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Vernalis plc: Announcement of Results for year ended 31/12/12

Apr 10 2013 12:00AM

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WINNERSH, UK -- (Marketwired) -- 04/10/13 --

10 April 2013LSE: VER Announcement of Results for the year ended 31 December 2012Vernalis plc (LSE: VER) today announces its audited results for theyear ended 31 December 2012.Financial Highlights- Revenue up 20 per cent to GBP14.6 million (2011: GBP12.2 million)driven by 65 per cent increase in research collaboration income * Research collaboration income was GBP8.7 million (2011: GBP5.3 million) including milestone income of GBP2.6 million (2011: GBP1.1 million) * Frovatriptan royalty income was GBP5.7 million (2011: GBP6.5 million) down 11% primarily due to exchange rates with underlying sales made by Menarini flat- Operating costs remain in-line with 2011- Pre-exceptional loss for the year reduced by 19 per cent- Balance sheet strengthened through GBP68.5 million of new equityfinancing (March 2012)- Underlying net cash burn reduced to GBP4.5 million (2011: GBP6.0million)Operational HighlightsCough Cold Commercial Pipeline:- Collaboration commenced March 2012- CCP-01 proof-of-concept achieved and milestone paid to Tris inMarch 2013- First NDA filing anticipated mid-2014- Four further programmes now in active development at Tris,with 505(b)(2) pathway based on comparative bioavailability confirmedon all five with FDA- 2012-13 prescription cough cold season up substantially on2011-12 with approximately 33.2 million prescriptions written in the 12months to February 2013NCE Development Pipeline:Frovatriptan (marketed) (Migraine):- Underlying Menarini sales EUR26.5 million (2011: EUR27.1 million)- Menarini outlook for 2013 is for flat underlying sales vs 2012V81444 (CNS diseases)- Positive Phase I and Receptor Occupancy studies completed (Mayand Dec 2012 respectively)- Plans underway to initiate Phase Ib/II POC study in H1 2013V158866 (Pain)- Positive results from Phase I study published at 14th WorldCongress on Pain (August 2012)- Announced today, patients being recruited into a Phase II POCstudy (April 2013)AUY922 (Cancer)- Continues in multiple Phase I and Phase II studies withNovartis in a variety of cancers including breast, non-small-cell lung,gastric, colon and colorectal cancersTosedostat - CHR2797 (Cancer)- Phase II trials in AML and MDS continue through Chroma/CellTherapeutics, IncRPL554- Anti-inflammatory study results announced by Verona Pharma(March 2013)- Future development focussing on bronchodilator properties ofRPL554Servier- Addition to pre-clinical NCE pipeline of first productcandidate from collaborationResearch Collaborations:- New collaborations with Genentech and Servier (January 2012)- Ongoing collaboration with Servier extended again (March 2013)- Genentech milestones of $4.0 million in cash already earned in2013Expected Newsflow:- Achieve multiple proofs-of-concept in cough cold pipeline- Progress CCP-01 towards NDA filing- AUY922 (Cancer) - Multiple Phase I and II study results(Novartis) (timing not disclosed)- V81444 (CNS diseases) * Initiate Phase Ib/II POC study (H1 2013) * Complete Phase II POC study (H1 2014)- V158866 (Pain) - Complete Phase II POC study (H1 2014)- Tosedostat - CHR2797 (Cancer)- Phase II study results (Chroma)(undisclosed)- Achieve milestones under existing collaborations (undisclosed)- Secure new research collaborations (undisclosed)Ian Garland, Chief Executive Officer, commented, "We performed verystrongly in 2012, both financially and operationally, with significantprogress in all three elements of our strategy. Revenues were upsharply and our loss and underlying cash burn were both reduced. Wedelivered proof-of-concept in the most advanced of our cough coldprogrammes and now have five active cough cold programmes indevelopment with a first NDA submission planned for the middle of nextyear. We had a record 12 months in our research business, growingrevenue for the fifth consecutive year, and reported positive resultsfrom two V81444 studies in our NCE pipeline. The outlook for 2013 andbeyond is strong as we continue to build our self-sustainingpharmaceutical company."Presentation & Conference CallVernalis management will host a presentation at 09.00am (UK) atBrunswick's offices, 16 Lincoln's Inn Fields, London WC2A 3ED today. Itwill also be available via webcast athttp://www.vernalis.com/investor-centre/presentations-and-webcasts andwww.cantos.com and via conference call, which can be joined bydialling: +44 (0) 20 3139 4830, Passcode 13117720#. -- ends --Enquiries:Vernalis