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York Pharma plc Interim Results -
Monday 23rd May 2005
Interim results for the six months ended 31 March 2005 Directors Michael Garrison Commercial Director (appointed 7 February 2005) Secretary and registered office Sue J Keast, 8 Baker Street, London, W1U 3LL. Company number 04466213 York Pharma plc Highlights
· Pre-tax loss of £778,387 in line with management expectations · Cash of £4.1 million at the end of the period · Abasol™ on track for first regulatory filing for the treatment of fungal infections of the skin in mid 2005 · £2.8 million of new funds raised in December 2004 by way of a placing with institutional and other investors · Institutional shareholder base expanded · Acquisition of Molecular SkinCare through share for share exchange completed, boosting the Company's product pipeline, management team and its cash reserves by approximately £2.0 million · Portfolio now covers skin diseases that represent over 50% of the US$10 billion prescription dermatology market · Relatively low risk product portfolio including one product in pre-registration and two entering Phase II development · Management team strengthened in scientific, clinical and commercial areas Geoffrey M Simmonds, Chairman, commented: We have made great strides over the last six months, having strengthened our product portfolio and management team as well as improving our financial position. We are poised for our first regulatory filing of Abasol™ in mid 2005 and the start of Phase II studies on YP001 for atopic eczema and YP003 for psoriasis. The true value of the asset base of our business is being recognised and we have expanded our shareholder base with the addition of a number of leading institutional investors. The Company is poised for further development and international growth. The remainder of 2005 will be a period in which York Pharma will generate significant newsflow as important milestones for the company are met and new initiatives are instigated. Contact Details: York Pharma plc Terry Sadler, CEO 0870 066 4453 Northbank Communications Financial Enquiries: Emma Palmer/Rowan Minnion 0207 886 8150 Media Enquiries: Douglas Pretsell 0207 886 8150 York Pharma plc Chairman and Chief Executive's statement
Corporate objectives York Pharma is a speciality pharmaceutical company. Its stated objective is the acquisition, development and commercialisation of novel prescription dermatological products. The company is committed to bringing to both patients and healthcare professionals effective and safe medicines of the highest quality for the superior treatment of diseases of the skin. Financial information The interim results for the six months ended 31 March 2005 are in line with management expectations and show a pre-tax loss of £778,387 (31 March 2004 - loss £31,291) for the period. Following a placing with institutional and other investors in December 2004, which raised £2.8 million and a further approximatelyc £2.0 million arising from the share for share acquisition of Molecular SkinCare, cash at the end of the period stood at £4.1 million after having written off all development costs in the period. These results reflect the Company's investment in the strategic expansion and accelerated development of our portfolio of products. Business review During the period under review, York Pharma has, via the acquisition of Molecular SkinCare Ltd (MSL), strengthened its product portfolio in keeping with its stated corporate objectives. York Pharma’s portfolio now comprises four pre-clinical or clinical products and a diagnostic, in addition to a platform technology for the discovery and development of dermatology products - the Skin Barrier Repair Technology (SBR Technology) platform. In addition to the antifungal market in which Abasol™, York Pharma’s lead product, will operate, the Company has added innovative dermatology products for the atopic eczema/irritant contact dermatitis and psoriasis markets. Combined, these three therapeutic markets make up over 50% of the total prescription dermatology market, valued at approximately US$10 billion. York Pharma is pleased to have such a robust and strategically focused dermatology product portfolio comprised of innovative products that address significant unmet market needs. Abasol™ Abasol™ (abafungin) is a totally new therapeutic molecule with a novel mode of action, and offering features and benefits that York Pharma believes will give it a meaningful competitive advantage in the important topical antifungal market. The global antifungal market in which Abasol™ will compete is valued at approximately $1.97 billion or approximately 20% of the overall global dermatology market, illustrating the potential value and strategic importance of the product to the Company. The spectrum of antifungal activity of Abasol™ is wide and includes yeasts. Laboratory tests have demonstrated activity against Candida (a principal cause of fungal infections) that is superior to that of other anti-Candidal agents, independent of inoculum size or the quantity of Candida that is present initially. Abasol™ has also demonstrated marked in vitro antibacterial activity against certain pathogenic species. If this activity is replicated in the clinic, then Abasol™ may have a further important advantage over other antifungal treatments, particularly in the treatment of mixed fungal/bacterial infections or superinfections. Abasol™ can also penetrate the nail bed matrix, a characteristic lacking in many existing therapies. Abasol™ is therefore of potential value in the treatment of fungal infections of the nail. The initial indication for Abasol™ is the treatment of fungal infections of the skin; subsequently, we are planning to