Wednesday, 10 December 2008 - Medical Marketing International Group plc (“MMI” or the “Company”) (AIM:MMG), the life sciences company focused on the development of drugs for cancer, today announces its half year results for the six months ended 30 September 2008.
Chairman’s statement
MMI is a life sciences business using its platform technologies to develop new products which enhance the treatment of cancer. The half year position of the Company is both financially and strategically in line with our expectations.
Vaccines to attack cancer
A commercial prostate cancer vaccine (“GVX 3322”) has been assembled and the DNA sequence verified. GVX 3322 is now undergoing preclinical equivalence studies with the academic vaccine used in the current clinical trial. The in vivo immunogenicity studies are on-going and will now complete in the first quarter of 2009. If a positive result is obtained, the Company will continue its preparations for the commencement of a Phase II trial.
Planning for the further clinical development of GVX 3322 has continued and discussions with leading clinical oncologists are defining the key parameters of the next prostate cancer trial. It is evident that the design of this trial will depend critically on the data from the current trial and, in particular, on the PSA-response rate that is observed. The Company is in discussions with the University of Southampton and Cancer Research Technology to obtain these data.
On 29 October 2008 the Company agreed to invest up to £427,500 in its cancer vaccines subsidiary, Genvax, by subscribing for up to 2,850 shares at £150 per share. The investment is staged and is conditional on certain commercial milestones being achieved. However, once fully subscribed, the Company’s stake in Genvax will increase from 58% to 66%.
Ruthenium chemotherapy
The ruthenium compound ONCO 4417 has been investigated in a number of studies to enhance our understanding of the mechanism of action by which it kills cancer cells. These studies show that ONCO 4417 induces DNA damage to levels comparable with that of cisplatin and suggest that the induced DNA damage may directly or indirectly result in apoptosis (programmed cell death). In addition, as ONCO 4417 does not appear to share cross-resistance mechanisms with cisplatin, it is likely that damage induced by ONCO 4417 is not resolved in the same way as that induced by cisplatin and therefore, may provide novel cancer targets for our ruthenium compounds. A summary of this work has been submitted for presentation at the American Association of Cancer Research Annual Meeting in April 2009.
ONCO 4417 is being evaluated in a human lung cancer xenograft model including comparison against cisplatin. Previous preclinical results demonstrated that ONCO 4417 is well tolerated when administered at higher doses and on a more frequent doing schedule than cisplatin.
We will now focus on investigating the mechanisms responsible for repair of ONCO 4417 induced damage. This knowledge will be used to target our ruthenium compounds to cancers where the drug will have most effect and to investigate the combination of ONCO 4417 with other drug agents.
We have also continued to evaluate the second generation compounds, prepared using a targeted synthesis approach, which have now demonstrated good in vitro efficacy across our panel of human tumour cells. Finally, the patent portfolio has been strengthened following the notification of allowance for a third EU patent.
Disposal of non-core activities
On 29 September 2008 the Company sold its subsidiary, Bioscience Innovation Centre Limited, for cash consideration of £1. This transaction facilitated the disposal of excess space whilst retaining not only the Company’s current laboratory services revenue stream but also its fully furnished and equipped laboratories. As a result, recurring facilities costs will be reduced by more than £250,000 each year and it is intended that these savings will be applied to the further development of the Company’s lead oncology programmes.
The Company continues to explore the possibility of divesting or out-licensing its anti-viral ribozyme technology.
Annual General Meeting (“AGM”)
At the Company’s AGM held on 17 September 2008 resolutions 1 to 6, being ordinary resolutions, were passed. The results of a poll on resolutions 7 to 10, being special resolutions, and the AGM were adjourned to 10.30am on 17 December 2008. The Board has since decided to withdraw these resolutions and therefore the adjourned AGM scheduled for 17 December 2008 will not take place and the AGM is treated as concluded.
One of the special resolutions referred to above was to change the Company’s name to Oncosense plc to reflect our focus on the oncology market. Although this resolution has now been withdrawn, we strongly believe that the name Oncosense more accurately reflects our strategy and business and therefore the Company has started to use Oncosense as a trading name.
