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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Thinksmart Limited | LSE:TSL | London | Ordinary Share | AU000XINEAE8 | ORD NPV (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 28.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:8466V Tissue Science Laboratories PLC 26 February 2004 26 February 2004 Tissue Science Laboratories plc (TSL) Preliminary Results for the year ended 31 December 2003 Tissue Science Laboratories plc (TSL), the medical devices company specialising in human tissue replacement and repair products derived from porcine dermis, today announces its Preliminary Results for the year ended 31 December 2003. Operational Highlights - In general surgery (hernia), US marketing operation and commission-only sales force expanded and rapid sales growth achieved, with sales of US$2.3m in 2003 (2002: US$0.6m (sales commenced June 2002)) - New products developed with CR Bard to address additional applications in urology/gynaecology and launched in January 2004 - Worldwide distribution deal signed in September with Zimmer Inc. in orthopaedic rotator cuff repair - Manufacturing facility ISO accredited and FDA inspected - Identification of a shortfall of evaluable patients in study for US regulatory approval of PermacolTM Injection; discussions planned with the FDA - Post year-end, signed non-binding heads of terms for US distribution of PermacolTM in head and face surgery; currently negotiating definitive agreement Financial Highlights - Continued strong growth in revenues for 2003, with product sales increasing by 57% to #4.9m (2002: #3.1m) - Improved gross margins, before exceptional costs, of 52% (2002: 48%); gross margin, after exceptional costs, 43% - Net loss for the year of #2.6m, after exceptional charge of #0.5m (2002: #2.3m) - Fund raising of #2.58m (before expenses) announced today to fund inventory build to support increased product demand from current growth and new distribution agreements, and to strengthen balance sheet for future partnering negotiations (see today's separate announcement) - Current trading in line with expectations; strong growth in sales expected to continue in 2004 Commenting on the results, Martin Hunt, CEO of TSL, said: "Despite the short term impact of the manufacturing issue we identified and announced in September, we have made substantial progress across the business over the past year, driven by the success of our core technology, PermacolTM Surgical Implant. The highlights have been the signing of our global marketing agreement with Zimmer for orthopaedic rotator cuff repair and the development of two new products in the urology/gynaecology field with Bard. We now have products in four different surgical areas - urology/gynaecology, orthopaedic, hernia and head & face - with significant growth expected in each of these markets in the coming year. Furthermore, the additional funds raised from today's announced Placing will strengthen us in our dealings with new partners and customers, and will enable us to accelerate our growth faster than might otherwise have been possible." -Ends- Enquiries: TSL plc Tel: 01252 333 002 Martin Hunt, Chief Executive David Jennings, Finance Director Hogarth Partnership Limited Tel: 020 7357 9477 Melanie Toyne-Sewell Chief Executive's Statement Overview of 2003 2003, our second full year since admission to AIM, has seen achievements being made across the business. I am particularly encouraged by our progress in marketing PermacolTM Surgical Implant and its derivatives. We have expanded our product range in urology and gynaecology with CR Bard Inc. (Bard) and, in general surgery, we have continued to develop our US commission-only sales team and add to our group of European distributors. In September, we signed a worldwide distribution agreement with Zimmer Inc. (Zimmer) in the field of orthopaedic rotator cuff repair and, today we announced that we have signed non-binding heads of terms for the distribution of our product, EnduragenTM, throughout North America in the head and face market. This year has also provided some challenges for the management team and staff of TSL. In our Interim results for the six months ended 30 June 2003 we reported on the manufacturing issue which resulted in a write-off of inventory of #0.5m and a short term interruption in supply of products to our customers. Appropriate corrective action has been taken (see 'Manufacturing' below). In August, our production facility was subject to a routine inspection by the US regulatory authority, the Food and Drug Administration (FDA). I am pleased to report that all observations made have been responded to and we do not anticipate any further requirements from the FDA in relation to this inspection. I believe this represents a considerable achievement for a company at our stage of development and I would like to extend my thanks to the operations team whose efforts made this possible. Financial Review Product sales increased by 57% to #4.9m (2002: #3.1m). Growth was achieved in our core markets, in particular, in general surgery/hernia where the UK sales team achieved #0.7m (2002: #0.3m) and the US commission-only sales team advanced sales to US$2.3m to 31 December (2002: US$0.6m (sales commenced June 2002)). In urology/gynaecology our marketing partner, Bard, achieved