REG - Provexis PLC - Half-year Report
31/12/2024 10:00
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RNS Number : 7641R Provexis PLC 31 December 2024
Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
UK Market Abuse Regulation. With the publication of this announcement, this
information is now considered to be in the public domain.
31 December 2024
Provexis plc
UNAUDITED INTERIM RESULTS FOR SIX MONTHS TO 30 SEPTEMBER 2024
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 2024.
Highlights
· Total revenue for the period £785k (six months ended 30
September 2023: £388k), a 103% increase relative to the prior half year,
including £725k from Fruitflow II SD (2023: £299k) and £60k (2023: £89k)
from Fruitflow+ Omega-3. The Company is dealing with numerous sales enquiries
from existing and new customers for further direct sales of Fruitflow II SD in
2025 and beyond.
· Provexis Ireland Limited, the Group's new Irish subsidiary
company, started trading in April 2024 from a fulfilment centre in the EU,
facilitating fast and tariff free sales of Fruitflow to customers in the EU.
· The new long term commercial partnership with dsm-firmenich
('DSM') has progressed well during the period, with continuing interest from
some significant global customers. The commercial partnership is based on: (i)
a Premix and Market-Ready Solutions supply agreement for Fruitflow II SD; and
(ii) the use of Fruitflow to confer health benefits in modulating the gut
microbiome of humans.
· In April 2024 the Company issued 45,123,732 new ordinary shares
of 0.1p each in the Company to DSM Venturing BV, in part satisfaction of an
inventory purchase; the shares were valued at £270,742.
· In December 2024, after the period end, the Company issued a
further 82,945,984 new ordinary shares of 0.1p each in the Company to DSM
Venturing BV, in satisfaction of: (i) a further inventory purchase; and (ii)
an estimated royalty liability payable to DSM for the two years ended 31
December 2024; the shares were valued at £559,885.
· The share issues to DSM Venturing BV are of direct benefit to the
Company's cash resources and net assets, and they will help the Company to
fund a wholly new production run of Fruitflow II SD which will be required in
the early months of 2025.
· Planned launch by BYHEALTH, a circa £2bn listed Chinese dietary
supplement business, of a number of Fruitflow based products in the Chinese
market has been progressing well, with potential sales volumes remaining at a
significant multiple of existing Fruitflow sales.
· BYHEALTH has been working since 2015 on an extensive regulatory
submission to the Chinese State Administration for Market Regulation ('SAMR')
for Fruitflow, seeking to establish a new permitted health function claim for
foods such as Fruitflow that can demonstrate an anti-platelet effect.
· In August 2023 BYHEALTH submitted: i) the first application under
the new SAMR Implementation Rules, seeking to obtain a new permitted health
function claim for foods such as Fruitflow which help to 'maintain normal
platelet aggregation function and benefit blood flow health'; and ii) some
related product registration applications. BYHEALTH stated publicly that it
has been working on the project since 2015, with 'tens of millions of funds'
(RMB) invested by BYHEALTH in the research and development work. The Company
and BYHEALTH remain in close and constructive dialogue, at a high level.
· Underlying operating loss* for the period of £98k (six months
ended 30 September 2023: £208k).
· Total cash inflow from operating activities for the period of
£17k (six months ended 30 September 2023: total cash outflow from operating
activities for the period of £61k).
· Cash of £478k at 30 September 2024 (30 September 2023: £319k).
*Loss from operations, adjusted for (i) share-based payments of £49k (2023:
£61k), and (ii) R&D tax relief: receivable tax credit of £Nil (2023:
£8k).
Provexis Chairman Dawson Buck and CEO Ian Ford commented:
'The Company is pleased to report on another strong period of progress, to
include £785k of revenue in the period from sales of the Company's Fruitflow
II SD ingredient and its consumer product Fruitflow+ Omega-3.
Total revenue increased by 103% (relative to the prior 6 months ended 30
September 2023), aided by the group's new Provexis Ireland business which
started trading in April 2024.
Sales of Fruitflow II SD in the half year from 1 April 2024 to 30 September
2024 were more than 11% ahead of sales of Fruitflow II SD for the full year
ended 31 March 2024.
The Company is dealing with numerous sales enquiries from existing and new
customers for further direct sales of Fruitflow in 2025 and beyond.
The new long term commercial partnership with dsm-firmenich ('DSM') has
progressed well, with continuing interest from some significant global
customers. The commercial partnership is based on: (i) a Premix and
Market-Ready Solutions supply agreement for Fruitflow II SD; and (ii) the use
of Fruitflow to confer health benefits in modulating the gut microbiome of
humans.
Provexis has been working with BYHEALTH for more than eight years to support
the planned launch of a number of Fruitflow based products in the Chinese
market. Clinical studies conducted in China are typically required to obtain
the necessary regulatory clearances in China, and a significant investment in
eight separate Fruitflow studies has been undertaken at BYHEALTH's expense.
Completed studies have shown excellent results in use for Fruitflow, and they
provide strong evidence for the efficacy of Fruitflow on platelet function.
In August 2023 the Company reported that BYHEALTH had submitted: i) the first
application for a new permitted health function claim and ii) some related
product registration applications. The significance of these major
developments for Fruitflow in China is further outlined here
www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods#
(http://www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods)
. BYHEALTH has noted that it has been working on the project since 2015, with
'tens of millions of funds' (RMB) invested by BYHEALTH in the research and
development work. The Company and BYHEALTH remain in close and constructive
dialogue, at a high level.
