Half Yearly Report

RNS Number : 9012Z

Proteome Sciences PLC

30 September 2009

 



PRESS RELEASE

    30th September, 2009

Proteome Sciences plc

('Proteome Sciences' or the 'Company')

RESULTS FOR THE SIX MONTHS ENDED 3Oth JUNE 2009

HIGHLIGHTS

Proteome Sciences plc (AIM: PRM), a leading developer of biomarkers in diagnostics and drug development, is pleased to announce its interim results for the six months ended 30 June 2009.  The main events of the period are summarised below: 

Commercial

TMT® sublicense signed between Thermo Fisher and Life Technologies Proteome Sciences to receive royalties on iTRAQ sales to 2021 License agreement in lung cancer with Oncimmune Inc. Lung cancer blood test launched in May expected in 100 centres across USA early 2010 License with Axela Inc. for brain damage biomarkers License with Millipore on Luminex® platform for Alzheimer's ISO 9001:2008 certification awarded Large follow-on study of stroke biomarkers commencing with existing partner

Financial

Cash used in operations £1.57m (2008 : £1.38m) Level of costs expected to remain unchanged in second half Board expecting a 50% increase in revenue for 2009 over 2008

Outlook

Further biomarker licenses expected in Alzheimer's disease, lung cancer and stroke PS Biomarker Services contracts in advanced negotiation CysTMT® developed with expected launch Q1 2010 Continue to monetise IP through further licenses with global leaders in diagnostics, drug development and scientific services

Commenting on these results, Christopher Pearce, Chief Executive of Proteome Sciences, said:

'In the first half of 2009, the previous year's license agreement with Thermo Fisher Scientific for our TMT® isobaric mass tags has been followed up with three biomarker licenses in lung cancer, brain damage and Alzheimer's disease. These licenses will generate revenue and royalties from our intellectual property (IP) portfolio and biomarker services and our partners are global leaders in diagnostics, drug development and scientific services with a significant presence in our target markets. Our technology platform is successfully delivering content for personalised medicine and we envisage further monetisation of our IP portfolio through additional licenses.

Over the last 18 months the business has been transformed from no meaningful commercial licenses or revenue to the situation today where we are targeting breakeven/profitability in 2010, supported by strong prospects of serial licenses and revenues from across our activities.'

ENDS

Attached: Full text of Chairman's statement, consolidated profit and loss account, consolidated balance sheet, consolidated cash flow statement and notes to the financial information.

For further information please contact:
Proteome Sciences plc www.proteomics.com	Tel:    [phone]
Christopher Pearce, Chief Executive James Malthouse, Finance Director Ian Pike, Chief Business Officer	Email:    [e-mail]  Email:    [e-mail] Email:    [e-mail]
Public Relations
IKON Associates  Adrian Shaw Tel:    [phone]  Mobile:    [phone] Email:    [e-mail]	Redleaf Communications Ltd.  Samantha Robbins / Anna Dunkin  Tel:    [phone] Email:    [e-mail]
Nominated Adviser Noble & Company Ltd.
John Llewellyn-Lloyd Sam Reynolds	Tel: [phone]

Notes to Editors:

About Proteome Sciences:

Proteome Sciences is a leading biomarker CRO providing protein biomarker discovery, validation and assay development services. The Company's MS Biomarker Assay system (MBA) uses its proprietary isobaric Tandem Mass Tags (TMT®) and reference materials combined with isotope dilution mass spectrometry. Highly multiplexed assays can be developed in weeks and are suitable for screening 10's to 100's of candidate biomarkers in validation studies. Assays for validated biomarkers can be rapidly developed using the same isotope dilution mass spectrometry format, or can be transferred for immunoassay development.

