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29 Mar 2011 07:00
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Company Epistem Plc
TIDM EHP.L (AIM)
Headline Interim Results to the 31 December 2010
Released 29 March 2011: 7.00AM
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Epistem Holdings Plc
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Interim Results to the 31 December 2010
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Epistem Plc (LSE:EHP), the rapidly growing UK biotechnology and personalised medicine company announces today its interim results for the six months ended 31 December 2010.
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Highlights
The interim results saw Epistem continuing to strengthen its business and financial position as follows;
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Β·; Year-on-year revenue growth to Β£3.0m (Β£2.8m: 2009/10)
Β·; Recent announcement of US$4.0m collaboration with Sanofi-Aventis for discovery and clinical biomarker support
Β·; Advance of our Novel Therapies drug discovery programme with Novartis
Β·; Extension of our 5 year contract to support the US Government biodefence programme
Β·; Commencement of Genedrive molecular diagnostic testing
Β·; Strengthening demand for Contract Research Services
Β·; First half profitable growth
Β·; Strong cash position, with Net Funds of Β£4.3m
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For further details please contact:
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Epistem Plc
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Matthew Walls, Chief Executive Officer ++44 (0) 161 606 7258
John Rylands, Finance Director
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Peel Hunt LLP
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James Steel ++44 (0) 207 418 8900
Vijay Barathan
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De Facto Financial Ltd
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Mike Wort, Anna Dunphy ++44 (0) 207 861 3838
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Notes to Editors:
About Epistem
Epistem is a biotechnology and personalised medicine company commercialising its expertise in the areas of oncology, gastrointestinal diseases and dermatological applications. Epistem develops innovative therapeutics, biomarkers, diagnostics and provides contract research services to drug development companies. The Group's core expertise is focused on the regulation of adult stem cells located in epithelial tissue, which includes the gastrointestinal tract, skin, hair follicles, breast and prostate. Epistem does not conduct research in the areas of embryonic stem cells or stem cell transplantation. The Group has specialist knowledge of the effects of radiation on adult epithelial stem cells and tissue and is developing novel therapies for treatment of mucositis and radiation sickness (acute radiation syndrome) alongside its proprietary preclinical models.
Epistem operates three distinct business divisions, Contract Research Services, Novel Therapies and Personalised Medicine (Biomarkers and Diagnostics).
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Chairman and Chief Executive Officer Statement
Despite the challenging economic climate, we have seen solid growth over the first half, both in year-on-year revenues as well as earnings.
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The recent announcement of our industry leading biomarker collaboration with Sanofi-Aventis, alongside a 5 year extension of our US government biodefence contract, continues to build strength in our core business, enabling us to advance our leading drug discovery and diagnostic programmes.
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This interim report covers the six-month period from the 1 July 2010 to 31 December 2010.
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Overview
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Results for the first six months showed a year-on-year revenue increase to Β£3.0m (Β£2.8m: 2009/10), largely driven by an improvement in Contract Research and Personalised Medicine revenues (including our Biomarker activities), which gave rise to a profit for the first half of Β£0.1m (Β£0.0: 2009/10).
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Contract Research Services saw a 19% increase in year on year revenues to Β£1.4m (Β£1.2m: 2009/10). The announcement of a 5 year extension to the US NIH biodefence contract, coupled with a strengthening performance in Europe helped buoy the first half divisional results.
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Personalised Medicine
Biomarker - The recent announcement of the Sanofi-Aventis biomarker collaboration sets out a new business model for biomarker discovery across the industry and this will greatly enhance the outlook of our Biomarker division. We anticipate that the collaboration with Sanofi-Aventis will generate Biomarker divisional revenues of US$4.0m over the next three years, with the prospect of the model being reproducible across our other pharmaceutical partners. Biomarker revenues also improved over the first half to Β£0.4m (Β£0.3m: 2009/10).
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Diagnostics - The division has commenced diagnostic testing in selected genitourinary medicine clinics in the UK for sexually transmitted disease. Commercial discussions have also commenced with major industry groups capable of taking forward our first disease diagnostics products into the market with initial (evaluation) revenues expected over the second half of the current financial year.
Novel Therapies's discovery and development programme continues to advance around identifying novel regulators of epithelial tissue. The funded research phase of the Novartis collaboration was completed at the end of February 2011 and we anticipate discussions continuing over the coming months around how best to develop the novel hits/leads that have emerged. Collaborative discussions are also being progressed with other potential partners in the areas of Regenerative Medicine and Oncology.
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Revenue and earnings growth continue to remain key to de-risking our business model and to enabling portfolio flexibility around the differing speeds of growth, investment and development for each of our business divisions.
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Financial Review
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Sales revenues from business operations for the six months of this financial year were Β£3.0m (Β£2.8m: 2009/10), a year on year increase of Β£0.2m.
