Trading Update

RNS Number : 0245V
Henderson Morley PLC
22 May 2008

22 May 2008

Henderson Morley PLC
("the Company")

Trading Update

The following is the text of a letter to be sent today to shareholders in the Company.

"Dear Shareholder

I am writing to shareholders to provide an update on the Company's current status with respect to our ongoing projects and the strategic
review, and our objectives moving forward.

As a significant shareholder I, like you, am disappointed by the current low share price. Your Directors strongly believe that this
price does not represent the true value of the Company. I have outlined the reasons below.

Even though Henderson Morley is a 'micro cap' biotech company on AIM, we have a very significant pipeline of both clinical and
pre-clinical products. We believe this pipeline is larger and potentially more valuable than those being developed by many companies that
have significantly higher market capitalisations.

The markets that our pipeline addresses are large and important and have, in many cases, little or no competition either widely
available or under development.

I describe the status of development of our current projects below and outline our strategy for exploiting the market potential for
them.

Koi Herpes Virus ("KHV")

As you will have seen from recent announcements, we are developing a vaccine against this virus that decimates Koi carp kept by breeders
and enthusiasts around the world. We have signed a collaborative research and option agreement, that is cash bearing, with Schering Plough
(SP), one of the largest pharmaceutical companies in the world. Under this agreement SP is paying an undisclosed amount each quarter for the
development of the vaccine for up to a 15 month period. The vaccine is in field studies in the UK and elsewhere, and results to date have
been very encouraging. We have demonstrated that all fish that received the high dose vaccine developed neutralising antibodies, which is
likely to be effective when examined in the field. The Company has also developed some very sophisticated blood tests (ELISA) that are able
to discriminate between infected and non infected fish.

A successful completion of the current and other field studies is likely to trigger an exclusive worldwide licence with SP. A granted
license would be for a minimum term of 10 years on a revenue sharing basis. The scientific team are also researching fish vaccine adjuvants.
These are important additions to vaccines that help boost immune responses, and thus aid in the protection of fish. This research is also
now in field studies.

Feline Herpes Virus ("FHV")

Feline herpes infection causes a significant disease burden to kittens and breeding cats. There is no anti-viral treatment licensed for
the disease, so Ionic Contra Viral Therapy ("ICVT") stands to be the first, and therefore the market leader if successfully licensed.
Clinical studies are being undertaken by a prestigious contract research organisation, Triveritas, which is in the process of recruiting
cats with the disease. This is a multi-centre study in Germany, and although a little slow in recruitment, results are expected within the
next few months.

If successful, Feline ICVT stands to be the first licensed treatment for FHV with the potential to take a market leading position. In
anticipation of a successful trial, we are currently seeking a sales and distribution partner, in the same way as we did for KHV.

Australian Centre for Vaccine Development
Cytomegalovirus ("CMV")

CMV is one of the most significant infections globally. It is responsible for the death of many renal transplant recipients, and causes
tens of thousands of babies to be born with brain damage every year.

The Australian Institute of Vaccine Development has possibly the most advanced and sophisticated CMV vaccine antigen candidate (the part
of the virus that is recognised by the immune system) anywhere in the world. The Institute had been seeking a 'delivery vector'- a way of
delivering the antigen to a patient's immune system. They consider that the PREPS and L-particles platform, the Company's proprietary
vaccine technology, may be a suitable delivery vector, hence a collaboration agreement was signed.

We are now in the process of incorporating their vaccine antigen into the PREPS and L-particles. This should be completed within the
next few months, following which large scale production of these particles will be undertaken in-house, and subsequently sent to Australia.
The Centre will then undertake extensive studies to validate the delivery mechanism and which we believe will demonstrate the same efficacy
as other comparable antigens. Success in this project alone could yield very significant up-front, milestone and royalty payments, once a
commercial partner is found.

