Preliminary Results for the Year Ended 30 September 2009

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Nov 25, 2009

Porton Down, UK, 25 November 2009: GW Pharmaceuticals plc (AIM: GWP), the developer and manufacturer of a range of new cannabinoid medicines, including Sativex®, announces its preliminary results for the year ended 30 September 2009.


Positive results in Sativex Phase III MS spasticity trial and long term randomised withdrawal study

Sativex MS spasticity European regulatory submission filed with outcome expected H1 2010

Sativex European launch preparations well underway

Marketing teams at partners, Bayer and Almirall, preparing for launch

Sativex manufacturing process brought in-house, thereby securing control over full supply chain

GW commercial manufacturing licence granted by regulatory authorities

Sativex Phase IIb/III cancer pain trial, funded by Otsuka as part of the US development programme, completed recruitment (announced today), due to report results in Spring 2010

Sativex MS spasticity regulatory submission filed in Canada with outcome expected H2 2010

Highly promising product pipeline in cancer, epilepsy and psychiatric illness emerging under the GW-Otsuka cannabinoid research collaboration

GW Metabolic Research Laboratory established. Phase II trial on novel cannabinoid medicine for the treatment of dyslipidaemia in Type II diabetes patients due to commence Q2 2010


Net profit after tax for the year of £1.5m (2008: £8.2m loss)

Turnover increased to £24.1m (2008: £11.8m) reflecting revenue growth from milestone income, Otsuka alliance and Sativex sales

Cash and short term deposits at 30 September 2009 increased to £20.6m (2008: £14.1m)

Dr Geoffrey Guy, GW’s Chairman, said: “During 2009, we have delivered our maiden full year profit, doubled turnover and improved our cash position. We also reported positive Phase III data for Sativex in MS spasticity and regulatory submissions are now underway in both Europe and Canada. In addition, we have made good progress with our US cancer pain programme and in advancing the product pipeline in exciting new areas.

“We are currently working with our marketing partners towards the first major commercial launch of Sativex. With this landmark event and further material clinical data due next year, I believe that 2010 will see GW complete the transition into a commercial stage pharmaceutical business with excellent growth prospects.”

An analyst presentation of the interim results is being held today at 09.30 at Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB.  Please contact Juliet Edwards at Financial Dynamics on +44 20 7269 7125 for details. An audio webcast of the presentation will be available on GW’s website at www.gwpharm.comlater this afternoon.


GW Pharmaceuticals plc (25/11/09) + 44 20 7831 3113
Dr Geoffrey Guy, Executive Chairman (Thereafter) + 44 1980 557000
Justin Gover, Managing Director 

Financial Dynamics + 44 20 7831 3113
Ben Atwell / John Dineen 

Investec Bank plc + 44 20 7597 4000
Patrick Robb

GW Pharmaceuticals plc
(“GW” or “the Group”)

Preliminary Results For The Year Ended 30 September 2009


GW has made excellent progress during the last year. Following positive results in the Sativex® Phase III study in Multiple Sclerosis (MS) spasticity, reported in March 2009, GW filed a regulatory submission in the UK and Spain, the outcome of which is expected in H1 2010. In anticipation of a positive outcome, the Group has obtained regulatory approval for its commercial manufacturing facility and is working closely towards launch with the Group’s marketing partners, Bayer HealthCare in the UK, and Almirall S.A. elsewhere in Europe. A regulatory submission has also now been filed for Sativex in MS spasticity in Canada.

In addition to Sativex for MS, GW has now completed patient recruitment into a large Phase IIb/III study of Sativex in cancer pain. This study, which is being funded by our United States partner, Otsuka Pharmaceutical Co. Ltd, and is targeted primarily at the US, is on track to report results in Spring 2010. GW and Otsuka are already setting up Phase III studies which are anticipated to start following the results of the Phase II/III trial.

The financial results continue a healthy trend established over recent years of increasing turnover and reduced cash burn, and it is pleasing to be announcing our maiden full year profit. GW has successfully implemented a business model which provides for sustained investment in its product pipeline whilst at the same time maintaining a strong cash position as well as a focus towards profitability. An important feature of this model is the relationship with Otsuka, which provides funding for both the US development of Sativex and the company’s cannabinoid pipeline development in Central Nervous System (CNS) and cancer.

The Group’s cannabinoid pipeline continues to make good progress. We have expanded our research this year in the field of diabetes and metabolic syndrome and are preparing to enter Phase II trials in the treatment of dyslipidaemia in Type II diabetes. In addition, a highly promising product pipeline in cancer, epilepsy and psychiatric illness is emerging under the GW-Otsuka cannabinoid research collaboration

With the first potential major approval for Sativex potentially in prospect, launch preparations underway, data from the US cancer pain Phase IIb/III trial due early next year and Phase III preparation having already commenced, partners for Sativex secured in key markets, a highly promising earlier stage pipeline and a robust financial position, we are confident about the future prospects for GW.


