TIDMLMT
RNS Number : 6961M
Lombard Medical Technologies PLC
29 August 2013
Press Information
Lombard Medical Technologies PLC
("Lombard Medical" or the "Company")
Interim results for the six months ended 30 June 2013
Aorfix(TM) Launch in the US Underway
London, UK, 29 August 2013 - Lombard Medical Technologies PLC
(AIM:LMT), the specialist medical technology company focused on
innovative vascular products, today announces its unaudited interim
results for the six months ended 30 June 2013.
Operational highlights
-- US FDA approval of Aorfix(TM) for the endovascular repair of
AAAs (Abdominal Aortic Aneurysms)
o Only endovascular stent graft approved in US for use in cases
with neck angulations up to 90 degrees
o Unique 0-90 degree label indication enabling treatment of
broadest range of AAA anatomies
o Compelling case for use over competing products supported by
extensive body of clinical evidence
o One of only nine PMAs (pre-market approvals) granted by the
FDA in H1 2013
-- Aorflex(TM) next generation delivery system approved by the
FDA in June for commercial use in the US
-- Aorfix US commercial launch underway, formal launch event at VEITH Symposium, November 2013
o Initial commercial cases successfully completed
o Direct sales team of 20 people recruited and product training
completed
o Physician training programme commenced
-- Approval for Aorfix in Japan on track, approval anticipated in H1 2014
Financial highlights
-- Total revenue increased 2%, in line with expectations, to GBP2.0m (H1 2012: GBP2.0m)
-- Aorfix commercial revenue increased 8% to GBP1.7m (H1 2012: GBP1.6m)
o Revenue increased 6% in the four main EU markets (UK, Germany,
Italy and Spain) to GBP1.1m (H1 2012: GBP1.0m)
o Revenue in Germany increased by 47% offsetting the effect of
continued EVAR centre consolidation in the UK
o Revenue outside the main EU markets increased 9% to GBP0.6m
(H1 2012: GBP0.5m)
-- Significant increase in demand for Aorfix in Germany and
Spain offsetting decline in demand for Aorfix in UK which is
expected to stabilise in H2 2013
o Combined demand for Aorfix over the four main EU markets
steady with 194 patients treated (H1 2012: 195)
-- Operating loss increased by 11% to GBP4.8m (H1 2012: GBP4.4m)
-- Loss after taxation increased by 14% to GBP4.9m (H1 2012: GBP4.4m)
-- Financing
o Aorfix US approval triggered receipt GBP13.5m (net of
expenses) of the c.GBP14.1m Second Tranche of the two tranche April
2011 fundraising as well as the Company's ability to draw down
$2.5m from the $5.0m loan facility granted by its exclusive
Japanese distribution partner, Medico's Hirata Inc.
o GBP20.9m (net of expenses) raised from a placing, subscription
and offer of shares in June
o GBP3.0m Convertible Loan Notes issued to Invesco in 2012 were
converted into new Ordinary Shares
-- Strong cash position - GBP34.3m as at 30 June 2013 (30 June 2012: GBP5.2m)
Post period events
-- Appointment of Raymond W. Cohen as Non-executive Chairman in July
Commenting on the results, Simon Hubbert, Chief Executive of
Lombard Medical, said:
"During the period we received FDA approval to commercialise our
Aorfix(TM) stent graft device in the US, a milestone event which
has transformed the future prospects of the Company. Importantly,
approval included a significantly differentiated 0-90 degree label
claim, making Aorfix the only device approved to treat both
standard and difficult to treat cases of AAAs. Much progress has
been achieved since approval in February, including the recruitment
and subsequent training of our own direct sales force in June.
Physician training programmes are also underway and we have
successfully completed a number of commercial cases in centres
across the US. We remain confident of capturing a significant share
of the large AAA market."
-Ends-
For further information:
Lombard Medical Technologies PLC Tel: +44(0)1235 750 800
Simon Hubbert, Chief Executive Officer
Ian Ardill, Chief Financial Officer
Canaccord Genuity Limited Tel: +44(0)20 7523 8000
Lucy Tilley / Tim Redfern / Henry
Fitzgerald O'Connor / Dr Julian Feneley
FTI Consulting Tel: +44(0)20 7831 3113
Simon Conway / Susan Stuart / Victoria
Foster Mitchell
Allen & Caron Tel: +1 (949) 474 4300
Matt Clawson
About Abdominal Aortic Aneurysms
AAAs are a balloon-like enlargement of the aorta which, if left
untreated, may rupture and cause death. Approximately 4.5 million
people are living with AAAs in the developed world and each year
600,000 new cases are diagnosed. In the U.S. aortic aneurysm
disease is among the leading cause of death and it is estimated
that 1.7 million people over the age of 55 have an AAA. The market
for the repair of AAAs in the U.S. is valued at more than $600
million annually, and is forecast to grow to $1.6 billion worldwide
by 2015 according to independent market research.
