Half Yearly Report

RNS Number : 2944Z

Epistem Holdings plc

14 March 2012

 

Company               Epistem Plc

TIDM                       EHP.L (AIM)

Headline                Interim Results to 31 December 2011

Released                14 March 2012: 7.00AM

Number

Epistem Plc

Interim Results to the 31 December 2011

Epistem Plc (LSE:EHP), the UK biotechnology and personalised medicine company announces today its unaudited interim results for the six months ended 31 December 2011.

Highlights

During the first half of the current financial year Epistem continued to strengthen its business and financial position as follows;

·      Year-on-year revenue growth to £3.1m (£3.0m: 2010/11)

·      Significant first half growth in the Personalised Medicine division

·      Strengthening biomarkers collaboration with Sanofi-Aventis and recent announcement of new biomarker collaboration with GSK

·      Increased investment in diagnostics (Genedrive^TM) and recent announcement of tuberculosis sales and marketing 'channel partner'

·      Continued advance and investment in our Novel Therapies drug discovery programme   

·      Cash placing raising £2.8m net contributed towards strong cash position of £5.3m

For further information contact:

Epistem Plc

Matthew Walls, Chief Executive Officer                                                         ++44 161 606 7258                            

John Rylands, Financial Director                                                    

Peel Hunt LLP

Nominated Adviser: James Steel/Vijay Barathan                                          ++44 207 418 8900            

De Facto Financial

Mike Wort/Anna Dunphy                                                                                   ++44 207 556 1063

Notes for editors

Epistem is a biotechnology and personalised medicine company commercialising its expertise in stem cells in the areas of epithelial (oncology, gastrointestinal and dermatological) and infectious diseases. Epistem develops innovative therapeutics, biomarkers and diagnostics (Genedrive^TM) alongside contract research services for drug development companies. The Group's core expertise is focused around the regulation of adult stem cells located in epithelial tissue including the gastrointestinal tract, skin, hair follicles, breast and prostate and utilizing novel as well as proprietary next generation molecular biology for use in personalised medicine. www.epistem.co.uk

 

Chairman and Chief Executive Officer Statement

Set against a climate of difficult and uncertain macro economic conditions, Epistem has continued to make solid progress in the development of its core business and the diversification of its technologies. First half year-on-year revenues increased to £3.1m, with a reported operating loss of £0.5m reflecting the ongoing development and investment in our Personalised Medicine and Novel Therapies divisions. 

The recent announcement of our Tuberculosis sales and marketing agreement with Xcelris Labs of India and a new biomarker collaboration with GSK, continue to build and diversify our commercial strengths whilst at the same time we have been advancing our leading diagnostic and drug development programmes.  

This interim report covers the six-month period from the 1 July 2011 to 31 December 2011.

Overview

Results for the first six months showed year-on-year revenue marginally increased to £3.1m (£3.0m: 2010/11), largely driven by a step up in our Personalised Medicine revenues (Biomarker and Diagnostics), which together with the increasing investment in our diagnostics technology (Genedrive^TM) and continuing development of our Novel Therapies drug leads gave rise to an operating loss for the first half of £0.5m (£0.1m profit: 2010/11).

Contract Research Services revenues remained steady over the first half at £1.4m (£1.4m: 2010/11). Structural changes across the pharmaceutical and biotechnology industry have created increased volatility within the sector and some corresponding contract delays. Despite the general market uncertainty, the division holds a strong competitive position and business relationships with our customers, including the US NIH, continue to strengthen.

Personalised Medicine

Biomarker - The biomarker division picked up momentum over the first half, helped by the Sanofi-Aventis biomarker collaboration announced in March 2011 and our growing relationship in support of their oncology preclinical-clinical translational medicine programme. The recently signed 3-year lung fibrosis collaboration with GSK will further bolster our biomarker position. Biomarker revenues stepped up significantly over the first half to £1.3m (£0.4m: 2010/11).  

