REG - Proteome Sciences - Final Results
31/03/2022 07:15
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RNS Number : 7321G Proteome Sciences PLC 31 March 2022
31 March 2022
Proteome Sciences plc
("Proteome Sciences" or the "Company")
Final results for the year ended 31 December 2021
The Company is pleased to announce its audited results for the year ended 31
December 2021.
Highlights:
· Total revenues of £5.13m (2020: £4.75m)
· Proteomic (biomarker) services revenues of £1.90m (2020: £1.44m)
· TMT(®) sales and royalties of £3.23m (2020: £3.27m)
· Total costs of £4.72m (2020: £4.20m)
· Adjusted EBITDA* of £1.35m (2020: £0.72m)
· Profit after tax of £0.07m (2020: £0.29m)
· Cash reserves at 31 December 2020 of £2.39m (2020: £2.21m)
Post year-end:
Dr. Mariola Soehngen, Chief Executive Officer of Proteome Sciences plc,
commented:
We are pleased to report that our business continued to grow despite another
year under Covid-19 pandemic conditions. In particular our service business
performed well again and we recorded a small profit and an adjusted EBITDA* of
£1.36m (2020: £0.73m). We were able to gain a record number of contracts
including a substantial order in excess of £1M, which gives us confidence
that our performance and the quality of our proteomics services is being
recognized in the market. Also our TMT revenues remained strong underlining
the USP we have in the proteomics field with these reagents.
2021 was also used to evaluate our strategic options and which has led us to
focus in the short term on growing our business further by adding high
profile, high value services like Single Cell Proteomics (SCP) to provide the
basis for further internationalization of the business in the medium term.
We are advanced in setting up SCP which meets a high need in the market
especially in oncology but also other disease areas like central nervous
disorders.
Furthermore, we have made strategic investments in new equipment and
additional staff that have increased our capacity and revenue generating
potential. Based on these investments and with the strategic approach we have
a solid basis for the current and future years to grow the company.
* - Adjusted EBITDA is a non-GAAP company specific measure which is
considered to be a key performance indicator of the Group's financial
performance. Adjusted EBITDA is calculated as operating profit before
depreciation (including right-to-use assets amortisation), amortisation,
non-recurring costs, and employee share-based payment.
Report and Accounts and Notice of Annual General Meeting:
Copies of the Annual Report and Accounts together with notice of the Annual
General Meeting ("AGM") will be posted to shareholders in early April and made
available on the Company's website by then (www.proteomics.com
(http://www.proteomics.com) ).
The Annual General Meeting (AGM) of the Company will take place at 12 noon on
Monday 16 May 2021 at Allenby Capital, 5 St Helen's Place, London, EC3A 6AB.
Formal notice of the AGM will be sent to shareholders which will contain
further information and the resolutions which will be proposed at this
meeting.
For further information please contact:
Proteome Sciences plc
Dr Mariola Soehngen, Chief Executive Officer Tel: +44 (0)20 7043 2116
Dr Ian Pike, Chief Scientific 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 (http://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® and TMT®MS2 are unbiased methods for identifying
and contextualising new targets and defining mechanisms of biological
activity, while analysis using Super-Depletion and TMTcalibrator™ 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
Despite a generally improving situation for most of the year, the COVID-19
pandemic continued to impact international business including ours.
Participation in conferences, visiting clients and interacting within our
organisation remained largely virtual with some face-to-face conferences
possible in the second part of the year. Whilst recent events in Ukraine are
of great concern, they do not currently affect our business and we do not
expect any impact to our customers' ability to provide samples for analysis.
Supply chain problems however cannot be ruled out (consumables and
instruments). Against these difficulties we have been able to continue to gain
further strong growth in our services business and TMT® revenues remained
solid. A record number of contracts were closed during 2021 including a
substantial contract with a major pharmaceutical company with a value in
excess of £1m, with the majority of this revenue expected to be generated in
2022. Group revenues for the full year increased by 8% to £5.13m (2020:
£4.75m). Services increased 32% to £1.90m (2020: £1.44m). Sales and
royalties attributable to TMT® and TMTpro™ reagents were £3.23m (2020:
£3.27m).
Having made good progress and turning profitable last year, we embarked on a
wider strategic analysis, invested in new staff, and instruments to add
capacity to our key workflows and awarded options which resulted in a share
based payment charge of £0.57m (2020: Nil). Consequently, total costs rose to
£4.72m (2020: £4.20m) and this has resulted in an operating profit of
£0.41m (2020: £0.55m) and a profit after tax of £0.07m (2020: £0.29m).
