BIOCOMPATIBLES INTERNATIONAL PLC ( Biocompatibles or the Company ) UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008

Transcription

1 5 March 2009 BIOCOMPATIBLES INTERNATIONAL PLC ( Biocompatibles or the Company ) UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008 Farnham UK, 5 March 2009: Biocompatibles International plc (LSE:BII) today announces its unaudited preliminary results for the year ended 31 December Highlights Revenue increase of 94% to 17.7m (2007: 9.1m). Gross profit increase of 105% to 14.0m (2007: 6.9m). Operating loss decrease of 49% to 3.2m (2007: 6.2m). Net funds at 31 December 2008 of 33.6m (2007: 34.3m). US launch of Medtronic s Endeavor Drug-Eluting Stent. Completion of recruitment in the Dermal Filler Bead trial. FDA approval of PARAGON I trial. Proposed dividend, based on royalty income. Drug-Eluting Beads Japan Option Agreement with Eisai. Acquisition of BrachySciences. Final PRECISION V data announced at CIRSE. Clinical Collaboration agreement with Bayer. First patient treated in the CellBeads TM stroke trial. GLP-1 Development and Option Agreement with AstraZeneca. Post Period Highlights Clinical Trial under way in UK in Liver Metastases from Colorectal Cancer. Financial guidance re-confirmed. Principal 2009 Operating Goals: Operating First patient treated in Bayer s, SPACE, trial (Drug-Eluting Bead +/- Nexavar in HCC). Launch of DC Bead in China. Presentation of data from the Drug-Eluting Bead Surgical Registry at The American Hepato-Pancreato-Biliary Accociation Annual Meeting (12-15 March, Miami Beach, Florida). AstraZeneca programme progress.

2 Completion of recruitment in the CellBeads TM stroke trial. Financial Revenue in the range 22m to 24m. Closing net funds of 27m after payment of the dividend of 2m. Payment of 5 pence per share dividend in May. Ends Contact: Biocompatibles +44 (0) Crispin Simon, Chief Executive Ian Ardill, Finance Director Biocompatibles International plc Biocompatibles International plc is a leading medical technology company in the field of drugdevice combination products. The Oncology Products Division conducts the marketing of Biocompatibles approved oncology products, supplied from facilities in Farnham, UK and Oxford, CT. These include Drug-Eluting Bead products which are used in more than 35 countries for the treatment of primary liver cancer (HCC), liver metastases from colorectal cancer, and other cancers; and Brachytherapy products (Radiation-Delivering Seeds) which are used in the treatment of prostate cancer. Our distribution partners include AngioDynamics Inc., Terumo Corporation and Eisai Co. Ltd. Our R&D Facilities are engaged in licensing and in new product development, based on the company s core drug delivery technologies. The Drug Delivery Division, in Farnham, UK is developing new products for oncology. CellMed, in Alzenau, Germany, is developing a Drug- Eluting Bead product for the treatment of stroke, based on proprietary stem cell technology; and a GLP-1 analogue for the treatment of diabetes and obesity partnered with AstraZeneca. We also have collaborative agreements with Bayer Healthcare Pharmaceuticals Inc., Medtronic Inc. and Merz Pharmaceuticals GmbH. Further information is available at This news release contains forward-looking statements that reflect Biocompatibles current expectation regarding future events. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of Biocompatibles research strategy, the applicability of the discoveries made therein, the successful and timely completion of clinical studies and the uncertainties related to the regulatory and commercialisation processes.

