TIDMPRM
RNS Number : 4636J
Proteome Sciences PLC
14 April 2020
14 April 2020
Proteome Sciences plc
("Proteome Sciences" or the "Company")
Final results for the year ended 31 December 2019
The Company is pleased to announce its audited results for the
year ended 31 December 2019.
Highlights:
-- Total revenues of GBP4.7m (FY18: GBP3.05m)
-- Proteomic (biomarker) services revenues of GBP0.93m (FY18: GBP0.75m)
-- TMT(R) sales and royalties of GBP3.7m (FY18: GBP2.20m)
-- Total costs of GBP4.36m (FY18: GBP4.42m)
-- Profit after tax of GBP0.15m (FY18: loss of GBP1.31m)
-- Cash reserves at 31 December 2019 of GBP0.80m
-- Launch of TMTpro(TM) 16plex reagents
-- Sustained growth of services business with highest level of quotes and projects delivered
Post year-end:
-- Q1 revenues broadly unaffected by COVID-19 pandemic
-- We continue to monitor the potential effects of social distancing on our business
Dr. Ian Pike, Interim Chief Executive Officer of Proteome
Sciences plc, commented:
"In 2019 we moved into profit as a result of strong growth in
both TMT(R) and biomarker services. TMT(R) performance was
particularly impressive with a 34% growth in underlying revenues
and accelerated attainment of a second sales milestone of GBP0.75m.
The launch of 16plex TMTpro(TM) in the summer was well received and
is expected to contribute significantly in 2020. Our strategy of
more direct customer engagement in the US market resulted in
significant increases in quotes issued and orders received,
particularly in the fourth quarter. With high levels of work
carried over from 2019 we have made a good start to 2020, though
significant uncertainty may result because of the impact of the
coronavirus pandemic. Currently there are no issues with supply
chains, or our staffing levels and the majority of samples required
for ongoing projects have already been received in Frankfurt. More
stringent measures around home isolation in the US could however
impact production and delivery of samples and critical reagents for
future studies, but we do not expect this to have a material effect
on full year revenues. We remain focused on all aspects of the
business with a positive outlook and look forward to providing
further updates during the year."
Report and Accounts and Notice of AGM:
Copies of the Annual Report and Accounts together with notice of
the Annual General Meeting ("AGM") will be posted to shareholders
by 17 April 2020 and made available on the Company's website by
then ( www.proteomics.com ). In light of the ongoing uncertainty
around social distancing measures, the date and venue of the AGM
will be notified to Shareholders in due course.
For further information please contact:
Proteome Sciences plc
Dr Ian Pike, Interim Chief Executive Tel: +44 (0)20 7043 2116
Officer
Richard Dennis, Chief Commercial Officer
Allenby Capital Limited (Nominated Adviser & Broker)
John Depasquale / Jeremy Porter Tel: +44 (0) 20 3328 5656
About Proteome Sciences plc. ( www.proteomics.com )
Proteome Sciences plc is a specialist provider of contract
proteomics services to enable drug discovery, development and
biomarker identification, and employs proprietary workflows for the
optimum analysis of tissues, cells and body fluids. SysQuant(R) and
TMT(R)MS2 are unbiased methods for identifying and contextualising
new targets and defining mechanisms of biological activity, while
analysis using Super-Depletion and TMTcalibrator(TM) provides
access to over 8,500 circulating plasma proteins for the discovery
of disease-related biomarkers. Targeted assay development using
mass spectrometry delivers high sensitivity, interference-free
biomarker analyses in situations where standard ELISA assays are
not available.
The Company has its headquarters in London, UK, with laboratory
facilities in Frankfurt, Germany.
Chief Executive Officer's Statement
This has been a year of significant development for the company
with strong growth from licensing and service revenues including
receipt of a significant milestone payment related to isobaric
tandem mass tag (TMT(R) ) sales that has resulted in a profit for
the year (2018: (GBP1.31m)). Whilst this is encouraging, the
underlying performance without one-off milestone payments would
have produced a loss after tax of GBP0.60m. Revenues for the full
year increased by 53% to GBP4.7m (2018: GBP3.05m). Year on year
sales and royalties attributable to TMT(R) reagents grew 68% to
GBP3.7m (2018: GBP2.20m). Proteomics services increased 24% to
GBP0.93m (2018: GBP0.75m) reflecting the growing impact of our
sales efforts in North America. Total costs of GBP4.36m were 1.4%
lower (2018: GBP4.42m) reflecting the final stages of
reorganisation. Cash reserves at the year-end were down marginally
at GBP0.80m (2018: GBP0.96m) though no further draw-down from the
Vulpes loan was taken and the cash position has been strengthened
by receipt in March 2020 of GBP0.75m in respect of the TMT(R) sales
milestone. Most significantly, the value of work carried forward
into 2020 is roughly four-fold greater than in the prior year with
GBP0.70m in signed orders on the books. As a result of these
positive events I am pleased to report that we achieved a profit
after tax of GBP0.15m compared with a loss of GBP1.31m in the
preceding year.
Services
This has been the busiest year for our proteomics services
business with orders for projects received from 40 clients. This
reflects our transition to become a full-service contract research
organisation specialising in mass spectrometry proteomics which was
completed at the end of 2018. We carried forward approximately
GBP150,000 of orders from 2018 giving a solid start to the year,
but this was followed by a slow second quarter as the signing of
orders and delivery of samples was delayed by our clients.
Nevertheless, we increased H1 revenues by 30% to GBP0.35m.
Consistent with previous years, the second half of the year saw
much stronger performance with over 60% of full year revenue
recognised in this period with the fourth quarter being
particularly strong with GBP0.40m of recognised revenue and
GBP0.80m of new orders signed. In total for 2019 we took orders
worth GBP1.54m, nearly doubling the previous year (GBP0.87m). As a
result, we started 2020 with a very strong order book in excess of
GBP0.70m with samples already received for over half of this.
Following the growth in 2018, these results show a continuing trend
towards higher values and repeat business as our clients in the
pharmaceutical and biotechnology sectors adopt proteomics across
their drug development programmes at all stages.
