Half-year Report
29/12/2017 07:09
RNS Number : 5466A
Provexis PLC
29 December 2017
29 December 2017 Provexis plc
UNAUDITED INTERIM RESULTS FOR SIX MONTHS TO 30 SEPTEMBER 2017
Provexis plc ("Provexis" or the "Company"), the business that develops, licenses and sells the proprietary, scientifically-proven Fruitflow heart-health functional food ingredient, announces its unaudited interim results for the six months ended 30 September 2017.
Key highlights
Total revenue for the period 124k (2016: 123k).
The Company and its commercial partner DSM have seen an encouraging increase in brand awareness and customer interest in Fruitflow in recent months; the total projected annual sales value of the prospective sales pipeline for Fruitflow now stands at a further new all-time high level.
Over 50 regional consumer healthcare brands containing Fruitflow now launched by DSM's customers, with further regional brands launched through DSM's distributor channels. An increasing number of further commercial projects have been initiated by DSM with prospective customers, including some prospective customers which are part of global businesses.
MOU for a research and collaboration agreement announced in April 2017 for Fruitflow between the Company and BY-HEALTH, a 2bn listed Chinese dietary supplement business. Collaboration will focus on BY-HEALTH's research programme into the development of new products that contribute to cardiovascular health, with BY-HEALTH planning to launch a number of Fruitflow based products in the Chinese market.
Patent application announced in December 2017 relating to the use of Fruitflow in protecting against the adverse effects of air pollution on the body's cardiovascular system, with laboratory work showing that Fruitflow can reduce the platelet activation caused by airborne particulate matter by approximately one third.
Further encouraging progress from the Company's Fruitflow + Omega-3 dietary supplement product which was launched in 2016. Listing with Amazon secured in June 2017, further UK sales channel opportunities are currently being progressed to include listings with some major UK retailers; the Company is actively seeking to launch the product online into wider international markets to include North America.
Planned formulation and launch of a Fruitflow + nitrates dietary supplement product which will be supported by the Company's strong patent position in this area.
Fruitflow blood pressure study published in the International Journal of Food Sciences and Nutrition, indicating that Fruitflow significantly lowered blood pressure in the study subjects; encouraging blood pressure results are expected to have a positive effect on current and future commercial negotiations for Fruitflow.
Company raised 672k through a two stage placing in May and August 2017.
Underlying operating loss* 153k (2016: 128k), reflecting increased patent costs during the period.
Cash 483k at 30 September 2017 (2016: 243k).
*before share based payments of 43k (2016: 13k), as set out on the face of the Consolidated Statement of Comprehensive Income
Provexis Executive Chairman Dawson Buck commented:
'We are pleased to be able to report on a period of significant progress for the Company, to include:
The encouraging increase in brand awareness and customer interest in Fruitflow which the Company and DSM have seen in recent months, with the total projected annual sales value of the prospective sales pipeline for Fruitflow now standing at a further new all-time high level;
The strategic collaboration agreement for Fruitflow between DSM and Chinese listed BY-HEALTH, and the related announcement by the Company confirming that it had entered into an MOU with BY-HEALTH for a research and collaboration agreement for Fruitflow;
The planned launch by BY-HEALTH of some Fruitflow based products in the Chinese market;
The patent application announced in December 2017 relating to the use of Fruitflow in protecting against the adverse effects of air pollution on the body's cardiovascular system, with laboratory work showing that Fruitflow can reduce the platelet activation caused by airborne particulate matter by approximately one third.
Encouraging progress with the Company's Fruitflow + Omega-3 dietary supplement product, which is expected to provide the Company with an additional long term income and profit stream;
The planned formulation and launch of a Fruitflow + nitrates dietary supplement product which will be supported by the Company's strong patent position in this area;
The publication of a Fruitflow blood pressure study in the International Journal of Food Sciences and Nutrition, indicating that Fruitflow significantly lowered blood pressure in the study subjects;
The strong support which the company has received from investors in relation to subscriptions to raise further working capital for the Company, to include a PrimaryBid.com element.
The Company expects that these strongly positive announcements and initiatives will have a beneficial effect on the current and future commercial prospects for Fruitflow. The Company is well placed to maximise the commercial opportunities arising from these developments for Fruitflow and the Provexis business, and remains positive about the outlook for the business for the second half of the year and beyond.'