3 Notes to Editors: Glossary of Terms: Drug-Eluting Beads Polymer embolisation microspheres designed to load and elute drugs. Pre-loaded Bead A Drug-Eluting Bead incorporating a drug which has been loaded into the Bead in Biocompatibles facility. CellBeads TM Stem Cells encapsulated in alginate microspheres, designed to deliver a therapeutic protein when implanted in a patient s body. CellMed s stem cells were derived from a single adult bone marrow donor and are stored and processed in a GMPcertified facility. Bead Block This product has a CE Mark and 510k clearance from the FDA. Bead Block is intended for the embolisation of hypervascularised tumors and arteriovenous malformations. Chemoembolisation Embolisation incorporating a chemotherapy drug. Conventional TACE Trans-Arterial Chemo-Embolisation a procedure whereby a chemotherapeutic agent is mixed into a slurry and injected via a catheter, locally at a tumour site. PRECISION TACE The use of either PRECISION Bead or DC Bead in the TACE procedure. PRECISION TACE results in a lower systemic drug exposure and more drug at the tumour site. DC Bead TM LC Bead TM Embolisation Hypervascular tumour Arteriovenous malformation PRECISION Bead TM Doxorubicin PARAGON Bead TM Irinotecan This product has a CE Mark. In Europe, DC Beads are intended to be loaded with doxorubicin for the purpose of: - Embolisation of vessels supplying malignant hypervascularised tumour(s), - Delivery of a local, controlled, sustained dose of doxorubicin to the tumour(s). This product has 510k clearance from the FDA. LC Bead is intended for the embolisation of hypervascularised tumors and arteriovenous malformations. The introduction of material to reduce or completely obstruct bloodflow. A growth of tissue with an abnormally increased blood supply which may be malignant or benign. A knot of distended blood vessels often overlying and compressing the surface of the brain. Biocompatibles proprietary Drug-Eluting Bead product containing doxorubicin. A widely used chemotherapeutic agent for the treatment of a large number of cancers. It is a powerful cytotoxic drug that is not cell cycle specific. Biocompatibles proprietary irinotecan HCl, Drug-Eluting Bead. A widely used chemotherapeutic agent for the treatment of colorectal cancer. It is a topoisomerase I inhibitor that interferes with DNA replication during cell division, leading to

4 Metastatic disease PRECISION Clinical Trials DEBIRI FOLFIRI HCC mcrc Hepatic colo-rectal metastases IDE Systemic chemotherapy FDA CE Mark CIRSE Cosmetic Dermal Filler Bead Drug-Eluting Stent (DES) Endeavor Stent cell death. The spread of a cancer from its original site (primary) to other locations within the body (secondary). In the case of colorectal cancer, the liver is the most common site of secondary tumours. A family of clinical trials sponsored by Biocompatibles for the evaluation of the Drug-Eluting Bead with Doxorubicin. Treatment involving the Drug-Eluting Bead with Irinotecan. A chemotherapy regimen for the treatment of colorectal cancer, made up of the drugs FOLinic Acid (Leucovorin), Fluorouracil (5-FU) and IRInotecan (Camptosar). Hepatocellular Carcinoma, primary tumour of the liver. Metastatic colo-rectal cancer is cancer of the colon or rectum that has spread, or metastasised to other parts of the body, such as the liver or lung. Colo-rectal cancer that has spread to the liver. Investigational Device Exemption The approval by the US Food and Drug Administration (FDA) to carry out a clinical trial in the US with an unapproved device. Treatment with anticancer drugs that travel through the bloodstream, reaching and affecting cells all over the body. The United States Food and Drug Administration, which regulates drugs and medical devices. A European standard for medical devices, a CE Mark indicates that a device meets the requirements of the Medical Device Directive and appropriate Quality System standards. The Cardiovascular and Interventional Radiological Society of Europe. This product is an alginate bead for use as a dermal filler to address facial wrinkles. A small metal scaffold coated with a drug which is placed in a blood vessel following angioplasty to keep the vessel open. Manufactured by Medtronic, the Endeavor Drug-Eluting Stent is coated with phosphorylcholine (PC), sub-licensed from Biocompatibles, and Zotarolimus TM, licensed from Abbott. GLP-1 Glucagon-like peptide-1, a protein that helps the pancreas β- cells produce insulin and has been shown to induce weight loss in overweight Type II diabetes patients. It also has shown strong anti-apoptotic effects that enable it to reduce programmed cell death. CM1 Endovascular delivery Non-vascular delivery Interventional CellMed s proprietary form of GLP-1 that is an unmodified human sequence GLP-1 but is plasma stable. Endovascular Delivery accesses treatment sites via major blood vessels. Non-vascular delivery accesses treatment sites by means other than endovascular delivery. These will include direct access in a surgical site and percutaneous, or through the skin, injection. Interventional oncology is the treatment of cancer and cancer-

