REG - Proteome Sciences - Final Results
04/04/2023 07:00
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RNS Number : 2316V Proteome Sciences PLC 04 April 2023
4 April 2023
Proteome Sciences plc
("Proteome Sciences", the "Company" or the "Group")
Final results for the year ended 31 December 2022
The Company is pleased to announce its audited results for the year ended 31
December 2022.
Highlights:
· Total revenues of £7.78m (2021: £5.13m)
· Proteomic (biomarker) services revenues of £2.75m (2021: £1.90m)
· TMT(®) sales, royalties and milestones of £5.03m (2021: £3.23m)
· Total costs of £6.05m (2021: £4.72m)
· EBITDA of £2.13m (2021: £0.63m)
· Adjusted EBITDA* of £2.43m (2021: £1.35m)
· Profit after tax of £1.33m (2021: £0.07m)
· Cash reserves at 31 December 2022 of £3.99m (2021: £2.39m)
Post year-end:
Dr. Mariola Soehngen, Chief Executive Officer of Proteome Sciences plc,
commented:
We are pleased to report the financial results of another successful year. We
have continued to show strong growth of our revenues, both in service sales
and the TMT(®) business despite the backdrop of negative external factors,
mainly the Russia-Ukraine war and its global impact on supply chains, energy
prices, inflation rates and economic recessions. Total revenues increased by
52% to £7.78m with services showing 45% revenue increase to £2.75m and
TMT(®)/TMTpro™ reagents by 56% to £5.03m. The milestone we earned based on
cumulative sales at Thermo Scientific contributed to this positive
development. EBITDA of £2.13m increased by £1.50m or 239% on prior year
mainly due to increased revenues and including the sales milestone payment of
£0.87m received from Thermo Scientific.
We have continued to strategically invest in our workforce and instruments by
hiring 6 employees and adding various instruments to support the promotion of
new services including the CellenONE(®) single cell proteomics (SCP)
platform and made investments into new reagents as future value drivers of our
tag business. We are looking forward to the SCP product launch later in the
year and remain confident of being one of the first contract research
organisations (CROs) providing a high-performance SCP service. The new tag
development programmes already meet high interest in the market.
* 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 AGM of the Company will take place at 12 noon on Wednesday 17 May 2023 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
Abdelghani Omari, Chief Financial 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.
Chief Executive Officer's Statement
Group revenues for the full year increased by 52% to £7.78m (2021: £5.13m),
services revenue increased 45% to £2.75m (2021: £1.90m) and sales, royalties
and milestones attributable to TMT(®)/TMTpro™ reagents increased by 56% to
£5.03m (2021: £3.23m). In December 2022, the Group received a cumulative
sales milestone payment of £0.87m under the exclusive licence and
distribution agreement with Thermo Scientific. Excluding the milestone payment
received, TMT(®)/TMTpro™ sales and royalties were £4.16m (2021: £3.23m)
and showed underlying growth of c29% in 2022.
In addition to the large carry over of orders from 2021 as reported in last
year's statement, we continued to generate further orders for contract
services in 2022, including a major contract win from a leading US academic
group in the neurodegenerative area. The contract value is in excess of £0.5m
and we finalised the work and recognised the revenues in 2022.
All this has been achieved against a backdrop of negative external factors.
Whilst the COVID-19 pandemic has mainly influenced our operations in the past
three years from the macro-economic perspective the main influencing factor is
the Russia-Ukraine war and its global impact on supply chains, energy prices,
inflation rates and economic recessions. As much as the pandemic developed
into an endemic situation, in most parts of Germany quarantine regulations for
those infected have been in place throughout the year. This has led to a high
number of absence days in our Frankfurt laboratory in 2022. Despite this we
have continued to show strong growth of our revenues, both in service sales
and the TMT(®) business.