This announcement contains inside information.
For further information please contact:
Provexis plc Tel: 07490 391888
Dawson Buck, Chairman enquiries@provexis.com
Ian Ford, Finance Director
Cenkos Securities plc Tel: 020 7397 8900
Bobbie Hilliam / Camilla Hume
Chairman's statement
The Company has had a strong and active first six months of the year, seeking to enhance further the commercial prospects of its innovative, patented Fruitflow heart-health ingredient.
The Company's Alliance partner DSM Nutritional Products has continued to develop the market actively for Fruitflow in all global markets. More than 50 regional consumer healthcare brands have now been launched by direct customers of DSM, and a number of further regional brands have been launched through DSM's distributor channels.
The Company and DSM have seen an encouraging increase in brand awareness and customer interest in Fruitflow in recent months, with an increasing number of further commercial projects being initiated with prospective customers, including some prospective customers which are part of global businesses.
The total projected annual sales value of the prospective sales pipeline for Fruitflow has continued to increase, now standing at a further new all-time high level.
Revenues for the period were 124k (2016: 123k), with the prior period's revenue including amounts of 28k received for marketing support (2017: Nil).
Revenues accruing to the Company for the period from its profit sharing Alliance for Fruitflow were 90k (2016: 88k).
The Company launched its Fruitflow + Omega-3 dietary supplement product in late June 2016 and in June 2017 the Company secured a listing for the product with Amazon.co.uk. The product achieved sales of 34k in the period (2016: 7k) and it has seen further sales growth since the period end.
The underlying operating loss for the period was 153k (2016: loss of 128k), reflecting increased patent costs arising during the period.
MOU for a research and development collaboration with By-Health Co., Ltd for Fruitflow
In April 2017 the Company announced it had entered into a memorandum of understanding with BY-HEALTH Co., Ltd, a 2bn listed Chinese dietary supplement business, which is intended to result in a research and collaboration agreement with BY-HEALTH for Fruitflow.
The Company also confirmed separately that Provexis and DSM were working with BY-HEALTH to support the planned launch of some Fruitflow based products in the Chinese market.
The proposed research and collaboration agreement between the Company and BY-HEALTH is intended to focus on BY-HEALTH's research programme into the development of new products that contribute to cardiovascular health, particularly in the field of blood pressure regulation, and it is intended to include a clinical trial which will be conducted in China. It is envisaged that the Company, BY-HEALTH and a third party Chinese research organisation will sign the research and collaboration agreement in the first quarter of 2018, with the bulk of the research programme to be completed in 2018.
It is envisaged under the MOU that the Company and BY-HEALTH will jointly provide primary funding for the research and collaboration work which will include the assessment of a number of different potential product formulations. Product formulations which are covered under the Company's existing patents would continue to be owned outright by the Company, and the Company would retain proportional joint ownership of any new product formulations developed as part of the project. It is envisaged that the Company will provide scientific and technical support for Fruitflow to BY-HEALTH throughout the collaboration.
In November 2016 the Company announced that DSM had entered into a strategic collaboration agreement for Fruitflow with BY-HEALTH focussing on the development of new products that contribute to cardiovascular health, to include evaluation and testing procedures to accord with Chinese technical and regulatory standards. The MOU announced by the Company in April 2017 is in support of this existing collaboration, whilst ensuring that the Company retains and strengthens its intellectual property holdings.
There are more than 230m people in China who are currently thought to have cardiovascular disease, and a significant increase in cardiovascular events is expected in China over the course of the next decade based on population aging and growth alone (source: World Health Organisation - Cardiovascular diseases, China). China is now the world's second-largest pharmaceuticals market, measured by how much patients and the state spend on drugs. The Company believes that Fruitflow has the potential to play an important role in the Chinese cardiovascular health market.
Patent application - Fruitflow protects against adverse effects of air pollution
In December 2017 the Company announced the filing of a patent application relating to the use of Fruitflow in protecting against the adverse effects of air pollution on the body's cardiovascular system.
