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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Premaitha | LSE:NIPT | London | Ordinary Share | GB00BN31ZD89 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.10 | 9.00 | 9.20 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMNIPT
RNS Number : 5150A
Premaitha Health PLC
29 December 2017
Premaitha Health PLC
("Premaitha", the "Company" or the "Group")
Half year results
Manchester, UK - 29 December 2017: Premaitha Health PLC (AIM: NIPT), a leading molecular diagnostics group with a primary focus on the commercialisation of its non-invasive prenatal testing ("NIPT") technology, announces half year results for the six months ended 30 September 2017.
Financial highlights
-- Revenues increased by 87% to GBP2.7m (H1 2016/17: GBP1.5m) -- Test volumes doubled to over 22,000 (H1 2016/17: 11,000) -- Gross profit up 120% to GBP1.3m, 48% of revenues (H1 2016/17: GBP0.6m, 41%)
-- Operating loss increased to GBP4.7m (H1 2016/17: GBP3.5m) due to GBP1.3m charge to increase litigation provision
-- Recovery efforts continuing for debts owed by Swiss customer, Genoma SA ("Genoma"), including successful application to place Genoma in bankruptcy in May 2017
-- Further $5.0m investment by Thermo Fisher in July 2017 in form of loan facility extension and associated warrants
-- Cash and cash equivalents at 30 September 2017 of GBP1.6m (not including R&D tax credits of GBP0.6m) (30 September 2016: GBP2.7m)
-- Continued focus on achieving positive pre-litigation cashflows by year-end March 2018
-- Litigation funding scenarios under review in light of adverse judgment in November 2017 and potential developments in Q1 2018
Operational highlights
-- Integration of Yourgene Bioscience ("Yourgene") acquisition completed successfully and synergies already being realised
-- Significant commercial progress:
o Expansion of customer base and increased market penetration in existing territories including: India; South East Asia; Middle East and Europe
o Entry into new markets with customers secured in East Asia and South Africa
o IONA(R) test approved for Brazilian Good Manufacturing Practice
-- Product development roadmap delivering enhancements and range expansion:
o IONA(R) test validated on Thermo Fisher's Ion S5 range of instruments
o Launched Sage(TM) remote analysis prenatal screening solution
-- Patent litigation continues to create significant headwinds:
o Further UK patent infringement claim filed by Illumina in September 2017, counter-application by Premaitha for abuse of legal process to be heard in March 2018
o Post period-end received adverse UK first instance judgment in relation to ongoing dispute with Illumina, appeal in preparation
o Active engagement continues with EU Competition Commission for anti-trust defence
Dr Stephen Little, CEO of Premaitha, said: "We continue to make excellent commercial progress, with revenues up 87% and test volumes doubling. In the last 6 months, the Group has made significant strides in expanding the business and de-risking its intellectual property position through international expansion. Today, less than 20% of the Group's revenues are impacted by the UK judgment. Recent laboratory installations and public policy implementations will drive further growth in 2018 and will further reduce the percentage of our revenues from the UK as our share of the very substantial global NIPT market continues to grow - a market which is forecast to exceed $1 billion by 2021.
"We were very disappointed by the first instance judgment in the UK in relation to the Illumina NIPT patent claims, for which we are preparing a robust appeal ahead of the next hearing in late January 2018. The potential scenarios remain complex and we are reviewing how best to achieve a de-risked IP landscape for investors and customers, with appropriate working capital in place to realise the significant global potential for the Group in 2018 and beyond.
"The Group remains focused on product development and international expansion. We have built a very strong network of distributors and customers in the NIPT space from which we expect to see substantial growth as awareness of the benefits of NIPT continues to grow. In addition, we are accelerating efforts to leverage Premaitha's scientific expertise into other applications of our molecular diagnostics technology and look forward to announcing exciting developments in due course."
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For more information, please contact: Premaitha Health PLC Tel: +44 (0)161 Dr Stephen Little, Chief Executive 667 1053 Officer Barry Hextall, Chief Financial Officer Joanne Cross, Head of Marketing investors@premaitha.com Cairn Financial Advisers LLP (NOMAD) Tel: +44 (0)20 Liam Murray / James Caithie 7213 0880 finnCap (Broker) Tel: +44 (0)20 Adrian Hargrave / Scott Mathieson 7220 0500 (Corporate Finance) Andrew Burdis / Abigail Wayne (Corporate Broking) Vigo Communications Tel: +44 (0)20 Ben Simons / Fiona Henson / Antonia 7830 9700 Pollock premaitha@vigocomms.com
About Premaitha
Premaitha is an international molecular diagnostics group which uses the latest advances in DNA analysis technology to develop safer, faster and regulatory approved genetic screening tests. The Group's primary focus is on non-invasive prenatal tests (NIPT) for pregnant women - an emerging, multi-billion dollar global market.