The Company's own research is focused on neurological and neurodegenerative conditions and it has discovered and patented blood biomarkers in stroke and brain damage as well as several cancers, solid organ transplant rejection and Alzheimer's disease. Proteome Sciences is based in Cobham, UK with facilities in London and Frankfurt

  Chairman's Statement :

In 2008, Proteome Sciences took significant steps towards securing growing and sustainable revenues by concluding the global license with Thermo Fisher for its TMT® reagents. To date in 2009, three licenses have been signed for our protein biomarkers in lung cancer, brain damage and Alzheimer's that will produce revenue and royalties from product sales and milestones. The first lung cancer test was launched in May 2009 using our annexin biomarkers from which we expect to start to receive royalties towards the end the second half of 2009. These revenue streams, together with TMT®, will become increasingly apparent through expanding sales as existing products become more established and new products are launched moving into 2010 and beyond. Further licenses are also expected to be concluded from our biomarker portfolio over the coming months.

As new licenses are signed the pattern, composition and timing of revenue will inevitably be uneven and shareholders should look to full year revenue growth and trends, not half year contributions, at this stage of the Company's development. The Board is expecting a revenue increase in excess of 50% in the current year to 31 December 2009 over 2008 with the great majority of revenue concentrated in the second half of the year.

With further licenses coming through and the build up of royalties, we anticipate that the pattern of revenue flow should then settle down to a more normal and predictable basis. It is also important to note that grant income is not shown as revenue but is offset against costs even though we receive the amount of that grant income as a valuable cash contribution against our annual costs. The amount in 2008 was £650,000 and this makes an important and continuing financial contribution to PS Biomarker Services.

Biomarkers

Lung Cancer

Recent reports in the US media indicate that the blood test for lung cancer launched by Oncimmune at the end of May using Proteome Sciences' annexin autoantibodies got off to a good start. There are now 20 sites offering the test, and this is expected to increase to over 100 sites in the next six months. Doctors have been saying that the test can detect lung cancer three to five years sooner than finding symptoms from a patient. Oncimmune expects that its test may become as routine as a PSA test for prostate cancer or mammograms for breast cancer and that 50 to 70 million people in the US could potentially benefit from having the test done on a regular basis. Health insurance does not yet cover the costs but reimbursement is the priority objective following the publication of peer-review studies later this year. Proteome Sciences will receive royalties from all tests sold with revenues expected from  Q4 2009 onwards.  Whilst royalty revenue is not initially anticipated to be significant, it is expected to rise quickly in line with the rapid increase in the number of centres offering the tests. Oncimmune is expected to launch the lung cancer test in the UK and Continental Europe in 2010.

Differential expression of the annexin proteins in breast cancer have also been highlighted in recent abstracts and presentations, demonstrating their novel utility and application for early diagnosis, for assessing the suitability of chemotherapy and as a target for therapy. Proteome Sciences' patents cover these uses and serial licenses are being rigorously explored for lung cancer diagnosis as well as for a range of different applications in breast cancer.

Stroke

Last year, additional data generated through the external evaluation of the stroke panel further extended the excellent results established from the earlier studies undertaken by our collaborators at the University of Geneva.

This process has continued and we are pleased to announce that we are commencing a further large study with an existing commercial partner using a small panel of protein biomarkers across a wide patient population to develop a rapid blood panel test for stroke. This should be completed in 2010 and we look forward to seeing a commercial blood test for stroke launched into the marketplace.

Alzheimer's Disease

In July 2009, Proteome Sciences announced an exclusive license agreement with Millipore Corporation in Alzheimer's disease (AD). Millipore will develop Luminex® bead based multiplex immunoassays using Proteome Sciences' proprietary AD biomarkers in blood and for other cognitive function disorders. The ability to rapidly measure these biomarkers will support researchers developing new drugs and diagnostics to treat and monitor patients with AD.

After the discovery and validation of a set of blood biomarker candidates, Proteome Sciences with its collaborators at KCL, London has selected a panel of nine protein biomarkers that form the content of a blood biomarker assay panel that is in late development/testing. License discussions are being actively pursued with a range of diagnostic and pharmaceutical companies.

Following the largest study ever of its kind, researchers from the UK and France have identified for the first time three new genes linked to AD. The breakthrough published in two studies in the journal Nature Genetics is the first since APOE, the only other gene for AD, was uncovered 15 years ago and has been hailed as a leap forward towards effective treatments.