Cash reserves at the year-end increased to £2.39m (2020: £2.21m). In
addition, Adjusted EBITDA (a non-GAAP company specific measure which is
considered to be a key performance indicator of the Group's financial
performance) increased as set out below:
2021 2020
£'000 £'000
Revenue 5,124 4,712
Gross profit 2,960 2,584
Administrative expenses (2,334) (1,868)
EBITDA 626 716
Other non-cash items and non-recurring costs 729 8
Adjusted EBITDA 1,355 725
Adjusted EBITDA increased 87% on prior year due to increased sales and tight
operational cost control.
Services
Our services business continued to show strong performance over the year.
The COVID-19 pandemic continued to impact on face-to-face client meetings even
though the majority of our clients were back to full time working in their
facilities. We also experienced some delays in the availability of samples for
analysis primarily due to the pandemic affecting the conduct of on-going
clinical trials. Cold chain shipping availability was also a source of some
sample delay as capacity was prioritised for COVID related samples and
vaccines. Direct marketing in respect to scientific and trade conferences and
exhibitions that we use to promote our services to new accounts continued to
be in virtual format but nevertheless, we succeeded to develop both new
accounts and to win repeat business from our current and new customers. The
strength of our H1 performance continued during the second half of the year,
with record sales invoiced and orders received. In total, we took orders worth
£3.75m a 139% increase over the previous year (2020: £1.57m). A particular
highlight was the in excess of £1m order received from a major pharmaceutical
partner for the analysis of samples from their pending phase 3 clinical trial.
Our results underline the increasing use of outsourced proteomics in
pharmaceutical and biotechnology research, and we expect this to continue well
into 2022 as companies look to add more functional value to their genomic data
and the general awareness that the proteome is the more important factor to
consider in drug development. Last year we expanded our activities in the
analysis of clinical research samples to discover new pharmacodynamic
biomarkers, signing up new clients and applying our TMTcalibrator™ combined
with abundant protein depletion to address novel therapeutic areas. We also
performed several targeted assay development programs across a range of
matrices. These should lead to the analysis of larger volume clinical
trial samples in the future and we expect further larger scale clinical trial
related orders to be placed.
Our sales in Europe have continued to grow and order values are now on a par
with what we receive from North America. We were particularly encouraged to
receive multiple repeat orders from several clients as we establish ourselves
as the preferred partner for mass spectrometry-based proteomic services.
Licences
Revenues from sales of TMT(®) and TMTpro™ reagents were our source of
licensing income in 2021 as no further payments relating to biomarker licenses
were received.
Tandem Mass Tags(®)
The overall sales pattern for TMT(®) reagents remained steady with similar
revenue of £3.23m compared to 2020 (2020: £3.27m) in spite of the ongoing
challenges associated with COVID. On a constant currency basis this represents
growth of 4.2%. Sales of the 11plex TMT(®) reagents continued to be robust
and still account for around 50% of total value, down from 57% in 2020 as the
demand for the newer generation TMTpro™ tags with higher plexing rates
overtook sales of 11plex TMT(®) reagents. In the second half of this year we
saw TMTpro™ 18plex tags overtaking standard TMT(®) accounting for 59% of
all sales and we have adapted our manufacturing and stock levels accordingly.
In March this year the first TMT(®) patent expired in all territories except
the USA where it remains in force until late 2022. We have seen no evidence of
commercial development of competing tags because the cost and lead time of
manufacturing and distribution of complex reagents remain a significant
barrier to entry. We have a total of 8 other TMT(®)-related patent families
stretching out to the mid-2030s which prevent the manufacture of generic
TMT(®) and TMTpro™ reagents by third parties. We expect sales of all
TMT(®) products to show good growth in 2022 and we continue to work closely
with our licensee Thermo Scientific to further develop and expand the market
for TMT(®) products.
Stroke Biomarkers
Inevitably the ongoing COVID-19 pandemic is affecting the ability of our
licensees Randox Laboratories (UK) and Galaxy CCRO (USA) to further the
development and clinical testing of their stroke diagnostic tests. Randox
remain fully committed to completing their first clinical trial to support
Conformité Européene (CE) marking and this remains open to new patients, but
a firm completion date is not yet available. Galaxy have made good progress in
developing new anti- Glutathione-s-Transferase Pi (GSTP) antibodies and this
has greatly improved performance of the lateral flow test. In parallel, they
have commissioned Proteome Sciences to develop a 'gold standard' mass
spectrometry assay to quantify GSTP in clinical samples and this work is
nearing completion.
Research
The continued strong growth in biomarker services has restricted the time
available to perform basic research and development activities though we have
retained active links with several academic groups following completion of the
BioCapture and PROMETOV grants this year. We have also not yet completed an
assessment of a claim under the UK R&D Tax Credit scheme as we clarify the
impact of group profitability on eligibility for the small- and large-entity
components of such a claim. Nevertheless, we are focusing development into new
higher value workflow services that provide excellent opportunities for future
growth.
