TIDMGWP
RNS Number : 0423E
GW Pharmaceuticals PLC
04 February 2015
GW Pharmaceuticals plc Reports First Quarter 2015 Financial
Results and Operational Progress
-Conference Call Today at 8:00 a.m. EST, 1:00 p.m. GMT-
London, UK, 4 February 2015: GW Pharmaceuticals plc (NASDAQ:
GWPH, AIM: GWP, GW, the Company or the Group), a biopharmaceutical
company focused on discovering, developing and commercializing
novel therapeutics from its proprietary cannabinoid product
platform, announces financial results for the first quarter ended
31 December 2014.
RECENT OPERATIONAL HIGHLIGHTS
-- Rapid advance of epilepsy program and upcoming milestones:
o Dravet Syndrome
-- Part A of Phase 2/3 trial complete
-- Part B of Phase 2/3 trial to commence Q1 2015 - top-line data
expected by end of 2015
-- Second Phase 3 trial on track to start Q1 2015 and expected
to complete recruitment in 2015
-- Orphan designation from European Medicines Agency for Dravet
syndrome
o Lennox-Gastaut syndrome
-- Two Phase 3 trials in Lennox-Gastaut syndrome on track to
start end Q1 2015 and expected to complete recruitment in 2015
o Expanded Access Program
-- 235 children currently on treatment in U.S. expanded access
program at 13 clinical sites
-- Updated data abstract submitted to the American Academy of
Neurology 2015 Annual Meeting being held in April
o Phase 2 CBDV epilepsy trial due to commence Q1 2015
o Notice of Allowance issued by the U.S. Patent and Trademark
Office for patent application covering use of CBD in treatment of
partial seizures
-- Sativex(R) program developments and upcoming milestones:
o First of three Phase 3 cancer pain trials complete, results
did not show a statistically significant difference for Sativex
compared with placebo
o Two additional Phase 3 cancer pain trials expected to read out
in H2 2015
-- Significant additional on-going clinical trial activity for
cannabinoid pipeline product candidates and upcoming 2015
milestones:
o Phase 2a study of GWP42003 for the treatment of schizophrenia
underway with data expected H2 2015
o Second part of Phase 1b/2a study underway of GWP42002:GWP42003
for the treatment of Recurrent Glioblastoma Multiforme (GBM), first
part safety cohort data reviewed by independent monitoring board
with agreement to proceed
o Phase 2b trial of GWP42004 in type-2 diabetes underway with
expected completion in 2016
FINANCIAL HIGHLIGHTS
-- Revenue for the three months ended 31 December 2014 of GBP8.0
million ($12.4 million) compared to GBP7.5 million for the three
months ended 31 December 2013
-- Loss for the three months ended 31 December 2014 of GBP3.4
million ($5.3 million) compared to GBP2.8 million for the three
months ended 31 December 2013
-- Cash and cash equivalents at 31 December 2014 of GBP156.6
million ($243.9 million) compared to GBP164.5 million as at 30
September 2014
"GW has very substantial clinical activity under way. In the
next two months, we will commence all four pivotal trials of
Epidiolex in Dravet syndrome and Lennox-Gastaut syndrome and we
expect initial top line data from at least one of these trials by
the end of the year," stated Justin Gover, GW's Chief Executive
Officer. "In addition, the expanded access program continues to
point to the potential for Epidiolex to treat additional forms of
epilepsy and we expect to commence clinical development programs in
further potential target indications during 2015. A further release
of data from this expanded access program is expected to be
presented during the second quarter. Beyond epilepsy, we are
continuing to progress further clinical trials in a number of
additional cannabinoid product candidates during the remainder of
this year. With so much activity and a robust balance sheet, we are
pleased with progress and confident in our prospects."
Conference Call and Webcast Information
GW Pharmaceuticals will host a conference call and webcast to
discuss the 2015 first quarter financial results today at 8:00 a.m.
EST / 1:00 p.m. GMT. To participate in the conference call, please
dial 877-407-8133 (toll free from the U.S. and Canada), or
0800-756-3429 (toll free from the UK) or 201-689-8040
(international). Investors may also access a live audio webcast of
the call via the investor relations section of the Company's
website at http://www.gwpharm.com. A replay of the call will also
be available through the GW website shortly after the call and will
remain available for at least 30 days. Replay Numbers: (toll
free):1-877-660-6853, (international):1-201-612-7415. For both
dial-in numbers please use conference ID # 13599976.
Enquiries:
GW Pharmaceuticals plc (Today) + 44 20 3727 1000
Stephen Schultz, VP Investor Relations 917 280 2424 / 401 500
(U.S.) 6570
FTI Consulting (Media Enquiries)
Ben Atwell / Simon Conway / John Dineen
(UK) + 44 20 3727 1000
Robert Stanislaro (U.S.) 212 850 5657
Trout Group, LLC (U.S. investor relations)
Todd James / Chad Rubin 646 378 2900
Peel Hunt LLP (UK NOMAD)
James Steel / Clare Terlouw + 44 20 7418 8900
GW Pharmaceuticals plc
("GW" or "the Company" or "the Group")
Financial Results for the First Quarter Ended 31 December
2014
GW Overview
GW is a biopharmaceutical company focused on discovering,
developing and commercializing novel therapeutics from its
proprietary cannabinoid product platform in a broad range of
disease areas. In 16 years of operations, GW has established a
world leading position in the development of plant-derived
cannabinoid therapeutics through its proven drug discovery and
development platform, a robust intellectual property portfolio and
its regulatory and manufacturing expertise.
GW commercialized the world's first plant-derived cannabinoid
prescription drug, Sativex(R) , which is approved for the treatment
of spasticity due to multiple sclerosis (MS) in 27 countries
outside the United States (U.S.). GW is also evaluating Sativex in
a Phase 3 program for the treatment of cancer pain with the U.S.
Food and Drug Administration (FDA).
GW is advancing an orphan drug program in the field of childhood
epilepsy with a particular focus on Epidiolex(R) , a liquid
formulation of pure plant-derived cannabidiol (CBD). GW is
currently developing Epidiolex for the treatment of both Dravet
syndrome and Lennox-Gastaut syndrome (LGS), each of which are
severe infantile-onset, genetic, drug-resistant epilepsy
syndromes.
In addition, GW's cannabinoid platform offers a deep pipeline of
additional product candidates including distinct clinical-stage
candidates targeting epilepsy, glioma, schizophrenia, ulcerative
colitis, and type-2 diabetes.
Epilepsy Drug Development Programs
GW's epilepsy franchise centers around two product candidates,
Epidiolex (CBD) and GWP42006 (cannabidivarin or CBDV). GW is
currently pursuing the development of a variety of individual
orphan epilepsy-related indications providing GW with significant
new market opportunities. These development programs are funded
completely by GW and GW retains all rights to commercialize any and
all products that evolve from these programs.
Epidiolex in Dravet Syndrome and LGS
GW is now undertaking a formal development program for Epidiolex
in the field of severe, drug-resistant childhood epilepsy. The
Company has received Orphan Drug Designation from the FDA for
Epidiolex for the treatment of both Dravet syndrome and LGS.