Fruitflow is well placed to play an important role in the Chinese
cardiovascular health market under the permitted health function claim
legislation, and we look forward to working closely with BYHEALTH seeking to
maximise the commercial success of this agreement for the benefit of both
companies.
The Company has developed a strong, long lasting and wide-ranging patent
portfolio for Fruitflow, and it owns outright four existing patent families
for Fruitflow. The new microbiome patent application takes this to a potential
total of five patent families, with potential patent protection now running
out to 2042. The four existing patent families have a truly global footprint,
and the Company also holds other valuable intellectual property and trade
secrets for Fruitflow. The intellectual property for Fruitflow is of
fundamental importance to the Company and its current and future commercial
partners, to include DSM and BYHEALTH, and it underpins the numerous
commercial opportunities which the Company and its partners are pursuing for
Fruitflow.
The Company expects that: (i) the significant changes to the sales and supply
chain structure for Fruitflow from January 2023 and the new Provexis Ireland
operation, (ii) the gut microbiome patent application and related long-term
partnership with DSM and (iii) the recent BYHEALTH regulatory developments in
China will have a strongly beneficial effect on the current and future
commercial prospects for Fruitflow and the business worldwide.
The Company would like to thank its customers and shareholders for their
continued support, and the Board remains strongly positive about the outlook
for Fruitflow and the Provexis business for the coming year and beyond.'
For further information please contact:
Provexis plc Tel: 07490 391888
Ian Ford, CEO enquiries@provexis.com
Dawson Buck, Non-executive Chairman
Allenby Capital Limited (Nominated Adviser and Broker) Tel: 020 3328 5656
Nick Naylor / Liz Kirchner / Lauren Wright
Chairman and CEO's statement
The Company has had an active and successful first six months of the year, and
it has made further progress with the commercial prospects of its innovative,
patented Fruitflow® heart-health ingredient.
DSM Nutritional Products - new agreements for Fruitflow®
Provexis entered into a long-term Alliance Agreement with DSM in 2010 to
commercialise Fruitflow through sales as an ingredient to brand owners in the
food, beverage and dietary supplement categories, with a contractual term for
the Agreement which ran to 31 December 2022.
More than 100 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. An increasing number of
commercial projects have been initiated by DSM with prospective customers in
recent years, including some prospective customers which are part of global
businesses, and the total projected annual sales value of the prospective
sales pipeline for Fruitflow, which is now shared across Provexis and DSM,
continues to stand at a substantial multiple of existing annual sales.
In June 2022 Provexis announced it had secured two new agreements with DSM for
Fruitflow, to replace the Alliance Agreement: (i) a Transfer of Business
agreement and (ii) a Premix and Market-Ready Solutions supply agreement, which
both took effect on 1 January 2023.
The Company also announced the filing of a new patent application in June 2022
relating to the use of Fruitflow to confer health benefits in modulating the
gut microbiome of humans. This followed the completion of a successful human
study, the results of which strongly support the use of Fruitflow for
modulating gut microbiota to confer a number of health benefits, to include a
reduction in TMAO (trimethylamine-n-oxide).
Under the terms of the two new agreements with DSM, and the June 2022 patent
application:
· DSM's existing and prospective customers for Fruitflow as a
straight ingredient (not a Premix or Market-Ready solution) transferred to
become direct customers of Provexis from 1 January 2023, and the Company took
over the wholly outsourced supply chain / production process for Fruitflow
from DSM at that time.
· A royalty is payable to DSM on the gross profits generated from
Fruitflow sales to customers transferred from DSM over the first four years of
the Transfer of Business agreement.
· From 1 January 2023 the net profit accruing to Provexis on sales
of Fruitflow in the calendar year - on a pro-forma basis, assuming like for
like sales and margins - would be materially ahead of the net share of the
profit that would have accrued to Provexis with like for like sales and
margins under the 2010 Alliance Agreement. On the same pro-forma basis,
assuming like for like sales and margins, the net profit accruing to Provexis
would further increase in each of the subsequent three calendar years.
· A new partnership was agreed with DSM in 2022 relating to the gut
microbiome patent, giving DSM preferential access to the use, marketing, and
sale of Fruitflow based products which are based on the patent, subject to
certain milestones which have been agreed between the parties. In addition to
the patent's core claim for Fruitflow, for modulating gut microbiota to confer
a number of health benefits, the patent also sets out some potential new uses
for Fruitflow in treating a wide variety of human health conditions, beyond
Fruitflow's existing established use in heart-health. The global digestive
health market size was US$38 billion in 2019 and it is projected to grow to
US$72 billion in 2027 at a high single-digit CAGR in the 2020-2027 period (see
www.fortunebusinessinsights.com/digestive-health-market-104750
(http://www.fortunebusinessinsights.com/digestive-health-market-104750) ).
· The results of the successful gut microbiome human study have
been submitted for publication in a peer reviewed scientific journal
www.sciencedirect.com/science/article/pii/S0022316622131275
(http://www.sciencedirect.com/science/article/pii/S0022316622131275) .