Single Cell Proteomic Analyses
We have performed an initial assessment of the ability to deliver single cell
proteomics analysis at commercial scale and are encouraged by the early
results. We will be actively pushing this forward in the first half of 2022
and hope to be able to launch a new workflow in H2 2022. As the process of
single cell preparation becomes standardised on automated platforms, the
potential to analyse several hundred cells per week is becoming practical and
is of great interest to the pharmaceutical industry as they look to better
understand heterogeneity of disease process and response to treatment. This is
mostly happening in the area of cancer drug development, but we have also
received interest from groups in other therapeutic areas.
SysQuant analysis of ubiquitin modified proteins
We have also successfully introduced a second SysQuant(®) workflow for
analysis of proteins modified with ubiquitin which signals them for
degradation. Recently, many pharmaceutical companies have developed methods to
selectively target proteins by recruiting this ubiquitination machinery, and
monitoring effects through mass spectrometry is a significant new market for
us. We have already delivered several projects in this area following our
initial development activities and see this as a major growth opportunity.
Fluid biomarker Discovery
Our expertise in fluid biomarker discovery using TMTcalibrator™ has been
recognised by many of our clients who are using this to support their drug
development programs in pre-clinical research and clinical trials,
particularly in the neurology field and we are actively pursuing new
grant-funded research with academic partners. We were also able to present the
results of a TMTcalibrator™ project performed for INmuneBIO to identify
response biomarkers in a Phase 1 trial of XPro1595, a novel sTNF agonist. Our
CSO Dr. Ian Pike presented the results at the recent Clinical Trials on
Alzheimer's Disease (CTAD) meeting held virtually in November 2021. The
proteomics data generated, allowed a number of protein and phospho-peptide
biomarkers to be identified that supported the proposed therapeutic effect of
XPro1595, including re-activation of myelination, regulation of
neuroinflammation and reduction of tau phosphorylation. Further aspects of the
research were presented at the AD/PD congress being held in Barcelona in March
2022.
Operating Environment
The COVID-19 vaccination programs have led to very different vaccination
levels internationally. Even in our main markets (US, EU, UK) this did not
lead to an alleviation of various restrictions in travel, customer contacts,
home working regulations etc. We were also strongly affected by the delayed
arrival of samples from our clients whether directly pandemic related or
not. We started the year with a strong order book which partly helped to
compensate for such delays.
We continued to perform the majority of our sales and marketing activities in
a virtual manner as the normal mix of on-site meetings and trade shows was
severely affected. Based on our experience during the year, we have identified
several trade shows and conferences where the virtual format is effective and
virtual booths led to strong customer interest. In addition, we have developed
an effective virtual marketing activity through directed e-marketing and we
expect this to remain part of the mix of activities for at least the first
half of 2022.
Overall, the strong level of interest in our services and number of project
proposals written reflects the continued high demand for outsourced proteomics
services as shown in the further growth of revenues achieved in 2021. We
performed a very thorough review of strategic options accessible to us based
on the analysis of growth areas where the company has deep expertise already
or where such areas are a logical expansion of our current business. We have
reached out to the international markets (primarily the USA) to evaluate our
options. Based on the outcome of this review we have devised a plan to, in the
short term, develop Proteome Sciences organically by adding the high need,
high value services that we identified (like single cell proteomics see
Research Section above) to our portfolio and expanding our capacity to meet
the continued growth in demand for high level proteomics services. Building
from this new base the company will be in a stronger position in the medium
term to establish further internationalisation of the business.
Volatility in foreign exchanges during the year affected non-sterling
denominated revenues as well as costs associated with the Frankfurt
laboratory, the overall effect on operating profit was slightly negative.
In this again most challenging year, we are extremely grateful to the
dedication and hard work of all staff who have remained focused on delivering
the highest volume and value of customer projects in our history. We have
managed to sustain the positive progress of 2020 with good growth in our
service revenue. Bolstered by the continued growth of revenues from
TMT(®)/TMTpro™ the business is well set for further growth.
Outlook
As we start the transition towards a sustained relaxation of COVID-related
restrictions, we expect the pace of business to accelerate throughout 2022. We
successfully managed ongoing relationships in 2021 and also attracted a solid
group of new customers undertaking pilot studies with good potential for
expansion in the coming year. The high demand for services in the fourth
quarter, combined with the record value of orders carried into 2022 required
us to make strategic investments in new equipment and additional staff that
have increased our capacity and revenue generating potential.
