e-Therapeutics posts an operating loss of £9.7m for the six months to the end of July (HY15: loss of £5.9m), including £2.1m goodwill write-off from the Searchbolt acquisition in May. The operating loss before goodwill write-off in the first six months of the year was £7.6m (six months to July 2016: loss £5.9m). This increased loss was primarily as a result of higher external project related costs within Discovery offset by lower Development spend. Administration costs were slightly higher in the period compared to the prior year. Development spend was around £0.7m lower in the first half of the year when compared to the comparable period last year. The majority of the external costs within Development relate to ETS2101. The company said: "Whilst we announced on 22 March 2016 the intention to proceed with an orderly wind down of the ETS2101 Ib trial, we still anticipate significant costs in the second half of the current financial year, although the level of costs should be reduced compared to the first half. "External Discovery project spend was £2.5m in the first half of the year compared to £0.9m in the same period of the prior year. This increase in spend is a reflection of both the increased number of projects during the period but also the maturing of some of these projects, with five projects in or just entering medicinal chemistry in the half year. As discussed previously, we will reduce the number of projects, nevertheless a similar level of external project spend is likely in the second half." Administrative costs were £1.1m in the first half (six months to July 2016: £0.8m). Most of the increase in cost related to Business Development and similar costs during the period. The Company's cash and deposits at the end of July 2016 were £19.9m (31 January 2016 £24.8m), reflecting a cash outflow in the first six months of £4.9m. The company received a R&D tax credit of £2.6m in June of this year resulting from allowable R&D spend in the prior year. This cash receipt accounted for the majority of the difference between the trading loss of £7.6m and the cash outflow £4.9m. The cash cost resulting from the acquisition of Searchbolt was broadly matched and offset by the movement in working capital in the period. Assuming no change in the tax environment we continue to anticipate future R&D tax receipts of up to £6m, this together with the cash and deposits position suggests over £25m of investable assets. The company said the cash burn is likely to remain high in the second half of the year but the cessation of our Development activities and increased focus in Discovery is expected to result in the burn rate reducing significantly in the next financial year. Chairman Iain Ross said: "This has been a busy six months which has seen fundamental changes to the business and its strategy. "We have a world-beating discovery engine with potent and significant programmes in our pipeline. We have a refocused and committed team, a targeted commercial partnership strategy and the support of a strong balance sheet. "With a renewed outlook and focus, the next few years should be exciting ones for the Company and its shareholders."
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