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28 September 2006, London ….SR Pharma plc (AIM:SPA) today announces its unaudited interim financial results for the six months ended 30 June 2006. Operational highlights
Financial highlights
SR Pharma ( www.srpharma.com ) SR Pharma plc is a European biopharmaceutical company, listed on AIM. The Company has two operating subsidiaries Atugen AG (www.atugen.com) based in Berlin, Germany and Stanford Rook Ltd based in London, UK. Atugen is a leader in RNAi therapeutics. This Company has developed novel, chemically modified proprietary siRNA molecules ("AtuRNAi") and a proprietary delivery system ("AtuPLEX") both of which have advantages over conventional siRNA molecules and their delivery systems. Currently Atugen and its collaboration partners have lead molecules in pre-clinical development for a variety of therapeutic indications. Clinical development of AtuRNAi therapeutic molecules for systemic applications in Atugen’s oncology programs are targeted to start in 2007. Other AtuRNAi therapeutic programs of Atugen’s collaborators are scheduled to commence in 2H 2006. Stanford Rook Ltd is an immunotherapy based company which owns a proprietary Mycobacterium vaccae-based technology and related products, which have been evaluated in clinical trials for the treatment of asthma, cancer and tuberculosis. In addition this Company has a number of other proprietary immunotherapeutic compounds and related intellectual property. Currently the Company is in discussions with third parties regarding the co-development and out-licensing of M. vaccae and related products. Enquiries:
Chairman’s Statement Dear Shareholder, I am pleased to report that significant progress has been made during the first half of the year in terms of the development of our lead siRNA candidates both internally and through external collaboration and licences which further validate the potential of our technology. R&D Programmes In April 2006 we published data to support the systemic applications of our siRNA-lipoplex (AtuPLEX) technology for enabling it’s therapeutic application in vivo in oncology applications, which has been developed by our subsidiary Atugen AG (“Atugen”). In June 2006 we announced a key technical breakthrough with our lyophilized (dry powder) liposomal-based siRNA formulations and that collaborations had been signed with third party suppliers (Genzyme, BioSpring and OctoPlus) in respect of the manufacturing and formulation of GMP material for our clinical studies. In September 2006 we announced that our lead investigator, Professor Wiedenmann, at the Charite in Berlin, where our first human studies will be conducted, had obtained some exciting results with our lead siRNA formulation in a pre-clinical model of human pancreatic cancer. Following discussions with the relevant European regulatory authorities to review our project plans, we remain on track to commence clinical trials of our proprietary siRNA molecules in the first half of 2007. Third party Collaborations & Licences In March 2006 we announced a licence deal with Merck Inc which will allow Merck to elucidate fully the therapeutic potential of a target gene owned by Atugen. Of major significance is the recent announcement that Atugen will receive milestone payments of up to $95 million (~£50 million) as well as royalties as a result of a sublicensing deal between Atugen, its collaborator Quark Biotech Inc., and Pfizer Inc. Under the terms of the licence, Atugen will receive a $2 million (~£1.1 million) upfront fee and further near term milestone payments based on development progress. The licence to Pfizer relates to a RNAi therapeutic product developed under an agreement between Quark Biotech and Atugen for the treatment of Age-related Macular Degeneration (AMD) and other diseases. Quark Biotech and Atugen have collaborated on this AtuRNAi therapeutic siRNA product for AMD since 2004 and are currently collaborating on additional therapeutic AtuRNAi siRNA products in other indications. Intellectual Property We have continued to file oppositions to competitive patents in the sector in order to protect our freedom to operate. Most significantly we are pleased to announce that the European Patent Office (EPO) has issued a notice of allowance to Atugen, in respect of its patent application (EP03784183) covering novel stabilized small interfering RNA (siRNA) molecules with blunt ends and positional modifications. The 38 claims in this patent broadly cover siRNA (“AtuRNAi”) structures having a positional arrangement of modified nucleotides leading to an increased stability against nuclease degradation. The modifications at the 2’ hydroxyl position of the ribose sugar include methoxy found in endogenous molecules such as ribosomal and transfer RNA. Therefore, the AtuRNAi molecules in Atugen’s current drug development programs consist of naturally occurring building blocks. The grant of this patent by the EPO will underline our continued freedom to operate with RNAi therapeutics and that our nuclease-resistant AtuRNAi molecules together with our proprietary delivery technologies represent a cutting edge drug development engine for SR Pharma and its collaboration partners. Stanford Rook Ltd We continue to explore opportunities to crystallise value from Stanford Rook’s proprietary M. vaccae technology. In view of this I am pleased to announce the appointment of Dr Laura Rosa Brunet as Director of Operations of our subsidiary Stanford Rook Ltd (“SRL”). During the period, significant progress has been made in discussions with existing and potential licencees in the field of allergic disorders and we anticipate new agreements being signed in the medium term. The Board remains confident that M. vaccae can play a role, inter alia in the treatment of specific cancers. In this respect, to identify immunological parameters to be applied to clinical analysis, we have initiated a collaboration with Professor Dalgleish of the Cancer Vaccine Institute, London, UK to investigate the effects of M. vaccae on the maturation and function of cells that are known to have a pivotal role in the immune response to cancer. In addition SRL has also recently agreed a licence deal with a third party company to explore and exploit the group’s inositol phosphoglycan technology in the field of pregnancy disorders. SR Pharma will share in the upside from any sale or sub-licence of the relevant technology. Financial Performance During the six months ended 30 June 2006, the group generated revenues of £780,000 from its RNAi technology. Total costs have risen to £3,029,000 for the half year compared to £793,000 in the same period last year, reflecting the significant expansion of the Group as a result of the acquisition of Atugen AG in July 2005. A comparison with the second half of 2005, following the acquisition of Atugen, shows that whilst we have continued to increase our expenditure on research and development this year, total costs for the first half of 2006 are lower than costs for the second half of 2005. After interest income and estimated tax credits based on its relevant research and development costs, the group is reporting a loss for the half year of £2,041,000. At the start of the year the group had cash balances of £9,091,000. The group has used some of these resources to bring down its external liabilities, which have reduced by over £500,000. The result is that at 30 June 2006 the group still held cash balances of £6,801,000, giving a cash usage in the half year of just £2,290,000 In conclusion, I remain confident that with the continued support of the board and management we will be able to build a meaningful and financially viable business, develop a credible product pipeline underpinned by sustainable third party collaborations and most importantly develop significant therapeutic medicines which will combat serious and debilitating diseases. Iain G Ross Chairman SR Pharma plc 28 September 2006
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