Additionally, GW has received Fast Track Designation from the FDA
and Orphan Designation from the European Medicines Agency (EMA) for
Epidiolex for the treatment of Dravet syndrome.
Following the opening of an Investigational New Drug Application
(IND) with the FDA, GW received and incorporated FDA input into the
proposed pivotal clinical trial protocols as well as other clinical
and non-clinical studies to support New Drug Applications (NDAs) in
both Dravet syndrome and LGS. Over recent months, GW's U.S.-based
in-house clinical research team has also been setting up clinical
trials sites across the U.S. including obtaining necessary licences
from the Drug Enforcement Administration (DEA).
In late October 2014, GW commenced a placebo-controlled Phase
2/3 clinical trial in Dravet syndrome. Part A of this study
comprises the pharmacokinetic and dose-finding elements of the
trial. Following rapid recruitment of patients into Part A, this
element of the study is now complete. Of the 34 patients
randomized, there were only 2 withdrawals. Data is currently being
collated and is expected to be reviewed by the independent safety
monitoring committee later this month. This committee is expected
to select the dose to be used in Part B of the study.Part B is
expected to commence later in this first quarter and is the Phase 3
element of the trial comparing the effect of Epidiolex with that of
placebo over a 12 week treatment period.
In addition to, and in parallel with this Phase 2/3 trial, GW
expects to commence a second pivotal Phase 3 trial in Dravet
syndrome around the end of the first quarter. Both pivotal Phase 3
trials are expected to complete this year with top-line data from
at least one of the trials expected by the end of 2015.
In LGS, GW expects to commence two Phase 3 trials around the end
of the first quarter of 2015. GW expects top-line data from at
least one of these pivotal trials in LGS around the end of
2015.
Epidiolex U.S. Expanded Access Program
In parallel with the Company's formal clinical trial program,
the FDA has granted 20 expanded access INDs to independent
investigators in the U.S. to treat a total of approximately 410
children and young adults suffering from intractable epilepsy with
Epidiolex. To date, 235 children and young adults are now receiving
treatment with Epidiolex in the U.S. at 13 clinical sites. In
addition to these expanded access INDs, the FDA has also granted 8
individual emergency INDs.
In October 2014, GW reported clinical effect data on 58 patients
who had reached 12 weeks of treatment. These data show promising
signals of efficacy and safety consistent with data released in
June 2014. The data also showed treatment durability as Epidiolex
lead to a maintained reduction in seizure frequency beyond the
initial 12 week treatment period and that approximately 95% of
patients who commenced treatment remain on therapy.
A number of posters related to data from the Epidiolex expanded
access program were presented by independent physicians at the
American Epilepsy Society's 2014 Annual Meeting. Amongst these
posters included data to suggest that CBD may have positive effects
on quality of life independent of seizure control.
GW expects additional clinical effect data to be reported at
medical meetings during both the first and second halves of 2015.
GW understands that updated data from the expanded access program
has been submitted by independent investigators as a late breaking
abstract to the American Academy of Neurology Annual Meeting in
April.
Patients being treated in the expanded access program suffer
from a range of treatment-resistant epilepsies. Data generated from
this program suggest the potential for Epidiolex to treat epilepsy
syndromes beyond Dravet and LGS and, as a result, GW expects to
commence clinical development programs in further potential target
indications during 2015.
CBDV (cannabidivarin) Development Program
GW is developing a second epilepsy product candidate GWP42006,
which features the non-psychoactive cannabinoid CBDV. GW has
completed a Phase 1 clinical trial of GWP42006 and expects to
commence a Phase 2 study of GWP42006 in patients with epilepsy in
the first quarter of 2015.
CBD/CBDV Intellectual Property Portfolio
GW recently received a Notice of Allowance from the U.S. Patent
and Trademark Office (USPTO) for U.S. patent application number
13/380,305, which protects the use of CBD in the treatment of
partial seizures and provides an exclusivity period until June
2030. GW's patent portfolio includes fourteen patent families
containing one or more pending and/or issued patents with claims
related to the use of CBD and/or CBDV in the treatment of epilepsy
as well as compositions, extraction techniques, CBD and CBDV
extracts and pure plant-derived CBD.
Sativex(R) in Cancer Pain
Sativex is an oromucosal spray consisting of a formulated
extract of the cannabis sativa plant that contains the principal
cannabinoids delta-9-tetrahydrocannabinol, or THC, and CBD. GW is
currently evaluating Sativex in a Phase 3 program to treat
persistent pain in people with advanced cancer who experience
inadequate pain relief from optimized chronic opioid therapy, the
current standard of care.
In January 2015, GW announced top-line results from the first of
three Sativex pivotal Phase 3 cancer pain trials. In this first
trial, Sativex (as adjunctive treatment to optimized chronic opioid
therapy) was well tolerated but did not meet the primary endpoint
of demonstrating a statistically significant difference from
placebo. GW has two additional pivotal Phase 3 trials ongoing
which, if positive, would allow for the submission of an NDA with
the FDA. At this time, GW expects these remaining two trials to
report results in the second half of 2015.
The costs of the Phase 3 cancer pain program are fully funded by
Otsuka Pharmaceutical Co. Ltd, who hold exclusive rights to
commercialize Sativex in the U.S.
Sativex in Multiple Sclerosis (MS)
Sativex is currently approved for the treatment of spasticity
due to multiple sclerosis in 27 countries outside the U.S. In the
U.S., a request for Special Protocol Assessment ("SPA") has been
submitted to the FDA for a proposed single Phase 3 study in this
indication. GW expects a response from the FDA in the first quarter
of 2015.
Other Pipeline Programs
Schizophrenia
GW's product candidate, GWP42003, has shown notable
antipsychotic effects in accepted pre-clinical models of
schizophrenia and importantly has also demonstrated the ability to
reduce the characteristic movement disorders induced by currently
available antipsychotic agents. The mechanism of GWP42003 does not
appear to rely on the dopamine D2 receptor augmentation of standard
antipsychotics and therefore has the potential to offer a novel
treatment option in this therapeutic area.
A Phase 2a trial of GWP42003 in the treatment for schizophrenia
is now ongoing. This study is expected to enroll approximately 80
patients with topline data expected in the second half of 2015.
Orphan Program in Glioma
GW is testing its product candidate GWP42002:GWP42003 in the
treatment of recurrent glioblastoma multiforme, or GBM, a
particularly aggressive brain tumor which is considered a rare
disease by the FDA and the European Medicines Agency. In
pre-clinical models, GW has shown these two cannabinoids, when
administered together, to be orally active in the treatment of
gliomas and have shown tumor response to be positively associated
with tissue levels of cannabinoids.
In 2014, GW commenced a Phase 1b/2a clinical trial in patients
with recurrent GBM. The first phase of this trial was an open-label
safety evaluation of GWP42002:GWP42003 in combination with
temozolomide. This phase of treatment is now complete. Safety data
from this initial patient cohort has been assessed by the
independent safety monitoring board and their approval has been
given to proceed into a placebo-controlled phase which is now
randomizing patients. GW expects the second phase of this study to
complete recruitment in 2015 with data expected in 2016.