Premaitha's IONA(R) test was launched in 2015 as the first CE-IVD NIPT test in Europe. It enables laboratories and healthcare practitioners to offer a complete CE-marked NIPT system in-house. The IONA(R) test is performed on a maternal blood sample - which contains traces of fetal DNA - and estimates the risk of a fetus being affected with Down's syndrome or other genetic conditions.
Unlike existing prenatal screening methods, due to its high level of accuracy, the IONA(R) test can significantly reduce the number of women subjected to unnecessary invasive follow up diagnostic procedures, such as amniocentesis, which are costly, resource intensive and carry a risk of miscarriage.
In March 2017, Premaitha acquired Yourgene Bioscience, a specialist next generation sequencing and bioinformatics company based in Taiwan, with its own NIPT screening test that operates on the same Thermo Fisher next-generation sequencing platform as Premaitha's IONA(R) test. Yourgene brings significant benefits to the Group through expanded market access in Asia - the world's fastest growing NIPT market - as well as opportunities for cross-selling and the ability to jointly develop expanded test content both within NIPT and beyond.
Premaitha is headquartered in Manchester, England, with Yourgene offices in Taipei and Singapore. Its shares trade on the AIM market of the London Stock Exchange (AIM: NIPT). For further information, please visit www.premaitha.com. Follow us on twitter @PremaithaHealth.
CHAIRMAN'S STATEMENT
I am pleased to present Premaitha's interim results for the six months to 30 September 2017. During the period the Group has made significant progress against our goal of becoming a leading player in the global NIPT market, following the succesful integration of the Yourgene business and significant international commercial expansion. Product development is an important feature of this emerging and competitive sector, and it is encouraging to see Premaitha continuing to launch product enhancements and extending our range of solutions. The UK patent litigation continues to create significant headwinds for the business but we remain on course to achieve positive pre-litigation cashflows by the end of the current financial year.
Strategic progress
Strategically, we have made significant strides in realising the global NIPT opportunity whilst also de-risking the intellectual property exposure of the business by expanding both our existing customer bases in Europe, India, South East Asia and the Middle East as well as entering new international markets in East Asia and South Africa. The groundwork is also being laid for further expansion into the Americas through product registration initiatives, as demonstrated by the Brazilian GMP approval. This geographic diversification demonstrates the increasing global demand for and uptake of NIPT and should prove advantageous in the context of the UK legal situation.
Litigation
In September 2017 Premaitha received a further UK patent infringement claim from Illumina. We believe this to be an abuse of legal process and have applied for the claim to be struck out. In November 2017, post period end, we received the first instance judgment in relation to the ongoing UK patent dispute with Illumina. This judgment was very disappointing but we continue to focus on expanding into more territories where we are able to serve pregnant women and their clinicians by competing on our technical and commercial merits. Active engagement with the EU's Competition Commission is ongoing and we remain hopeful that they will intervene to stop the competitive abuses we see against ourselves and others.
Outlook
Premaitha's NIPT solutions are gaining increasing traction in a rapidly developing global market. Our geographic diversification has dramatically reduced the Group's dependence on any single market, with 80% of revenues now outside the UK. Awareness and recognition of NIPT continues to grow, with increasing governmental support in a number of countries for this safer method of testing. Premaitha is succesfully building a global NIPT business, despite the legal headwinds, and we are making excellent progress on revenues, margins and costs to achieve positive pre-litigation cashflows by the end of this financial year in March 2018.
The board is disappointed by the ruling handed down by the judge in relation to the ongoing UK patent dispute with Illumina, and is working with the Company's lawyers to prepare an appeal. Our ultimate aim remains to develop the business successfully with the minimum IP risk possible and we continue to work closely with our advisers to develop a robust roadmap to achieve this. Whilst the litigation remains a complex situation with multiple potential outcomes, we are currently developing plans for a range of legal scenarios and will keep investors informed as more clarity emerges.
Whilst the global prospects for the Group remain very exciting for NIPT, we are also accelerating plans to leverage the Group's significant scientific and technological expertise to further strengthen our investment proposition.
Adam Reynolds
Chairman
29 December 2017
CHIEF EXECUTIVE OFFICER'S STATEMENT
Commercial progress
In the first half of the year, the Group has made significant progress in expanding its international customer base and penetrating new markets. We completed the acquisition of Yourgene in March 2017, and are pleased to have now successfully completed its integration, having identified a number of synergies, leveraging both Premaitha's and Yourgene's respective customer bases and expertise.