The regulatory strategy for Sativex in Europe is to first obtain approval for the indication of MS spasticity. Following initial approval in the UK and Spain, marketing authorisation for this indication will be sought in the rest of Europe and certain other territories around the world. In the US, cancer pain has been selected as the initial target indication for approval. GW expects to expand the licensed indication of Sativex in Europe and other territories to cancer pain in the future based on the data being generated in the US. Longer term, the opportunity for Sativex may be expanded into other indications for which positive Phase II/III data has already been generated.

In Canada, MS neuropathic pain was the first approved indication, and this has been successfully followed by the approval in cancer pain. These approvals were obtained with earlier data under the Notice of Compliance with conditions (NOC/c) policy.

MS Spasticity

In May 2009, a regulatory submission was filed for Sativex for the symptomatic relief of spasticity in people with MS, and both the UK and Spanish regulators are currently in the process of conducting their review. This submission followed positive results announced in March 2009 from GW’s pivotal Phase III double-blind randomised placebo-controlled study of Sativex in patients with spasticity due to MS, who have achieved inadequate relief with existing therapies. This study was performed in response to a request by the UK regulator and was designed with formal scientific advice from both the UK and Spanish regulatory authorities.

This Phase III study used an enriched design whereby 572 patients initially received Sativex for 4 weeks in a single-blind manner (Phase A), following which eligible Sativex responders (n=241) were randomized to continue on Sativex or switch to placebo for a further 12 weeks in a double-blinded manner (Phase B). The prospectively defined primary efficacy endpoint of the study - the difference between the mean change in spasticity severity of Sativex vs Placebo in Phase B - was highly statistically significantly in favour of Sativex (p=0.0002). The difference between Sativex and placebo was also significant for a number of secondary endpoints. 74% of Sativex patients compared with 51% of patients on placebo achieved an improvement of greater than 30% in their spasticity score over the entire study (p=0.0003). In addition, statistically significant improvements were also seen in spasm frequency (p=0.005), sleep disturbance (p<0.0001), patient global impression of change (p=0.023), physician global impression of change (p=0.005), carer global impression of change (p=0.005) and the Barthel Activities of Daily Living Index (p=0.007).

The study also provided further evidence of Sativex’s reassuring safety profile. The adverse event data in this study was superior to previous Sativex studies – an improvement which resulted from the modified dose titration regimen employed in the study. The adverse event profile in Phase B (after the four weeks in Phase A) on Sativex was essentially similar to that of placebo.

In addition to the Phase III data, GW also announced this year positive results from a randomised withdrawal study, providing evidence of long term efficacy.

MS Spasticity Regulatory Strategy

As stated above, a regulatory submission has been filed in the UK and Spain under the decentralised procedure. Under this procedure, the UK acts as the Reference Member State. We expect to secure approvals in these two countries in H1 2010. Following these initial approvals, we intend to seek wider approval during 2010 in additional European countries via the mutual recognition procedure.

Beyond Europe, we have filed for a full Notice of Compliance (NOC) approval in this indication in Canada and have also filed a “Section 23” submission in New Zealand. We intend to file in other territories around the world during 2010.

Cancer Pain

In 2007, GW obtained approval for Sativex in Canada in the indication of cancer pain.  This approval was obtained under the Canadian Notice of Compliance with Conditions (NOC/c) policy on the basis of a single positive 177 patient Phase II trial conducted in Europe.

GW’s ongoing cancer pain clinical programme is being wholly funded by Otsuka who have the US rights to this product. These trials are designed to obtain approval in this indication from the Food & Drug Administration (FDA), but it is also intended that they form the basis of a future European regulatory application in this indication. We have taken scientific advice from the European Medicines Evaluation Agency (EMEA) which confirms the US trials programme to be appropriate for European regulatory purposes.

The first major US trial carried out in collaboration with Otsuka has completed patient recruitment and is due to report results in Spring 2010. This five-week, randomized, placebo-controlled study is a Phase IIb/III dose ranging study in 360 patients. The primary objective of the study is to evaluate the efficacy and optimum dose range of Sativex in these patients as an adjunct to their pre-existing pain medications. The study has recruited in the US, Europe, South Africa and Latin America.

The current US development programme anticipates two further Phase III trials prior to a subsequent submission of a New Drug Application to the FDA. GW and Otsuka have already commenced preparation for these two trials in order that they may commence as soon as possible following the Phase IIb/III trial data.

All data generated from the cancer pain trials as part of the US collaboration with Otsuka will be used by GW for submissions to regulatory authorities in Europe and elsewhere.