5 Oncology Brachytherapy Nexavar (sorafenib) related problems using minimally invasive, targeted treatments performed under imaging guidance. The implantation of seeds that deliver radiation for the treatment of prostate cancer. Nexavar is an oral multikinase inhibitor for the treatment of two common types of cancer, hepatocellular carcinoma (HCC) and advanced renal cell carcinoma (RCC) Operational Review Biocompatibles made good progress in 2008 both in operational performance, in terms of the annual goals set at the beginning of the year and in the three strategic priorities identified in the 2007 Annual Report. First, re-establishing the growth of the Drug-Eluting Bead products, which was achieved; second, in leveraging existing Company assets into new transactions, which was achieved by the transactions with Eisai, Bayer and AstraZeneca; and third, in identifying complementary product lines with a reasonable valuation, which was achieved with the acquisition of BrachySciences. Highlights included the sales growth rate of the flagship Bead Products of 91%, the acquisition of Brachysciences completed in August and the agreements with AstraZeneca signed in December. In the 2007 Annual Report, the Company established goals for 2008 that were planned for announcement during the course of the year and a review of progress follows below. Revenue in the range of 12m to 15m. This goal was achieved. Revenue was 17.7m, representing growth of 95% on 2007 and compared with guidance of 15m to 17m (revised on 24 July 2008). Closing net funds of 30m. This goal was achieved. Year-end net funds were 33.6m compared with guidance of 28m. Presentation of randomised Phase II data from the PRECISION V trial at CIRSE. This goal was achieved. Start of US registration trial for a Pre-loaded Bead. This goal was not achieved however patient screening had commenced in the PARAGON I trial for the PARAGON Bead (pre-loaded with irinotecan for the treatment of hepatic colorectal metastases).

6 Report of US launch of Medtronic s Endeavor Drug-Eluting Stent. This goal was achieved. Completion of recruitment in the CE Mark trial for the cosmetic dermal filler bead. This goal was achieved Completion of recruitment in the CellBeads stroke trial. This goal was not achieved although recruitment in the stroke trial has commenced with the successful treatment of the first patient in October, followed by a second by the year end. Oncology Products Division The Oncology Products Division conducts the marketing of Biocompatibles approved oncology products, supplied from facilities in Farnham UK and Oxford CT. These include Drug-Eluting Bead products which are used in more than 35 countries for the treatment of primary liver cancer (HCC), liver metastases from colo-rectal cancer, and other cancers; and Brachytherapy products (radiation-delivering seeds) which are used in the treatment of prostate cancer. Our Bead Products distribution partners include Angiodynamics Inc., Terumo Corporation and Eisai Co. Ltd. Sales of Oncology Products grew by 165% to 8.3m and included first sales of Brachytherapy Products following the August acquisition of BrachySciences. The Division operating profit margin was a satisfactory 17%. Sales of the Company s Bead Products, Bead Block TM, LC Bead TM, DC Bead TM and PRECISION Bead TM, grew by 91% in comparison with Sales were strong across all regions EU, US and Rest of World; and were led by growth in distributors sales to hospitals of our flagship Drug-Eluting Bead products. In May, Biocompatibles granted the Japanese company Eisai Co. Ltd an exclusive twelve month option to license the Drug-Eluting Bead Products in Japan. Eisai is a large pharmaceutical company and it is committing significant resources behind our products for Japan where HCC is highly prevalent. In August and September we announced results from the PRECISION V trial, a Phase II randomised controlled trial evaluating our Drug-Eluting Bead against a control arm of conventional TACE (ctace) in hepatocellular carcinoma (HCC). 212 patients were recruited at 23 European hospitals. The Principal Investigator Panel concluded that the PRECISION V results show that DC Bead is a better treatment than conventional TACE. An improved response with significantly lower toxicity is unusual for a new cancer therapy.