Recent laboratory work has shown that Fruitflow can reduce the platelet activation caused by airborne particulate matter, such as that from diesel emissions, by approximately one third. The beneficial effects of this reduction can be observed in laboratory models representing healthy subjects as well as in models representing subjects with an underlying cardiovascular problem.
The patent application describes 'a composition comprising a water soluble tomato extract (Fruitflow) for use in maintaining cardiovascular health, lessening the risk of developing a cardiovascular health problem, or reducing the likelihood of worsening an existing cardiovascular health problem in a subject who is exposed, or is at risk of exposure, to particulate air pollution', and uses of Fruitflow described in the patent application include:
Maintaining healthy platelet function in the presence of air pollution;
Maintaining a healthy blood circulation and blood flow in the presence of air pollution;
Reducing the risk of an adverse cardiovascular condition, such as atherosclerosis or thrombosis, in the presence of particulate matter air pollution;
Reducing the severity of cardiovascular diseases when exposed to particulate matter; and
Reducing the risk of cardiovascular and respiratory illness in an air polluted environment.
The World Health Organization ('WHO') estimates that in 2012 around 1 in 9 deaths were attributed to exposure to air pollution, making it the largest environmental risk factor for ill health, with 92% of the world's population living in places where air quality levels exceed WHO limits.
The patent filing means that DSM and the Company can use this research now to assist with discussions with current and potential customers. The Company expects that this patent application will have a strongly beneficial effect on the current and future commercial prospects for Fruitflow worldwide.
Fruitflow + Omega-3 dietary supplement product
In June 2016 the Company announced the launch of its new Fruitflow + Omega-3 dietary supplement product, which is available through the Company's new e-commerce website www.fruitflowplus.com, the product also has a Facebook page at www.facebook.com/FruitflowPlus.
In June 2017 the Company secured a listing for the product with Amazon.co.uk. Further UK sales channel opportunities are currently being progressed to include listings with some major UK retailers, and the Company is actively seeking to launch the product online into wider international markets to include North America.
Fruitflow + Omega-3 is a two-in-one supplement in an easy to take capsule, supporting healthy blood flow and normal heart function, and it achieved sales of 34k in the period (2016: 7k), with further sales growth seen since the period end. The product achieved sales of 29k in the nine month period from its launch to the end of the Company's financial year on 31 March 2017.
In May 2014 the US Food and Drug Administration issued some guidance concerning the use of low dose Aspirin, stating that after carefully examining scientific data from major studies it has concluded 'the data do not support the use of aspirin as a preventive medication by people who have not had a heart attack, stroke or cardiovascular problems, a use that is called 'primary prevention.' In such people, the benefit has not been established but risks - such as dangerous bleeding into the brain or stomach - are still present.' The Company believes that this guidance remains a particularly strong opportunity for Fruitflow in North America.
The Company and DSM are committed to a number of ongoing scientific and marketing initiatives for Fruitflow and the Company's Fruitflow + Omega-3 capsules, seeking to extend the reach of the existing science for Fruitflow and give the products further global exposure. A promotional broadcast event is being planned to take place in January 2018.
Fruitflow + nitrates dietary supplement product
In December 2013 British and international patent applications were filed for the use of Fruitflow in mitigating exercise-induced inflammation and for promoting recovery from intense exercise, seeking to enhance further the potential of the technology in the sports nutrition sector. The patent was granted by the UK IPO on 3 May 2017, and patents are being sought in Europe, the US, China and ten other territories. The patent application has now entered the national phase, with potential patent protection out to December 2033.
The Company is keen to progress the formulation and launch of a Fruitflow + nitrates dietary supplement product which would be supported by the Company's strong patent position in this area. The product would have anti-inflammatory and circulation benefits for athletes seeking to recover after exercise, properties which would also be potentially beneficial to a wide range of other consumers to include people suffering from the symptoms of basic ageing.
Fruitflow and Blood Pressure - Collaboration with University of Oslo
In November 2014 the Company signed a two stage collaboration agreement with the University of Oslo seeking to undertake further research into the relationship between Fruitflow and blood pressure regulation.
In December 2016 it was announced that the Company and the University had completed the second stage of the collaboration work, which had seen the parties conduct a small clinical trial in Oslo by way of a proof of principle study. The study examined the acute effects of different amounts of Fruitflow in powder format on parameters relating to blood pressure, such as systolic and diastolic blood pressure, mean arterial pressure, pulse pressure and heart rate. The trial subjects, who were healthy with no underlying cardiovascular disease or other conditions likely to affect blood pressure, received both placebo and Fruitflow supplements in a blinded crossover design.