Neuropathic Pain

In 2005, GW obtained approval for Sativex in Canada in the indication of neuropathic pain in MS.  This approval was obtained under the Canadian NOC/c policy on the basis of a single positive Phase III trial.  In recent years, GW has generated positive results from clinical trials in a number of models of central and peripheral neuropathic pain. These data may contribute to future regulatory filings in Europe and elsewhere in these indications. Following the initial approval for Sativex in Europe in MS spasticity, GW will consider adding to this evidence base.


In July 2009, GW announced that it had passed a Good Manufacturing Practice (GMP) inspection by the UK regulatory authority of its new in-house commercial manufacturing facility for Sativex, and a GMP Certificate and Manufacturer’s/Importer’s Licence has been issued, enabling the facility to act as the principal manufacturing site for the anticipated European commercial launch of Sativex. This commercial licence adds to GW’s previous licences to manufacture clinical trials materials and to manufacture product for named patient supply.

The new GW manufacturing facility is initially able to produce quantities of Sativex sufficient to treat 25,000 patients per year. In addition, GW has put in place arrangements at its manufacturing site to expand this capacity in order to respond to increased demand in the coming years.

Over recent years, GW has built up considerable levels of stock such that GW is well placed to deal with the increase in demand that is expected following European regulatory approvals. GW currently holds stock at various intermediate stages of the manufacturing process sufficient to treat approximately 25,000 patients for one year.

In addition to acting as the commercial manufacturer, GW has also this year taken over responsibility for commercial-scale extraction, which had previously been sub-contracted. As a result of these steps, GW can now perform all steps of the manufacturing process in-house, thereby securing control over the supply chain for Sativex.


The Sativex marketing rights in the UK are held by Bayer HealthCare and the rights in Spain held by Almirall. Both marketing partners are now well advanced in preparation for Sativex’s launch.

The Sativex launch team at Bayer will leverage their leading position in the field of MS disease modifying treatments, established through its Betaferon® product, to ensure the successful launch of Sativex. Through marketing Betaferon, Bayer has established close relationships with key opinion leaders and patient organisations in the MS field. The marketing team and medical advisors working on Sativex are derived from Bayer’s current MS team. In addition, Bayer has in place eight MS specialist sales persons for Betaferon targeting the 85 MS centres in the UK and these individuals will be responsible for the Sativex sales effort. A further team of healthcare development professionals   have   been   employed  by  Bayer  to  inform  NHS budget-holders  around  the  UK  about the forthcoming launch of Sativex and the potential  budget impact of the product. The various functions within Bayer have established close working relationships with their relevant counterparts at GW and an intense effort is now underway in order to ensure a successful product launch.

Sativex has been available as an unlicensed medicine in the UK since 2006 and this provides valuable clinical experience for commercial launch. Over 2,400 UK patients have received Sativex on prescription to date (including 400 ex-trial patients), and over 2,000 UK physicians have prescribed the medicine. 95 per cent of UK Primary Care Trusts (PCTs) have reimbursed Sativex on prescription.

The Sativex launch team at Almirall benefits from Almirall’s position as Spain’s largest domestic pharmaceutical company. Almirall’s last reported annual sales in Spain exceeded €500m, of which €168m related to neurology products. Almirall has employed a central European brand and marketing team for Sativex as well as a local team for each individual country, including Spain. In Spain, Almirall will market Sativex through a dedicated sales force of Sativex specialists. There are 34 key MS hospital centres in Spain, of which nearly half already have experience of Sativex on a named patient prescription basis. As with Bayer, GW has a close working relationship with all relevant functions within Almirall as we work together towards launch in Spain and thereafter in the rest of Europe.


Although Sativex awaits regulatory approval outside of Canada, the medicine can be prescribed by physicians in countries around the world as an unlicensed medicine. The basis on which Sativex may be prescribed depends upon clinical judgement of doctors in relation to specific nominated patients. No marketing or promotional activity is permitted for unlicensed medicines.

The majority of named patient prescriptions occur in the UK, details of which are provided above. Outside the UK, the largest named patient prescription use is currently in Spain and Italy. In the last financial year, total named patient sales increased by 44% to £1.3m (2008: £0.9m).

Experience of Sativex as a prescription medicine demonstrates that 60 per cent of patients who have failed to obtain benefit from current medication obtain meaningful improvements on Sativex and continue on the medicine following their first prescription. This is consistent with data from controlled clinical trials. A high proportion of these patients remain on the medicine long term with some now having over eight years of use. The safety profile of Sativex in clinical practice is also reassuring with few adverse event reports received and no adverse comment from any regulatory authority.

Sativex has now been exported to 28 countries either on named patient prescription or in clinical trials. We believe that this demonstrates a growing awareness and appreciation of Sativex amongst the medical community and gives reason to be confident about eventual regulatory approvals abroad.