About Lombard Medical
Lombard Medical Technologies PLC (AIM: LMT) is a medical device
company focused on device solutions for the $1.3 billion per annum
abdominal aortic aneurysm (AAA) repair market. The Company's lead
product, Aorfix(TM), is an endovascular stent graft which has been
specifically designed to solve the problems that exist in treating
complex tortuous anatomy, which is often present in advanced AAA
disease. Aorfix is the only stent graft approved for AAA neck
angulations of up to 90 degrees and is currently being
commercialized worldwide. Aorfix is the first AAA stent graft not
of U.S. origin to gain FDA approval. The Company is headquartered
in Oxfordshire, England with U.S. operations in Irvine, CA.
Further background on the Company can be found at
www.lombardmedical.com.
Chief Executive's Review
The first half of 2013 was one of the most significant periods
in Lombard Medical's history, dominated by the news in February
that the Company's Aorfix(TM) device received FDA approval for
commercial sale in the US. US approval of Aorfix, the Company's
product for the treatment of AAAs, provides a strong platform for
future growth in the world's largest EVAR market and will create
significant shareholder value going forward.
In addition to achieving US approval of Aorfix, Lombard Medical
also received FDA approval for Aorflex(TM), the Company's next
generation delivery system for the Aorfix stent graft which is
already commercially available in Europe. The Company also
completed the recruitment of its own direct sales force and is well
advanced in the process of building its US business infrastructure,
which includes relocating its US commercial headquarters to Irvine,
California in Q3 2013.
The US commercial launch of Aorfix is underway and a number of
Aorfix procedures have been successfully completed post FDA
approval. The Aorfix physician training programme is being rolled
out across the US and has met with high levels of physician
enrolment. A formal launch event of Aorfix with the new Aorflex
delivery system, will take place at the 40th Annual Symposium on
Vascular and Endovascular Issues (VEITH Symposium) in New York City
in November 2013.
Revenue
Total revenue increased by 2%, in line with expectations, to
GBP2.0m (H1 2012: GBP2.0m).
Aorfix commercial revenue increased by 8% to GBP1.7m (H1 2012:
GBP1.6m). Aorfix revenue in the main four EU markets (UK, Germany,
Italy and Spain) grew by 6% to GBP1.1m (H1 2012: GBP1.0m). The
particularly strong growth in revenue and demand seen in Germany
and Spain during the period helped to counter the impact of UK EVAR
centre consolidation. Combined demand for Aorfix over the four main
EU markets held at the 2012 level with 194 patients treated (H1
2012: 195 patients). Demand and revenue differ due to the effect of
distributor stocking/destocking in Italy and Spain.
Aorfix commercial revenue outside of the main EU markets
increased by 9% to GBP0.6m (H1 2012: GBP0.5m) driven largely by
distributors in the EMEA region. Commercial revenues of non-Aorfix
product from our Lombard Medical Scotland facility decreased by 18%
to GBP0.3m (H1 2012: GBP0.4m).
Aorfix regulatory approval in the US sets the stage for
significant growth
The FDA's decision in February to approve commercialisation of
Aorfix in the US is a significant milestone for the Company and the
key driver of future growth.
The FDA's approval included a label indication for the treatment
of patients with angulations at the neck (top) of the aneurysm of
up to 90 degrees. This gives Aorfix the broadest label for such a
device on the US market and makes it the only endovascular stent
graft approved for use in high angle (>60 degrees) cases. Such a
high angle indication can already be found on the European label
for Aorfix. It is estimated that approximately 30% of all patients
have some tortuosity either at the neck of the aneurysm or in the
iliac arteries, and it is to this segment of patients that Aorfix
is targeted with its uniquely flexible design.
US EVAR market - a substantial and growing market
The US EVAR market was estimated to be $625 million in 2012 and
is expected to grow to $964 million in 2018, representing a CAGR of
7.5 per cent.
