TIDMPXS
RNS Number : 1648P
Provexis PLC
04 June 2015
4 June 2015
Provexis plc
Enhanced terms to the DSM Alliance Agreement for Fruitflow(R),
Trading Update and PrimaryBid.com
Provexis plc ("Provexis" or the "Company"), the business that
develops and licenses the proprietary, scientifically-proven
Fruitflow(R) heart-health functional food ingredient, is delighted
to announce that the Company has agreed significantly enhanced
financial terms for its long-term Alliance Agreement with DSM for
Fruitflow(R).
The Company's Alliance Agreement with DSM Nutritional Products
for Fruitflow(R) includes a financial model which is based upon the
division of profits between the two partners on an agreed basis,
linked to certain revenue targets, following the deduction of the
cost of goods and a fixed level of overhead from sales.
Under the revised terms which have been agreed for the Alliance
Agreement, the fixed level of overhead deduction from sales will
permanently decrease with effect from 1 January 2015, backdated,
thus increasing the profit share payable to the Company.
The Company announced on 1 June 2010 that it had entered into
the Alliance Agreement for Fruitflow(R) with DSM. If the revised
fixed level of overhead deduction from sales had been in place from
the inception of the Agreement, the underlying profit share payable
to the Company in Euros would have been 101% higher than the actual
profit share that was payable to the Company over the three and a
half year period ended 30 September 2014.
The Company stated in its interim results on 30 December 2014
that the fixed level of overhead deduction from sales in the
Alliance Agreement was set to decrease contractually from 1 January
2016, but the decrease announced today exceeds the decrease which
had been envisaged, to the Company's advantage, and consequently
the 1 January 2016 change will not take effect.
Provexis remains responsible under the Alliance Agreement for
contributing scientific expertise necessary for successful
commercialisation, and the Company remains responsible for filing
and maintaining patents and trade marks for Fruitflow(R). The
Company will continue to pursue its existing strategy to strengthen
the breadth and duration of its patent and trade mark coverage,
seeking to maximise the commercial returns that can be achieved
from Fruitflow(R).
The revised commercial terms of the Alliance Agreement reflect
the continued strength of the long term relationship between
Provexis and DSM. DSM Venturing BV, the corporate venturing unit of
Royal DSM NV, continues to hold an unchanged 9.1 per cent
shareholding in the Company. All other commercial terms of the
Alliance Agreement remain confidential between the two parties.
Trading update
The Company is also pleased to provide an update on trading
following the end of its financial year on 31 March 2015.
In its preliminary results statement expected in early
September, the Company expects to report on another strong year of
progress, building on the low overhead strategy which was adopted
in 2013. The Company's Alliance partner DSM Nutritional Products
has continued to develop the market actively for the Company's
novel, patented Fruitflow(R) heart-health ingredient in all global
markets, with over 35 regional consumer healthcare brands now
having been launched by DSM customers. DSM's total revenues for
Fruitflow(R) for the year ended 31 March 2015, which are
denominated in Euros, grew strongly by more than 73% year on year,
reflecting strong interest in Fruitflow(R) and the success of the
powder format which is being used in an increasing number of new
product launches.
The powder format of Fruitflow(R) has broad potential
applications in tablet, gel capsule and dietary supplement
products. Interest from potential customers for this format remains
strong.
An increasing number of further commercial projects have been
initiated by DSM with prospective customers, including some
prospective customers which are part of global businesses, with
good prospects for these projects to be launched as consumer
products. Interest in the technology exists in all major global
markets.
In its preliminary results statement expected in early September
the Company expects to announce revenues for the year ended 31
March 2015 of GBP38k (2014: GBP5k). Revenues for the first half of
the year to 30 September 2014 were GBP8k, largely due to high
scale-up costs in the initial Fruitflow(R) powder manufacturing
setup phase, which were reduced significantly towards the close of
the quarter ended 30 June 2014.
A further significant reduction in production costs for
Fruitflow(R) powder was identified in late 2014, and this started
to take effect in the first calendar quarter of 2015.
The Company expects to report an underlying operating loss from
continuing operations for the year ended 31 March 2015 of
approximately GBP410k (2014: loss of GBP578k), a 29% year on year
reduction which continues to reflect the cost reduction actions
taken in 2013.
In November 2014 the Company signed a two stage collaboration
agreement with the University of Oslo to undertake further research
into the relationship between Fruitflow(R) and blood pressure
regulation. Recent work undertaken by the University has shown that
the Company's Fruitflow(R) technology has a potential new
bioactivity, leading to blood pressure lowering effects which would
be of relevance to a large number of consumers and patients with a
wide range of cardiovascular conditions.
The first stage of the collaboration agreement has been
laboratory based, focussing on developing the science, with major
areas including fractionation, testing, dosage and further IP
development. Preliminary results from this first stage of the
project have been encouraging, and work is ongoing.