· DSM conducted a strong launch of the new microbiome technology in
January 2023
(www.dsm.com/human-nutrition/en/talking-nutrition/press-releases/2023-01-20-new-study-reveals-dsms-fruitflow-activates-gut-heart.html
(http://www.dsm.com/human-nutrition/en/talking-nutrition/press-releases/2023-01-20-new-study-reveals-dsms-fruitflow-activates-gut-heart.html)
), with widespread trade press coverage. The technology has seen strong and
ongoing interest from some significant global customers.
· Provexis will sell Fruitflow as a straight ingredient to DSM
exclusively for use in DSM's Premix Solutions and Market-Ready Solutions
businesses, with DSM then looking to sell the resulting Premix and
Market-Ready Solutions products on to its customers. DSM's Premix and
Market-Ready Solutions businesses are part of DSM's Customized Solutions
business which also offers personalised nutrition solutions to customers, a
rapidly developing growth area. The Company looks forward to supporting DSM
and its Premix and Market-Ready Solutions customers for many years to come.
· A number of DSM's customers for Fruitflow which have been
transferred to Provexis have been Fruitflow customers for several years,
including some distributor customers which sell Fruitflow on to third parties.
The Company has been progressing these sales relationships since the Transfer
of Business agreement was announced in June 2022, and it has been able to
generate new customers for Fruitflow outside the royalty arrangements with
DSM, in addition to its existing supply and distribution agreement for
Fruitflow with BYHEALTH.
From 1 January 2023 the Group's sales channels for Fruitflow therefore
include:
1. Former DSM customers for Fruitflow;
2. DSM and its Premix and Market-Ready Solutions businesses, which will
leverage the resources and relationships of DSM in some of the major global
markets, and seek to commercialise the gut microbiome patent;
3. New customers for Fruitflow as a straight ingredient;
4. BYHEALTH and its customers, through the Company's long-term supply and
distribution agreement for Fruitflow with BYHEALTH; and
5. The Group's Fruitflow+ Omega-3 dietary supplement product which is sold
direct to consumers, the Group will also look to serve its Chinese
Cross-Border e-commerce distributor for this product in China.
The Company is in discussions with a number of third parties seeking to
progress new sales and distribution opportunities for Fruitflow, and it can be
contacted for all Fruitflow sales enquiries by email at
fruitflow@provexis.com.
Fruitflow® transfer arrangements from 1 January 2023, and trading for the
period
The customer transfer process from DSM to Provexis has progressed well, with
sales commencing to customers for Fruitflow II SD (Fruitflow II SD is
Fruitflow as an ingredient, in Spray Dried powder form) in February 2023, when
the first batch of Fruitflow inventory was transferred from DSM's fulfilment
centre in The Netherlands to the Company's outsourced fulfilment centre in the
UK.
Revenue Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£ £ £
Fruitflow II SD ingredient 724,817 298,879 651,845
Fruitflow+ Omega-3 60,531 88,655 150,119
785,348 387,534 801,964
Total revenue during the six months ended 30 September 2024 increased by 103%
year on year (relative to the prior six months ended 30 September 2023),
primarily due to an increase of £426k (143%) in sales of Fruitflow II SD in
the period to £725k (2023: £299k), aided by the group's new Provexis Ireland
business which started trading in April 2024.
Sales of Fruitflow II SD in the half year from 1 April 2024 to 30 September
2024 were more than 11% ahead of sales of Fruitflow II SD for the financial
year ended 31 March 2024.
Loss from operations for the period was £148k (2023: £276k), to include
non-cash share-based payments of £49k (2023: £61k).
Underlying operating loss for the period (being the loss from operations,
adjusted for (i) share-based payments of £49k (2023: £61k), and (ii) R&D
tax relief: receivable tax credit of £Nil (2023: £8k)) was £98k (2023:
£208k), an improvement of £109k year on year, aided by increased sales.
In April 2024 the Company issued 45,123,732 new ordinary shares of 0.1p each
in the Company to DSM Venturing BV, a significant existing shareholder in
Provexis, in part satisfaction of an inventory purchase; the shares were
valued at £270,742 on 5 April 2024, the date of admission.
In December 2024, after the period end, the Company issued 82,945,984 new
ordinary shares of 0.1p each in the Company to DSM Venturing BV, in
satisfaction of: (i) a further inventory purchase, for the final part of DSM's
stocks of Fruitflow; and (ii) an estimated royalty liability payable to DSM
for the two years ended 31 December 2024; the shares were valued at £559,885
on 24 December 2024, the date of admission.
The share issues to DSM Venturing BV are of direct benefit to the Company's
cash resources and net assets, and they will help the Company to fund a wholly
new production run of Fruitflow II SD which will be required in the early
months of 2025.
A royalty is payable to DSM on the gross profits generated from Fruitflow
sales to customers transferred from DSM over the first four years of the
Transfer of Business agreement, entered into by the Company in June 2022. The
six months ended 30 September 2024 included six months of the royalty at the
second-year rate to 31 December 2024. Royalties payable to DSM are included in
cost of goods. The terms of the Transfer of Business agreement otherwise
remain strictly confidential between the Company and DSM.
Fruitflow II SD is currently manufactured in the EU. Rules of origin under the
post BREXIT trade deal announced in December 2020 have meant that shipments of
Fruitflow II SD from a UK fulfilment centre for re-export and sale to EU
customers are at potential risk of additional tariffs on re-entry into the EU.
