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York Pharma - Preliminary Results for the Year Ended 30 September 2005 Hitchin, UK, 28th November 2005 - York Pharma plc, the AIM-listed (AIM:YRK) strategic acquirer, developer and marketer of pharmaceutical products in the field of dermatology, is pleased to announce its preliminary results for the year ended 30th September 2005. Over the period York has made significant progress towards its aim of becoming a leading international company focusing on novel prescription products for dermatology, and this strategy remains on track. Highlights of the year ended 30th September 2005
Chairman's statement I am delighted that in my first statement to you as Chairman of York Pharma plc I am able to report such strong progress for the Group. As you will be aware, York Pharma joined AIM in April 2004 and 30 September 2005 thus marks the end of its first full financial year as a public company. Our stated objective at the time of the flotation was to acquire, develop and commercialise prescription dermatological products. Our commitment was to bring to both healthcare professionals and patients a collection of high quality, safe and effective medicines that would prevent, diagnose and treat diseases of the skin. During this period we have made solid progress towards these goals. We have invested heavily in our portfolio of prescription dermatological treatments and have succeeded in bringing together a management and scientific team that will allow us to achieve full shareholder value from these products within our planned timeframe. We have already made the first regulatory filing for our lead product, Abasol™, and anticipate our first revenues next year. Six other key pipeline products/projects are progressing through their development and clinical trial phases to timetable and within budget. Terry Sadler, our Chief Executive, has written a very thorough product and market review that follows this statement. The loss of £2,690,011 for the year ended 30 September 2005 reflects our ongoing investment in the development of our product portfolio and is in line with expectations. There is no dividend. Since our flotation, and during the year, both our cash position and product pipeline have been strengthened further by the acquisition of Molecular Skincare Limited and two cash placings totalling £7.8 million (gross of expenses) to new and existing shareholders. The price achieved on the most recent placing of 106p represented a greater than four-fold increase on the original flotation price. In addition, our progress since flotation was recognised when York Pharma received an award as the best performing AIM techMARK mediscience share in the year ending 31 March 2005. A proportion of the proceeds from the cash placings are to be used for product acquisitions. The company continues to identify, evaluate and pursue the acquisition of suitable strategic product opportunities that will add value to the business. The Group now plans to build on what has been achieved to date. A central financial and administrative function has recently been established based in new offices in Milton Keynes. In addition to our operations in Germany, we have recently established a new subsidiary in Japan which we have always recognised as a key market. Further initiatives are planned for France, Italy, Spain and the United States in the near future. I am sure that all shareholders will join me in expressing our gratitude to the senior management and staff who have contributed to the Group’s progress. We are conscious that much remains to be done. However York Pharma now has in place those key elements that should allow it to fully exploit its product portfolio and maximise shareholder value to budget and within the planned timeframe. Max Dyer Bartlett Chairman Chief Executive's review Since our last report we have made substantial progress in all areas of the business. Our pipeline is progressing well and maturing, our asset base has been strengthened, new operational capabilities are being established and our existing operations are developing well. Most pleasingly, we are ‘on track’ and ‘on budget’ in all sectors of the business. To expand on this positive progress, I am pleased to report in some detail hereunder on these activities. Pipeline Our pipeline currently comprises seven products/projects. Products span pre-clinical to pre-registration status, and cover many of the key therapeutic areas within prescription dermatology.
