GeneMedix 1H losses on budget; restructuring talks still underway
Biopharma GeneMedix plc (GMX.L), developer therapeutic proteins using recombinant DNA technology and novel cell culture, today reported a first half loss of £2.8m and said that negotiations regarding its restructuring were still underway.
The loss for the six months to end May was marginally higher than the £2.7m recorded in the first half of 2005. In fact the company has cut administrative expenses by £0.3m, but spent a similar extra amount on research and development.
Chief Executive Officer Julian Attfield (pictured) said the company had "continued to make good progress in the development of its lead compound Epostim and in its restructuring programme".
Expenditure was in line with forecasts, while there were no revenues in the period, he said.
As GeneMedix said earlier this month, it is in "exclusive discussions" with an unnamed "major company", and is receiving bridging payments to fund its on-going activities whilst negotiations progress.
The Company also said it had received a second cash in-flow on the sale of its Chinese subsidiary, with the deal to be concluded over the coming months, which will bring in around £1.6m.
The Directors said that they were aware, as they have said in two previous financial summaries this year, that "due to the recurring losses in the business and the effect of long term debt instruments which are held at book rather than redeemable value, the Company is demonstrating, under the provisions of S142 of the Companies Act, a serious loss of capital.
EGM
"The Directors have a duty to call an EGM to explain the reasons for this. As explained in the preliminary statements this situation has arisen due to the inability under current accounting rules to revalue a £4m convertible loan which the Company has the option to unwind at about a quarter of its balance sheet value.
"In discussions with certain major shareholders on this issue the consensus view still remains that the meeting should be held once the Directors are in a position to give investors clearer visibility regarding the future direction of the Company.
"As it is the intention of the Company to conclude its restructuring programme shortly with a transaction that will require shareholder approval, an EGM has not yet been convened, but should current negotiations with the major company not progress or suffer any further delays, an EGM will be called with immediate effect."
Mr Attfield said the Directors "remain confident that there will be a satisfactory conclusion to its restructuring programme, but it must be clear that, without continuing to receive cash inflows under the temporary exclusivity arrangement and if the payments from China are not received on a timely basis, the Company only has sufficient resources to continue the current level of activity for a maximum of two months from the date of this announcement".
The company's share price did not move on the news, suggesting the market, though no doubt keen to see a quick resolution to the restructuring, has been kept well informed.
25th August 2006