Consequently, the Company setup a new Irish subsidiary company, Provexis
Ireland Limited, which started selling Fruitflow to EU customers in April 2024
via an outsourced fulfilment centre in the EU. The Company continues to use an
outsourced fulfilment centre in the UK for its non-EU customers.
BYHEALTH Co., Ltd.
In November 2021 the Company announced it had entered into a supply and
distribution agreement (the 'BYHEALTH Agreement') for Fruitflow with BYHEALTH,
a listed Chinese dietary supplement business with a market capitalisation of
approximately £2 billion.
The BYHEALTH Agreement, which followed the Company's extensive work with
BYHEALTH over the last eight years, took full effect from 1 January 2023 and
it gives BYHEALTH exclusive supply and distribution rights to commercialise
Fruitflow in Mainland China, Hong Kong, Macau, Taiwan and Australia (the
'Territories').
Under the BYHEALTH Agreement Provexis is responsible for the manufacture,
supply and sale of Fruitflow to BYHEALTH, and BYHEALTH is responsible for the
manufacture, marketing, and sale of Fruitflow based functional food and
dietary supplement finished products in the Territories, through BYHEALTH's
extensive sales network. BYHEALTH also has exclusive rights to act as the
distributor of Fruitflow as an ingredient in the Territories.
Provexis and BYHEALTH will seek to collaborate on research and development
projects which may result in the development and approval of Fruitflow as a
drug, for potential sale and distribution in the Territories.
Regulatory progress in China - new permitted health function claim
Provexis has been working with BYHEALTH for more than eight years to support
the planned launch of a number of Fruitflow based products in the Chinese
market. Clinical studies conducted in China are typically required to obtain
the necessary regulatory clearances in China, and a significant investment in
eight separate Fruitflow studies has been undertaken at BYHEALTH's expense.
Completed studies have shown excellent results in use for Fruitflow, and they
provide strong evidence for the efficacy of Fruitflow on platelet function.
The Chinese regulatory system for functional health food ingredients, such as
Fruitflow, is governed by the State Administration for Market Regulation (the
'SAMR') and it is based on a defined list of permitted health function claims
which brand owners are permitted to use on product labels.
The SAMR provides the possibility of adding new health function claims to the
list, with claims needing to demonstrate a relationship between a food or
nutrient and a consequent health improvement, subject to evaluation and
verification by the SAMR.
SAMR certified functional health foods are required to use a blue cap / blue
hat logo on their product packaging, which identifies products as approved
functional health foods in China.
BYHEALTH has been working on an extensive regulatory submission to the SAMR
seeking to establish a new permitted health function claim for foods such as
Fruitflow that can demonstrate an anti-platelet effect, inhibiting platelet
function and conferring beneficial health effects.
On 28 August 2023 the SAMR announced in China that the 'Implementation Rules
for Health Food New Functions and Product Technology Evaluation' (the
'Implementation Rules') had been agreed by the SAMR in June 2023, with these
new rules to take effect from 28 August 2023.
On 29 August 2023 it was announced in China that BYHEALTH had submitted: i)
the first application under the Implementation Rules, seeking to obtain a new
permitted health function claim for foods such as Fruitflow which help to
'maintain normal platelet aggregation function and benefit blood flow health';
and ii) some related product registration applications.
The significance of these major developments for Fruitflow in China is further
outlined here
www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods#
(http://www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods)
. BYHEALTH has noted that it has been working on the project since 2015, with
'tens of millions of funds' (RMB) invested by BYHEALTH in the research and
development work.
The Company has previously stated that if BYHEALTH is successful in obtaining
a new permitted health function claim in China for functional health foods,
such as Fruitflow, that can demonstrate an anti-platelet effect, it is
expected that this would result in some significant orders for Fruitflow,
potentially at a multiple of current total sales values. The Company and
BYHEALTH remain in close and constructive dialogue, at a high level.
Fruitflow+ dietary supplement products
Fruitflow+ Omega-3 is available to purchase from the Company's subscription
focussed e-commerce website www.fruitflowplus.com
(http://www.fruitflowplus.com) , and from Amazon UK.
The Fruitflow+ Omega-3 business reported sales in the period of £61k (6
months ended 30 September 2023: £85k), reflecting largely unchanged
subscriber numbers on the www.fruitflowplus.com website. The prior year period
for the six months ended 30 September 2023 included a further order from the
Company's Chinese Cross-Border e-commerce ('CBEC') channel. The CBEC
distribution agreement in China is separate but wholly complementary to the
Company's work with BYHEALTH, with the CBEC regulations enabling sales of
Fruitflow+ Omega-3 in China now, prior to the health function claim which
BYHEALTH is seeking to secure.
Fruitflow+ Omega-3 has a social media presence on Facebook
www.facebook.com/FruitflowPlus (http://www.facebook.com/FruitflowPlus) ,
Instagram www.instagram.com/fruitflowplus
(http://www.instagram.com/fruitflowplus) and Twitter / X
https://twitter.com/FruitflowPlus (https://twitter.com/FruitflowPlus) .
The Company is seeking to expand further its commercial activities with
Fruitflow+ Omega-3 and other Fruitflow+ combination products, and it is
currently in dialogue with some other potential international direct selling
customers.