Diagnostics - The announcement of the Xcelris Labs tuberculosis collaboration earlier this month marks the first major collaboration for our proprietary Genedrive^TM technology. Genedrive^TM is now being tested across a range of disease areas and we expect our Tuberculosis assay to move towards the regulatory approval process over the coming months. First half diagnostics revenues were £0.3m largely relating to development and technology evaluation revenues.

Our Novel Therapies discovery and development programme continues to advance around identified novel regulators of epithelial tissue. Discussions continue with prospective parties around licensing opportunities for our novel hits/leads in both regenerative medicine and oncology. Collaborative discussions are expected to continue over the coming months.

Revenue growth remains key to de-risking our business model alongside the development of our leading technologies. The diversity of our business portfolio provides some flexibility to help manage the differing speeds of growth, investment and development for each of our business divisions and we remain excited by the prospects of our core technologies.     

Financial Review

Sales revenues from business operations for the six months of the current financial year were £3.1m (£3.0m: 2010/11), a year on year increase of £0.1m.

Contract Research Services first half revenues remained broadly in line with last year, with the growth in Personalised Medicine (Biomarkers and Diagnostics) showing the greatest divisional increase over the first half. Personalised Medicine revenue growth offset the year-on-year absence of Novel Therapies revenues related to the Novartis funded drug discovery programme. The Diagnostics revenues which are starting to emerge should help further support the revenue outlook for the group. Demand over the period for our core scientific expertise and technology remained firm.

Contract costs increased in the first half, largely reflecting the increased business growth in Personalised Medicine. Measured and careful investment in our business divisions continues to accelerate our technology developments and maintain our drug development programmes.  Overall the Company reported an operating loss of £0.5m (£0.1m: 2010/11) for the first half, which reflects the increased but targeted investment we are currently making across our business.  

The corresponding basic earnings/(loss) per share figure for the first half was (4.8)p (2010/11: 0.9p)

Following a successful cash placing of £2.7m (net) in November 2011, the first half cash reserves at the 31 December 2011 were £5.3m (£3.6m: 30 June 2011).

Operational Review

Contract Research Services continues to develop and strengthen its core biology and scientific expertise to deliver improved drug efficacy models to the highest level of quality and service. Following last year's step up in revenue growth and margins, we anticipate a reduced level of growth from this division over this financial year partly reflecting the structural changes affecting a number of our core customers. Overall, a steady first half revenue performance across the US and Europe allowed this division to deliver broadly similar year-on-year revenues. Our collaboration as part of the US NIH biodefence program continues to strengthen. 

Personalised Medicine

Biomarker divisional growth improved significantly over the first half supported by the Sanofi-Aventis oncology biomarker programme. During the first year of the Sanofi-Aventis collaboration, we have built a close working relationship with the French and US teams to support the development and delivery of targeted biomarkers of drug effect for key oncology pathways. We have also recently announced a new biomarker collaboration with GSK in lung fibrosis. The GSK collaboration is expected to expand further over the coming years to provide both biomarkers of drug effect and markers of disease progression. We anticipate a solid performance from our biomarker division into the second half.            

Diagnostics. The announcement of the Xcelris Labs tuberculosis collaboration marks the first major contract and 'channel partner' for the newly created Diagnostic group using our next generation Genedrive^TM device and ID^TM assay technology. Genedrive^TM is a molecular diagnostic device for near patient 'Point of Care' testing targeting a wide range of infectious diseases and biological mutations. Its simple sample preparation, low cost and rapid diagnosis (~30mins) across a broad spectrum of diseases is expected to change the way 'Point of Care' diagnostics tests are delivered. Genedrive^TM is now undergoing testing across a range of infectious diseases, oncology mutations and biosurveillance applications with selected channel partners and the Company will make further announcements in due course.

The Novel Therapies division has made good progress in the development of its novel hits/leads over the first half. Discussions are ongoing with selected groups around the development of our lead candidates in regenerative medicine and oncology.

Strategy

Epistem remains focused on strengthening its revenues and advancing our globally leading technologies and scientific expertise to continue to deliver increased shareholder value. Where appropriate, we will consider the acquisition of new technology and businesses to complement our growth strategy. 

