Last checked at 10 May 2017 07:01
10 May 2017
Provexis plc
Trading update
Provexis plc ('Provexis' or the 'Company'), the business that develops, licenses and sells the proprietary, scientifically-proven Fruitflow® heart-health functional food ingredient, is pleased to provide an update on trading following the end of its financial year on 31 March 2017.
In its preliminary results statement currently scheduled for early September the Company expects to report on a strong year of progress.
The Company's Alliance partner DSM Nutritional Products has continued to develop the market actively for Fruitflow® in all global markets. More than 50 regional consumer healthcare brands have now been launched by direct customers of DSM, and a number of further regional brands have been launched through DSM's distributor channels.
The Company expects to report revenues for the year ended 31 March 2017 of £228k, a 148% year on year increase (2016: £92k).
Revenues accruing to the Company for the year from its profit sharing Alliance for Fruitflow® were £153k, a 66% year on year increase (2016: £92k).
The Company launched its Fruitflow® + Omega-3 dietary supplement product in late June 2016 and in its nine months on sale the product achieved sales of £29k for the financial year to 31 March 2017 through the new e-commerce website www.fruitflowplus.com.
The balance of revenue recognised in the period reflects amounts of £46k (2016: £Nil) received for marketing support; the related marketing expenditure is included as part of administrative costs.
The Company expects to report an underlying operating loss for the year of £382k (2016: loss of £385k), a record low for the Group.
An increasing number of further commercial projects have been initiated by DSM with prospective customers, including some prospective customers which are part of global businesses, with good prospects for these projects to be launched as consumer products. The Company and DSM have seen an encouraging increase in brand awareness and customer interest in Fruitflow® in recent months, and the total projected annual sales value of the prospective sales pipeline for Fruitflow® has continued to increase, now standing at an all-time high level.
MOU for a research and development collaboration with By-Health Co., Ltd for Fruitflow®
In April 2017 the Company announced that it had entered into a memorandum of understanding with BY-HEALTH Co., Ltd, a substantial listed Chinese dietary supplement business, which is intended to result in a research and collaboration agreement with BY-HEALTH for Fruitflow®.
The Company also confirmed separately that Provexis and DSM were working with BY-HEALTH to support the planned launch of some Fruitflow® based products in the Chinese market, with the first launch envisaged in the second half of 2017.
The proposed research and collaboration agreement between the Company and BY-HEALTH is intended to focus on BY-HEALTH's research programme into the development of new products that contribute to cardiovascular health, particularly in the field of blood pressure regulation, and it is intended to include a clinical trial which will be conducted in China. It is envisaged that the Company, BY-HEALTH and a third party Chinese research organisation will sign the research and collaboration agreement later this year, with the bulk of the research programme to be completed in 2018.
It is envisaged under the MOU that the Company and BY-HEALTH will jointly provide primary funding for the research and collaboration work which will include the assessment of a number of different potential product formulations. Product formulations which are covered under the Company's existing patents would continue to be owned outright by the Company, and the Company would retain proportional joint ownership of any new product formulations developed as part of the project. It is envisaged that the Company will provide scientific and technical support for Fruitflow® to BY-HEALTH throughout the collaboration.
In November 2016 the Company announced that its Alliance partner for Fruitflow®, DSM, had entered into a strategic collaboration agreement for Fruitflow® with BY-HEALTH focussing on the development of new products that contribute to cardiovascular health, and the MOU announced by the Company in April is in support of this existing collaboration, whilst ensuring that the Company retains and strengthens its intellectual property holdings.
There are more than 230m people in China who are currently thought to have cardiovascular disease, and a significant increase in cardiovascular events is expected in China over the course of the next decade based on population aging and growth alone. China is now the world's second-largest pharmaceuticals market, measured by how much patients and the state spend on drugs. The Company believes that Fruitflow® has the potential to play an important role in the Chinese cardiovascular health market.
Fruitflow® + Omega-3 dietary supplement product
On 29 June 2016 the Company announced the launch of its new Fruitflow® + Omega-3 dietary supplement product, which is exclusively available through the Company's new e-commerce website www.fruitflowplus.com, the product also has a Facebook page at www.facebook.com/FruitflowPlus
Fruitflow® + Omega-3 is a two-in-one supplement in an easy to take capsule, supporting healthy blood flow and normal heart function, and it achieved sales of £29k in the nine month period from its launch to the end of the Company's financial year on 31 March 2017.