One of the newly associated genes, CLU produces the protein clusterin that has been shown to be involved in the clearance of amyloid beta peptide, a major component of the 'plaques' that form in the brain of patients with AD. Clusterin is one of the protein biomarkers on our AD blood biomarker assay panel. Proteome Sciences has strong intellectual property coverage for the diagnostic and prognostic utility of clusterin, and has already developed a mass spectrometric (MS) based clusterin assay for a variety of applications. Separately and, in addition, a test for clusterin on the Luminex® platform is under development through our partnership with Millipore.

These recent developments are opening up multiple new avenues and opportunities for the commercial exploitation of Proteome Sciences' strong intellectual property position in AD through serial outlicenses.

PS Biomarker Services

The three recent grant funded projects SENS-IT-IV, Diogenes and BioTag are all progressing well. In Diogenes, over 400 patient samples using TMT® have been analysed and this is thought to be the largest study worldwide using isobaric mass labelling with over 100 Orbitrap runs and 300 gigabytes of data. Similarly SENS-IT-IV is one of the largest proteomics studies of its type undertaken involving close to 200 samples and is on target to meet its timelines and milestones.

Historically, data analysis has been very challenging by virtue of the quantity of information being generated, but it is a testament to PS Biomarker Services capabilities that we have been able to successfully remove several of the roadblocks associated with handling and analysis of massive data volumes.

Proteome Sciences was particularly pleased earlier this year to be awarded ISO 9001:2008 accreditation for its PS Biomarker Services activities at our facilities in Frankfurt, Germany. This allows us to more comprehensively exploit the fast growing field of biomarker qualification and mass spectrometry assays through the provision of ISO certified services for customers.

We are in advanced negotiations to conclude commercial programmes with PS Biomarker Services and further announcements are expected shortly.

Reagents

Since obtaining the license for TMT® (also covering the field of isobaric mass tagging) in 2008, Thermo Fisher has implemented a strong global marketing/advertising campaign to promote TMT® reagents, increase awareness and understanding of isobaric mass tags and build market share. Whist initially the timing and levels of revenues from TMT® have been below our expectations, they have shown strong quarterly growth and we expect to see such growth continuing for both TMT® sales and the isobaric mass tag market as a whole. Publications from a number of the major proteomics groups in pharmaceutical research (Pfizer, Novartis and Cellzome) and academia demonstrate the excellent performance of TMT®.

Part of the license with Pierce Biotechnology Inc., a business unit of Thermo Fisher Scientific Inc. (Thermo Fisher) enables Thermo Fisher to provide third-party commercial licenses for any other products being marketed for isobaric mass tagging, including Applied Biosystem's iTRAQ reagents, (now part of Life Technologies). Proteome Sciences has now consented to a sublicense agreement between Thermo Fisher and Life Technologies concerning Proteome Sciences' isobaric mass tag technology TMT®. The terms of the agreement between Thermo and Life Technologies remain confidential.  

Proteome Sciences will nevertheless receive further license fees, a milestone payment and future royalties from all sales of iTRAQ isobaric mass tag products by Life Technologies in addition to the existing revenues generated from Proteome Sciences license and manufacturing agreement with Thermo Fisher for TMT® reagents. As a result of the agreement referred to above, Proteome Sciences anticipates that c. $2m (£1.2m) will be reflected in revenue in the fourth quarter of 2009.

As part of the sublicense, Life Technologies will also withdraw any opposition against Proteome Sciences European TMT® patents as originally filed by Applera Corporation, now part of Life Technologies.

Proteome Sciences has continued to develop the TMT® product range. From the close working relationship with Thermo a new tag, CysTMT®, has been developed and this is expected to be launched by Thermo by the first quarter of 2010 to expand the range of applications of TMT® in the marketplace. Tagging with CysTMT® targets a specific set of peptides and so offers a range of different applications to the standard TMT® reagents. It is particularly applicable for direct labelling of more complex samples such as plasma and removes the need for prior depletion.

TMT and CysTMT® are highly complementary and extend the range of TMT® isobaric tags to a wider customer base and for a broader set of applications and will expand the revenue from our core family of TMT® reagents.

Financial Results

The financial results for the six months to the 30 June, 2009 show a loss for the period of £2,395,076 compared with £2,292,811 in the corresponding period in 2008.