Ulcerative Colitis
In October 2014, GW reported preliminary top line results from a
10-week randomized, double-blind, placebo controlled Phase 2a study
of GWP42003 extract in the treatment of UC in patients who had not
been able to gain remission from the condition despite first line
treatment. While the study did not meet the primary endpoint of
percentage of participants achieving remission quantified by the
MAYO score, data from this 60 patient study showed promising
signals of efficacy across a range of secondary endpoints in
patients who completed the course of treatment.
GW believes that, in patients who were able to take GWP42003 for
a prolonged treatment period, these results provide good evidence
for a therapeutic effect in the treatment of UC in patients who had
previously failed to respond to first line therapy. In addition, GW
believes that the results support further investigation of GWP42003
albeit with a modified dosage form.
Type-2 Diabetes
GW is testing its product candidate GWP42004 in the treatment of
type-2 diabetes. GWP42004 is an orally administered product which
features plant-derived tetrahydrocannabivarin (THCV) as its active
ingredient. THCV is distinct from THC and does not share its
intoxicating psychoactive effects. The study will compare the
efficacy, safety and tolerability of GWP42004 compared with placebo
and is expected to complete in 2016. GW believes that if the Phase
2b study confirms the Phase 2a findings, GWP42004 would have the
potential to offer a novel orally-administered treatment option in
this large potential market.
Upcoming GW Investor Conference Participation
GW expects to participate in the following upcoming investor
conferences: Leerink Partners Global Healthcare Conference in New
York City (February); Cowen & Company's 35(th) Annual
Healthcare Conference in Boston (March); and the Bank of
America/Merrill Lynch 2015 Small and Mid-Cap Equity Conference in
Boston (March).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with the condensed consolidated financial information
contained herein, which has been prepared in accordance with
International Accounting Standard 34, Interim Financial Reporting.
GW presents its condensed consolidated financial information in
pounds sterling.
Solely for the convenience of the reader, unless otherwise
indicated, all pound sterling amounts stated in the Condensed
Consolidated Balance Sheet as at 31 December 2014, the Condensed
Consolidated Income Statement and the Condensed Consolidated Cash
Flow Statement for the 3 months ended 31 December 2014 have been
translated into U.S. dollars at the rate on 31 December 2014 of
$1.5577 to GBP1.00. These translations should not be considered
representations that any such amounts have been, could have been or
could be converted into U.S. dollars at that or any other exchange
rate as at that or any other date.
Overview
GW generates revenue from Sativex product sales, license fees,
collaboration fees, technical access fees, development and approval
milestone fees, research and development fees and royalties. The
accounting policies that GW applies in recognising these revenues
are set out in detail in Note 2 to the consolidated financial
statements for the year ended 30 September 2014 included in the
Company's 2014 UK annual report for the year ended 30 September
2014 (available from GW's website at www.gwpharm.com).
The principal factors affecting GW's profitability and cash flow
are the amount of GW-funded research and development expenditure
timing, the rate of growth of Sativex product revenues and the
amount of development and approval milestone receipts from the
Company's commercial partners.
Expenditure on research and development activities is recognised
as an expense in the period in which the expense is incurred. A
proportion of GW's research and development expenditure is funded
by the Company's collaboration partners. GW refers to this as
"partner-funded research and development expenditure". Most of this
expenditure currently relates to the Sativex cancer pain
development for the U.S market which is wholly funded by
Otsuka.
GW also incurs research and development expenditures that are
funded from GW's own cash resources. This typically relates to core
research and development spend on the Company's staff and research
facilities plus spend on the Epidiolex development program and
certain pipeline product Phase 2 trials, currently in the areas of
adult epilepsy, glioma, schizophrenia, and type-2 diabetes. GW
refers to this as "GW-funded research and development
expenditure."
Management and administrative expenses consist primarily of
salaries, employer payroll taxes and benefits related to GW's
executive, finance, business development and support functions.
Other management and administrative expenses include costs
associated with managing commercial activities and the costs of
compliance with the day-to-day requirements of being a listed
public company on NASDAQ in the U.S. and on the AIM Market in the
United Kingdom, including insurance, general administration
overhead, investor relations, legal and professional fees, audit
fees and fees for taxation services.
Net foreign exchange gains/losses primarily result from
unrealized gains from translating the Group's U.S. dollar
denominated cash deposits to pounds sterling at the closing U.S.
dollar to Sterling exchange rate.
As a U.K. resident trading entity, GW is subject to U.K.
corporate taxation. GW's tax recognized represents the sum of the
tax currently payable or recoverable, and deferred tax. Deferred
tax assets are recognized only to the extent that it is probable
that taxable profits will be available against which deductible
temporary differences can be utilized. As a company that carries
out extensive research and development activities, GW benefits from
the U.K. research and development tax credit regime, whereby the
Company's principal research subsidiary company, GW Research
Limited, is able to surrender the trading losses that arise from
its research and development activities for a cash rebate. This has
resulted in a tax credit for each of the periods reported herein,
as disclosed in the tax benefit line of the condensed consolidated
income statements.
Results of Operations:
Comparison of the three months ended 31 December 2014 and 31
December 2013:
Revenue
Total revenue for the three months to 31 December 2014 was
GBP8.0 million, compared to GBP7.5 million for the three months
ended 31 December 2013. This increase reflects:
-- GBP0.3 million increase in Sativex product sales revenues to
GBP1.1 million for the three months ended 31 December 2014 compared
to GBP0.8 million for the three months ended 31 December 2013.
-- GBP0.1 million increase in development and approval
milestones to GBP0.1 million for the three months ended 31 December
2014 from GBPnil for the three months ended 31 December 2013.
Other revenue streams, individually, did not change by a
material amount.
The increase in Sativex product sales for the three months ended
31 December 2014 compared to the three months ended 31 December
2013 was driven by an increase in volume of Sativex inventory
shipped to GW's commercial partners. This increase was driven by
increased shipments to Germany and Italy compared to the prior
period.
Sativex in-market sales volumes sold by GW's commercial partners
for the three months ended 31 December 2014 were 35% higher than
the three months ended 31 December 2013.
The increase in development and approval milestones of GBP0.1
million for the three months ended 31 December 2014 compared to the
three months ended 31 December 2013 is due to a EUR125,000
(GBP97,000 equivalent) milestone receivable from Ipsen on
submission of a Sativex multiple sclerosis regulatory dossier in
Brazil.
Cost of sales
Cost of sales for the three months ended 31 December 2014 of
GBP0.6 million represent an increase of GBP0.2 million compared to
the GBP0.4 million recorded in the three months ended 31 December
2013. This increase reflects the growth in the volume of Sativex
inventory shipped to commercial partners in the three months ended
31 December 2014.
Research and development expenditure
Total research and development expenditure for the three months
ended 31 December 2014 of GBP15.1 million increased by GBP5.9
million compared to the GBP9.2 million incurred in the three months
ended 31 December 2013. The Otsuka funded element of this spend
remained constant at GBP6.4 million whilst GW-funded research and
development expenditure increase by GBP5.9 million to GBP8.7
million for the three months ended 31 December 2014 from GBP2.8
million for the three months ended 31 December 2013. The increase
is due to:
-- GBP2.6 million increase in staff and employment-related
expenses linked to increased headcount as the Group expands its
team in the UK and the U.S. to enable execution of the epilepsy
development program.
