Syntopix Group plc - Interim results for the six months ended 31 January 2008

24 Apr 2008

Syntopix Group plc (AIM: SYN) the speciality pharmaceutical research and development company focused on dermatological diseases, today announces its interim results for the six months ended 31 January 2008.

Highlights:

  • Positive results from our first Phase II study.
  • First commercial exclusive evaluation agreement with a major consumer healthcare company.
  • Strengthening prospects for further licensing and joint development agreements with other healthcare and dermatological companies.
  • Expanding library of compounds and combinations of compounds.
  • Growing intellectual property portfolio with three granted patents and 12 patent applications.

Dr Stephen Jones (Chief Executive Officer) commented: "I am pleased with the Group's progress over the last 6 months. We are expanding the use of our antimicrobial pipeline and are attracting commercial interest in new areas of consumer healthcare. Our Phase II proof of concept study yielded positive results, which has enabled us to progress discussions with several dermatological companies. I am also pleased to report that we signed our first commercial agreement in December 2007 with a major healthcare company and we have expectations for further commercial opportunities in the next 12 months."

Enquiries

Syntopix Group plc                          + 44 (0) 845 125 9204
Dr Rod Adams, Chairman
Dr Stephen Jones, Chief Executive
Officer

Buchanan Communications Limited             + 44 (0) 20 7466 5000
Mark Court
Catherine Breen

KBC Peel Hunt Ltd                           + 44 (0) 20 7418 8900
Capel Irwin

Notes to editors

About Syntopix Group plc

Syntopix is a group focused on the discovery and development of drugs for the topical treatment of dermatological diseases. The company was founded in 2003 as a spin-out from the University of Leeds by Dr Jon Cove and Dr Anne Eady, two of the leading experts in skin microbiology, with initial funding from The Wellcome Trust.

Syntopix' strategy is to seek to reduce the risks and costs of drug discovery and development by discovering novel uses for known compounds. The company concentrates on compounds and combinations of compounds that have a history of use in man; and that have well characterised properties, for example antimicrobials and anti-inflammatories. The Group currently has 3 granted patents and 12 further pending patent applications.

Syntopix is currently concentrating on acne and Staphylococcus aureus infections and has identified a pipeline of lead drug candidates that it intends to take through pre-clinical and, as appropriate, clinical trials. The Group intends to out-license products to commercial partners on obtaining proof of principle and to seek co-development partnerships.

The Group is based at the Institute of Pharmaceutical Innovation in Bradford, giving access to the expertise in skin biology, formulation and toxicology at the universities of Bradford and Leeds.

Syntopix' shareholders include Techtran Group Limited (a subsidiary of IP Group plc), The Wellcome Trust Limited, University of Leeds Limited and Ridings Early Growth Investment Company Limited. Syntopix joined the AIM market of the London Stock Exchange in March 2006.

For further information please visit www.syntopix.com.

Chairman and Chief Executive's Statement

We are pleased to report the interim result for the six months to 31 January 2008.

Since our last annual report, we have continued to work on the discovery of compounds for use in the treatment of acne and the prevention and treatment of superficial skin infections due to Staphylococcus aureus including methicillin resistant strains (MRSA). We are also expanding into new areas of consumer healthcare where our ability to detect novel activities of known compounds and beneficial interactions between compounds is of potential commercial interest.

We have conducted and reported a Phase II clinical study in subjects with acne-prone skin and have also evaluated a range of compounds for activity against MRSA in a model system. Additionally, we have signed and reported a 12-month exclusive evaluation agreement with a major consumer healthcare company in the field of oral healthcare. Finally, we are in an advanced stage of discussions with another major consumer healthcare company to evaluate the use of our antimicrobial pipeline in another area of personal healthcare.

Development Programme

We have completed the Phase II proof-of-concept clinical study in 130 subjects with acneic skin that we reported as just having started in the last Annual Report. This randomised, blinded trial began in July 2007 and was conducted in Germany. Two Syntopix preparations were investigated: SYN 0126, a compound used in cosmetic preparations; and a combination of SYN 0126 with SYN 0091, a bacteriostatic agent used in soaps and cosmetics. The study had positive (an existing marketed product) and negative (vehicle) controls, and the products were used once a day for eight weeks.

The combination preparation containing SYN 0126 and SYN 0091 ranked as more effective than the marketed product and as most effective overall with statistically significant reductions in inflammatory and non-inflammatory lesions (spots) from week 2 to the end of the study. By week 8, this preparation had reduced the total number of lesions by 27% and the acne severity grade by 38%; reductions for the marketed product were 12% and 24% respectively. From week 4 onwards the Syntopix product reduced the total number of acne spots to a significantly greater extent than the currently marketed acne treatment.