The competitive landscape in the US is more favourable to that
in the EU with fewer competitors approved in the 0 to 60 degree
angle market and no competitor with approval to treat neck angles
above 60 degrees. In the EU two such devices are approved but these
are limited for use in patients with AAA neck angles of up to 75
degrees, specifically where the neck length is at least 15mm. All
other approved devices in the EU are approved for use in cases with
up to 60 degree angles, with the exception of one device which has
no angle indication and is not approved in the US. The average
selling price of EVAR devices in the US is materially higher than
that of equivalent devices in the EU.
In a closely regulated and litigious country such as the US,
there is significant focus on 'on-label' use of products.
Physicians are subject to regulatory pressure to avoid, where
possible, 'off-label' use of devices. Aorfix is approved for use
'on-label' in patients across a broader indication of neck angles
than its competitors with the consequence that Aorfix can be used
by physicians in patients displaying highly tortuous anatomies
where such patients would otherwise need to be treated 'off-label'
using an AAA device. The broad indication of Aorfix will promote
the treatment of AAAs using EVAR for some patients where
FDA-approved 'on-label' products were not previously available;
current treatment options are either open surgery or use of
'off-label' devices.
Aorfix US commercial launch strategy on track
The Company is launching Aorfix with the new Aorflex delivery
system in the US and a number of commercial cases have already been
successfully completed since approval earlier this year. A formal
launch event of Aorfix with the Aorflex delivery system will take
place at the VEITH Symposium in New York in November 2013.
Preparations for the US commercial launch of Aorfix are on-track
and the Company has recruited its own direct sales force and
marketing infrastructure to launch Aorfix in the US. Initially
Lombard Medical will be focussing on the c. 300 centres which
perform more than 50% of the EVAR operations in the US. US
commercial sales have commenced, with several procedures
successfully performed to date.
During the period, the Company hired Michael Gioffredi,
President of Operations in the US, who has 30 years' experience in
medical device companies, the majority of which has been in
vascular sales and marketing roles. A sales team of 20 people with
experience in EVAR, peripheral vascular sales or related fields is
now in place. In June, this new team attended and successfully
completed the in-depth training programme about the use of Aorfix
and the EVAR procedure.
The sales team is now focused on increasing US physician
knowledge of Aorfix and organising their participation in physician
training programmes, which commenced at various US venues in
August. 11 physician training programmes were completed in August
at specialist training centres and EVAR centres, with 9 physician
training programmes planned in September.
Marketing efforts for Aorfix will leverage the device's unique
label in the underserved tortuosity segment which represents up to
30% of all EVARs. The Company calculates this segment of the market
to be currently valued at c.$185m and expected to grow to c.$290m
in 2018. Aorfix is the only approved device to treat such highly
angulated cases but also works well in treating less challenging
anatomies (0-60 degrees).
RoW Aorfix update
We continue to work with our exclusive Japanese distribution
partner, Medico's Hirata Inc., to obtain Aorfix approval in Japan.
Medico's Hirata is a leading supplier and developer of medical
device products in Japan, with the sales infrastructure to maximise
the potential of Aorfix in this important market. The Japanese
market for EVAR products is estimated to be worth $100m and is one
of the fastest growing in the world. Medico's Hirata remains in
dialogue with the Japanese PMDA (Pharmaceuticals and Medical
Devices Agency) to achieve regulatory approval for Aorfix, which we
anticipate will be granted in H1 2014.
Clinical data
Lombard Medical has remained committed to the collection of data
in its Retrospective Aorfix Data Retrieval Registry (RADAR). The
RADAR registry now contains data from over 1,900 Aorfix cases and
enables the Company to present on the largest clinical experience
ever compiled on complex anatomy EVAR patients at conferences
around the world.
New Product Development
Lombard Medical made progress with two new product development
projects in line with our continuous commitment to providing
innovative endovascular solutions which meet clinicians' needs and
improve patient outcomes.
The first project is focused on improving clinicians' experience
during Aorfix stent graft delivery. The new delivery system,
Aorflex, was launched in Europe in April 2012 and has received
positive clinician feedback since launch. The submission for the US
approval of the Aorflex delivery system was made to the FDA in
April 2013 and in June 2013 Aorflex was approved for commercial use
in the US. The Company's formal US commercial launch of Aorfix will
include Aorflex as the stent graft's delivery system.
The Company has also made progress towards expanding the size
range of Aorfix, thereby addressing the needs of patients with AAAs
with aortic neck diameters either too large or too small for the
current product size range. Based on published clinical data,
management estimates this to be up to 25 per cent. of the total AAA
patient population. A wider range of sizes will be available for
custom order (customised to a physician's requirements and not
requiring a CE Mark) in Europe in the second half of 2013. A
clinical study to support regulatory approval of the most widely
used combinations of sizes in the expanded size range is
anticipated to commence in 2014.