In July 2007, GW signed a research collaboration agreement with Otsuka to research, develop and commercialise novel cannabinoid medicines in the therapeutic areas of CNS and oncology. Otsuka fund all in-house and third party activities performed under the collaboration. The research is being carried out at GW’s laboratories at Aberdeen University as well as other international academic centres with which GW has developed strong collaborative relationships.

The research collaboration has produced significant advances in our abilities to produce and formulate phytocannabinoids, and to understand their basic pharmacology. This has led to the development of several new potential drug candidates, and to significant new intellectual property.

In the field of cancer research, we have shown in pre-clinical studies the ability of certain cannabinoids to inhibit the growth of various cancers, notably prostate, breast and colon cancer, and have recently presented work which shows the ability of cannabinoids to synergise with existing anti-cancer agents in reducing the growth of glioma cells in cancer models.  The mechanisms of action of these effects are becoming better understood, and extend far beyond actions at the cannabinoid receptors.

In the field of schizophrenia, some cannabinoids have shown notable anti-psychotic effects in accepted pre-clinical models of schizophrenia, and importantly have also demonstrated the ability to reduce the characteristic movement disorders induced by currently available anti-psychotic agents.

As part of the research collaboration, GW has also been engaged in fundamental research into the anti-epileptic effects of phytocannabinoids which has already shown a marked anti-epileptic effect in several pre-clinical models of epilepsy. These findings have recently been published in the Journal of Pharmacology and Experimental Therapeutics (Jones, NA et al, Cannabidiol displays anti-epileptiform and anti-seizure properties in vitro and in vivo).

In each of these three important therapeutic areas, GW considers that the data generated to date support advancing new cannabinoid drug candidates into clinical trials.


GW has carried out pre-clinical research on its cannabinoids in several models of diabetes and is now preparing to advance a novel cannabinoid THCV:CBD drug candidate into a Phase IIa multiple dose study in the treatment of dyslipidaemia and fatty liver in Type II diabetic patients. This study is on track to commence Q2 2010.

In June 2009, the Group’s metabolic research effort was expanded through the formation of an exclusive strategic alliance with Professor Mike Cawthorne, the scientist who led the team that invented rosiglitazone (Avandia®), and the Clore Laboratory, University of Buckingham, focusing on the research of cannabinoids, and potentially other phytomedicines, in the field of type 2 diabetes and metabolic disease. A dedicated section of the Clore Laboratory has been named the “GW Metabolic Research Laboratory”.

The principal objectives of this strategic alliance are as follows:
• to provide GW with a dedicated facility for undertaking pre-clinical pharmacologic studies of cannabinoids in the area of metabolic disease
• to provide GW with exclusive access to plant-based therapies under evaluation at the Clore Laboratory
• to support the pharmaceutical development of new GW cannabinoid medicines to address defined aspects of the metabolic syndrome
• to provide expert advice to GW, through Professor Cawthorne, in the metabolic disease area

GW believes that its in-house research programme in the field of diabetes and metabolic syndrome offers significant commercial potential and the opportunity to create new partnerships in the future.


We are pleased to report our maiden full year profit, strong revenue growth, positive cash flow and a robust cash position. These results continue a healthy trend established over recent years of increasing turnover from multiple revenue streams coupled with reduced cash burn as a greater proportion of research spend is funded by licensing partners.

Income Statement

We are reporting our maiden full year pre-tax profit of £1.2m, compared with a pre-tax loss of £10.2m last year. The Group’s profit after tax for the year was £1.5m (2008: £8.2m loss).

Revenues more than doubled to £24.1m, up from £11.8m in 2008. Milestone income of £8m was received in the year following positive Phase III MS Spasticity results achieved in March 2009 (2008: £Nil).

Total Sativex sales increased by 32% to £1.7m (2008: £1.3m), the largest component of which, named patient sales, grew by 44% to £1.3m (2008: £0.9m). Sales in Canada remained flat year on year. As in prior years, this situation is due to the lack of public reimbursement for Sativex in that country.  Named patient sales growth in Spain has been strong and we have now supplied over 50 Spanish hospitals, generating revenues of £0.3m during the year.

Research and development fee revenues of £12.5m (2008: £8.6m) represent an increase of 46% over last year. These fees consist of research and development costs incurred by GW and charged to Otsuka under the Sativex US development agreement, totalling £9.1m (2008: £6.3m) and the research collaboration agreement of £3.4m (2008: £2.3m). During the year, Otsuka has engaged the services of GW’s clinical team in order to fast-track the completion of the Phase IIb study. This additional funding is one of the key factors that led to the reduction in GW-funded research overhead during 2009.

Total research and development expenditure, which is expensed as incurred, was £19.3m (2008: £19.0m), of which £12.5m (2008: £8.6m) was funded by Otsuka. GW-funded research reduced to £6.8m (2008: £10.4m) representing 35% (2008: 55%) of total research and development spend.