We have also seen the value of repeat projects increasing, and we received a
significant order worth over £1m for analysis of clinical trials samples that
will be performed over the coming 12 months. We are also working on a
substantial commercial opportunity from single cell proteomics where automated
sample preparation combined with TMTpro™ can deliver high throughput
analysis. We are also seeing that the return to on-site working in academia
and the pharmaceutical industry is driving sales of TMTpro™ reagents and we
have ensured we have sufficient stocks on hand to meet this growing demand.
The Board is confident that the progress over the last three years has created
an excellent platform for the further development of the company. The strong
order book and cash position in early 2022 provide a strong starting point.
Proteome Sciences is well set following the strategic investments we are and
have been making to achieve a step-change in growth and revenue and gives the
Board increased confidence that the business can grow the profit in 2022.
We would like to thank our shareholders and employees for their continuing
support and we look forward to communicating further progress during 2022.
Dr. Mariola Söhngen
Chief Executive Officer
31 March 2022
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(®) and TMTpro™, 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 major provider of contract research services for the
identification, validation and application of protein biomarkers. Our clients
are predominantly pharmaceutical and 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 mass spectrometry-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 2021
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. To ensure we can offer our clients the best service, we
continue to invest significantly in direct sales activities with intensive
virtual meetings e-marketing, participation in virtual conferences and trade
shows to attract clients to our offerings.
The competitive landscape for proteomics services has grown considerably
through this year, and there has been significant funding invested in
companies providing new products for proteomic analysis. Initial public
offerings have triggered interest in financial markets. This reflects the
growing recognition of the importance of protein biomarkers in precision
healthcare. Our services are well positioned in the proteomics spectrum and we
are exploring ways to leverage our experience and reputation in the service
sector to build synergies with emerging technologies and maximising value for
existing shareholders.
Despite the significant restrictions on travel throughout the year, we have
further improved our methods of virtual engagement and secured the highest
level of orders with a record £2.5m of value carried over into 2022.
Proteomics is becoming the defining technology for enabling drug development
In 2020 we saw a sizeable shift of focus from genomics towards proteomics in
the activities of pharmaceutical research and development groups. In part this
reflects the mature nature of genomics research and the dawning realization
that the lack of predictability from gene sequencing studies requires a more
granular approach. In accordance with this realization, the demand for both
total protein expression and more importantly for deep quantification of
specific post-translational modifications has grown substantially through the
last year.
Virtually all processes within cells that keep us healthy, and which are
disrupted in disease are the result of a complex set of protein functions and
interactions. Proteins provide the scaffold to allow cells to form specific
shapes, and to change their morphology when needed, e.g., extended neurons, or
for immune cells to squeeze between tissue layers to get to the site of
disease. Other proteins convert sugar and other nutrients to provide energy,
whilst others regulate how fast or slow processes run and guide the
maintenance and replication of DNA to ensure accurate copies of cells are
formed on division. How these proteins interact is affected by the addition
and removal of modifying chemicals such as phosphates, nitrates, small organic
groups and occasionally other proteins. Drug developers now realize that
understanding each target in this context of complex post-translational
modifications (PTMs) is essential to improve productivity and maximal
responses to treatment.
Fluid biomarker discovery
We were already well established in the deep profiling of changes in protein
phosphorylation in cells and tissues and have previously extended this to
analysis of cerebrospinal fluid in neurodegenerative disease. This year, we
have demonstrated the utility of TMTcalibrator™ phosphoproteomic analysis in
blood plasma and serum, making this a key technology for the discovery of
biomarkers in other diseases including cancer, inflammatory and metabolic
disorders. We have also expanded our capability to monitor other PTMs relevant
to fibrotic disorders and have delivered several biomarker studies in this
emerging therapeutic area.
SysQuant for the detection of ubiquitylated proteins
This year we launched new services for analysis of ubiquitylation, a PTM that
signals proteins for degradation. This is particularly useful for assessing
the performance of a new class of drugs called proteolysis-targeting chimera
(PROTAC, or molecular glues) that enhance ubiquitylation of specific target
proteins that are causing disease. Once ubiquitylated, these proteins are
destroyed and their disease-causing activity is reduced and in some cases
fully removed.
Whilst there are other options for monitoring PTMs than our mass spectrometry
methods, most suffer from a lack of specificity and/or sensitivity. Only mass
spectrometry is able to perform a proteome-wide assessment of these complex
protein modifiers at a scale and specificity required for drug development
applications and we will continue to invest in adding additional capacity and
workflows to our service business to meet this growing demand.
