Unaudited results for the 12 months to 31 May 2022

RNS Number : 0638A

Oncimmune Holdings PLC

21 September 2022

 

This announcement contains inside information

for the purposes of the UK Market Abuse Regulation

21 September 2022

Oncimmune Holdings plc

 ("Oncimmune", the "Company" and, together with its subsidiaries, the "Group")

Unaudited results for the 12 months ended 31 May 2022

The number of ImmunoINSIGHTS contracts won doubles year-on-year

Increasing ImmunoINSIGHTS penetration into top 15 global pharma

Restructuring of the EarlyCDT® Lung operation created an immediately EBITDA-profitable product business

Oncimmune Holdings plc (AIM: ONC.L), the leading global immunodiagnostics group, today announces its unaudited results for the twelve months ended 31 May 2022 and provides an update on recent trading. The reporting period reflects the announced change to the Company's financial year end to 31 August (from 31 May) and the requirement to maintain continuity of reporting pending release of audited results for the 15 months to 31 August 2022, which is expected to occur by the end of January 2023.

Operational Highlights

· Doubled the number of ImmunoINSIGHTS contracts year-on-year - 18 new contracts or extensions signed in the period, an increase from 9 contracts signed in the 12 months to 31 May 2021 and 3 contracts signed in the 12 months to 31 May 2020

· Increased ImmunoINSIGHTS penetration into top 15 global pharma

· Weighted pipeline value of potential ImmunoINSIGHTS contracts currently stands at over £11.0M and growing at c.£0.75M per month. Approximately 40% revenue visibility at start of new financial year across the combined business.

· EarlyCDT® Lung test received Medicare coverage in the US at substantially increased in-market selling price

· Appointment of Alistair Macdonald as the new Non-executive Chair of the Group

· Received Queen's Award for Enterprise in Innovation 2022

Financial highlights

· Recognised revenue for the period was £3.86M (2021: £3.72M)

· Gross profit for the period was £1.46M (2021: £2.86M) which includes the majority of the ImmunoINSIGHTS commercial and production team costs

· Administrative expenses were £7.05M (2021: £5.65M) which incorporates £0.61M increase in the non-cash amortisation charge on intangible assets, one-off £0.24M recruitment costs of the build-out of our ImmunoINSIGHTS production headcount and US commercial team, and higher IT, staff remuneration and insurance costs. Excluding these items, administration expenses were in line with the prior year

· Research & development expenses were broadly stable at £1.52M (2021: £1.62M) but are forecast to materially decline materially over the forthcoming year

· Share-based payments were £1.80M (2021: £1.05M) comprising non-cash expenses of the Group's LTIP and share options plans

· Loss after tax was £9.90M (2021: £4.72M)

Post period end

· The restructuring of the EarlyCDT® Lung product business post the reporting period has substantially reduced the ongoing cost base by £0.5M, which combined with increased contracted revenues, has created an immediately EBITDA profitable EarlyCDT® Lung product business

· The current ImmunoINSIGHTS pipeline is continuing to build in value and, encouragingly, over the past six weeks, contracts whose progress through the pipeline had previously slowed are now being signed. These new contracts are a mix of follow-on-studies as well as new pharma clients.

Dr Adam M Hill, CEO of Oncimmune said : "Whilst the market conditions over the past 12 months have been undoubtedly challenging, particularly for life science tools companies whose biotech customers have been substantially affected, we are encouraged by the momentum of our ImmunoINSIGHTS business. The importance of our autoantibody profiling service to pharma companies and biotechs is evident in the growing list of blue-chip customers, which includes many of the world's leading pharmaceutical companies. We have invested considerable time and resources in ensuring our systems and processes meet the highest standards which have in turn allowed us to sign an increasing number of MSAs with global pharma companies.

"The commercial pipeline has grown well under our new Chief Business Officer who was appointed in September 2021. As we start the new financial year, our current visibility of revenue from the combined ImmunoINSIGHTS pharma services and EarlyCDT® Lung product businesses is greater than approximately 40% of management's total FY2023 expectations  . Furthermore, with a current pipeline valued at £11.0M and growing at £0.75M a month, as well as being driven by a stable and experienced commercial team, the Board has confidence in FY2023 being an inflexion year in the commercial growth of the Company."

The Director and Officer of the Company named below take responsibility for this announcement.