A further hearing of the warranty claim against Sanofi-Aventis Deutschland GmbH was held in camera at the end of June in Frankfurt. We were encouraged that further information confirming the nature and extent of our loss has been requested by the Court and this will be submitted accordingly. As a consequence, there is little more that can be said at this time other than that things are moving forwards and that we continue to believe that we have a strong claim and this is being actively pursued.

Reference has been made above to the uneven nature of the Company's income at this stage of its development and this was reflected in the figures for the six months to 30 June, 2009 in which revenue amounted to £0.090m, compared with £0.813m in 2008. Despite this fall in turnover the loss before taxation for the period was only slightly higher at £2.485m, compared with £2.388m in the corresponding period in 2008, largely because of grant income credited of £0.308m (2008 : £0.021m) and a reduction in finance costs as a result of the lower level of interest rates.

Costs continue to be controlled carefully, and the cash outflow of the Company has again benefited from the non-payment of certain Directors' salaries and as a result of the additional income which is expected to be received in the remainder of this year the Directors anticipate, subject to no unforeseen circumstances, a lower rate of loss in that period and a reduced cash outflow.

Current Outlook

Considerable advances have been made by Proteome Sciences over the period under review, particularly through the three biomarker licenses signed in lung cancer, brain damage and Alzheimer's and through the ISO 9001 : 2008 accreditation for the PS Biomarker Services activities in Frankfurt. These should now enable us to fulfil the commercial expectations that have been anticipated for some time.

  The main focus for our proprietary biomarkers is in diseases with high volume/high value applications where there is both considerable unmet need and with either poor provision or no diagnostics available. The recent launch of the lung cancer test heralds the arrival of the next generation of tests. With the regularisation of the TMT® license concluded between Thermo and Life Technologies, we can now look forward to royalty payments through to at least 2021 from all TMT® and iTRAQ products.

We firmly believe that Proteome Sciences biomarker content and IP is now well positioned to generate multiple licensing opportunities in diagnostics and drug development. We are encouraged by the progress to date and prospects ahead.

R.S. Harris

Chairman        30th September, 2009

Unaudited consolidated income statement 

For the six months ended 30th June, 2009

Six months ended 30th June 2009 £

Six months ended 30th June 2008 £

Year ended 31st December 2008 £

Continuing operations
Revenue	90,321		813,420		849,487
Cost of sales	(15,755)		(200,627)		(225,874)
	__________		_________		__________
	74,566		612,793		623,613
Gross profit
Administrative expenses	(2,400,831)		(2,751,726)		(4,888,371)
Share of results of associates	-		(6,947)		(14,538)
	__________		_________		__________
Operating loss	(2,326,265)		(2,145,880)		(4,279,296)
Investment revenues	540		5,708		9,073
Finance costs	(159,351)		(247,639)		(516,060)
	__________		_________		__________
Loss before taxation	(2,485,076)		(2,387,811)		(4,786,283)
Tax	90,000		95,000		161,815
	__________		_________		__________
Loss for the period from continuing operations	(2,395,076)		(2,292,811)		(4,624,468)
	__________		_________		__________
Attributed to shareholders of the company	(2,395,076)		(2,292,811)		(4,624,468)
	__________		_________		__________
Loss per share
Basic and diluted	(1.80p)		(1.74p)		(3.49p)

Unaudited consolidated statement of recognised income and expense 

For the six months ended 30th June, 2009

Six months ended 30th June 2009 £

Six months ended 30th June 2008 £

Year ended 31st December 2008 £

Exchange differences on translation of foreign operations	(82,240)		123,936		223,133
	_________		_________		__________
Net (expense)/income recognised directly in equity	(82,240)		123,936		223,133
Loss for the period	(2,395,076)		(2,292,811)		(4,624,468)
	_________		_________		__________
Total comprehensive expense for the period	(2,477,316)		(2,168,875)		(4,401,335)
	_________		_________		__________