The Company is also planning and developing further iterations
of the Aorfix product and its delivery system, including a
reduction in the device profile and the inclusion of a
repositionable graft top-end to assist the physician in placing the
graft accurately during the procedure.
The Board
After two years of service as Lombard Medical's Chairman and
following the achievement of FDA approval for Aorfix in the United
States, John Rush announced in April that he would step down as
Non-executive Chairman of the Company, pending completion of a
comprehensive search for his successor. I would like to thank John
for his service as Chairman and I am pleased that John remains an
active and committed member of the Board as a Non-executive
Director.
Post period end, in July, the Board appointed Raymond W. Cohen
as Non-executive Chairman. Ray, a US national, has extensive
international medical device experience having held several
Chairman and CEO positions on the boards of both publicly listed
and private life sciences companies in the US and Europe. Ray
served as Chief Executive Officer of Vessix Vascular, Inc., a
developer of a renal denervation system used to treat uncontrolled
hypertension. During his tenure as CEO, the company was acquired by
Boston Scientific Corporation in a structured transaction valued at
up to $425 million.
In May, Thomas Casdagli, Non-executive Director, resigned from
the Board. Thomas was the Non-executive Director appointed by MVM
in accordance with its right to appoint a Non-executive Director
for so long as MVM held in excess of 5% of the issued share capital
of the Company. With MVM's shareholding falling to 3.5% following
the equity fundraising in June, Thomas stepped down from the Board.
I would like to thank Thomas for his service as a Director since
his appointment in 2011.
Outlook
US FDA approval of Aorfix combined with the funds raised in June
to commercialise this product, have materially changed Lombard
Medical's future prospects. The Company has launched Aorfix in the
US and expects to hold a formal launch event at the VEITH Symposium
in New York City in November 2013.
With our uniquely labelled device and the resources to
effectively commercialise Aorfix, we are confident of securing a
meaningful share of the significant and growing US EVAR market and
of growing revenues in Europe. With the help of our partner in
Japan, one of the fastest growing markets in the world, we
anticipate approval of Aorfix in H1 2014. Together these events
will translate into the creation of significant value for
shareholders going forward.
Principal Risks and Uncertainties
The Principal Risks and Uncertainties faced by the Company
remain as reported on page 18 of the Annual Report for the year
ended 31 December 2012, with the exception of the Financial
Resources risk. The Company was successful in raising finance in
addition to the second tranche of the May 2011 fundraising,
mitigating this risk.
Financial Review
Total revenue for the period increased 2% to GBP2.0m (H1 2012:
GBP2.0m).
Commercial Aorfix revenue increased by 8% to GBP1.7m (H1 2012:
GBP1.6m), with growth in Germany, Spain and Italy offset by a
decline in the UK following the consolidation of centres performing
EVAR over the past 18 months. Revenue from distributors outside the
main EU markets returned to growth in the period. Other commercial
revenues declined by 18% to GBP0.3m (H2 2011: GBP0.4m) due to the
decrease in OEM revenues generated by the Company's Prestwick
facility.
The gross profit of GBP0.6m (H1 2012: GBP0.6m) represented a
gross margin of 32% (H1 2012: 30%). The gross margin is in line
with expectations and reflects low production volumes in the first
half of the year ahead of the stock build for US launch commencing
in July. An increase in gross margin is expected from the second
half of the year, driven by the combination of increased volumes, a
higher average selling price in the US and the on-going process
improvement programme, which is currently in its data gathering
phase.
Selling, marketing and distribution expenses increased by 48% to
GBP2.1m (H1 2012: GBP1.4m) due to increases in sales and marketing
headcount and activity in the US following FDA approval, in
readiness for the US launch.
Research and development expenditure decreased by 16% to GBP2.1m
(H1 2012: GBP2.5m) as clinical and regulatory expenditure reduced
on the Aorfix clinical trial following FDA approval.
Administrative expenses increased by 24% to GBP1.3m (H1 2012:
GBP1.1m). This is primarily due to a share option charge of GBP0.1m
in the current year following the changes made to the performance
criteria in June, compared with a credit of GBP0.3m in the prior
year.
Finance costs of GBP0.3m (H1 2012: GBP0.1m) were incurred as a
result of the accounting for the effective interest payable on the
convertible loan notes.
