TIDMNIPT
RNS Number : 2660L
Premaitha Health PLC
30 September 2016
Premaitha Health plc
("Premaitha" or the "Company")
Final results
Manchester, UK - 30 September 2016 - Premaitha Health plc (AIM:
NIPT), developer of the leading CE-marked complete non-invasive
prenatal screening system, announces final results for the year
ended 31 March 2016.
Financial Highlights:
-- Revenues of GBP2.5m (2015: GBP132k) from the IONA(R) test in
its first full year of commercialisation
-- Operating loss GBP5.9m (2015: GBP4.3m) before one-off and
non-cash items of GBP6.2m (2015: GBP3.2m)
-- Strong balance sheet with cash at year-end of GBP5.3m (2015: GBP2.7m)
-- GBP13.0m investments secured in period
o GBP8.0m Placing (July 2015)
o GBP5.0m Thermo Fisher investment in loans and warrants
(December 2015)
-- Further GBP4.0m loan/warrants by Thermo Fisher post year-end (September 2016)
-- Provision for anticipated litigation costs increased for
strongest possible defence, GBP5.4m balance at year-end
Operational Highlights:
-- IONA(R) test sales in excess of 17,000 in the first full year since launch
-- Awarded lab contracts with hospitals in the UK, Poland,
Switzerland, France, Russia and the Middle East
-- Secured service customers across the UK, Asia, Europe and Latin America
-- Enhanced relationship with Thermo Fisher - manufacturer of
the next generation sequencing instrument on which Premaitha's
IONA(R) test runs - through further strategic investment by Thermo
Fisher and ongoing technical work to validate the IONA(R) test on
new instruments
-- Benefits of NIPT being recognised by Governments and
countries moving towards making NIPT freely available through
public health services
-- Illumina launched patent infringement proceedings against
Premaitha in March and October 2015. Premaitha vigorously defending
the actions on grounds of patent invalidity, non-infringement and
anti-competitive behaviours. Ongoing European Commission
investigation into potentially anti-competitive behaviour by
Illumina and others
Corporate Highlights
-- Strengthened Board with appointments of Barry Hextall as CFO
(June 2015) and William Denman as CMO (October 2015)
-- Adam Reynolds appointed Chairman (September 2016)
-- finnCap appointed as sole broker to the Company (September 2016)
-- A copy of the 2016 Annual Report and Accounts have been
posted today to all shareholders. Further copies is available to
the public on the Company's website, www.premaitha.com.
Update on post year end commercial progress
-- New lab contracts signed in Italy, France and first Asian lab secured in Thailand
-- 9 labs operational (up from 4 at 31 March 2016), with further 4 scheduled by the end of 2016
-- Reduced reliance on two European customers
-- Service laboratory growing, now more than 25 UK and international clients
-- Product registrations commenced in Mexico and Canada
Adam Reynolds, Non-executive Chairman, commented:
"The team at Premaitha has worked extremely hard in the first
year since the launch of our lead product to raise awareness of the
IONA(R) test's benefits amongst pregnant women and regulatory
bodies.
"Awareness of the benefits of NIPT is rising sharply and this is
evidenced both in the level of M&A activity in our sector; and
in the increasing number of countries moving towards making NIPT
freely available through their public health services.
"We firmly believe that NIPT should be available to all pregnant
women - not just those at high risk - to reduce the number of women
who are required to undergo unnecessary invasive testing which
carries the well-documented associated risks.
"In addition to driving widespread availability of the IONA(R)
test, Premaitha is also leveraging its expertise in molecular
diagnostics and exploring other high impact applications for our
technology in oncology and pre-implantation."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
For more information, please contact:
Premaitha Health plc Tel: +44 (0)
161 667 6865
Dr Stephen Little, Chief Executive investors@premaitha.com
Office
Barry Hextall, Chief Financial
Officer
Joanne Cross, Head of Marketing
Cairn Financial Advisers LLP (Nomad) Tel: +44 (0)
20 7148 7900
Liam Murray
finnCap (Sole Broker) Tel: +44 (0)
20 7220 0500
Adrian Hargrave / Scott Mathieson
(Corporate Finance)
Tony Quirke (Corporate Broking)
Vigo Communications Tel: +44 (0)
20 7830 9700
Ben Simons / Fiona Henson / Antonia
Pollock
premaitha@vigocomms.com
About Premaitha
Premaitha is a molecular diagnostics company which uses the
latest advances in DNA analysis technology to develop safer, faster
and regulatory approved non-invasive screening tests for pregnant
women.
Premaitha's lead test - the IONA(R) test - was launched in
February 2015 and is the leading CE marked complete system which
estimates the risk of a fetus being affected with Down's syndrome
or other genetic conditions. The IONA(R) test is performed on the
mother's blood sample - which contains traces of fetal DNA - and
then analysed using next generation DNA sequencing technology from
ThermoFisher Scientific.
Unlike existing prenatal screening methods, due to its high
level of accuracy, the IONA(R) test can significantly reduce the
number of women subjected to unnecessary stressful and invasive
follow-up diagnostic procedures which are costly, resource
intensive and carry a risk of miscarriage.
Non-invasive prenatal screening is an emerging, multi-billion
dollar global market and Premaitha's complete CE marked system
enables laboratories and health care practitioners to offer an
approved, non-invasive prenatal screening system in-house.
Premaitha is based in Manchester Science Park, United Kingdom
and its shares trade on the AIM market of the London Stock Exchange
(AIM: NIPT). For further information please visit
www.premaitha.com. Follow us on twitter @PremaithaHealth.
Chairman's Statement
Premaitha has made significant progress in its first full
trading year with customer contracts operational across Europe and
being installed in the Middle East. The in-house service laboratory
achieved CQC registration and is offering excellent service levels
to a growing roster of clinicians in the UK and
internationally.