A significant development was the application of our proprietary
TMTcalibrator(TM) biomarker discovery workflow in clinical studies.
As an example, our proteomics analysis of cerebrospinal fluid (CSF)
samples from patients enrolled in Cognition Therapeutics Phase 1
trial of novel compound Elayta(TM), identified multiple potential
biomarkers supporting the positive effect of treatment. Based on
this study, we have now extended our relationship with Cognition
Therapeutics and are currently analysing both CSF and plasma
samples from an ongoing Phase 2 trial of Elayta(TM).
We also completed our first clinical-grade targeted assay study
under the certified Good Clinical Laboratory Practice (GCLP)
protocol. Our client required high-sensitivity detection of an
undisclosed biomarker which was not quantifiable using standard
immunoassay methods. We were able to develop a test with a low
pg/ml limit of quantification that was free of any matrix
interference and subsequently used this to analyse an initial
cohort of samples from patients enrolled in a Phase 1 trial.
We received considerable interest in the Super Depletion method
for the unbiased analysis of plasma samples at high sensitivity.
During the year we have extended our offering to include different
species commonly used in pre-clinical drug development studies and
combined it with higher-plexing TMTpro(TM) and TMTcalibrator(TM)
workflows for several new and existing customers. We expect this
trend of renewed engagement in blood biomarker research to continue
and we are ideally placed to exploit our status as exclusive
providers of Super Depletion combined with TMTcalibrator(TM) and
TMTpro(TM).
In August we expanded our sales team by recruiting a European
Sales Manager reflecting our confidence in the growth potential for
proteomics services in Europe and with the goal of diversifying our
client base to achieve a greater balance between the US and EU
sales. At the same time, we terminated the partnership with our
European agents Cenibra.
This year we have continued to expand our marketing activities
in line with growing revenues. Our strategy is to combine a mix of
direct business development visits to the main pharmaceutical and
biotech hubs in the US and Europe alongside attending trade shows
where we typically have a booth in the exhibition hall. We
undertook 4 quarterly trips to the US visiting each coast on a
six-month schedule, all of which resulted directly in orders for
biomarker services. Over the year we also attended 21 trade shows
and I was invited to speak and chair sessions at three of these.
Through
these activities we detected a marked improvement in the level
of interest in performing proteomics studies across all stages in
drug development, both from our traditional client base of the
small to medium sized biotechnology companies and most notably
within larger pharmaceutical companies, with all of them looking to
fulfil their requirements mainly through outsourcing.
Licences
This year was significant for the launch of the 16plex
TMTpro(TM) reagents in the summer. The positive growth in sales
seen in the first half of this year was bolstered by initial orders
for TMTpro(TM) stocks which continued through the second six
months. The strong market response to TMTpro(TM) has been supported
by several studies showing the new tags perform as well as the
original TMT(R) reagents, and the addition of 5 extra channels
means there are fewer missing data points, allowing more expansive
studies to be designed. Proteome Sciences was the first to publish
data on the new tags and we are aware of several other publications
currently under review for publication, all of which are likely to
drive further demand.
We also introduced TMTpro(TM) into our proteomics services and
have received a strong response from our clients. We are the only
service provider currently able to offer TMTpro(TM) and we are
working with our exclusive licensee Thermo Scientific to ensure all
Contract Research Organisations and commercial service providers
offering TMT(R) -based services are aware of the appropriate
licensing options, that currently do not include TMTpro(TM).
The combined TMT(R) and TMTpro(TM) sales and royalties were well
ahead of our internal forecasts, delivering 34% annual growth in
the underlying business. Importantly, we have not seen any decrease
in the level of TMT(R) reagent ordering from our licensee Thermo
Scientific, suggesting that the launch of TMTpro(TM) has not
materially affected the existing tag market. In addition to the
underlying growth of the core TMT(R) and TMTpro(TM) sales and
royalties, we also accrued the second sales-related milestone of
GBP0.75m in December which was received in cash in March 2020. This
has only taken 25 months from the first sales milestone that was
attained in November 2017, demonstrating the rapid acceleration in
the use of isobaric tagging across a wide range of proteomics
applications.
There has been further progress from both licensees of our
stroke blood biomarkers. Randox Laboratories has continued to
recruit patients into its clinical validation study required for CE
(Conformit é Europ é ene) marked approval of its stroke biochip
array and Evidence Analyzer system. Whilst clinical validation
studies have been ongoing, Randox have also validated the Stroke
Biochip for use on the Evidence MultiSTAT device which is designed
for point-of-care testing and this has featured in their marketing
activities at several trade shows, including the prestigious
American Association of Clinical Chemistry in August. As well as
supporting an early stroke diagnosis, Randox now state that the
test can also differentiate between ischemic and haemorrhagic
stroke and provide a stronger indication for use of thrombolysis
when used in combination with brain imaging (which is standard of
care).
This year we also signed a further non-exclusive licence to the
Company's stroke biomarker IP with Galaxy CCRO Inc. ("Galaxy"), a
recently formed US clinical contract research organisation. Galaxy
are initially developing a lateral flow device for measurement of
GSTP in patients suspected of having stroke. It is intended that
the device can be utilised both in the emergency response setting
by ambulance crews and paramedics as well as by nursing staff
within a hospital emergency department or specialised stroke unit.
Galaxy have made good progress in developing a prototype device and
expect to initiate clinical validation studies in Europe and the US
in 2020. Under the terms of the licence the Company will benefit
from subsequent development milestones and a running royalty on any
product sales and we look forward to updating shareholders at a
later date.
Research
The restructuring of our business completed in 2018 has focused
exclusively on expanding the proteomics services revenue and
supporting the launch of TMTpro(TM). As an inevitable consequence
of these activities, there has been little scope for new research
projects which has delayed the launch of the two targeted mass
spectrometry assays for clusterin and tryptophan metabolites.