The Board believes that Epistem's growing business model differentiates us within the sector as a lower risk investment proposition with significant upside potential.    

Outlook

Over the second half of the current financial year we expect to see Contract Research Services maintain its steady revenue position alongside the advancement of our Personalised Medicine division. Novel Therapies discussions will continue across a group of partners, but the timing, duration and outcome of these discussions remains uncertain.

We remain committed to advancing our expertise and heritage in stem cells and to extending our international profile in scientific excellence across the pharmaceutical, diagnostic and regenerative medicine industries.   

The Board remains confident that the Group is well placed to deliver increasing shareholder value based on its current performance and on the opportunities now emerging.

David Evans                                          Matthew Walls

Non Executive Chairman                    Chief Executive Officer

14 March 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 31 December 2011

	Six months ended	Six months ended	Year Ended
	31 December 2011	31 December 2010	30 June 2011
	Unaudited	Unaudited	Audited
	£000	£000	£000
Revenue	3,055	2,978	5,752
Contract costs	(2,515)	(1,467)	(3,072)
Discovery and development costs	(395)	(646)	(979)
General administrative costs	(688)	(772)	(1,316)
Operating (loss)/profit	(543)	93	385
Finance income	7	11	18
Finance costs	-	(2)	(46)
(Loss)/profit on ordinary activities before taxation	(536)	102	357
Taxation on ordinary activities	145	(29)	28
Total comprehensive income for
the financial period	(391)	73	385
(Loss)/earnings per share (pence)
Basic	(4.8)p	0.9p	4.9p
Diluted	(4.8)p	0.8p	4.3p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2011

			Employee
			share
		Share	incentive	Share	Reverse
	Share	premium	plan	options	acquisitions	Retained
	capital	account	reserve	reserve	reserve	Earnings	Total
	£000	£000	£000	£000	£000	£000	£000
Balance at 1 July 2010	119	11,206	(43)	633	(2,484)	(3,647)	5,784
Allotment of ordinary shares	-	-	-	-	-	-	-
Share issue costs	-	-	-	-	-	-	-
Purchase of own shares (SIP)	-	-	(23)	-	-	-	(23)
Exercise of options	-	-	-	-	-	-	-
Recognition of equity- settled share-based payments	-	-	-	6	-	-	6
Total comprehensive income for the period	-	-	-	-	-	73	73
At 31 December 2010	119	11,206	(66)	639	(2,484)	(3,574)	5,840
Purchase of own shares (SIP)	-	-	(22)	-	-	-	(22)
Recognition of equity- settled share-based payments	-	-	-	52	-	-	52
Total comprehensive income for the period	-	-	-	-	-	312	312
At 30 June 2011	119	11,206	(88)	691	(2,484)	(3,262)	6,182
Allotment of ordinary shares	12	2,765	-	-	-	-	2,777
Share issue costs		(56)	-	-	-	-	(56)
Exercise of options	2	77	-	(12)	-	12	79
Purchase of own shares (SIP)	-	-	(25)	-	-	-	(25)
Recognition of equity-settled share-based payments	-	-	-	84	-	-	84
Total comprehensive income for the year	-	-	-	-	-	(391)	(391)
At 31 December 2011	133	13,992	(113)	763	(2,484)	(3,641)	8,650