ongoing and entering clinical development in 2006 Intellectual Property The eleven patent families which protect York Pharma’s current R&D projects are owned and controlled by the Company. Additional IP is steadily being generated to secure York Pharma’s products and technologies going forward. Trade Marks are also under our own ownership; in particular the Abasol™ mark is being registered in all territories where commercialisation by York Pharma is anticipated. Current Operations The business was strengthened further with the acquisition on 1 February 2005 of Molecular Skincare Limited (‘MSL’) based in Sheffield. This business was a pioneer and developer of novel dermatological products, and now forms the basis of York Pharma’s R & D activities, with a dedicated team and exciting projects. York Pharma plc now has four subsidiaries, York Pharma (R&D) Limited (formerly MSL), York Pharma (UK) Limited, York Pharma GmbH and York Pharma KK (founded post year end). United KingdomPlc functions are located in the United Kingdom and your directors are meeting monthly to report on progress, review new opportunities and to plan for the future. York Pharma (R&D) Limited is located in Sheffield and is responsible for the discovery and development of York Pharma’s dermatological pipeline. York Pharma (UK) Limited is located in Milton Keynes, Buckinghamshire, and houses both UK commercial operations and group financial functions. Marketing planning is underway in anticipation that the United Kingdom will be the first territory worldwide in which Abasol™ will be commercialised. The UK dermatological pharmaceuticals market is valued at approximately US$ 545 million. GermanyYork Pharma GmbH has responsibility for regulatory affairs and clinical development. The offices in Homberg, close to Frankfurt, will also house the commercial functions for the domestic German market. After the United Kingdom, it is likely that Germany will be one of the principal mainland European territories in which York Pharma will build its own sales force and market Abasol™. The German dermatological pharmaceuticals market is valued at approximately US$ 746 million. EuropeFrance, Italy and Spain are the remaining European markets where York Pharma has expressed its intention to establish its own commercial presence. These dermatological markets are valued at US$ 627 million, US$ 455 million and US$ 364 million, respectively. JapanAfter the USA, Japan is the world's second-largest pharmaceutical market and represents a key territory for York Pharma. York Pharma KK has been founded to commercialise Abasol™ initially. Much of the Abasol™ clinical development programme was carried out in Japan; indeed, 61 centres in Japan undertook clinical studies on the product. This should provide an excellent springboard to support the regulatory submission in this important market. The Japanese dermatological pharmaceuticals market is valued at approximately US$ 1.3 billion. USA The USA, as the world's largest market, is also of major importance to York Pharma. However, for practical reasons, efforts are being focused upon Europe and Japan while the Company actively progresses its plans to register Abasol™ in the USA. A meeting with the US regulator is planned during the first quarter of 2006 to clarify the Company’s position with regard to data requirements for its lead product, Abasol™. The US dermatological pharmaceuticals market is valued at approximately US$ 4.7 billion. Abasol™ The Company’s lead product, Abasol™ (abafungin), is a new therapeutic molecule with a novel mode of action, offering features and benefits, which York Pharma believes will give it a competitive advantage.
There are other significant areas of dermatology and gynaecology in which Abasol™ may find a valuable use but the Company is concentrating its resources on these two commonly occurring conditions. Abasol has already benefited from a full and comprehensive research and development programme up to and including Phase III Clinical Studies. Nearly 3,000 patients have taken part in clinical trials involving a topically applied formulation of Abasol™ and the results have demonstrated levels of efficacy at least as good and, in some areas, significantly superior to currently marketed products. On 29 July 2005, the Company made its first regulatory filing of Abasol™ with the MHRA in the United Kingdom. An approval by the UK regulator would lead to further regulatory filings and approvals in other EU territories. In parallel with this activity, the Company is progressing towards regulatory filing in Japan and the USA which it hopes to make in the second half of 2006. The Market for Abasol™ Sales of dermatological products in the developed world are valued at US$ 10.4 billion and growing at 5% per annum. Within this market, Abasol™ will occupy the topical antifungal segment which is valued at approximately US$ 2.4 billion. Europe, the USA and Japan, the primary commercial targets, represent approximately 85% of this sales value; in accordance with our business plan, Abasol™ will therefore compete initially in a market valued at US$ 2.04 billion. Clinical testing has confirmed that Abasol™ is a well tolerated and effective medicine that has a distinctive profile and your Directors believe it has the potential to take a significant percentage of this market, making it a highly valuable asset. Abasol™ has the properties to extend its use into other therapeutic areas which will further enhance its value to the Company. YP001 The first product to emerge from York Pharma’s