We have continued to strategically invest in our workforce and instruments by
hiring six employees and adding various instruments to support the promotion
of new services including the Meso Scale Discovery (MSD) multiplex ELISA
system, the CellenONE(®) single cell proteomics platform and investment into
new reagents, all of which led to an increase of costs. We have awarded
options which resulted in a share based payment charge of £0.30m (2021:
£0.57m). Consequently, total costs rose to £6.05m (2021: £4.72m) and this
has resulted in an operating profit of £1.73m (2021: £0.41m) and a profit
after tax of £1.33m (2021: £0.07m). Cash reserves at the year-end
increased to £3.99m (2021: £2.39m). In addition, Adjusted EBITDA (a non-GAAP
Group specific measure which is considered to be a key performance indicator
of the Group's financial performance) increased as set out below:
2022 2021
£'000 £'000
Revenue 7,780 5,124
Gross profit 4,767 2,960
Administrative expenses * (3,039) (2,548)
EBITDA 2,125 626
Other non-cash items and non-recurring costs 303 729
Adjusted EBITDA 2,428 1,355
Adjusted EBITDA increased 79% on prior year mainly due to increased revenues
and including the sales milestone payment of £0.87m received from Thermo
Scientific.
*Includes depreciation of £0.4m (2021: £0.2m)
Services
Our services business continued to show strong performance over the year. As
mentioned above, the COVID-19 pandemic has had a lower impact on face-to-face
client meetings as scientific based conferences and exhibitions return to the
pre-COVID-19 format of on-site attendance. Once the US opened up to allow
foreign travellers to cross their border in Q1 2022, we re-started our program
of client visits. The majority of our customer base in US biopharma were back
at work and allowing sales visits to their facilities.
As reported in 2021, we continue to experience delays in the availability of
samples for analysis primarily due to the pandemic affecting on-going clinical
trials. Cold chain shipping availability was also a source of some sample
delay as capacity was prioritised for COVID-19 related samples and vaccines.
This had a real impact by delaying the arrival of samples from the large trial
we received in 2021. We can only start the analysis of these samples once
the whole cohort has been collected and delivered to our Frankfurt facility.
This prevents analytical bias in the data generation if the analysis is
performed in multiple batches.
Consequently delays in recruitment are directly translated into delays in our
project initiation and downstream revenue recognition. Despite this the last
of the samples were in house by year end 2022 and we expect to complete this
work by mid 2023.
With the revamp of the www.proteomics.com (http://www.proteomics.com) website
in spring 2022 and in-person attendance of scientific and trade conferences
and exhibitions, we have continued to promote our services to new and existing
accounts. We succeeded in developing new accounts and winning repeat business
from our existing current customers. Just under one quarter of these orders
were from new clients.
Our results underline the increasing use of outsourced proteomics in
pharmaceutical and biotechnology research, and we expect this to continue in
2023 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. In 2023 we expect to enhance our activities with the launch of our
new Single Cell Proteomics application area. These additions should lead to
the analysis of larger volume pre-clinical and clinical samples in the future
and we expect further larger scale clinical trial related orders to be placed.
Licences
Tandem Mass Tags(®)
The exclusive agreement for sales and distribution of Tandem Mass Tag(®) and
TMTpro™ reagents with Thermo Scientific continues to be the Company's most
significant licensing activity. After a strong performance in 2021 as global
research activity started to return to normal levels, we saw further growth in
2022 with total revenues (excluding the milestone payment) increasing 29% to
£4.16m (2021: £3.23m), product sales growing 26% and royalty receipts by
33%. As expected, the shift to TMTpro™ accelerated, with sales of the newer
product now accounting for 68% (2021: 50%) of the total by value. At the end
of the year we also received a further milestone payment of £0.87m (2021:
£Nil) following the attainment of the latest cumulative sales milestone.
Whilst the earliest of the TMT(®) patents covering the original technology
expired in the US in 2022. TMT(®) and TMTpro™ tags are covered by later
generation patents running through until the mid-2030s. We do not expect the
expiration of these earlier cases to affect TMT revenues.
Stroke Biomarkers
Our licensees Randox and Galaxy CCRO Inc. continue to pursue trials of their
respective stroke diagnostic products and remain committed to launching them
as in vitro diagnostic devices in due course. Randox's ongoing clinical trial
has begun recruiting again after a long delay due to COVID-19 but they do not
have a forecast of when the product may be approved for clinical use. Galaxy
CCRO are developing a lateral flow device for assessing the time of stroke
onset based on kinetic measurement of blood levels of
glutathione-s-transferase pi (GSTP). They plan to perform an initial clinical
validation study initiating in Q2 2023 prior to expanding this to meet the
requirements for CE marking in Europe.
Research
With the majority of resources dedicated to providing contract services, we
did not have capacity to undertake much internal research during the year.
Nevertheless, several initiatives have been started that will continue into
2023. In particular, we are investing in a number of process improvements that
will increase capacity in sample preparation. We are using our network of
international key opinion leaders to support these efforts and expect to see a
substantial improvement in throughput as we move into the second half of 2023.