CONSOLIDATED BALANCE SHEET

As at 31 December 2011

	31 December	31 December	30 June
	2011	2010	2011
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Non-current assets
Intangible assets	1,256	388	1,075
Plant and equipment	547	584	567
Deferred taxation	665	505	520
	2,468	1,477	2,162
Current assets
Trade and other receivables	2,321	1,199	1,910
Tax receivables	117	75	117
Cash and cash equivalents	5,255	4,320	3,620
	7,693	5,594	5,647
Liabilities
Current liabilities
Deferred income	17	230	75
Trade and other payables	1,414	987	1,447
Obligations under finance leases	-	14	-
	1,431	1,231	1,522
Net current assets	6,262	4,363	4,125
Total assets less current liabilities	8,730	5,840	6,287
Non-current liabilities
Liabilities payable 1 - 5 years	(80)	-	(105)
Net Assets	8,650	5,840	6,182
Capital and reserves
Called-up equity share capital	133	119	119
Share premium account	13,992	11,206	11,206
Employee share incentive plan reserve	(113)	(66)	(88)
Share options reserve	763	639	691
Reverse acquisition reserve	(2,484)	(2,484)	(2,484)
Retained earnings	(3,641)	(3,574)	(3,262)
Total shareholders' equity	8,650	5,840	6,182

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 31 December 2011

 

			31 December	31 December	30 June
			2011	2010	2011
			(unaudited)	(unaudited)	(audited)
			£000	£000	£000
Cash flows from operating activities
		Operating (loss)/profit for the year	(543)	93	385
		Depreciation, amortisation and impairment	96	99	194
		Share based payment expense	84	6	58
Operating (loss)/profit before changes in working capital and provisions
			(363)	198	637
	(Increase) in trade and other receivables		(411)	(188)	(899)
	(Decrease) in deferred income		(58)	(744)	(899)
	(Decrease)/Increase in trade and other payables		(33)	(27)	433
Net cash (outflow) from operations			(865)	(761)	(728)
	Finance costs		-	-	(46)
	Interest received		7	11	18
	Tax received		-	75	75
			7	86	47
Net cash (outflow) from operating activities
			(858)	(675)	(681)
Cash flows from investing activities
	Acquisition of fixed assets		(257)	(328)	(1,093)
Net cash outflow from investing activities			(257)	(328)	(1,093)
Cash flows from financing activities
	Proceeds from issue of share capital		2,777	-	-
	Expenses of share issue		(56)	-	-
	Exercise of share options		79	-	-
	Purchase of own shares		(25)	(23)	(45)
	Increase/(decrease) in borrowings		(25)	(25)	68
Net cash inflow/(outflow) from financing activities			2,750	(48)	23
Net increase/(decrease) in cash equivalents			1,635	(1,051)	(1,751)
Cash and cash equivalents at beginning of year			3,620	5,371	5,371
Cash and cash equivalents at end of year			5,255	4,320	3,620
Analysis of net funds
	Cash at bank and in hand		5,255	4,320	3,620
Net funds			5,255	4,320	3,620

 

 

 

 

  

NOTES TO THE PRELIMINARY RESULTS TO 31 DECEMBER 2011

A. Business segments

	Contract Research	Personalised	Novel
	Services	Medicine	Therapies	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000
Six months ended 31 December 2011
Revenue	1,403	1,652	-	-	3,055
Segment trading result	395	222	(370)	(610)	(363)
less depreciation and amortization	(36)	(24)	(24)	(12)	(96)
less equity-settled share-based payments	(2)	(15)	(1)	(66)	(84)
Operating profit/(loss)	357	183	(395)	(688)	(543)
Six months ended 31 December 2010
Revenue	1,386	383	1,209	-	2,978
Segment trading result	424	(68)	601	(759)	198
less depreciation and amortization	(26)	(24)	(36)	(13)	(99)
less equity-settled share-based payments	-	(4)	(2)	-	(6)
Operating profit/(loss)	398	(96)	563	(772)	93
Twelve months ended 30 June 2011
Revenue	3,002	1,130	1,620	-	5,752
Segment trading result	1,029	148	716	(1,256)	637
less depreciation and amortisation	(55)	(38)	(74)	(27)	(194)
less equity-settled share-based payments	(7)	(17)	(1)	(33)	(58)
Operating profit/(loss)	967	93	641	(1,316)	385

 

B. Earnings per share

Basis of Calculation

The basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders for the year by the weighted average number of ordinary shares in issue during the year.

The weighted average number of shares in issue during the period was 8,095,560 (2010: 7,933,983)

 

END

 

 

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