Intuitive Inv Regulatory News (IIG)

Intuitive Investments Group plc

Final Results

Notice of Annual General Meeting

Intuitive Investments Group plc (AIM: IIG) ("IIG" or the "Company"), a closed-end investment company focussed on the life sciences sector, announces its final results for the year to 30 September 2022. The full report and accounts (the "Report") can be viewed by clicking on the following link: https://iigplc.com/financial-reports/

Annual General Meeting

The Report also includes the notice of the Company's Annual General Meeting, which will be held at the Parklands Hotel & Country Club, Crookfur Park, Ayr Road, Newton Mearns, Glasgow G77 6DT on 17 January 2023 at 10.30 am.

Financial highlights

Operational highlights

· Acquisition of Touchless Innovation Ltd, including its wholly owned subsidiary Touch-Less Hygiene UK Ltd and the business and assets of Sanoserv International Franchising Ltd (trading as Sanondaf).

· Subscription to raise £607,000 by the issue of 2.76 million new ordinary shares at a price of 22 pence per share, principally subscribed for by directors of IIG.

· Investment in Ocutec Ltd, a private company in the late-stage portfolio, at a cost of £250,000.

· The follow-on investment in Pneumowave Ltd resulting in an uplift in valuation of £454,000.

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About Intuitive Investments Group plc

Intuitive Investments Group plc is an investment company seeking to provide investors with exposure to a portfolio concentrating on fast growing and/or high potential Life Sciences businesses operating predominantly in the UK, continental Europe and the US, utilising the Board's experience and in particular that of the Chairman of the Investment Committee, David Evans, to seek to generate capital growth over the long term for shareholders.

Regulatory Information

This Announcement contains inside information for the purposes of the UK version of the market abuse regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

Intuitive Investments Group Plc

Chairman and Chief Executive's Report

Background

We are pleased to report the year end results to 30 September 2022. Julian Baines replaced David Evans as Chairman of the Company in February 2022 with David becoming Chair of the Investment Committee at that time.

Market commentary

The macro-environment continues to be challenging in the small cap healthcare sector. During the year under review the AIM All-Share (AXX) index fell by 35.0%. By comparison, the Company's NAV fell 10.6%.

As we noted in our interim statement, a handful of small cap healthcare companies were overvalued, often driven by anticipation of COVID-related revenues, but we had not invested in these companies. The subsequent mark down in small-cap healthcare has been indiscriminate and not driven by fundamentals.

Another notable trend in the healthcare sector has been the relative underperformance of the share prices of small cap companies compared to large cap companies. This is partly a function of generalist investors seeking defensive and liquid characteristics of large cap healthcare companies. This differential in performance is unsustainable, not least as we believe the large cap companies will begin to exploit this relative valuation gap by acquiring small and mid-sized companies. We have begun to see some M&A activity in the sector.

Opportunity

Rather than viewing the small cap healthcare sector's performance with dejection, we view this as an opportunity to invest in companies, both private and publicly traded, which are below their long-term value. Moreover, we perceive there is unmet medical need and the need for innovation in hygiene, sanitisation and healthcare-associated infection prevention sector. Therefore, we will look to capitalise on this opportunity around infection prevention, building on the foundation we have in our investment in Sanondaf. We also recognise that overheads in many publicly traded small cap companies is too high and not an efficient use of capital, therefore we will look to acquire or merge if there is a strategic logic.

Reliable statistics as to the cost of healthcare-associated infections are difficult to source as the impacts are multifaceted, for example, the additional length of stay in hospital, further interventions needed as management of infection invariably involves use of broad-spectrum antibiotics and attributing mortality. However, there is reporting of certain infections. For example, The UK Health Security Agency (UKHSA) reported that in the year to March 2022 compared to year to March 2020, the year prior to the COVID pandemic, E. coli and meticillin resistant Staphylococcus aureus cases were lower, Klebsiella spp., Pseudomonas aeruginosa and meticillin sensitive Staphylococcus aureus were similar and Clostridioides difficile infection counts were at a nine-year high.