The tax credit of GBP0.2m (H1 2012: GBP0.1m) consisted of an
estimate of GBP0.2m for the R&D tax credit arising in the
period (H1 2012: GBP0.3m less an adjustment of GBP0.2m for an
overestimate of the R&D tax credit in the prior year
accounts).
The loss and total comprehensive expense for the period
increased by 14% to GBP5.0m (H1 2012: GBP4.4m).
The net cash outflow from operating activities decreased by 21%
to GBP4.0m (H1 2012: GBP5.1m) principally due to decreased working
capital requirements of GBP0.7m (H1 2012: increase of GBP0.5m).
Net cash used in investing activities increased to GBP0.5m (H1
2012: GBP0.1m) due to purchase of sales and marketing equipment to
support the US launch.
Net cash flows from financing activities were GBP36.0m (H1 2012:
GBP2.8m), and consisted of the following:
-- The US approval of Aorfix in February triggered the receipt
by the Company of the GBP13.5m (net of expenses) second tranche of
the two tranche April 2011 fundraising.
-- Aorfix approval also triggered the Company's ability to draw
down $2.5m from the $5.0m loan facility granted by its exclusive
Japanese distribution partner, Medico's Hirata Inc.
-- In June, the Company raised an additional GBP20.9m (net of
expenses) through a placing, subscription and offer of new shares.
The fundraising received strong support from the Company's existing
shareholders as well as a number of new top tier institutional
investors.
As previously announced, the Company expects to use the net
proceeds of the June fundraising, together with its existing cash
resources, approximately as follows:
-- Build the sales and marketing infrastructure to launch Aorfix in the US
-- Following US launch, continue to grow Aorfix market share in the US
-- Expand Aorfix production capacity
-- Develop next generation products, line extensions and delivery devices
-- Clinical trials
-- Grow the rest of world sales of Aorfix and launch in select
new territories (including Japan in H1 2014)
-- General working capital purposes
In June, the GBP3.0m Convertible Loan Notes issued to Invesco
Asset Management Limited, the Company's largest shareholder, in
2012 were converted into new Ordinary Shares, effectively
extinguishing the debt.
The Company had cash of GBP34.3m as at 30 June 2013 (30 June
2012: GBP5.2m) which we anticipate will be sufficient to enable the
Company to achieve its longer-term goals in the US market and to
support Lombard Medical's strategy through to cash generation.
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2013 (unaudited)
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2012
2013 2012
Note GBP'000 GBP'000 GBP'000
------------------------------------- ---- -------- -------- ---------------------------
Revenue 2 2,006 1,974 3,889
Cost of sales (1,364) (1,384) (2,489)
------------------------------------- ---- -------- -------- ---------------------------
Gross profit 642 590 1,400
------------------------------------- ---- -------- -------- ---------------------------
Selling, marketing and distribution
expenses (2,073) (1,405) (2,792)
Research and development expenses (2,080) (2,490) (4,598)
Administrative expenses (1,331) (1,072) (2,252)
------------------------------------- ---- -------- -------- ---------------------------
Total operating expenses (5,484) (4,967) (9,642)
Operating loss (4,842) (4,377) (8,242)
Finance income - interest receivable 9 18 23
Finance costs (266) (137) (421)
------------------------------------- ---- -------- -------- ---------------------------
Loss before taxation (5,099) (4,496) (8,640)
Taxation 3 150 145 350
------------------------------------- ---- -------- -------- ---------------------------
Loss and comprehensive expense for
the period (4,949) (4,351) (8,290)
------------------------------------- ---- -------- -------- ---------------------------
Basic and diluted loss per ordinary
share (pence)
From continuing operations 4 (18.4) (21.6) (41.1)
------------------------------------- ---- -------- -------- ---------------------------
Consolidated Balance Sheet
as at 30 June 2013 (unaudited)
30 June 30 June 31 December
2013 2012 2012
Note GBP'000 GBP'000 GBP'000
------------------------------ ---- -------- -------- -----------
Assets
Intangible assets 2,215 2,255 2,235
Property, plant and equipment 966 681 590
Non-current assets 3,181 2,936 2,825
------------------------------ ---- -------- -------- -----------
Inventories 1,962 2,629 1,959
Trade and other receivables 1,407 1,265 1,138
Taxation recoverable 719 1,295 569
Cash and cash equivalents 34,271 5,188 2,747
------------------------------ ---- -------- -------- -----------
Current assets 38,359 10,377 6,413
------------------------------ ---- -------- -------- -----------
Total assets 41,540 13,313 9,238
------------------------------ ---- -------- -------- -----------
Liabilities
Borrowings 5 - (183) (2,761)
Trade and other payables (3,341) (2,559) (2,323)
