Provexis PLC Capital structure and funding update (0513V)

TIDMPXS

RNS Number : 0513V

Provexis PLC

03 April 2023

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

3 April 2023

Provexis plc

('Provexis' or the 'Company')

Capital structure and funding update

Provexis, the business that develops, licenses and sells the proprietary, scientifically-proven Fruitflow(R) heart-health functional food ingredient, is pleased to provide an update on its capital structure and funding. This update specifically refers to the 'Capital structure and funding' section of the Company's Interim Results announcement which was released on 30 December 2022.

Capital structure and funding update

The Company remains keen to minimise dilution to shareholders and remains focussed on moving into profitability as its revenues from Fruitflow increase.

DSM's existing and prospective pipeline of customers for Fruitflow as a straight ingredient (not a DSM Premix or DSM Market-Ready solution) were successfully transferred to become direct customers of Provexis with effect from 1 January 2023. Sales to these customers commenced in February 2023, when the first batch of Fruitflow inventory was transferred from DSM's fulfilment centre in The Netherlands to the Company's outsourced fulfilment centre in the UK.

From the legal perspective of Fruitflow customers the Company is deemed to be a new supplier and a considerable number of account setup forms and extensive food safety and other questionnaires have been required as part of the handover process.

In June 2022 Provexis and DSM announced a new long-term partnership relating to the gut microbiome patent application which the Company filed in June 2022. New products arising from this collaboration are expected to be dealt with by DSM's Premix and Market-Ready Solutions businesses.

In January 2023 the results of a successful gut microbiome human study were published in a leading peer reviewed scientific journal, and DSM issued a press release which received widespread coverage in the trade media. These announcements have helped to generate renewed interest from prospective customers for Fruitflow which are part of truly global businesses.

The Company has contractually committed to purchase more than EUR550k of Fruitflow inventory from DSM thus far, of which EUR348k was delivered and paid for in full in the quarter ended 31 March 2023. The remainder of the inventory which the Company has contractually committed to purchase from DSM is expected to be delivered and paid for in April 2023.

From 1 January 2023 the Company has been looking to sell Fruitflow to:

   1.   former DSM customers for Fruitflow; 
   2.   DSM and its Premix and Market-Ready Solutions businesses; 
   3.   new customers for Fruitflow as a straight ingredient; and 

4. By-Health and its customers, through the Company's long-term supply and distribution agreement for Fruitflow with By-Health.

The Company is now in direct contact with more than 50 actual and prospective Fruitflow customers and it is seeking to ascertain the likely demand from these actual and prospective customers for the next 12 months and beyond, with particular regard to the best before dates of DSM's remaining inventory.

The outsourced manufacturer of Fruitflow II SD (Fruitflow in spray dried powder form, the primary form of Fruitflow which is sold) is currently running some long-term stability tests on the product, with a possible view to an extension to the product's existing approved shelf life, and the results of these tests are expected in the coming weeks.

The Company will be in a better position to judge how best to manage its future inventory requirements (which can be met from either: (i) DSM's existing Fruitflow inventory; or (ii) a new Fruitflow production run) in the coming weeks once it has a clearer picture of: (i) the likely demand from the Company's actual and prospective Fruitflow customers for the next 12 months and beyond, to include By-Health; and (ii) the outcome of the stability tests on the existing Fruitflow inventory. The Company is therefore currently seeking to negotiate an extension to the initial three month inventory handover period with DSM. While these negotiations progress the Company will receive incoming funds from further sales of the Company's existing Fruitflow inventory.

The Company remains in negotiations with a third party which might be able to hold inventory for the Company on a consignment basis, with the Company potentially only paying for the inventory when it is required for sale.

Based on the Company's current level of cash it continues to be expected that the Group will need to raise further equity finance, or potentially new loan finance, in the coming months. Considering the success of previous fundraisings and the current performance of the business, the Directors continue to have a reasonable expectation of raising sufficient additional equity capital or new loan finance.

A further announcement will be made by the Company at the appropriate time.

For further information please contact:

 
 Provexis plc              Tel: [phone] 
  Dawson Buck, Chairman     [e-mail] 
  Ian Ford, CEO 
 Allenby Capital Limited    Tel: [phone] 
  Nick Naylor 
 

Notes for editors

About Provexis plc

AIM-listed Provexis is focused on the development, licensing and sales of its proprietary, scientifically-proven Fruitflow(R) heart-health functional food ingredient.

