Lipoxen expects significant license fee income from project base, raises £1.2m

Pharmaceutical company Lipoxen (AIM: LPX) said in its full-year results statement that it expects its project base to return significant license fee income going forward. It noted that the license deals that have been pushed out from 2009 to 2010, leading to declines in revenues last year, still have the potential to deliver revenues in the near term.

The management now intends to focus on developing its proprietary product pipeline and securing income from license deals, while reducing its pure research activities following the restructuring of its internal scientific operations, which was aimed at minimizing the risk of future programme delays and enabled the company to deliver near term opportunities for its platform technologies.

Lipoxen has already secured the necessary funding to move forward with its development programme after conducting a successful placing to raise £1.2 million, which was also announced today. The shares were placed at 7 pence per share compared to the stock’s yesterday’s closing price of 7.13 pence.

Shares in Lipoxen rallied 10.5% on the news in early deals.

Other highlights in the year to end-December 2009 included the singing of a collaboration agreement with Pharmasyntez ZAO and a preclinical feasibility project agreement with PATH Malaria Vaccine Initiative to apply the ImuXen technology to enhance the performance of malaria vaccine candidates.

“FY2009 saw tangible advances in the underlying science for both vaccine and drug platform technologies. Although the revenues from research and development work declined in 2009, the company has a substantial project base that has the capacity to deliver significant licence fee income going forward, and it is management's focus to deliver licence deals for both our lead candidates and technology out-licensing,” said chief executive of Lipoxen Scott Maguire.

The delays in clinical progress were blamed on regulatory and financial issues as both Insulin and EPO have already generated what Lipoxen said was excellent Phase I data, indicating their potential to be “genuinely market-challenging products.” EPO has now commenced a Phase II FDA/EMEA compliant trial in India and insulin candidate SuliXen is planned to enter Phase II trials in Russia in Q2 2010 with the board expecting the first major licensing of these products to occur in 2011.

Despite the decline in revenues from £1.2 million to £0.5 million in the full year due to the aforementioned delays, full year losses narrowed from £3.8 million to £3.6 million, which was better than budgeted, and losses per share were down from 2.89 pence to 2.47 pence. The increased cash burn left the company with a cash balance of £1.02 million at 31 December, prior to the capital raising.

Other post-period events included the granting of a new US patent for PolyXen technology, the dosing of first patients in an FDA/EMEA regulated Indian Phase II trial of ErepoXen and the granting of patients for Polysialylated G-CSF StimuXen Technology in six European countries.

http://www.proactiveinvestors.co.uk/companies/news/15156/lipoxen-expects-significant-license-fee-income-from-project-base-raises-12m-15156.html