-- GBP2.2 million increase in epilepsy and other GW-funded
clinical program costs - reflecting the costs associated with the
set-up phase for GW's Dravet and Lennox-Gastaut syndrome Epidiolex
studies, cost of our other pipeline studies and costs of providing
regulatory support and Epidiolex under the increasing number of
FDA-authorized expanded access INDs.
-- GBP0.5 million increase in depreciation of R&D assets and other property-related overheads.
-- GBP0.3 million increase costs of growing an increased volume
of high CBD plant material for the Epidiolex development
program.
-- The prior period included a GBP0.3 million inventory
provision release which was not repeated in the current period.
Management and administrative expenses
Management and administrative expenses for the three months
ended 31 December 2014 of GBP0.8 million decreased by GBP0.5
million compared to the GBP1.3 million incurred in the three months
ended 31 December 2013. This net decrease reflect:
-- A GBP0.7 million decrease in respect of employee-related expenses, comprising:
o a GBP0.9 million decrease in the charge in respect of the
provision for payroll taxes on unrealized staff share option
gains;
o and a GBP0.2 million increase in payroll costs driven by
increased headcount.
-- A GBP0.2 million increase in respect of increased
accountancy, audit and investor relation costs arising from GW's
U.S. listing and Sarbanes-Oxley compliance.
Net foreign exchange gains / (losses)
Net foreign exchange gains/losses for the three months ended 31
December 2014 was a gain of GBP4.0 million, an increase of GBP4.2
million compared to the GBP0.2 million loss recorded for the three
months ended 31 December 2013. In both periods the gain/loss
recognised relates to the remeasurement of the Group's U.S. dollar
denominated cash deposits to pounds sterling at the closing U.S.
dollar to Sterling exchange rate at 31 December 2014. Dollar
denominated cash deposits totalled $149 million (GBP95.8 million
equivalent) at 31 December 2014 and averaged $159 million in the
period (GBP102.1 million equivalent).
Taxation
Our tax credit was GBP1.1 million for the three months ended 31
December 2014, which represents an increase of GBP0.4 million
compared to a GBP0.7 million credit recorded in the three months
ended 31 December 2013.
In the three months ended 31 December 2014, GW recorded a tax
credit of GBP1.1 million made up of: (i) the recognition of an
accrued GBP0.9 million research and development tax credit expected
to be claimable by GW Research Limited in respect of the research
and development expenditure incurred in the three months ended 31
December 2014; (ii) the recognition of an additional GBP0.2 million
of research and development tax credits in respect of the year
ended 30 September 2014 in its principal research subsidiary, GW
Research Limited, as part of the process for finalising tax returns
for that period.
In the three months ended 31 December 2013, GW recorded a tax
credit of GBP0.7 million made up of: (i) the recognition of an
accrued GBP0.9 million research and development tax credit to be
claimable by GW Research Limited in respect of the research and
development expenditure incurred in the three months ended 31
December 2013; (ii) recording of GBP0.2 million of deferred tax
expense due to the fact that previously recognized losses have been
utilized to offset profits earned in the three months ended 31
December 2013 by GW Pharma Limited.
Profit/Loss
The Group reported a loss after tax for the three months ended
31 December 2014 of GBP3.4 million compared with a loss after tax
for the three months ended 31 December 2013 of GBP2.8 million.
Liquidity and Capital Resources
Cash Flow
Net cash outflow from operating activities for the three months
ended 31 December 2014 of GBP6.2 million was GBP3.8 million higher
than the GBP2.4 million outflow from operating activities for the
three months ended 31 December 2013, principally reflecting the
increase in investment in Epidiolex and other pipeline research and
development activies.
Capital expenditure for the three months ended 31 December 2014
of GBP5.9 million, consisting primarily of planned upgrades to our
Cannabinoid extraction and Epidiolex manufacturing and growing
facilities, was GBP5.0 million higher than the GBP0.9 million for
the three months ended 31 December 2013.
Net cash flow from financing activities decreased by GBP0.2
million to a GBP0.1 million inflow in the three months ended 31
December 2014 compared to a GBP0.3 million inflow for the three
months ended 31 December 2013 due to a GBP0.2 million reduction in
proceeds on the exercise of employee share options.
As at 31 December 2014, GW had a closing cash position of
GBP156.6 million compared to GBP164.4 million as at 30 September
2014.
Property, plant and equipment
Property, plant and equipment at 31 December 2014 increased by
GBP6.1 million to GBP17.7 million from GBP11.6 million at 30
September 2014. This increase reflects the upgrade and expansion of
new Cannabinoid extraction facilities and growing facilities for
Epidiolex production.
Inventories
Inventories at 31 December 2014 decreased by GBP0.1 million to
GBP4.7 million from GBP4.8 million at 30 September 2014.
Inventories consist of finished goods, consumable items and work in
progress and are stated net of a GBP0.3 million realisable value
provision (30 September 2014: GBP0.4 million). During the three
months ended 31 December 2014, the provision for inventories
reduced by GBP0.1 million as a result of having utilised some of
the Group's work in progress to manufacture Sativex in the
period.
Trade receivables and other receivables
Trade receivables and other receivables at 31 December 2014
increased by GBP0.1 million to GBP2.0 million from GBP1.9 million
at 30 September 2014. This is due to an increase in prepaid rent as
a result of the timing of rental invoices.
Trade and other payables
Current trade and other payables at 31 December 2014 increased
by GBP1.1 million to GBP13.5 million from GBP12.4 million at 30
September 2014. This increase reflects a GBP0.6 million increase in
trade creditors as a result of the continued expansion of GW funded
clinical trials and manufacturing capability and a GBP0.5 million
increase in the provision held for revenue rebates to our
commercial partners.
Non-current trade and other payables at 31 December 2014
increased by GBP0.1 million to GBP8.0 million from GBP7.9 million
at 30 September 2014. This reflects a GBP0.1 million increase
resulting from accrued interest on the finance facility provided by
the Group's landlord for the Cannabinoid extraction facility
current under construction.
Headcount
Average headcount for the three months ended 31 December 2014
was 294 (31 December 2013: 204).
Guidance
There are no proposed changes to the 2015 guidance as provided
at the time of GW's 2014 year end results announcement.
RISKS AND UNCERTAINTIES
A detailed analysis of the risks that the Group faces is set out
in the Company's Annual Report on Form 20-F filed by the Company
with the SEC on 4 December 2014. The following summary of key risks
for the Group are as highlighted below:
-- We are substantially dependent on the commercial success of
our only approved product, Sativex, which is currently being
commercialized for MS spasticity outside the United States.
-- In addition to Sativex for MS spasticity, we are also
dependent on the success of our product candidates, including
Epidiolex for childhood epilepsy and Sativex for cancer pain, none
of which may receive regulatory approval or be successfully
commercialized. In this regard, and as noted above, the results of
the first of three Phase 3 cancer pain trials to be completed for
Sativex did not show a statistically significant difference for
Sativex compared with placebo.