growth in both Europe and in the US, despite the temporary interruption to supply of inventory in the third quarter, a consequence of the manufacturing issue referred to below. Gross margins before the exceptional inventory charge of #0.5m were 52% (2002: 48%). Gross margin after the exceptional charge was 43%. During the year, we consolidated our production and packaging operations at our Swillington facility and we are targeting further efficiencies in manufacturing as output and operational productivity increases. Administrative expenses excluding Research & Development expenditure increased to #2.8m (2002: #2.3m) primarily as a result of the expansion of our US marketing operations and increased product liability and general insurance premiums. Expenditure on productdevelopment and research amounted to #1.3m (2002: #1.4m) and included #0.1m relating to the restructuring of the technical/new product development team. A tax refund of #0.2m was obtained in the year in respect of the government's research and development tax credit scheme. The net loss for the year before charging the exceptional costs of #0.5m was #2.1m (2002: #2.3m). The net loss after the exceptional charge was #2.6m (2002: #2.3m). The basic loss per ordinary share was 11.8p (2002: 10.5p) The second half of 2003 saw an accelerated weakening of the US dollar against Sterling. The Company had taken steps to protect its revenues by selling forward the majority of its dollar receipts such that the impact of the adverse currency movement in the year was not significant. The Company retained cash of #2.5m at the year-end (2002: #5.4m) and net funds of #1.6m (2002: #4.9m). Today, we have announced a proposed fund raising of #2.58m (before expenses) through a conditional underwritten placing by Panmure Gordon. Full details of this are described in a separate announcement. Technology and Products TSL uses its proprietary technology to produce tissue replacement and repair products from porcine collagen. The product is currently presented in two forms - a sheet repair material and injectable collagen. * PermacolTM Surgical Implant is a flat sheet of collagen and elastin matrix for use by surgeons in soft tissue replacement and repair. Its patented manufacturing process and product characteristics give PermacolTM a number of key clinical and marketing attributes. * PermacolTM Injection is a suspension of milled collagen in saline. In its first product presentation as a urethral bulking agent(UBA), it addresses urinary stress incontinence in women. A second format, a finer milled collagen, is being developed as a dermal filler. Markets and Strategy Our current strategy is to market PermacolTM Surgical Implant in the following fields: * Urology/Gynaecology - pelvic floor reconstruction and incontinence * General Surgery - complex hernia repairs * Orthopaedic Surgery - rotator cuff repair of the shoulder * Head and Face Surgery - facial reconstruction and repair Our strategy is to approach each of these target markets through a combination of strategic marketing partners, national level distributors or, where appropriate, through our own sales teams. Sales and Marketing Total product sales grew strongly in 2003 to #4.9m (2002: #3.1m) despite being impacted by a shortfall in available inventory in the third quarter. The current marketing status and marketing approach for PermacolTM Surgical Implant can be summarised as follows: Application Market Regulatory Route to Market Status Urology/Gynaecology Worldwide 510k Marketing Partner - CR Bard Inc* General Surgery US 510k Direct - US 'commission-only' sales team General Surgery UK CE Mark Direct - UK sales team General Surgery Europe CE mark National level distributors Orthopaedic Surgery Worldwide 510k Marketing Partner - Zimmer Inc** Head and Face Surgery North 510k Marketing Partner*** America * Marketed as PelvicolTM ** Market branding to be announced *** To be marketed as EnduragenTM, non-binding heads of terms signed * Urology/Gynaecology Bard has worldwide rights to market PelvicolTM in the field of urology and gynaecology and is targeting pelvic floor reconstruction and incontinence. Bard has marketed PelvicolTM in Europe since 2000 and in the US since 2001, and sales have grown steadily as Bard's market penetration has increased. Total revenues to TSL advanced by 12% to US$4.0m in 2003 (2002: US$3.5m). Sales growth has been particularly strong in Europe, aided by obtaining reimbursement status for PelvicolTM in the French market. Revenues were, however, adversely impacted in the year due to the shortfall of available inventory in the third quarter, but sales were restored in the fourth quarter of 2003 when inventory shipments returned to planned levels. In January 2004, Bard launched two new urology/gynaecology products jointly developed with TSL - PelviLaceTM Biourethral Support System and PelviSoftTM BioMesh. These new products will target surgical areas not currently addressed by PelvicolTM, in particular urethral sling procedures, and I look forward to reporting on the progress of these products in due course. * General Surgery (hernia) US TSL has marketed PermacolTM to the complex and recurrent hernia market in the US since June 2002 via a commission-only sales team. We have further developed this team in 2003, supported by our own marketing operation