Contacts:Ian Garland, Chief Executive Officer +44 (0) 118 938 0015David Mackney, Chief Financial OfficerNomura Code Securities Limited: +44 (0) 20 7776 1200Juliet ThompsonJonathan SeniorBrunswick Group: +44 (0) 20 7404 5959Jon ColesNotes to EditorsAbout VernalisVernalis is a revenue generating development stage pharmaceuticalcompany with significant expertise in drug development. The Group hasone marketed product, frovatriptan for the acute treatment of migraine,an exclusive licensing agreement to develop and commercialise multiplenovel products focussed on the US prescription cough/cold market aswell as seven programmes in its NCE development pipeline. Vernalis hassignificant expertise in fragment and structure based drug discoverywhich it leverages to enter into collaborations with largerpharmaceutical companies. The Company's technologies, capabilities andproducts are endorsed by collaborations with Endo, Genentech, Lundbeck,Menarini, Novartis, Servier and Tris.For further information about Vernalis, please visit www.vernalis.comVernalis Forward-Looking StatementThis news release may contain forward-looking statements that reflectthe Company's current expectations regarding future events includingthe clinical development and regulatory clearance of the Company'sproducts, the Company's ability to find partners for the developmentand commercialisation of its products, as well as the Company's futurecapital raising activities. Forward-looking statements involve risksand uncertainties. Actual events could differ materially from thoseprojected herein and depend on a number of factors including thesuccess of the Company's research strategies, the applicability of thediscoveries made therein, the successful and timely completion ofclinicalstudies, the uncertainties related to the regulatory process,the ability of the Company to identify and agree beneficial terms withsuitable partners for the commercialisation and/or development of itsproducts, as well as the achievement of expected synergies from suchtransactions, the acceptance of frovatriptan and other products byconsumers and medical professionals, the successful integration ofcompleted mergers and acquisitions and achievement of expectedsynergies from such transactions, and the ability of the Company toidentify and consummate suitable strategic and business combinationtransactions.Operational ReviewWe have made excellent progress in the last year across all three tiersof our strategy to build a diversified, self-sustaining pharmaceuticalcompany. One year on from our transformational licensing agreement andfinancing, we now have a broad pipeline of late-stage low-risk drugs indevelopment, complementing our maturing pipeline of new chemicalentities (NCE) and our successful research group.A priority for 2012 was the implementation of the Tris Pharmadevelopment and licensing deal under which we exclusively licensed TrisPharma's extended release liquid drug delivery technology forapplication within the US prescription cough cold market. Under thatagreement, Tris Pharma is developing up to six novel long-actingformulations of prescription cough cold products that we plan tocommercialise in the US. We announced in March 2013 that the mostadvanced of these products, CCP-01, had achieved proof-of-concept andhas moved into the final stages of development, with a planned NDAfiling in mid 2014. In parallel with the development of this leadproduct, we have progressed with Tris Pharma exploratory development ofup to nine more potential products, from which we have selected fourpreferred products for further development. Tris Pharma will continuedevelopment of these four products in 2013, aiming to achieveproof-of-concept for all of them over the next 24 months.The commercial opportunity in the US prescription cough cold market forthe products being developed by Tris Pharma continues to besignificant. Following a mild cough cold season in 2011/2012, theseason so far in 2012/2013 has been moderately severe, withprescriptions for cough cold products up 21 per cent in the eightmonths to February 2013 compared to the same period in the prior year.There were 33.2 million prescriptions in the 12 months to February 2013indicating a potential US$2 billion market for extended-release liquidproducts.In our NCE pipeline, we are continuing to pursue the early clinicaldevelopment of our adenosine A2A receptor antagonist, V81444 for CNSdiseases. Following successful completion of a Phase I study in May2012, we initiated and successfully completed a receptor occupancystudy to confirm A2A target engagement in man. We are