Single Cell Proteomics
As with last year, we have prioritized commercial project delivery and the
level of internal research has been relatively low. Nevertheless, we have
initiated a project to evaluate the current feasibility of performing single
cell proteomics at scale. This has the potential to deliver strong revenues
and is an area of intense interest to both academic and commercial scientists
with significant barriers to entry. Critical to the success of quantitative
single cell proteomics is the use of TMTpro™ reagents as the benefits of
mixing tiny amounts of protein from 16 individual cells allows greater
sensitivity and more protein identifications. We have performed preliminary
analysis of the technology for single cell preparation and obtained promising
results with quantification of approximately 750 to 1,000 proteins. We have
now installed a new mass spectrometer (Thermo Exploris 480) which we expect to
improve performance, as well as increasing throughput and overall capacity.
Status of the Tandem Mass Tag(®) Product Portfolio
Sales of TMT(®) and TMTpro™ reagents stood up well to the ongoing
challenges for researchers operating under COVID restrictions during the year.
Total revenues were £3.23m (2020 £3.27m) (4.2% increase on constant currency
basis). It has also to be taken into account that some 2021 TMT(®) and
TMTpro™ orders were placed in late 2020 which artificially reduces the
revenues in 2021. Whilst there was a continued market demand for increased
plexing rates enabling higher-throughput experiments and more reproducible
data, sales of the 11plex TMT(®) reagents remained strong in the first half
of the year before dropping in the second period that reflected the launch of
the final pair of TMTpro™ tags (completing the 18plex set), and we expect to
see a continued upward shift in use of the higher plexing tags now available.
In March 2022 we saw the first of the TMT(®) patent families expiring in all
territories except the United States, where it remains in force until the
second half of 2022. We are not aware of any competing products having been
launched in the last 9 months and will retain a watching brief with our
licensee Thermo Scientific. Other patents in the TMT(®) portfolio that cover
several alternate tag designs as well as our TMT(®) and TMTpro™ products
remain in full effect with the TMTpro™ patents extending out to the
mid-2030s.
We continue to monitor the commercial use of TMT(®) and TMTpro™ by
third-party Contract Research Organisations and work closely with our
colleagues at Thermo Scientific to maximise the licensing of these entities,
which brings us additional revenues through their activities.
Stroke biomarkers
Unfortunately, the rate of patient recruitment in the clinical trial of
Randox's stroke diagnostic test continues to be extremely affected by COVID.
Randox is also deeply involved in COVID test manufacture and provision of
testing services and this will inevitably be impacting on resources available
for stroke test development. However, they remain committed to concluding the
trial and we expect more news in the first half of 2022. Similarly, Galaxy
CCRO (USA) has experienced delays in initiating a trial of its GSTP Lateral
Flow Device. They are working with their first trial site to resolve these
issues and in the meantime have been able to improve the sensitivity and
linearity of the test having developed new proprietary antibodies which will
be used in all new product development. In addition to this activity, Galaxy
has contracted Proteome Sciences to develop a target mass spectrometry assay
for GSTP to serve as a gold-standard method for accurate quantification of
trial samples, an important benchmark for clinical trial interpretation. This
work is proceeding well and a final test format is expected to be available in
H1 2022.
Patent Applications and Proprietary Rights
Patents and intellectual property rights underpin several key aspects of our
business and we received allowance of 10 patents during the year, including
cases covering several biomarker panels relating to Alzheimer's disease, the
tryptophan
metabolite assay and our TMTcalibrator™ workflow. The costs of prosecution
and maintenance of our portfolio remains closely controlled and was in line
with expectations.
Strategic evaluation
We performed a very thorough review of strategic options accessible to us
based on the analysis of growth areas where the company has deep expertise
already or where such areas are a logical expansion of our current business.
We have reached out to the international markets to evaluate our options.
Based on the outcome of the review, we have concluded that initially the best
way to develop Proteome Sciences is to build organically by adding high need
services (like single cell proteomics) to our portfolio and expanding capacity
to meet the continued growth in demand and this process has already begun.
In the mid-term we plan to evaluate further options to internationalise
our business.
Financial Review
Results and Dividends
Key Performance Indicators (KPI's)
● The directors consider that revenue, Adjusted EBITDA, and profit
before/after tax are important in measuring Group performance. The
performance of the Group is set out in the Chief Executive Officer's
Statement.
● The directors believe that the Group's rate of cash expenditure and
its effect on Group cash resources are important. Net cash inflows from
operating activities for 2021 were £0.79m (2020: £1.59m). The costs in 2021
were higher when compared to 2020 due to the investment in our strategic
process, building internal capacity, investment in new instrumentation and
share option awards resulting in a share based payment charge. We achieved
strong growth in biomarker services revenues with TMT(®) revenues remaining
broadly in line with 2020. We did not require draw down from the arranged loan
from Vulpes. Cash at 31 December is £2.39m (2020: £2.21m).