7 The strategy for our Drug-Eluting Bead Products is focused on two substantial opportunities HCC, where we estimate that the market opportunity is up to $400m; and hepatic colorectal metastases where we believe the market opportunity is larger. We define our market as interventional oncology implants. We have two significant competitors whose results are readily available. Our market share by value in this three competitor view rose from 19% in 2007 to 26% in Our goal is to become the leader in interventional oncology implants a market worth around $60m in 2008 and one that we intend to grow and lead. All these numbers are Biocompatibles estimates. In August we were delighted to complete the acquisition of BrachySciences - a medical device, brachytherapy, business located in Oxford, Connecticut, principally marketing implantable seeds that deliver radiation for the treatment of prostate cancer. The highest market penetration of brachytherapy is in the US, where Biocompatibles estimates BrachySciences market share to be around 5%. Following the acquisition, the premium Anchorseed product was rolled out with positive physician feedback and total BrachySciences sales were in line with the budget set on completion of the acquisition. R&D Businesses Our R&D Facilities are engaged in licensing and in new product development, based on the Company s core drug delivery technologies. The Drug Delivery Division in Farnham, UK is developing new products for oncology. We have an R&D agreement with Bayer HealthCare Pharmaceuticals Inc. in Oncology and, through Abbott s sub-licence, a relationship with Medtronic Inc. in Cardiovascular medicine. Drug Delivery revenue grew by 66% to 8.3m as a result of the one-off milestone received from Abbott and increased royalties following the US launch of Medtronic s Endeavor Drug-Eluting Stent. The Division traded at a loss, in line with budget. While the Oncology Products Division is responsible for commercialising our approved oncology products, the Drug Delivery Division is responsible for manufacturing the products and building the pre-clinical and clinical science that are essential to our success. In addition it is this group which is responsible for the new product registrations and regulatory filings in our expanding list of sales territories. The next generation of oncology products includes further developments in Interventional Oncology as well as drug eluting bead products for further indications. In September we announced the establishment of a clinical collaboration agreement with Bayer HealthCare Pharmaceuticals and Onyx Pharmaceuticals, Inc. The focus of the collaboration will be the evaluation of the combination of Biocompatibles Drug-Eluting Beads with Bayer s Nexavar (sorafenib) in patients with HCC. The principal focus of the programme will be a randomised Phase IIb trial, sponsored by Bayer. Biocompatibles expects that a positive trial