Intellectual property
The Company is responsible for filing and maintaining patents and trade marks
for Fruitflow, and patent coverage for Fruitflow now includes the following
patent families which are all owned outright by Provexis:
Patent family Developments in the period from
Sep-24 to Dec-24
Improved Fruitflow / Fruit Extracts
Improved Fruitflow / Fruit Extracts, with patents granted by the European Patent applications (seeking additional patent protection) are pending in
Patent Office in January 2017, September 2020 and April 2023. Europe, Hong Kong and the USA.
Patents have been granted in thirteen other major territories to include China
and USA; and applications are at a late stage of progression in a further four
global territories, with potential patent protection out to November 2029.
Antihypertensive (blood pressure lowering) effects
This patent was originally developed in collaboration with the University of Patent applications are pending in China and Japan.
Oslo, and it has now been granted for Fruitflow in Europe, the US and four
other territories. Patent applications are being progressed in China and
Japan, with potential patent protection out to April 2033.
In August 2020 the Company announced it had agreed to purchase the background
and joint foreground blood pressure lowering IP owned by Inven2 AS, the
technology transfer office at the University of Oslo, and Provexis now owns
these important patents outright, with the licensing option originally held by
Inven2 having been cancelled.
Fruitflow with nitrates in mitigating exercise-induced inflammation and for
promoting recovery from intense exercise
Patents have been granted around Europe and in the US, Australia, Brazil,
Canada, China, Hong Kong, India, Israel, Japan, South Korea, the Philippines,
New Zealand and Mexico.
Patent applications are pending in Europe, Hong Kong and the USA.
Further patent protection is being sought in three territories, with potential
patent protection out to December 2033.
Fruitflow for air pollution
The use of Fruitflow in protecting against the adverse effects of air Patent applications are pending in nine global territories.
pollution on the body's cardiovascular system.
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.
US, Australian, Brazilian, Indonesian, Israeli, Japanese Malaysian and
Taiwanese patents have been secured and there are pending applications in nine
jurisdictions (including the US where a further application has been filed)
which extends potential patent protection for Fruitflow out to November 2037.
Fruitflow to confer health benefits in modulating the gut microbiome of humans
The Company filed a patent application in June 2022 relating to the use of
Fruitflow to confer health benefits in modulating the gut microbiome of
humans. This followed the completion of a successful human study, the results Patent applications have been filed in 15 global territories.
of which strongly support the use of Fruitflow for modulating gut microbiota
to confer a number of health benefits.
The international procedure concluded in December 2024 and applications have
now been filed in 15 important territories (including Europe, China and the
USA), with potential patent protection out to June 2043.
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 and / or significant growth phase, it may need to raise funds in the
future to meets its working capital requirements.
The Company has needed to hold Fruitflow II SD in stock from 1 January 2023
onwards, to sell to new and existing customers, and the Company therefore
agreed to purchase from DSM the remaining stocks of Fruitflow which DSM held
on 31 December 2022.
In April 2024 the Company issued 45,123,732 new ordinary shares of 0.1p each
in the Company to DSM Venturing BV, a significant existing shareholder in
Provexis, in part satisfaction of an inventory purchase; the shares were
valued at £270,742.
In December 2024, after the period end, the Company issued 82,945,984 new
ordinary shares of 0.1p each in the Company to DSM Venturing BV, in
satisfaction of: (i) a further inventory purchase for the final part of DSM's
stocks of Fruitflow; and (ii) an estimated royalty liability payable to DSM
for the two years ended 31 December 2024; the shares were valued at £559,885.
The share issues to DSM Venturing BV are of direct benefit to the Company's
cash resources and net assets, and they will help the Company to fund a wholly
new production run of Fruitflow II SD which will be required in the early
months of 2025.
The size / volume and therefore cost of a wholly new production run of
Fruitflow II SD will be determined with reference to the Company's best
estimate of demand for Fruitflow over the next 24 months, and the Company is
currently in dialogue with its existing and prospective customers for
Fruitflow II SD, seeking their assistance as best possible with this volume
estimate. The forecasting process involves a considerable degree of
uncertainty, subject to existing and new customers' changing plans,
requirements and regulatory progress, and inevitably there is a wide range of
possible outcomes in terms of overall forecast demand.
The production process for Fruitflow II SD takes place in two stages, which
need to be booked with its outsourced supply chain partners in advance of
production taking place. The Company is in close dialogue with all key parties
in its supply chain for Fruitflow, to include: (i) maximum capacity planning;
(ii) production cost and other efficiencies; and (iii) the potential
requirement for much larger batches of Fruitflow II SD to be made at
relatively short notice.
In the coming months, based on its current level of cash, the Group may need
to raise further equity finance or potentially new loan finance, subject in
large part to the size / volume of new production runs of Fruitflow II SD
which the Company may need to commission, with larger production runs
inevitably requiring more cash at the outset.
Considering the success of previous fundraisings and the current performance
of the business, the Directors have a reasonable expectation of raising
sufficient additional equity capital or new loan finance to continue in
operational existence for the foreseeable future. Subject to the outcome of
ongoing negotiations with a third party, the Company might also be able to
hold some of its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale.
For these reasons the Directors are of the opinion that at 31 December 2024,
the Group and Company's liquidity and capital resources are adequate to
deliver the current strategic objectives and 2025 business plan and that the
Group and Company remain a going concern.