We started to develop capacity for Single Cell Proteomics (SCP) in the second
half of the year. SCP represents a major technical challenge but offers a
substantial market value as drug developers and clinical scientists look to
the role of cell heterogeneity in determining treatment responses. We
evaluated the CellenONE(® ) SCP platform in January and following some
supply chain issues finally installed our own machine in August. We recruited
a dedicated SCP scientist in September and we are now making progress in
establishing a robust sample preparation pipeline. With the delays in
procurement experienced in 2022 we now expect the process design and
optimization to be completed in the first half of 2023 as we move towards a
product launch later in the year. Whilst this is slightly later than we had
anticipated, we remain confident of being one of the first contract research
organisations (CROs) providing a high-performance SCP service.
To further support our research efforts, we have applied for several grants
including a follow-on EU Doctoral Network grant around novel molecular
imprinted polymers (MIPs), as well as an application relating to amyotrophic
lateral sclerosis (ALS) biomarker and drug target discovery. We expect to
receive results of the first rounds of review in Q2 2023. If successful, the
grants will allow us to add research staff and perform targeted research
projects that could lead to new products and services in the future.
Operating Environment
We were adversely 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. In spite of this
we successfully attracted a lot of market interest and activity exemplifying
the rising importance of proteomics in drug development and medical decision
making. This translated into a constant flow of other contracts in addition to
the two major contract wins 2021 and 2022.
The implementation of the results of our strategic review in 2021 have led to
organic development internally expanding areas of our technical expertise by
adding the high need, high value services that we identified including Single
Cell Proteomics (see Services and Research Section above) to our services
capabilities and expanding our capacity to meet the continued growth in demand
for high level proteomics services. As anticipated our new reagents programmes
have progressed well and we have attracted considerable interest in the
market. These developments will allow us to increase and extend the growth and
internationalisation of our business.
Volatility in foreign exchanges during the year affected non-sterling
denominated revenues, the overall effect on operating profit was positive at
£0.24m.
At the end of another year of solid growth across our business and the
substantial strategic investments that have been made for the future, we would
like to thank all our teams for their contribution, passion and hard work to
make all this happen. Our services business and our TMT(®)/TMTpro™ reagents
are well set for further growth.
We successfully managed ongoing relationships in 2022 and also continued to
attract new customers both from the US and Europe undertaking pilot studies
with good potential for expansion via repeat orders in the coming year. As
mentioned above, close to one quarter of the service orders won were from new
clients.
We started the year with record value of orders that were carried over into
2022. Strategic investment was made in new equipment and additional staff
that have increased our capacity and revenue generating potential. This
investment has already proved successful with a record revenue in Service and
TMT(®)/TMTpro™ tags being achieved, and this has provided the foundation
for increased revenue growth in 2023.
Outlook
We are continuing to work on the substantial commercial opportunity from SCP
where automated sample preparation combined with TMTpro™ can deliver high
throughput analysis. Technically this is challenging, but we expect to launch
this service later in 2023. 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 stock on hand to
meet this growing demand.
The Board is confident that the progress over the recent years has created an
excellent platform for the further development of the Group. The strong order
book, new projects (SCP and new reagents), high customer interest and our cash
position in 2023 provide a strong starting point. Proteome Sciences is well
set to achieve a step-change in growth and gives the Board increased
confidence that the business can grow revenue and EBITDA (both adjusted for
the milestone received in 2022) in 2023.
We would like to thank our shareholders and team for their continuing support,
and we look forward to communicating further progress during 2023.
Dr. Mariola Söhngen
Chief Executive Officer
3 April 2023
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, new reagents 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 2022
Growing Our Services Business
In early 2022 we invested in a Meso Scale Discovery multiplex ELISA
platform. This platform enables Proteome Sciences to offer an additional
service to our clients to detect and quantify proteins in samples from normal
healthy subjects that would be generally undetectable by mass spectrometry.
These proteins, usually cytokines and chemokines, are generally of interest in
a study in a variety of diseases. The service was first used in connection
with the large contract from a European pharma client that we won in 2021.
We expect to offer these additional services to other clients in the future.