Current liabilities (3,341) (2,742) (5,084)
------------------------------ ---- -------- -------- -----------
Borrowings 5 (1,659) (2,478) -
------------------------------ ---- -------- -------- -----------
Non-current liabilities (1,659) (2,478) -
------------------------------ ---- -------- -------- -----------
Total liabilities (5,000) (5,220) (5,084)
------------------------------ ---- -------- -------- -----------
Net assets 36,540 8,093 4,154
------------------------------ ---- -------- -------- -----------
Equity
Capital and reserves attributable
to equity holders of the Company
Called up share capital 6 33,106 28,189 28,189
Share premium account 6 79,905 47,451 47,451
Other reserves 6 11,118 11,437 11,437
Accumulated loss (87,589) (78,984) (82,923)
------------------------------ ---- -------- -------- -----------
Total equity 36,540 8,093 4,154
------------------------------ ---- -------- -------- -----------
Consolidated Cash Flow Statement
for the six months ended 30 June 2013 (unaudited)
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2012
2013 2012
Note GBP'000 GBP'000 GBP'000
----------------------------------------- ---- -------- -------- ---------------------------
Cash outflow from operating activities
Cash used in operations 7 (3,891) (5,077) (8,274)
Interest paid (103) - (184)
Research and development tax credits - - 931
----------------------------------------- ---- -------- -------- ---------------------------
Net cash outflow from operating
activities (3,994) (5,077) (7,527)
----------------------------------------- ---- -------- -------- ---------------------------
Cash flows from investing activities
Interest received 1 18 23
Purchase of property, plant and
equipment (508) (141) (137)
Net cash flows used in investing
activities (507) (123) (114)
----------------------------------------- ---- -------- -------- ---------------------------
Cash flows from financing activities
Proceeds from issue of ordinary
shares 35,753 - -
Share issue expenses (1,383) - -
Proceeds from issue of convertible
loan note 1,655 3,000 3,000
Convertible loan notes issue expenses - (157) (157)
Net cash flows from financing activities 36,025 2,843 2,843
----------------------------------------- ---- -------- -------- ---------------------------
Increase/(decrease) in cash and
cash equivalents 31,524 (2,357) (4,798)
Cash and cash equivalents at beginning
of period 2,747 7,545 7,545
----------------------------------------- ---- -------- -------- ---------------------------
Cash and cash equivalents at end
of period 34,271 5,188 2,747
----------------------------------------- ---- -------- -------- ---------------------------
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2013 (unaudited)
Share Share Other Accumulated Total
Capital Premium Reserves Loss Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- ---------- --------------- --------------- ---------
At 1 January 2012 28,189 47,451 11,118 (74,375) 12,383
Loss and total comprehensive
expense for the period - - - (4,351) (4,351)
Share-based compensation - - - (258) (258)
Equity component
of convertible loan
notes (net of issue
costs) - - 319 - 319
At 30 June 2012 28,189 47,451 11,437 (78,984) 8,093
Loss and total comprehensive
expense for the period - - - (3,939) (3,939)
At 31 December 2012 28,189 47,451 11,437 (82,923) 4,154
Loss and total comprehensive
expense for the period - - - (4,949) (4,949)
Share-based compensation - - - 53 53
Issue of ordinary
shares 4,488 31,266 - - 35,754
Share issue expenses - (1,383) - - (1,383)
Conversion of convertible
loan note 429 2,571 (319) 230 2,911
At 30 June 2013 33,106 79,905 11,118 (87,589) 36,540
------------------------------ --------- ---------- --------------- --------------- ---------
Notes to the Financial Information
1 Basis of Preparation of Interim Financial Information
The unaudited interim financial statements have been prepared in
accordance with International Financial Reporting Standards and
International Accounting Standards (collectively IFRS) as adopted
by the EU including those applicable to accounting periods ending
31 December 2013 and the accounting policies set out in Lombard
Medical Technologies PLC's Annual Report for the year ended 31
December 2012. These interim financial statements have been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting". They do not include all the
statements required for full annual financial statements, and
should be read in conjunction with the consolidated financial
statements of the Group as at 31 December 2012.
The financial information contained in this interim financial
statement is unaudited and does not constitute statutory accounts
as defined in section 434 of the Companies Act 2006. The financial
information for the year ended 31 December 2012 has been extracted
from the Group's published financial statements for that year.