Outlook
The Company is pleased to report on another strong period of progress, to
include £785k of revenue in the period from sales of the Company's Fruitflow
II SD ingredient and its consumer product Fruitflow+ Omega-3.
Total revenue increased by 103% (relative to the prior 6 months ended 30
September 2023), aided by the group's new Provexis Ireland business which
started trading in April 2024.
Sales of Fruitflow II SD in the half year from 1 April 2024 to 30 September
2024 were more than 11% ahead of sales of Fruitflow II SD for the full year
ended 31 March 2024.
The Company is dealing with numerous sales enquiries from existing and new
customers for further direct sales of Fruitflow in 2025 and beyond.
The new long term commercial partnership with dsm-firmenich ('DSM') has
progressed well, with continuing interest from some significant global
customers. The commercial partnership is based on: (i) a Premix and
Market-Ready Solutions supply agreement for Fruitflow II SD; and (ii) the use
of Fruitflow to confer health benefits in modulating the gut microbiome of
humans.
Provexis has been working with BYHEALTH for more than eight years to support
the planned launch of a number of Fruitflow based products in the Chinese
market. Clinical studies conducted in China are typically required to obtain
the necessary regulatory clearances in China, and a significant investment in
eight separate Fruitflow studies has been undertaken at BYHEALTH's expense.
Completed studies have shown excellent results in use for Fruitflow, and they
provide strong evidence for the efficacy of Fruitflow on platelet function.
In August 2023 the Company reported that BYHEALTH had submitted: i) the first
application for a new permitted health function claim and ii) some related
product registration applications. The significance of these major
developments for Fruitflow in China is further outlined here
www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods#
(http://www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods)
. BYHEALTH has noted that it has been working on the project since 2015, with
'tens of millions of funds' (RMB) invested by BYHEALTH in the research and
development work. The Company and BYHEALTH remain in close and constructive
dialogue, at a high level.
Fruitflow is well placed to play an important role in the Chinese
cardiovascular health market under the permitted health function claim
legislation, and we look forward to working closely with BYHEALTH seeking to
maximise the commercial success of this agreement for the benefit of both
companies.
The Company has developed a strong, long lasting and wide-ranging patent
portfolio for Fruitflow, and it owns outright four existing patent families
for Fruitflow. The new microbiome patent application takes this to a potential
total of five patent families, with potential patent protection now running
out to 2042. The four existing patent families have a truly global footprint,
and the Company also holds other valuable intellectual property and trade
secrets for Fruitflow. The intellectual property for Fruitflow is of
fundamental importance to the Company and its current and future commercial
partners, to include DSM and BYHEALTH, and it underpins the numerous
commercial opportunities which the Company and its partners are pursuing for
Fruitflow.
The Company expects that: (i) the significant changes to the sales and supply
chain structure for Fruitflow from January 2023 and the new Provexis Ireland
operation, (ii) the gut microbiome patent application and related long-term
partnership with DSM and (iii) the recent BYHEALTH regulatory developments in
China will have a strongly beneficial effect on the current and future
commercial prospects for Fruitflow and the business worldwide.
The Company would like to thank its customers and shareholders for their
continued support, and the Board remains strongly positive about the outlook
for Fruitflow and the Provexis business for the coming year and beyond.
Dawson
Buck Ian
Ford
Chairman CEO
Consolidated statement of comprehensive income Unaudited Unaudited Audited
Six months ended 30 September 2024 six months six months year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£ £ £
Notes
Revenue 785,348 387,534 801,964
Cost of goods (512,000) (249,870) (518,169)
Gross profit 273,348 137,664 283,795
Selling and distribution costs (32,811) (32,744) (65,706)
Research and development costs (123,716) (140,225) (301,722)
Administrative costs - share based payment charges (49,207) (60,526) (121,051)
Administrative costs - other (215,153) (180,504) (398,908)
Loss from operations (147,539) (276,335) (603,592)
Finance income 890 1,029 1,594
Loss before taxation (146,649) (275,306) (601,998)
Taxation (12,500) 8,200 13,880
Loss and total comprehensive loss for the period (159,149) (267,106) (588,118)
Attributable to:
Owners of the parent (159,149) (267,106) (586,243)
Non-controlling interest - - (1,875)
Loss and total comprehensive loss for the period (159,149) (267,106) (588,118)
Loss per share to owners of the parent
Basic and diluted - pence 3 (0.01) (0.01) (0.03)
Consolidated statement of financial position Unaudited Unaudited Audited
30 September 2024 30 September 30 September 31 March
2024 2023 2024
Notes £ £ £
Assets
Current assets
Inventories 152,755 145,863 136,520
Trade and other receivables 144,760 264,410 125,479
Corporation tax asset 46,680 41,000 46,680
Cash and cash equivalents 478,199 318,819 189,357
Total current assets 822,394 770,092 498,036
Total assets 822,394 770,092 498,036
Liabilities
Current liabilities
Trade and other payables (471,006) (319,017) (307,448)
Total current liabilities (471,006) (319,017) (307,448)
Total liabilities (471,006) (319,017) (307,448)
Total net assets 351,388 451,075 190,588