However, we have initiated a new research trial to evaluate the
clusterin assay in both plasma and cerebrospinal fluid of 30
Alzheimer's disease patients, 20 individuals with mild cognitive
impairment and 30 cognitively normal controls. We expect this study
to complete in the first quarter of 2020. Similarly, for the
tryptophan metabolite assay, we have performed further analyses
within a multinational research project PROMETOV supported by the
EU ERA-NET TRANSCAN-2 programme. We are now reviewing data within
the consortium and expect to be able to update shareholders on the
outcomes later this year.
We published the first scientific paper on TMTpro(TM) reagents
in November (Thompson et al. 2019. Anal. Chem. 2019, 91, 24,
15941-15950) showing their equivalent performance to TMT(R) and
providing details on their optimized methods of use.
Operating Environment
The slowing of pharmaceutical industry spending on proteomics
and other outsourced activities seen in the mid-part of 2018 showed
signs of reversing in the last quarter as we have previously
reported. This allowed us to start 2019 with a modest order book
and we have seen the growth in outsourcing continue to improve
through the current year. This reflects a very apparent
re-engagement of pharmaceutical and biotechnology companies in the
creation of multi-omic strategies to better inform drug development
decision making, and the need to backfill studies with high quality
proteomic data. It has been particularly pleasing that several of
the new clients we have worked with this year mentioned our quality
and reputation as a major reason for working with us.
We remain confident that the implementation of the UK's decision
to leave the European Union on 31 January 2020 will have no
short-term impact on our business as all operational activities are
performed in our German subsidiary Proteome Sciences R&D GmbH
& Co KG. We also expect that the impact for our clients'
research budgets and external activities will be unaffected,
supported by the early evidence of our order book value of GBP0.70m
carried into 2020.
We completed the final stage of company re-organisation and cost
reduction at the start of the year with the benefit being a further
1.4% reduction in operating costs compared to 2018. We have now
attained high levels of efficiency across the different parts of
the business and were able to deliver strong growth in proteomic
service revenues for the full year.
A significant factor in our growing service revenues has been an
increased presence in our core markets, particularly in the US.
This followed an evolution of our strategy to build on the positive
effects achieved through working with a contract sales
organisation, to taking a more direct approach to business
development activities through site visits and attending trade
shows with an exhibition booth. Based on this success, we have now
recruited a sales manager for Europe and are replicating the model
that has been successful in the US. Although only in post since
August, they have already had a positive impact.
In common with previous years we applied for the R&D tax
credit and payment of our 2018 claim was received in a timely
manner. As expected, our move to more contract research projects
led to a reduction in the size of the R&D tax credit and we
expect future claims to be of similar value.
Volatility in foreign exchanges during the year affected
non-sterling denominated revenues as well as costs associated with
the Frankfurt laboratory, but the overall effect on operating
profit was neutral.
I am grateful to the dedication and hard work of all staff and
to our growing client base for their continued business. Finally,
on behalf of all shareholders, I would like to thank Jeremy Haigh
who left the Company at the end of the year, for his considerable
efforts in leading the business through this process of change. We
are currently in the process of appointing a full-time replacement
CEO. It has been a year of positive progress as we have seen the
refocusing of our business start to deliver the expected benefits
to both our cost base and revenue streams. Bolstered by outstanding
revenues from TMT(R) we have achieved our first operational profit
and the business is in a strong position to take advantage of the
significant opportunities in the next decade.
Outlook
The last ten years will rightly be seen as the decade of
genomics, as next generation sequencing allowed population-level
studies to identify hundreds of new associations with disease, and
virtually every drug development program incorporated the analysis
of nucleic acids to deliver personalised medicine. However, it also
saw major progress in proteomics with rapid gains in speed and
sensitivity of mass spectrometers, the dominance of our isobaric
tagging technologies, TMT(R) and the recently introduced
TMTpro(TM), new workflows including TMTcalibrator(TM) and plasma
Super Depletion for biomarker discovery, and the wider acceptance
of targeted MS methods for clinical use. We are perhaps then
justified in predicting the coming decade as being that of
proteomics where we will leverage the optimised business strategy
we have developed in the last 3 years.
Critical to our success will be the continued delivery of novel
biomarker discovery and development strategies and expansion into
additional areas of protein characterisation. Our introduction of
plasma Super Depletion in 2018 has been well received by our
pharmaceutical industry clients. We are already seeing strong
growth for this workflow combined with the higher plexing rates of
TMTpro(TM) and the sensitivity gains offered by TMTcalibrator(TM),
both of which are unique to Proteome Sciences. Following the
successful accreditation of our Frankfurt facility under GCLP, we
have moved our technologies nearer to the clinic and created a
significant opportunity in performing the proteomic analysis of
therapeutic proteins with one client already engaged and further
expansion expected in 2020.
T he very positive response to the launch of 16plex TMTpro(TM)
suggests that there is strong demand for higher plexing rates, and
this had very little effect on sales of the original TMT(R)
reagents. We are confident that the overall value of TMT(R) and
TMTpro(TM) will continue to grow strongly as exciting new TMT (R)
-based workflows such as SCoPE-MS (single-cell proteomics) and
CETSA (drug target profiling) become widely adopted.
This year we have opportunities to consolidate our position as
preferred supplier to a number of recently acquired clients and
build strong new partnerships, as the pharmaceutical industry
continues to accelerate its integration of proteomics services
through outsourcing. The strength of our order book and increased
capacity in sales means we are well placed to maintain our
competitive position as a global leader in providing proteomic
services.
Whilst ongoing events relating to the COVID-19 pandemic have the
potential to disrupt our business, we are currently operating as
usual, processing samples from the orders carried forward at the
end of 2019. We have also received new orders and our clients have
confirmed that they do not expect any delays to provision of
samples for these studies. We continue to monitor developments
globally and specifically in Germany with the health and safety of
our staff being our highest priority.
The Board is confident of building on the great progress made in
2019 as we start with a strong order book and cash position
following receipt of the TMT(R) sales milestone and, subject to
unforeseen events relating to COVID-19, we expect to sustain and
further improve our financial performance in 2020.