In connection with the large European based pharma client mentioned above much
of this contract had been completed and invoiced by the year end. This
project enabled our services group to operate at a sample volume greater than
we have seen before. Over 3,000 samples were received, processed and
reported throughout 2022. As scientific studies move into larger sample
cohorts, this experience places us in a stronger position moving forward, both
in the logistics of handling and storing these samples through to the
practicalities of processing the samples through analysis and reporting. In
relation to the sample processing, we will be looking at improving internal
workflows connected with these large scale samples in 2023, thereby making us
even more efficient in the future.
Expanding beyond the core proteome
The shift from genomic-led drug development to a protein-centric strategy is
increasing the demand for a wide range of services and driving development of
new technologies. With this increased activity comes a greater appreciation of
the complex relationship between protein expression, post-translational
modification and biological function. Whilst this is something we were
promoting a decade ago, the wider acceptance within the pharmaceutical
industry is creating significant new opportunities for Proteome Sciences. Last
year we introduced a new version of SysQuant(®) for the analysis of protein
ubiquitylation. This has been quite successful in bringing us to the attention
of companies using new classes of drugs to hijack the ubiquitylation machinery
in cells to cause targeted degradation of a single protein. Alongside our
SysQuant(®) phosphoproteomics service, we now offer our customers a range of
tools to move beyond the core proteome and explore the role that different
post-translational modifications play in disease and response to drug
treatment. We are continuing to expand the numbers of post-translational
modifications we can characterise using iterative computational search
strategies, and further extending utility through development of targeted
assays for specific proteoforms created in a disease or treatment response
context that can be used to support drug development and clinical trials.
In expanding the mapping of post-translational modifications and different
proteoforms, the power of sample multiplexing becomes increasingly important
as it provides more intense spectra and higher localisation scores than are
often seen with label-free methods. This is particularly important when
looking beyond the core proteome in peripheral fluids such as plasma and
cerebrospinal fluid, which can be further enhanced using tissue triggers in
our TMTcalibrator™ workflow.
Single Cell Proteomics (SCP)
SCP represents a major technical challenge but offers a substantial market
value as drug developers and clinical scientists look to the role of cell
heterogeneity in determining treatment responses. It has widely been suspected
that the different cell populations within diseased tissues affects how
individuals respond to treatment, and this is increasingly the case with
highly targeted medicines. Building on the success of other single cell omics,
the field of SCP has evolved rapidly within the academic sector, but
challenges around reproducibility and throughput limitations are restricting
wider adoption. During the last year we have continued to explore ways to
develop a robust SCP service but delays in product availability and recruiting
have restricted progress against our planned timeline.
Using very small amounts of bulk digested cell lines, we have optimised the
mass spectrometry workflow for SCP samples. However, there remains a challenge
in delivering robust and reproducible sample preparation and we evaluated the
commercially available CellenONE(®) SCP platform in January. Results were
promising and following some supply chain issues we finally installed our own
machine in August. We also recruited a dedicated SCP scientist who started
work in September and we are now making progress in establishing a robust
sample preparation pipeline. With the delays in procurement experienced in
2022 we now expect the process design and optimization to be completed in the
first half of 2023 as we move towards a product launch later in the year.
Whilst this is somewhat later than we had anticipated, we remain confident of
being one of the first CROs providing a high-performance SCP service.
We are also working on alternative strategies and reagents for SCP that may
deliver further benefits in throughput and data quality. Early results are
encouraging and we expect to establish collaborations with key opinion leaders
in the field to drive the project forward.
Status of the Tandem Mass Tag(®) Product Portfolio
The signs of revival in research activity seen in 2021 were continued in 2022
and this is reflected in strong growth from the TMT portfolio. Total revenues
from TMT(®) product sales and royalties (excluding the milestone payment)
increased 29% to £4.16m (2021: £3.23m), product sales growing 26% and
royalty receipts by 33%. As expected, the shift to TMTpro™ was further
accelerated, with sales of the newer product now accounting for 68% of the
total by value (2021: 50%). We also received a milestone payment of £0.87m
(2021: £Nil) following the attainment of the latest cumulative sales
milestone. We stand to receive further milestone payments in the future but do
not expect this in the short term.
The continued growth in TMT(®) sales comes against the backdrop of
alternative methods for mass spectrometry proteomics, particularly
data-independent acquisition (DIA) gaining popularity. It is encouraging that
the value of the 18plex TMTpro™ reagents in increasing sample throughput and
overall data quality is increasingly seen by researchers and we still
anticipate strong growth in the number of TMT(®) users and value of sales.