expand the indications to include fungal infections of the nails. The potential for further indications is being evaluated but may include vaginal candidiasis, vulvovaginitis (especially where bacteria are also implicated), dermatitis associated with various skin bacteria and possibly some forms of acne. Manufacture of commercial scale quantitiesnew batches of abafungin has been completed and York Pharma is now proceeding toward securing marketing authorisations in Europe, USA and Japan. The Company’s first regulatory filing in Europe remains on target for mid 2005. Skin Barrier Repair Technology (SBR Technology) The skin barrier provides a valuable protection for individuals from their environment and, when it is impaired, can lead to a variety of skin conditions such as atopic eczema, irritant contact dermatitis and sensitive skin. The Company’s SBR Technology platform seeks to exploit discoveries that enable the restoration and maintenance of skin barrier function by correcting the abnormal protease activity and impaired moisture maintenance functions that can result in a variety of significant skin diseases, including atopic eczema. Currently, the global market value for atopic eczema and irritant contact dermatitis products is approximately $2.5 billion, or 25% of the overall $10.0 billion dermatology market. YP001 The first therapeutic product to emerge from York Pharma's SBR Technology platform is YP001, a product for the treatment of atopic eczema (atopic dermatitis), a disease characterised by intense itching, scratching, redness and dryness of the skin. The prevalence of atopic eczema is increasing, now affecting 15 to 25% of children and 2% of adults and causes an enormous amount of suffering at a crucial time in a child's development. A medical review (Flohr et al, J Allergy Clin Immunol, Vol. 114, No. 1, 150-158) has revealed recently that approximately 66% of children with clinically defined atopic dermatitis in the community are not immunologically atopic. This strongly supports earlier discoveries by the Company surrounding the importance of skin barrier dysfunction in the development of atopic eczema. The physical sites predisposed to 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, underlining the relevance of skin barrier breakdown as a very important event in the development of atopic eczema. Changes in genes that regulate the thickness and function of the skin barrier have been identified. YP001 is expected by York Pharma to be marketed as a topical cream comprised of Generally Regarded as Safe (GRAS) ingredients aimed at preventing flares of eczema and will shortly enter Phase llII clinical development. To date, in vitro and in vivo data has confirmed that the ingredients of YP001 have substantial anti-protease activity and exert a significant beneficial effect on minimising water loss from the skin. YP001 is expected to become the first dermatological product that optimally restores barrier function, correcting a major underlying factor that predisposes to clinical disease. Existing therapies such as topical steroids are aimed at controlling the clinical flare rather than correcting the underlying factors predisposing individuals to the disease and prolonged use may cause side effects such as thinning of the skin. YP002 The second product to arise from the SBR Technology platform, YP002, will be marketed as a point of care (POC) diagnostic for identifying individuals with a dysfunctional skin barrier that would benefit from our SBR Technology products, including YP001. The product arises from important discoveries made by MSL scientists about the genetics of eczema and the resulting abnormal composition of proteins associated with the impaired skin barrier. The test will enable those having 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 addition to our portfolio. The collaboration announced recently 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, emphasises the product's commercial and therapeutic potential. 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 global psoriasis market is valued at approximately $630 million but independent analysis (SG Cowen 2004 Psoriasis Survey) has projected that it will grow to $2.0 billion by 2008. Approximately 85% of patients have mild to moderate disease which is not appropriate for treatment with the newer biologics due to their product profile, associated high cost and required administration by injection. York Pharma's anti-psoriasis product YP003 is a small molecule that is expected to be formulated as a cream for the topical management of psoriasis. It is anticipated that YP003 will shortly enter a Phase IIa proof of concept clinical trial in psoriatic patients. A comparison will be made against a placebo cream and against the standard of care topical product, calcipotriol, as a positive control. This study is anticipated to complete by year end. YP003 acts on a new therapeutic target discovered by MSL scientists and so has a novel mechanism of action for the treatment of psoriasis. In addition, York Pharma has discovered that an existing medicinal product is a potent inhibitor of the therapeutic target. It has generated new patents covering its use in a variety of conditions including psoriasis and has secured the necessary freedom to commercialise the product exclusively. Data generated by in vitro and in vivo tests has 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 from the competition by having a lower risk of skin irritancy, a more favourable safety profile and efficacy that is not diminished with ongoing administration. YP004 Although YP004 is at the pre-clinical stage, it has a major potential in the treatment of cancers, including melanoma. York Pharma scientists have