I would like to thank our shareholders and employees for their
continuing support and patience and I look forward to communicating
further progress during 2020.
Dr. Ian Pike
Interim Chief Executive Officer
9 April 2020
Strategic Report
Review of the Business
The principal activities of the Group involve protein biomarker
research and development. As a leader in applied proteomics, we use
high sensitivity proprietary techniques to detect and characterise
differentially expressed proteins in biological samples for
diagnostic, prognostic and therapeutic applications. In addition,
we invented and developed the technology for TMT(R) and TMTpro(TM),
and manufacture these small, protein-reactive chemical reagents
which are sold for multiplex quantitative proteomics under
exclusive license by Thermo Scientific.
Proteome Sciences is a leading provider of contract research
services for the identification, validation and application of
protein biomarkers. Our clients are predominantly pharmaceutical
& biotechnology companies, but we also perform services for
other sectors including academic research. While we have several
well-established workflows that meet the needs of many customers,
we retain our science-led business focus wherever possible,
developing new analytical methods and data analysis tools to
provide greater flexibility in the types of studies we can deliver.
Our contract service offering remains centred on MS-based
proteomics, and this is becoming more widely implemented in drug
development projects as the pharmaceutical industry seeks to expand
biological knowledge beyond genomics. These services are fully
aligned with the drug development process, can be used in support
of clinical trials and in vitro diagnostics, and include
proprietary bioinformatics capabilities.
Progress during 2019
Growing Our Services Business
The use of outsourcing to specialist service laboratories within
the biopharmaceutical sector continues to grow in value,
particularly in the area of proteomics. This now extends to the
whole procurement process itself, with most major pharmaceutical
companies using third-party outsourcing agencies to handle
contracts and payments. This is simplifying the process of engaging
with new clients and reducing the time to complete contracts but
can increase the burden on providing competitive tenders. To ensure
we can offer our clients the best service, we continue to invest
significantly in direct sales activities with over a dozen business
development trips involving face-to-face meetings conducted in the
US and Europe in 2019. In addition, we had a presence at 21 trade
shows covering a wide range of disease areas and core
drug-development topics. We have also moved away from using
contract sales agents as we now have a sufficiently active
opportunities list to support a second sales manager, who was
recruited to cover the European market in August.
The growing requirement for outsourced proteomics services is
reflected by a growth in the number of non-specialist companies
offering MS capabilities to this market, though very few of these
are licensed to use TMT(R) in contract research and currently there
are no others licensed to use TMTpro(TM). This has not impacted our
client base significantly, and we continue to attract business from
clients who have worked with other proteomics service providers in
the past. One of the major drivers is the increasing recognition of
the quality of our service from the initial sales approach, through
study design to delivery of the final report.
Industry Trends Increase the Need for Proteomics
Pharmaceutical drug development has a tendency to follow trends,
as one Company reporting progress in a particular area triggers
others to enter the same research space. Recent trends include the
rapid expansion of activities in immuno-oncology, fibrotic
disorders and inflammatory diseases. In all three of these areas
there is a growing need for deeper analysis of protein expression
as the diseases are predominantly characterised by extensive
post-translational modifications affecting how cells and proteins
interact with each other. We have been successful in aligning our
core technologies to serve the needs of pharmaceutical companies
working in this space, to better understand how their experimental
medicines are working and how diseases may adapt to escape the drug
effects.
Another major growth opportunity is the analysis of protein
degradation. Abnormal expression and clearance of proteins within
cells can have many negative consequences leading to disease.
Understanding how individual proteins or complexes involved in a
specific cellular function are being processed may open new
opportunities for therapeutic intervention. Answering these
questions has so far relied on limited approaches that cannot
provide the necessary holistic view. We have leveraged our
proprietary technologies to design a single workflow to monitor
both degradation of selected proteins and changes in the wider
biology of treated cells using a combination of unbiased
peptidomics, proteomics and phosphoproteomics combined with
TMTpro(TM).
Light on the Horizon for Alzheimer's
The high-profile failure of a raft of clinical trials of drugs
targeting beta-amyloid in Alzheimer's disease led to a significant
withdrawal from the space by most large pharmaceutical companies.
At the same time it increased focus on companies using alternative
therapeutic strategies targeting tau, different brain receptors and
inflammatory processes. It also raised significant questions about
the best biomarkers to use to monitor treatment and assess
outcomes.
In 2019 we started working with Pittsburgh-based Cognition
Therapeutics who are developing Elayta(TM), a small molecule
inhibitor of beta-amyloid interaction with synaptic receptors that
modifies downstream signalling and provides neuroprotective
effects. In a first study we applied TMTcalibrator(TM) to quantify
changes in the levels of specific proteins and protein
phosphorylations in cerebrospinal fluid (CSF) from 24 individuals
enrolled in a phase 1b/2a clinical trial. We demonstrated
drug-mediated reductions in phosphorylation at the majority of
sites on tau protein, a key hallmark of Alzheimer's disease and an
important biomarker of disease diagnosis and progression. This was
the opposite of what we have previously reported in untreated
Alzheimer's disease patients where CSF levels of tau
phosphorylation are generally increased compared to controls,
suggesting a positive effect of Elayta(TM). We are currently
working with Cognition Therapeutics to analyse both CSF and plasma
samples from a second Elayta(TM) trial.
We have also initiated proteomics studies for biomarker
discovery and/or targeted assay development for two other companies
developing alternative therapeutic approaches for Alzheimer's
disease, as well as with an academic group exploring the mechanism
of a reported protective gene mutation.
Reinvigorating the Tandem Mass Tag(R) Product Portfolio
We delivered the first supplies of 16pex TMTpro(TM) tags to our
exclusive licensing partner Thermo Scientific in the early summer.
Following a soft launch at the American Society for Mass
Spectrometry meeting in June, the tags were officially launched at
the Human Proteome Organisation annual conference in September.
With TMTpro(TM) we have introduced a completely new structure that
builds in improvements in synthesis evolved from the original
TMT(R) tags allowing a full set of tags to be manufactured in
around 70% of the time.