Australian Centre for Vaccine Development
Epstein Barr Virus ("EBV")

EBV is a major contributor to the cause of cancer globally (nasopharyngeal carcinoma - a cancer affecting the tissues behind the nose).
No vaccine currently exists to prevent the infection, and consequently a successful vaccine in this field could generate sales of several
million units annually. Once we have the necessary data, we will collaborate with the Australian team to attract commercial partners to this
project. This could occur within the next 12 months or so.

Cancer immunotherapy

One of the main reasons that cancer is such a significant problem is because individual cancer cells have developed ways of evading
detection by the body's immune system. If they are not recognised they cannot be destroyed. If they are recognised, an immune response may
be able to eradicate the individual diseased cells. Different cancer cells have different surface proteins, and these proteins, if presented
in an appropriate way to the immune system, may stimulate an immune response. Cells known as dendritic cells (white cells found in the skin
and mucous membranes), are very important for recognising cancer cells.

We are working with SBL, a state of the art dendritic cell company, which is undertaking, (at no cost to Henderson Morley) detailed
studies on the interaction between dendritic cells (important cells of the immune system) and PREPS and L particles.

Several cancer antigens are being included within PREPS and L-particles, and the specific anti-cancer immune responses will be examined
once we have produced large scale virus stocks.

We are also in collaboration with the largest animal cancer research and treatment centre in North America. Dogs are prone to develop
the malignant skin cancer malignant melanoma. There is a considerable similarity between dog cancer and human cancer. We are therefore
planning to examine PREPS and L-particles that carry melanoma antigens as a cancer immunotherapy.
If this is successful, using this initial antigen, there are many other cancer antigens that could be included to target other forms of
cancer. This is a very exciting prospect, and the opportunity for commercial success is immense.

LICENCE UPDATE

Licences have been signed with Croma Pharma (for eye indications), Amistad (for herpes and dysplasias) and Cutanea Life Sciences (for
warts). Several other licences remain possible covering different territories and different disease areas. It would be fair to say that the
performance of certain licensing partners to date has been disappointing; however, we are pleased with the progress which has been made by
others. The current status is as follows:

Cutanea -Unfortunately we have not yet had the results from Cutanea that we expected, and we are working with them to realise the full
potential of this part of the ICVT platform.

Amistad Pharma has been very active. It is currently involved in negotiations with other partner companies in the EU, US and Japan, with
a view to using ICVT with novel delivery mechanisms. It is anticipated that announcements will be made regarding this in the near future.

Croma Pharma having successfully completed a Phase l study, started a large scale, international, multi-centre Phase ll study that was
of regulatory standard. Due to a combination of slow recruitment under the trial protocol, and other factors beyond our control, it is
likely that the trial will be restarted in a different country with a different recruitment methodology. We will continue however to
supervise Croma's efforts diligently to ensure that trial objectives are met and in the interim, step up our efforts to create further
licenses in North America and the Far East.

PRODUCT PORTFOLIO

ICVT

As shareholders will be aware we discovered this new way of killing viruses using tried and tested, off patent drugs, in a different and
novel combination. We re-patented and proved the concept of the first, broad acting, non toxic, anti-DNA virus platform. This technology is
effective against a broad range of viruses, including HPV (responsible for skin and genital warts) (adenovirus cause of viral red-eye),
herpes simplex (cold sores and genital herpes) as well as some orphan disease indications.

Our products have great potential in their respective markets. The injectable formulation of ICVT will target the most common viral
sexually transmitted disease globally - genital warts (caused by HPV). The statistics regarding this disease are astounding - approximately
20 million Americans are currently infected with HPV, and another 6.2 million people become newly infected each year. At least 50% of
sexually active men and women acquire genital HPV infection at some point in their lives. (CDC figures). Although treatments are available,
none target the ability of the virus to replicate. The vast majority of treatments simply destroy the infected tissues. The figures for skin
warts are similar - over 60 million treatments occur each year globally, and once again, ICVT offers distinct advantages over the
competition.

For the treatment of adenovirus infection of the eyes, we are working in a field with no marketed competition and no other broad acting
anti-viral treatments in the clinic. Successful studies would result in the first broad acting anti-viral eye drop available globally.