now moving thisprogramme into a Phase Ib/II POC study in an undisclosed CNS indicationthat will be initiated in 2013, with data likely to be available in2014. Our other priority in-house programme, a FAAH inhibitor, V158866,is now recruiting patients into a Phase II proof-of-concept study totreat neuropathic pain experienced by patients with spinal cord injury.This study is also scheduled to report data in 2014. Our strategy is topartner all of our new chemical entity programmes, including both ofthese and our Phase I-ready Chk1 oncology programme.Our novel Hsp90 programme, AUY922, is already partnered with Novartisand continues to be investigated in a number of Phase I and Phase IIcancer studies. Novartis is undertaking studies in a broad range ofcancers, including breast, non-small-cell lung, gastric, colon andcolorectal cancers. We remain very excited about the prospects for thisprogramme and, based on timelines indicated by Novartis onclinicaltrials.gov, hope to see news from these ongoing studies overthe coming two years.Our balanced approach to investment in research has been rewarded in2012 with a record year in terms of revenue from researchcollaborations. Leveraging our skills in the fragment- andstructure-based drug design field, we have collaborated successfullywith leading global pharmaceutical companies, earning both fees andsuccess milestones for our work. The most advanced of ourcollaborations has a candidate in pre-clinical development which, ifsuccessful, could enter Phase I clinical studies in 2013. We willcontinue our balanced strategy in 2013 and aim to secure furthercollaborations to add to those already in progress.Financially, we remain exceptionally strong with GBP81.6 million of cashresources and no debt at the year end. We continue to receive a steadyroyalty stream from frovatriptan under our collaboration with Menarini.This income stream, together with the success-based structure of ourlicensing agreement with Tris Pharma, and our balanced approaches toNCE development and research, enabled us to limit our 2012 underlyingnet cash burn to just GBP4.5 million. We will continue to manage costsand cash tightly.In April 2012, the Company moved to AIM from the LSE Main Market as theconcentration of its shares among a few key investors meant that theCompany did not satisfy the "free float" requirements of the MainMarket.Our outlook for 2013 is very encouraging with potential for furthersignificant progress in our Tris Pharma programmes and positivedevelopments in both our NCE and research operations. We would like tothank our Board members and staff for their contributions during asuccessful year and our shareholders for their continued support.Financial Review:Successful research collaborations drive 20 per cent overall revenuegrowthRevenue from continuing operations totalled GBP14.6 million(2011: GBP12.2 million) up 20 per cent year-on-year. Revenue includedGBP5.7 million from the supply of frovatriptan (2011: GBP6.5 million)and GBP8.9 million (2011: GBP5.7 million) in respect of collaborationsand the release of deferred revenue.Research collaboration income (including milestones) increased 65 percent to GBP8.7 million (2011: GBP5.3 million). At the end of the year,we had five active collaborations underpinning this growth. Thesecollaborations generated GBP6.1 million of FTE income (2011: GBP4.2million) and a further GBP2.6 million of milestones (2011:GBP1.1 million). Because of the long investment time horizons for theseactivities, the goal for the last five years has been to make this partof the business self-financing whilst delivering potential upsidethrough research and clinical milestones as well as royalties oncommercialisation. Following five years of growth in researchcollaboration income (at a CAGR of 38 per cent), this goal was achievedduring 2012.Frovatriptan royalties flat in eurosUnderlying sales of frovatriptan by Menarini in Europe and CentralAmerica were EUR26.5 million, flat compared to 2011 (2011: EUR27.1million). Underlying volumes of tablet sales in 2012 were also flatcompared to 2011 at 9.6 million (2011: 9.4 million). Vernalis receives25.25 per cent of Menarini sales via a royalty linked to the supply ofactive pharmaceutical ingredients (API) so the reported royalties donot necessarily track the underlying performance of Menarini in themarket.The reported Menarini frovatriptan royalties of GBP5.7 million were 11per cent below 2011 (GBP6.5 million). Included in both years were threebatches of bulk API and one batch of tablets shipped to Menarini forthe Central American markets. The decrease in income is