Prior to launch, we tested the relative performance of
TMTpro(TM) against the original tags to demonstrate equivalence. In
common with other beta testers including Thermo Scientific, we
found that the total number of peptides and proteins quantified was
essentially the same whilst users could analyse 45% more samples
per experiment. The initial market response has been very positive
as users see the value in running larger biomarker discovery
studies with fewer individual experiments, increasing both the
number of quantified features and reducing the amounts of missing
data.
The impact of TMTpro(TM) on sales of original TMT(R) is
difficult to predict, though it has clearly driven the larger part
of increased revenues this year. Early indications are that many of
the major users will switch to the higher-plex tags for all new
projects and use original TMT(R) for completing legacy research and
we therefore expect sales of the original TMT(R) tags to remain
relatively flat in 2020.
Patent Applications and Proprietary Rights
The review of patents undertaken last year has produced a
substantial saving in external patent costs and we continue to
evaluate the portfolio for its economic potential. Three patents
were granted in 2019 relating to TMT(R) , TMTpro(TM) and our
proprietary clusterin glycoform biomarkers in Alzheimer's
disease.
Board Changes
On 31 October 2019 the Company announced that Dr Jeremy Haigh,
Chief Executive Officer, had resigned and would leave the
organisation and cease to be a Director on 31 December 2019. Dr.
Ian Pike, Chief Scientific Officer, has assumed the duties of the
CEO in an Interim role. The Board has engaged search consultants
and is making good progress on recruiting a new CEO.
Financial Review
Results and Dividends
The profit after tax for the year was GBP0.15m (2018:
(GBP1.31m)). The directors do not recommend the payment of a
dividend (2018: Nil). The Group results are stated in the
Consolidated Income Statement and reviewed in the Chief Executive
Officer's Statement.
Key Performance Indicators (KPI's)
(i) The directors consider that revenue and profit before/after
tax are important in measuring Group performance. The profile of
the Group has changed as a result of ongoing licensing agreements
and with the adoption/conclusion of other commercial agreements and
service contracts. The performance of the Group is set out in the
Chief Executive Officer's Statement.
(ii) The directors believe that the Group's rate of cash
expenditure and its effect on Group cash resources are important.
Net cash inflows/(outflows) from operating activities for FY2019
were GBP0.02m (2018: (GBP0.50m)). The cost-containment measures put
in place in the previous two years were consolidated, and we
achieved strong growth in both TMT(R) and Biomarker Services
revenues. Consequently, we did not require further draw down from
the arranged loan from Vulpes. Cash at 31 December (GBP 0.80m) was
supplemented by the GBP0.75m sales milestone and stronger than
expected Q4 royalties for TMT(R) that were received in March
2020.
(iii) We have now completed our transition to a service-based
business, contract revenues from our proteomics (biomarker)
services should increase both in absolute terms and as a proportion
of total Group revenues; in 2019 we increased service income by 24%
to GBP0.93m relative to 2018, though the share of total revenue
fell slightly due to strong TMT (R) sales. We expect growth in
revenue from Biomarker Services to continue in the coming year,
along with the percentage contribution to total revenues.
We also look to increase the amount of repeat business, as this
is an important measure of customer satisfaction. This year we
increased the number and value of projects from existing customers,
who now account for 75% of sales value. These same customers are
also looking to place further orders in 2020.
(iv) We believe it is essential that we respond to our customer
needs in a timely manner, looking to minimise the lead time from
first contact to placing of orders. Whilst we have previously
focused primarily on time to deliver requested quotes, we now
consider the rate of conversion from quote to order as a more
relevant metric of the strength of our product offering and sales
process. In 2019 we provided over 50 detailed statements of work
with 55% of these being converted into orders.
Financial Performance
For the twelve-month period ended 31 December 2019 revenue
increased 53% to GBP4.66m (2018: GBP3.05m).
-- Licences, sales and services revenue increased 57% to
GBP4.63m (2018: GBP2.96m). This is comprised of two revenue
streams: TMT(R) -related revenue and Proteomic (Biomarker)
Services. Although core sales and royalties for TMT(R) tags
increased by 68% to GBP3.70m, this includes a significant sales
milestone reached in late 2019 from our exclusive distribution
partner Thermo Scientific without which growth of core TMT(R)
related revenue would have been 34% (2018: GBP2.20m)
-- Grant income was GBP0.02m (2018: GBP0.09m).
The profit after tax was GBP0.15m (2018: (GBP1.31m).
Taxation
Owing to the changing nature of our services business, with a
stronger focus on commercial activities, we have not fully assessed
our available R&D tax credit for 2019, and such amounts are
only recognised when reasonably assured.
Costs and Available Cash
-- The Group maintained a positive cash balance in 2019 and
continues to seek improved cash flows from commercial income
streams. Our operating costs have been significantly reduced which
enabled positive cash flows throughout the year. We consider that
in order to maintain a positive cash balance costs will need to be
kept in line with 2019.
-- Administrative expenses in 2019 were GBP2.65m (2018:
GBP3.24m). This is a decrease of 18%, representing full year cost
savings following continued cost containment during the year.
-- Staff costs for the year were GBP2.11m (2018: GBP2.25m).
-- Property costs of GBP0.30m were in line with previous years.
-- Other overheads decreased by GBP0.23m as a result of cost
containment initiatives driven by a review of patent
obligations.
-- Finance costs arose as a result of interest due on loans from
two major investors in the Company and inclusion of IFRS16 related
interest of GBP0.01m. Costs of GBP0.34m are marginally higher than
the prior year.
-- Profit after tax for 2019 was GBP0.15m (2018: loss of
GBP1.31m). The net cash inflow from operating activities was
GBP0.02m (2018: (GBP0.50m)). Cash at the year-end was GBP 0.80m
(2018: GBP0.96m).