● Contract revenues from our proteomics (biomarker) services should
increase both in absolute terms and as a proportion of total Group revenues;
in 2021 we increased service income by 32% to £1.90m (2020: £1.44m).
As a proportion of total group revenue service income in 2021
was 37% compared to 30% in 2020.
Financial Performance
For the twelve-month period ended 31 December 2021 revenue increased 8% to
£5.13m (2020: £4.75m).
● Licences, sales and services revenue increased 9% to £5.12m
(2020: £4.71m). This is comprised of two revenue streams: TMT(®)-related
revenue and Proteomic (Biomarker) Services. Sterling values of our sales and
royalties received for TMT(®) tags decreased by 1% to £3.23m (2020 £3.27m)
● Grant income was £0.01m (2020: £0.04m).
● Adjusted EBITDA increased to £1.35m (2020: £0.72m)
● The profit after tax was £0.07m (2020: £0.29m).
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 2021, and such amounts are only recognised when reasonably assured.
Costs and Available Cash
● The Group maintained a positive cash balance in 2021 and continues to
seek improved cash flows from commercial income streams. Our operating costs
have remained stable which enabled positive cash flows throughout the year.
Administrative expenses in 2021 were £2.55m (2020: £2.04m).
● Staff costs for the year were £2.99m (2020: £2.15m) of which £0.57m
was a share based payment charge (2020: £0.01m)
● Property costs without charges on rent of £0.17m were slightly below
previous years
● Other administrative costs remained stable at £0.14m (2020: £0.14m)
mainly due to lower travel expenses due to COVID-19 restrictions.
● Finance costs relate to interest due on loans from two major investors
in the Company and lease interest. Costs of £0.29m were lower than the
prior year (2020: £0.30m).
● Loans from related parties were £10.83m (2020: £10.55m) which includes
interest
● Trade and other payables were £0.60m (2020: £0.77m)
● Trade and other receivables were £0.60m (2020: £0.79m)
● Profit after tax for 2021 was £0.07m (2020: £0.29m). Adjusted EBITDA
for the year was £1.35m (2020: £0.72m).
● Adjusted EBITDA conversion to operating cash inflows before working
capital movements was 86% (2020: 100%)
● The net cash inflow from operating activities was £0.79m (2020:
£1.59m).
● Cash at the year-end was £2.39m (2020: £2.21m).
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 2021 was
encouraging as both interest and orders increased substantially when compared
to the previous year. 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 by increasing the coverage of unbiased discovery
experiments and broadening capabilities for analysis of very small samples
including single cells, investing in our own sales by 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.
Adding new services bears the risk that competitors are already more advanced
and it will be difficult to find and retain new customers.
Management of risk: We believe the technology we are developing for single
cell proteomics has a high demand in the market and hence we believe there is
sufficient room for many players to satisfy the demand. Moreover, Proteome
Sciences has a USP as we are the owner of TMT(®) which gives us a number of
advantages (including cost control) vis a vis competitors.
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 and staff turnover is low, their retention
cannot be guaranteed as evidenced by 1 resignation during 2021.
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.
Investment Limitations
Sales and royalties from TMT(®) have historically been key to revenue and
working capital for the group to invest in the business. Over the last 3 years
the development and compound growth in proteomics services revenues are
starting to generate additional working capital for further investment through
internationalisation and expansion of the business activities. Despite
remaining cash positive, making a small profit and seeing strong growth in our
proteomics services revenues in 2021 we are still currently reliant on TMT(®)
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 three 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 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. All patents have a limited period of
validity and competing products may be sold by third parties on expiry in each
territory. We have seen expiry of the first patents covering TMT(®) in most
territories in the last year, although in the US the main patent is valid
until mid-September 2022.
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 biannual review ensuring that its ongoing cost is proportional to its
perceived value. We seek to prolong the value of our proprietary technologies
by patenting improved chemical tags and superior biomarker panels when we are
able to do so, and we monitor the impact of patent expiry by monitoring of
market share of licensed products such as TMT(®) and TMTpro™.
Coronavirus (COVID-19) Pandemic
The world in general is learning to live with COVID and high vaccination rates
and availability of new drugs are dramatically reducing burdens on healthcare
systems allowing society to re-open. We continue to support staff with the
provision of a safe working environment through the use of safety measures
according to national regulations and control of visitors. Whilst we still
have contingency planning in case of further temporary restrictions, we are
expecting all aspects of our business to continue getting back to pre-pandemic
modalities.
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. Site visits were restricted
to only essential visitors, distancing measures were in place and the
compulsory wearing of personal protective equipment.
