546 10,561 19,217
Other current assets 8,566 5,156 3,164
Fixed assets
(including goodwill) 46,335 27,889 15,249
Total assets 72,447 43,606 37,630
Current liabilities
(including provisions
& deferred income) 18,088 10,887 11,120
Shareholders' equity 54,359 32,719 26,510
Total liabilities
and shareholders' equity 72,447 43,606 37,630
US Dollar amounts have been translated at the closing rate on 30 September
2003 (1.00 pound: $1.6614) solely for information.
Notes to the Financial Statements
1 Basis of preparation
These unaudited statements, which do not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985, have been prepared using
the accounting policies set out in the Group's 2002 Annual Report and Accounts.
The 2002 Annual Report and Accounts received an unqualified auditor's report and
have been delivered to the Registrar of Companies.
There have been no changes to the Group's accounting policies in 2003.
The financial information has been prepared on a going concern basis. This
assumes that additional funds are raised through either equity financing or
licencing of our development programmes. In the event that additional funds are
not secured, the company would immediately seek to further reduce its overheads
and development expenditure on its drug candidates and would seek to licence
rights to some of its drug candidates and technologies at an earlier stage than
currently intended.
Notes to the Financial Statements
2 Acquisition of KS Biomedix Holdings Plc
On 12 September the Group announced the successful acquisition of KS Biomedix
Holding plc. Under the terms of the offer made to KS Biomedix shareholders,
1.0714 shares in Xenova Group plc have been issued in exchange for each share
held in KS Biomedix. An additional contingent deferred consideration of 10p per
KS Biomedix share held will be paid in Xenova Group plc shares upon the
commercial sale of the KS Biomedix TransMID(TM) product in either the US or
European markets before 14 August 2011. Based upon a Xenova Group plc closing
share price of 15.25 pence on 11 September this values KS Biomedix at 17.0m
pounds including the contingent deferred consideration payable in respect of
TransMID(TM) of 6.5m pounds.
Details of the book value and provisional fair value of the assets and
liabilities of KS Biomedix as at 11 September are set out below:
Provisional
Book values Adjustments Fair values
000 000 000
pounds pounds pounds
Fixed assets
Tangible 3,296 -- 3,296
Intangible 5,569 (5,569) --
Investment in joint
venture - net assets 99 -- 99
Stock 9 -- 9
Debtors 1,991 -- 1,991
Cash and liquid investments 4,082 -- 4,082
Creditors falling
due within one year (2,249) -- (2,249)
Creditors falling
due after more than one year (61) -- (61)
Net assets acquired 12,736 (5,569) 7,167
Satisfied by:
Shares issued and
to be issued 10,551
Contingent deferred
consideration to be
settled by in shares 6,458
Expenses of acquisition 553
Total consideration 17,562
Goodwill arising on acquisition 10,395
In this provisional fair value table there have been no accounting policy
adjustments made to the balance sheet values stated at 11 September. Intangible
fixed assets acquired comprised goodwill in respect of the acquisition by KS
Biomedix of KS Avicenna Inc in 2001, which has not been capitalised separately
from the goodwill arising on the acquisition of KS Biomedix by Xenova. In
addition to the 553,000 pounds of acquisition expenses, share issue costs of
633,000 pounds were incurred.
The goodwill arising on the acquisition of the KS Biomedix business has been
capitalised and amortised over the 10 year estimated useful life of the acquired
business.
In addition to acquiring 100% of KS Biomedix Holdings plc, Xenova acquired 100%
of KS Canada Holdings Inc, KS Canada Inc and KS Avicenna Inc, as well as a 50%
share in Discerna Ltd, a joint venture with Babraham Biosciences Technology
Limited.
As part of the restructuring activities following completion of the acquisition
approximately 26 positions have been lost across both head office and the
research and development functions. Included within administration expenses for
the period to 30 September 2003 is 0.7m pounds in respect of severance payments
regarding the acquired business.
DATASOURCE: Xenova Group plc
CONTACT: UK: David A Oxlade, Chief Executive Officer, or Daniel Abrams,
Group Finance Director, or Jon Davies, Corporate Communications, all of Xenova
Group plc, +44-1753-706600; or US: Press - Brad Miles, ext. 17, or Daniel
Budwick, ext. 14, or Investors - Jonathan Fassberg, ext. 16, or Lee Stern,
ext. 22, all of Trout Group/BMC Communications, +1-212-477-9007; or David
Yates, or Ben Atwell, both of Financial Dynamics, +44-207-831-3113
Web site: http://www.xenova.co.uk/