PREPS and L-particles

Our vaccines are also targeting diseases of real significance to human health. In 1999, the Institute of Medicine (IOM) of the National
Academy of Sciences (USA) assigned the highest priority for a vaccine to prevent congenital human cytomegalovirus (HCMV) infection, on the
basis of the life-time cost to the health care system and the impact of the virus on human suffering. Working with a global leader, the
Australian Centre for Vaccine Development, which has significant resource and expertise, we believe our vaccine candidate will help address
this need.

Our pipeline also has a number of other opportunities relating to PREPS and L-particles. The versatility of the technology to enable
delivery of a very wide range of proteins to cells means that the potential applications are vast. We are initially focussing on diseases of
most importance - cancer and infectious disease, but are also examining its use as a treatment for autoimmune disease, prevention of organ
transplant rejection and its use as a targeted delivery to the nervous system.

Animal Health

Our animal health programme has similar potential. The time lines for licensing animal health products are much shorter than human
equivalents, and the regulatory pathway is much more straightforward. No marketed competition exists (in all of the major markets) for a
vaccine against KHV. The virus has spread rapidly - it was discovered in 1996, and is now present in over 20 countries. With the support of
SP, our vaccine has the potential to be the first licensed product against this disease.

Patent Suite

We have been continuing to expand our Intellectual Property portfolio. New patents have recently been filed or are in preparation for
new uses of PREPS and L-particles, our KHV vaccine, our cancer vaccine candidates and other significant uses of PREPS and L-particles.

STRATEGIC REVIEW

As announced on 3 July 2007, the Company has been undertaking a strategic review of its operations, which, as then stated, may have
included a sale of some or all of part of the Company.

It has become clear to your Board that, with the prevailing market conditions and a dismally low share price, to market or sell the
whole Company at this time would be unlikely to result in an offer which fully reflects the Company's potential and its portfolio of
technologies and patents. We have therefore engaged industry specific consultants to identify and approach appropriate purchasers for some
of the technologies that we hold in-house. We have not been in talks with any party in relation to an offer for the Company as a whole, but
continue to talk to interested parties for the sale of some of our technologies outright. On this basis we have specifically ruled out
seeking a buyer for the whole of Henderson Morley Plc and as such we are no longer considered to be in an 'offer period' under the City Code
on Takeovers and Mergers.

I am pleased to report that interest levels from these ongoing conversations with potential acquirers remain high. It will have been
clear, from widespread publicity, that many fully integrated pharma companies are 'cash rich and pipeline poor'. If a sale of some of our
technologies were to be completed it would in all likelihood bring a significant cash injection to the Company. We remain optimistic, and
with sufficient capital for our immediate needs, no debts, and a rich and diverse pipeline, the prospects for the Company are very good.

I wish to thank you for your ongoing support for Henderson Morley and look forward to bringing you news on the current projects,
licences and product portfolio with respect to the strategic review at the appropriate time. I believe that the current share price has
considerable upside potential as Henderson Morley has a broad pipeline of clinical and pre-clinical products in large addressable markets
with little or no competitive products in the market or under development. We are delighted that so far the Koi Herpes Virus trial looks to
be very encouraging and we are expecting results from the Feline Herpes Virus trial within months. Our vaccine for Cytomegalovirus is close
to in-house production and we are making good progress with cancer immunotherapy."

---ENDS---

Enquiries:

HENDERSON MORLEY PLC Tel: 0121 442 4600
Andrew Knight, Chairman

BISHOPSGATE COMMUNICATIONS LTD Tel: 020 7562 3350
Maxine Barnes
Nick Rome

BREWIN DOLPHIN INVESTMENT BANKING Tel: 0113 241 0126
Neil Baldwin

HYBRIDAN LLP Tel: 0203 159 5085
Stephen Austin/Claire Noyce

Further information on Henderson Morley plc can be accessed through the Company's website at www.henderson-morley.com

This information is provided by RNS
The company news service from the London Stock Exchange

END

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