We continue to feel the unwanted attentions of a dominant market
player who clearly fears fair competition from a superior offering.
We continue to defend the technical claims and we are pleased that
the EU Competition Commission are starting to look at market
behaviour of the aggressors (see principal risks and uncertainties
section).
Feedback from customers and front-line medical professionals is
extremely positive and we are building a supportive base from which
to expand the company in the coming years. This dialogue has
enabled the development of product and service enhancements which
will continue to keep the IONA(R) test at the forefront of
non-invasive prenatal testing.
Focused strategy underpinned by strong clinical foundations
The Group's strategy remains to apply DNA-based technological
advances to significant medical challenges, initially by delivering
a rapid take-up of DNA-based prenatal screening solutions. We
develop, produce and sell molecular diagnostic products and
services to prenatal screening and genetics laboratories
internationally. These products and services are developed and
delivered to the highest quality standards, and are supported by
strong clinical studies and collaborations with knowledge leaders
in the field.
Highly capable team assembled
We have retained an exceptional team of leading scientists and
experienced professionals in all disciplines at our Manchester
headquarters and have continued to assemble an outstanding
commercial team with true global reach to generate revenues and
support our expanding international client base.
I would like to thank all of those individuals for their efforts
in delivering the impressive achievements to date.
Financial position
Financially, the Group is at the early stages of its journey.
The fundraising in July 2015 demonstrated strong shareholder
support for our strategy and the subsequent investments by Thermo
Fisher in December 2015 and September 2016 was further
corroboration of the exciting potential for the IONA(R) test and
Premaitha.
Outlook
Premaitha has been a public company for just over two years and
from a standing start with zero revenue has made substantial
progress. During the current financial year we will continue this
growth trajectory.
The outlook for the current financial year is dominated by three
separate but related strands:
-- Litigation
-- Commercial Opportunities
-- Strategic Relationship
Litigation
The litigation by Illumina has been a significant challenge for
the Company in terms of the consumption of managerial time and
financial resource. The Board firmly believes in the strength of
its case and ultimately this will be resolved in a Court of Law in
the United Kingdom in the second half of 2017, unless our opponents
see sense in the meantime. Depending on the outcome of that case
the Court has indicated a preparedness to consider an action by the
Company to pursue an anti-trust case against Illumina. The Board
believes it has substantive evidence to support its claims.
We have been greatly encouraged by the European Commission's
investigation into anticompetitive conduct by Illumina and
Sequenom. We understand that the Commission is investigating the
background to - and creation of - the Pooled Patent Agreement and
the Claimants behaviour since then infringes Articles 101 and or
102 TFEU. We also believe that the Commission is examining whether
the licensing practices of Illumina raise competition law
concerns.
The costs for the defence of our position as well as the costs
for assisting the European Commission's investigation into
potential anti-competitive conduct have been fully provided for in
our 2015 /16 accounts, and we believe we have appropriate funding
in place to support this and our commercial plans. We are confident
of our position and believe the market should not be dominated by
one monopolistic player. Their conduct is denying choice and access
to high quality localized NIPT screening, and we are sure the
appropriate authorities will reach the same view.
Commercial opportunities
We finished the 2015/16 financial year strongly and have seen
this momentum continue into the current financial year. We are
seeing continued growth in our installed base within Europe and
what is very encouraging is the growth and momentum we are
experiencing for IONA(R) within the Middle East and Asia. I believe
during the course of the next twelve months these territories will
become very dominant for us in terms of revenue growth and where we
do not face the same litigation issues as in Europe.
We have built an extremely robust business with substantial
global opportunities, I am very proud of what we have achieved and
becoming a global business. Although the short to medium term focus
will be partially centered on the litigation and its distractions,
one must not forget the progress we have made and the substantial
growth opportunities we have ahead of us.
Strategic relationship
We have built the foundations of a strong relationship with
Thermo Fisher Scientific in terms of our own commercial and product
development on the Ion Torrent platform. We see ourselves as a key
content provider to Thermo Fisher and its Life Technologies and
Brahms subsidiaries and we want to further build upon this in the
coming year.
Board change
Finally I would like to take this opportunity to thank David
Evans for guiding Premaitha as Chairman over the past four years.
The next phase of Premaitha's growth strategy should see
significant expansion opportunities within the Far-East over the
next twelve months and I look forward to updating shareholders
shortly on our progress.
Strategic and financial review
We have made substantial progress in the year to launch the
IONA(R) prenatal screening test, demonstrate its excellent clinical
credentials and build a highly capable international molecular
diagnostics business.
The IONA(R) prenatal screening test has made an impressive start
since its launch in February 2015. Over 17,000 tests were sold in
its first trading year as CE-IVD kits to customers in the UK and
Europe, and as tests performed in our own CQC-registered service
laboratory. Customer feedback has been extremely positive and
published clinical results show it is a market-leading test that is
well-positioned for the prenatal screening industry. Product
development continues apace to ensure we meet the evolving needs of
the screening community across the world.
The business is now fully operational with manufacturing,
service and commercial activities focused on delivering
consistently high quality products and support to an expanding
international customer base. There is still much to do to realise
the significant potential of the Company, and the IONA(R) test, not
least to resist the obstacles placed in our way by aggressive
competitors, and we remain focused on the addressing the challenges
and realising the opportunities this entails.
Strategy
Our published clinical results and early contract wins confirm
our strategy of providing product-based screening solutions to our
laboratory customers to enable the rapid dissemination of NIPT
technology. The IONA(R) test has been specifically designed to
allow clinical laboratories, even without a background in DNA
analysis technology, to offer the new NIPT tests thereby ensuring
broad uptake and access to pregnant women. Supporting these
customers to build sustainable 'hub and spoke' business models is a
key part of our ongoing strategy.