discovered that the relevant target for this antibody is expressed on melanoma and other cancer cells and this presents an exciting opportunity for the development of a new treatment. The Company received a Research and Development grant of £75,000 from the Department of Trade & Industry (DTI) to support further development of the project and is now embarking on a series of experiments to validate YP004 in a range of cancers after which York Pharma will determine the optimal out-licensing or partnering strategy. York has characterised the receptor and found that its inhibition causes 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 illustrate the growing problem which YP004 may play an important role in addressing. Malignant melanoma kills 1,700 people annually in the UK alone with 7,300 new cases diagnosed each year, further underlining why new therapeutic treatments are needed urgently. People In the same way as we are confident about our portfolio of products, so wWe are delighted with the strengthening of the York Pharma team which has occurred with our acquisition of Molecular SkinCare. In particular, we have strengthened our management expertise in critical areas such as scientific research, clinical dermatology and commercial development of our enlarged portfolio. 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. In other territories, the Company will seek to realise value from its portfolio through partnerships, licensing and entering into distributor arrangements. These activities now fall under the remit of Mr Michael Garrison, who we welcome warmly to the board of York Pharma Plc as Commercial Director. Prior to his appointment, Michael was CEO of Molecular SkinCare having 26 years of pharmaceutical industry experience in the USA and global markets. Michael will also be responsible for seeking out and evaluating further product acquisition opportunities. Following the acquisition of MSLMolecular Skincare (renamed York Pharma (R&D) Limited), the Company now has its own small but dedicated team of research scientists who focus specifically upon identifying the underlying causes of skin diseases and, through that understanding, to develop novel and innovative treatments. Dr Simon Ward, our Chief Scientific Officer (CSO), leads the team based within the Sheffield University medical school complex. Dr Ward graduated from The London School of Pharmacy with a Joint Honours degree in Pharmacology and Toxicology. After research appointments in the pharmaceutical industry, he went on to secure a D.Phil in the Department of Human Anatomy, University of Oxford. Prior to founding Molecular SkinCare, he joined the University of Sheffield and became a Reader in the Division of Genomic Medicine, building a strong research laboratory with extensive collaborations. With over 15 years experience in both industrial and academic research including toxicology, pharmacology and the conduct of preclinical trials, the Company has a talented and experienced CSO. Moving development projects from the laboratory into the clinic is always a quantum step and we are most fortunate to have the services of Dr Michael Cork as our Medical Adviser to guide this transition. Dr Cork, an internationally recognised clinical dermatologist with specific expertise in the area of childhood atopic dermatitis and gene-environment interactions in the development of atopic dermatitis, provides the Company with key clinical insight and development expertise. Currently at the University of Sheffield, Michael holds the position of Head of Academic Dermatology and Reader in the Division of Genomic Medicine. He also holds active dermatology clinics at both the Royal Hallamshire Hospital and Sheffield Children's Hospital as a Senior Consultant Dermatologist which allows the Company to maintain a constant link with a world class dermatology clinic. Our Managing Director in Germany and Chief Operating Officer, Lothar Nau, has both wide and current knowledge of the international prescription dermatology market and is ideally placed to build both our presence in Germany and also to take responsibility for the establishment of our international operating companies. Administration With the addition of our operational base in Sheffield we have also strengthened our Company wide administrative activities and procedures, particularly in relation to the filing and maintenance of intellectual property, as well as project management of our R&D programmes. Intellectual property is key to any pharmaceutical or technology based business and we have ten nine wholly owned patent families within the Company. This provides York Pharma with the intellectual assets to freely develop and commercialise its own products whilst also enabling the Company to generate value through future licensing agreements. The Future We are poised for our first regulatory filing of Abasol™ in mid 2005 and the start of Phase II studies on YP001 for atopic eczema and YP003 for psoriasis. The underlying value of the asset base of our business is being recognised and the Company is poised for further development and international growth. The remainder of 2005 will be a period in which York Pharma will generate significant newsflow as important milestones for the company are met and new initiatives are instigated. It has taken great effort and dedication from the York Pharma team, our advisers and supporters to achieve so much in such a short period of time; we thank them all for their past efforts and we will continue to recognise and harness their goodwill and enthusiasm to take our enterprise to its next level of development. Geoffrey M Simmonds Terry I Sadler Chairman Chief Executive •23 May 2005
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