Management and administration expenditure decreased to £2.7m (2008: £2.8m) while the share-based payment charge also decreased to £0.6m (2008: £0.7m). Interest receivable reduced from £0.8m in 2008 to just £0.1m in 2009 as a result of the significant reduction during the year in interest rates on cash deposits.

The Group has claimed a research and development tax credit of £0.3m (2008: £1.8m) for the year. This is subject to agreement with HM Revenue and Customs.

Cash Flow

The mid-year receipt of a £8m development milestone from Almirall, plus the continuing reduction in GW-funded research and development expenditure led to a small positive cashflow for the year. This was further enhanced by the £6.3m (net) of new funds raised via the issue of new equity to Great Point Partners and M&G Investment Management in August, resulting in a positive cashflow of £6.5m for the full year. Having started the year with £14.1m of cash, the Group ended the year with £20.6m.

Capital expenditure of £1.0m (2008: £0.4m) consisted mainly of the costs incurred in setting up in-house manufacturing facilities following the strategic decision to bring the commercial finished product manufacture as well as the extraction stage of the manufacturing process in-house.

During the year the Group also received £1.8m of research and development tax credit claimed in respect of the 2008 financial year.

Balance Sheet

The Group’s net funds comprise cash balances together with amounts held on short term deposit totalling £20.6m (2008: £14.1m).

Inventory of £0.6m (2008: £0.5m) consists of finished goods, consumable items and work in progress. Trade and other receivables at 30 September 2009 were £0.8m (2008: £0.8m), consisting of £0.1m (2008: £0.2m) of trade debtors (from sales of Sativex) and £0.7m (2008: £0.6m) of accrued income, other receivables and prepayments

At 30 September 2009 the Group had received £2.7m (2008: £2.5m) of advance payments for research activities to be carried out on behalf of Otsuka in the next six months. This has been disclosed as an advance payment received, within deferred revenue due within one year.

Deferred signature fee revenue amounts to £15.4m (2008: £17.3m), of which £1.9m (2008: £1.9m) is shown as due within one year. £13.5m (2008: £15.4m) is shown as due after more than one year and represents the balance of non-refundable Sativex licence agreement signature fees. This will be recognised as revenue in future periods.

Average headcount of the Group for the year was 110 (2008: 113).

2010 Financial Year

In 2010, UK regulatory approval of Sativex would result in a £10m milestone payment from Bayer. A further £2.5m milestone payment is payable by Almirall following both regulatory and pricing approval in Spain. Such pricing approval is required for launch in Spain and is anticipated to be obtained a few months following receipt of the marketing authorisation.  We expect a modest increase in GW-funded R&D spend for the coming year.


GW has made excellent progress in 2009. The financial results include a maiden full year profit, significantly increased turnover and a robust cash position. The Group has reported positive Phase III data for Sativex in MS spasticity and regulatory submissions in Europe and Canada are now underway. In addition, GW has completed patient recruitment into its Phase II/III study in cancer pain on schedule, and continued to advance the product pipeline in exciting new areas.

GW has set the foundation for an exciting year ahead. In anticipation of the first European regulatory approval in the coming months, the Group is now working with its marketing partners towards the first major commercial launch of Sativex. We also look forward to the Phase II/III cancer pain data and advancing this indication into Phase III in the United States. In addition, the Group expects to advance the next of our cannabinoid pipeline candidates into Phase II. We believe that 2010 will see GW complete the transition into a commercial stage pharmaceutical business with excellent growth prospects.

By Order of the Board

Dr Geoffrey Guy    Justin Gover      
Chairman     Managing Director

This news release may contain forward-looking statements that reflect GWs current expectations regarding future events, including development and regulatory clearance of the GW’s products.  Forward-looking statements involve risks and uncertainties.  Actual events could differ materially from those projected herein and depend on a number of factors, including (inter alia), the success of the GW’s research strategies, the applicability of the discoveries made therein, the successful and timely completion of uncertainties related to the regulatory process, and the acceptance of Sativex® and other products by consumer and medical professionals.

Year ended          Year ended
30 September     30 September 
Notes             2009                      2008
£000’s                   £000s

Revenue                                                             3             24,121                    11,774
Cost of sales                                                                       (433)                       (249)
__________         __________
Gross profit                                                                        23,688                     11,525
Research and development expenditure     4          (19,337)                   (19,027)
Management and administrative expenses
Share-based payment                                                    (2,693)                     (2,775)
(634)                         (726)
__________         __________
Operating profit/(loss)                                                       1,024                    (11,003)
Interest income                                                                      128                            809
__________         __________
Profit/(loss before tax)                                                       1,152                     (10,194)
Tax credit                                                                              5 353                          1,974
__________         __________

Profit/(loss for the period)                                                 1,505                       (8,220)
__________         __________

Earnings/(Loss) per share
- basic and diluted                                            6                  1.2p                       (6.8p)

All activities relate to continuing operations.