We are confident that our model of providing the highest
consistent quality products to localised screening laboratories,
and from our own CQC-registered service laboratory, is ideally
suited to the needs of the international markets for prenatal
screening, and we are pleased to see this strategy being
corroborated by a broad range of customers across the world.
Market development
By the end of the financial year, Premaitha had established the
IONA(R) test in four customer laboratories and was installing it in
a further six announced contracts. The customers are spread across
the UK, Europe and the Middle East and are a mixture of public
(NHS) and private providers. Once installed, we support our
partners in their demand-building activities through clinical
education and promotional activities.
In addition we have established an in-house service laboratory,
for which we achieved CQC-registration, to provide prenatal
screening services during installation and demand-building phases
for our customers. The service laboratory is supporting customer
clinicians as far afield as Asia and Latin America.
The decision to adopt NIPT testing remains a complex one for
laboratories as it involves significant capital outlay and
uncertainty as to how quickly the solution will be adopted by
official bodies and patients. The sales process can, therefore, be
lengthy. However, we remain confident that ultimately all prenatal
screening will include NIPT and that the IONA(R) test represents
the best available solution for pregnant women and the screening
clinicians and laboratories who support them. During the year we
saw public bodies starting to announce decisions to include NIPT in
pregnancy screening pathways and we expect this trend to continue
in the coming years.
Product development
The IONA(R) test is demonstrably fit for purpose in the NIPT
screening field and to ensure this continues to be the case we have
introduced a number of additional product and software features
such as sex determination and fetal fraction, with key attributes
that maintain high positive predictive values and low redraw rates.
Throughput, cost and ease of use are also important considerations
for our laboratory customers and our high throughput kit is one
example of how we improve customer economics as they expand the
prenatal screening offering and scale.
In addition to these new developments we are also extending the
availability of the IONA(R) test by performing registration studies
to allow us to sell the product in territories in Asia and the
Americas.
The analysis of cell-free DNA potentially offers clinical
advantages in other fields of medicine and we have embarked on
initial studies to identify opportunities to leverage our
capabilities in the future in areas such as other prenatal
conditions and in cancer detection.
Operations
Key performance indicators (KPIs)
The Board recognises the importance of KPIs in driving
appropriate behaviours and enabling the monitoring of Group
performance. For the current financial year the primary KPIs were
the number of IONA(R) tests sold or performed in-house, and net
cash balances. Over 17,000 IONA(R) tests were sold or performed and
cash at the period end was GBP5,337k (2015: GBP2,709k). Going
forward the Board will evolve appropriate KPIs to drive the
commercialisation of the IONA(R) test, and to ensure robust
financial performance.
Geographical footprint
Premaitha has secured contracts with laboratory customers in the
UK, Europe and the Middle East. We have also appointed a key sales
leader in Asia Pacific and distributors in a number of territories,
and we also have opportunities in the Americas. As new customers
come on stream, we will build an appropriate commercial and
technical support infrastructure in regional hub locations.
Application support
We are able to offer training and application support to
laboratories that may not be familiar with the technology used in
the IONA(R) test. To deliver this activity, our excellent support
team provide exemplary customer service at their laboratories and
via our helpdesk.
Clinical laboratory
We have established a laboratory to perform IONA(R) testing to
support client demonstrations and to act as an enabling resource
for customers who are installing the IONA(R) workflow in their own
facilities or are building sample volumes with their downstream
clinical partners. During the year this laboratory achieved CQC
registration and is now delivering very good turnaround times with
high accuracy and low redraw rates.
Supply chain
Our supply chain and NGS platform partners coupled with our
in-house operational capabilities have scaled quickly whilst
maintaining the high quality standards we, and our customers,
demand. We remain confident that these partners are aligned
culturally and operationally to fulfil the potential we aim to
achieve with the IONA(R) prenatal screening test.
Financial
Income statement
In the first trading year revenues were GBP2,452k (2015:
GBP132k), predominantly from sales of IONA(R) test products with
also some non-recurring equipment revenues from one customer.
General and administrative expenses of GBP6,573k (2015: GBP4,468k)
were principally incurred on staff costs, sales and marketing and
product development expenditure. Research & Development tax
credits are anticipated to be GBP294k (2015: GBP800k) due to the
IONA(R) test being post-launch throughout the reporting period. The
operating loss after general administrative expenses was GBP5,872k
(2015: GBP4,336k) before the one-off and non-cash items totalling
GBP6,163k (2015: GBP3,200k) detailed below.
There is a resultant operating loss after one-off and non-cash
items of GBP12,032k (2015: GBP7,536k).
One-off and non-cash items
Significant one-off and non-cash items have been shown
separately in the consolidated statement of comprehensive income
and total GBP6,163k (2015: GBP3,200k). The principal one-off item
is a provision for anticipated costs in the ongoing litigation with
Illumina Inc, and others. The litigation provision has been
increased by GBP5,834k (2015: GBP500k) to reflect the robust
defence being prepared in response to the aggressive tactics being
adopted by Illumina.
Also, in July 2015, there was an oversubscribed share placing of
GBP8.0m with associated fundraising expenses of GBP201k (2015:
GBP739k). In addition, there is a non-cash item in the form of a
share-based payments charge of GBP124k (2015: GBP346k). As noted in
the Company's interim results, the deemed cost of the reverse
acquisition in July 2014 has been restated in the prior year to
GBP1,615k.
Finance income / (expenses)
During the period the Group incurred a net finance charge of
GBP84k (2015: net finance income of GBP88k), with interest and
unwinding discounts on the Thermo Fisher loan instrument offsetting
interest earned on cash balances.
Taxation
The loss on ordinary activities before taxation of GBP12,116k
(2015: GBP7,448k) generated a tax loss the benefit of which will
not be recognised until the Company can be more certain of
recoverability through future profitability.