Importantly, there are preliminary data from academic users that a subset of
the TMTpro™ reagents can be used in DIA applications, where tagging was not
previously possible. This opens up a further opportunity to drive adoption of
TMTpro™ in groups that were previously using label-free methods. As the
uptake of TMTpro™ continues to drive sales, we are continuing to review the
TMT portfolio and specifically looking at the market interest in further
increases to plexing rates.
As reported previously, the earliest of the TMT(®) patents covering the
original technology, expired in the US in mid-2022. TMT(®) and TMTpro™
tags are covered by later generation patents running through until the
mid-2030s. These cases also cover potential next-generation tag designs that
can deliver sets of isobaric tags in excess of 30 plex.
Stroke biomarkers
Our licensees Randox and Galaxy CCRO Inc. continue to pursue trials of their
respective stroke diagnostic products that incorporate several biomarkers
licensed from Proteome Sciences. In the case of Randox, their ongoing clinical
trial has begun recruiting again after a long delay due to COVID-19. Recent
changes in the European regulations concerning in vitro diagnostics will have
some impact on approval times, but until the trial has completed recruitment
we will not have a forecast of when the product may be approved for clinical
use.
Galaxy CCRO Inc. are developing a lateral flow device for measuring GSTP, a
biomarker linked to time of stroke onset. They plan to perform an initial
clinical validation study prior to expanding this to meet the requirements for
CE marking in Europe. As part of the development work, Proteome Sciences
developed a high-performance mass spectrometry assay for GSTP and this was
used to confirm excellent linearity of signal of the lateral flow device
relative to absolute GSTP concentration in a small group of stroke patients.
This work was recently showcased on Galaxy's booth at the 2023 International
Stroke Conference in Dallas, US.
Patent Applications and Proprietary Rights
During the year we received allowance of 23 individual patents relating to six
different inventions. Five of these relate to different aspects of TMT(®) and
TMTpro™ reagents and methods of their use. The remainder were from the
clusterin and tryptophan biomarker families. The final national member of the
TMT1 patent family expired in the United States but we do not expect this to
affect our ongoing TMT revenues. Whilst the cost of patent prosecution and
maintenance saw a moderate increase during the year, we expect this to remain
relatively constant in 2023.
Strategic evaluation
The implementation of the results of our strategic review in 2021 has led to
internal expansion in areas of our technical expertise adding high need, high
value services that we identified (like SCP see Research Section above) to our
portfolio and expanding our capacity to meet the continued growth in demand
for high level proteomics services. As anticipated our new reagents programmes
have progressed well and have attracted considerable interest from the market.
These will increase and extend the growth and internationalisation of 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 2022 were £2.14m (2021: £0.79m). The costs in 2022
were higher when compared to 2021 due to the investment in our strategic
process, building internal capacity and investment in new instrumentation. We
achieved strong growth in biomarker services revenues and TMT(®) revenues as
compared to 2021. Cash at 31 December 2022 was £3.99m (31 December 2021:
£2.39m).
· Contract revenues from our proteomics (biomarker) services should
increase both in absolute terms and as a proportion of total Group revenues;
in 2022 we increased service revenues by 45% to £2.75m (2021: £1.90m).
As a proportion of total Group revenue (excluding the milestone revenue)
service revenues in 2022 was 40% compared to 37% in 2021.
Financial Performance
For the twelve-month period ended 31 December 2022 revenue increased 52% to
£7.78m (2021: £5.13m)
● Licences, sales and services revenue (adjusted for the milestone)
increased 35% to £6.91m (2021: £5.12m). 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 increased
by 29% to £4.16m (2021 £3.23m)
● Adjusted EBITDA increased to £2.43m (2021: £1.35m)
● The profit after tax was £1.33m (2021: £0.07m)
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 2022, and such amounts are only recognised when reasonably assured.