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Contract Research Services and Personalised Medicine provided the firmest support for revenue growth with demand for both these businesses continuing to build around our core scientific expertise. Novel Therapies revenues remained constant throughout the first half based on the fixed funded resources in support of the Novartis discovery programme.
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Costs remained broadly in line with the prior year, enabling the business to report a profit of Β£0.1m (Β£0.0m: 2009/10) for the first half.
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The corresponding basic earnings per share figure for the first half was 0.9p (2009/10: 0.0p)
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New investment in our Personalised Medicine diagnostics platform, Genedrive (Β£0.2m) and non-cash related profit and loss adjustments (Β£0.8m) brought cash reserves at the 31 December 2010 to Β£4.3m (Β£5.3m: 30 June 2010).
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Operational Review
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Contract Research Services
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Our Contract Research Services division continues to build its core biology and scientific reputation around complex drug efficacy modeling and high quality of service. An improving first half revenue performance in Europe and US enabled the division to show strong growth, especially around our inflammatory bowel disease models.
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Personalised Medicine
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Biomarker divisional growth improved over the first half and will be further supported by the recently announced Sanofi-Aventis biomarker and commercialisation collaboration. The collaboration will provide oncology biomarker support to Sanofi-Aventis across its oncology division over the next three years. We anticipate further biomarker revenue collaborative growth over the second half.
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Diagnostics. Epistem's new diagnostic device 'Genedrive', is targeting a near patient, low cost and rapid turnaround (~25mins) molecular diagnosis across a broad spectrum of disease areas. Genedrive is now in production and assay build has commenced in sexually transmitted disease (STD). External beta testing is underway with collaborative discussions ongoing with a number of major groups for use of the device in a range of infectious diseases and oncology. Genedrive is expected to be both novel and disruptive in its market position and we anticipate generating significant growth and interest in our diagnostic strategy.
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The Novel Therapies collaboration with Novartis has completed its research phase and we are considering next steps around the development of our novel hits/leads under the collaboration. Hits/leads generated to date are being characterised across a number of disease areas and these will be further developed over the coming months. We will carefully select and prioritise those hits/leads for further development. Alongside the Novartis collaboration, we are also advancing our discussions with other pharmaceutical/biotech groups.
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Strategy
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Epistem remains focused on strengthening revenue and earnings growth coupled with advancing our globally leading technologies and scientific expertise. Where appropriate, we will carefully consider acquisition of new technology and businesses to complement our growth strategy.
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The Board believes that Epistem's growing business model differentiates us within the sector as a lower risk investment proposition with significant upside potential.
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Outlook
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Over the second half we expect to see improving Contract Research Services and Biomarker revenues alongside the advance of the first revenues from our 'Genedrive' diagnostic platform. Novel Therapies discussions will continue across a group of partners, including Novartis, but there may be some uncertainty around the timings, duration and outcome of these discussions.
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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.
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The Board remains confident that the Group is well placed to deliver increasing shareholder value in the medium term based on its current performance and on the opportunities now emerging.
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David Evans Matthew Walls
Non Executive Chairman Chief Executive Officer
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29 March 2011
Statement of Consolidated Comprehensive Income
For the six months ended 31 December 2010
Six months to Six months to Year ended
31 Dec 2010 31 Dec 2009 30 June 2010
(unaudited) (unaudited) (audited)
Β£'000 Β£'000 Β£'000
Revenue 2,978 2,763 5,740
Contract costs (1,467) (1,315) (2,697)
Discovery and development costs (646) (747) (1,433)
General administrative costs (772) (700) (1,298)
Operating profit 93 1 312
Finance income 11 7 40
Finance costs (2) (3) (2)
Profit on ordinary activities before taxation 102 5 350