Principal Risks and Uncertainties
Commercialisation Activities
It is uncertain whether our range of contract proteomic services
will generate sufficient revenues for the Group ultimately to be
successful in an increasingly competitive commercial market which
generally favours companies with a broader technology platform than
our own. Progress in 2019 was encouraging as both interest and
orders increased quarter on quarter during the year with 14
contracts worth over GBP0.7m carried into 2020. This reflects the
growing recognition that proteomics requires a high level of
expertise only generally available in specialised service
providers.
Management of Risk: The Group has sought to manage this risk by
broadening its proteomic services offering (e.g. Super Depletion),
investing in our own sales by employing a dedicated Sales Manager
in Europe, dedicating more staff time to direct business
development activities in our principal commercial territories and
adopting conventional service-based metrics directed at speed, cost
and quality.
Dependence on Key Personnel
The Group depends on its ability to retain a limited number of
highly qualified scientific, commercial and managerial personnel,
the competition for whom is strong. While the Group has entered
into conventional employment arrangements with key personnel, aimed
at securing their services for minimum terms, their retention
cannot be guaranteed as evidenced by two resignations during
2019.
Management of Risk: The Group has a policy of organising its
work so that projects are not dependent on any one individual, and
we have strong managerial oversight and support for our
laboratory-based staff. Retention is also sought through annual,
role-based reviews of remuneration packages, performance related
bonus payments, and the opportunity for share option grants.
Cash Limitations
Despite remaining cash positive, making a small profit and
seeing steady growth in our proteomics services revenues in 2019 we
are still reliant on TMT (R) sales and royalties for the majority
of our revenues and working capital to invest in growing the
business remains limited.
Management of Risk: In addition to previous cost reduction and
ongoing containment measures which have significantly changed the
cost profile of the business over the last two years, we also
actively engage with our major creditors to manage the Company's
debt.
Competition and Technology
The international bioscience sector is subject to rapid and
substantial technological change. There can be no assurance that
developments by others will not render the Group's service
offerings and research activities obsolete or otherwise
uncompetitive. Proteomics remains a growth area where increasing
demand from the pharmaceutical industry remains ahead of the growth
in service provider capacities.
Management of Risk: The Group employs highly experienced
research scientists and senior managerial staff who monitor
developments in technology that might affect the viability of its
service business or research capability. This is achieved through
access to scientific publications, attendance at conferences and
collaboration with other organisations.
Licensing Arrangements
The Group intends to continue sub-licensing new discoveries and
products to third parties, but there can be no assurance that such
licensing arrangements will be successful.
Management of Risk: The Group manages this risk by a thorough
assessment of the scientific and commercial feasibility of proposed
research projects which is conducted by an experienced management
team. Risk has also been reduced by decreasing the overall number
of research projects and re-distributing available resources.
Patent Applications and Proprietary Rights
The Group seeks patent protection for identified protein
biomarkers which may be of diagnostic, prognostic or therapeutic
value, for its protein-reactive, chemical mass tags, and for its
other proprietary technologies. The successful commercialisation of
such biomarkers, chemical tags and proteomic workflows is likely to
depend on the establishment of such patent protection. However,
there is no assurance that the Group's pending applications will
result in the grant of patents, that the scope of protection
offered by any patents will be as intended, or whether any such
patents will ultimately be upheld by a court of competent
jurisdiction as valid in the event of a legal challenge. If the
Group fails to obtain patents for its technology and is required to
rely on unpatented proprietary technology, no assurance can be
given that the Group can meaningfully protect its rights.
Management of Risk: The Group retains limited but experienced
patent capability in house, supplemented by external advice, which
has established controls to avoid the release of patentable
material before it has filed patent applications. Maintenance of
the existing patent portfolio is subject to rigorous biannual
review ensuring that its ongoing cost is proportional to its
perceived value.
Coronavirus (COVID-19) Pandemic
The rapid emergence of the coronavirus pandemic has caused
significant disruption to many manufacturing and retail businesses
where the implementation of social distancing measures is not
practical or deemed ineffective. In many countries pharmaceutical
research and development has been protected from more general
restrictions on worker travel and we expect this to remain to be
the case throughout the pandemic. However, there is a risk that we
will be forced to suspend operations in our laboratory in
Frankfurt, or that our clients cannot source and ship samples for
analysis, leading to delay in completion of projects. We have also
seen a number of international and national trade shows and
exhibitions be postponed or move to a virtual format. As these
events are one of the methods used to establish business to
business introductions there is the potential that there may be an
impact to our business development activities.
.
Management of Risk: We have implemented social distancing and
enhanced cleaning measures for our laboratories and implemented
home working for all UK staff and those capable of doing so in
Frankfurt. We have also cancelled all site visits other than
essential maintenance. Our sales staff are also working from home
and using our prospect database to engage new business. We will
continue to monitor the ability to deliver client work and ensure
we are able to utilise any central or regional Government funding
available to support businesses during the pandemic.
Section 172 statement
From 1 January 2019 legislation was introduced requiring
companies to include a statement pursuant to section 172 of the
Companies Act 2006.
The Board recognises the importance of the Group's wider
stakeholders when performing their duties under Section 172(1) of
the Companies Act and their duties to act in the way they consider,
in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing so
have regard (amongst other matters) to-
(a) the likely consequences of any decision in the long
term,
(b) the interests of the company's employees,
(c) the need to foster the company's business relationships with
suppliers, customers and others,
(d) the impact of the company's operations on the community and
the environment,
(e) the desirability of the company maintaining a reputation for
high standards of business conduct, and
(f) the need to act fairly as between members of the
company.
The Board considers that all their decisions are taken with the
long-term in mind, understanding that these decisions need to
regard the interests of the company's employees, its relationships
with suppliers, customers, the communities and the environment in
which it operates. I t is the view of the Board that these
requirements are addressed in the Corporate Governance Statement on
page 13, which can also be found on the company's website
www.proteomics.com .
For the purpose of this statement detailed descriptions of the
decisions taken are limited to those of strategic importance.
The Board believes that three decisions taken during the year
fall into this category and were made with full consideration of
both internal and external stakeholders.