Results from the pilot study indicated that a 150mg dose of Fruitflow in powder format significantly lowered the average 24-hour systolic blood pressure compared to placebo. When the monitoring time was split into waking and sleeping periods, both systolic and diastolic blood pressure were significantly lower after 150mg Fruitflow treatment than after placebo treatment during the waking period; systolic pressure was also significantly lower during the sleeping period.
In September 2017 the encouraging results from the blood pressure collaboration were published in the International Journal of Food Sciences and Nutrition.
The published study, titled 'Consumption of Fruitflow lowers blood pressure in pre-hypertensive males: a randomised, placebo controlled, double blind, cross-over study' is expected to be a strong opportunity to promote Fruitflow further across scientific, trade customer and consumer channels with a positive effect on current and future commercial negotiations for Fruitflow.
Intellectual property
The Company is responsible for filing and maintaining patents and trade marks for Fruitflow as part of the Alliance Agreement with DSM. The Company is pursuing a strategy to strengthen the breadth and duration of its patent coverage to maximise the commercial returns that can be achieved from the technology. Trade marks were originally registered in the larger global territories, and new registrations are typically now sought in additional territories in response to requests from current or prospective DSM customers for Fruitflow.
In December 2013 British and international patent applications were filed for the use of Fruitflow in mitigating exercise-induced inflammation and for promoting recovery from intense exercise, and as indicated above the patent was granted by the UK IPO on 3 May 2017. Patents are being sought in Europe, the US, China and ten other territories, with the patent application now having entered the national phase, with potential patent protection out to December 2033.
The Company's patent application for Fruit Extracts, relating to part of the production process for Fruitflow, was granted by the European Patent Office on 11 January 2017, with the patent application also now having entered the national phase across larger global territories, with potential patent protection out to November 2029.
The Company's patent application which was announced in December 2017, relating to the use of Fruitflow in protecting against the adverse effects of air pollution on the body's cardiovascular system, brings potential patent protection out to 2036.
Crohn's disease intellectual property
The Group continues to maintain the Crohn's disease intellectual property registered in Provexis (IBD) Limited, a company which is 75% owned by Provexis plc and 25% owned by The University of Liverpool. The Group continues to investigate further options for the Crohn's disease project, seeking to maximise its value.
Capital structure and funding
The Company is seeking to maximise the commercial returns that can be achieved from its Fruitflow technology, and the Company's cost base and its resources continue to be very tightly managed. The Company remains keen to minimise dilution to shareholders and it is focussed on moving into profitability as Fruitflow revenues increase, but while the Company remains in a loss making position it will need to raise working capital on occasions, and the Company raised a gross 672k through a two stage placing in May and August 2017.
The Company highly values its private investor base and it was pleased to be able to provide private investors with an opportunity to participate in the August 2017 placing at 0.50 pence per share through the PrimaryBid.com platform; the placing received a strong response from investors via the platform.
The funds raised from these placings will be used to provide the Company with additional working capital to support its revenue growth plans over the coming years, they have also considerably strengthened the Group's balance sheet.
Outlook
We are pleased to be able to report on a period of significant progress for the Company, to include:
The encouraging increase in brand awareness and customer interest in Fruitflow which the Company and DSM have seen in recent months, with the total projected annual sales value of the prospective sales pipeline for Fruitflow now standing at a further new all-time high level;
The strategic collaboration agreement for Fruitflow between DSM and Chinese listed BY-HEALTH, and the related announcement by the Company confirming that it had entered into an MOU with BY-HEALTH for a research and collaboration agreement for Fruitflow;
The planned launch by BY-HEALTH of some Fruitflow based products in the Chinese market;
The patent application announced in December 2017 relating to the use of Fruitflow in protecting against the adverse effects of air pollution on the body's cardiovascular system, with laboratory work showing that Fruitflow can reduce the platelet activation caused by airborne particulate matter by approximately one third.
