Exhibit 99.1
(ABN 79 000 248 304)
Appendix 4D
Consolidated preliminary half year report
For the half year ended 31 December 2006
Compared to the half year ended 31 December 2005
23 February, 2007
| | | | $ A | |
| | | | | |
Revenues from operations | | down 66.7% to | | 543,022 | |
| | | | | |
Loss from operations after tax | | up 24.1% to | | (5,626,435 | ) |
| | | | | |
Net loss attributable to members | | up 24.1% to | | (5,626,435 | ) |
No interim dividend has been declared for the current period and no dividend was declared or paid for the previous year.
Net tangible assets (NTA) per share as at 31 December, 2006: $0.054. [2005: $(0.036)]
The attached accounts have been reviewed.
Commentary on the Company’s operations for the six months to 31 December, 2006 is included on pages 2 and 3 of this report.
23 February, 2007
Dear Shareholder,
We are pleased to present to you the half-yearly results to December 31, 2006, and report on the substantial progress in the clinical, research and corporate activities of ChemGenex Pharmaceuticals.
As we continue to expand our registration-directed clinical programs our expenditure in the half year ended December 31, 2006 increased compared to the corresponding period last year. The total loss for the period of $5.626 million was 24.1% higher than for the corresponding period last year ($4.535 million). Revenue from ordinary activities of $0.543 million decreased by 66.7% over the corresponding period last year ($1.630 million) reflecting the completion of our research alliance with Vernalis.
The half-year to December 31, 2006 saw major advances in the development program for the company’s lead agent, Ceflatonin® (homoharringtonine). Our registration-directed trial for chronic myeloid leukemia (CML) patients who are resistant to Gleevec® and have the T315I Bcr-Abl point mutation commenced enrolment in Q3, 2006. We currently have nine centres in the USA and Europe working with us and we are looking to have 15 centres involved by H2, 2007. In support of this key clinical program the United States Food and Drug Administration (FDA) granted Fast Track status for Ceflatonin in T315I positive CML patients in November 2006. The Fast Track designation will enable ChemGenex to file a New Drug Application (NDA) on a rolling basis as data becomes available. This permits the FDA to review the filing as it is received, rather than waiting for the entire document prior to commencing the review process. Further support for our lead program came with the granting of a significant manufacturing patent by the United States Patent and Trademark Office in January 2007.
In addition to the registration-directed trial in CML patients with the T315I Bcr-Abl point mutation we will soon initiate a second registration-directed clinical trial with patients who have failed Gleevec and another tyrosine kinase inhibitor. Clinical trials are also continuing with Ceflatonin in combination with Gleevec treatment. These trials are designed to increase commercial potential of Ceflatonin following product approval. Data presented by researchers from the M.D. Anderson Cancer Center in Houston at the American Society of Hematology annual meeting in December 2006 supports the efficacy of this combination therapy.
Looking forward, we expect to complete patient enrolment in the registration-directed phase 2/3 clinical trial of Ceflatonin in Gleevec-resistant CML patients with the T315I mutation in 2007. Pending successful clinical results and the meeting of other regulatory requirements, we will submit Ceflatonin to the FDA for product approval in 2008.
The phase 2 clinical study of our second compound, Quinamed® (amonafide dihydrochloride), at the Sarah Cannon Cancer Center in Nashville, Tennessee completed enrolment in late 2006. We are currently reviewing data and expect to announce results from these trials in H1, 2007. Pending positive trial results, we will initiate a phase 2b study of Quinamed in prostate cancer patients in H2, 2007.
The diabetes and obesity program is progressing several opportunities that we believe will be attractive to potential partners. The therapeutics program based on Gene Expression Signatures has identified four lead candidates that are currently in preclinical testing. The biomarkers program is developing both gene- and protein-based diagnostic assays that are being used to test our human sample libraries to determine if specific biomarkers are differentially expressed in humans prior to the onset of disease.