For further information:

Oncimmune Holdings plc

Dr Adam M Hill, Chief Executive Officer

Matthew Hall, Chief Financial Officer

[e-mail]

Singer Capital Markets (Nominated Adviser and Joint Broker)

Aubrey Powell, Harry Gooden, George Tzimas, James Fischer

[phone]

WG Partners (Joint Broker)

David Wilson, Nigel Barnes, Erland Sternby

[phone]

Investor Relations:

John Goold

[e-mail]

About Oncimmune

ImmunoINSIGHTS Service Business

Oncimmune is a leading immunodiagnostics developer, primarily focused on the growing fields of immuno-oncology, autoimmune disease and infectious diseases. The ImmunoINSIGHTS service business leverages Oncimmune's technology platform and methodologies across multiple diseases, to offer life-science organizations actionable insights for therapies across the development and product lifecycle. Our core immune-profiling technology is underpinned by our library of over eight thousand immunogenic proteins, one of the largest of its kind. This helps identify trial participants and patients into clinically relevant subgroups, enabling development of targeted and more effective treatments.

Oncimmune's ImmunoINSIGHTS service business is based at the Company's discovery research centre in Dortmund, Germany. The business platform enables life science organizations to optimize drug development and delivery, leading to more effectively targeted and safer treatments for patients.

The ImmunoINSIGHTS development team is based in the US and Europe and Oncimmune is seeking to replicate the Dortmund facility in the US in the medium term.

EarlyCDT Product Business

Oncimmune's immunodiagnostic technology, EarlyCDT, can detect and help identify cancer on average four years earlier than standard clinical diagnosis. Our lead diagnostic test, EarlyCDT Lung, targets a vast market estimated to grow to £3.8bn by 2024. With over 200,000 tests already performed for patients worldwide and its use being supported by peer reviewed data in over 12,000 patients, we are poised to become an integral component of future lung cancer detection programs, globally.

Oncimmune's diagnostic products business is located at its laboratory facility in Nottingham, UK. 

For more information, visit  www.oncimmune.com

Operational and commercial review, including post period events

ImmunoINSIGHTS

There were 18 new or extensions to existing contracts signed in the period , an increase from nine contracts signed in the 12 months to 31 May 2021 and 3 contracts signed in the 12 months to 31 May 2020.

The current pipeline continues to build in overall value and, encouragingly, over the past six weeks, we have begun signing contracts whose progress through the pipeline had previously slowed. These new contracts are a mix of follow-on-studies as well as new pharma clients.

The current weighted value of the commercial pipeline of potential contracts currently stands at over £11.0M and is growing at c.£0.75M month-on-month. Within the £11.0M of weighted pipeline, we have approximately £1.8M of new contracts which have completed their legal processes and are in the execution phase, and therefore we anticipate commencing work on these projects in Q1 2023. Together with existing signed contracts whose revenue is also expected to be recognised in Q1 2023, we anticipate recognising total revenue for Q1 2023 of approximately £2.3M. Thereafter, the pipeline is showing a further £2.5M of potential revenue expected to be recognised over Q2 2023.

The growth in the pipeline is largely due to the planned expansion in the ImmunoINSIGHTS commercial team which was substantially expanded from December 2021 onwards. We now have in place an established commercial team with sufficient experience, scale and reach to adequately serve our growing pharma client base in the US and Europe. The pipeline of commercial engagements and proposals for potential contracts is benefiting from this enlarged commercial team , and we are confident our strategy will result in higher volumes of signed contracts in the near to medium term.

The Company's marketing function has been significantly enhanced with the appointment of a Senior Director of Global Marketing, based in North America. This appointment will be key to building brand awareness across the globe, including through the use of digital projects and automated marketing initiatives. The Group's website has been re-launched to focus on ImmunoINSIGHTS and we anticipate the website will lead to an increase in enquiries and in turn contracts as the website's technical content continues to build.

The scale up of the Group's Dortmund facility is complete , which tripled the facility's operating capacity through increased headcount and equipment. This expansion has supported the signing of pilot or proof-of-concept studies, whose completion is, more often than not, the gateway to signing larger follow-on contracts and for which capacity needs to be in place on signing.

During the year we have deliberately directed the business and its resources towards obtaining approved supplier status with our major pharma customers by signing master service agreements ("MSAs"). This is particularly the case with larger value contracts or where the study therapeutic area is clinically or commercial sensitive. The fact that many of our larger clients are requiring extensive procurement audits to be undertaken prior to signing MSAs is a clear indication that we are moving up the value chain and of growing importance to our customers. We believe that the MSAs are a necessity and create a solid foundation for the future development of our business, as well as being of further value in the medium term. They will enable long term relationships to be created, will facilitate faster contract wins in the future, and help differentiate ImmunoINSIGHTS from current and future potential competitors. 