Encouraging progress with the Company's Fruitflow + Omega-3 dietary supplement product, which is expected to provide the Company with an additional long term income and profit stream;
The planned formulation and launch of a Fruitflow + nitrates dietary supplement product which will be supported by the Company's strong patent position in this area;
The publication of a Fruitflow blood pressure study in the International Journal of Food Sciences and Nutrition, indicating that Fruitflow significantly lowered blood pressure in the study subjects;
The strong support which the company has received from investors in relation to subscriptions to raise further working capital for the Company, to include a PrimaryBid.com element.
The Company expects that these strongly positive announcements and initiatives will have a beneficial effect on the current and future commercial prospects for Fruitflow. The Company is well placed to maximise the commercial opportunities arising from these developments for Fruitflow and the Provexis business, and remains positive about the outlook for the business for the second half of the year and beyond.
Dawson Buck
Chairman
| Consolidated statement of comprehensive income | Unaudited | Unaudited | Audited | |
| Six months ended 30 September 2017 | six months | six months | year | |
| ended | ended | ended | ||
| 30 September | 30 September | 31 March | ||
| 2017 | 2016 | 2017 | ||
| Notes | ||||
| Revenue | 124,259 | 123,456 | 227,618 | |
| Cost of goods | (10,374) | (2,278) | (9,533) | |
| Gross profit | 113,885 | 121,178 | 218,085 | |
| Selling and distribution costs | (11,349) | (2,929) | (11,333) | |
| Research and development costs | (76,285) | (53,092) | (187,163) | |
| Administrative costs | (221,687) | (205,441) | (446,010) | |
| Underlying operating loss | (152,700) | (127,685) | (382,287) | |
| Share based payment charges | (42,736) | (12,599) | (44,134) | |
| Loss from operations | (195,436) | (140,284) | (426,421) | |
| Finance income | 209 | 667 | 890 | |
| Loss before taxation | (195,227) | (139,617) | (425,531) | |
| Taxation | 6,660 | 6,120 | 14,445 | |
| Loss and total comprehensive expense for the period | (188,567) | (133,497) | (411,086) | |
| Attributable to: | ||||
| Owners of the parent | (173,926) | (119,161) | (380,087) | |
| Non-controlling interests | (14,641) | (14,336) | (30,999) | |
| Loss and total comprehensive expense for the period | (188,567) | (133,497) | (411,086) | |
| Loss per share to owners of the parent | ||||
| Basic and diluted - pence | 3 | (0.01) | (0.01) | (0.02) |
| Consolidated statement of financial position | Unaudited | Unaudited | Audited |
| 30 September 2017 | 30 September | 30 September | 31 March |
| 2017 | 2016 | 2017 | |
| Assets | |||
| Current assets | |||
| Inventories | 22,070 | 39,705 | 32,450 |
| Trade and other receivables | 92,256 | 102,836 | 86,976 |
| Corporation tax asset | 19,980 | 18,100 | 26,425 |
| Cash and cash equivalents | 482,942 | 243,178 | 12,349 |
| Total current assets | 617,248 | 403,819 | 158,200 |
| Total assets | 617,248 | 403,819 | 158,200 |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | (72,698) | (132,879) | (133,314) |
| Total current liabilities | (72,698) | (132,879) | (133,314) |
| Net current assets | 544,550 | 270,940 | 24,886 |
| Total liabilities | (72,698) | (132,879) | (133,314) |
| Total net assets | 544,550 | 270,940 | 24,886 |
| Capital and reserves attributable to | |||
| owners of the parent company | |||
| Share capital | 1,885,238 | 1,750,818 | 1,750,818 |
| Share premium reserve | 17,179,546 | 16,648,471 | 16,648,471 |
| Warrant reserve | 26,200 | 26,200 | 26,200 |
| Merger reserve | 6,599,174 | 6,599,174 | 6,599,174 |
| Retained earnings | (24,693,179) | (24,332,598) | (24,561,989) |
| 996,979 | 692,065 | 462,674 | |
