London, UK, 5 May 2010: Ark Therapeutics Group plc (“Ark” or the “Company”) today provides an update on the strategic review initiated on 9 March 2010.
Following the announcement on 9 March 2010 the Company has conducted a strategic review of its extensive portfolio of assets, their potential and the alternative strategies to optimise shareholder value.
As previously disclosed, Ark has also entered into discussions with a number of parties regarding the potential sale of the Company. The Company has also received a number of approaches from parties expressing interest in discrete parts of the business.
The strategic review of Ark’s portfolio of assets has confirmed to the Board that there is significant value which can be created for shareholders, a conclusion which is further validated by the approaches from third parties relating to discrete parts of the business.
The Board believes, furthermore, that the approaches received to date for a sale of the Company do not adequately reflect the value of the Company’s assets. Until such time as discussions with the companies which have made approaches are formally terminated, however, the Company remains in an offer period for the purposes of the Takeover Code.
The Board has concluded that shareholders’ interests are best served by a change of strategy to one of selective partnering of programmes together with a plan to monetise certain assets. A number of events to validate the value of the Company are expected to be concluded in the next 12 months.
The Board will continue discussions with those parties that have expressed an interest in discrete parts of the business as the Board believes that the change in strategy and these approaches have the potential to create superior near-term value for shareholders. This should also extend the cash runway beyond H2 2011 and provide the Company with more time to realise the value of its pipeline.
Ark will seek a partner to complete the clinical development for Cerepro® now that all other aspects including the adenoviral platform are cleared for approval and will also minimise expenditure on Trinam® by modifying the existing trial to a Phase IIb and then seeking a partner for a final Phase III trial. Ark believes that the regulatory achievement with the adenoviral platform will also enable the Company to validate its early stage programmes more rapidly through partnering deals.
In re-focusing the business for the next stage of its development, the Board has agreed with Nigel Parker that, after twelve years of leadership, he will step down from the Board and as CEO with immediate effect. Nigel has played a key role in the Company’s progress and the Board wishes to extend its thanks to him for driving and steering Ark from an IP-based start-up business to be the first biotech company in the world to achieve an approvable gene-therapy platform. His knowledge and experience will remain available to Ark as he will continue as a consultant to the Company.
Martyn Williams, currently CFO, has accepted the Board’s invitation to take on the role of CEO with immediate effect. Martyn has been CFO since 1998 and has an intimate knowledge of all the Group’s assets. The Board is confident that he has all the skills needed to implement the change of strategy.
Summary Review of Assets:
Cerepro® – The MAA review by the European regulator established that Ark’s adenoviral gene-therapy platform is now approvable, with no outstanding issues on chemistry and manufacturing, preclinical and environmental aspects of the product. The EMA has requested a further trial to overcome the technical regulatory issue over the defined endpoint of the previous trial. This trial is estimated to take approximately 4 years. The FDA is currently reviewing the data package for a BLA filing with a response expected in June 2010. Ark has reviewed undertaking an additional trial and, whilst very confident of the clinical benefit offered by Cerepro®, believes the cost will be too onerous to pursue on a standalone basis and is therefore seeking a partner to complete the development of the product.
Trinam® – As part of the emphasis on extending the cash runway and seeking early proceeds from partnering, the Company has decided to amend the current Phase III trial to a Phase IIb. The results from this trial are expected to be available in mid 2011, at which point Ark intends to seek a partner in order to complete the Phase III development. The Company is giving full attention to increasing the rate of recruitment into the current study, which has been impacted by the previously reported third party manufacturing issue and the management focus on the Cerepro® MAA.
EG011 – Refractory Angina – patients are continuing to be enrolled for the Phase I/IIa trial with results from the first 2 cohorts expected in H2 2010 with final results early in 2011. After this point the Company will consider partnering the product in order to progress its development further.
EG016 – Peripheral Vascular Disease – the product has recently commenced enrolment into a Phase I/IIa trial using Ad-VEGF-D the mid-term results of which are expected in H2 2010. Having previously demonstrated success in PVD patients using Ad-VEGF-A in an earlier study, the Company has moved to AD-VEGF-D which has been shown to be more angiogenic than Ad-VEGF-A. The Company will consider partnering the product after the current trial in order to progress its development further.
EG01257 – Neuropilin-1 – the product comprises small molecule antagonists that have been shown to significantly reduce tumour growth in a cancer model. Following the announcement of pre-clinical in-vivo results on 12 April 2010 which generated interest from potential partners, Ark intends to conclude a partnering deal prior to developing the NRP-1 programme further.