Foreign exchange
The Group made a loss of GBP54k (2015: GBP20k gain) on
translation of its foreign subsidiaries to the presentational
currency.
Loss per share
The total comprehensive loss of GBP12,130k (2015: GBP7,428k)
represents a loss per share of 6 pence (2015: 5 pence).
Balance sheet
At the balance sheet date the Group had total assets of
GBP10,490k (2015: GBP5,646k). Property, plant and equipment
increased to GBP1,936k (2015: GBP1,347k) due mainly to an
additional leasehold unit in Manchester and capital equipment to
furnish the new service laboratory. Current assets increased to
GBP8,554k (2015: GBP4,299k) due to higher cash and debtors,
including an GBP800k R&D tax credit received in May 2016.
Total equity and liabilities increased to GBP10,490k (2015:
GBP5,646k) with the comprehensive loss offset by the equity
fundraising in July 2015 and the loan funding from Thermo
Fisher.
Cashflow
The Group had an opening cash position of GBP2,709k (2015:
GBP50k) and generated a surplus of GBP2,628k (2015: GBP2,660k).
Cash and cash equivalents at the end of the period was GBP5,337k
(2015: GBP2,709k).
During the period the Group had cash used in operating
activities of GBP7,042k (2015: GBP5,026k) due to higher operating
losses and increased net working capital. Investing activities
generated a deficit of GBP1,131k (2015: surplus GBP149k) due to
capital expenditure. The July 2015 fundraising exercise and the
December 2015 Thermo Fisher loan generated a financing surplus of
GBP10,800k (2015: GBP7,537k).
Dividends
No dividend is recommended (2015: GBPnil) due to the early stage
nature of the Group.
Capital management
The Board's objective is to maintain a balance sheet that is
both efficient at delivering long-term shareholder value and also
safeguards the Group's financial position in light of variable
economic cycles and the principal risks and uncertainties outlined
in this report. As at 31 March 2016 the Group had cash of GBP5,337k
(2015: GBP2,709k) with no short-term borrowings (2015: GBPNil). The
Thermo Fisher loan was an initial drawdown of GBP2,760k in December
2015 which will rise to GBP5.0m which is repayable by December
2023. Interest is allowed to accumulate throughout the term of this
loan. The Board continues to monitor its balance sheet to ensure it
has an adequate capital structure.
Post-balance sheet events
After the balance sheet date there were a number of further
procedural hearings in the patent litigation process. We believe
that these developments were largely positive for the Company and
resulted in changes to the way the cases will be heard, additional
collaboration with a third party defending similar claims and the
formal identification of anti-trust objections by Premaitha. Whilst
generally favourable developments, the impact on cost estimates is
significant should the various cases proceed to trial. Full
provision for these costs has been included in the litigation
provision (see principal risks section and note 18). In September
2016 we announced additional loan funding from Thermo Fisher with
associated warrants being issued, thereby giving us the funding to
continue our commercial progress and product development pipeline
whilst mounting the strongest possible defence.
Consolidated statement of comprehensive income
Year ended 13 months to
31 March 2016 31 March 2015
(restated)
GBP GBP
-------------------------------------------- -------------------------------- --------------------------------------
Continuing Operations
Revenue 2,452,378 132,267
Cost of sales (1,751,395) -
Gross profit 700,983 132,267
General administrative expenses (6,573,384) (4,468,129)
Fundraising expenses (201,340) (738,604)
Deemed cost of reverse acquisition - (1,615,282)
Increased in litigation provision (5,834,345) (500,000)
Share based payment charge (124,089) (345,769)
-------------------------------------------- -------------------------------- --------------------------------------
Total administrative expenses (12,733,158) (7,667,784)
Operating loss (12,032,175) (7,535,517)
Finance income 15,000 88,005
Finance costs (99,232) -
Net financing (expenses)/income (84,232) 88,005
Loss on ordinary activities before taxation (12,116,407) (7,447,512)
Tax on loss on ordinary activities 39,545 -
Loss from continuing operations (12,076,862) (7,447,512)
Other comprehensive (expense)/income
Exchange translation differences (53,599) 19,558
Total comprehensive loss (12,130,461) (7,427,954)
Attributable to :
Owner of the parent (12,130,461) (7,427,954)
(12,130,461) (7,427,954)
-------------------------------------------- -------------------------------- --------------------------------------
Loss per share:
Basic and diluted (GBP) 0.06 0.05
-------------------------------------------- -------------------------------- --------------------------------------
Consolidated statement of changes in equity
Merger Reverse Currency
Share Share relief acquisition translation Warrants Retained
capital premium reserve reserve reserve reserve losses Total equity
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
(restated) (restated) (restated)
LIR LIR LIR LIR LIR LIR LIR LIR
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
13 months ended 31 March 2015
Balance at 1
March 2014 12,046,223 22,813,765 - - - - (1,565,669) 33,294,319
Loss for the
period as
previously
reported - - - - - - (6,797,197) (6,797,197)
Prior year
adjustment - - - - - - (650,315) (650,315)
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
Restated loss
for the
period - - - - - - (7,447,512) (7,447,512)
Other
comprehensive
income - - - - 19,558 - - 19,558
Total
comprehensive
income/
(expense) for
the period - - - - 19,558 - (7,447,512) (7,427,954)
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
Transactions with owners
Issue of share
capital 16,126,910 658,147 954,545 - - - - 17,739,602
Share issue
expenses - (164,891) - - - - - (164,891)
Share-based
payment
charge - - - - - - 402,154 402,154
Reverse
acquisition
as previously
reported - - - (40,597,348) - - - (40,597,348)
Prior year
adjustment - - - 650,315 - - - 650,315
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
Restated
reverse
acquisition - - - (39,947,033) - - - (39,947,033)
Total