Skin Barrier Repair (SBR) Technology platform is YP001, a product for the treatment and prevention of atopic eczema (dermatitis), a disease characterised by redness and dryness of the skin and by flares of intense itching and scratching. A recently published medical review has revealed that up to 66% of children seen by their primary physician with clinically defined atopic dermatitis are not immunologically atopic. This strongly supports York Pharma’s earlier discoveries surrounding skin barrier dysfunction and its role in the development of atopic eczema. The relevance of the skin barrier is underlined by the fact that the sites usually involved in atopic eczema are also those that have a relatively thin skin barrier, such as the face, inside flexor of the arm, behind the knees and the eyelids. Changes in genes that are associated with eczema (dermatitis) and which regulate the thickness and function of the skin barrier have been identified. YP001, which will shortly enter Phase ll clinical development, is designed to restore and maintain the integrity of the skin barrier by normalising the activity of proteolytic enzymes that, when abnormal, can otherwise lead to premature breakdown of the barrier in genetically predisposed individuals and facilitate access of irritants and allergens. YP001 consists of Generally Regarded as Safe (GRAS) ingredients which have been shown in vitro and in vivo to have potent anti-protease activity and to exert a significant beneficial effect on the skin. YP001 is intended to become the first product that optimally restores barrier function, correcting the underlying factor that predisposes to clinical disease. On 30 August 2005, York Pharma announced the successful clinical validation of Skin Protease Inhibition (SPI), following results generated from 374 test sites on the skin of 36 volunteers. From its leading position in this field, the Company will draw upon this SPI technology platform to refine the final formulation of YP001 for progress into a Phase IIa clinical study. The Market for YP001 The prevalence of eczema has been rising progressively in developed countries since the 1940’s (Cork et al, The rising prevalence of atopic eczema and environmental trauma to the skin. Dermatology in Practice, 2002, Vol 10, No 3, pp 22-26; Taylor B, et al, Changes in the reported prevalence of childhood eczema since the 1939-45 war. Lancet 1984; ii: 1255-1257.). The prevalence of atopic eczema continues to increase annually and now affects 15 to 25% of children and 2% of adults, causing an enormous amount of suffering and distress at a crucial time in a child’s development. Currently the eczema market is valued at US$ 2.5 billion and accounts for approximately 10-20% of total referrals to dermatologists. The market segment has experienced recent growth due to the continued rising prevalence of the condition and introduction of new products. One of the products, pimecrolimus which has been commercialised internationally by Novartis for a relatively short period of time, achieved 2004 sales of US$ 349 million thereby illustrating the market’s demand for effective, non-steroidal treatments. However, the FDA in the USA has recently required that safety warnings be added to the prescribing information of these newer immunomodulatory products advising their use only as second-line agents and for short periods of time. This reinforces further the market opportunity for a product having the profile of YP001. YP002 YP002 will be the second product generated from the SBR Technology platform and will be marketed as a point of care (POC) diagnostic test to identify individuals with a dysfunctional skin barrier that would benefit from preventative or therapeutic use of SBR Technology products, including YP001. YP002 arises from important discoveries made by York Pharma scientists into the genetics of the skin barrier. They have identified certain groups of genes that specify proteins that maintain the integrity of the skin barrier. By analysis of proteolytic profiles, the test will identify individuals whose skin barrier is not fully functional, giving rise to sensitivity to environmental agents, such as soaps and detergents, and the risk of dermatitis. The diagnostic test will enable individuals with an impaired skin barrier to take positive therapeutic steps prior to the cascade of events resulting in overt clinical skin disease. Importantly, it will also provide a valuable tool for clinicians and patients to monitor the response to skin barrier therapy. The YP002 product will add value to all therapeutic products set to emerge from the SBR Technology platform and therefore represents a valuable part of the Company’s portfolio. York Pharma recently announced collaboration with St George’s Hospital Medical School Biomics Centre and the receipt of an Innovation Promoters grant of £25,000 for the development of YP002. The Market for YP002 Most body systems or major organs can be subjected to a ‘health check’ and remedial action taken if a degree of dysfunction is observed. The skin is the body’s largest organ and currently no such proprietary ‘health check’ exists to measure the status of the skin barrier. YP002 aims to address this need and as such will create a new market for measurement of both skin integrity and the response to dermatological treatment. YP003 Approximately 85% of psoriasis patients have mild to moderate disease, but are not appropriate for treatment with the newer biologics due to their product profiles, associated high cost and required administration