In June 2017, the Group announced further commercial progress in India. With over 26 million births per annum, India has the highest birth rate in the world. Despite NIPT in India being at an early stage of development, Premaitha's solutions are gaining traction and the Group believes there is a significant market opportunity. In July 2017, Premaitha announced that Yourgene had signed contracts with two significant laboratories in South East Asia, which will be established as regional hubs for NIPT. The laboratories were secured by two partners who are already established providers of NIPT in their domestic markets with ambitions to further expand across the territory. One partner is amongst the largest listed genomic testing companies in Asia and will market under its own brand.
Premaitha announced the launch of Sage(TM) in the period, a NIPT solution incorporating additional prenatal screeing analysis tools. Sage(TM) is available through Yourgene, and offers customers a cost-effective, high-quality and flexible prenatal screening test. The launch of Sage(TM) significantly expands Premaitha's market opportunity, giving access not only to new customers, but also offering additional analysis tools for existing customers.
In August, the Group's IONA(R) test was approved for Brazilian Good Manufacturing Practice by Brazil's regulatory authority. The approval enables Premaitha to proceed with the official application to register the test with Brazil's National Health Surveillance Agency.
Premaitha announced its entry into the South African market in September 2017, where Premaitha believes its customer is among the first laboratories to offer a CE-IVD accredited NIPT system and will act as a hub, extending services to its national network of clinics and hospitals across the country.
The Group has also made significant progress in the Middle East in the first half of the year and post period-end, signing a number of contracts via the Group's regional distribution network. Premaitha now has an excellent network of customer laboratories across the region, with two further laboratories to become operational in Q1 2018.
Post period-end, Premaitha entered its first East Asian territory, signing an agreement with a new laboratory partner in November 2017, which will provide a NIPT screening solution to its network of hospitals and clinics in the region, with the installation expected to complete in H1 2018. The territory has an already established NIPT market with attractive market dynamics and growth prospects. The Group also demonstrated further geographic progress across Europe, with four new laboratories added in December 2017. The laboratories, situated across three European countries, are all private reference laboratories seeking to offer the IONA(R) test in their respective regions. The laboratories will be fully installed by early 2018 and the Group anticipates that they will perform an aggregate volume of over 9,000 NIPT tests per year once they are fully active, generating in excess of GBP1.0m in annual revenues for Premaitha.
Thermo Fisher Scientific
The strengthening of Premaitha's relationship with Thermo Fisher Scientific continued in the first half of the year, with the validation of Premaitha's NIPT solutions completed on Thermo Fisher's latest range of Ion S5 range of instruments in the period. The Ion S5 instrument is being widely adopted by laboratories carrying out next generation sequencing, and is able to be used for wider applications, including oncology. In addition, Thermo Fisher provided an additional $5.0m in loan facilities to Premaitha in July 2017, in return for $5.0m of warrants, of which $1.0m remain unissued as the relevant loan drawdown milestone has not yet been triggered.
Genoma SA
In May 2017, Premaitha was successful in its application for its Swiss customer, Genoma to be placed into bankruptcy for non-payment of debts. Premaitha continues to pursue all options to recover the outstanding debt owed to Premaitha by Genoma of approximately GBP0.8m, and has supported the Swiss Bankruptcy Office in prosecuting a thorough recovery process. Premaitha has applied - with other creditors - for assignment of the bankruptcy process to remain in control of recovery activities. These processes are not quick but we remain optimistic that a partial recovery can be achieved.
UK Litigation
In September 2017 Premaitha received a further UK patent infringement claim from Illumina. We believe this to be an abuse of legal process and have applied for the claim to be struck out. This application will be heard in March 2018 and whilst we expect to be successful we have provisioned the full defence costs. Any defence cycle will likely be impacted by the main patent appeal but the exact way in which these parallel claims will interact will only emerge during Q1 2018.
In the UK patent infringement proceedings, the trial was heard in July 2017 and the first instance judgment was released, post period end, in November 2017. The Court ruled against the Company on several matters of patent vailidity and infringement and rejected applications to declare two alternative methods as non-infringing. Premaitha is currently seeking leave to appeal at the Form of Order Hearing, scheduled for late January 2018. The hearing will determine the nature of any appeals by both parties and any interim penalties that might be imposed against us.
As part of our multi-faceted defence strategy we continue to engage with the EU's Competition Commission to make our case that the motivation for these legal actions is anti-competitive.