due primarilyto a weakening of the euro during 2012, as shipments are invoiced ineuros and then translated into sterling for financial reportingpurposes. The average euro:sterling exchange rate for 2012 was 1.2410,down 9 per cent versus 1.1436 in 2011.External development costs focused on V158866 and V81444Research and development expenditure from continuing operationsdecreased 5 per cent to GBP13.0 million (2011: GBP13.6 million) andcomprised GBP11.2 million (2011: GBP10.9 million) of internally fundedresearch and development costs and GBP1.8 million (2011: GBP2.7 million)of external costs associated with the development pipeline. The externalcosts remain focused on clinical development of V158866 and V81444 withproof-of-concept studies being conducted during 2013.G&A expenditure continues to be tightly managedGeneral and administrative expenditure before exceptional items wasGBP5.2 million (2011: GBP4.8 million), an increase of GBP0.4 millionfor the year. Adjusting for one-off items for foreign exchange and TrisPharma related expenses, the underlying G&A was GBP4.8 million (2011:GBP4.4 million), an increase of 9 per cent. This increase is largelyexplained by the fluctuation in the share option charge which wasGBP0.3 million higher in 2012 (2012: GBP0.8 million; 2011: GBP0.5million) following the introduction of the value builder plan in theyear.The 2011 exceptional item of GBP2.4 million included GBP1.9 millionrelated to aborted acquisition costs as well as an adjustment to theexisting vacant lease provision of GBP0.5 million.Operating loss reduced by 38 per cent on a pre-exceptional basis and 52per cent on a post exceptional basisThe operating loss for the year from continuing operations beforeexceptional items was GBP5.2 million (2011: GBP8.3 million) a decreaseof 38 per cent year-on-year. The operating loss from continuingoperations after exceptional items was GBP5.2 million (2011: GBP10.7million) a decrease of 52 per cent.Weakness in US dollar distorts finance costs and underlying tradingperformanceWith the current economic uncertainty, we have minimised our exposureoperationally to foreign exchange movements by using forward contractsfor our euro income stream but also by matching the currency in whichour cash is held with our future obligations, where possible.Immediately following the equity issue in March 2012, we purchasedUS$100 million, to match our Tris Pharma and US commercial financingrequirements. As a consequence of holding these US dollar deposits,there will be a financial reporting foreign exchange exposure on theretranslation of the US dollar cash balances back into sterling at eachreporting date, but critically any changes in foreign exchange ratesbetween sterling and the US dollar will not impact our ability toexecute on the US commercial plan.At 31 December 2012, the US dollar had weakened against sterling,compared to the purchased rate in March 2012 of 1.5763, creating aGBP1.8 million unrealised retranslation loss for the year. Consequentlythe finance cost and the loss for the year include this GBP1.8 millionunrealised retranslation loss. Excluding the impact of this foreignexchange loss, finance expense for the year was flat at GBP0.2 million.Since the year end the US dollar has strengthened significantly againststerling eliminating this loss.R&D tax credit remains flatThe tax credit of GBP1.6 million (2011: GBP1.7 million) representsamounts that are expected to be received under current legislation onresearch and development tax credits for small- and medium-sizedcompanies. The tax credit for the year was GBP1.4 million (2011: GBP1.6million) and the balance of GBP0.2 million (2011: GBP0.1 million)represents claims in relation to prior years.Pre-exceptional loss for the year reduced by 19 per centThe loss for the year before exceptional items was GBP5.2 million (2011:GBP6.4 million), a reduction of 19 per cent. Excluding the impact of theGBP1.9 million total exchange loss on all non-sterling cash balances,the pre-exceptional loss for the year was GBP3.3 million, a reductionof 48 per cent.The loss for the year from continuing operations after exceptionalitems in 2011 was GBP8.9 million and the loss after discontinuedoperations and exceptional items was GBP7.7 million. There were noexceptional or discontinued items in the current year.Balance sheetFurther strengthening of the balance sheet through GBP68.5 million newequity issueNon-current assets increased to GBP6.9 million (2011: GBP4.3 million)due to the US$5 million upfront payment to Tris Pharma on signing thedevelopment and licensing agreement and in consideration for