PO Box 1069, Grovedale Victoria 3216, Australia Telephone: +61 3 5227 2752 Facsimile: +61 3
5227 1322
Email: chemgenex@chemgenex.com ABN 79 000 248 304
In early February 2007 the company announced that two respected biotechnology investment funds had become significant shareholders in the company. Alta Partners, based in San Francisco and GBS Venture Partners, based in Melbourne participated in an acquisition of existing shares and capital raising for new shares and share options in ChemGenex. Both Alta and GBS Ventures have outstanding reputations, and this transaction consolidates the financial position of the company at a critical time. Contemporaneous with the investment transaction, the company announced the appointment of two new Non-executive Directors; Mr Daniel Janney and Dr Geoff Brooke, and the resignation of four Non-executive Directors; Mr Kevin Dart, Mr Roger Byrne, Mr Peter Bradfield and Dr Denis Wade.
The last six months has seen a strong flow of positive news from our clinical and preclinical programs, and the Board and management team look forward to continuing the excellent progress as we move towards completing enrolment in our registration-directed trial in late 2007. We look forward to sharing this excitement, and the value it creates, with you.
Dr. Greg Collier
Managing Director
Auditor’s Independence Declaration to the Directors of ChemGenex PharmaceuticalsLimited
In relation to our review of the financial report of ChemGenex Pharmaceuticals Limited for theyear ended 31 December 2006, to the best of my knowledge and belief, there have been nocontraventions of the auditor independence requirements of the Corporations Act 2001 or anyapplicable code of professional conduct.
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| | | | |
D R McGregor | | | Ernst & Young |
Partner | | | | |
| | | | |
Melbourne | | | | |
22 February 2007 | | | | |
Liability limited by a scheme approved under
Professional Standards Legislation.
Statement of Changes in Equity
| | | | | | | | Reserves | | | | | | | | | |
| | Issued | | Capital | | Asset | | FX | | Option | | Equity | | Accumulated | | Total | |
| | Capital | | Profits | | Revaluation | | Translation | | Premium | | Options | | Losses | | Equity | |
| | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | |
At 30 June, 2005 | | 84,592,891 | | 648,540 | | 150,447 | | — | | 10,866,878 | | 428,962 | | (71,452,270 | ) | 25,235,448 | |
Loss for six months to 31 December, 2005 | | — | | — | | — | | — | | — | | — | | (4,535,407 | ) | (4,535,407 | ) |
Total income/(expense) for the period | | — | | — | | — | | — | | — | | — | | (4,535,407 | ) | (4,535,407 | ) |
Share-based payments | | — | | — | | — | | — | | — | | 309,963 | | — | | 309,963 | |
| | | | | | | | | | | | | | | | | |
At 31 December, 2005 | | 84,592,891 | | 648,540 | | 150,447 | | — | | 10,866,878 | | 738,925 | | (75,987,677 | ) | 21,010,004 | |
Loss for the six months to 30 June, 2006 | | — | | — | | — | | — | | — | | — | | (5,834,312 | ) | (5,834,312 | ) |
Total income/(expense) for the period | | — | | — | | — | | — | | — | | — | | (5,834,312 | ) | (5,834,312 | ) |
Issue of share capital(i) | | 15,723,021 | | — | | — | | — | | — | | — | | — | | 15,723,021 | |
less cost of issue | | (423,297 | ) | — | | — | | — | | — | | — | | — | | (423,297 | ) |
Share-based payments | | — | | — | | — | | — | | — | | 529,493 | | — | | 529,493 | |
| | | | | | | | | | | | | | | | | |
At 30June, 2006 | | 99,892,615 | | 648,540 | | 150,447 | | — | | 10,866,878 | | 1,268,418 | | (81,821,989 | ) | 31,004,909 | |
Foreign Exchange Translation | | — | | — | | — | | (417,428 | ) | — | | — | | — | | (417,428 | ) |
Loss for six months to 31 December, 2006 | | — | | — | | — | | — | | — | | — | | (5,626,435 | ) | (5,626,435 | ) |
Total income/(expense) for the period | | — | | — | | — | | (417,428 | ) | — | | — | | (5,626,435 | ) | (6,043,863 | ) |
Issue of share capital(ii) | | 90,000 | | — | | — | | — | | — | | — | | — | | 90,000 | |
Less cost of issue(iii) | | (30,573 | ) | — | | — | | — | | — | | — | | — | | (30,573 | ) |
Share-based payments | | — | | — | | — | | — | | — | | 51,230 | | — | | 51,230 | |
| | | | | | | | | | | | | | | | | |
At 31 December, 2006 | | 99,952,042 | | 648,540 | | 150,447 | | (417,428 | ) | 10,866,878 | | 1,319,648 | | (87,448,424 | ) | 25,071,703 | |
(i) In May 2006 Chemgenex Pharmaceuticals Limited announced a programme of share issues to provide working capital and to continue the company’s ongoing research activities-
· On May 18, 2006 16,700,000 ordinary shares were issued at 43 cents each. This issue was ratified by an Extraordinary General Meeting of shareholders held on 16 June , 2006.