Costs and Available Cash
● The Group maintained a positive cash balance in 2022 and continues to
seek improved cash flows from commercial income streams. Even though operating
costs have increased year on year, the Group generated a positive cash flow in
the year. Administrative expenses in 2022 were £3.04m (2021: £2.55m)
● Staff costs for the year were £3.12m (2021: £2.99m) of which £0.30m
was a share based payment charge (2021: £0.57m)
● Property costs without charges on rent of £0.16m were lower than
previous years
● Other administrative costs which relate to the UK only remained stable
at £0.11m (2021: £0.14m). Finance costs relate to interest due on loans
from two major investors in the Company and lease interest. Costs of £0.47m
were higher than the prior year (2021: £0.29m)
● Trade and other payables were £0.82m (2021: £0.60m)
● Trade and other receivables were £1.44m (2021: £0.60m)
● Profit after tax for 2022 was £1.33m (2021: £0.07m)
● Adjusted EBITDA for the year was £2.43m (2021: £1.35m)
● Adjusted EBITDA conversion to operating cash inflows before working
capital movements was 94% (2021: 86%)
● The net cash inflow from operating activities was £2.14m (2021:
£0.79m)
● Cash at the year-end was £3.99m (2021: £2.39m)
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 2022 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 (Unique Selling Point) as we are the owner of TMT(®) which
gives us a number of advantages (including cost control) vis à 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 2022.
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 net profit and seeing strong growth in our
proteomics services revenues in 2022 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 four 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. The final TMT1 patent expired in the US in September. This was the
last case with broad claims to the field of isobaric tagging, but the patents
covering the TMT(®) and TMTpro™ products themselves, along with several
proprietary methods such as TMTcalibrator™ and MS3 quantification remain in
force. Whilst the expiration of the earliest TMT patent results in a reduced
royalty rate under the exclusive licence and distribution agreement with
Thermo Scientific, we do not expect this to impact our total revenue growth in
2023 and beyond. We continually monitor the implications of patent expiry and
have not seen any generic isobaric tags enter the markets so far.
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
As much as the pandemic has developed into an endemic situation, in most parts
of Germany quarantine regulations for those infected were still in place
during 2022. This has led to a high number of absence days in our Frankfurt
Laboratory in 2022. 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 two
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 (AGM)
The Board encourages engagement with the Group's shareholders took the
decision to hold the AGM as both an in person meeting as well as to arrange
access via an online portal which allowed shareholders to attend the meeting
virtually so as to make the meeting as accessible as possible.
· Board visit to German subsidiary
The Board considers the interests and wellbeing of all its employees to be
important to the ongoing success of the organisation. The Board took the
decision that it would make a two day visit to the Frankfurt site of the
organisation in 2022, during which the directors were able to spend time
observing operational activities and to meet with employees.
By Order of the Board
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
V Birse
Company Secretary
3 April 2023
Consolidated income statement
For the year ended 31 December 2022
Note Year ended Year ended
31 December 2022 31 December 2021
£'000 £'000
Revenue
Licences, sales and services 7,780 5,124
Grant services - 5
Revenue - total 7,780 5,129
Cost of sales (3,013) (2,169)
Gross profit 4,767 2,960
Administrative expenses (3,039) (2,548)
Operating profit 1,728 412
Finance costs (473) (294)
Profit before taxation 1,255 118
Tax credit/(charge) 70 (46)
Profit for the year 1,325 72
Profit per share
Basic 3 0.45p 0.02p
Diluted 0.43p 0.02p
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
£'000 £'000
Profit for the year 1,325 72
Other comprehensive income for the year
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of foreign operations 158 (37)
Re-measurement of Defined Benefit Pension Scheme 145 (22)
Profit and total comprehensive income for the year 1,628 13
Owners of parent 1,628 13
Consolidated balance sheet
As at 31 December 2022
2022 2021
£'000 £'000
Non-current assets
Goodwill 4,218 4,218
Property, plant and equipment 444 219
Right-of-use asset 873 1,050
5,535 5,487
Current assets
Inventories 901 1,088
Trade and other receivables 1,443 604
Contract assets 560 479
Cash and cash equivalents 3,994 2,387
6,898 4,558
Total assets 12,433 10,045
Current liabilities
Trade and other payables (823) (599)
Contract liabilities (104) (35)
Borrowings (11,262) (10,825)
Lease liabilities (300) (260)
(12,489) (11,719)
Net current liabilities (5,591) (7,161)
Non-current liabilities
Lease liabilities (353) (602)
Pension provisions (434) (499)
Total non-current liabilities (787) (1,101)
Total liabilities (13,276) (12,820)
Net liabilities (843) (2,775)
Equity
Share capital 2,952 2,952
Share premium 51,466 51,466
Share-based payment reserve 4,495 4,193
Merger reserve 10,755 10,755