established near Atlanta, Georgia. Market penetration has been rapid and sales increased to US$2.3m in 2003 (2002: US$0.6m). By the end of 2003, PermacolTM had been sold to approximately 200 US hospitals in circa 30 states. Our strategy, having established a foothold in this market, is to focus sales training and marketing resources on key metropolitan areas, to achieve full geographical coverage and maximise future sales growth. UK, Europe and Rest of the World TSL has been active in the UK market since 1998 through its own direct sales team. In 2003, UK sales performed strongly, growing by 110% to #0.7m (2002: #0.3m), aided by the introduction of larger sizes of PermacolTM at the end of 2002. In Continental Europe, in 2003, we have established national level distributors in Italy, Greece, Switzerland and Sweden. In the Far East, a distributor has been appointed and regulatory approval is being obtained for entry into the Korean market. * Orthopaedic Surgery In September 2003, we announced a worldwide distribution agreement with Zimmer for the marketing of PermacolTM for the orthopaedic surgical application of rotator cuff repair of the shoulder. Zimmer is a leader in the field of orthopaedics, and is listed on theNew York Stock Exchange with a market capitalisation of approximately US$19bn. Zimmer estimates that there are more than 250,000 rotator cuff repairs performed annually in the US alone, with growth in both primary and revision procedures. Zimmer is targeting the 30 per cent. of these procedures that are subject to re-tears and where a material such as PermacolTM can add to the strength of the repair. The Directors estimate that this segment of the market has a potential value of approximately US$150m per annum. The distribution agreement with Zimmer provides for a pre-launch evaluation of PermacolTM in order to support a full market launch in the US. This evaluation is proceeding and I will continue to update shareholders on progress during the year. * Head and Face Surgery We have signed non-binding heads of agreement with a specialist head and face medical technology company in North America for the distribution rights to EnduragenTM, our head and face product. The Company is currently negotiating a definitive agreement for sales into North America. The initial target market will include rhinoplasty procedures, of which there are 300,000 performed annually in the US. We estimate that this market has a potential value of US$65m per annum. * PermacolTM Injection - Urethral Bulking Agent (UBA) PermacolTM Injection is indicated for use as a UBA for female stress incontinence. It is a common condition affecting one in eight women over the age of 45 and in the US alone, there are an estimated 11 million sufferers. Although the Company has entered the European market, our main focus will be on the US market where injectable bulking agents have been more widely adopted and where the Company believes that its product would offer advantages over existing treatments. European Marketing The Company has commenced marketing PermacolTM Injection in the UK. Post-marketing clinical studies have shown PermacolTM Injection to be an effective UBA when compared with current market leading products. However, despite the effectiveness of the product, sales have been slower than expected. We believe that this is largely due to Johnson & Johnson's marketing drive for its Tension-free Vaginal Tape (TVT) product. Despite involving a more invasive procedure than one using UBA, the use of TVT is currently dominating the stress incontinence market. In order to widen the potential clinical usage of Permacol TM Injection in Europe, we are developing a device, which is designed to enable urethral bulking procedures to be carried out as an outpatient procedure as opposed to day surgery, thereby, potentially giving surgeons significant cost and time benefits. US Marketing We are concluding a clinical study across a number of European centres to further determine the efficacy of the product which will support a regulatory submission to the FDA. It was originally anticipated that the clinical study would be completed and a PMA submission made to the FDA in the first half of 2004. However, during the review period at the end of the study, it became apparent that there was a larger than expected patient drop-out rate and a compromise in the conduct of the study protocol in two of the main study centres located in Poland. The Company is currently analysing the impact of the data and will approach the FDA shortly to establish the best way to proceed in its regulatory submission. Depending on the outcome of discussions with the FDA, the original timetable for marketing PermacolTM Injection in the United States is likely to be extended by up to two years. The Company has sufficient unallocated resources within its existing clinical budgets to undertake this process in 2004/05 and the Directors do not expect that this development will impact TSL's existing clinical and early stage development projects. Marketing studies of PermacolTM Injection conducted in several large UK hospitals have demonstrated its effectiveness in treating patients with stress urinary incontinence and we remain confident of the long-term success of this product. Manufacturing The new manufacturing facility (completed in 2002) has