Notwithstanding the difficult global economic conditions which are impacting decision-making and causing a slowdown in signing of new ImmunoINSIGHTS contracts , the value and number of potential commercial contracts within our pipeline continues to grow. Throughout the reporting period, the sales cycles from initial discussions to contracting and implementation has lengthened. This is partly due to the deliberate MSA process we are pursuing, under which large pharma conducts extensive procurement processes before committing to a long-term engagement with Oncimmune. However, once completed, these MSAs are already beginning to provide longer term benefits by both shortening the contracting cycle and widening our overall access to our clients' existing and future clinical programmes.

As the Company builds its pharma services business, ImmunoINSIGHTS, the trend for new pharma companies to undertake smaller pilot studies is being increasingly observed. This allows customers to validate our technology and quality of service before then signing higher value contracts with larger sample sets. These smaller pilot studies have also been used by our clients to compare our technology, quality of service and the value of our data informatics and analysis, against competitors. We are pleased to report that, whenever we have asked to perform against competitors, we have emerged as the leading provider of immune-profiling services, which in turn has resulted in the signing of follow-on contracts or a requirement to complete a MSA audit process as a precursor to signing long-term supply arrangements. We are therefore confident that, as our business grows, our reputation and market penetration will increase to the point where pharma companies will feel increasingly confident to award ImmunoINSIGHTS multiple contracts in differing disease areas, as well as multi-year recurring contracts.

Having built a solid foundation in offering highly valued scientific insights to pharma and biotech companies, the Group is now also focusing on expanding its technological capabilities and service offerings. This is being pursued using internal resources and, as has been announced in recent updates, the Group is also actively evaluating potential M&A opportunities which could accelerate this expansion. We believe there is a real opportunity to create a market-leading organisation with a broader range of pharma services, which can be the partner of choice for the world's leading pharma and major biotech companies. This strategy of combining organic growth with the acquisition of adjacent technologies is one which other pharma service providers have successfully executed on, including companies with which our newly appointed Chair has been involved.

EarlyCDT® Lung

In July 2022, the Nottingham-based product business was restructured, to substantially lower its cost base and ensure that this business is immediately EBITDA profitable on existing contracted revenues, before the benefit of any further volume growth.

Biodesix, Inc. (Nasdaq: BDSX) ("Biodesix"), the Group's US distributor of the EarlyCDT Lung product (marketed in the US as NodifyCDT ® ) , recently announced that WPS Government Health Administrators, the Medicare Administrative Contractor with jurisdiction for Biodesix's Kansas laboratory, has provided a coverage determination for the NodifyCDT® Lung nodule test at an in-market selling price which is approximately 10 times the current selling price. Medicare coverage is expected to drive faster and wider adoption of the test across the US which will in turn provide increased revenues to the Group over time. Overall sales in the US are also underpinned by our existing commercial contract with Biodesix, which provides minimum sales volumes.

Biodesix also recently announced that Royal Philips is to incorporate the results from tests performed on the NodifyCDT® Lung nodule into the Philips Lung Cancer Orchestrator lung cancer patient management system. We anticipate that this development will lead to an increase in awareness of the test amongst clinicians across the US and in turn increase in the volume of tests performed.

Product sales continued to our distributor base outside of the US, although sales volumes are still affected by the COVID-19 pandemic.

The iDx-Lung ¹ programme, a collaboration between the University of Leeds, the Southampton Clinical Trials Unit at the University of Southampton, is ongoing, with 4,400 patients recruited to date in Southampton and Leeds.

A successful real-world screening evaluation pilot with the Norfolk and Waveney Clinical Commissioning Group ("CCG") has been completed and the final report is expected in the coming months . Adoption of the EarlyCDT Lung test within this NHS CCG is expected in the second half of calendar 2022.

A second pilot study screening over 2,000 patients has also been signed and is anticipated to commence in the second half of calendar 2022. This study will be undertaken alongside a regional cancer alliance which will add further exposure for the EarlyCDT® Lung test within this specialist group of clinical leaders focused on improving the cancer pathways and outcomes for patients. On completion of the pilot and the associated report, we anticipate this will lead to an ongoing supply contract.

New appointment to Chair

On 8 July 2022, Alastair Macdonald was appointed as Non-executive Chair of the Group. Alistair succeeds Meinhard Schmidt, who has retired from the Board. The Company has already recorded its thanks to Meinhard for his services to the Company; helping guide the Company through its IPO and supporting the senior management team on the strategic evolution of the business.

Alistair brings a 25-year career in life sciences to Oncimmune. Until recently he was CEO of one of the world's leading integrated CRO, Syneos Health, Inc. ("Syneos") (Nasdaq: SYHN; market cap c.US$6.6BN), prior to which he was CEO of INC Research ("INC") which merged with inVentiv Health to become Syneos in 2017. During his time with INC and then Syneos, revenues grew both organically and through a series of acquisitions from $20M to over $5.0BN.