Financial position
The Group's results for the six months to 30 September 2017 are presented in the financial statements and show trading revenues of GBP2.7m (H1 2016/17: GBP1.5m). Gross profit increased 120% to GBP1.3m (H1 2016/17: GBP0.6m), with further margin improving product enhancements implemented in September 2017. General administrative expenses increased to GBP4.5m (H1 2016/17: GBP3.9m) due to the inclusion of Yourgene Bioscience's cost base with like-for-like costs remaining tightly controlled. The total comprehensive loss was GBP5.0m (H1 2016/17: GBP3.6m loss) due to a charge of GBP1.3m for an increase in the litigation provision as described above. Loss per share was GBP0.02 (H1 2016/17: GBP0.02).
In July 2017, the Group announced a further extension of its investment agreement with Thermo Fisher, whereby Thermo Fisher made available to Premaitha an additional secured loan facility of $5.0m, of which $4.0m was drawn down immediately for the purposes of working capital to support commercial growth strategies. The remaining loan will be released as milestones are triggered and will give rise to a further $1m issue of warrants on the same terms as previous tranches.
In the reporting period the Group used GBP4.3m cash in operating activities (H1 2016/17: GBP3.5m) and a further GBP0.1m (H1 2016/17: GBP0.3m) was invested in new property, plant and equipment. Proceeds from financing activities were GBP4.7m of loan drawdowns (H1 2016/17: GBP1.1m). Cash at the end of the period was GBP1.6m (31 March 2017: GBP1.3m), with GBP0.6m R&D tax credits anticipated in H2. The Group remains focused on driving revenues, improving margins, reducing costs and effectively managing working capital in order to achieve positive pre-litigation cashflows by the end of the financial year.
If revenues fail to grow at the anticipated pace, or if further litigation-related costs are required, then there could be lower cash headroom or even a cash shortfall. In this situation, the Group will need to seek additional funding through its existing funders, the London capital markets or potentially through Asian investors now that the Group is more balanced to that region.
Overall working capital requirements are under review in light of the potential litigation scenarios and ongoing business needs to ensure the Group remains a going concern and can realise the opportunity it has created since launching the IONA(R) test in 2015 and acquiring Yourgene in 2017.
Dr Stephen Little
Chief Executive Officer
29 December 2017
Hot Features
Premium
Consolidated statement of comprehensive
income
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2017 2016 2017
Notes GBP GBP GBP
Revenue 2,713,409 1,453,005 3,078,744
Cost of sales (1,405,220) (857,066) (1,796,334)
Gross profit 1,308,189 595,939 1,282,410
Other operating income 16,548 - 263
Administrative expenses
General administrative expenses (4,548,899) (3,886,268) (7,079,130)
Increase in litigation provision
and other litigation expenses (1,299,609) - (387,983)
Share-based payments and
warrant expenses (170,843) (176,961) (332,261)
Costs associated with the
acquisition of subsidiary - - (301,216)
Provision for doubtful trade
receivables - - (785,317)
(6,019,351) (4,063,229) (8,885,907)
Operating loss (4,694,614) (3,467,290) (7,603,234)
Financing income 18,177 91 45,374
Financing expenses (253,405) (94,882) (292,243)
Loss on ordinary activities
before taxation (4,929,842) (3,562,081) (7,850,103)
Tax on loss on ordinary
activities 16,746 - (8,943)
Loss for the period (4,913,096) (3,562,081) (7,859,046)
Other comprehensive expense
Exchange translation differences (107,537) (30,009) (24,323)
Loss and total comprehensive
loss for the period (5,020,633) (3,592,090) (7,883,369)
Loss per share (GBP)
Basic 4 0.02 0.02 0.03
Diluted 4 0.02 0.02 0.03
Consolidated statement of financial
position
Unaudited Unaudited Audited
30 September 30 September 31 March
2017 2016 2017
GBP GBP GBP
Assets
Non-current assets
Goodwill 7,014,447 - 7,014,447
Intangible assets 1,461,776 - 1,539,392
Property, plant and
equipment 2,414,815 1,867,932 2,890,446
Total non-current
assets 10,891,038 1,867,932 11,444,285
Current assets
Inventories 323,937 437,769 427,925
Trade and other receivables 3,321,574 2,968,853 3,289,012
Tax asset 919,550 826,941 1,101,345
Cash and cash equivalents 1,594,519 2,736,617 1,300,667
Total current assets 6,159,580 6,970,180 6,118,949
Total assets 17,050,618 8,838,112 17,563,234
Equity and liabilities
attributable to equity
holders of the company
Equity
Called up share capital 32,266,188 32,173,133 32,266,188
Share premium account 28,482,061 27,023,661 28,482,061
Merger relief reserve 10,012,644 954,545 10,012,644
Reverse acquisition