People
Our employees are crucial to the success of the Company. We believe that having responsible employees who display sound judgement, are aware of the consequences of decisions and actions, and who act in an ethical and responsible manner, is key to the future success of the business. On behalf of the entire Board, we would like to thank our employees for their considerable efforts and support over the last six months and we look forward to this continuing in the future.
Financial position
On 30 July 2008, the Company raised £0.95 million resulting in net funds at 30 September 2008 being £2.18 million (31 March 2008: £2.71 million) which is sufficient to last until June 2009.
Outlook
The Board is committed to the future of MMI and its shareholders and is focused on creating and then realising value from our oncology pipeline. We are confident that our development plans outlined above are in the best interests of all our stakeholders. We do recognise, though, that as a development company we rely upon financial support from the shareholder community. With our strategy to build value from not only the technologies that are being developed but also within the business as a whole, we continue to believe that we have the ability to return shareholder value in the medium term.
Phil Cartmell
Chairman
Financial review
The results for the six months ended 30 September 2008 show an increase in revenue of 14% to £73,053 (2007: £63,834) and an increase in operating loss of 25% to £2.64 million (2007: £2.11 million). The operating loss includes a charge of £1.59 million for the disposal of a subsidiary undertaking which if excluded, would reduce the operating loss to £1.05 million, a reduction of 50% on the prior period. The Company raised £0.95 million in July 2008 resulting in net funds at 30 September 2008 being £2.18 million (31 March 2008: £2.71 million). An analysis of the key movements is provided below.
Revenue
Revenue continues to comprise fees for services provided to the National Blood Service and for laboratory services, both of which are expected to continue for the foreseeable future.
Research and development
Following the Company’s decision to concentrate its resources on the further development of its lead oncology programmes based on its DNA vaccine and ruthenium technologies, investment in research and development, all of which is expensed as incurred, decreased by 48% to £469,917 (2007: £899,906).
Administrative expenses
Administrative expenses, which primarily comprise staff and establishment costs (excluding those allocated to research and development expenditure) and professional fees, have been reduced by more than £0.6 million to £653,700 (2007: £1,270,342). This is primarily explained by the combined effect of:
• a significant reduction in Directors’ remuneration following the departure of the two founder directors;
• savings of approximately £70,000, primarily from advisers’ fees;
• a recovery of £71,080 under indemnities in previous Directors’ consultancy agreements for fees paid gross following a HM Revenue & Customs inspection in January 2006 (see note 11 of the half-yearly report); and
• a decrease in the share-based payments charge of £226,449 to £11,165 (2007: £237,614) following the departure of a number of employees.
Disposal of subsidiary undertaking
On 29 September 2008 the Company sold its wholly-owned subsidiary, Bioscience Innovation Centre Limited, for cash consideration of £1 resulting in a charge to the consolidated income statement of £1.59 million, £1.43 million of which relates to impairment of the goodwill originally recognised on the acquisition of Bioscience Innovation Centre Limited (see note 1 of the half-yearly report).
The nature of the transaction was such that the only operational impact on the Group was the replacement of a 25 year lease for 25,000 sq ft that expired in 2024 with a new lease for 7,400 sq ft for a minimum of five years. The transaction, which is a significant component of the Company’s cost efficiency programme, facilitated the disposal of excess space so that recurring facilities costs will be reduced by more than £250,000 each year. It is intended that these savings will be applied to the further development of the Company’s lead oncology programmes.
Interest income and income tax
Interest income decreased by 56% to £61,508 (2007: £139,406) primarily due to a lower average net funds balance during the period (2008: £2.44 million, 2007: £4.83 million). Income tax relates to research and development tax credits for the period.
Liquidity and capital resources
The Group’s net funds comprise cash and cash equivalents less finance lease liabilities. On 30 July 2008, the Company raised £0.95 million by issuing 5,027,886 ordinary shares at 19 pence each to new and existing shareholders. As a result, net funds at 30 September 2008 were £2.18 million (31 March 2008: £2.71 million).
Financial outlook
The Group intends to continue to fund the development programmes of its oncology platforms whilst seeking potential collaborative partners. The Directors have prepared cash flow projections which show that current cash resources are sufficient to last until June 2009.