· On 1 June , 2006 1,665,170 ordinary shares were issued at 43 cents under a Share Placement Programme offered to all shareholders
· On 16 June , 2006 18,200,000 ordinary shares were issued at 43 cents per share following approval by an Extraordinary General Meeting of shareholders held on 16 June , 2006.
(ii) On 21 December , 2006 300,000 ordinary shares were issued after options granted at the Annual General Meeting o f21 November , 2003 were exercised. Under the terms approved by share holders these options were exercised at 30 cents each and the 300,000 shares issued raised $90,000.
(iii) Costs associated with the May 2006 issue not processed until after30 June , 2006.
Notes to the Half-Year Financial Statements
31 DECEMBER 2006
1. CORPORATE INFORMATION
ChemGenex Pharmaceuticals Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (“ASX”) and are traded as Level 2 American Depository Receipts (“ADRs”) on the NASDAQ Stock Market.
The nature of the operations and principal activities of the Group are described in note 3.
The financial report of ChemGenex Pharmaceuticals Limited (the Company) for the half-year ended 31 December, 2006 was authorised for issue in accordance with a resolution of the directors on 22 February, 2007.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.
The half-year financial report should be read in conjunction with the Annual Financial Report of ChemGenex Pharmaceuticals Limited as at 30 June 2006.
It is also recommended that the half-year financial report be considered together with any public announcements made by ChemGenex Pharmaceuticals Limited and its controlled entities during the half-year ended 31 December 2006 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.
(a) Basis of Preparation
The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 “Interim Financial Reporting” and other mandatory professional reporting requirements.
The half-year financial report has been prepared in accordance with the historical cost convention.
The financial report is presented in Australian dollars.
For the purposes of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.
(b) Summary of significant accounting policies
The half-year consolidated financial statements have been prepared using the same accounting treatment as used in the annual financial statements for the year ended 30 June 2006. Australian Accounting Standards and Interpretations that were mandatory for adoption by the Group from 1 July 2006 had no impact on this half-year financial report.
3. DIVIDENDS PAID AND PROPOSED
No dividends have been paid or proposed during the six months ended December 31, 2006. (2005: Nil).
4. CONTINGENT ASSETS AND LIABILITIES
Since the last annual reporting date, there has been no material change of any contingent liabilities or contingent assets.
5. SEGMENT INFORMATION
The economic entity performs biotechnology research.
Following the acquisition of ChemGenex Therapeutics Inc. in June 2004 the economic entity’s operations have been conducted in Australia and the United States of America.
Discovery and clinical research activities in oncology are managed at the Group’s American offices in Menlo Park, California.