reserve (39,947,033) (39,947,033) (39,947,033)
Foreign exchange
translation reserve (165,901) (64,050) (58,364)
Warrants reserve 4,123,559 2,329,693 3,069,382
Retained losses (32,722,331) (23,808,961) (27,980,078)
Total equity 2,049,187 (1,339,012) 5,844,800
Current liabilities
Trade and other payables 4,802,207 2,592,701 3,497,907
Borrowings 38,665 - 119,087
Derivative financial
instruments - 535,448 -
Provisions 1,769,794 4,282,171 3,321,995
Total current liabilities 6,610,666 7,410,320 6,938,989
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2017 2016 2017
Notes GBP GBP GBP
Non-current liabilities
Borrowings 8,113,028 2,597,037 4,310,543
Long term provisions - 169,767 173,960
Deferred tax liability 277,737 - 294,942
Total non-current
liabilities 8,390,765 2,766,804 4,779,445
Total equity and liabilities 17,050,618 8,838,112 17,563,234
Statement of
changes in
equity
Share Share Merger Warrants Reverse Currency Retained Total
capital premium relief reseve acquisition translation losses
account reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
Six months ended 30 September 2016 (unaudited)
Balance at 1
April 2016 32,173,133 27,023,661 954,545 1,770,363 (39,947,033) (34,041) (20,453,293) 1,487,335
Loss for the
year - - - - - - (3,562,081) (3,562,081)
Other
comprehensive
loss - - - - - (30,009) - (30,009)
Total
comprehensive
loss
for the period - - - - - (30,009) (3,562,081) (3,592,090)
Transactions
with owners
Share-based
payments - - - - - - 206,413 206,413
Warrants issued - - - 559,330 - - - 559,330
Total
transactions
with
owners - - - 559,330 - - 206,413 765,743
Balance at 30
September
2016 32,173,133 27,023,661 954,545 2,329,693 (39,947,033) (64,050) (23,808,961) (1,339,012)
Share Share Merger Warrants Reverse Currency Retained Total
capital premium relief reserve acquisition translation losses
account reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
12 months ended 31 March 2017 (audited)
Balance at 1
April 2016 32,173,133 27,023,661 954,545 1,770,363 (39,947,033) (34,041) (20,453,293) 1,487,335
Loss for the
year - - - - - - (7,859,046) (7,859,046)
Other
comprehensive
loss - - - - - (24,323) - (24,323)
Total
comprehensive
loss
for the year - - - - - (24,323) (7,859,046) (7,883,369)
Transactions
with owners
Issue of share
capital
- other 17,000 1,470,500 - - - - - 1,487,500
Share issue
expenses - (12,100) - - - - - (12,100)
Issue of share
capital
on acquisition 76,055 - 9,058,099 - - - - 9,134,154
Share-based
payments - - - - - - 332,261 332,261
Warrants issued - - - 1,299,019 - - - 1,299,019
Total
transactions
with
owners 93,055 1,458,400 9,058,099 1,299,019 - - 332,261 12,240,834
Balance at 31
March 2017 32,266,188 28,482,061 10,012,644 3,069,382 (39,947,033) (58,364) (27,980,078) 5,844,800
Share Share Merger Warrants Reverse Currency Retained Total
capital premium relief reserve acquisition translation losses
account reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
Six months ended 30 September 2017 (unaudited)
Balance at 1
April 2017 32,266,188 28,482,061 10,012,644 3,069,382 (39,947,033) (58,364) (27,980,078) 5,844,800
Loss for the
year - - - - - - (4,913,096) (4,913,096)
Other
comprehensive
loss - - - - - (107,537) - (107,537)
Total
comprehensive
loss
for the period - - - - - (107,537) (4,913,096) (5,020,633)
Transactions
with owners
Share-based
payments - - - - - - 170,843 170,843
Warrants issued - - - 1,054,177 - - - 1,054,177
Total
transactions
with
owners - - - 1,054,177 - - 170,843 1,225,020
Balance at 30
September
2017 32,266,188 28,482,061 10,012,644 4,123,559 (39,947,033) (165,901) (32,722,331) 2,049,187
Consolidation statement of cash
flows
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2017 2016 2017
GBP GBP GBP
Cash flows from operating
activities
Loss for the year after
tax (4,913,096) (3,562,081) (7,859,046)
Adjustments for:
Taxation (credited)/charged (16,746) - 8,143
Finance costs 253,405 94,882 292,243
Investment income (18,177) (91) (45,374)
Loss on disposal of subsidiaries - - 7,596
Loss on disposal of property,
plant and equipment 15,486 - -
Depreciation and impairment
of property, plant and
equipment 535,434 345,057 724,028
Amortisation of intangible
non-current assets 77,616 - 12,936
Foreign exchange movements 19,045 (30,009) (24,323)
Share based payment and
warrant expense 170,843 206,413 332,261
Decrease in provisions (1,726,161) (1,096,071) (2,052,054)
Movements in working
capital:
Decrease in inventories 103,988 23,638 118,271
(Increase)/decrease in
trade and other receivables (290,948) (212,800) 182,063
Increase in trade and
other payables 1,304,301 500,736 447,132
Decrease/(increase) in
tax asset 181,795 267,702 (6,702)
Cash used by operations (4,303,215) (3,462,624) (7,862,826)