Queen's Award for Enterprise in Innovation 2022

Oncimmune was awarded the Queen's Award for Enterprise 2022 in the innovation category, endorsing Oncimmune as a leading developer of applied immunodiagnostics for the early detection of disease, drug discovery and development.

Financial highlights

Recognised revenue for the period was £3.86M (2021: £3.72M). Throughout the reporting period we experienced a progressive slowdown in the signing of new ImmunoINSIGHTS contracts. More detail for the reasons behind this can be found in the operational and commercial review. More recently, however, we have begun to sign new contracts which had previously slowed within the commercial pipeline. Additionally, in June 2022, Biodesix announced the successful Medicare coverage determination for EarlyCDT® Lung in the US at an in-market selling price which is approximately 10 times the current selling price. Coincident with this announcement, we have received updated revenue forecasts from Biodesix which confirm an increase in order volumes as well as an increase in the average in-market selling price which has resulted in an uplift in our quarterly royalty revenues.

Gross profit for the period was £1.46M (2021: £2.86M), which for the reporting period, includes the majority of the costs of the ImmunoINSIGHTS commercial and production teams. During the reporting period the cost of both teams increased substantially compared to the prior year.

Administrative expenses were £7.05M (2021: £5.65M). Certain costs were higher in the reporting period including one-off recruitment costs of £0.24M associated with the build-out of our ImmunoINSIGHTS production headcount and US commercial team, £0.13M of IT costs to move staff to home-working during the COVID-19 pandemic, £0.53M of increased staff remuneration and £0.16M of increased insurance costs. Also included is a non-cash £0.61M increased amortisation charge against Intangible assets. Excluding these costs, administration expenses are in line with the prior year.

In August 2022, a restructuring of the Nottingham-based EarlyCDT® Lung product business was undertaken which reduced the ongoing cost base by approximately £0.5M and, when combined with the recent increase in contracted revenues, has created an immediately EBITDA profitable business.

Research & development expenses were stable at £1.52M (2021: £1.62M). For the forthcoming year to 31 August 2023, we anticipate research & development expenditure to significantly reduce in line with our priority focus on the commercial activities of the Group.

Share-based payments were £1.80M (2021: £1.05M) representing the non-cash cost of expensing the Group's LTIP and share options plans.

Loss after tax was £9.90M (2021: £4.72M).

Gross cash balance at the period end was £2.53M (31 May 2021: £8.63M; 30 November 2021: £2.97M) and net debt at the period end was £8.16M (31 May 2021: £0.83M; 30 November 2021: £5.39M), after investment, including capacity growth. The Company drew down an additional €3.0M (c. £2.50M) in December 2021 under the IPF facility to fund the acceleration in the ImmunoINSIGHTS business, including the expansion of the US-based commercial team.

In August 2022, the Group's renewed its debt banking facility with IPF Partners. The new terms provide for a 12-month deferral of all principal repayments until June 2023, no further issue of warrants, no change in the fixed existing cash margin rate of 9%, and the continued repayment of interest as from September 2022. The new facility terms are expected to provide the Group with a cash headroom to continue to grow the commercial pipeline and convert that pipeline into signed contracts, revenue, and cash. An arrangement fee of EUR €1.5M has been agreed which is payable at final maturity of the debt, with up to 50% (EUR €0.75M) of this fee able to be offset against any warrants already issued to IPF Partners.

¹ NHS Lung Health Check Programmes in Wessex and Yorkshire as part of the iDx-LUNG evaluation programme

Consolidated statement of comprehensive income

		Unaudited Year to  31 May		Audited Year to  31 May
		2022		2021
		£'000		£'000
		Total		Total
Revenue		3,859	3,722
Cost of sales		(2,402)	(865)
Gross profit/(loss)		1,457	2,857
Research and development expenses		(1,517)	(1,615)
Administrative expenses		(7,052)	(5,652)
Share-based payment		(1,800)	(1,046)
		(10,369)	(8,313)
Other income		326	311
Operating loss		(8,586)	(5,145)
Finance income		-	403
Finance costs		(943)	(954)
Finance costs - net		(943)	(551)
Loss before taxation		(9,529)	(5,696)
Taxation		17	1,068
Loss after tax from continuing operations the financial year		(9,512)	(4,628)
Other comprehensive income
Exchange translation differences		(384)	(91)
Loss after tax and total comprehensive income for the year attributable to equity holders		(9,896)	(4,719)
Basic and diluted loss per share		(13.7)p	(7.17)p

 