The Group has no gains or losses other than those losses above and therefore no separate statement of recognised income and expense has been presented.

30 September       30 September 
Notes             2009                      2008
£000’s                    £000s

Non-current  assets   
Intangible assets - goodwill                                           5,210                       5,210
Property, plant & equipment                                           1,858                       1,107
__________         __________

7,068                       6,317
__________         __________

Current assets   
Inventories                                                           7                551                           503
Taxation recoverable                                         5                360                         1,798
Trade and other receivables                            8                811                           774
Cash and cash equivalents                                          20,601                      14,054
__________         __________

22,323                      17,129
__________         __________

Total assets                                                                       29,391                      23,446
________________________________________ ________________________________________
Current liabilities   
Trade and other payables                               9             (4,496)                      (5,363)
Obligations under finance leases                                      (35)                                 -
Deferred revenue 10 (4,594) (4,411)
__________         __________
(9,125)                      (9,774)
Non-current liabilities   
Obligations under finance leases                                      (45)                                 -
Deferred revenue                                           10            (13,499)                   (15,399)
________________________________________ ________________________________________
Total liabilities                                                                 (22,669)                    (25,173)
__________         __________

Net assets/(liabilities)                                                       6,722                        (1,727)
__________         __________

Share capital                                                  11                   129                              121
Share premium account                                                64,677                         58,375
Other reserves                                                                 19,262                         19,262
Retained earnings                                                        (77,346)                      (79,485)
__________         __________

Shareholders’ funds                                                        6,722                         (1,727)
__________         __________

The 2009 year end results were approved by the board of Directors on 24 November 2009. 

Called-up Share   
share  premium        Other  Retained 
capital     account  reserves  earnings                 Total
£000’s       £000’s      £000’s     £000’s              £000’s
At 1 October 2007                                  120       58,272      19,262   (71,991)               5,663
Exercise of share options                        1             103                -                -                   104
Share-based payment                              -                  -                  -           726                  726
Retained loss for the year                        -                  -                  -      (8,220)            (8,220)
__________ __________ _________ __________ _________
Balance at 30 September 2008           121          58,375     19,262    (79,485)          (1,727)
__________ __________ _________ __________ _________
Exercise of share options                         -                 15                 -                 -                  15
Issue of new share capital                       8            6,599               -                  -              6,607
Expenses of share issue                          -              (312)               -                  -              (312)
Share-based payment                               -                      -                -             634                634
Retained profit for the year                        -                      -                -           1,505          1,505
__________ __________ _________ __________ _________

Balance at 30 September 2009            129             64,677     19,262     (77,346)         6,722
__________ __________ _________ __________ _________

Year ended          Year ended
30 September     30 September 
2009                      2008
£000’s                   £000s
Operating profit/(loss)                                                       1,024               (11,003)
Adjustments for:  
Depreciation of property, plant & equipment                   456                       415
Share-based payment charge                                            634                       726
Operating cash flows before movements in working capital 2,114     (9,862)
(Increase)/decrease in inventories                                    (48)                         32
(Increase)/decrease in receivables                                   (38)                         15
(Decrease)/increase  in payables                                (2,599)                       227

Cash used by operations                                                 (571)                   (9,588)
Income tax credits received                                             1,791                      2,191

Net cash inflow/(outflow) from operating activities      1,220                   (7,397)
Investing activities  
Interest received                                                                   127                           821
Purchases of property, plant and equipment            (1,061)                         (440)
_______________________________________ ________________________________________
Net cash from investing activities                                    (934)                         381
Financing activities  
Proceeds on issue of shares                                          6,622                          104
Expenses of share issue                                                  (294)                              -
Capital element of finance leases                                     (67)                              -
Net cash from financing activities                                   6,261                         104
Net increase/(decrease) in cash and cash equivalents 6,547               (6,912)
Cash and cash equivalents at beginning of year       14,054                    20,966
Cash and cash equivalents at end of the period          20,601                   14,054

1. General information

The financial information set out above does not constitute the company’s statutory accounts for the years ended 30 September 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company’s Annual General Meeting.  The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section s498(2) or (3) Companies Act 2006 or equivalent preceding legislation.

The Board of Directors of the Company approved this statement on 24 November 2009.

2. Accounting policies

a) Basis of accounting
This statement has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and is an abbreviated form of the 2009 statutory accounts which will be issued to shareholders shortly. Although the statutory accounts are fully complaint with IFRS, this abbreviated announcement does not itself contain all of the disclosures required for full IFRS compliance.