Unaudited consolidated statement of changes in equity

For the six months ended 30th June, 2009

	Share Capital	Share Premium a/c	Other reserve	Equity reserve	TranslationReserve	P&L a/c	Total
	£	£	£	£	£	£	£
At 1 January 2009	1,328,036	29,660,338	10,755,000	1,769,922	161,531	(49,299,085)	(5,624,258)
Total comprehensive expense for the period	-	-	-	-	(82,240)	(2,395,076)	(2,477,316)
Issue of share capital	-	-	-	-	-	-	-
Share-based payment charge	-	-	-	216,000	-	-	216,000
	_________	__________	__________	_________	_________	__________	_________
Balance at 30 June 2009 (unaudited)	1,328,036	29,660,338	10,755,000	1,985,922	79,291	(51,694,161)	(7,885,574)
	_________	__________	__________	_________	_________	__________	_________

  Unaudited consolidated statement of changes in equity

For the year ended 31st December, 2008

	Share Capital	Share Premium a/c	Other reserve	Equity reserve	TranslationReserve	P&L a/c	Total
	£	£	£	£	£	£	£
At 1 January 2009	1,314,654	29,150,563	10,755,000	1,834,832	(61,602)	(45,158,414)	(2,164,967)
Total comprehensive expense for the period	-	-	-	-	223,133	(4,624,468)	(4,401,335)
Issue of share capital	13,382	509,775	-	-	-	-	523,157
Share-based payment charge	-	-	-	418,887	-	-	418,887
	_________	__________	__________	_________	_________	__________	_________
Balance at 31 December 2008	1,328,036	29,660,338	10,755,000	1,769,922	161,531	(49,299,085)	(5,624,258)
	_________	__________	__________	_________	_________	__________	_________

For the six months ended 30th June, 2008

	Share Capital	Share Premium a/c	Other reserve	Equity reserve	TranslationReserve	P&L a/c	Total
	£	£	£	£	£	£	£
At 1 January 2009	1,314,654	29,150,563	10,755,000	1,834,832	(61,602)	(45,158,414)	(2,164,967)
Total comprehensive expense for the period	-	-	-	-	123,936	(2,292,811)	(2,168,875)
Issue of share capital	12,582	487,575	-	-	-	-	500,157
Share-based payment charge	-	-	-	160,726	-	-	160,726
	_________	__________	__________	_________	_________	__________	_________
Balance at 30 June 2008	1,327,236	29,638,138	10,755,000	1,995,558	62,334	(47,451,225)	(3,672,959)
	_________	__________	__________	_________	_________	__________	_________

Unaudited consolidated balance sheet

As at 30th June, 2009

			Six months ended 30th June 2009 £		Six months ended 30th June 2008 £			Year ended 31st December 2008 £
Non-current assets
Goodwill			4,218,241			4,218,241			4,218,241
Property, plant and equipment			277,287			397,201			397,680
Interest in associates			-			770,632			-
Other investments			763,502			-			763,502
			5,259,030			5,386,074			5,379,423
Current assets
Inventories			172,291			190,959			188,080
Trade and other receivables			490,045			587,011			600,699
Cash and cash equivalents			-			108,414			273,810
			662,336			886,384			1,062,589
Total assets			5,921,366			6,272,458			6,442,012
Current liabilities
Trade and other payables			(841,074)			(1,119,522)			(821,826)
Current tax liabilities			(33,502)			(39,691)			(48,944)
Short-term borrowings			(10,677,377)			(6,583,853)			(9,087,662)
Short-term provisions			(2,125,117)			(1,752,645)			(1,972,232)
Deferred grant income			-			(261,663)			-
			(13,677,070)			(9,757,374)			(11,930,664)
Net current liabilities			(13,014,734)			(8,870,990)			(10,868,075)
Non-current liabilities
Deferred grant income			-			(188,043)			-
Long-term provisions			(129,870)			-			(135,606)
			(129,870)			(188,043)			(135,606)
Total liabilities			(13,806,940)			(9,945,417)			(12,066,270)
Net liabilities			(7,885,574)			(3,672,959)			(5,624,258)
Equity
Share capital			1,328,036			1,327,236			1,328,036
Share premium account			29,660,338			29,638,138			29,660,338
Equity reserve			1,985,922			1,995,558			1,769,922
Other reserve			10,755,000			10,755,000			10,755,000
Translation reserve			79,291			62,334			161,531
Retained loss			(51,694,161)			(47,451,225)			(49,299,085)
Total deficit			(7,885,574)			(3,672,959)			(5,624,258)