8 result would establish the combined therapy as the standard of care in the developed world for HCC patients eligible for TACE. The principal focus of the clinical activity is a second generation Drug-Eluting Bead, PARAGON BEAD TM, pre-loaded with irinotecan for the treatment of patients with hepatic colorectal metastases. After the end of the year, the first patient was treated in a European based neoadjuvant study. This product is not expected to be approved before Scale-up of our manufacturing plant in Farnham continued according to plan. The proportion of Bead product, by sales value, supplied into inventory from the Farnham plant increased to 85% in 2008 from 66% in 2007, the remainder of the product having been supplied by our partner, Biocure. From 2009, the Farnham plant will be solely responsible for the manufacturing of the Bead Products. Medtronic s Endeavor Drug-Eluting Stent was approved in the US in February. Biocompatibles earns a royalty of 1.5% on world-wide sales of the Endeavor stent and earned a milestone payment on the first commercial sale of the stent in the US. Medtronic reported Endeavor market share in the US at approximately 12% for the quarter ended 24 October The Drug Delivery Division has a number of other earlier stage programmes in development. This R&D group has now been responsible for the development of three product lines that have been successfully commercialised (coronary stents, contact lenses and Bead Products) and the Board is optimistic that the formula will continue to deliver. CellMed, in Alzenau, Germany, is developing a Drug-Eluting Bead product for the treatment of stroke, based on proprietary stem cell technology; has developed a GLP-1 analogue for the treatment of diabetes and obesity, now a partnered programme with AstraZeneca plc.; and has established a partnership with Merz Pharmaceuticals GmbH for the development of a cosmetic Dermal Filler Bead. CellMed s revenue grew by 13% to 1.1m, as a result of the revenue recognised on the AstraZeneca Agreement. CellMed traded at a loss, in line with budget. The highlight of the year was the signing in December of Product Development and Option-to- License Agreements with AstraZeneca for a proprietary GLP-1 analogue which was invented and developed by CellMed. The Product Development Agreement provides for a programme of pre-clinical, Phase I and Phase IIa activities that will be managed by CellMed. Payment by AstraZeneca of a schedule of option fees, totalling up to 8.8m, is designed to cover the cost of the product development work. The Option-to-License provides AstraZeneca with an exclusive option to license the relevant patents for exploitation in the field of diabetes and obesity at any time during the course of the Product Development program. On the exercise of the Option-to-License, AstraZeneca would pay a licence fee of 25m and would assume financial and management responsibility for the programme. There is provision for further milestones up to a maximum value of 293.5m. After launch, royalties in the single to mid-teens digit range would apply, the rate depending on the level of sales achieved.

9 The first patient was treated in the CellBeads stroke trial and the patient s good recovery prompted considerable favourable publicity in the UK and in Germany. Plans have been established to accelerate patient recruitment. Recruitment was completed in a clinical trial, managed by Merz Pharmaceuticals, to evaluate the Company s proprietary Dermal Filler Bead as an aesthetic treatment. Filing for CE Mark approval occurred, as planned, at the turn of the year. Approval is still expected in the first half of Financial Review The loss for the year ended 31 December 2008 was 0.5m (2007: loss of 2.0m, which included 0.6m of gain on sale of discontinued operations). Revenue increased by 94% to 17.7m in 2008 (2007: 9.1m). At constant currencies and excluding the effect of the acquisition of BrachySciences, growth was 48% - in line with our expectations at the start of the year. The Oncology Products Division s sales grew by 165% to 8.3m (2007: 3.1m). Sales of Bead Products grew significantly from the lower 2007 base which had reflected our distributor inventory correction. The Division also recognised its first sales of Brachytherapy Products following the August acquisition of BrachySciences. Drug Delivery Division revenue grew by 66% to 8.3m (2007: 5.0m) as a result of the one-off milestone received from Abbott and increased royalties following the US launch of Medtronic s Endeavor Drug-Eluting Stent. CellMed s revenue grew by 13% to 1.1m (2007: 1.0m), as a result of the revenue recognised on the AstraZeneca Agreement. The weakening of sterling over the course of 2008 also contributed towards the additional sales in each division. Gross profit increased by 105% to 14.0m (2007: 6.9m) as a result of the growth in Drug- Eluting Bead sales, the acquisition of BrachySciences, the Abbott milestone and royalties on Medtronic s Endeavor Drug-Eluting Stent sales. Operating expenses, increased by 30% to 17.6m in 2008 (2007: 13.5m). Selling and marketing costs increased by 52% to 3.0m (2007: 2.0m) mainly driven by the acquisition of BrachySciences. Research and development costs increased by 26% to 11.9m (2007: 9.4m) mainly due to increasing clinical trial expenditure. Administrative expenses increased by 27% to 2.7m (2007: 2.1m), again due to the acquisition of BrachySciences. The weakening of sterling over the course of 2008 also contributed towards the additional cost in each category. We made a contribution to research and development costs, defined as gross profit less selling and marketing costs and administrative expenses, of 8.3m (2007: 2.8m). At a time of significant investment in the product pipeline, this measure focuses management on a key profit indicator until the business moves into overall profitability. Overall, the operating loss decreased to 3.2m in 2008 (2007: 6.2m). Interest receivable has remained at 2.0m (2007: 2.0m), supported by interest received on a significant reclaim of VAT relating to previous years.