Following these positive study results, several major dermatological companies have approached us. It is the Group's intention to investigate the possibility of a licensing agreement with a suitable partner in the cosmetics or consumer healthcare industries.

We have also conducted a study, in Canada, using a model system to determine the effectiveness of SYN 0017, SYN 0854, SYN 0564 and SYN 0017 in combination with SYN 0710 against the carriage of MRSA. Compared to vehicle, SYN0017 produced a greater reduction in numbers of MRSA than the positive control and ranked as the most effective treatment. The commercial significance of this result is being evaluated.

Commercial agreements

In December 2007 we announced that we had signed a 12-month exclusive evaluation agreement with a major consumer healthcare company. Under this agreement, Syntopix will evaluate the Group's library of compounds for their potential usefulness in oral healthcare. The full financial details of the agreement are confidential, although Syntopix has received an upfront payment at the start of the exclusivity period and will receive further payments for any compounds subject to additional evaluation. Commercialisation of a compound would be subject to a licensing agreement to be negotiated separately.

We have also been in discussions with another major consumer healthcare company, concerning the use of antimicrobial compounds in a different area of personal healthcare. These discussions will be completed over the next few months, and we are very confident that this will result in a Joint Development Agreement to evaluate Syntopix compounds in order to improve the effectiveness of a major consumer healthcare brand. Discussions are underway with this company regarding a commercial contract.

Lead candidate development programmes

It is our intention to conduct another human use study in 2008 with a new test compound. This will utilise the experience gained from the previous studies and will use the same clinical model that was used so successfully for our first Phase II study. We anticipate results will be available before the end of the calendar year.

Pipeline

The Group continues its research activities to generate further potential promising synergistic combinations. We continue to screen single compounds and combinations of compounds and now have over 1,400 compounds in our library. Approximately 20% of these compounds show antimicrobial activity against Propionibacterium acnes and/or Staphylococcus aureus. We are also extending the range of microbes that we use to evaluate antimicrobial activity, in line with the commercial interest we are receiving from several healthcare companies and anticipate that this will result in more commercial opportunities.

Our intellectual property portfolio continues to grow: Syntopix has a patent portfolio that currently comprises three granted patents and a further 12 patent applications.  Each application is continually re-evaluated for commercial relevance, and in the last 12 months we have filed a new application on average every six to eight weeks.

Financial summary

Since our last Annual Report, the Group has continued its development programme and we have completed the Phase II study in Germany and the MRSA study in Canada. Total research and development costs during the six months to 31 January 2008 were £668,883 (six months to 31 January 2007: £490,763). The increase is partly attributable to the additional studies undertaken in this period and partly due to additional expenditure on patent protection for our growing intellectual property portfolio.

Towards the end of this accounting period we signed our first commercial deal. The group has received upfront payments for an exclusivity and evaluation agreement amounting to £145,000. In accordance with our revenue recognition accounting policy, this is initially treated as deferred income and is being recognised in revenue over the period of the agreement. Consequently, revenue recognised in this accounting period amounts to £36,666 and the remaining deferred income of £108,334 will be recognised over the next 10 months.

The Group is well positioned for establishing further revenue streams from commercial deals going forward.

At 31 January 2008, the Group had cash reserves of £724,505 (31 January 2007: £2,501,993) and net assets of £798,024 (31 January 2007: £2,636,275). As in previous periods we anticipate further Research and Development tax credits in the coming months. The Group continues to carefully monitor overhead costs.

In our 2007 Annual Report, we stated that the Group will need additional funding during the next financial period to enable the planned development programme to continue and to ensure that the Group has sufficient financial resources to sustain the trading operations until the Group becomes cash generative as a result of revenues from royalties, milestones and other commercial deals. The directors remain confident that the Group will be able to raise sufficient additional funds.

This is the first accounting period in which the Group is required to comply with International Financial Reporting Standards and consequently this report is prepared in accordance with the new requirements. The effect of implementing the new standards is largely presentational and there is no significant impact on the reported results or net assets.

Outlook

The Group has made significant progress during the six months to 31 January 2008. We have entered into our first commercial deal and the positive results from the Phase II study have enabled us to progress discussions with several major dermatological companies. Consequently, we believe that the Group is well positioned to capitalise on the development activity undertaken in this period.

Dr Rod Adams, Chairman
Dr Stephen Jones, Chief Executive Officer

23 April 2008

The full text of this announcement is available on RNS.