Unaudited consolidated cash flow statement

 For six months 30th June, 2009

Six months ended 30th June 2009 £

Six months ended 30th June 2008 £

Year ended 31st December 2008 £

Cash flows from operating activities
Cash used in operations	(1,570,418)		(1,383,506)		(3,823,233)
Interest paid	(159,351)		(247,639)		(516,060)
Tax (paid)/refunded	(8,503)		-		217,678
	_________		_________		_________
Net cash outflow from operating activities	(1,738,272)		(1,631,145)		(4,121,615)
	_________		_________		_________
Cash flows from investing activities
Purchases of property, plant and equipment	(6,630)		(11,231)		(31,346)
Interest received	540		5,708		9,073
	_________		_________		_________
Net cash outflow from investing activities	(6,090)		(5,523)		(22,273)
	_________		_________		_________
Financing activities
Proceeds on issue of shares	-		500,158		523,157
New loans raised	1,584,562		647,254		3,151,063
	_________		_________		_________
Net cash from financing activities	1,584,562		1,147,412		3,674,220
	_________		_________		_________
Net decrease in cash and cash equivalents	(159,800)		(489,256)		(469,668)
Cash and cash equivalents at beginning of period	273,810		530,195		530,195
Effect of foreign exchange rate changes	(119,163)		67,475		213,283
	_________		_________		_________
Cash and cash equivalents at end of period	(5,153)		108,414		273,810
	_________		_________		_________

  Notes to the unaudited interim results

 For six months 30th June, 2009

1.   The information for the period ended 30 June, 2009 does not constitute statutory accounts as defined in Section 240 of 
      the Companies Act 1985. It has been prepared in accordance with the accounting policies set out in, and is consistent
      with, the audited financial statements for the year to 31st December, 2008. These statutory accounts, upon which the
      auditors issued an unqualified opinion, and which did not contain any statement under Section 237(2) of (3) of the 
      Companies Act 1985, have been delivered to the Registrar of Companies.

      The interim financial report has been prepared with accounting policies consistent with International Financial Reporting
      Standards. The financial statements have been prepared under the histrorical cost basis.

2.    Loss per share from continuing operations

The calculation of the basic and diluted loss per share is based on the following data:

Unaudited first half 2009

Unaudited first half 2008

Year ended 31st December 2008

Loss
Loss for the purpose of basic loss     per share being net loss attributable     to equity holders of the parent	(2,395,076)		(2,292,811)		(4,624,468)
Number of shares					No.
Weighted average number of       ordinary shares for the purpose        of basic loss per share	132,803,571		132,032,294		132,405,718
Share options	-		-		-
Weighted average number of      ordinary shares for the purpose of      diluted loss per share	132,803,571		132,032,294		132,408,718
IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, net loss would only be increased by the exercise of out-of-the-money options. Since it seems inappropriate to assume that the option holders would act irrationally, no adjustment has been made to diluted EPS for out-of-the-money share options.

  Notes to the unaudited interim results (continued)

 For six months 30th June, 2009

3    Note to the consolidated cash flow statement
	Unaudited first half 2009 £		Unaudited first half 2008 £	Year ended 31st December 2008 £
Operating loss	(2,326,265)		(2,145,880)		(4,279,296)
Adjustments for:
Depreciation of property, plant and equipment	82,655		83,889		174,291
Share of loss of associates	-		6,947		14,538
Share-based payment expense	216,000		160,725		418,887
	_________		_________		_________
Operating cash flows before movements in working capital	(2,027,610)		(1,894,319)		(3,671,580)
Decrease in inventories	15,788		-		45,118
Decrease/(increase) in receivables	190,883		(41,654)		(57,228)
Increase/(decrease) in payables	250,521		588,998		(486,237)
(Decrease)/increase in provisions	-		(36,531)		346,694
	_________		_________		_________
Cash used in operations	(1,570,418)		(1,383,506)		(3,823,233)
	________		_________		________

 

END

 

 

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