thedevelopment of products. This increase was partially offset by thecontinued amortisation of the frovatriptan intangible asset.Current assets increased to GBP88.6 million (2011: GBP32.4 million)primarily due to the GBP65.9 million, net of expenses, equity issue inMarch 2012. Total liabilities decreased to GBP10.1 million(2011: GBP12.7 million) and, importantly, we remain debt free.Cash key to executing commercial strategyCash resources, comprising held-to-maturity financial assets and cashand cash equivalents increased by GBP56.9 million to GBP81.6 million(2011: GBP24.7 million).Underlying net cash burn for the year (representing the movement incash resources but excluding one off items, discontinued operations andmilestones) was GBP6.3 million and GBP4.5 million excluding the impactof the GBP1.8 million retranslation loss on US dollar denominated cashdeposits (2011: GBP6.0 million). The decrease in cash burn primarilyreflects reduced investment in our NCE pipeline during 2012 as well asincreased FTE income from our research collaborations.Outlook for 2013 and beyondFully funded for future successThe Company is now on an exceptionally strong financial footing withGBP81.6 million of cash and no debt. The balance sheet has beenstrengthened over the last 12 months through the equity fundraising andthe performance of the underlying business continues to be strong. TheCompany has mitigated the risk of fluctuations in the US dollar bybuying US$100 million following the fundraising and consequently theCompany is very well positioned for 2013 and beyond as we build adiversified, self-sustaining pharmaceutical company.Risks and UncertaintiesLike all businesses we face risks and uncertainties, many of which areinherent within any pharmaceutical development company looking toestablish commercial operations. Below are those principal risks anduncertainties that we consider could have a material impact on ouroperational results, financial condition and prospects. These risks arenot in any particular order of priority and there may be other risksthat are either currently unknown or not considered material whichcould have a similar impact on our business in the future. Our riskmanagement process is explained in the corporate governance report.Clinical and regulatory riskThere are significant inherent risks in developing drugs forcommercialisation due to the long and complex development process. Anydrug which we or our partners wish to offer commercially to the publicmust be put through extensive research, pre-clinical and clinicaldevelopment all of which takes several years and is extremely costly.We and/or our collaborators may fail to successfully develop a drugcandidate because of:- The failure of the drug in pre-clinical studies.- The inability of clinical trials to demonstrate the drug is safeand effective in humans.- The failure of the drug in bioequivalence studies.- The failure to develop a viable formulation with differingcharacteristics from existing drugs.- The failure to find a collaborator to take the drug candidate intoexpensive later stage studies.- The failure to manufacture the drug substance in sufficientquantities and at commercially acceptable prices.In addition, the complexity and multijurisdictional nature of theregulatory processes could result in either delaysin achieving regulatory approval or non-approval. If a product isapproved, the regulators may impose additionalrequirements, for example, restrictions on the products' indicated usesor the levels of reimbursement receivable, that could impact on thecommercial viability of the drug. Once approved, the product and itsmanufacture will continue to be reviewed by the regulators and may bewithdrawn or restricted in the future.Pricing, reimbursement and competitionOur commercial success depends on the acceptance of our/and ourcollaborators' products by the market, including physicians,third-party payers and patients. We may be adversely affected bythird-party reimbursement and healthcare cost containment initiatives.Third-party payers including government and private health insurers areincreasingly attempting to contain healthcare costs through measuresthat are likely to impact the products we are developing, including:- Challenging the prices charged for healthcare products.- Limiting both coverage and the amount of reimbursement for newtherapeutic products.- Refusing to provide coverage when an approved drug is used in away that has not received regulatory marketing approval.