Taxation on ordinary activities (29) - (60)
Total Comprehensive Income for the financial period 73 5 290
Earnings per share (pence)
- basic 0.9p 0.0p 3.8p
- fully diluted 0.8p 0.0p 3.3p
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Consolidated Statement of Changes in Equity
For the six months ended 31 December 2010
Employee
Equity Share Share Share Reverse
Share Premium Incentive Options Acquisitions Retained Total
Capital Account Plan reserve Reserve Reserve Earnings Equity
Β£'000 Β£'000 Β£'000 Β£'000 Β£'000 Β£'000 Β£'000
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At 1 July 2009 108 8,467 - 606 (2,484) (3,937) 2,760
Allotment of ordinary shares 11 2,873 - - - - 2,884
Share issue costs - (135) - - - - (135)
Recognition of equity settled share-based payments - - - 14 - - 14
Total Comprehensive Income
Β for the financial period - - - - 5 5
At 31 December 2009 119 11,205 - 620 (2,484) (3,932) 5,528
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Purchase of own shares - - (43) - - - (43)
Exercise/lapse of options - 1 - (1) - -
Recognition of equity settledshare-based payments - - - 14 - - 14
Total Comprehensive Income
Β for the financial period - - - - 285 285
At 30 June 2010 119 11,206 (43) 633 (2,484) (3,647) 5,784
Purchase of own shares - - (23) - - - (23)
Recognition of equity settledshare-based payments - - - 6 - - 6
Total Comprehensive Income
for the financial period - - - - 73 73
At 31 December 2010 119 11,206 (66) 639 (2,484) (3,574) 5,840
Consolidated Balance Sheet
As at 31 December 2010
31 Dec 2010 31 Dec 2009 30 June 2010 (unaudited) (unaudited) (audited)
Β£'000 Β£'000 Β£'000
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Non-current assets
Intangible assets 388 137 135
Plant and equipment 584 587 608
Deferred taxation 505 594 536
1,477 1,318 1,279
Current assets
Trade and other receivables 1,199 1,107 1,011
Tax receivables 75 150 150
Cash and cash equivalents 4,320 5,598 5,371
5,594 6,855 6,532
Liabilities
Current liabilities
Deferred income 230 1,380 974
Trade and other payables 987 895 1,014
Obligations under finance leases 14 46 37
Corporation taxation - - 2
Bank overdrafts and loans - 77 -
1,231 2,398 2,027
Net current assets 4,363 4,457 4,505
Total assets less current liabilities 5,840 5,775 5,784
Non-current liabilities
Deferred income - (230) -
Obligations under finance leases - (17) -
Net assets 5,840 5,528 5,784
Capital and reserves
Called-up equity share capital 119 119 119
Share premium account 11,206 11,205 11,206
Employee share incentive plan reserve (66) - (43)
Share options reserve 639 620 633
Reverse acquisition reserve (2,484) (2,484) (2,484)
Retained earnings (3,574) (3,932) (3,647)
Total shareholders' equity 5,840 5,528 5,784
Consolidated Statement of Cash Flows
For the six months ended 31 December 2010
31 Dec 2010 31 Dec 2009 30 June 2010
(unaudited) (unaudited) (audited)
Β£'000 Β£'000 Β£'000
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Cash flows from operating activities
Operating profit for the year 93 5 312
Depreciation, amortisation and impairment 99 80 169
Share-based payment expense 6 14 28
Operating profit before changes in working
capital and provisions 198 99 509
Β (Increase) in trade and other receivables (188) (287) (191)
(Decrease)/ in deferred income (744) (690) (1,326)
(Decrease)/increase in trade and other payables (27) 174 293
Net cash outflow from operations (761) (704) (715)
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Interest received 11 7 40
Tax received 75 - -
86 7 40
Net cash outflow from operating activities (675) (697) (675)
Cash flows from investing activities
Investment in intangible assets and plant & equipment (328) (200) (308)
Net cash outflow from investing activities (328) (200) (308)
Cash flows from financing activities
Proceeds from issue of share capital - 2,884 2,884
Expenses of share issue - (135) (135)
Purchase of own shares (23) - (43)
Repayment of borrowing (25) (27) (48)
Net cash (outflow)/inflow from financing activities (48) 2,722 2,658
Net increase/(decrease) in cash equivalents (1,051) 1,825 1,675
Cash and cash equivalents at beginning of period 5,371 3,696 3,696
Cash and cash equivalents at end of period 4,320 5,521 5,371
Analysis of Net Funds
Cash at bank and in hand 4,320 5,598 5,371
Bank overdrafts - (77) -
Net Funds 4,320 5,521 5,371
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Segment information
Contract Research Personalised Novel Unallocated Services Medicine Therapies Expenses Total
Β£'000 Β£'000 Β£'000 Β£'000 Β£'000
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Six months ending 31 December 2010
Revenue 1,386 383 1,209 - 2,978
Segment trading result 424 (68) 601 (759) 198
Less depreciation and amortisation (26) (24) (36) (13) (99)
Less equity settled share-based payments - (4) (2) - (6)
Operating profit/loss 398 (96) 563 (772) 93
Six months ending 31 December 2009
Revenue 1,166 307 1,290 - 2,763
Segment trading result 328 (134) 584 (685) 93
Less depreciation and amortisation (12) (18) (38) (10) (78)
Less equity settled share-based payments - (6) (3) (5) (14)
Operating profit/loss 316 (158) 543 (700) 1
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Twelve months ending 30 June 2010
Revenue 2,519 800 2,421 - 5,740
Segment trading result 759 (51) 1,067 (1,265) 510
Less depreciation and amortisation (31) (36) (80) (22) (169)
Less equity settled share-based payments (6) (12) - (11) (29)
Operating profit/loss 722 (99) 987 (1,298) 312
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