The resulting recommendation of the UKHSA is that control efforts in the hospital setting must be maintained or strengthened, while increasing attention on healthcare interventions in the community and the interface between hospital and community infection control teams improved.

Sanondaf has a technology which provides excellent disinfection capability with very quick turnaround times, particularly when compared to competitor products. The company's service and machines are cost effective and can be used in both community and hospital settings - truly disinfection for all.

Corporate performance review

Sanondaf has a diverse customer base with over 60 customers, including the NHS, serviced through its head office. It has an extensive network of 25 franchisees in the UK and operates across ten countries. Management accounts for Sanondaf, to 30 September 2022 show revenue of £1,893,000 and profit before tax of £518,000.

There has been a reduction in revenues in a post-COVID environment which was exacerbated by Sanondaf's major customer going through a change of ownership with this followed by industrial action, resulting in significantly reduced revenues. We and the management team had anticipated an element of this reduction in revenue due in a post-COVID environment, but anticipated this would be more than matched by the opportunity in international master franchise sales.

However, we have found these international sales lead times are extending, again in part due to a post-COVID related malaise. We remain confident about the growth prospectus for the international business in the medium-term, but in the short-term these opportunities are yet to be realised, we are therefore having constructive discussions with the vendors regarding the deferred consideration.

In addition, Sanondaf has evolved its business model to include the sale of machines and consumable supply direct to customers, including the NHS, allowing Sanondaf to capture sales at a higher margin.

Unquoted investments

The unquoted portfolio continues, in the main, to be held either at cost, plus accrued interest if applicable, or the valuation of the most recent investment round. Both Axol Bioscience Ltd and Momentum Ltd have raised additional capital. This is at the same valuation as the round in which IIG participated and therefore there is no change in valuation. Three investments were made during the year, Sanondaf, Ocutec Ltd and a follow-on investment into Pneumowave Ltd. The follow-on investment in Pneumowave Ltd has resulted in an uplift in valuation of £454,124. Further details of the companies in the unquoted portfolio are contained at the end of this statement.

Listed portfolio at 30 September 2022

The publicly traded portfolio has not performed well. As noted above we do not perceive that any of our investments achieved excessive valuations, but have been marked down indiscriminately in the post-COVID small cap healthcare sell off. We believe volatility will be a feature in the small cap healthcare sector and as quickly as companies de-rated there is the potential to appreciate, particularly with good stock specific news such as FDA approvals for Polarean Imaging plc, further licensing deals in other disease states for Evgen plc, roll-out of innovative diagnostic tests in Yourgene plc and customer wins with improved efficiency and cost savings through telemedicine in Trellus Health plc. Light Science Technologies plc has made progress, although there have been significant headwinds, as seen by their latest trading update.

Financial performance

NAV per share has decreased by 10.6% from the previous year end. Net Assets were £12,934,00, including investments of £11,160,000 and cash of £1,553,000

There is net deficit income of £1,073,000, comprising unrealised losses of £1,493,000, realisation of publicly traded companies of £76,000, interest from the convertible loan notes in aggregate of £148,000 and management fees received of £31,000. The administrative costs of the business were £494,000 for the year, which included one off costs of £94,000 in relation to the acquisition of Touchless Innovation. Overall retained loss was £1,158,000.

Given the cash and liquid investments compared to the administrative costs, the Company has adequate working capital for a number of years. The Board does not propose to declare a dividend.

Change to investment policy

We are proposing, as part of the Notice of Annual General Meeting, at the end of the report and accounts, to remove the investment restriction that no investment or group of investments in the same company or group of companies will represent more than 45% of NAV. We believe this change will allow the Board more flexibility in generating shareholder returns.

People

We have an excellent Board and Advisory Panel, which we believe have the necessary skills to substantially grow the Company. We wish to take this opportunity to thank the team for their commitment and hard work during this initial period.