- Moving towards a reference pricing model, particularly in Europewhere the amount of reimbursement is determined in light ofreimbursement levels for comparable drugs in other countries, which canseverely restrict the potential per unit price for many drugs unlessthere is significant differentiation from existing products.These or other healthcare reforms that may be adopted in the futurecould harm our business and, in particular, could have a materialadverse effect on the amounts that public and private payers will payfor our or our collaborators' commercialised products. If we and/or ourcollaborators develop products that are not covered by government orthird-party reimbursement schemes, are reimbursed at prices lower thanthose expected or become subject to legislation controlling treatmentsor pricing, we and/or our partners may not be able to generatesignificant revenues or attain profitability for any products which areapproved for marketing.Our business faces intense competition from major pharmaceuticalcompanies and specialised biotechnology companies developing drugs forthe same market opportunities. Some factors that may affect the rateand level of market acceptance of any of our or our collaborators'products include:- The existence or entry into the market of superior competingproducts or therapies.- Entry to the market of competing products earlier than our or ourcollaborators' products.- The price of our or our collaborators' products compared tocompeting products.- Public perception and publicity concerning the safety, efficacyand benefits of our or our collaborators' products, compared tocompeting products and therapies.- The effectiveness of the sale and marketing efforts of our salesforce (once established) or our collaborators' sales force.- Regulatory developments relating to manufacturing or use of our orour collaborators' products.- The willingness of physicians to adopt a new treatment regime.Intellectual propertyIntellectual property protection remains fundamental to our strategy ofdeveloping novel drug candidates. Our ability to stop others making adrug, using it or selling the invention or proprietary rights byobtaining and maintaining protection is critical to our success. We owna portfolio of patents and patent applications which underpin ourresearch and development programmes. We invest significantly inmaintaining and protecting this intellectual property to reduce therisks over the validity and enforceability of our patents. However, thepatent position is always uncertain and often involves complex legalissues. Therefore, there is a risk that intellectual property maybecome invalid and/or expire before, or soon after, commercialisationof a drug product and we may be blocked by other companies' patents andintellectual property.Manufacturing riskThe supply of frovatriptan API to Menarini for the EU and CentralAmerican markets is a substantial proportion of our income and so ourability to manufacture and supply this product on schedule is critical.In addition, our ability to successfully scale-up production processesto viable clinical trial or commercial levels is vital to thecommercial viability of any product. Availability of raw materials isextremely important to ensure that manufacturing campaigns areperformed on schedule and therefore dual sourcing is used wherepossible. Product manufacture is subject to continual regulatorycontrol and products must be manufactured in accordance with goodmanufacturing practice.Any changes to the approved process may require further regulatoryapproval which may incur substantial cost and delays. These potentialissues could adversely impact on the results from operations and ourcash liquidity.In-licensing complementary productsOur strategy is to augment the low-risk, late-stage Tris Pharmaportfolio of products through in-licensing complementary products toour commercial pipeline. This is an extremely competitive area, withmany large and mid-sized pharmaceutical companies also looking toexecute a similar strategy, and consequently this may be difficult toachieve with our current financial resources and infrastructure. Afailure to succeed in successfully in-licencing complementary productsmay affect our ability to grow revenues and attain profitability.Financial risksCash flowWe have a history of operating losses which are anticipated to continuein the near term. Following the GBP65.9 million (net of expenses) equityfundraising announced in February 2012, the Company is well capitalisedto execute its transition into a profitable and cash generativepharmaceutical company over time. However, the Group may need to seekfurther capital through equity or debt financings in the future and ifthis is not