-- The decision to grant Galaxy CCRO a licence to the Company's
stroke biomarker IP. The benefit of granting this licence is
creating value from the patent portfolio that the Company has
maintained. The Board considered the views of both the internal and
external stakeholders in this matter before granting the licence
and concluded that it was in the best interests of all stakeholders
as the Company will benefit from royalties from any future product
sales and development milestones.
-- The decision to move away from using contract sales agents in
EU and bringing those functions in house by appointing a European
Sales Manager. The Board consulted with internal stakeholders on
this matter and considered that it enabled the Group to provide a
better service to its external stakeholders, primarily being its
customers in that region.
-- The decision to manufacture and launch TMTpro(TM) tags
enabled us to meet market demands for higher plexing rates and
maintain strong revenue growth. The Board engaged with the internal
and external stakeholders to conclude that investment in the
manufacture and launch of new products would be of benefit to all
stakeholders and shareholders by meeting a clear market demand and
extending the wider TMT(R) portfolio.
By Order of the Board
Hamilton House
Mabledon Place
London WC1H 9BB
V Birse
Company Secretary
9 April 2020
Consolidated income statement
For the year ended 31 December 2019
Note Year ended Year ended
31 December 31 December
2019 2018
GBP'000
Revenue
Licences, sales and services 4,634 2,958
Grant services 22 91
Revenue- total 4,656 3,049
Cost of sales (1,702) (1,180)
_______ _______
Gross profit 2,954 1,869
Administrative expenses (2,655) (3,239)
_______ _______
Operating profit/loss 299 (1,370)
Finance income - -
Finance costs (335) (289)
_______ _______
Profit/Loss before taxation (36) (1,659)
Tax 185 346
_______ _______
Profit/Loss for the year 149 (1,313)
_______ _______
Profit/Loss per share
Basic and diluted 3 0.05p (0.44p)
_______ _______
Consolidated statement of comprehensive income
For the year ended 31 December 2019
Year ended Year ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Profit/Loss for the year 149 (1,313)
_______ _______
Other comprehensive income
for the year
Exchange differences on translation
of foreign operations (70) 24
__________ __________
Total comprehensive income / (expense)
for the year 79 (1,289)
__________ __________
Consolidated balance sheet
As at 31 December 2019
2019 2018
GBP'000 GBP'000
Non-current assets
Goodwill 4,218 4,218
Property, plant and equipment 75 56
Right-of-use asset 581 -
_________ _________
4,874 4,274
__________ __________
Current assets
Inventories 871 1,147
Trade and other receivables 486 320
Contract assets 1,331 328
Cash and cash equivalents 799 958
__________ __________
3,487 2,753
__________ __________
Total assets 8,361 7,027
__________ __________
Current liabilities
Trade and other payables (738) (541)
Contract liabilities (26) (25)
Borrowings (10,262) (9,936)
Lease liabilities (584)
__________ __________
(11,610) (10,502)
__________ __________
Net current liabilities (8,123) (7,749)
__________ __________
Non-current liabilities
Provisions
Pension provisions (403) (343)
(403) (343)
__________ __________
Total liabilities (12,013) (10,845)
__________ __________
Net liabilities (3,652) (3,818)
__________ __________
Equity
Share capital 2,952 2,952
Share premium account 51,466 51,466
Share-based payment reserve 3,615 3,532
Merger reserve 10,755 10,755
Translation reserve (109) (43)
Retained loss (72,331) (72,480)
__________ __________
Total equity (deficit) (3,652) (3,818)
__________ __________
=============================== ============== ==============
Consolidated statement of changes in equity
For the year ended 31 December 2019
Share Share Equity
Share premium based attributable Total
capital account payment Translation Merger Retained to owners (deficit)
reserve reserve reserve loss of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2018 2,952 51,466 3,503 (67) 10,755 (71,167) (2,558) (2,558)
Loss for the
year - - - - - (1,313) (1,313) (1,313)
Exchange
differences
on
translation
of foreign
operations - - - 24 - - 24 24
Total
comprehensive
expense for
the
year - - - 24 - (1,313) (1,289) (1,289)
--------------- ----------- ------------ ----------- ------------- ------------ ------------ ------------- -----------
Credit to
equity
for
share-based
payment - - 29 - - - 29 29
__________ ___________ __________ ________ ___________ ___________ ___________ __________
At 31 December
2018 2,952 51,466 3,532 (43) 10,755 (72,480) (3,818) (3,818)
__________ ___________ __________ _______ _ ___________ ________ ________ __________
___ ___
Consolidated statement of changes in equity
For the year ended 31 December 2019
Share Share Equity
Share premium based attributable Total
capital account payment Translation Merger Retained to owners (deficit)
reserve reserve reserve loss of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2019 2,952 51,466 3,532 (43) 10,755 (72,480) (3,818) (3,818)
Loss for the
year - - - - - 149 149 149
Exchange
differences
on
translation
of foreign
operations - - - (66) - - (66) (66)
--------------- ----------- ------------ ----------- ------------- ------------ ------------ ------------- -----------
Total
comprehensive
income for
the
year - - - (66) - 149 83 83
--------------- ----------- ------------ ----------- ------------- ------------ ------------ ------------- -----------
Credit to
equity
for
share-based
payment - - 83 - - - 83 83
__________ ___________ __________ ________ ___________ ___________ ___________ __________
At 31 December
2019 2,952 51,466 3,615 (109) 10,755 (72,331) (3,652) (3,652)
__________ ________ ______ ___ _____ ___________ ___ ___ ________ __________
___ ____ ________
Consolidated cash flow statement
For the year ended 31 December 2019
Group Group
Year ended Year ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Operating loss (36) (1,659)
Adjustments for:
Net finance costs 335 289
Depreciation of property, plant
and equipment 89 229
Share-based payment expense 83 29
Operating cash flows before
movements in Working capital 471 (1,112)
(Increase) / Decrease in inventories 276 (201)
(Increase) / Decrease in receivables (1,169) 77
Increase / (Decrease) in payables 197 6
Increase / (Decrease) in provisions 60 (20)
__________ __________
Cash used in operations (165) (1,250)
Tax refunded 185 746
__________ __________
Net cash outflow from operating
activities 20 (504)
__________ __________
Cash flows from investing activities
Purchases of property, plant
and equipment (58) (4)
Interest received - -
__________ __________
Net cash outflow from investing
activities (58) (4)
__________ __________
Financing activities
Lease payments (58)
Proceeds on issue of Borrowings - 700
Repayment of HP creditors - (166)
__________ __________
Net cash (outflow)/inflow from
financing activities (58) 534
__________ __________
Net increase in cash and cash
equivalents (96) 26
Cash and cash equivalents at
beginning of year 958 908
Effect of foreign exchange rate
changes (63) 24
__________ __________
Cash and cash equivalents at
end of year 799 958
__________ __________
Notes to the Financial Information
1. Basis of Preparation
The financial information set out in this document does not
constitute the Company's statutory accounts for the years ended 31
December 2018 or 2019. Statutory accounts for the years ended 31
December 2018 and 31 December 2019, which were approved by the
directors on 9 April 2020, have been reported on by the Independent
Auditors. The Independent Auditor's reports on the Annual Report
and Financial Statements for years ended 31 December 2018 and 2019
were unqualified but did draw attention to a material uncertainty
relating to going concern and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2018 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2019 will be delivered to the Registrar
of Companies in due course and will be posted to shareholders
shortly, and thereafter will be available from the Company's
registered office at Hamilton House, Mabledon Place, London WC1H
9BB and from the Company's website
http://www.proteomics.com/investors .