transactions
with owners 16,126,910 493,256 954,545 (39,947,033) - - 402,154 (21,970,168)
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
Balance at
31 March 2015 28,173,133 23,307,021 954,545 (39,947,033) 19,558 - (8,611,027) 3,896,197
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
12 months ended 31 March 2016
Balance at 1
April 2015 28,173,133 23,307,021 954,545 (39,947,033) 19,558 - (8,611,027) 3,896,197
Loss for the
period - - - - - - (12,076,862) (12,076,862)
Other
comprehensive
expense - - - - (53,599) - - (53,599)
Total
comprehensive
expense for
the period - - - - (53,599) - (12,076,862) (12,130,461)
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
Transactions
with owners
Issue of share
capital 4,000,000 4,000,000 - - - - - 8,000,000
Share issue
expenses - (283,360) - - - - - (283,360)
Share-based
payment
charge - - - - - - 234,596 234,596
Warrants
issued - - - - - 1,770,363 - 1,770,363
Total
transactions
with owners 4,000,000 3,716,640 - - - 1,770,363 234,596 9,721,599
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
Balance at
31 March 2016 32,173,133 27,023,661 954,545 (39,947,033) (34,041) 1,770,363 (20,453,293) 1,487,335
--------------- ----------- ----------- -------- ------------- ------------ ----------- ------------- -------------
Consolidated statement of financial position as at 31 March
2016
As at As at
31 March 31 March
Company number 3971582 2016 2015
(restated)
GBP GBP
--------------------------------- ------------- -------------
Assets
Non-current assets
Property, plant and equipment 1,935,891 1,347,280
Total non-current assets 1,935,891 1,347,280
--------------------------------- ------------- -------------
Current assets
Inventories 461,407 450,038
Trade and other receivables 1,661,275 339,354
Cash and cash equivalents 5,336,859 2,709,355
Corporation tax receivable 1,094,643 800,454
Total current assets 8,554,184 4,299,201
--------------------------------- ------------- -------------
Total assets 10,490,075 5,646,481
--------------------------------- ------------- -------------
Equity and liabilities
attributable to equity
holders of the parent company
Share capital 32,173,133 28,173,133
Share premium 27,023,661 23,307,021
Merger relief reserve 954,545 954,545
Reverse acquisition reserve (39,947,033) (39,947,033)
Foreign exchange translation
reserve (34,041) 19,558
Warrants reserve 1,770,363 -
Accumulated deficit (20,453,293) (8,611,027)
Total equity 1,487,335 3,896,197
--------------------------------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 2,091,964 1,085,818
Provisions 5,386,326 500,000
Total current liabilities 7,478,290 1,585,818
--------------------------------- ------------- -------------
Non-current liabilities
Deferred tax liability - 39,545
Provisions 161,683 124,921
Interest bearing loans 1,362,767 -
and borrowings
Total non-current liabilities 1,524,450 164,466
--------------------------------- ------------- -------------
Total equity and liabilities 10,490,075 5,646,481
--------------------------------- ------------- -------------
Consolidated statement of cash flows for the year ended 31 March
2016
12 months 13 months
to to
31 March 31 March
2016 2015
(restated)
GBP GBP
--------------------------------------------- ------------- ------------
Cash flow from operating
activities
Loss before tax (12,116,407) (7,447,512)
Adjustments for :
Finance income (15,000) (88,005)
Finance costs 99,232 -
Deemed cost of reverse acquisition - 1,615,282
Depreciation 557,323 258,413
Loss on disposal of property,
plant and equipment - 98,707
Increase in litigation provision
less amounts utilised 4,886,326 500,000
Share option and warrant
expense 234,596 402,154
Foreign exchange movements (53,599) (11,806)
R&D Tax credit (294,189) (800,454)
--------------------------------------------- ------------- ------------
(6,701,718) (5,473,221)
Changes in working capital:
Increase in inventories (11,369) (450,038)
Increase in trade and other
receivables (1,371,470) (52,818)
Increase in trade and other
payables 1,006,146 695,722
Increase in provisions 36,762 -
Cash used in operating activities (7,041,649) (5,280,355)
R & D tax credit received - 254,259
Net cash used in operating
activities (7,041,649) (5,026,096)
--------------------------------------------- ------------- ------------
Cash flow from investing
activities
Acquisition of parent, net
of cash acquired - 1,229,128
Purchase of property, plant
and equipment (1,146,543) (1,168,110)
Proceeds from sale of property, 610 -
plant and equipment
Interest received 15,000 88,005
Interest paid (3) -
Net cash (used in)/generated
from investing activities (1,130,936) 149,023
--------------------------------------------- ------------- ------------
Financing Activities
Proceeds from issue of equity
instruments 7,716,640 7,074,711
Proceeds from borrowing 3,083,450 461,867
Net cash from financing activities 10,800,090 7,536,578
--------------------------------------------- ------------- ------------
Net change in cash and cash
equivalents 2,627,504 2,659,505
Cash and cash equivalents
at beginning of period 2,709,355 49,850
Cash and cash equivalents
at end of period 5,336,859 2,709,355
--------------------------------------------- ------------- ------------
Basis of preparation
This financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS), adopted for use
in the European Union and including IFRIC interpretations issued by
the International Accounting Standards Board (IASB) and the
Companies Act 2006.
The Group has applied all accounting standards and
interpretations issued relevant to its operations for the year
ended 31 March 2016. The consolidated financial statements have
been prepared on a going concern basis.
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined by
section 434 and 435 of the Companies Act 2006. The financial
information for the year ended 31 March 2016 has been extracted
from the Group's financial statements upon which the auditor's
opinion is unmodified and does not include any statement under
section 498(2) or 498(3) of the Companies Act 2006. The statutory
accounts for the year ended 31 March 2016 will be delivered to the
Registrar of Companies following the Annual General Meeting.