10 The Group has recognised Research and Development tax credits of 0.6m (2007: 1.3m), which are receivable from HM Revenue & Customs. Included in the 2007 credit was 0.5m relating to additional claims in respect of previous years. At the year-end the Group had 152 employees (2007: 91), 48 of which relate to the acquisition of BrachySciences. The Group generated net cash of 1.7m from operating activities (2007: net cash used 2.6m), benefiting from the milestone received from Abbott, interest and R&D tax credits received. Net cash used in investing activities was 15.0m (2007: nil) and included 2.9m in relation to the acquisition of BrachySciences (2007: nil) and the purchase of 11.7m of short term deposits (2007: nil). Net assets at 31 December 2008 were 48.3m (2007: 40.7m) which included cash, cash equivalents and short term deposits of 33.6m (2007: 34.3m) and goodwill and intangible assets arising from the acquisitions of CellMed and BrachySciences of of 17.1m (2007: 7.0m). The Company expects total 2009 cash outflow to be around 6.6m (2008: 0.7m). This will leave 2009 closing net funds at around 27m and includes payment of the dividend of 2.0m. The significant cash balance and controlled cash expenditure positions the Company strongly in the current economic climate. The Company expects to achieve consolidated revenue for 2009 in the range of 22m to 24m, the mid point of which represents growth of 30% over This growth is expected to be derived from the full year effect of BrachySciences, underlying growth from the Bead Products and an increase in the revenue recognised from the AstraZeneca Agreement. These anticipated increases are offset by a decline in the Drug Delivery Division s revenue because of the one-off nature of the Abbott milestone in Dividend On 15 May 2008, the Company announced its plan to pay a dividend based on the royalty income receivable from Abbott on sales of Medtronic s Endeavor Drug-Eluting Stent. The Board will meet in late March and plans to approve the payment of the dividend based on the Biocompatibles International plc audited 2008 accounts. The Company will then publish the details of the 5 pence per share dividend, including the record date.

11 Consolidated Income Statement - unaudited For the year ended 31 December Notes Revenue 2 17,685 9,105 Cost of sales (3,657) (2,250) Gross profit 14,028 6,855 Other operating income Selling and marketing costs (2,992) (1,966) Research and development costs (11,885) (9,413) Administrative expenses (2,712) (2,128) Operating loss (3,161) (6,178) Finance income 2,032 1,982 Finance expense (60) (15) Loss before tax (1,189) (4,211) Tax credit 732 1,610 Loss for the year from continuing operations (457) (2,601) Gain on sale of discontinued operation, net of tax Loss for the year attributable to ordinary shareholders (457) (1,957) Loss per share (basic & diluted) 3 (1.2)p (5.3)p Loss per share from continuing operations (basic & diluted) 3 (1.2)p (7.1)p

12 Consolidated Balance Sheet - unaudited At 31 December ASSETS Non-current assets Notes Property, plant and equipment 1, Goodwill 4 5,495 2,146 Intangible assets 4 11,793 4,815 Current assets 18,703 7,753 Inventories Current income tax assets 1,232 1,270 Trade and other receivables 7,886 3,162 Short-term deposits 7,662 - Cash and cash equivalents 25,964 34,346 43,689 39,109 Total assets 62,392 46,862 EQUITY Capital and reserves attributable to equity holders Ordinary shares 8,417 8,053 Share premium 2,366 49,781 Shares to be issued 2, Merger reserve 12,089 20,789 Other reserves 49,781 47,800 Retained losses (26,432) (85,751) Total equity 48,342 40,722 LIABILITIES Non-current liabilities Deferred income tax liabilities 1,781 1,348 Provisions Current liabilities 2,001 1,513 Trade and other payables 11,725 4,376 Provisions ,049 4,627 Total liabilities 14,050 6,140 Total equity and liabilities 62,392 46,862