Capital and reserves attributable to
owners of the parent company
Share capital 2,262,945 2,217,822 2,217,822
Share premium reserve 18,928,940 18,703,321 18,703,321
Merger reserve 6,599,174 6,599,174 6,599,174
Retained earnings (26,905,922) (26,537,368) (26,795,980)
885,137 982,949 724,337
Non-controlling interest (533,749) (531,874) (533,749)
Total equity 351,388 451,075 190,588
Consolidated statement of cash flows Unaudited Unaudited Audited
30 September 2024 six months six months year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£ £ £
Cash flows from operating activities
Loss after tax (159,149) (267,106) (588,118)
Adjustments for:
Finance income (890) (1,029) (1,594)
Taxation charge / (Tax credit receivable) 12,500 (8,200) (13,880)
Share-based payment charge - share options 49,207 60,526 121,051
Changes in inventories (16,235) 181,934 191,277
Changes in trade and other receivables (19,281) (203,436) (64,505)
Changes in trade and other payables 163,558 130,680 119,111
Net cash flow from operations 29,710 (106,631) (236,658)
Taxation (12,500) 45,160 45,160
Total cash flow from operating activities 17,210 (61,471) (191,498)
Cash flow from investing activities
Interest received 890 1,169 1,734
Total cash flow from investing activities 890 1,169 1,734
Cash flow from financing activities
Proceeds from issue of share capital - purchase of inventory 270,742 - -
Total cash flow from financing activities 270,742 - -
Net change in cash and cash equivalents 288,842 (60,302) (189,764)
Opening cash and cash equivalents 189,357 379,121 379,121
Closing cash and cash equivalents 478,199 318,819 189,357
Consolidated statement of changes in equity Share Share Merger Retained Total equity Non- Total
30 September 2024 capital premium reserve earnings attributable to owners of controlling interests equity
the parent
£ £ £ £ £ £ £
At 31 March 2023 2,217,822 18,703,321 6,599,174 (26,330,788) 1,189,529 (531,874) 657,655
Share-based charges - share options - - - 60,526 60,526 - 60,526
Total comprehensive expense for the period - - - (267,106) (267,106) - (267,106)
At 30 September 2023 2,217,822 18,703,321 6,599,174 (26,537,368) 982,949 (531,874) 451,075
Share-based charges - share options - - - 60,525 60,525 - 60,525
Total comprehensive expense for the period - - - (319,137) (319,137) (1,875) (321,012)
At 31 March 2024 2,217,822 18,703,321 6,599,174 (26,795,980) 724,337 (533,749) 190,588
Share-based charges - share options - - - 49,207 49,207 - 49,207
Issue of shares - inventory purchased 5 April 2024 45,123 225,619 - - 270,742 - 270,742
Total comprehensive expense for the period - - - (159,149) (159,149) - (159,149)
At 30 September 2024 2,262,945 18,928,940 6,599,174 (26,905,922) 885,137 (533,749) 351,388
1. General information, basis of preparation and accounting policies
General information
Provexis plc is a public limited company incorporated and domiciled in the
United Kingdom (registration number 05102907). The address of the registered
office is 2 Blagrave Street, Reading, Berkshire RG1 1AZ, UK.
The main activities of the Group are those of developing, licensing and
selling the proprietary, scientifically-proven Fruitflow® heart-health
functional food ingredient.
Basis of preparation
This condensed financial information has been prepared using accounting
policies consistent with International Financial Reporting Standards in the
European Union (IFRS).
The same accounting policies, presentation and methods of computation are
followed in this condensed financial information as are applied in the Group's
latest annual audited financial statements, except as set out below. While the
financial figures included in this half-yearly report have been computed in
accordance with IFRS applicable to interim periods, this half-yearly report
does not contain sufficient information to constitute an interim financial
report as that term is defined in IAS 34.
Use of non-GAAP profit measure - underlying operating profit
The directors believe that the operating loss before share based payments
measure provides additional useful information for shareholders on underlying
trends and performance. This measure is used for internal performance
analysis. Underlying operating loss is not defined by IFRS and therefore may
not be directly comparable with other companies' adjusted profit measures. It
is not intended to be a substitute for, or superior to IFRS measurements of
profit.
The interim financial information does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006 and has been neither audited
nor reviewed by the Company's auditors Shipleys LLP pursuant to guidance
issued by the Auditing Practices Board.
The results for the year ended 31 March 2024 are not statutory accounts. The
statutory accounts for the last year ended 31 March 2024 were approved by the
Board on 30 September 2024 and are filed at Companies House. The report of the
auditors on those accounts was unqualified, contained an emphasis of matter
with respect to going concern, and did not contain a statement under section
498 of the Companies Act 2006.
The interim report for the six months ended 30 September 2024 can be
downloaded from the Company's website www.provexis.com. Further copies of the
interim report and copies of the 2024 annual report and accounts can be
obtained by writing to the Company Secretary, Provexis plc, 2 Blagrave Street,
Reading, Berkshire RG1 1AZ, UK.
This announcement was approved by the Board of Provexis plc for release on 31
December 2024.
Going concern
Under the terms of the DSM Transfer of Business agreement which was announced
in June 2022, DSM's existing and prospective pipeline customers for Fruitflow
II SD as a straight ingredient (not a DSM Premix or DSM Market-Ready solution)
transferred to become direct customers of Provexis WEF 1 January 2023.