by injection. York Pharma’s antipsoriatic product, YP003, is a small molecule that will be formulated as a cream for the topical management of psoriasis. York Pharma scientists have researched a new therapeutic target and mechanism of action for the treatment of psoriasis. In the process, the Company has discovered an existing medicinal product that is a potent inhibitor of the new therapeutic target. York Pharma has applied for patents extending the use of this product to a variety of conditions, including psoriasis, and has secured the necessary freedom to commercialise the YP003 product exclusively. Results of in vitro and in vivo tests have confirmed the ability of YP003 to alter significantly the abnormal hyperproliferation of epidermal cells, characteristic of the disease. By inhibiting a particular biochemical pathway that is over-active in psoriasis, YP003 triggers cells that are abnormally proliferating to stop dividing and undergo final differentiation, a principal therapeutic objective in psoriasis. The present gold standard therapy for mild to moderate psoriasis consists of the vitamin D analogues, such as calcipotriol. Tests conducted to date with YP003 give York Pharma confidence that, pending confirmatory studies in man, the product will be well differentiated versus the competition by having a lower risk of skin irritancy, a more favourable safety profile and efficacy that is not diminished with ongoing administration. As reported on 30 June 2005, YP003 has entered a Phase lla “proof of concept” clinical trial in psoriatic patients. A comparison is being made against a placebo gel and against the standard of care topical product, calcipotriol, as a positive control. The results of this study are expected before the end of 2005. The Market for YP003 Psoriasis affects approximately 14 million people with the prevalence varying by market, ranging from approximately 0.5% in Japan, 2% in the USA and UK and 2.5% in Scandinavia. The psoriasis market is valued at approximately US$ 630 million but independent analysts have projected it to grow to US$ 2.0 billion by 2008. Current therapies can be limited in their use by tolerance to treatment, some toxicity and not least cosmetic acceptability. YP003 has the potential to provide an effective treatment without these major drawbacks. YP004 Although YP004 is at the pre-clinical programme stage, it has a major potential in the treatment of cancers, including melanoma. York Pharma scientists have identified that the relevant drug target is expressed in melanoma skin cancer cells, thus making it of particular interest for evaluating that condition. YP004 is aimed at the therapeutic inhibition of a novel receptor characterised by York Pharma, which is expressed on the surface of the cell in a variety of cancers including melanoma and renal cell carcinoma. In a model of renal cell carcinoma, an experimental antibody that inhibited the receptor caused an important and marked shift from a state of ongoing proliferation to a state of terminal differentiation in the cells targeted by the therapy. Recent reports predicting a trebling in skin cancer over the next 30 years illustrates the growing problem which YP004 may address. Malignant melanoma kills 1,700 people annually in the UK; 7,300 new cases are also diagnosed each year for which new therapeutic treatments are needed urgently. YP005 On 19 July 2005 the Company announced the acquisition of patents and know-how rights relating to sphingosine-1-phosphate (S1P) from the inventors, headed by Professor Monika Schaefer-Korting and the Freie Universität Berlin. S1P is a pre-clinical product which may have potential in hyperproliferative skin disorders such as acne. S1P has a novel dual mechanism of action which is aimed at preventing the overproduction of corneocytes at the entrance of sebaceous follicle ducts believed to be a primary cause of acne, whilst also having complementary anti-inflammatory properties. The profile of S1P has the potential to become a breakthrough treatment for this skin condition. Professor Schaefer-Korting`s group has particular expertise in the development and evaluation of novel topical drug carrier systems and is focused currently on nanostructured lipid carriers. In pre-clinical tests, these carriers were found to deliver S1P to the skin follicle where acne starts. The Freie Universität Berlin is one of the world’s leading teams in dermatological research and the Company will continue to collaborate with them on the future development of S1P. The Market for YP005 The global pharmaceutical acne market is currently valued at US$ 2.3 billion. Acne is a common condition with 80-85% of individuals experiencing some form of acne during the course of their lives. Approximately 17 million people are believed to be affected by the condition in the US market alone. Patients are highly motivated to seek treatment given the age of individuals affected and the visible and embarrassing symptoms caused by the condition. The market is ripe for a product that is well tolerated, effectively manages the symptoms of the condition and avoids the antibiotic resistance concerns associated with some existing products. YP005 has the potential to address this market need. YP006 The development and use of Abasol™ in onychomycoses has, since our last report, been clearly defined as a new and separate project. Onychomycoses – fungal infections of the nails and nailbed – is a common and chronic condition. Current locally applied treatments offer only low cure rates and lengthy treatment