The full financial statements will be published on the Group website

This statement has been prepared under the historical cost convention.

The Directors have considered the financial position of the Group, its cash position and future cash flows when considering going concern. They have also considered the Group’s business activities, the key policies for managing financial risks and the key factors affecting the likely development of the business in 2010. In light of this review, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 September each year.  Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies of the entity concerned, generally accompanying a shareholding of more than one half of the voting rights.  All intra-group transactions, balances, income and expenses are eliminated on consolidation.  Acquisitions are accounted for under the acquisition method.

c) Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of trade discounts, value added tax and other sales-related taxes.  No revenue is recognised for consideration, the value or receipt of which is dependent on future events, future performance or refund obligations. The Group’s principal revenue streams and their respective accounting treatments are set out below:

i) Product sales
Revenue from the sale of products is recognised upon shipment to customers or at the time of delivery depending on the terms of sale.

ii) Research and development fees
Revenue from contract research and development agreements is recognised as the services are performed.

iii) Licensing fees
Licensing fees represent revenues derived from product out-licensing agreements and from contract research and development agreements.

Signature fees received in connection with product out-licensing agreements, even where such fees are non-refundable and not creditable against future royalty payments, are deferred and recognized over the period of the license term, or the period of the associated collaborative assistance if that period is reasonably estimable.

iv) Development and approval milestones
During the term of certain contract research and development agreements and licensing agreements, the Group is eligible to receive non-refundable development and approval milestone payments when certain clinical or regulatory results are achieved or upon the occurrence of certain milestone events.  These milestones are recognised upon achievement of the relevant result or upon the occurrence of the milestone event when they become receivable.

d) Research and Development
Research and Development expenditure is recognised as an intangible asset only when the Group has achieved reasonable certainty that future economic benefits will flow to the Group and then only to the extent that the asset created is separately identifiable and the costs of which can be measured reliably.

All Research and development expenditure incurred prior to achieving regulatory approval is therefore expensed as incurred.

e) Taxation
The tax expense represents the sum of the tax currently payable or recoverable and deferred tax.

The tax payable or recoverable is based upon amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised only to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.

f) Intangible Assets - Goodwill
Goodwill arising on the acquisition of the subsidiary undertakings, representing the excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired, is recognised as an asset and shown separately on the face of the balance sheet. Goodwill is tested for impairment at least annually and, where appropriate, an impairment charge is reflected in the income statement.

Determination of whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires an estimate of the present value of expected future cash flows discounted at an appropriate discount rate. Where appropriate, provision is then made to ensure that the carrying value does not exceed this value in use estimate.

g) Property, plant and equipment
Fixtures and equipment are stated at cost, net of accumulated depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets, at rates calculated to write off the cost of each asset on a straight-line basis over its expected useful life commencing upon the satisfactory completion of installation such that assets are ready for their intended use, as follows:

Motor vehicles    4 years
Plant, machinery and laboratory equipment          4 -10 years
IT and office equipment   4 years
Leasehold improvements                            4 years or term of the lease if shorter

h) Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is calculated using the First in First Out “FIFO” method.  Cost includes materials, direct labour and an attributable proportion of manufacturing overheads based on normal levels of activity. Net realisable value is the estimated selling price in the ordinary course of business, less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Provision is made for obsolete, slow moving or defective items where appropriate.  Inventory is also provided for where the level of inventory held is in excess of the amount required to manufacture projected future sales volumes based on the current regulatory status of the relevant product. The provision ensures that the carrying value of inventory does not exceed expected net realisable value.
Prior to achieving territorial regulatory approvals, the sales volume projections for each territory, used to estimate the required level of inventory provision, are derived by applying historic growth rates to the current volumes being sold via named patient sales programmes. Once a territorial approval is achieved, volume projections are revised to take account of expected commercial sales volumes for that territory, based upon projections provided by commercial partners, adjusted to take into account other factors such as historic experience of sales growth rates and expected market penetration.

i) Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.

j) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits held at call with banks and other short term highly liquid investments with an original maturity of three months or less.

k) Foreign currency
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated at the rates of exchange prevailing at that date.  Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the income statement.

l) Share-based payment
The Group has applied the requirements of IFRS 2, Share-based payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as at 1 October 2005.

The Group issues equity-settled share-based payments to employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

Fair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

3. Business segments

The Directors consider that the Group operates within a single business segment, being pharmaceutical development.

Year ended          Year ended
30 September     30 September
2009                      2008
£000’s                   £000s
Product sales                                               1,689                     1,278
Research and development fees           12,532                     8,596
Licensing fees:  
- signature fees                                            1,900                     1,900
- development and approval fees             8,000                              -
__________         __________
24,121                   11,774
__________         __________

Geographical analysis of revenue: 
Year ended          Year ended
30 September     30 September
2009                      2008
£000’s                   £000s
£000’s  £000s
UK 992 813
Europe (excluding UK) 9,075 906
North America 10,689 7,758
Asia 3,365 2,297
__________ __________
24,121 11,774
__________ __________

All revenue and profits before taxation originated in the UK. All assets and liabilities are held in the UK.

