Technology-driven drug discoverer e-Therapeutics PLC (LON:ETX) saw its cash burn and losses fall in the first half of the year as it continues to implement the plan recently brought in by its new chief executive.
As part of a strategic review undertaken by Ray Barlow earlier this year, e-Therapeutics told investors it would be focusing on its Network-Driven Drug Discovery (NDD) platform whilst keeping a lid on costs.
Reduce and refocus
One of the ways it has gone about tightening its purse strings is by reducing the number of self-funded discovery programmes. It will now concentrate on just two that it believes “have the greatest potential”.
Further “prudent” cost control meant the operating loss for the six months ended 31 July narrowed significantly to £3.7mln (H1 2016: loss of £9.7mln), while first half cash burn also fell sharply to £1.6mln (H1 2016: £4.9mln).
ETX has plenty of money in the bank as well, with cash and cash deposits of £12.4mln at the end of the period.
Numbers 'evidence of prudent approach'
“We continue to execute against the plans communicated to the markets in July,” said Barlow.
"Our figures in the first half provide evidence of a prudent approach to the management of costs and cash resources and the impact of reducing the number of self-funded discovery programmes.
“This will allow us to continue progressing our immuno-oncology programmes, to continue investing in the platform and to direct resources into exploring promising new disease areas where Network-Driven Drug Discovery could make a significant impact.”
He added: “Our business development activities are now underway as we pursue deals and external sources of funding for our existing non-I-O programmes, as well as partnership opportunities with the NDD platform."
Speaking of NDD, which is a computer-based drug discovery platform, ETX’s management thinks it’s on to a winner.
The platform has been created and validated by ETX itself and the company believes it has the potential to discover “new and better” drugs more quickly.
As mentioned above, the company doesn’t yet have the resources required to progress all of the discovery programmes churned out by NDD, so it is on the lookout for partners, which is part of the new business model brought in by Barlow.
“Our business model is directed to external collaboration and partnership, including the out-licensing of our NDD-derived drug assets at a pre-clinical stage,” he said.
“This approach should generate revenues in the form of upfront payments, progress-based milestone payments and ultimately royalties on sales.”
Financing good until 2019
As for the second half, e-Therapeutics said it expects a “modest increase” in its operating loss compared to the first six months of the year.
Almost all of this will be down to additional external spend on the two core drug discovery projects as well as increased business development activity.
That said, the cash position “remains strong” and chief finance officer Steve Medlicott said there is enough money knocking about in the ETX coffers to finance the firm’s projects into 2019.
Shares were down 0.7% to 10.55p in mid-morning trade.