In recent months, following some limited digital and other marketing investment, the rate of sales for the product has more than doubled relative to the initial launch period, with more than half of recent sales coming from customers on monthly subscriptions. Total monthly sales have increased every month for the past seven months.
Further UK sales channel opportunities for the product are currently being progressed, to include online listings with some major UK retailers, and some international sales channel opportunities are being explored. Fruitflow® + Omega-3 is currently sold in Europe, only, and the Company is seeking to launch the product online into wider international markets to include North America, supported by some limited and carefully targeted marketing and with continuing support from DSM.
In May 2014 US Food and Drug Administration issued some guidance concerning the use of low dose Aspirin, stating that after carefully examining scientific data from major studies it has concluded 'the data do not support the use of aspirin as a preventive medication by people who have not had a heart attack, stroke or cardiovascular problems, a use that is called 'primary prevention.' In such people, the benefit has not been established but risks - such as dangerous bleeding into the brain or stomach - are still present.' The Company believes that this guidance remains a particularly strong opportunity for Fruitflow® in North America.
Fruitflow® + nitrates dietary supplement product
In December 2013 British and international patent applications were filed for the use of Fruitflow® in mitigating exercise-induced inflammation and for promoting recovery from intense exercise, seeking to enhance further the potential of the technology in the sports nutrition sector. The patent was granted by the UK IPO on 3 May 2017, and patents are being sought in Europe, the US, China and ten other territories. The patent application has now entered the national phase, with potential patent protection out to December 2033.
The Company is keen to progress the formulation and launch of a Fruitflow® + nitrates dietary supplement product which would be supported by the Company's strong patent position in this area. The product would have anti-inflammatory and circulation benefits for athletes seeking to recover after exercise, properties which would also be potentially beneficial to a wide range of other consumers to include people suffering from the symptoms of basic ageing.
Fruitflow® and Fruitflow® + Omega-3 marketing initiatives
The Company and DSM are committed to a number of ongoing scientific and marketing initiatives for Fruitflow® and the Company's Fruitflow® + Omega-3 capsules, seeking to extend the reach of the existing science for Fruitflow® and give the products further global exposure. Scientific and marketing initiatives include:
Scientific studies
On 23 November 2016 the Company announced the publication of an important study for Fruitflow® in the European Journal of Clinical Nutrition.
The study, titled 'A randomised controlled trial comparing a dietary antiplatelet, the water-soluble tomato extract Fruitflow®, with 75mg aspirin in healthy subjects' was undertaken by Provexis with independent statistical analysis by BIOSS, and it compared the effects of Fruitflow® and 75mg aspirin. Interactions between Fruitflow® and aspirin when consumed together were also studied. A total of 47 healthy subjects completed the trial over a 7-month period.
The study, which is available to view on the Company's website at www.provexis.org/wp-content/uploads/2016/12/EJCN-Aspirin-Fruitflow-study-23-Nov-16.pdf demonstrates that Fruitflow® showed up to 30% reduction from baseline platelet aggregation in each of three different biological pathways, while a single dose of aspirin caused up to 60% reduction in a single pathway, with lesser effects on the other two. The study showed no negative interactions between Fruitflow® and aspirin when consumed together.
The study findings are statistically significant and serve to demonstrate the potential effectiveness of Fruitflow® as a dietary supplement with a significant effect on blood flow, suitable for daily use in primary prevention of CVD, and with no adverse side effects.
The World Health Organization reports that more people die annually from CVDs than from any other cause.
On 12 July 2016 the Company announced the publication of another important study for Fruitflow® in the European Journal of Nutrition.
The study, titled 'Fruitflow®: the first European Food Safety Authority-approved natural cardio-protective functional ingredient' includes a scientific summary of the entire Fruitflow® project from its inception and it is expected to be a significant opportunity to promote Fruitflow® further across scientific, trade customer and consumer channels. The study is available to view on the Company's website at www.provexis.org/wp-content/uploads/2017/03/Fruitflow-the-first-European-Food-Safety-Authority-approved-natural-cardio-protective-functional-ingredient-07-Jul-16.pdf
It is envisaged that further study publications for Fruitflow® will be submitted to appropriate scientific journals in due course.