| Non-controlling interest | (452,429) | (421,125) | (437,788) |
| Total equity | 544,550 | 270,940 | 24,886 |
| Consolidated statement of cash flows | Unaudited | Unaudited | Audited |
| 30 September 2017 | six months | six months | year |
| ended | ended | ended | |
| 30 September | 30 September | 31 March | |
| 2017 | 2016 | 2017 | |
| Cash flows from operating activities | |||
| Loss after tax | (188,567) | (133,497) | (411,086) |
| Adjustments for: | |||
| Profit on sale of fixed assets | - | - | (3,000) |
| Finance income | (209) | (667) | (890) |
| Taxation | (6,660) | (6,120) | (14,445) |
| Share-based payment charge | 42,736 | 12,599 | 44,134 |
| Changes in inventories | 10,380 | (39,705) | (32,450) |
| Changes in trade and other receivables | (5,075) | (53,232) | (37,540) |
| Changes in trade and other payables | (60,616) | 19,132 | 19,567 |
| Total cash outflow from operations | (208,011) | (201,490) | (435,710) |
| Tax credits received | 13,105 | 5,408 | 5,408 |
| Total cash outflow from operating activities | (194,906) | (196,082) | (430,302) |
| Cash flow from investing activities | |||
| Proceeds from sale of fixed assets | - | - | 3,000 |
| Interest received | 4 | 624 | 1,015 |
| Total cash inflow from investing activities | 4 | 624 | 4,015 |
| Cash flow from financing activities | |||
| Proceeds from issue of share capital | 665,495 | 249,000 | 249,000 |
| Total cash inflow from financing activities | 665,495 | 249,000 | 249,000 |
| Net increase / (decrease) in cash and cash equivalents | 470,593 | 53,542 | (177,287) |
| Opening cash and cash equivalents | 12,349 | 189,636 | 189,636 |
| Closing cash and cash equivalents | 482,942 | 243,178 | 12,349 |
| Consolidated statement of changes in equity | Share | Share | Warrant | Merger | Retained | Total equity | Non- | Total |
| 30 September 2017 | capital | premium | reserve | reserve | earnings | attributable to owners of | controlling interests | equity |
| the parent | ||||||||
| At 31 March 2016 | 1,647,068 | 16,503,221 | 26,200 | 6,599,174 | (24,226,036) | 549,627 | (406,789) | 142,838 |
| Share-based charges | - | - | - | - | 12,599 | 12,599 | - | 12,599 |
| Issue of shares - placing 8 August 2016 | 93,333 | 130,667 | - | - | - | 224,000 | - | 224,000 |
| Issue of shares - placing 22 September 2016 | 10,417 | 14,583 | - | - | - | 25,000 | - | 25,000 |
| Total comprehensive expense for the period | - | - | - | - | (119,161) | (119,161) | (14,336) | (133,497) |
| At 30 September 2016 | 1,750,818 | 16,648,471 | 26,200 | 6,599,174 | (24,332,598) | 692,065 | (421,125) | 270,940 |
| Share-based charges | - | - | - | - | 31,535 | 31,535 | - | 31,535 |
| Total comprehensive expense for the period | - | - | - | - | (260,926) | (260,926) | (16,663) | (277,589) |
| At 31 March 2017 | 1,750,818 | 16,648,471 | 26,200 | 6,599,174 | (24,561,989) | 462,674 | (437,788) | 24,886 |
| Share-based charges | - | - | - | - | 42,736 | 42,736 | - | 42,736 |
| Issue of shares - placing 16 May 2017 | 70,000 | 280,000 | - | - | - | 350,000 | - | 350,000 |
| Issue of shares - placing 4 August 2017 | 64,420 | 251,075 | - | - | - | 315,495 | - | 315,495 |
| Total comprehensive expense for the period | - | - | - | - | (173,926) | (173,926) | (14,641) | (188,567) |
| At 30 September 2017 | 1,885,238 | 17,179,546 | 26,200 | 6,599,174 | (24,693,179) | 996,979 | (452,429) | 544,550 |
| Unaudited | Unaudited | Audited | |
| six months | six months | year | |
| ended | ended | ended | |
| 30 September | 30 September | 31 March | |
| 2017 | 2016 | 2017 | |
| Loss for the period attributable to owners of the parent - | 173,926 | 119,161 | 380,087 |
| Weighted average number of shares | 1,823,287,791 | 1,674,554,508 | 1,712,581,870 |
| Basic and diluted loss per share - pence | 0.01 | 0.01 | 0.02 |