Outlook

Although COVID appears to be in the distant past, it highlights the need for effective products and services in hygiene, sanitisation and hospital acquired infection prevention sector. We perceive we have an opportunity to exploit this need by building an infection prevention business on the foundation we have in our investment in Sanondaf. This presents a real opportunity of providing shareholders excellent returns in the medium term.

21 December 2022

Later stage investments

BioQ Pharma Incorporated ("BioQ") (www.bioqpharma.com)

Investment of US$1 million by way of unsecured convertible loan notes and warrants, valued at cost plus accrued interest.

BioQ has raised more than $30 million in subscription for the CLN and is looking to prepare for a fundraising in the Series E ordinary shares. A further update is expected by the company before the calendar year end.

BioQ is a commercial-stage, medical device and pharmaceutical company, addressing the infusible drugs market. BioQ's proprietary InveniousTM platform comprises a "connect-and-go" drug-device system combination, which can be utilised to improve the delivery of infusible medicines. BioQ's platform includes a bespoke unit-dose delivery solution for infusible drugs, whereby a diluent delivery system and administration line are combined in one self-contained, ready-to-use presentation. The key benefits of the platform include reduced cost and complexity compared to current infusion techniques.

Touchless Innovations Ltd ("Sanondaf") (www.sanondaf.co.uk)

Investment of £6.36 million to acquire the entire issued share capital, held at fair value, for which cost is deemed the most appropriate basis of measurement.

Sanondaf is a market-leading provider of specialist disinfection and decontamination services operating in 10 countries and has 25 regional sites in the UK. Treatments are non-corrosive, contain no toxic ingredients and Sanondaf's application methods ensure they are not harmful to people, animals or the environment. It is safe for use in all settings, including operating theatres, critical care units, and is CASA (Civil Aviation Safety Authority) approved. Sanondaf's disinfection formula has proven efficacy against pathogens, included, viruses, mould, bacteria and fungi.

Series A and B investments

Axol Bioscience Ltd ("Axol") (www.axolbio.com)

Investment of £249,092 in A ordinary shares, held at fair value, for which cost is deemed the most appropriate basis of measurement. The company undertook a fundraising in April 2022 at the same valuation as IIG's investment.

Axol produces high quality human cell products, particularly in relation to pluripotent stem cell and critical reagents such as media and growth supplements, which are sold to medical research and drug discovery organisations. Axol also provides contract research for example customising cell lines for customers, such as reprogramming and differentiation. The Chairman of Axol is Jonathan Milner, who was previously deputy chairman of Abcam plc.

CardiNor AS ("CardiNor") (www.cardinor.com)

Investment of £122,260 in ordinary shares, held at fair value, for which cost is deemed the most appropriate basis of measurement.

CardiNor has made excellent progress particularly with the amount of money raised, which includes:

· Elisa test CE marked with clear route to market in the Europe and next generation magnetic test being developed.

· RuO in the US, but distribution deal done with IBL and talking to Labcorp. Going for full FDA approval.

Valuation is 80 million NOK c.£7 million. CardiNor is a Norwegian biotech company established in June 2015 to commercialise the development of secretoneurin ("SN"), an important new biomarker for cardiovascular disease ("CVD"). SN is the only biomarker shown to be associated with biological processes linked to cardiomyocyte handling. This unique biological function explains why SN presents as an independent and strong predictor of mortality in all major patient cohorts, including ventricular arrhythmia, acute heart failure, acute respiratory failure patients with CVD and severe sepsis. CardiNor has completed development of a research assay based on immunoassay technology to measure SN in blood and the assay is under further clinical development, allowing it to obtain a CE mark.

The Electrospinning Company Ltd ("TECL") (www.electrospinning.co.uk)

Investment of £500,000 in ordinary shares, held at fair value, for which cost is deemed the most appropriate basis of measurement.