Tax paid (459) - (7,018)
Net cash outflow from
operating activities (4,303,674) (3,462,624) (7,869,844)
Investing activities
Purchase of subsidiary
undertaking - - 400,294
Net outflow on disposal
of subsidiary undertaking - - (2,557)
Purchase of property,
plant and equipment (135,868) (277,098) (406,236)
Interest received 1,701 91 10,824
Net cash (used in)/generated
from investing activities (134,167) (277,007) 2,325
Financing activities
Net proceeds from issue
of shares - - 1,475,400
Proceeds from borrowings 4,852,184 1,139,392 2,356,986
Repayment of borrowings (111,520) - -
Interest paid (8,971) (3) (1,059)
Net cash generated from
financing activities 4,731,693 1,139,389 3,831,327
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2017 2016 2017
GBP GBP GBP
Net increase/(decrease)
in cash and cash equivalents 293,852 (2,600,242) (4,036,192)
Cash and cash equivalents
at beginning of period 1,300,667 5,336,859 5,336,859
Cash and cash equivalents
at end of period 1,594,519 2,736,617 1,300,667
1 Notes to the interim financial statemnets
General information
The principal activity of Premaitha Health PLC
(the "Company") and its subsidiaries (together,
the "Group") is that of that of a molecular diagnostics
business for research into, and the development
and commercialisation of gene analysis techniques
for pre-natal screening and other clinical applications
in the early detection, monitoring and treatment
of disease. The Company is incorporated and domiciled
in the United Kingdom. The address of its registered
office is St James' House, St James' Square, Cheltenham,
Gloucestershire, GL50 3PR. The registered number
is 03971582.
As permitted, this Interim Report has been prepared
in accordance with the AIM rules and not in accordance
with IAS 34 "Interim Financial Reporting".
The consolidated financial statements are prepared
under the historical cost convention.
This Consolidated Interim Report and the financial
information for the six months ended 30 September
2017 does not constitute full statutory accounts
within the meaning of section 434 of the Companies
Act 2006 and are unaudited. This unaudited Interim
Report was approved by the Board of Directors
on 28 December 2017.
The Group's financial statements for the period
ended 31 March 2017 have been filed with the Registrar
of Companies. The Group's auditor's report on
these financial statements was unqualified and
did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
Electronic communications
The Company is not proposing to bulk print and
distribute hard copies of this Interim Report
for the six months ended 30 September 2017 unless
specifically requested by individual shareholders.
The Board believes that by utilising electronic
communication it delivers savings to the Company
in terms of administration, printing and postage,
and environmental benefits through reduced consumption
of paper and inks, as well as speeding up the
provision of information to shareholders.
News updates, Regulatory News and Financial statements
can be viewed and downloaded from the Group's
website, www.premaitha.com. Copies can also be
requested from; The Company Secretary, Premaitha
Health PLC, Rutherford House, Manchester Science
Park, Manchester M15 6SZ or by email: investors@premaitha.com.
2 Accounting policies
Basis of preparation
This financial information has been prepared in
accordance with International Financial Reporting
Standards (IFRS), including IFRIC interpretations
issued by the International Accounting Standards
Board (IASB) as adopted by the European Union
and in accordance with the accounting policies
which will be adopted in presenting the Group's
Annual Report and Financial Statements for the
year ending 31 March 2018. These are consistent
with the accounting policies used in the Financial
Statements for the year ended 31 March 2017.
Going concern
The Group is making substantial financial progress
in its trading activities and is diversifying
its business geographically to mitigate IP risks
in specific territories but it remains loss-making
and faces significant headwinds with its UK legal
defences against Illumina.
In reviewing the Group's financial plans, the
Directors have focused on the rate of growth
of revenue, decisions available to them for improvement
in gross margins and in management of the Group's
cost base, the potential implications of the
litigation outcome and on the potential for the
Group to realise capital through commercial exploitation
of the Group's unvalued intangible capabilities
such as its intellectual property, development
capabilities and customer relationships. In the
short term, existing funding routes may be required
to support any working capital shortfalls.