-- In respect of our product candidates targeting orphan
indications, there is no assurance that we will successfully obtain
orphan drug exclusivity for any of our product candidates. Even if
we obtain orphan drug exclusivity for any of our product candidates
this exclusivity may afford limited protection and may be lost if
the FDA later determines that the request for designation was
materially defective, or if the we are unable to assure sufficient
quantity of the drug. Further if another party obtains orphan drug
exclusivity for the drugs and indications we are targeting, we may
be precluded from commercializing our product candidates in those
indications during that period of exclusivity.
-- Expanded access studies are uncontrolled, carried out by
individual investigators independent from GW, and not typically
conducted in strict compliance with Good Clinical Practices, all of
which can lead to a treatment effect which may differ from that in
placebo-controlled trials. Data from these studies provide only
anecdotal evidence of efficacy for regulatory review, contain no
control or comparator group for reference and are not designed to
be aggregated or reported as study results. Moreover, data from
such small numbers of patients may be highly variable. Such
information may not reliably predict data collected via systematic
evaluation of the efficacy in company-sponsored clinical trials.
Reliance on such information may lead to Phase 2 and 3 clinical
trials that are not adequately designed to demonstrate efficacy and
could delay or prevent GW's ability to seek approval of
Epidiolex.
-- We expect to face intense competition, often from companies
with greater resources and experience that we have. If we are
unable to scale up and compete successfully our commercial
opportunities may be reduced.
-- Problems in our manufacturing process, failure to comply with
manufacturing regulations, unexpected increases in our
manufacturing costs or an inability to meet unexpected demands for
our products could harm our business, results of operations and
financial condition.
-- Sativex, Epidiolex and our other product candidates contain
controlled substances, the use of which may generate public
controversy around our business which could negatively impact the
commercial success of any of our approved products or the future
development of our product candidates.
-- We have significant and increasing liquidity needs and may
require additional funding. There is no guarantee we will be able
to raise such additional funding or rasie such funding on
reasonable terms.
-- Any failure by us to comply with existing or future
regulations could harm our reputation and operating results.
-- Legislative or regulatory reform of the health care system,
or the laws governing the use of marijuana for medicinal or
recreational use, in the United States and foreign jurisdictions
may affect our ability to profitably sell our products, if
approved.
-- Our ability to research, develop and commercialize Sativex
and our product candidates is dependent on our ability to maintain
licenses relating to the cultivation, possession and supply of
controlled substances.
-- Clinical trials for our product candidates are expensive,
time consuming, uncertain and susceptible to change, delay or
termination.
-- We may not be able to maintain and protect our proprietary
technology and assets and third parties may assert that we infringe
their patents and proprietary rights, which could impair our
proprietary cannabinoid product platform and commercial
opportunities and adversely effect our operating profits.
-- We depend substantially on the commercial expertise of our
collaboration partners, and rely on Otsuka's funding of the
clinical program for Sativex in cancer pain and MS.
-- Sativex and the other product candidates we are developing
will be subject to U.S. controlled substance laws and regulations
and failure to comply with these laws and regulations, or the cost
of compliance with these laws and regulations, may adversely affect
the results of our business operations, both during clinical
development and post approval, and our financial condition. Failure
to comply with these laws and regulations may also harm our
reputation.
-- New investors may experience future dilution as a result of future issues of equity.
-- As a foreign private issuer, we are exempt from a number of
rules under the U.S. securities laws and Nasdaq corporate
governance rules and are permitted to file less information with
the Securities and Exchange Commission than U.S. companies. This
may limit the information available to holders of the ADSs.
GW continues to face a number of potential risks and
uncertainties which could have a material impact on the Group's
performance over the remaining nine months of the financial year
and could cause actual results to differ materially from expected
and historical results.
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial information for the 3 months ended 31
December 2014.
The directors do not consider that the principal risks and
uncertainties have changed since the Annual Report on Form 20-F for
the year ended 30 September 2014 was filed by the Group with the
SEC on 4 December 2014.
Related party transactions
The Group did not enter into any related party transactions
during the period.
Justin Gover Adam George
Chief Executive Officer Chief Financial Officer
About GW Pharmaceuticals plc
Founded in 1998, GW is a biopharmaceutical company focused on
discovering, developing and commercializing novel therapeutics from
its proprietary cannabinoid product platform in a broad range of
disease areas. GW commercialized the world's first plant-derived
cannabinoid prescription drug, Sativex(R) , which is approved for
the treatment of spasticity due to multiple sclerosis in 27
countries outside the United States. Sativex is also in Phase 3
clinical development as a potential treatment of pain associated
with advanced cancer. GW is also advancing an orphan drug program
in the field of childhood epilepsy with a focus on Epidiolex(R) ,
which is in Phase 2/3 clinical development for the treatment of
Dravet syndrome and which is also expected to enter Phase 3
clinical trials in the treatment of Lennox-Gastaut syndrome. GW has
a deep pipeline of additional cannabinoid product candidates which
includes compounds in Phase 1 and 2 clinical development for
glioma, ulcerative colitis, type 2 diabetes, and schizophrenia. For
further information, please visit www.gwpharm.com.
Forward-looking statements
This news release contains forward-looking statements that
reflect GW's current expectations regarding future events,
including statements regarding financial performance, the timing of
clinical trials, the relevance of GW products commercially
available and in development, the clinical benefits of Sativex(R)
and Epidiolex(R) and the safety profile and commercial potential of
Sativex and Epidiolex. 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 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, Epidiolex and other
products by consumer and medical professionals. A further list and
description of risks and uncertainties associated with an
investment in GW can be found in GW's filings with the U.S.
Securities and Exchange Commission. Existing and prospective
investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
GW undertakes no obligation to update or revise the information
contained in this press release, whether as a result of new
information, future events or circumstances or otherwise.
GW Pharmaceuticals plc
Condensed consolidated income statement
Three months ended 31 December 2014
Three months Three months Three months
ended ended ended
31 December 31 December 31 December
Notes 2014 2014 2013
$000's GBP000's GBP000's
Revenue 2 12,408 7,965 7,487
Cost of sales (887) (569) (358)
Research and development
expenditure 3 (23,561) (15,126) (9,153)
Management and administrative
expenses (1,250) (802) (1,275)
Net foreign exchange gain/(loss) 6,284 4,034 (236)
_______ _______ _______
Operating loss (7,006) (4,498) (3,535)
Interest income 68 44 31
Interest expense (31) (20) (20)
_______ _______ _______
Loss before tax (6,969) (4,474) (3,524)
Tax benefit 4 1,664 1,068 707
_______ _______ _______
Loss for the period (5,305) (3,406) (2,817)
_______ _______ _______
Loss per share - basic and
diluted 5 (2.2c) (1.4p) (1.6p)
All activities relate to continuing operations.
