Sign In
Last checked at 
14 Mar 2012 07:00
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 (GenedriveTM) 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 (GenedriveTM) 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 (GenedriveTM) 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 GenedriveTM technology. GenedriveTM 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 GenedriveTM device and IDTM assay technology. GenedriveTM 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. GenedriveTM 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)
Follow the stocks