4. Research and development expenditure

                                                                Year ended          Year ended
                                                               30 September     30 September
                                                                     2009                      2008
                                                                     £000’s                   £000s
GW-funded research                                    6,805                  10,431
Development partner-funded research        12,532                    8,596
__________ __________
Total                                                             19,337                   19,027
__________ __________

5. Tax credit

                                                                  Year ended          Year ended
                                                                 30 September     30 September
                                                                     2009                      2008
                                                                     £000’s                   £000s

UK Corporation tax – R&D tax credit:  
Prior year (7) 176
Current period                                                  360                    1,798
Total credit for the period                                 353                     1,974
__________            __________

The UK Corporation tax credit relates to research and development expenditure claimed under the Finance Act 2000.

The amounts are subject to the agreement of HM Revenue and Customs.

6. Earnings per share

The calculations of earnings per share are based on the following profits/(losses) and numbers of shares.

Basic                                                       Diluted 

2009                        2008                          2009                         2008
£000’s                     £000’s                      £000’s                     £000’s
Profit/(loss) for the year               1,505                     (8,220)                        1,511                      (8,220)
___________       __________           __________             __________

Number of shares Number of shares Number of shares Number of shares
Weighted average          122,534,208           120,514,879            128,125,821           120,514,879
number of shares       ___________       __________           __________             __________

7. Inventory
                                                                30 September     30 September
                                                                      2009                      2008
                                                                      £000’s                    £000s

Raw Materials                                                  93                          107
Work in progress                                            286                          317
Finished goods                                               172                            79
__________ __________
                                                                        551                          503
__________ __________

Inventory is stated net of a realisable value provision of £4.0m (2008 £3.6m)

8. Trade and other receivables

                                                                  30 September     30 September
                                                                         2009                      2008
                                                                         £000’s                   £000s

Amounts falling due within one year  
Trade receivables                                            129                        204
Other receivables                                              75                        195
Prepayments and accrued income                  607                        375
                                                                       __________ __________
                                                                         811                        774
                                                                         __________ _________

9. Trade and other payables

                                                                     30 September     30 September
                                                                          2009                      2008
                                                                          £000’s                   £000s

Trade payables                                                       2,463                    2,954
Other taxation and social security                           156                       159
Accruals                                                                    1,834                    2,209
Defined contribution pension scheme accruals    43                          41
__________ __________
4,496                    5,363
__________ __________

10. Deferred revenue
30 September     30 September
2009                      2008
£000’s                   £000s

Amounts falling due within one year 
Deferred signature fee income                  1,900                    1,900
Advance payments received                       2,694                    2,511
__________ __________
4,594                    4,411
__________ __________
Amounts falling due after one year  
Deferred signature fee income                13,499                  15,399
__________ __________

Deferred signature fee income represents the balance of the non-refundable signature fees received from Almirall and Otsuka. These amounts will be recognised as revenue in future periods.

For Almirall the £12m signature fee is being recognised at the rate of £0.8m per year over 15 years from December 2005. In the case of Otsuka, where the Group’s obligations under the agreement are weighted towards the earlier years, the $18m (£9.2m) signature is being recognised from 1 April 2007 to 30 September 2011 at the rate of £1.1m per year and at £0.28m per year for the following 15 years.

Advance payments received represents payments for research and development activities to be carried out in the next financial year on behalf of Otsuka. These amounts will be recognised as revenue in future periods.

11. Share Capital

As at 30 September 2009 the authorised share capital of the Company and the allotted, called-up and fully paid amounts were as follows:

2009                      2008
£000’s                   £000s
200,000,000 ordinary shares of 0.1p each                                          200                         200

Allotted, called-up and fully paid
129,277,655 (2008: 120,785,335) ordinary shares of 0.1p each    129                          121

During the year the following ordinary shares of 0.1p each were issued by the Company:

Total nominal   Total share            Total
Number of                   value       premium      consid'n
Year Ended 30 September 2009                shares                £000’s           £000’s         £000’s
Issue of new ordinary shares                8,470,920                          8              6,599           6,607
Exercise of share options                            21,400                        –                      15               15

Total nominal   Total share            Total
Number of                      value       premium      consid'n
Year Ended 30 September 2009              shares                   £000’s           £000’s         £000’s
Exercise of share options                        488,200                           1                  103               104

12. Availability of information
A copy of this statement is available from the Company Secretary at Porton Down Science Park, Salisbury, Wiltshire, SP4 0JQ.



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