GW Pharmaceuticals plc
Condensed consolidated statement of changes in equity
Three months ended 31 December 2014
Called-up Share
share premium Other Accumulated
capital account reserves deficit Total
GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 1 October 2013 178 84,005 20,184 (68,965) 35,402
Exercise of share options - 299 - - 299
Share-based payment transactions - - - 241 241
Loss for the period - - - (2,817) (2,817)
_________ _________ ________ __________ ________
Balance at 31 December
2013 178 84,304 20,184 (71,541) 33,125
_________ _________ ________ __________ ________
Balance at 1 October 2014 237 220,551 19,260 (81,464) 158,584
Issue of share capital - 59 - - 59
Exercise of share options - 62 - - 62
Share-based payment transactions - - - 269 269
Loss for the period - - - (3,406) (3,406)
Other comprehensive loss - - (6) - (6)
_________ _________ ________ __________ ________
Balance at 31 December
2014 237 220,672 19,254 (84,601) 155,562
_________ _________ ________ __________ ________
Consolidated statement of comprehensive loss
For the three months ended 31 December 2014
Three months Three months
ended ended
31 December 31 December
2014 2013
GBP000's GBP000's
------------------------------------------------- ------------ ------------
Loss for the period (3,406) (2,817)
Items that may be reclassified subsequently to
profit or loss
Exchange differences on retranslation of foreign
operations (6) -
Other comprehensive loss for the period (6) -
------------------------------------------------- ------------ ------------
Total comprehensive loss for the period (3,412) (2,817)
------------------------------------------------- ------------ ------------
GW Pharmaceuticals plc
Condensed consolidated balance sheets
As at 31 December 2014
As at As at As at
31 December 31 December 30 September
Notes 2014 2014 2014
Non-current assets $000's GBP000's GBP000's
Intangible assets - goodwill 8,115 5,210 5,210
Property, plant and equipment 27,622 17,733 11,639
Deferred tax asset 4 398 255 277
_________ __________ __________
36,135 23,198 17,126
_________ __________ __________
Current assets
Inventories 6 7,243 4,649 4,777
Taxation recoverable 9,876 6,340 5,251
Trade receivables and other assets 7 3,192 2,049 1,857
Cash and cash equivalents 243,926 156,594 164,491
_________ __________ __________
264,237 169,632 176,376
_________ __________ __________
Total assets 300,372 192,830 193,502
_________ __________ __________
Current liabilities
Trade and other payables 8 (21,051) (13,514) (12,376)
Obligations under finance leases 10 (213) (137) (126)
Deferred revenue 9 (9,721) (6,240) (4,827)
_________ __________ __________
(30,985) (19,891) (17,329)
Non-current liabilities
Trade and other payables 8 (12,529) (8,043) (7,927)
Obligations under finance leases 10 (2,713) (1,742) (1,781)
Deferred revenue 9 (11,827) (7,592) (7,881)
_________ __________ __________
Total liabilities (58,054) (37,268) (34,918)
_________ __________ __________
Net assets 242,318 155,562 158,584
_________ __________ __________
Equity
Share capital 369 237 237
Share premium account 343,743 220,672 220,551
Other reserves 29,991 19,254 19,260
Accumulated deficit (131,785) (84,601) (81,464)
_________ __________ __________
Total equity 242,318 155,562 158,584
_________ __________ __________
------------
GW Pharmaceuticals plc
Condensed consolidated cash flow statements
For the three months ended 31 December 2014
Three months Three months Three months
ended ended ended
31 December 31 December 31 December
2014 2014 2013
$000's GBP000's GBP000's
Loss for the period (5,305) (3,406) (2,817)
Adjustments for:
Interest income (68) (44) (31)
Interest expense 31 20 20
Tax benefit (1,664) (1,068) (707)
Depreciation of property, plant and equipment 767 492 303
Net foreign exchange gains (6,337) (4,068) (201)
Decrease in provision for inventories (45) (29) (344)
Share-based payment charge 419 269 241
__________ __________ __________
(12,202) (7,834) (3,536)
Decrease/(increase) in inventories 245 157 (373)
Increase in trade receivables and other
assets (299) (192) (2,815)
Increase in trade and other payables
and deferred revenue 2,630 1,689 4,279
__________ __________ __________
__________ __________ __________
Net cash outflow from operating activities (9,626) (6,180) (2,445)
__________ __________ __________
Investing activities
Interest received 65 42 45
Purchases of property, plant and equipment (9,185) (5,897) (862)
__________ __________ __________
Net cash outflow from investing activities (9,120) (5,855) (817)
__________ __________ __________
Financing activities
Proceeds on exercise of share options 97 62 299
Proceeds of new equity issue 92 59 -
Interest paid (36) (23) (20)
Capital element of finance leases (44) (28) (21)
__________ __________ __________
Net cash inflow from financing activities 109 70 258
Effect of foreign exchange rate changes
on cash and cash equivalents 6,337 4,068 201
__________ __________ __________
Net decrease in cash and cash equivalents (12,300) (7,897) (2,803)
Cash and cash equivalents at beginning
of the period 256,226 164,491 38,069
__________ __________ __________
Cash and cash equivalents at end of the
period 243,926 156,594 35,266
__________ __________ __________
------------
GW Pharmaceuticals plc
Notes to the condensed consolidated financial statements
Three months ended 31 December 2014
1. Significant accounting policies
Basis of preparation
These unaudited condensed consolidated interim financial
statements for the three month periods ended 31 December 2014 and
31 December 2013 of GW Pharmaceuticals plc and subsidiaries
(collectively, the "Group") have been prepared in accordance with
International Accounting Standard 34 - "Interim Financial
Reporting", as issued by the International Accounting Standards
Board ("IASB") and as endorsed by the European Union. These
statements were approved by the Board on 4 February 2015.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by the IASB and as
adopted by the European Union have been condensed or omitted as
permitted by IAS 34. The balance sheet as at 30 September 2014 was
derived from the audited financial statements.
The significant accounting policies and methods of computation
adopted in the preparation of these interim condensed financial
statements are consistent with those used in the preparation of the
Group's annual audited financial statements for the year ended 30
September 2014 in accordance with IFRSs. These interim financial
statements include all adjustments, which are necessary to fairly
state the results of the interim period and the Group believes that
the disclosures are adequate to make the information presented not
misleading. Interim results are not necessarily indicative of
results to be expected for the full year.
The Group has not early adopted any standard, interpretation or
amendment that was issued but is not yet effective.
IFRS 15 is effective for financial years beginning on or after 1
January 2017 and establishes comprehensive guidelines for
determining when to recognise revenue and how much revenue to
recognise. The core principle in that framework is that a company
should recognise revenue to depict the transfer of promised goods
or services to the customer in an amount that reflects the
consideration to which the company expects to be entitled in
exchange for those goods or services. The standard was published in
May 2014 and the Group is currently working on its implementation.
The Directors do not expect that the adoption of other standards
and Interpretations in future periods will have a material impact
on the financial statements of the Group.
The information for the period ended 30 September 2014 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006.
Solely for the convenience of the reader, unless otherwise
indicated, all pound sterling amounts stated in the Condensed
Consolidated Balance Sheet as at 31 December 2014, the Condensed
Consolidated Income Statement and the Condensed Consolidated Cash
Flow Statement for the 3 months ended 31 December 2014 have been
translated into U.S. dollars at the rate on 31 December 2014 of
$1.5577 to GBP1.00. These translations should not be considered
representations that any such amounts have been, could have been or
could be converted into U.S. dollars at that or any other exchange
rate as at that or any other date.