Those accounts that have been delivered to the Registrar of
Companies were audited and whilst the audit report was unqualified
it did contain a material uncertainty in respect of going concern
but did not contain a statement under section 498 of the Companies
Act 2006.
The interim financial statements have been prepared on the going
concern basis, which assumes that the Group will continue in
operational existence for the foreseeable future.
The Group has achieved regulatory approval for its Aorfix
product in the United States in February 2013 and has since
commenced commercial sales of the device. The launch of Aorfix will
continue to absorb cash until sufficient funds from products sold
are generated. Following several fundraisings in the first half of
2013, the group had GBP34.3m of cash as at 30 June 2013 which is
sufficient to fund its activities for the foreseeable future. Based
on the above, the Directors consider the going concern assumption
to be appropriate and therefore the going concern basis has been
adopted in the preparation of these financial statements.
2 Operating Segment Analysis
The Group operates one segment being the Cardiovascular Devices
and Medical Fabrics segment in accordance with reports used by the
chief operating decision makers identified as the executive board
members who take operating decisions.
6 months 6 months
Revenue by destination: ended ended Year ended
30 June 30 June 31 December
2013 2012 2012
GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------------
United Kingdom and Europe 1,767 1,672 3,399
United States of America 25 29 44
Rest of World 214 273 446
-------------------------- -------- -------- -------------
2,006 1,974 3,889
-------------------------- -------- -------- -------------
3 Taxation on Loss on Ordinary Activities
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2013 2012 2012
GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------------
UK research and development claim:
- for the current year 150 360 575
- for prior years - (215) (215)
----------------------------------- -------- -------- -------------
150 145 360
Overseas taxation charge - - (10)
Total tax credit 150 145 350
----------------------------------- -------- -------- -------------
4 Loss per Share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares. The diluted earnings per ordinary share
are identical to those used for the basic earnings per ordinary
share as the exercise of share options and warrants would have had
the effect of reducing the loss per ordinary share and are
therefore not dilutive.
Reconciliations of the losses and weighted average number of
shares used in the calculations are set out below:
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2013 2012 2012
GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- -------------
Loss for the period (GBP'000) (4,949) (4,351) (8,290)
----------------------------------------- -------- -------- -------------
Weighted average number of ordinary
shares ('000) 26,889 20,162 20,162
----------------------------------------- -------- -------- -------------
Basic and diluted loss per share (pence) (18.4) (21.6) (41.1)
----------------------------------------- -------- -------- -------------
5 Borrowings
Invesco convertible loan notes
Convertible Loan Notes with a face value of GBP3m were issued to
Invesco, the Company's largest shareholder, on 30 March 2012. The
loan notes paid interest of 8% per annum and were repayable at the
Company's discretion at any time until 1 July 2013; and were
repayable or convertible at the holder's discretion at any time
between 1 July 2013 and 1 September 2013 or on certain other events
as noted in the shareholder circular dated 9 March 2012. In the
case of conversion, the conversion share price was 140 pence per
share.
On 24 May 2013, as part of the placing, subscription and offer,
the Company and Invesco agreed to vary the terms of the convertible
loan to allow for earlier conversion and notice of conversion was
received from Invesco on 6 June 2013. As a result, on 17 June 2013
the Company issued 2,142,857 ordinary shares of 20 pence to Invesco
and retired the Convertible Loan Notes.
At 30 June 2013, there was no balance outstanding:
GBP'000
--------------------------------------- --------
Liability component at 1 January 2013 2,761
Interest expense 253
Interest paid (103)
Converted to equity (2,911)
--------------------------------------- --------
-
--------------------------------------- --------
The outstanding liability on the convertible loan notes had been
valued using a discount rate of 18%, considered a market rate for
an equivalent non-convertible loan and the excess liability had
been treated as an equity component and credited to other reserves.
On conversion, the difference between the outstanding value and the
face value was charged to accumulated losses and the equity
component was transferred to accumulated losses from other
reserves.
Medico's Hirata convertible loan
On 28 March 2013 the Company received $2.5m from the total $5.0m
total convertible loan facility granted by its exclusive
distribution partner in Japan, Medico's Hirata Inc. The loan
accrues interest of 3% per annum, payable when the loan is repaid
or converted. The term is for a period of seven years from the
receipt of regulatory approval for Aorfix in Japan, anticipated to
be granted in the first half of 2014. Conversion of the loan is at
Medico's Hirata Inc's discretion and will be based on the share
price at the time of conversion.