In December 2014 we were pleased to announce that Professor Asim
Duttaroy, the original inventor of Fruitflow(R) had been
re-appointed to the Company's Scientific Advisory Board. Professor
Duttaroy is Group Leader of Chronic Disease at the University of
Oslo's Faculty of Medicine, and he is leading the University of
Oslo's research team for the Company's blood pressure project.
Marketing efforts for Fruitflow(R) have seen the product being
promoted at several major trade shows. The product has been
featured in numerous publications and it has been the subject of
several trade seminars and presentations, some of which are
available to view in the news section of the Company's website
www.provexis.com.
Marketing initiatives in 2015 have included a new DSM product
video for Fruitflow(R) which is primarily targeted at potential
business customers for Fruitflow(R) in the consumer healthcare
sector. The video makes reference to the US Food and Drug
Administration's guidance in May 2014 concerning the use of low
dose Aspirin, which remains a strong opportunity for
Fruitflow(R).
The product video has been a good opportunity to promote
Fruitflow(R) more widely, and it has been viewed by a wide variety
of current and prospective customers for Fruitflow(R), with further
bespoke versions of the video likely to be released in due course.
The video is also available to view via the Company's website
www.provexis.com.
Some of the underlying scientific studies for Fruitflow(R), to
include the Company's Aspirin Comparison Human Trial for
Fruitflow(R), will be submitted for publication in the coming
months in appropriate scientific journals. Publication of the
studies is also expected to be a significant opportunity to promote
Fruitflow(R).
The Company is in the process of launching a high quality
dietary supplement product containing Fruitflow(R) which will be
sold initially from the Company's website on a mail order basis.
The new dietary supplement product is expected to provide the
Company with an additional income and profit stream, and the
Company is seeking to minimise setup costs for this product with
the use of appropriate approved outsourcers. Publication of the
Fruitflow(R) studies should give the Company an opportunity to
promote this new product strongly, on a particularly cost effective
basis.
The Company is in the process of redesigning its website, in
part to accommodate its new ecommerce channel, with the new website
expected to be launched in the coming weeks.
Darwin Equity Financing Facility and PrimaryBid.com
The Company used its equity financing facility to draw down
GBP45k in April 2014 to strengthen the balance sheet, and help fund
the Company's patent and trade mark costs for Fruitflow(R). The
Company raised a further GBP125k using its Equity Financing
Facility in December 2014, which has helped to fund the
collaboration agreement for blood pressure regulation with the
University of Oslo.
The Company's cost base and its resources continue to be very
tightly managed, and the Company remains keen to minimise dilution
to shareholders. The Company currently has in excess of GBP200k
cash at bank and it is focussed on moving into profitability as
Fruitflow(R) revenues increase, but while it remains in a loss
making position it will need to raise some further working capital
and consequently the Company is pleased to announce it has joined
PrimaryBid.com (www.primarybid.com), the online platform dedicated
to equity crowdfunding for AIM-listed companies.
PrimaryBid.com provides a new channel for the Company to raise
equity from investors, allowing investors to bid directly for new
shares in the Company at prices of their choosing, subject to
certain limited restrictions.
PrimaryBid.com will provide the Company with ongoing access to
an aggregated book of bids submitted by prospective investors, with
the Company having full discretion as to whether or not to proceed
with a share placing to raise capital through PrimaryBid.com.
Should the Company wish to proceed with a share placing this
would be done by issuing new shares, in order to satisfy any number
of the bids presented through the PrimaryBid.com platform. Shares
may only be issued to the extent that the Company has the requisite
shareholder authorities to fulfil the issuance. Full details can be
found on www.primarybid.com.
The Company's existing 10 September 2013 equity financing
agreement with Darwin Strategic Limited has been cancelled, as a
result of the Company joining PrimaryBid.com.
Dawson Buck, Chairman of Provexis, commented:
"We are delighted to announce the revised terms which have been
agreed for the Alliance Agreement, which will permanently increase
the profit share payable to the Company. The revised commercial
terms of the Alliance Agreement reflect the continued strength of
the long term relationship between Provexis and DSM.
We are pleased to join the new and innovative PrimaryBid.com
platform which will allow us to access funding directly from
investors in a way which has traditionally been very restrictive.
The platform provides us with the potential to access capital
flexibly and quickly when the Company should need to do so, and it
will give private investors who have been supporting the Company
the ability to participate in potential future fundraisings.
The Company's trading update today includes a number of very
positive developments for the business, and with the Company's low
operational costs we are well positioned to drive value for
shareholders, and we remain positive about the outlook for the
business."
ends-
For further information please contact:
Provexis plc Tel: 07917 670260
Dawson Buck, Chairman enquiries@provexis.com
Ian Ford, Finance Director
Cenkos Securities plc Tel: 020 7397 8900
Bobbie Hilliam
This information is provided by RNS
The company news service from the London Stock Exchange
END
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