The Directors do not consider the business to be seasonal or
cyclical.
Going concern
At 31 December 2014 the Group had cash and cash equivalents of
GBP156.6 million. The Group is also generating revenues from
Sativex sales, milestone payments and research and development fees
receivable from pharmaceutical licensing partners. The Directors
have reviewed the working capital and research and development
funding requirements of the Group for the next twelve months and
consider that the cash and cash equivalents, recurring revenues,
together with the strong development partner relationships that are
in place, mean that the Group is well placed to manage its business
risks successfully.
The Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial information for the three months ended 31
December 2014.
2. Segmental Information
Operating Segments
Information reported to the Company's Board of Directors, the
chief operating decision maker for the Group, for the purposes of
resource allocation and assessment of segment performance is
focused on the stage of product development. The Group's reportable
segments are as follows:
-- Commercial: The Commercial segment promotes Sativex through
strategic collaborations with major pharmaceutical companies for
the currently approved indication of spasticity due to MS. The
Group has licensing agreements for the commercialisation of Sativex
with Almirall S.A. in Europe (excluding the United Kingdom) and
Mexico, Otsuka Pharmaceutical Co. Ltd. ("Otsuka") in the U.S.,
Novartis Pharma AG in Australia, New Zealand, Asia (excluding
Japan, China and Hong Kong), the Middle East and Africa, Bayer
HealthCare AG in the United Kingdom and Canada, Neopharm Group in
Israel and Ipsen Biopharm Ltd. in Latin America (excluding Mexico
and the Islands of the Caribbean). Commercial segment revenues
include product sales, royalties, license, collaboration, and
technical access fees, and development and approval milestone
fees.
-- Sativex Research and Development: The Sativex Research and
Development ("Sativex R&D") segment seeks to maximise the
potential of Sativex through the development of new indications.
The current focus for this segment is the Phase 3 clinical
development programme of Sativex for use in the treatment of cancer
pain. The Group also believe that MS spasticity represents an
attractive indication for the U.S. and we intend to pursue an
additional clinical development programme for this significant
market opportunity. In addition, Sativex has shown promising
efficacy in Phase 2 trials in other indications such as neuropathic
pain, but these areas are not currently the subject of full
development programmes. Sativex Research and Development segment
revenues consist of research and development fees charged to
Sativex licensees.
-- Pipeline Research and Development: The Pipeline Research and
Development ("Pipeline R&D") segment seeks to develop
cannabinoid medications other than Sativex across a range of
therapeutic areas using our proprietary cannabinoid technology
platform. The Group's product pipeline includes Epidiolex, a
treatment for Dravet syndrome and Lennox-Gastaut syndrome, a second
epilepsy product candidate as well as other product candidates in
Phase 1 and 2 clinical development for glioma, ulcerative colitis,
type-2 diabetes and schizophrenia. Pipeline Research and
Development segment revenues consist of research and development
fees charged to Otsuka under the terms of our pipeline research
collaboration agreement.
The accounting policies of the reportable segments are
consistent with the Group's accounting policies. Segment result
represents the result of each segment without allocation of
share-based payment expenses, and before management and
administrative expenses, interest expense, interest income and
tax.
No measures of segment assets and segment liabilities are
reported to the Company's Board of Directors in order to assess
performance and allocate resources. There is no intersegment
activity and all revenue is generated from external customers.
Segmental revenues and results
For the Three Months Ended 31 December 2014
Total reportable
Pipeline segments Unallocated Consolidated
Commercial(1) Sativex R&D R&D GBP'000 costs(2)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue:
Product sales 1,089 - - 1,089 - 1,089
Research and development
fees - 6,292 123 6,415 - 6,415
License, collaboration and
technical access fees 364 - - 364 - 364
Development and approval
milestones 97 - - 97 - 97
Total revenue 1,550 6,292 123 7,965 - 7,965
Cost of sales (569) - - (569) - (569)
Research and development
credit/(expenditure) 30 (7,288) (7,679) (14,937) (189) (15,126)
------------- ----------- -------- ---------------- ------------- ------------
Segmental result 1,011 (996) (7,556) (7,541) (189) (7,730)
------------- ----------- -------- ---------------- ------------- ------------
Management and administrative
expenses (802)
Net foreign exchange gain 4,034
Operating loss (4,498)
Interest income 44
Interest expense (20)
Loss before tax (4,474)
Tax benefit 1,068
------------
Loss for the period (3,406)
------------
The following is an analysis of depreciation and the movement in
the provision for inventories by segment for the three months ended
31 December 2014:
Total Reportable
Sativex Pipeline Segments Unallocated
Commercial R&D R&D GBP'000 Costs Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------- -------- -------- ---------------- ----------- --------------
Depreciation (54) (68) (335) (457) (35) (492)
Decrease/(increase) in provision
for inventories 30 (1) - 29 - 29
--------------------------------- ---------- -------- -------- ---------------- ----------- --------------
1 The research and development credit/(expenditure) in the
commercial segment is the element of the inventory provision
movement that relates to commercial inventory.
2 Unallocated costs represent the portion of share-based payment
expenditures which is included in research and development
expenditure, but which is not allocated to segments. The remaining
share-based payment expenditure is included within management and
administrative expenses, which is similarly excluded from segmental
result.
Segmental revenues and results
For the Three Months Ended 31 December 2013
Total
Pipeline reportable Unallocated Consolidated
Commercial(1) Sativex R&D R&D segments costs(2)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue:
Product sales 804 - - 804 - 804
Research and development
fees - 6,221 138 6,359 - 6,359
License, collaboration
and technical access
fees 324 - - 324 - 324
Total revenue 1,128 6,221 138 7,487 - 7,487
Cost of sales (358) - - (358) - (358)
Research and development
credit/(expenditure) 352 (6,396) (2,971) (9,015) (138) (9,153)
------------- ----------- -------- ----------- ------------- ------------
Segmental result 1,122 (175) (2,833) (1,886) (138) (2,024)
------------- ----------- -------- ----------- ------------- ------------
Management and administrative
expenses (1,275)
Net foreign exchange
loss (236)
Operating loss (3,535)
Interest income 31
Interest expense (20)
------------
Loss before tax (3,524)
Tax benefit 707
------------
Loss for the period (2,817)
------------
The following is an analysis of depreciation and the movement in
the provision for inventories by segment for the three months ended
31 December 2013:
Total Reportable
Sativex Pipeline Segments Unallocated
Commercial R&D R&D GBP'000 Costs Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------- -------- -------- ---------------- ----------- --------------
Depreciation - (83) (220) (303) - (303)
Decrease/(increase) in provision
for inventories 352 (14) - 338 - 338
--------------------------------- ---------- -------- -------- ---------------- ----------- --------------
1 The research and development credit/(expenditure) in the
commercial segment is the element of the inventory provision
movement that relates to commercial inventory.