The financial information set out in these results has been
prepared using the recognition and measurement principles of
International Accounting Standards, and International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The accounting
policies adopted in these results have been consistently applied to
all the years presented and are consistent with the policies used
in the preparation of the financial statements for the year ended
31 December 2018, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2019. New standards impacting the Group
that have be adopted in the annual financial statements for the
year ended 31 December 2019 is IFRS 16 Leases. Other new standards,
amendments and interpretations to existing standards, which have
been adopted by the Group have not been listed, since they have no
material impact on the financial statements.
2. Liquidity and Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive Officer's Statement on page 4
and Strategic Report on page 6. .
These financial statements have been prepared on the going
concern basis which remains reliant on the Group achieving an
adequate level of sales in order to maintain sufficient working
capital to support its activities. The directors have reviewed the
Company's and the Group's going concern position, taking account of
current business activities, budgeted performance and the factors
likely to affect its future development, as set out in the Annual
report, and including the Group's objectives, policies and
processes for managing its working capital, its financial risk
management objectives and its exposure to credit and liquidity
risks.
In particular, the directors' have considered the potential
impacts of COVID-19 may have on the ability to achieve adequate
level of sales. The rapid emergence of the coronavirus pandemic has
caused significant disruption to many manufacturing and retail
businesses where the implementation of social distancing measures
is not practical or deemed ineffective. In many countries
pharmaceutical research and development has been protected from
more general restrictions on worker travel and we expect this to
remain to be the case throughout the pandemic. However, there is a
risk that we will be forced to suspend operations in our laboratory
in Frankfurt, or that our clients cannot source and ship samples
for analysis, leading to delay in completion of projects. We have
also seen a number of international and national trade shows and
exhibitions be postponed or move to a virtual format. As these
events are one of the methods used to establish business to
business introductions there is the potential that there may be an
impact to our business development activities. If sales are not in
line with cash flow forecasts then additional funding will be
required. The directors have prepared cash-flow forecasts covering
a period of at least 12 months from the date of approval of the
financial statements, which foresee that the Group will be able to
operate within its existing facilities. However, the timeline
required to close sales contracts and the order value of individual
sales continues to vary considerably, which constrain the ability
to accurately predict revenue performance. Furthermore, the Group's
services are still in the development phase and as such, the
directors consider that costs could exceed income in the short
term.
The Group is also dependent on the unsecured loan facility
provided by the Chairman of the Group, which under the terms of the
facility, is repayable on demand.
The directors have received confirmation from the Chairman that
he has no intention of seeking its repayment, with the facility
continuing to be made available to the Group, on the existing
terms, for at least 12 months from the date of approval of these
financial statements.
The Group is also dependent on the loan facility provided by
Vulpes Investment Management (VIM).
The directors have received confirmation from VIM that they will
not seek repayment for at least 12 months from the date of approval
of these financial statements.
However, there is a risk that the Group's working capital may
prove insufficient to cover both operating activities and the
repayment of its debt facilities. In such circumstances, the Group
would be obliged to seek additional funding through a placement of
shares or source other funding.
As such, the directors have concluded that the circumstances set
forth above represent a material uncertainty, which may cast
significant doubt about the Company and Group's ability to continue
as going concerns and therefore that they may be unable to realise
assets and discharge liabilities in the normal course of business.
The financial statements do not include the adjustments that would
be required if the Company and the Group were unable to continue as
a going concern.
3. Profit per Share from Continuing Operations
The calculations of basic and diluted loss per ordinary share
are based on the following losses and numbers of shares.
2019 2018
GBP'000 GBP'000
Profit/Loss for the financial
year 149 (1,313)
__ ______ __ ______
2019 2018
Number of Number of
shares shares
Weighted average number of ordinary shares
for the purposes of calculating basic and
diluted earnings per share: 295,182,056 295,182,056
In 2019 the profit attributable to ordinary shareholders and
weighted average number of ordinary shares for the purpose of
calculating the diluted earnings per ordinary share are identical
to those used for basic earnings per ordinary share. This is
because none of the issued share options are in the money and are
therefore not dilutive.
4. Cautionary Statement on Forward-looking Statements
Proteome Sciences ('the Group') has made forward-looking
statements in this preliminary announcement. The Group considers
any statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the Group to differ materially from those
contained in any forward-looking statement. These statements are
made in good faith based on information available to them and such
statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors,
underlying any such forward-looking information.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR IJMATMTIBBMM
(END) Dow Jones Newswires
April 14, 2020 02:00 ET (06:00 GMT)
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