The Company has needed to hold Fruitflow II SD in stock from 1 January 2023
onwards, to sell to new and existing customers, and the Company therefore
agreed to purchase from DSM the remaining stocks of Fruitflow which DSM held
on 31 December 2022.
In April 2024 the Company issued 45,123,732 new ordinary shares of 0.1p each
in the Company to DSM Venturing BV, a significant existing shareholder in
Provexis, in part satisfaction of an inventory purchase; the shares were
valued at £270,742 on 5 April 2024, the date of admission.
In December 2024 the Company issued 82,945,984 new ordinary shares of 0.1p
each in the Company to DSM Venturing BV, in satisfaction of (i) a further
inventory purchase for the final part of DSM's stocks of Fruitflow, and (ii)
an estimated royalty liability payable to DSM for the two years ended 31
December 2024; the shares were valued at £559,885 on 24 December 2024, the
date of admission.
The share issues to DSM Venturing BV for (i) the inventory purchases and (ii)
the settlement of an estimated royalty liability are of direct benefit to the
Company's cash resources and net assets, and they will help the Company to
fund a wholly new production run of Fruitflow II SD which will be required in
the early months of 2025.
The size / volume and therefore cost of a wholly new production run of
Fruitflow II SD will be determined with reference to the Company's best
estimate of demand for Fruitflow over the next 24 months, and the Company is
currently in dialogue with its existing and prospective customers for
Fruitflow II SD, seeking their assistance as best possible with this volume
estimate. The forecasting process involves a considerable degree of
uncertainty, subject to existing and new customers' changing plans,
requirements and regulatory progress, and inevitably there is a wide range of
possible outcomes in terms of overall forecast demand.
The production process for Fruitflow II SD takes place in two stages, which
need to be booked with its outsourced supply chain partners in advance of
production taking place. The Company is in close dialogue with all key parties
in its supply chain for Fruitflow, to include (i) maximum capacity planning,
(ii) production cost and other efficiencies and (iii) the potential
requirement for much larger batches of Fruitflow II SD to be made at
relatively short notice.
In the coming months, based on its current level of cash, the Group may need
to raise further equity finance or potentially new loan finance, subject in
large part to the size / volume of new production runs of Fruitflow II SD
which the Company may need to commission, with larger production runs
inevitably requiring more cash at the outset.
Considering the success of previous fundraisings and the current performance
of the business, the Directors have a reasonable expectation of raising
sufficient additional equity capital or new loan finance to continue in
operational existence for the foreseeable future. Subject to the outcome of
ongoing negotiations with a third party, the Company might also be able to
hold some of its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale.
For these reasons the Directors are of the opinion that at 31 December 2024,
the Group and Company's liquidity and capital resources are adequate to
deliver the current strategic objectives and 2025 business plan and that the
Group and Company remain a going concern.
Accounting policies
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 March 2024, as described in those
annual financial statements.
2. Segmental reporting
The Group's operating segments are determined based on the Group's internal
reporting to the Chief Operating Decision Maker (CODM). The CODM has been
determined to be the Board of Directors as it is primarily responsible for the
allocation of resources to segments and the assessment of performance of the
segments. The performance of operating segments is assessed on revenue.
The CODM uses revenue as the key measure of the segments' results as it
reflects the segments' underlying trading performance for the financial period
under evaluation. Revenue is reported separately to the CODM and all other
reports are prepared as a single business unit.
Revenue Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£ £ £
Fruitflow II SD ingredient 724,817 298,879 651,845
Fruitflow+ Omega-3 60,531 88,655 150,119
785,348 387,534 801,964
3. Earnings per share
Basic earnings per share amounts are calculated by dividing the profit
attributable to owners of the parent by the weighted average number of
ordinary shares in issue during the period.
The loss attributable to equity holders of the Company for the purpose of
calculating the fully diluted loss per share is identical to that used for
calculating the basic loss per share. The exercise of share options would have
the effect of reducing the loss per share and is therefore anti-dilutive under
the terms of IAS 33 'Earnings per Share'.
Basic and diluted loss per share amounts are in respect of all activities.
There were 178,500,000 share options in issue at 30 September 2024 (2023:
188,500,000) that are currently anti-dilutive and have therefore been excluded
from the calculations of the diluted loss per share.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
Loss for the period attributable 159,149 267,106 586,243
to owners of the parent - £
Weighted average number of shares 2,261,712,366 2,217,821,523 2,217,821,523
Basic and diluted loss per share - pence 0.01 0.01 0.03
4. Share capital and Total Voting Rights
At 31 December 2024, the date of this announcement, the Company's issued share
capital comprises 2,345,891,239 ordinary shares of 0.1 pence each, each with
equal voting rights. The Company does not hold any shares in treasury and
therefore the total number of ordinary shares and voting rights in the Company
is 2,345,891,239.
The above figure may be used by shareholders in the Company as the denominator
for the calculations by which they will determine if they are required to
notify their interest in, or change to their interest in, the share capital of
the Company under the FCA's Disclosure Guidance and Transparency Rules.
5. Cautionary statement
This document contains certain forward-looking statements with respect to the
financial condition, results and operations of the business. These statements
involve risk and uncertainty as they relate to events and depend on
circumstances that will incur in the future. Nothing in this interim report
should be construed as a profit forecast.
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