Fruitflow is a natural, breakthrough ingredient that helps with platelet aggregation. This helps promote normal blood flow and circulation, which in turn benefits cardiovascular health. Fruitflow helps the platelets to circulate freely and smoothly throughout your blood, without sticking to one another or to the blood vessels themselves. Freely flowing blood helps reduce stress on your cardiovascular system.

Fruitflow is a highly concentrated form of bioactives which is lycopene-free and contains over 30 known anti-platelet compounds. Published clinical studies have shown that Fruitflow works to maintain healthy blood flow in a similar way to 75mg aspirin but with a milder and reversible action; Fruitflow has a similar antiplatelet effect to a single dose of aspirin - but when taken daily, it has none of aspirin's side effects.

The science behind Fruitflow has been validated by leading peer review publications and regulatory authorities. Fruitflow is the only natural antiplatelet to have a health claim approved by the European Food Safety Authority, stating that 150mg of Fruitflow 'helps maintain normal platelet aggregation, which contributes to healthy blood flow'.

Provexis entered into a long-term Alliance Agreement with DSM Nutritional Products in 2010 to commercialise Fruitflow through sales as an ingredient to brand owners in the food, beverage and dietary supplement categories. More than 100 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.

In June 2022 Provexis announced it had secured two new agreements with DSM for Fruitflow, to replace the Alliance Agreement: (i) a Transfer of Business agreement and (ii) a Premix and Market-Ready Solutions supply agreement, both to take effect from 1 January 2023.

DSM's existing and prospective pipeline customers for Fruitflow as a straight ingredient have transferred to become direct customers of Provexis WEF 1 January 2023, and Provexis took over the outsourced supply chain / production process for Fruitflow at that time. The customer transfer process from DSM to Provexis is currently ongoing, and thus far it has seen a number of positive interactions with customers for direct sales of Fruitflow by Provexis in 2023 and beyond.

Fruitflow has a number of specific health benefits which have been reflected in separate patent filings for the use of Fruitflow in:

   --    mitigating exercise-induced inflammation; 
   --    managing blood pressure; 

-- protecting against the adverse effects of air pollution on the body's cardiovascular system. Laboratory work has shown that Fruitflow can reduce the platelet activation caused by airborne particulate matter, such as that from diesel emissions, by approximately one third; and

-- conferring health benefits in modulating the gut microbiome of humans, to include a reduction in TMAO, following the completion of a successful human study which is further detailed here www.dsm.com/human-nutrition/en/talking-nutrition/press-releases/2023-01-20-new-study-reveals-dsms-fruitflow-activates-gut-heart.html .

A new partnership was agreed with DSM in June 2022 relating to the commercialisation of the gut microbiome patent, subject to certain milestones which have been agreed between the parties.

In November 2021 Provexis entered into a long term supply and distribution agreement for Fruitflow with By-Health Co., Ltd. ('By-Health'), a GBP4bn listed Chinese dietary supplement business, to support the planned launch of some Fruitflow based products in the Chinese market.

The planned launch is progressing well with potential sales volumes remaining at a significant multiple of existing Fruitflow sales.

By-Health has made a significant investment in eight separate studies in China, at its sole expense, in support of the Fruitflow based products which it plans to launch in China.

The five completed studies showed excellent results in use for Fruitflow, and they provide strong evidence for its efficacy on platelet functions. The Chinese regulatory system for functional health food ingredients such as Fruitflow is governed by the State Administration for Market Regulation (SAMR), China's top market regulator, and it is based on a defined list of 27 permitted health function claims which brand owners are permitted to use on product labels.

By-Health is working on an extensive regulatory submission to the SAMR for Fruitflow, seeking to establish a new permitted health function claim for food ingredients such as Fruitflow that can demonstrate an anti-platelet effect, addressing the aberrant blood clots which can lead to heart attacks and strokes.

If By-Health is successful in obtaining a new permitted health function claim it is currently expected that this would result in some significant orders for Fruitflow, potentially at a multiple of current total sales values.

Provexis sells a high quality dietary supplement product containing Fruitflow and Omega-3 from its website www.fruitflowplus.com on a mail order basis. The product is also available to purchase from Amazon.co.uk and from Holland & Barrett.

COVID-19

In September 2020 Fruitflow was recognised in a review article by the Frontiers in Nutrition journal www.frontiersin.org/articles/10.3389/fnut.2020.583080/full which stated that nutraceuticals such as Fruitflow may serve as:

'A safe antiplatelet prophylactic treatment for those at high risk of COVID-19 who may also be at increased risk of thrombotic complications and an alternative to pharmacological compounds that may cause greater risk of bleeding.'

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 and www.fruitflowplus.com .

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April 03, 2023 02:00 ET (06:00 GMT)