Tern Regulatory News (TERN)

4 November 2020

Tern Plc

("Tern" or the "Company")

Investment in digital health data company Talking Medicines Limited

Tern Plc (AIM:TERN), the investment company specialising in the Internet of Things ("IoT"), is pleased to announce an investment of £860,000 for a 23.4% holding in Talking Medicines Limited ("Talking Medicines"). Tern is the lead investor in this syndicated funding round of an aggregate of £1.1 million alongside the Scottish Investment Bank, Scottish Enterprise's investment arm, who is following its initial investment.

Highlights

· Talking Medicines, based in Glasgow and London, uses advanced artificial intelligence and machine learning techniques to provide pharmaceutical companies with real-time data intelligence.

· Talking Medicines looks to capture the "global digital voice" of the patient from numerous unstructured online sources to provide actionable intelligence to its customers, aimed at transforming big pharma's understanding of patient sentiment.

· Talking Medicines will use the funds to grow its product team in order to launch its new artificial intelligence data service, with a view to rapidly scaling its patient database and broadening its customer base.

· This investment represents the second IoT healthcare investment by Tern and expands Tern's participation in the rapidly growing digital health market.

· The investment in Talking Medicines provides the Tern portfolio with access to artificial intelligence ("AI"), machine learning ("ML") and natural language processing ("NLP") technologies.

· The transaction is in line with the Company's strategy to increase the breadth of its portfolio and brings the number of Tern's portfolio companies to six.

· The investment will be funded from Tern's existing cash resources.

Talking Medicines

Talking Medicines, based in Glasgow and London, uses advanced AI and ML to provide pharmaceutical companies with real-time data intelligence. The company uses a collection of AI, ML and NLP tools to capture and structure the global digital voice of the patient from real world conversations and behaviours at home. Through mapping the patient voice from social media and connected devices to information on the specific regulated medicines they are using, Talking Medicines is able to build data points to determine trends and patterns of patient sentiment across these medicines, including how the patient takes and reacts to the medicine. This intelligence is at an individual medicine level with metrics that pharmaceutical companies can use, which are not currently readily available to them, to support patient-centric marketing decisions, driving more effective marketing spend and, ultimately, improved medicines and patient outcomes.

The investment is into non-participating preference shares, which carry a coupon of 6% per annum. Each holder of these preference shares has the right to convert its shares at any time into Talking Medicine ordinary shares at an initial conversion rate of 1:1. Following the investment, Tern is entitled to appoint the Chair of the board of Talking Medicines and have one board observer.

For the year ended 31 August 2019, the latest available financial year, Talking Medicines made an unaudited retained loss of £166,094 and at that date had unaudited net assets of £421,479. Over £1 million has been invested in the business prior to this funding round. Further information on Talking Medicines may be found at https://talkingmedicines.com.

This investment is in line with the Company's strategy to increase its synergistic portfolio and brings the number of Tern's portfolio companies to six. It is being funded from Tern's existing cash resources.

Commenting on the investment, Tern CEO, Al Sisto, said, "We are truly excited to add Talking Medicines to our portfolio. It is a company that brings expertise in artificial Intelligence and machine learning to our portfolio with its platform and is solving a critical problem for an industry that spends around US$30 billion1 on marketing annually, whilst lacking systematic data tools that can structure patient sentiment from social channels2. The Talking Medicines platform, with its natural language processing and differentiated technology provides pharma companies with the ability to find meaningful and valuable insights from the c.50% and growing proportion of the world's population who are active on social media. This gives Talking Medicines' clients the ability to capture valuable measurements and insights about their products from the voice of their own patients.

"We look forward to working with the Talking Medicines team as the proceeds of our investment are used to scale the business."

Talking Medicines CEO, Jo Halliday, added, "We are delighted that Tern is joining our investor group, and that Al Sisto will be bringing his wealth of experience to the Board. Talking Medicines' vision is to create the world's leading source for organising the voice of the patient by specific drug, transforming big pharma's understanding of patient sentiment. 80% of people in the US access health information online3 and during the pandemic there are estimates of significant growth in the use of social media accounts. Now more than ever we passionately believe that big pharma needs a systematic way to make data-driven decisions through accessing high grade social intelligence from the patient. This investment will scale our team and the development of our AI, ML, NLP tools to translate what patients are saying into actionable pharma grade intelligence through our global patient confidence score by medicine. We are aligned with our customers in looking to technical innovation to drive more effective medicines."

Sources

1 https://jamanetwork.com/journals/jama/fullarticle/2720029

2 https://pharmaphorum.com/views-and-analysis/pharma-social-media-time-engage-now/

3 Health Information Obtained from the Internet and Changes in Medical Decision Making, Journal of Medical Internet Research, February 12, 2018

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014 (MAR).

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