As described in the Chairman and Chief Executive
statements, the Group has made significant progress
towards achieving positive cashflows through
growth in gross profitability. The Group has
reported an increased operating loss due to additional
litigation provisions. Without this separately
disclosed item the Group's operating losses in
the reporting period were stable with increased
gross profits absorbed by the inclusion of Yourgene's
cost base. Future growth in gross profitability
should therefore contribute to the drive towards
financial self-sufficiency. To achieve this objective
the Group's forecasts include assumptions of
further growth in revenue arising from new customers
already secured since the reporting date, and
anticipated to arise from the Group's sales pipeline.
Product improvements designed to improve margins
have been implemented from September 2017 and
these are already contributing to improved gross
profitability post the reporting date. There
is also an ongoing commitment to constrain costs
and working capital requirements to achieve positive
cashflows in the near future. The Group has also
recently launched a diversification programme
intended to derive value from its development
capabilities and by offering additional products
to its existing sales channels.
The funding requirements of the Group are reducing
but the Group is still dependent on its funders,
until it can achieve the self-sufficiency described
above. The Company has a proven track record
of securing funding through debt and equity routes
and the Directors believe it is reasonable to
assume that such funds will remain available
until self-sufficiency can be achieved. However,
the ongoing patent litigation presents significant
headwinds and if events transpire differently
to these forecasts, for example if revenues fail
to grow at the anticipated pace, or if further
litigation-related costs are required, then there
could be lower cash headroom or even a cash shortfall.
In this situation, the Group will need to seek
additional funding through its existing funders,
the London capital markets or potentially through
Asian investors now that the Group is more balanced
to that region. The directors have not yet sought
to raise additional funding therefore the availability
of this in the future is inherently uncertain.
The directors have concluded that the combination
of these circumstances represent a material uncertainty
that, if they were to transpire adversely, may
cast significant doubt about the Group's ability
to continue as a going concern and, therefore,
that it may be unable to realise its assets and
discharge its liabilities in the ordinary course
of business. Nevertheless, after making enquiries,
and considering the uncertainties described above
and mitigation strategies in place, the directors
have a reasonable expectation that the Group
has, or can obtain, adequate resources to continue
in operational existence for the foreseeable
future. For these reasons, they continue to adopt
the going concern basis in preparing the interim
financial information.
The interim financial information does not include
the adjustments that would result if the Group
was unable to continue as a going concern.
Taxation
Taxes on income in the interim periods are accrued
using the rate of tax that would be applicable
to expected total annual earnings.
3 Income tax (credit)/charge
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2017 2016 2017
GBP GBP GBP
Current tax
UK corporation tax on profits
for the current period - - -
Foreign corporation tax on
profits for the current period 459 - 8,943
459 - -
Deferred tax
Origination and reversal of
temporary differences (17,205) - -
Total tax (credit)/charge (16,746) - 8,943
The Research and development tax credit of GBP405,687
(Mar-17: GBP806,301) is shown as a deduction
against general administrative expenses.
Deferred tax of GBP277,737 (Mar-17: GBP294,942)
is recognised in respect of the intangible fixed
assets acquired in a business combination in
March 2017.
4 Loss per share
Basic
Basic loss per share is calculated by dividing
the total comprehensive loss for the period of
GBP5,020,633 (Mar-17: loss GBP7,883,369) by the
weighted average number of ordinary shares in
issue during the period 321,218,709 (Mar-17:
236,277,783).
Diluted
Diluted earnings per share dilute the basic earnings
per share to take into account share options
and warrants. The calculation includes the weighted
average number of ordinary shares that would
have been issued on the conversion of all the
dilutive share operations and warrants into ordinary
shares. 122,316,022 options and warrants (Mar-17:
76,463,906) have been excluded from this calculation
as the effect would be anti-dilutive.
5 Trade and other receivables
On 11 December 2015, the Group entered into a
loan agreement with Life Technologies Corporation
("LTC"), part of the Thermo Fisher Scientific
Group ("Thermo Fisher"), under the terms of which
Thermo Fisher provided a loan facility of GBP5m
to the Group, which was subsequently extended
on 22 September 2016 by a further GBP4m under
an additional agreement.
On 11 July 2017, the Group has further extended
this loan agreement to provide an additional
secured loan facility of $5m, of which $4m was
immediately available for drawdown in the period
and $1m will be drawn down against future performance
milestones.
Included in trade and other receivables is an
amount of GBP860,559 (Mar-17: GBP1,069,417) in
respect of commitment fees for the undrawn increased
facility arising on issue of the 2016, 2017 and
New 2017 Warrants.
An amount of GBP833,879 (Mar-17: GBP785,317)
has been provided for doubtful receivables. The
Group's Swiss customer, Genoma, and its parent
company Esperite NV are experiencing financial
difficulties despite completing a significant
fundraising at 8 March 2017, with Genoma placed
in bankruptcy in May 2017. Another customer,
Medgenetix, based in Poland also has significant
long-term balances owed to the Group of GBP46k
and legal proceedings are ongoing to recover
the outstanding monies from both of these customers.