The consolidated financial information has been prepared on the
basis of accounting policies set out in the Group's financial
statements for 2016.
Going concern
Following a detailed review of the Group's financial plans, the
Board has a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. The detailed review process looked at key commercial and
operational drivers of financial performance and in particular
liquidity. These forecasts were predicated on the current
litigation strategy and on securing the loan funding from Thermo
Fisher announced in September 2016. The underlying business
forecasts were compiled on the same basis as the Group's budgeting
process and updated for performance in the first few months of the
2017 financial year. The forecasts are sensitive to revenue growth
as well as to working capital controls and spending decisions.
Operational plans are in progress to improve cash efficiency, much
Group expenditure remains discretionary and revenues are monitored
closely to allow for responsive decision-making to balance cash
expectations with available funds. As further mitigation for
potential downsides the Group has identified potential funding
facilities for additional resilience if and when required.
The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
Segmental analysis
In the opinion of the directors, the Company has one class of
business in two geographic locations, a molecular diagnostics
business based in the UK which sells into the UK and Rest of World
geographic areas.
Revenue, analysed by category, was as follows:
13 months
to
Year ended 31 March
31 March 2016 2015
GBP GBP
--------------------- ----------------------------------- -------------------------------
Sales of goods 2,005,782 -
Rendering of
services 74,548 4,767
Non recurring sales
of equipment 372,048 -
Grant Income - 127,500
2,452,378 132,267
--------------------- ----------------------------------- -------------------------------
Revenue and non-current assets, analysed by geographical area,
was as follows:
Year ended 13 months to
31 March 2016 31 March 2015
GBP GBP GBP GBP
Revenue Non-current assets Revenue Non-current assets
UK 738,333 1,935,891 132,267 1,347,280
Rest
of
world 1,714,045 - - -
------- ----------------------------- ----------------------------------------------- ----------------------------- ------------------------------------------
2,452,378 1,935,891 132,267 1,347,280
------- ----------------------------- ----------------------------------------------- ----------------------------- ------------------------------------------
During 2016, the first year of trading revenues for the Group,
GBP2,047,219 (83.5%) (2015: GBPNil) of the Group's revenue depended
on two customers who each represented more than 10% of Group
revenues. GBP1,560,319 (63.6%) related to one customer and
GBP486,900 (19.9%) related to the other.
Operating loss
The following items have been included in arriving at the
operating loss for continuing operations:
13 months
Year ended to
31 March 31 March
2016 2015
GBP GBP
------------------------------- ----------------------------- ----------------------------
Research and development 902,948 1,847,546
R&D Tax credit (294,189) (800,454)
Depreciation of property,
plant and equipment 557,323 258,413
Loss on disposal of property,
plant and equipment - 98,707
Operating lease rentals:
- land and buildings 169,946 95,923
- other 8,697 1,803
-------------------------------- ----------------------------- ----------------------------
Separately disclosed items
13 months
Year ended to
31 March 31 March
2016 2015
(restated)
GBP GBP
------------------------------------ ------------------------------ -----------------------
Separately disclosed items
within administrative expenses
Fundraising expenses 201,340 738,604
Deemed cost of reverse acquisition - 1,615,282
Increase in litigation provision 5,834,345 500,000
Share based payments 124,089 345,769
------------------------------------- ------------------------------ -----------------------
Total separately disclosed
items 6,159,774 3,199,655
------------------------------------- ------------------------------ -----------------------
-- Fundraising expenses relate to professional and other fees
relating to the issuing of shares and warrants.
-- The deemed cost of reverse acquisition is the aggregate
deemed fair value of the consideration paid, assets and liabilities
acquired and resulting charge to the income statement in respect of
the acquisition of Premaitha Limited by Premaitha Health Plc.
-- The litigation expenses relate to additional provision
provided for the expected total costs of defending the company
against a claim of patent infringement
-- Share-based payment costs relate to the provision made in
accordance with IFRS 2 'Share-based payment' following the issue of
share options issued to employees and other persons subsequent to
admission to AIM.
Taxation on profits from ordinary activities
Year ended 13 months to
31 March 2016 31 March 2015
GBP GBP
---------------------------------------------- --------------------------------- ---------------------------------
Current tax expense
UK corporation tax - -
Deferred tax
Origination and reversal of timing
differences (39,545) -
Total tax expense (39,545) -
The reason for the difference between the actual tax credit for
the period and the standard rate of corporation tax in the UK
applied to losses for the period are as follows:
Year ended 13 months to
31 March 2016 31 March 2015
(restated)
Factors affecting the tax charge for the period GBP GBP
------------------------------------------------------- --------------- ---------------------------------
Loss on ordinary activities before taxation (12,116,407) (7,447,512)
UK corporation tax of 20% (2015: 20%) (2,423,281) (1,489,502)
Effects of:
Tax-rate differences in foreign jurisdictions 7,822 -
Non-deductible expenses 1,015,551 381,349
Deferred tax not recognised (21,211) (80,912)
R&D tax credit 176,425 (160,091)
Tax losses carried forward 1,244,694 1,349,156
Adjustment in respect of prior periods (deferred tax) (39,545) -
-------------------------------------------------------- --------------- ---------------------------------
Total tax expense (39,545) -
The Research and development tax credit of GBP294,189 (2015:
GBP800,454) is shown as a deduction against general administrative
expenses.
The Group is required to estimate the income tax in each of the
jurisdictions in which it operates. This requires an estimation of
the current tax liability together with an assessment of the
temporary differences which arise as a consequence of different
accounting and tax treatments. These temporary differences result
in deferred tax assets or liabilities which are included within the
statement of financial position. Deferred tax assets and
liabilities are measured using substantially enacted tax rates
expected to apply when the temporary differences reverse.