13 Consolidated Statement of Changes in Equity - unaudited Ordinary Notes shares Share premium Shares to be issued Merger reserve Other reserves Retained losses Total equity Balance at 1 January ,010 49,781-20,789 47,792 (84,670) 41,702 Fair value losses, net of tax: - available-for-sale financial assets Currency translation adjustments Loss for the year (1,957) (1,957) Total recognised loss for the year (1,663) (1,655) New share capital issued Acquisition of treasury shares (43) (43) Shares in respect of acquisition of subsidiary Revaluation of consideration - - (25) (25) Share based schemes: - value of employee services Balance at 31 December ,053 49, ,789 47,800 (85,751) 40,722 Currency translation adjustments ,459 2,459 Loss for the year (457) (457) Total recognised profit for the year ,002 2,002 New share capital issued Acquisition of treasury shares (43) (43) Shares in respect of acquisition of subsidiary 253 1,507 2, ,872 Revaluation of consideration Refunded expenses on issue of share capital Capital reduction 6 - (49,781) - (8,746) 1,981 56,546 - Share based schemes: - value of employee services Balance at 31 December ,417 2,366 2,121 12,089 49,781 (26,432) 48,342

14 Consolidated Cash Flow Statement - unaudited For the year ended 31 December Notes Cash flows from operating activities Cash used in operations 5 (536) (5,579) Interest received 1,636 1,907 Interest paid - (15) Tax credit received 670 1,039 Taxation paid (71) - Net cash generated from/(used in) operating activities 1,699 (2,648) Cash flows from investing activities Acquisition of trade and net assets (2,861) - Purchase of intangibles (124) Purchases of property, plant and equipment (508) (195) Proceeds from sale/redemption of available-for-sale financial assets Purchases of short-term deposits (7,662) - Interest received Net cash used in investing activities (10,993) (44) Cash flow from financing activities Proceeds from the issue of share capital Share issue refunds (costs) Interest received on share issue refunds (costs) Repayment of borrowings arising on acquisition of trade and net assets (406) - Net cash generated from financing activities Net decrease in cash and cash equivalents (8,462) (2,692) Cash and cash equivalents at beginning of year 34,346 37,020 Exchange gains on cash and bank overdrafts Cash and cash equivalents at end of year 25,964 34,346

15 Notes to the consolidated financial statements 1. Significant Accounting Policies The preliminary results for the year ended 31 December 2008 have been prepared using the accounting policies set out in the financial statements for the year ended 31 December The financial information presented is unaudited and does not constitute the Company s statutory accounts for the year ended 31 December The auditors reported on the 31 December 2007 financial statements and their report was unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act Of the applicable new accounting standards becoming effective in the year, none are deemed to have a material impact on the financial information contained in this report. 2. Segmental Reporting In 2008 the Group s business segment International Division has changed to Oncology Products to reflect the incorporation of the BrachySciences business in the Group s internal structure for planning and reporting. Analysis of revenue per main business segment is as follows: Oncology Products 8,300 3,128 Drug Delivery 8,249 4,974 CellMed 1,136 1,003 17,685 9,105 Analysis of revenue per geographical segment is as follows: Europe 12,017 7,561 United States of America 4,952 1,395 Rest of the world ,685 9, Loss per share The calculation of basic loss per ordinary share has been based on the loss of 457,000 (2007: 1,957,000) and on 37,305,862 (2007: 36,754,331) ordinary shares, being the weighted average number of ordinary shares in issue. Potential ordinary shares are not treated as dilutive as their conversion to ordinary shares does not increase the net loss per ordinary share from continuing operations.