regimens, whilst oral treatments which offer a higher degree of efficacy have some concerns over toxicity which limit their use in what is a non-life threatening condition. Abasol™ has the potential to offer a treatment which is both safe and effective, with an important competitive advantage; Abasol™ not only kills fungus when it is in the actively growing phase but also kills the resting spores which may become active after an apparent cure has been achieved, once again starting the cycle of recurrent infection. Once the most appropriate dosage form for delivering Abasol™ into and through the nail has been selected and validated, the product will proceed immediately into clinical development. The Market for YP006 The market for topical products to treat onychomycoses is valued at approximately US$ 800 million. The prevalence of onychomycoses varies by market with a recent study indicating 2-3% of the US population to be afflicted whilst another study conducted in Finland found it to affect 13% of that population. Both studies indicated that the prevalence rose to approximately 25% in elderly patients. Approximately 26% of diabetics, a growing patient population, are afflicted by the condition. Presently, topically applied products have relatively poor efficacy whilst orally administered systemic products have side effect profiles which often do not justify their use in most cases. One of the leading products in this area is topically applied ciclopiroxolamine which can take up to six months to demonstrate a clinical improvement in the condition, and a complete cure is reported in less that 10% of treated patients. Despite this profile, the product generated c US$ 140 million sales in 2003 in the US market alone. A product that is well tolerated and more effective than present alternatives has the potential to capture and significantly grow the present US$ 800 million market. YP006 has an attractive profile for delivering that opportunity and we look forward to its development and ultimate commercialisation. Note: Market values have been taken from data published by IMS for the twelve months ending 30 June 2005 People Your board of directors continues to meet monthly to ensure the development and well-being of the Company. During the period, Geoffrey Simmonds, our non-executive Chairman retired and was replaced by Max Dyer Bartlett. We thank Geoffrey most sincerely for his support and wise counsel since the flotation of York Pharma and welcome Max into the business at an exciting time in our international development. We have also strengthened expertise in critical areas such as scientific research, commercial development and finance & administration. The company has made clear its intention to commercialise its own products in key markets, including the United Kingdom, France, Germany, Italy, Spain, the USA and Japan. Neil Symmonds joined York Pharma (UK) Limited on 1 September 2005 as Sales and Marketing Director. Also in September 2005, Toshio Nagae was appointed President of York Pharma KK, our newly founded Japanese operating company. Sheran Lobley was appointed as Group Financial Controller and joins Neil Symmonds in our new office in central Milton Keynes, Buckinghamshire. We welcome them and all other new team members to the York Pharma ‘family’. The Future This statement is intended to keep all our shareholders fully briefed on the progress of the company and its current and future plans. We operate a comprehensive web site at www.yorkpharma.com and should anyone wish to obtain information provided in earlier announcements and press releases, then these are readily available on our web site. We intend to develop York Pharma into a world-class dermatological specialist. This will require our company to have products in its portfolio to treat the principal dermatological conditions. These include fungal infections, psoriasis, eczema and acne. These four conditions represent the lion's share of the expanding global dermatological market and are areas in which we have an active presence. As always, it has taken great commitment and dedication from the York Pharma team, our advisers and supporters to achieve so much during the period; we thank them all for their efforts during the last twelve months. York Pharma is set for an exciting period of growth; we are well financed, we have a great team and team spirit and a first rate pipeline. We are focused on continuing to deliver upon our milestones and business objectives to the benefit of both our shareholders and our team. In conclusion, we are pleased to have successfully completed our first full financial year as a public company and we are also grateful to our shareholders, both established and new, who have supported us over this same period. We look forward to reporting to them further going forwards. By the time of the next interim statement, we should be in a position to be able to report additional positive and significant progress for our business. Terry I Sadler Chief Executive Officer For further information:
Notes to editors: About York Pharma plc York Pharma is an AIM-listed strategic acquirer, developer and marketer of pharmaceutical products in the field of dermatology. Its portfolio now embraces skin diseases that make up more than 70% of the global $10bn dermatology market, and its lead product, Abasol for the treatment of fungal infections of the skin, has been filed for European marketing approval. For further information, please go to www.yorkpharma.com |
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