Key Opinion Leaders' roundtable
The Company conducted a Key Opinion Leaders' roundtable event for Fruitflow® in London on 29 September 2016, with considerable support from DSM.
The roundtable was focussed on raising awareness of the importance of blood flow in cardiovascular health, and the effectiveness of dietary antiplatelets, and it was attended by key scientists from Provexis and DSM, along with a number of interested health care professionals with close links to the national media. The event was recorded and a video for Fruitflow® + Omega-3 capsules targeting prospective consumers can be seen here www.youtube.com/watch?v=P3HCSdyupEY&t=71s
The Company and DSM are keen to secure greater medical advocacy for Fruitflow® and the roundtable event forms part of this strategy, supported by a broader consumer PR campaign. The Company is keen to conduct a follow up roundtable event in the coming months.
Digital marketing strategy
A digital marketing strategy, strongly supported by DSM, has also been implemented, seeking to drive and optimise online leads and sales for the Company's Fruitflow® + Omega-3 capsules. The capsules have been promoted across key social media and other search platforms, to include DSM's key digital communities and channels.
Other marketing initiatives
Other marketing initiatives for Fruitflow® have seen the product being promoted at several major food ingredient and dietary supplement trade shows. The product has been featured in numerous publications and it has been the subject of several trade seminars and presentations, some of which are available to view in the news section of the Company's website www.provexis.com.
Some further limited digital and other marketing investment is envisaged in the coming months, likely to include a carefully costed and targeted radio campaign.
Fruitflow® and Blood Pressure - Collaboration with University of Oslo
In November 2014 the Company signed a two stage collaboration agreement with the University of Oslo seeking to undertake further research into the relationship between Fruitflow® and blood pressure regulation. Recent work undertaken by the University has shown that Fruitflow® has a potential new bioactivity, leading to blood pressure lowering effects which would be of relevance to a large number of consumers and patients with a wide range of cardiovascular conditions.
The first stage of the collaboration work, completed in 2015, was focussed on developing the science and the key results from this stage were very encouraging, with strong evidence from the laboratory based work that a standard 150mg dose of Fruitflow® in powder format has the potential to give a clinically relevant reduction in systolic blood pressure.
The Company and the University completed the second stage of the collaboration work in December 2016, which had seen the parties conduct a small clinical trial in Oslo by way of a proof of principle study. The study examined the acute effects of different amounts of Fruitflow® in powder format on parameters relating to blood pressure, such as systolic and diastolic blood pressure, mean arterial pressure, pulse pressure and heart rate. These blood pressure related parameters were monitored over a 24-hour period using ambulatory blood pressure monitoring. Platelet function was also measured. The trial subjects, who were healthy with no underlying cardiovascular disease or other conditions likely to affect blood pressure, received both placebo and Fruitflow® supplements in a blinded crossover design.
Results from the pilot study indicated that a 150mg dose of Fruitflow® in powder format significantly lowered the average 24-hour systolic blood pressure compared to placebo. When the monitoring time was split into waking and sleeping periods, both systolic and diastolic blood pressure were significantly lower after 150mg Fruitflow® treatment than after placebo treatment during the waking period; systolic pressure was also significantly lower during the sleeping period.
Raised blood pressure is estimated to cause more than 7 million premature deaths throughout the world each year, and 4.5% of the disease burden. Treating raised blood pressure by way of achieving systolic blood pressure < 140 and diastolic blood pressure < 80 has been associated with a 35-40% reduction in the risk of stroke and at least a 16% reduction in the risk of heart attack (WHO 2007). The pilot study results therefore show that Fruitflow® may have clinically relevant effects in blood pressure control.
The University of Oslo's research team was led by Professor Asim Duttaroy, Group Leader of Chronic Disease at the Faculty of Medicine, who was the original inventor of Fruitflow®. Provexis' work under the collaboration was led by Dr Niamh O'Kennedy, a research chemist specialising in the field of natural products chemistry who played a key role in the development of Fruitflow®, and the health claim for Fruitflow® which was adopted by the European Food Safety Authority ('EFSA').