Section 172 statement
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. It is the view of the
Board that these requirements are addressed in the Corporate Governance
Statement, which can also be found on the company's website www.proteomics.com
(http://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 as follows:
· Annual General Meeting
The Board encourages engagement with the Group's shareholders but as in 2020
the Board took the difficult decision that the Annual General Meeting would be
held as a closed meeting to comply with the COVID-19 regulations and in the
best interests of shareholders and employees.
· Vulpes Investment Management Loan Agreement Amendment to enable
conversion into ordinary shares
The Board made the decision to agree to an amendment to the Loan Agreement
with Vulpes Investment Management on the 18 June 2021 to enable conversion of
the loan into ordinary shares. The Board considered that by doing so it
would promote the success of the Company for the benefit of the members as a
whole.
· Investment in new instruments
The Board made the decision during 2021 to invest in new instruments which
included a new Mass Spectrometer. The Board considered that this was
necessary to maintain the Group's competitive advantage would improve
performance, by increasing throughput and overall capacity in the interests of
its customers.
By Order of the Board
5 Dashwood Lang Road
Bourne Business Park
Addlestone, Surrey KT15 2HJ
V Birse
Company Secretary
31 March 2022
Consolidated income statement
For the year ended 31 December 2021
Note Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Revenue
Licences, sales and services 5,124 4,712
Grant services 5 41
Revenue- total 5,129 4,753
Cost of sales (2,169) (2,168)
Gross profit 2,960 2,585
Administrative expenses (2,548) (2,036)
Operating profit 412 549
Finance costs (294) (304)
Profit before taxation 118 245
Tax (charge)/credit (46) 50
Profit for the year 72 295
Profit per share
Basic 3 0.02p 0.10p
Diluted 0.02p 0.10p
Consolidated statement of comprehensive income
For the year ended 31 December 2021
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Profit for the year 72 295
Other comprehensive income for the year
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (37) 18
Re-measurement of Defined Benefit Pension Scheme (22) (27)
Profit and total comprehensive income for the year 13 286
Owners of parent 13 286
Consolidated balance sheet
As at 31 December 2021
2021 2020
£'000 £'000
Non-current assets
Goodwill 4,218 4,218
Property, plant and equipment 219 58
Right-of-use asset 1,050 484
5,487 4,760
Current assets
Inventories 1,088 878
Trade and other receivables 604 788
Contract assets 479 457
Cash and cash equivalents 2,387 2,210
4,558 4,333
Total assets 10,045 9,093
Current liabilities
Trade and other payables (599) (768)
Contract liabilities (35) (153)
Borrowings (10,825) (10,547)
Lease liabilities (206) (491)
(11,719) (11,959)
Net current liabilities (7,161) (7,626)
Non-current liabilities
Lease liabilities (602) (359)
Pension provisions (499) (492)
Total non-current liabilities (1,101) (851)
Total liabilities (12,820) (12,451)
Net liabilities (2,775) (3,358)
Equity
Share capital 2,952 2,952
Share premium 51,466 51,466
Share-based payment reserve 4,193 3,623
Merger reserve 10,755 10,755
Translation reserve and other reserve (128) (91)
Retained loss (72,013) (72,063)
Total equity (deficit) (2,775) (3,358)
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share Share Equity attributable to owners of the parent
Share premium based payment Total
capital account reserve Translation Merger Retained (deficit)
reserve reserve loss
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2020 2,952 51,466 3,615 (109) 10,755 (72,331) (3,652) (3,652)
- - - - - 295 295
Profit for the year 295
Exchange differences on translation of foreign operations - - - 18 - - 18
18
Re-measurement of Defined Benefit Pension Schemes - - - - - (27) (27) (27)
Profit and total comprehensive expense for the year - - - 18 - 268
268 268
Credit to equity for share-based payment - - 8 - - - 8
8
At 31 December 2020 2,952 51,466 3,623 (91) 10,755 (72,063) (3,358)
(3,358)
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share Share Equity attributable to owners of the parent
Share premium based payment Total
capital account reserve Translation Merger Retained (deficit)
reserve reserve loss
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 2,952 51,466 3,623 (91) 10,755 (72,063) (3,358) (3,358)
Profit for the year - - - - - 72 72 72
Exchange differences on translation of foreign operations - - - (37) - - (37) (37)
Re-measurement of Defined Benefit Pension Schemes -- - - - - (22) (22)
(22)
Profit and total comprehensive income for the year - - - (37) - 50
(13) (13)
Credit to equity for share-based payment - - 570 - - - 570
570
At 31 December 2021 2,952 51,466 4,193 (128) 10,755 (72,013) (2,775)
(2,775)
Consolidated cash flow statement
For the year ended 31 December 2021
Group Group
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Profit/(loss) after tax 72 295
Adjustments for:
Finance costs 294 304
Depreciation of property, plant and equipment 213 165
Revaluation of lease (28) -
Tax charge/(credit) 46 (50)
Share-based payment expense 570 8
Operating cash flows before movements in Working capital
1,168 722
Increase in inventories (211) (6)
Decrease in receivables 163 571