2 Unallocated costs represent the portion of share-based payment
expenditures which is included in research and development
expenditure, but which is not allocated to segments. The remaining
share-based payment expenditure is included within management and
administrative expenses, which is similarly excluded from segmental
result.
Revenues from the Group's largest customer are included within
the above segments as follows:
Sativex Pipeline
Commercial R&D R&D Total
GBP'000 GBP000's GBP000's GBP000's
________ _________ _______ ________
Three months ended 31 December 2014 70 6,292 122 6,484
________ _________ _______ ________
Three months ended 31 December 2013 - 6,221 138 6,359
________ _________ _______ ________
Geographical analysis of turnover by destination of customer
Three months Three months
ended ended
31 December 31 December
2014 2013
GBP000's GBP000's
UK 352 229
Europe (excluding UK) 956 639
United States 6,362 6,289
Canada 173 190
Asia 122 140
__________ __________
7,965 7,487
__________ __________
3. Research and development expenditure
Three months Three months
ended ended
31 December 31 December
2014 2013
GBP000's GBP000's
GW-funded research and development 8,711 2,794
Development partner-funded research
and development 6,415 6,359
__________ __________
Total 15,126 9,153
__________ __________
4. Tax benefit
Three months Three months
ended ended
31 December 31 December
2014 2013
GBP000's GBP000's
Current period research and development
tax credit (926) (900)
Adjustments in respect of prior year
tax credit (164) -
Current period utilization of deferred
tax assets 22 193
__________ __________
Total credit for the period (1,068) (707)
__________ __________
Tax credits relate to UK research and development tax credits
claimed under the Finance Act 2000.
In the year ended 30 September 2014, the Group recognised the
full estimated benefit for qualifying current year research and
development expenditures incurred during the year, based on the
Group's sustained history of agreeing such claims with HMRC. Any
difference in the credit ultimately received is recorded as an
adjustment in respect of prior year.
At 31 December 2014, the Group had recognized a deferred tax
asset of GBP0.3 million in respect of GBP1.3 million of carried
forward tax losses that the Group expected to be utilized to offset
against future trading profits.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient future taxable profits will be available
to allow all or part of the asset to be recovered.
5. Loss per share
The calculations of loss per share are based on the following
results and numbers of shares.
Three months Three months
ended ended
31 December 31 December
2014 2013
GBP000's GBP000's
Loss for the period - basic and
diluted (3,406) (2,817)
___________ ___________
Number of shares
Three months Three months
ended ended
31 December 31 December
2014 2013
Million Million
Weighted average number of ordinary
shares 236.7 177.8
Less: ESOP trust ordinary shares(1) - -
___________ ___________
Weighted average number of ordinary
shares for purposes of basic earnings
per share 236.7 177.8
Effect of potentially dilutive - -
shares arising from share options
and warrants(2)
___________ ___________
Weighted average number of ordinary
shares for purposes of diluted
earnings per share 236.7 177.8
___________ ___________
Loss per share-basic (1.4p) (1.6p)
Loss per share-diluted (1.4p) (1.6p)
(1) As at 31 December 2014 and 31 December 2013, 34,706 ordinary
shares were held in the ESOP trust. The financial effect is less
than GBP0.1 million for each of the three month periods ended 31
December, and consequently these have not been presented above.
(2) The impact of 8.7 million antidilutive share options have
been excluded from the diluted loss per share calculation for the
three months ended 31 December 2014 (8.9 million antidilutive share
options and warrants for the three months ended 31 December
2013).
6. Inventories
31 December 30 September
2014 2014
GBP000's GBP000's
Raw materials 210 210
Work in progress 3,684 3,885
Finished goods 755 682
__________ __________
4,649 4,777
__________ __________
Inventory is stated net of a provision for inventories,
calculated in accordance with the Group's accounting policy. The
movement in the provision for inventories is as follows:
2014 2013
GBP000's GBP000's
-------------------------------------- -------- --------
Opening balance - as at 1 October 351 1,601
Write-down of inventories 15 14
Write off of inventories included
in the provision (28) (637)
Reversal of write-down of inventories (44) (352)
Closing balance as at 31 December 294 626
-------------------------------------- -------- --------
The reversal of write-down of inventories is as a result of an
increased level of production, reducing the level of work in
progress expected to expire before use. Inventories with a carrying
value of GBP2.6 million are considered to be recoverable after more
than one year from the condensed consolidated balance sheet date,
but within the Group's normal operating cycle (30 September 2014:
GBP3.2 million).
7. Trade receivables and other receivables
31 December 30 September
2014 2014
GBP000's GBP000's
Amounts falling due within one
year
Trade receivables 588 612
Other receivables 928 809
Prepayments and accrued income 533 436
__________ __________
2,049 1,857
__________ __________
8. Trade and other payables
31 December 30 September
2014 2014
GBP000's GBP000's
Amounts falling due within one year
Other creditors and accruals 9,514 9,114
Trade payables 3,003 2,342
Fit out funding 260 218
Other taxation and social security 737 702
__________ __________
13,514 12,376
__________ __________
Amounts falling due after one year
Fit out funding 8,043 7,927
__________ __________
21,557 20,303
__________ __________
Fit out funding represents GBP8.3 million owed to the Group's
landlord reflecting the liability to repay the GBP7.8 million of
fit out funding received to fund the expansion and upgrades to
manufacturing facilities and associated accrued interest of GBP0.5
million. This is expected to be repaid in the form of lease rentals
commencing upon the completion of construction, currently expected
to be during the third quarter of the year ending 30 September
2015, over a 15-year term. The Group has estimated that GBP0.3
million will be due within one year and the remaining GBP8.0
million is due after one year.
9. Deferred revenue
31 December 30 September
2014 2014
GBP000's GBP000's
Amounts falling due within one year
Deferred license, collaboration and technical
access fee income 1,292 1,366
Advance research and development fees 4,948 3,461
__________ __________
6,240 4,827
__________ __________
Amounts falling due after one year
Deferred license, collaboration and technical
access fee income 7,592 7,881
__________ __________
Deferred revenues result mainly from the unamortized portion of
up-front license fees received in 2005 of GBP12.0 million from
Almirall S.A. and collaboration and technical access fees from
other Sativex licensees.
Advance research and development fees represent amounts received
from Otsuka for activities to be carried out on behalf of Otsuka.
These amounts will be recognised as revenue in future periods as
the services are rendered.
10. Amounts payable under finance leases
Minimum lease payments
31 December 30 September
2014 2014
GBP000's GBP000's
Amounts payable under finance
leases:
Within one year 209 200
In the second to fifth years inclusive 826 838
After five years 1,338 1,382
__________ __________
2,373 2,420
Less: future finance charges (494) (513)
__________ __________
Present value of lease obligations 1,879 1,907
__________ __________
Present value of minimum
lease payments
31 December 30 September
2014 2014
Amounts payable under finance
leases:
Amounts due for settlement within
12 months 137 126
Amounts due for settlement after
12 months 1,742 1,781
__________ __________
1,879 1,907
__________ __________
At as 31 December 2014, the weighted average lease term
remaining is 12.1 years (30 September 2014: 12.3 years). All lease
obligations are denominated in sterling.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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