Intellectual property
The Company is responsible for filing and maintaining patents and trade marks for Fruitflow® as part of the Alliance Agreement with DSM. We are pursuing a strategy to strengthen the breadth and duration of our patent coverage to maximise the commercial returns that can be achieved from the technology. Trade marks were originally registered in the larger global territories, and new registrations are typically now sought in additional territories in response to requests from current or prospective DSM customers for Fruitflow®.
In December 2013 British and international patent applications were filed for the use of Fruitflow® in mitigating exercise-induced inflammation and for promoting recovery from intense exercise, and as indicated above the patent was granted by the UK IPO on 3 May 2017. Patents are being sought in Europe, the US, China and ten other territories, with the patent application now having entered the national phase, with potential patent protection out to December 2033.
The Company's patent application for Fruit Extracts, relating to part of the production process for Fruitflow®, was granted by the European Patent Office on 11 January 2017, with the patent application also now having entered the national phase across larger global territories, with potential patent protection out to November 2029.
Capital structure and funding
The Company is seeking to maximise the commercial returns that can be achieved from its Fruitflow® technology, and the Company's cost base and its resources continue to be very tightly managed. The Company remains keen to minimise dilution to shareholders and it is focussed on moving into profitability as Fruitflow® revenues increase, but while the Company remains in a loss making position it will need to raise working capital on occasions, hence the Company's announcement on 2 May 2017 confirming that it was in late stage discussions with a small group of investors in relation to two subscriptions to raise further working capital for the Company.
The Board is pleased with the outcome of the First Subscription for £350,000 announced earlier today, and is also pleased to report non-legally binding indications of interest in a Second Subscription to raise approximately £375,000, of which approximately £250,000 is likely to be subject to the Company receiving positive EIS advance assurance clearance from HMRC. The Company highly values its private investor base and it intends to provide private investors with an opportunity to participate in the Second Subscription at 0.50 pence per share through the PrimaryBid.com platform.
The total First and Second Subscriptions are currently expected to raise at least £475,000 in total, and if the Company receives positive EIS advance assurance clearance from HMRC total Subscriptions are currently expected to exceed £725,000.
The funds raised will be used to provide the Company with additional working capital to support its revenue growth plans over the coming years, to include the research and collaboration agreement announced in April with BY-HEALTH for Fruitflow®, and they will considerably strengthen the Group's balance sheet.
Dawson Buck, Chairman of Provexis, commented:
'We are pleased to be able to report a 148% increase in revenue for the year ended 31 March 2017, along with other significant progress for the Company to include:
· The encouraging increase in brand awareness and customer interest in Fruitflow® which the Company and DSM have seen in recent months, with the total projected annual sales value of the prospective sales pipeline for Fruitflow now standing at an all-time high level;
· The strategic collaboration agreement for Fruitflow® between DSM and Chinese listed BY-HEALTH, focussing on the development of new products that contribute to cardiovascular health in China, and the related announcement by the Company confirming that it had entered into an MOU with BY-HEALTH for a research and collaboration agreement with BY-HEALTH for Fruitflow;
· The planned launch by BY-HEALTH of some Fruitflow® based products in the Chinese market, with the first launch envisaged in the second half of 2017;
· The launch and encouraging initial progress of the Company's Fruitflow® + Omega-3 dietary supplement product, which is expected to provide the Company with an additional long term income and profit stream. Further UK sales channel opportunities for the product are currently being progressed, to include online listings with some major UK retailers, and some international sales channel opportunities in North America and elsewhere are being explored;
· The planned formulation and launch of a Fruitflow® + nitrates dietary supplement product which would be supported by the Company's strong patent position in this area;
· The second stage of the Company's blood pressure pilot study for Fruitflow® which indicated that Fruitflow® significantly lowered blood pressure in waking subjects;
· The Fruitflow® comparison study with aspirin published in the European Journal of Clinical Nutrition, providing strong support for the use of Fruitflow® in the primary prevention of cardiovascular disease, and the detailed scientific study for Fruitflow® which was published in the European Journal of Nutrition in July 2016;
· The strong support which the company has received recently from investors in relation to two subscriptions to raise further working capital for the Company, to include a PrimaryBid.com element; the First and Second Subscriptions are currently expected to raise at least £475,000 in total, and may exceed £725,000 if the Company receives positive EIS advance assurance clearance from HMRC.