Management judgement is required to determine the total provision
for income tax. Amounts accrued are based on management's
interpretation of country specific tax law and the likelihood of
settlement.
Factors that may affect future tax charges
The Group has estimated trading losses of GBP8,228,622 (2015:
GBP2,463,894), estimated excess management fees of GBP6,082,666
(2015: GBP5,251,864), non-trade loan relationship deficits of
GBP100,063 (2015: GBPNil) and capital losses of GBP1,934,399 (2015:
GBP1,934,399).
The tax losses have resulted in a potential deferred tax asset
of approximately GBP3,258,350 (2015: GBP1,930,031) which has not
been recognised as it is uncertain the future taxable profits will
be sufficient to utilise the losses.
ViaLogy LLC may be entitled to further tax losses not reflected
in the above. The maximum amount of losses available is $6,000,000,
however this is subject to an annual limitation which is estimated
at $250,000 per year. At the reporting date the accrued potential
losses claimable are estimated at $2,250,000 (2015: $2,000,000).
The losses disclosed in relation to the US have not been agreed
with the US taxation authorities and thus are the best estimate of
management as at 31 March 2016.
Prior period adjustments
The comparatives for the year-ended 31 March 2015 have been
amended in these financial statements to reflect an error in the
accounting for the reverse acquisition of Premaitha Health Plc and
its subsidiaries.
The deemed fair value of the consideration for this reverse
acquisition was previously stated at GBP2,308,094. Subsequent to
the prior period adjustment this has been amended to a fair value
of GBP2,958,409. The resulting charge to the income statement in
respect of the acquisition has, consequently, increased from
GBP964,967 to GBP1,615,282.
This increase in the fair value also causes a decrease in the
reverse acquisition reserve from GBP40,597,348 to
GBP39,947,033.
This adjustment, and the consequential increase in the loss
after tax attributable to the parent company for the year to 31
March 2015, results in an increase in the basic loss per share to
GBP0.05 compared to the previously reported loss of GBP0.04 per
share.
Loss per share
Basic
Basic loss per share is calculated by dividing the loss after
tax attributable to the equity holders of the parent company for
the period of GBP12,130,461 (2015: loss GBP7,427,954) by the
weighted average number of ordinary shares in issue during the
period 218,109,064 (2015: 151,891,657).
Diluted
Diluted earnings per share dilute the basic earnings per share
to take into account share options and warrants. The calculation
includes the weighted average number of ordinary shares that would
have been issued on the conversion of all the dilutive share
operations and warrants into ordinary shares. 58,993,088 options
and warrants (2015: 33,307,884) have been excluded from this
calculation as the effect would be anti-dilutive.
Provisions
31 March 2016 31 March 2015
GBP GBP
------------------------- -------------- --------------
Current liabilities
Litigation provision 5,386,326 500,000
Non-current liabilities
Dilapidation provision 161,683 124,921
-------------------------- -------------- --------------
5,548,009 624,921
------------------------- -------------- --------------
Litigation provision
Premaitha is defending two patent infringement litigation claims
filed in the English courts which claim that Premaitha's
non-invasive pre-natal test infringes patents owned or licensed by
the claimants. The first claim was filed in March 2015 by the
claimants Illumina, Inc., Seequenom, Inc. and Stanford University.
The second claim was filed in September 2015 by the claimants
Illumina, Inc. and the Chinese University of Hong Kong. The cases
are due to be heard in the UK High Court in 2017.
The Group has assessed the expected costs of defending these
claims, and has provided in full for the expected litigation costs.
The Group recognised a provision in the prior year financial
statements of GBP500,000 for expected litigation costs in respect
of the first claim. Following the filing of the second claim, and a
re-assessment of the Group's legal strategy and the litigation
costs expected to be incurred in defending both claims, the
provision has been increased to GBP5,386,326.
Litigation
provision
GBP
----------------------------------- -----------
At 1 March 2014 -
Increase in provision 500,000
Amounts utilised -
----------------------------------- -----------
At 31 March 2015 and 1 April 2015 500,000
Increase in provision 5,834,345
Amounts utilised (948,019)
------------------------------------- -----------
At 31 March 2016 5,386,326
------------------------------------- -----------
As the Group cannot reliably estimate what proportion of the
litigation costs will be paid after more than 12 months from the
reporting date, the amount is classified as current.
Dilapidation provision
As part of the Group's property leasing arrangements there is an
obligation to return the premises in the same state that they were
received and repair damages which incur during the life of the
lease, such as wear and tear. The cost is charged to profit and
loss as the obligation arises. The provision is expected to be
utilised between 2016 and 2021 as the leases terminate.
Dilapidation
provision
GBP
------------------------------------------------- -------------
At 1 March 2014 -
Capitalised in cost of short leasehold property 124,921
Amounts utilised -
------------------------------------------------- -------------
At 31 March 2015 and 1 April 2015 124,921
Capitalised in cost of short leasehold property 36,762
Amounts utilised -
------------------------------------------------- -------------
At 31 March 2016 161,683
--------------------------------------------------- -------------
Other interest bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost.
31 March 2016 31 March 2015
GBP GBP
------------------------------------ -------------- --------------
Non-current liabilities
Other secured interest bearing loan 1,362,767 -
1,362,767 -
------------------------------------ -------------- --------------
The secured loan provided by Life Technologies Corporation
(LTC), part of the Thermo Fisher Scientific Group, is accruing
interest at a rate of 6% on the principal capital balance of
GBP2,760,000 and is secured by way of a fixed and floating charge
over intellectual property of the Group. This loan is wholly
repayable in more than 5 years.