Consolidated statement of financial position

			Unaudited 31 May	Audited 31 May
			2022	2021
			£'000	£'000
Assets
Non-current assets
Goodwill			1,578	1,578
Intangible assets			3,237	4,116
Property, plant and equipment			918	664
Right-of-use assets			627	930
Deferred tax asset			927	937
			7,287	8,225
Current assets
Inventories			413	143
Trade and other receivables			6,219	7,079
Contract assets			808	200
Cash and cash equivalents			2,530	8,631
			9,970	16,063
Total assets			17,257	24,278
Equity
Capital and reserves attributable to the equity holders
Share capital			695	691
Share premium			40,635	40,497
Other reserves			5,894	4,094
Merger reserve			31,882	31,882
Foreign currency translation reserve			(296)	88
Own shares			(1,926)	(1,926)
Retained earnings			(79,611)	(70,099)
Total equity			(2,727)	5227
Liabilities
Non-current liabilities
Deferred tax			115	374
Lease liability			352	671
Other liabilities			2,000	2000
Borrowings			2,420	6,239
			4,887	9,284
Current liabilities
Trade and other payables			1,963	1,979
Contract liabilities			5,180	5,175
Other statutory liabilities			40	55
Lease liability			443	310
Other liabilities			-	-
Borrowings			7,471	2,248
			15,097	9,767
Total liabilities			19,984	19,051
Total equity and liabilities			17,257	24,278

Consolidated statement of changes in equity

	Share capital	Share premium	Other reserves	Merger reserve	Foreign currency translation reserve	Own shares	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 June 2020	635	31,459	3,048	31,882	179	(1,926)	(65,471)	(194)
Loss for the year	-	-	-	-	-	-	(4,628)	(4,628)
Other comprehensive income:
Currency translation differences	-	-	-	-	(91)	-	-	(91)
Total comprehensive expense for the period	-	-	-	-	(91)	-	(4,628)	(4,719)
Transactions with owners:
Shares issued in year	50	8,331	-	-	-	-	-	8,381
Options exercised	2	106	-	-	-	-	-	108
Shares issued in relation to prior year acquisition Share-based option charge	4 -	601 -	- 1,046	- -	- -	- -	- -	605 1,046
As at 31 May 2021	691	40,497	4,094	31,882	88	(1,926)	(70,099)	5,227
Loss for the year	-	-	-	-	-	-	(9,512)	(9,512)
Other comprehensive income:
Currency translation differences	-	-	-	-	(384)	-	-	(384)
Total comprehensive income	-	-	-	-	(384)	-	(9,512)	(9,896)
Transactions with owners:
Shares issued in year	-		-	-	-	-	-	-
Exercise of options and warrants	4	138	-	-	-	-	-	142
Shares issued in relation to prior year acquisition	-	-	-	-	-	-	-	-
Share option charge	-	-	1,800	-	-	-	-	1,800
As at 31 May 2022	695	40,635	5,894	31,882	(296)	(1,926)	(79,611)	(2,727)

 Consolidated statement of cash flows

			Unaudited Year to  31 May	Audited Year to  31 May
			2022	2021
			£'000	£'000
Cash flows from operating activities
Loss before income tax			(9,529)	(5,696)
Adjusted by:
Depreciation and amortisation			1429	740
Share-based payment charge			1,800	1,046
Interest received			-	(403)
Interest expense			943	954
Gain on disposal of assets			-	-
Fair value gain Exchange rate movement			- 3	176 -
Changes in working capital:
(Increase)/decrease in inventories			(270)	31
Increase in trade and other receivables			253	(5,837)
Increase / (decrease) in trade and other payables			(428)	4,841
Cash used in operating activities			(5,799)	(4,148)
Interest paid			(169)	(885)
Interest received			-	3
Income tax received			(243)	503
Net cash used by operating activities			(6,211)	(4,527)
Cash flows from investing activities
Purchase of property, plant and equipment			(504)	(446)
Purchase of intangible assets			-	(625)
Proceeds from sale of assets			-	215
Net cash (used in)/ generated from investing activities			(504)	(856)
Cash flows from financing activities
Net funds raised through share issue			142	8,489
Loan advances			3,345	2,728
Loan repayments			(2,347)	(1,135)
Principal elements of lease repayments			(153)	(303)
Net cash generated from financing activities			987	9,779
Movement in cash attributable to foreign exchange			(375)	(5)
Net change in cash and cash equivalents			(6,103)	4,391
Cash and cash equivalents at the beginning of the year			8,631	4,240
Cash and cash equivalents at the end of the year			2,528	8,631

 

END

 

 

FR EAFNEAEPAEAA