successful, the financial condition of the Group may beadversely affected.Counterparty credit riskThe Company is exposed to credit-related losses on cash deposits in theevent of non-performance by counterparties.With the current economic uncertainty, counterparty credit risk is akey consideration when placing cash funds on deposit. Thecreditworthiness of counterparties is assessed prior to placing fundson deposit and is monitored through to maturity. Under the Companytreasury policy there is a maximum amount that can be placed with anyone counterparty. If any counterparty were to experience financialdifficulties this may impact the Company's liquidity in the future.Foreign exchangeWe record our transactions and prepare our financial statements insterling but almost all of our revenue is from licensing andcollaborative agreements and frovatriptan royalties which are receivedin US dollars or euros. A proportion of our expenditure is incurred inUS dollars and other currencies, relating principally to clinicaltrials and the Tris Pharma agreement. Our cash balances arepredominantly held in sterling, US dollars and euros.With the current economic uncertainty, we have minimised our exposureoperationally, to foreign exchange movements by matching the currencyin which our cash is held with our future obligations. Immediatelyfollowing the equity issue in March 2012, we purchased US$100 million,to match our Tris Pharma and US commercial financing requirements. As aconsequence of holding these foreign currency deposits, we will have afinancial reporting foreign exchange exposure on the retranslation ofthe US dollar cash balances back into sterling at each reporting date,but critically any changes in foreign exchange rates between sterlingand the US dollar will not impact our ability to execute on the UScommercial plan.To the extent that income and expenditure in currencies other thansterling and US dollars are not matched, fluctuations in exchange ratesbetween sterling and these currencies, principally euros, may result inrealised or unrealised foreign exchange gains and losses. Simplederivative contracts have been used to mitigate the risk offluctuations in exchange rates where there has been certainty over theamount and timing of the income.Where the timing and/or the amount to be received is uncertain, riskmanagement is more difficult but the Group has used derivatives wherepossible and will continue to do so. To the extent that derivativeinstruments are considered too costly, because of the flexibilityrequired or the time over which protection is sought, any fluctuationsin foreign exchange movements may have a material adverse impact on theresults from operations and our cash liquidity in the future.Return on investmentAs already mentioned, the drug development process is inherently riskyand because it is conducted over several years it can be extremelycostly. Many drug candidates fail in development due to the clinicaland regulatory risks, and even in those circumstances where drugs areapproved, sales levels can be disappointing due to competition,healthcare regulation and/or intellectual property challenges. As aresult the returns achieved may be insufficient to cover the costsincurred. The Group looks to mitigate the development and commercialrisk of its NCE pipeline by partnering drug candidates at anappropriate stage. This partnering event crystallises part of theprogramme's value, with the goal of retaining an attractive proportionof the commercial upside through future milestones and an ongoingroyalty interest from commercial sales.Related PartiesRelated parties disclosures are given in note 10.Statement of directors' responsibilitiesEach of the directors, whose names and functions are listed in themanagement and governance section of the annual report, confirm that,to the best of their knowledge:- the Group financial statements, which have been prepared inaccordance with IFRSs as adopted by the EU, give a true and fair viewof the assets, liabilities, financial position and loss of the Group;and- the directors' report contained on pages 30 to 33 of the annualreport includes a fair review of the development and performance of thebusiness and the position of the Group, together with a description ofthe principal risks and uncertainties that they face.To view the full text of this press release, paste the following linkinto your web browser:http://www.rns-pdf.londonstockexchange.com/rns/9653B_1-2013-4-9.pdf This information is provided by RNS The company news service from the London Stock ExchangeEND





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