(Decrease)/Increase in payables (288) 158
Increase in provisions 7 88
Cash generated from operations (840) (1,533)
Tax (paid)/received (46) 50
Net cash inflow from operating activities 793 1,583
Cash flows from investing activities
Purchases of property, plant and equipment (204) (13)
Loans advanced to subsidiary undertakings) - -
Net cash (outflow)/inflow from investing activities
(204) (13)
Financing activities
Lease payments (400) (146)
Net cash outflow from financing activities (400) (146)
Net increase in cash and cash equivalents 189 1,424
Cash and cash equivalents at beginning of year 2,210 799
Effect of foreign exchange rate changes (12) (13)
Cash and cash equivalents at end of year 2,387 2,210
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 2021 or 2020
within the meaning of Section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2021, which were approved by the
directors on 31 March 2022, 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 2021 and 2020 were
unqualified 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 2020 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2021 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 5 Dashwood Lang Road, Bourne
Business Park, Addlestone, Surrey, KT15 2HJ and from the Company's website
http://www.proteomics.com/investors (http://www.proteomics.com/investors) .
The financial information set out in these results has been prepared using the
recognition and measurement principles of UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006.
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
2020, except for those that relate to new standards and interpretations
effective for the first time for periods beginning on (or after) 1 January
2021. 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 and Strategic Report.
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.
Despite the continuing effects of COVID-19, Group revenues for the year ended
31 December 2021 increased by 8% to £5.13m (2020: £4.75m). Proteomics
services increased 32% to £1.90m (2020: £1.44m). Sales and royalties
attributable to TMT(®) and TMTpro™ reagents were £3.23m (2020: £3.27m).
Total costs were £4.72m (2020: £4.20m) and resulted in Operating Profits
decreasing by 25% to £0.41m (2020: £0.55m) and a profit after tax of £0.07m
(2020: £0.29m). Adjusted EBITDA increased to £1.35m (2020: £0.72m). Cash
reserves at the year-end increased to £2.39m (2020: £2.21m).
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 amount owed as of 31 December 2021, including interest, was
£10,054k (2020: £9,795k). Further details of this facility are set out in
note 18(b) to the financial statements.
The directors have received a legally binding written 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 15 months from the date of approval of these financial statements or
until at least 30 June 2023.
On 29 March 2021, the loan facility with Vulpes Investment Management Private
Limited ("VIM") (the "Loan") was amended such that the Loan and all accrued
interest is now repayable on 1 May 2022 (previously 1 May 2021). On the 17
June 2021 the Loan Agreement was amended to allow for conversion into ordinary
shares such that until 30 April 2022, VIM may convert part (being not less
than £50,000 or a multiple thereof) or all of the Drawn Loan and accrued
interest to 31 December 2020 (being £51,538) into new ordinary shares of the
Company. The conversion price is 7.16p per share, which is the average of the
closing middle market price for the ordinary shares of the Company during the
five consecutive trading days immediately prior to entering into the Loan
Amendment. The amount owed as of 31 December 2021, including interest, was
£771k (2020: £751k). The directors have received a legally binding written
confirmation from VIM that they will not seek repayment for at least 15 months
from the date of approval of these financial statements or until at least 30
June 2023. On 30 March 2022, the Company signed the Third Amendment to the
VIM Loan Agreement which extended the term of the loan to 30 June 2023.
Following a detailed review of forecasts, budgets, sales order book and with
the knowledge of how the Group has traded in the first year post the global
pandemic, the directors have a reasonable expectation the Group as a whole,
has adequate financial and other resources to continue in operational
existence for the period of at least twelve months post approval of these
financial statements. For this reason, the Directors continue to adopt the
going concern basis in preparing the Financial Statements.
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.
2021 2020
£'000 £'000
Profit for the financial year 72 295
2021 2020
Number of Number of
shares
shares
Weighted average number of ordinary shares for the purposes of calculating
basic and diluted earnings per share:
Weighted average number of ordinary shares and outstanding options for the
purposes of calculating diluted earnings per share: 295,182,056 295,182,056
301,850,775 295,182,056
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 not identical to those used for basic earnings per ordinary
share. This is because the options are in the money from the vesting date of
the 15 September 2021 onwards and are therefore dilutive as of 31 December
2021.
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.
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