At 30 June 2013, the amount outstanding comprised:
GBP'000
------------------------------------------------ --------
Face value of convertible loan notes issued on
28 March 2013 ($2,500,000) 1,646
Interest expense 13
Included in non-current liabilities 1,659
------------------------------------------------ --------
The convertible loan note is considered a financial liability
with no equity component as there is a contractual obligation to
deliver a variable number of shares at the market price if the loan
note is converted. The fair value of the loan note is therefore the
same whether the settlement of the obligation is made in cash or in
shares at the time of repayment.
6 Equity
On 22 March 2013 and following the satisfaction of certain
conditions, the Company issued 10,040,000 ordinary shares of 20
pence each to the investors in the second tranche of the May 2011
fundraising. The shares were priced at 140 pence each, being the
lower of 140 pence (post the 2012 share consolidation) and the
prevailing market price on the day the second tranche was drawn
down by the Company. Total proceeds were GBP14.1m before
fundraising expenses.
On 17 June 2013, the Company issued 12,398,518 ordinary shares
of 20 pence each to the investors in a placing, subscription and
offer to qualifying participants. The shares were priced at 175
pence each, raising total proceeds of GBP21.7m before fundraising
expenses.
As part of the placing, subscription and offer, the Company
agreed with Invesco, its largest shareholder, to a variation of the
terms of the GBP3m of 8% Convertible Loan Notes issued on 30 March
2012. The variation allowed for the earlier conversion of the
Convertible Loan Notes and notice of conversion was received from
Invesco on 6 June 2013. As a result, on 17 June 2013 the Company
issued 2,142,857 ordinary shares of 20 pence to Invesco and retired
the Convertible Loan Notes.
i) Share capital
30 June 2013 30 June 2012 31 December 2012
-------------------- --------------------- --------------------- ---------------------
Number Nominal Number Nominal Number Nominal
of Value of Value of Value
shares GBP'000 shares GBP'000 shares GBP'000
000s 000s 000s
-------------------- ---------- --------- ---------- --------- ---------- ---------
Allotted, called
up and fully paid
Ordinary shares of
20p each 44,743 8,949 20,162 4,032 20,162 4,032
A deferred shares
of 0.862p each 373,857 3,223 373,857 3,223 373,857 3,223
B deferred shares
of 1p each 136,186 1,361 136,186 1,361 136,186 1,361
C deferred shares
of 0.9 p each 2,174,695 19,573 2,174,695 19,573 2,174,695 19,573
-------------------- ---------- --------- ---------- --------- ---------- ---------
33,106 28,189 28,189
-------------------- ---------- --------- ---------- --------- ---------- ---------
Rights - Ordinary Shares
Voting: in a show of hands every holder has one vote and in a
poll each share has one vote.
Dividends: each ordinary share has the right to receive
dividends.
Return on capital: each ordinary share has the right in a
liquidation of the Company's assets.
Rights - Deferred Shares
Voting: deferred shares do not entitle the holders to attend or
vote at any general meeting of the Company.
Dividends: deferred shares do not entitle the holder to receive
any dividend or other distribution.
Return on capital: the holders of deferred shares are only
entitled to receive the amount paid up on each deferred share after
the holders of the ordinary shares have received the sum of GBP1
million for each ordinary share and have no other right to
participate in the assets of the Company.
ii) Share Premium Account
This consists of the proceeds from the issue of shares in excess
of their par value less associated issue costs.
iii) Other Reserves
This arose on: the conversion of convertible preference shares
to ordinary shares and represents the difference between the fair
value of the preference shares and the nominal value of the
ordinary shares issued; and the accounting for the equity
component, net of issue costs, of the convertible loan notes issued
in 2012. This latter element was transferred to the Accumulated
Loss on the conversion of the loan notes.
7 Reconciliation of Loss before Taxation to Net Cash Outflow from Operating Activities
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2013 2012 2012
GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- -------------
Loss before taxation (5,099) (4,496) (8,640)
Depreciation and amortisation of licences 152 88 195
Share-based compensation expense/(credit) 53 (258) (258)
Net finance expense 257 119 398
Decrease/(increase) in inventories (3) (317) 353
Decrease/(increase) in receivables (269) 200 327
(Decrease)/increase in payables 1,018 (413) (649)
------------------------------------------ -------- -------- -------------
Net cash used in operating activities (3,891) (5,077) (8,274)
------------------------------------------ -------- -------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUUARUPWPUR
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