16 Notes to the consolidated financial statements (continued) 4. Business combinations CellMed AG On 7 March 2005, the Group acquired 100% of the share capital of CellMed AG, a medical technology company developing medical device and drug delivery products in Germany. The remaining element of the purchase consideration for the acquisition of CellMed AG is as follows: Contingent Consideration The total consideration included contingent consideration, which may become payable in shares and cash, calculated on cash received from the commercialisation of certain intellectual property. The Company has valued an element of this consideration based on cash that has been received or the receipt of which is probable. It continues not to value the consideration that is uncertain because it is not able to measure the consideration reliably. The maximum contingent consideration payable is 3,608,000 in cash and the issue of 2,418,823 shares. The Company has accounted for 70,403 shares to be issued in 2009, valued at 169,000 and 102,000 of cash to be paid in BrachySciences On 1 August 2008, the Group acquired the trade and net assets of BrachySciences Inc. and its affiliated companies. From the date of acquisition to 31 December 2008 the acquired business contributed revenues of 2,325,000 and net loss of 105,000 to the Group. All intangible assets were recognised at their respective fair values. The excess over the net assets acquired is recognised as goodwill in the financial statements. Details of net assets acquired and goodwill are as follows: Purchase consideration - cash paid 2,494 - contingent and conditional cash to be paid 1,371 - fair value of shares issued 1,752 - fair value of shares to be issued 1,952 direct costs relating to the acquisition: - cash paid contingent cash to be paid 107 Total purchase consideration 8,141 Fair value of net assets acquired (5,903) Goodwill 2,238 1,132,685 shares were issued and valued at the price per share fixed in the purchase agreement.

17 Notes to the consolidated financial statements (continued) The assets and liabilities arising from the acquisition are as follows: Property, plant and equipment 128 Intangibles 5,821 Inventories 282 Trade and other receivables 619 Cash and cash equivalents 142 Deferred income tax liabilities (157) Borrowing (343) Trade and other payables (589) Net assets acquired 5,903 No adjustments were made to the carrying values of the assets and liabilities acquired to derive the fair values noted above. The outflow of cash and cash equivalents on the acquisition is calculated as follows: Purchase consideration settled in cash 2,959 Cash and cash equivalents in subsidiary acquired (142) Net cash outflow on acquisition 2,817 The purchase consideration for the acquisition of BrachySciences included the following: Conditional Consideration The total consideration included conditional consideration which may become payable in cash in the event of positive outcomes on specific warranties and indemnities. The maximum conditional consideration payable is US$1.0 million. Contingent Consideration The total consideration included contingent consideration which may become payable in shares and cash calculated on the achievement of individual EBIT and sales targets in each of the financial years The Company has valued an element of this consideration to the extent that it believes its payment is probable and capable of reliable measurement. The maximum contingent consideration payable is $4.2 million in cash and the issue of 2.5 million shares.

18 Notes to the consolidated financial statements (continued) 5. Cash flows from operating activities Continuing operations Loss for the year (457) (2,601) Adjustments for: Tax (732) (1,610) Depreciation Amortisation Loss on disposal of machinery and equipment 7 - Share-based schemes: value of employee services Finance income (2,032) (1,982) Finance costs Net exchange losses/(gains) 83 (31) Changes in working capital: Increase/ decrease in inventories (209) 36 Increase in trade and other receivables (3,860) (306) Increase/(decrease) in trade and other payables 4,684 (231) Increase/(decrease) in provisions 55 (350) Cash used in continuing operations (536) (5,579) Discontinued operations Profit for the year Decrease in provisions - (644) Cash flow for discontinued operations - - Cash used in operations (536) (5,579) 6. Equity & Reserves On the 29 October 2008, the High Court approved the Company's application to cancel its share premium account. As a result, 49,781,000 was transferred from Share Premium to Other reserves, where it will remain as an undistributable reserve for up to ten years, unless the Company makes appropriate arrangements to protect creditors remaining at the date of any distribution that were creditors at the date of the Court approval. The Company has also transferred 57,114,000 from Other reserves to Retained earnings. This amount resulted from a prior cancellation of share premium, approved by the High Court on 16 July The Company has received legal advice that as a period of ten years has elapsed since the cancellation, the balance can now be treated as distributable.