Discovery into metabolic syndrome and depression are managed from the Group’s corporate head office at Geelong, Victoria, Australia.
| | Australia | | United States of
America | | Total | |
Half year to 31 December, 2006 | | $ | | $ | | $ | |
Revenue | | | | | | | |
Research revenue | | 231,967 | | — | | 231,967 | |
Other revenue | | 233,222 | | — | | 233,222 | |
Inter-segment sales | | — | | 2,271,382 | | 2,271,382 | |
Total segment revenue | | 465,189 | | 2,271,382 | | 2,736,571 | |
Unallocated income and eliminations | | 214,793 | | (2,175,120 | ) | (1,960,327 | ) |
Total consolidated revenue | | 679,982 | | 96,262 | | 776,244 | |
Result | | | | | | | |
Segment result | | (5,414,743 | ) | (211,692 | ) | (5,626,435 | ) |
Inter-segment elimination | | 2,271,382 | | (2,271,382 | ) | — | |
Net loss for the period | | (3,143,361 | ) | (2,483,074 | ) | (5,626,435 | ) |
| | Australia | | United States of
America | | Total | |
Half year to 31 December, 2005 | | $ | | $ | | $ | |
Revenue | | | | | | | |
Research revenue | | 1,498,875 | | — | | 1,498,875 | |
Other revenue | | 153,928 | | — | | 153,928 | |
Inter-segment sales | | — | | — | | — | |
Total segment revenue | | 1,652,803 | | — | | 1,652,803 | |
Unallocated income and eliminations | | 131,248 | | 29 | | 131,277 | |
Total consolidated revenue | | 1,784,051 | | 29 | | 1,784,080 | |
Result | | | | | | | |
Segment result and net loss for the period | | (2,150,452 | ) | (2,384,955 | ) | (4,535,407 | ) |
6. SUBSEQUENT EVENTS
On 8 February, 2007 Charter Pacific Corporation, at that time the Company’s largest shareholder, announced the sale of 28,100,000 shares in ChemGenex Pharmaceuticals Limited to institutional investors including interests associated with Alta Partners and GBS Venture Partners.
On 8 February, 2007 the Company announced a placement of 17,056,377 shares at 62 cents and 5,685,459 options to interests associated with Alta Partners and GBS Venture Partners. The share issue will raise $10,574,954 in equity capital. The options will have an exercise price of 75 cents each and will expire 5 years from issue.
On 8 February, 2007 the Company announced a rights issue to eligible share holders of shares at 62 cents and 5 year options at an exercise price of 75 cents. Details of this rights issue will be provided to shareholders in due course.
Following the share transfer on 8 February, 2007 the Company accepted the resignation of the following directors- Kevin Dart, Roger Byrne, Peter Bradfield and Denis Wade.
On February 8, 2007 the Company announced that Daniel Janney and Geoff Brooke would become directors of the Company. These appointments became effective on 13 February, 2007.
Director’s Declaration
DECLARATION
In accordance with a resolution of the directors of ChemGenex Pharmaceuticals Limited, I state that:
In the opinion of the directors:
(a) the financial statements and notes of the consolidated entity:
(i) give a true and fair view of the financial position as at 31 December 2006 and the performance for the half-year ended on that date of the consolidated entity; and
(ii) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable
On behalf of the Board
Dr. G. Collier
Managing Director,
Melbourne.
22 February, 2007
To the members of ChemGenex Pharmaceuticals Ltd
Report on the Half-Year Condensed Financial Report
We have reviewed the accompanying half year financial report of ChemGenex Pharmaceuticals Ltd and the entities it controlled during the half year, which comprises the balance sheet as at 31 December 2006, and the income statement, statement of changes in equity and cash flow statement for the half year ended on that date, other selected explanatory notes and the directors’ declaration.
Directors’ Responsibility for the half year Financial Report
The directors of the company are responsible for the preparation and fair presentation of the half year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the half year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2006 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 and other mandatory financial reporting requirements in Australia. As the auditor of ChemGenex Pharmaceuticals Ltd and the entities it controlled during the half year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of ChemGenex Pharmaceuticals Ltd and the entities it controlled during the half year, is not in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2006 and of its performance for the half year ended on that date; and
(ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia.
Ernst & Young
D R McGregor
Partner
Melbourne
22 February 2007
Liability limited by a scheme approved under
Professional Standards Legislation.