Translation reserve and other reserve 31 (128)
Retained loss (70,542) (72,013)
Total equity (deficit) (843) (2,775)
Consolidated statement of changes in equity
For the year ended 31 December 2022
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 2022 2,952 51,466 4,193 (128) 10,755 (72,013) (2,775) (2,775)
- - - - - 1,325 1,325
Profit for the year 1,325
Exchange differences on translation of foreign operations - - - 158 - - 158
158
Re-measurement of Defined Benefit Pension Schemes - - - - - 145 145 145
Profit and total comprehensive expense for the year - - - 158 - 1,470
1,628 1,628
Credit to equity for share-based payment - - 303 - - - 303
303
At 31 December 2022 2,952 51,466 4,495 31 10,755 (70,542) (843)
(843)
Consolidated statement of changes in equity
For the year ended 31 December 2022
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 2022
Group Group
Year ended Year ended
31 December 31 December
2022 2021
£'000 £'000
Profit/(loss) after tax 1,325 72
Adjustments for:
Finance costs 437 294
Depreciation of property, plant and equipment 106 213
Revaluation of lease 178 (28)
Tax charge/(credit) (70) 46
Share-based payment expense 303 570
Operating cash flows before movements in Working capital
2,279 1,168
Decrease/(Increase) in inventories 187 (211)
(Increase)/Decrease in receivables (920) 163
Increase/(Decrease) in payables 293 (287)
(Decrease)/Increase in provisions 80 7
Foreign exchange 151 -
Cash generated from operations 2,070 (840)
Tax received/(paid) 70 (46)
Net cash inflow from operating activities 2,140 793
Cash flows from investing activities
Purchases of property, plant and equipment (319) (204)
Loans advanced to subsidiary undertakings) - -
Net cash (outflow)/inflow from investing activities
(319) (204)
Financing activities
Lease payments (209) (400)
Net cash outflow from financing activities (209) (400)
Net increase in cash and cash equivalents 1,612 189
Cash and cash equivalents at beginning of year 2,387 2,210
Effect of foreign exchange rate changes (5) (12)
Cash and cash equivalents at end of year 3,994 2,387
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 2022 or 2021
within the meaning of Section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2022, which were approved by the
directors on 3 April 2023, 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 2022 and 2021 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 2021 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2022 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 Coveham House, Downside
Bridge Road, Cobham, Surrey KT11 3EP 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
2021, except for those that relate to new standards and interpretations
effective for the first time for periods beginning on (or after) 1 January
2022. 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. The financial position
of the Group, its cash flows, liquidity position and borrowing facilities are
described in the notes to the financial statements, in particular in the
consolidated cash flow statement.
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 challenges from the
macro environment on international business, especially the Russia-Ukraine
Conflict and the general inflationary pressure on costs, may have on the
ability to achieve adequate level of sales.
Group revenues for the year ended 31 December 2022 increased by 52% to £7.78m
(2021: £5.13m). Proteomics services increased 45% to £2.75m (2021:
£1.90m). Sales and royalties attributable to TMT(®) and TMTpro™ reagents
were £4.16m (2021: £3.23m). Total costs were £6.05m (2021: £4.72m) and
resulted in Operating Profits increasing by 322% to £1.73m (2021: £0.41m)
and a profit after tax of £1.33m (2021: £0.07m). Adjusted EBITDA increased
to £2.43m (2021: £1.35m). Cash reserves at the year-end increased to £3.99m
(2021: £2.39m)
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 2022, including interest, was
£10,459k (2021: £10,054k).
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 12 months from the date of approval of these financial statements or
until at least 30 April 2024.
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 2021 (being £51,538) into new ordinary shares of the
Company. The conversion price was 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 2022, including interest, was
£802k (2021: £771k). 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 second 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 profits and numbers of shares.
2022 2021
£'000 £'000
Profit for the financial year 1,325 72
2022 2021
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
309,020,565 301,850,775
The weighted average number of ordinary shares outstanding was calculated
applying the treasury stock method to an amount of 18.3m shares options which
were in the money at the 31 December 2022. An average share price for 2022 of
4.10p per share added by the outstanding service amounts for these options and
resulting in a number of shares of 13.838,509 added to the existing issued
share stock for the purpose to calculate the diluted EPS. A number of 6.1m
shares were not considered in the calculation of the weighted number of
outstanding shares used for the diluted EPS calculation as these options were
at the 31 December 2022 not dilutive.
4. Cautionary Statement on Forward-looking Statements
Proteome Sciences 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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