Other pre-clinical assets – Ark intends to leverage its approvable platform with other pre-clinical assets including EG013 for foetal growth restriction and seek a partner at an early stage in order to maximise the development potential.
ACE IP - In the USA, the Company believes it is in the final stages of patent prosecution with the US Patent Office. Grant of the patent in the USA will trigger a further milestone payment to the Company under its agreement with Boehringer Ingleheim and also enable further exploitation of this intellectual property. In Europe, the Company is considering the decision of the European Patent Office yesterday to uphold the opposition to the Company’s patent and will provide a further update.
Manufacturing – Ark has developed a world leading manufacturing facility in Finland which is already generating third party revenues for the Company. Ark is reviewing a number of options to optimise the facility’s use and value. The options under review include increasing the scale of contract manufacturing capacity in order to maximise revenue generation and responding to more formal collaborative partnership approaches in relation to our manufacturing capability.
Woundcare – the Woundcare business has continued to show strong sales growth and is a highly attractive but ultimately non-core asset in the context of the Company’s focus on gene-based medicines. A potential disposal of the Woundcare business is therefore being considered if an appropriate valuation can be achieved for the business. Ark is in discussions with interested parties about such a sale.
Cash Position – Ark recently announced that its cash, cash equivalents and money market instruments position at 31 December 2009 was £21.5m. In the light of recent events management has imposed a series of cost cutting initiatives in order to reduce the cash burn. The Company believes it has adequate cash to service its cost base until H2 2011, excluding monetisation of any of its portfolio assets or the introduction of partnering deals which would extend its cash runway.
Andrew Christie, Chairman of Ark, said
“On behalf of the Board, I thank Nigel Parker for his important contribution to the business as CEO and look forward to continuing to benefit from his knowledge of gene-based medicines.
Ark has a very valuable portfolio of assets, manufacturing capabilities and world leading science. Our priority in the short term is to extract value from these assets by seeking partners or acquirers for individual parts of the business whilst progressing development of key programmes. We look forward to providing updates as we implement our revised strategy.
The Board is delighted that Martyn Williams has agreed to take on the role of CEO and we are confident that he can lead the Company through this change of strategy.”
For further information:
Ark Therapeutics Group plc Tel: + 44 (0)20 7388 7722
Martyn Williams, CEO
Andrew Christie, Chairman
Financial Dynamics Tel: +44 (0)20 7831 3113
Ben Atwell
Susan Quigley
Ark Therapeutics Group plc
Ark Therapeutics Group plc is a specialist healthcare group (the “Group”) addressing high value areas of unmet medical need within vascular disease, wound care and cancer. These are large and growing markets, where opportunities exist for effective new products to generate significant revenues. With six marketed devices, Kerraboot®, Kerraped®, Flaminal®, Neuropad®, KerraMax® and Kerraglove® and three further lead pharmaceutical products in late stage clinical development: Cerepro®, Vitor™, and Trinam®, the Group is transitioning from an R&D company to a commercial, revenue generating business.
Ark’s own products are sourced from related but largely non-dependent technologies within the Group and have been selected both to enable them to be taken through development within the Group’s own means and to benefit from Orphan Drug Status and/or Fast Track Designation, where appropriate. This strategy has allowed the Group to retain greater value and greater control of clinical development timelines, and to mitigate the risks of dependency on any one particular programme or development partner. Ark has secured patents or has patent applications pending for all its lead products in principal pharmaceutical markets.
Ark has its origins in businesses established in the mid-1990s by Professor John Martin and Mr Stephen Barker of University College London and Professor Seppo Ylä-Herttuala of the AI Virtanen Institute at the University of Kuopio, Finland, all of whom play leading roles in the Company’s research and development programmes.
Ark’s shares were first listed on the London Stock Exchange in March 2004 (AKT.L).
This announcement includes “forward-looking statements” which include all statements other than statements of historical facts, including, without limitation, those regarding the Group’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Group’s products and services), and any statements preceded by, followed by or that include forward-looking terminology such as the words “targets”, “believes”, “estimates”, “expects”, “aims”, “intends”, “will”, “can”, “may”, “anticipates”, “would”, “should”, “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group’s control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in which the Group will operate in the future. Among the important factors that could cause the Group’s actual results, performance or achievements to differ materially from those in forward-looking statements include those relating to Ark’s funding requirements, regulatory approvals, clinical trials, reliance on third parties, intellectual property, key personnel and other factors. These forward-looking statements speak only as at the date of this announcement. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.