6 Provisions
Premaitha is defending two patent infringement
litigation claims which claim that Premaitha's
non-invasive pre-natal test infringes patents
owned or licensed by the claimants. The first
claim was filed in March 2015 by the claimants
Illumina, Inc., Sequenom, Inc. and Stanford University.
The second claim was filed in September 2015 by
the claimants Illumina, Inc. and the Chinese University
of Hong Kong. The cases were heard in the UK High
Court in 2017, with the first instance judgment
received in November 2017 as described in the
Directors' Report and in note 10.
With respect to the litigation the Group recognised
a provision in the financial statements to 31
March 2016 of GBP5,386,326 for expected litigation
costs in respect of these claims. Following an
assessment of the litigation costs expected to
be incurred in defending both claims, the provision
has not been increased further in the current
period. Costs of GBP 2,975,457 have been incurred
against the provision in the period and with the
additional GBP1,245,000 provision for the 321
claim (see below), the provision as at 30 September
2017 totals GBP1,591,538. The likely appeal arising
from the adverse November 2017 judgment, where
the IONA(R) test was deemed to have infringed
some surviving claims on each of the patents in
question, has not been provisioned as there was
no requirement or commitment for this process
at the reporting date. Similarly, no provision
is made for potential cost awards or damages claims
which will be determined at the Form of Order
hearing scheduled for late January 2018. The potential
working capital implications arising from the
November judgment are discussed further in the
going concern section of note 2.
In September 2017, Illumina filed a third patent
infringement claim against the Company (the "321
claim"). In response the Company has filed an
abuse of process claim which will be heard in
March 2018 and which, if successful, would stop
this claim. However, the success of this abuse
of process claim cannot be guaranteed and therefore
a provision of GBP1,245,000 has been made to cover
the expected costs of a full defence. The 321
claim overlaps with the likely appeal on the first
two patent claims and, if the 321 claim survives
the abuse of process hearing, it is likely to
be stayed pending the outcome of the appeal. Therefore,
the timing of when these costs will arise and,
indeed, if they ever will, remains uncertain at
the time of these financial statements. The costs
of the main appeal are expected to be lower than
this 321 provision, possibly significantly lower.
7 Warrants and derivative financial instruments
On 11 July 2017, the Group issued 28,938,797 warrants
with a fair value of GBP820,848 and this amount
has been accounted for as a commitment fee for
the provision of increased loan facilities (see
note 5). These warrants formed part of a $5m funding
agreement with LTC. As part of the same agreement
warrants for $1m were committed on the same terms,
subject to the Company accessing the final $1m
of available loan finance. The number of these
additional warrants has been estimated at 7,542,330
based on an assumed forward share price and exchange
rate. An independent valuation attributes a fair
value of GBP233,329 to these future warrants.
8 Interest bearing loans and borrowings
A secured loan facility was provided by LTC in
December 2015 and this was subsequently extended
by additional facilities in September 2016. As
at 31 March 2017, there was GBP3,559,564 remaining
to be drawn down from this facility. During the
period an additional GBP1,867,124 was drawn down,
with GBP1,692,440 remaining for drawdown against
future milestones. On 11 July 2017, the Group
entered into a loan facility extension agreement
with LTC for a further facility of $4,000,000
which was drawn in full on 12 July 2017. There
is also a potential additional facility of $1,000,000
which is dependent upon future performance. These
loan facilities are secured by way of fixed and
floating charges over intellectual property of
the Group. The drawn-down portions of these loans
are accruing interest at 6% per annum and are
repayable in more than 5 years.
9 Share capital
On 11 July 2017, at the same time as entering
into the LTC loan facility extension, the Group
simultaneously entered into a further warrant
agreement with Thermo Fisher. Under this agreement
Premaitha issued Thermo Fisher warrants over 28,938,797
new ordinary shares in the Company exercisable
at 10.725 pence ("New 2017 Warrants"), being a
premium of 10% over the closing share price on
10 July 2017 (the last business day prior to issue
of the New 2017 Warrants).
10 Events after the reporting period
After the balance sheet date the patent litigation
first instance judgment was delivered on 21 November
2017. Despite being successful on certain claims,
the findings overall were adverse for the Company
as described in note 6 (Provisions), with the
financial implications discussed in the going
concern section of note 2.
Since the reporting date, and subsequent to the
trial judgment, the Group has continued to make
commercial progress announcing new customer laboratories
in the Middle East, Europe, and a first customer
in East Asia.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
December 29, 2017 02:00 ET (07:00 GMT)
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