Held at cost, TECL is trading in line with management expectations. TECL has a technology platform built around the process of electrospinning, a technique for production of micro and nano-fibre biomaterials from a variety of natural and synthetic polymers, and a suite of post-processing technologies to convert the biomaterials into medical device components. The core business is the sale of product development and manufacturing services to medical device companies. TECL is also using its know-how to develop proprietary materials for targeted out-licensing opportunities, aiming to capture more of the end-market value created by its innovations and expertise.

Micrima Ltd ("Micrima") (www.micrima.com)

Investment of £200,000 by way of convertible loan note held at fair value, for which cost is deemed the most appropriate basis of measurement.

Micrima is a commercial stage company which has developed a new imaging method, the MARIA® system, based on radiofrequency technology to improve early diagnosis of breast cancer. Micrima continues to make progress, but has suffered some delays in its commercial launch due to not achieving the requisite sensitivity.

Momentum Bioscience Ltd ("Momentum") (www.momentumbio.co.uk)

Investment of £125,000 in preferred A ordinary shares, held at fair value, for which cost is deemed the most appropriate basis of measurement. Momentum undertook an additional subscription in September 2022 at the same valuation as IIG's investment.

Momentum is developing a revolutionary rapid diagnostic test for patients suspected of sepsis, an infection of the blood stream resulting in symptoms including a drop in a blood pressure, increase in heart rate and fever. Momentum's SepsiSTAT® system enables reporting of the presence or absence and 'pan gram identification' of viable organisms in just two hours, helping direct the right antimicrobials. The system also provides a pure concentrate of growing organisms for further analysis. Faster testing in suspected sepsis patients can reduce mortality, accelerate hospital discharge, lower hospital costs, and reduce the incidence of antimicrobial resistance. SepsiSTAT® is a diagnostic test that runs from a sample of whole blood before any culturing steps are taken and is currently being studied in clinical practice with highly encouraging early results indicating competitive sensitivity versus the current standard of care. Over 120 million blood tests for sepsis are run annually representing a market potential of over £1 billion.

Ocutec Ltd ("Ocutec") (www.ocutec.com)

Investment of £250,000 in ordinary shares, held at fair value, for which cost is deemed the most appropriate basis of measurement.

Ocutec has patented technology covering the formulation of novel contact lens products, contact lens comfort solutions and injection moulding technology for rapid manufacturing. Ocutec is based in Glasgow, and has been operating since 2006, having been spun out of the University of Strathclyde.

PneumoWave Ltd ("PneumoWave") (www.pneumowave.com)

Investment of £904,124 in new ordinary shares, held at fair value, for which last investment round is deemed the most appropriate basis of measurement.

IIG invested £100,000 by way of convertible loan notes which converts at a 15% discount to the Series A and £350,000 in the pre-series A funding round. The Series A round has completed leading to an increase in valuation of £454,124.

PneumoWave, which was incorporated in February 2018, is developing an innovative remote respiratory monitoring platform comprising a small, chest-worn biosensor and AI-driven data analysis/alerting software for the early detection, prediction, and prevention of adverse events in respiratory patients, both in hospitals and at home. In 2020, PneumoWave was awarded Breakthrough Medical Device designation from the U.S. Food and Drug Administration for the development of the device, which is designed to monitor breathing in real-time to a clinical standard of care.

The specially designed wireless biosensor is one of the smallest available and transmits data to the cloud using a data hub or smartphone, alerting the patient, their household members, doctor, nurse, or emergency services where life-threatening changes occur. PneumoWave's technology will be able to accurately monitor large numbers of patients in any location at any time.

Intuitive Investments Group Plc

Statement of Comprehensive Income

For the year ended 30 September 2022

Intuitive Investments Group Plc

Statement of Financial Position

As at 30 September 2022

Intuitive Investments Group Plc

Statement of Changes in Equity

As at 30 September 2022

Intuitive Investments Group Plc

Statement of Cash Flows

For the year ended 30 September 2022