This loan is part of the provision of a total of GBP5,000,000 of
secured loan facilities from LTC to the Group with GBP1,770,363
recognised as the fair value on grant of 20,325,204 warrants to the
lender.
An additional GBP323,450 of the loan facility was used to settle
legal costs during the year. The remaining GBP1,916,550 loan
facility retention is to be drawn down against future
milestones.
The implied effective interest rate on the amount allocated to
the loan as a liability is 19.21%.
Share capital
Ordinary shares of Deferred shares of
GBP0.10 each GBP0.009 each Share premium Total
No. GBP No. GBP GBP GBP
------------------- ------------------- ----------- ------------------- ---------- -------------- -----------
Balance at 1 March
2014 2,689,460,366 2,689,460 1,039,640,244 9,356,762 22,813,765 34,859,988
Shares
consolidation (2,662,565,762) - - - - -
Shares issued 161,269,105 16,126,911 - - 493,256 16,620,167
-------------------- ------------------- ----------- ------------------- ---------- -------------- -----------
Balance at 31 March
2015 188,163,709 18,816,371 1,039,640,244 9,356,762 23,307,021 51,480,154
Balance at 1 April
2015 188,163,709 18,816,371 1,039,640,244 9,356,762 23,307,021 51,480,154
Shares issued 40,000,000 4,000,000 - - 3,716,640 7,716,640
-------------------- ------------------- ----------- ------------------- ---------- -------------- -----------
Balance at 31 March
2016 228,163,709 22,816,371 1,039,640,244 9,356,762 27,023,661 59,196,794
-------------------- ------------------- ----------- ------------------- ---------- -------------- -----------
On 2 July 2015 the Company issued 40,000,000 new Ordinary shares
of GBP0.10 each at GBP0.20 raising GBP8 million before
expenses.
All ordinary shares in issue have equal voting rights and rights
to dividends or other distributions. The deferred shares rank
equally in all respects but do not have any voting rights or rights
to receive dividends or other distributions and will not have any
return on capital on a winding up.
Thermo Fisher Scientific loan and warrants
On 11 December 2015, the Group entered into a loan agreement
with Life Technologies Limited ("Thermo Fisher"), under the terms
of which Thermo Fisher provided a loan facility of GBP5m to the
Group. The term of the loan is 8 years and the rate of interest
applied to the loan is 6%.
The loan is secured by a fixed and floating charge against the
intellectual property of the Group.
The Group simultaneously entered into a share warrant agreement
with Thermo Fisher. The Group assessed the accounting treatment of
the loan and warrant agreements and have concluded that, although
they are separate financial instruments, it is necessary to
allocate the initial proceeds received between the loan and the
warrants based on their fair values, because the instruments were
entered into at the same time.
Having considered the terms of the warrants, it has been
concluded that they represent an equity instrument. The warrants
are accounted for at fair value on inception in accordance with IAS
32. The loan is initially recognised at fair value on inception and
subsequently measured at amortised cost using the effective
interest rate method, in accordance with IAS 39.
The Group allocated the initial proceeds of the loan of
GBP2,760,000 (the remainder is yet to be drawn down), according to
the respective fair values of the loan and warrant instruments as
follows:
GBP'000
Loan 990
Warrants 1,770
--------------- --------
Total initial
proceeds 2,760
The warrants are accounted for as an equity instrument under IAS
32, and are not subsequently re-measured. As the loan is
subsequently measured at amortised cost using the effective
interest rate method, an accretion charge is recognised over the
life of the loan to restore its carrying value to the amount drawn
down. The charge recognised in the year is as follows:
GBP'000
Fair value on inception 990
Amount subsequently
drawn down 323
Accretion charge
to 31 March 2016 50
Carrying value at
31 March 2016 1,363
On 11th December 2015 the Group also issued warrants over
20,325,204 shares to Thermo Fisher. The warrants have an exercise
price of 24.6p per share, and have a term of 8 years.
Initial consideration received was GBP2,760,000. Per IAS 32, the
Group estimated the allocation of the initial consideration between
the loan and the warrants.
At 31 March 2016, the following warrants were outstanding in
respect of Ordinary shares:
Date of grant Exercise period 2016 number 2015 number
------------------ -------------------------------------- ------------ ------------
11 December 2015 11 December 2015 to 10 December 2023 20,325,204
------------------ --------------------------------------- ------------ ------------
The fair values of the warrants granted were determined using a
variation of the Black-Scholes model, incorporating the dilutive
effects of the warrants. The following principal assumptions were
used in the valuations:
Thermo Fisher Warrants
------------------------- -----------------------
Share price 20.63p
Volatility 68%
Dividend yield 0%
Risk-free interest rate 1.74%
Expected warrant life 8 years
---------------------------- -----------------------
Warrants and weighted average exercise prices are as follows for
the reporting periods presented:
Thermo Fisher Warrants
Number of shares Weighted average exercise price per share
GBP GBP
------------------------------ ----------------------- ------------------------------------------
Outstanding at 1 April 2015 - -
Granted 20,325,204 0.25
Lapsed - -
Forfeited - -
Exercised - -
------------------------------ ----------------------- ------------------------------------------
Outstanding at 31 March 2016 20,325,204 0.25
Exercisable at 31 March 2015 - -
Exercisable at 31 March 2016 20,325,204 0.25
------------------------------- ----------------------- ------------------------------------------
Post balance sheet events
The Group has evaluated all events or transactions that occurred
after 31 March 2016 up to the date of signing of the financial
statements.
On 22 September 2016, the Group entered into a loan agreement
with Thermo Fisher for a further facility of GBP4,000,000. The
Group simultaneously entered into a further warrant agreement with
Thermo Fisher.
No other material subsequent events have occurred that would
require adjustment to or disclosure in the financial
statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEUFWUFMSESU
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September 30, 2016 02:00 ET (06:00 GMT)
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