The Company expects that these strongly positive announcements and initiatives will have a beneficial effect on the current and future commercial prospects for Fruitflow®. The Company is well placed to maximise the commercial opportunities arising from these developments for Fruitflow® and the Provexis business, and remains positive about the outlook for the business for the coming year and beyond.'
This announcement contains inside information.
ends-
For further information please contact:
Provexis plc Tel: 07490 391888
Dawson Buck, Chairman enquiries@provexis.com
Ian Ford, Finance Director
Cenkos Securities plc Tel: 020 7397 8900
Bobbie Hilliam
Notes for editors
About Provexis plc
AIM-listed Provexis is focused on the development and licensing of its proprietary, scientifically-proven Fruitflow® heart-health functional food ingredient.
In May 2009, the Company's Fruitflow® technology was the first to be substantiated by the European Food Safety Authority ("EFSA") under the new Article 13(5) for proprietary and emerging science. In December 2009 the European Commission authorised the health claim "Helps maintain normal platelet aggregation, which contributes to healthy blood flow", which was the first wording to be authorised under Article 13(5).
In June 2010 it was announced that the Company had entered into a long-term Alliance Agreement with DSM Nutritional Products to commercialise Fruitflow®, and in June 2015 the Company confirmed it had agreed significantly enhanced financial terms for its Alliance Agreement with DSM for Fruitflow®.
The Company's Alliance partner DSM Nutritional Products has developed the market actively for the Company's novel, patented Fruitflow® heart-health ingredient in all global markets, with over 50 regional consumer healthcare brands now having been launched by direct customers of DSM, and with a number of further regional brands having been launched through DSM's distributor channels.
An increasing number of further commercial projects have been initiated by DSM with prospective customers, including some prospective customers which are part of global businesses, with good prospects for these projects to be launched as consumer products. Interest in the technology exists in all major global markets.
In June 2016 the Company launched a high quality dietary supplement product containing Fruitflow® and Omega-3 which is being sold initially from a separate, dedicated website www.fruitflowplus.com on a mail order basis.
The Company conducted a Key Opinion Leaders' roundtable event for Fruitflow® in London on 29 September 2016, focussed on raising awareness of the importance of blood flow in cardiovascular health, and the effectiveness of dietary antiplatelets. The roundtable was attended by key scientists from Provexis and DSM, along with a number of interested health care professionals with close links to the media. The event was recorded and a video for Fruitflow® + Omega-3 capsules targeting prospective consumers can be seen here www.youtube.com/watch?v=P3HCSdyupEY&t=48s
The Company and DSM are keen to secure greater medical advocacy for Fruitflow® and the roundtable event forms part of this strategy.
The roundtable event is being supported by a broader consumer PR campaign, and the Company's Fruitflow® + Omega-3 dietary supplement product has featured in a number of recent articles in the UK national press which can be seen here www.fruitflowplus.com/fruitflow-in-the-media
The Company has been engaged in a two stage collaboration agreement with the University of Oslo to undertake further research into the relationship between Fruitflow® and blood pressure regulation. In December 2016 the Company announced the results from the second stage of the collaboration, a pilot study which indicated that a standard dose of Fruitflow® in powder format significantly lowered average 24-hour systolic blood pressure compared to placebo. Both systolic and diastolic blood pressure were shown to be significantly lower whilst trial subjects were awake, a clinically relevant reduction in blood pressure which is expected to be of interest to a large number of consumers and patients with a wide range of cardiovascular conditions.
In April 2017 the Company announced that it had entered into a memorandum of understanding with BY-HEALTH Co., Ltd ('BY-HEALTH') which is intended to result in a research and collaboration agreement with BY-HEALTH for Fruitflow®. The Company also confirmed separately that Provexis and DSM are working with BY-HEALTH to support the planned launch of some Fruitflow® based products in the Chinese market, with the first launch envisaged in the second half of 2017.
BY-HEALTH is a substantial Chinese listed dietary supplement business which is currently valued in excess of £1.7bn.
Provexis was founded in 1999 and is headquartered in Reading, Berkshire.
Provexis shares are traded on the AIM market of the London Stock Exchange under the ticker symbol PXS.
For further information, please visit www.provexis.com