significantly increased capacity in the manufacture of PermacolTM and enables our in-house functions to be consolidated in one location. As reported in our interim results for the six months ended 30 June 2003, as a result of the redesign of the manufacturing process on scale-up, a quantity of stock was produced that did not meet the Company's stringent quality assurance release criteria which are based on internationally accepted standards. The Company's quality assurance systems identified the affected inventory and no product was released to the market. This resulted in a provision of #0.5m being made and a short-term interruption to supply. Appropriate corrective action was taken and normal manufacture and product release recommenced in September 2003. Research and Development During the year, we have continued to channel resources into developing new products to exploit additional market applications for the PermacolTM sheet and injectable forms. The Company is focusing on markets in which it already operates toexploit fully the sales force and partners' marketing knowledge and market presence. The following areas are currently under development: * PermacolTM Surgical Implant Rectal Prolapse The PermacolTM Surgical Implant is currently being used in a small-scale clinical study for a new procedure for the repair of rectal prolapse, with the aim of reducing the recurrence rate. Professor Norman Williams and his team at St. Bartholomew's and Royal London School of Medicine & Dentistryare leading this study. Prophylactic Stoma Reinforcement In the UK, there are approximately 20,000 new stomas (openings created in the abdomen, for example as a result of a colostomy procedure) created by surgeons in patients each year. A significant proportion of stomas are affected by herniation within 12 months, often requiring corrective surgery or the re-siting of the stoma. A pilot study is being carried out by Professor Williams and his team into the prophylactic use of PermacolTMin stoma creation. The Company will seek US regulatory approval for rectal prolapse under its existing 510(k) approvals and for prophylactic stoma reinforcement under a new PMA. * PermacolTM Injection Bulking Agent Since the launch of this product in Europe, we have identified further opportunities to utilise an injectable collagen in a number of other surgical applications where a long-lasting agent would be of benefit. The Company is currently evaluating the market opportunities presented by each area. Dermal Filler We are planning to enter the reconstructive and facial augmentation market with an injectable product. Our aim will be to provide a longer-lasting dermal filler that reduces the need for regular repeattreatments - typically three to six months for most competing collagen products. A human clinical study is to commence in the second quarter of 2004 and our strategy will be to secure a marketing partner in this field to fund the US PMA regulatory submission and market entry. Regulatory During the year, we have applied for regulatory approval for PermacolTM Surgical Implant for Korea and have made a submission to the Australian regulatory authorities. We are also seeking regulatory access for Canada. Further CE marks have been obtained in respect of PelviLaceTM Biourethral Support System and PelviSoftTM BioMesh, and both products were launched by Bard in January 2004. Our production facility has undergone numerous inspections and audits from a number of regulatory bodies, including the FDA, and distribution partners. The facility has also achieved accreditation to ISO 13485/2003 and ISO 9001/2000. Current Trading and Outlook Since a significant proportion of the Company's sales are in US dollars, long-term weakness of the US dollar against the UK pound would have a potential impact on TSL's business. In line with the Company's stated policy on the hedging of foreign exchange, the Company has entered into arrangements to hedge US$5 million at a composite rate of US$1.62=#1.00 for the year ending 31 December 2004. The Company is seeking to extend facilities available in respect of unhedged US dollar revenues as part of its ongoing programme. Current trading is in line with our expectations and the Directors remain confident that 2004 will be another year of progress for TSL. We consider that the core PermacolTM and PelvicolTM Surgical Implant products will continue to grow strongly together with sales of PelviSoftTM Biomesh and PelviLaceTM Biourethral Support System launched by Bard in January 2004. In addition, TSL will seek to finalise its prospective deal with its partner to market Enduragen TM, to progress our distribution agreement with Zimmer and continue to grow the European distribution network. Martin Hunt Chief Executive Officer Tissue Science Laboratories plc Consolidated Profit & Loss Accounts for the Year Ended 31 December 2003 Year Ended Year Ended 31 December 31 December 2003 2002 (Audited) (Audited) #000s #000s TURNOVER: 4,945 3,167 Cost of sales excluding exceptional item (2,361) (1,651) Exceptional item (461) - Cost of Sales (2,822) (1,651) Gross Profit 2,123 1,516 Selling & distribution costs (927) (644) Administrative Expenses Researchand development costs (1,256) (1,397) Other administrative expenses (2,848) (2,287) Total administrative expenses (4,104) (3,684) Operating Loss (2,908) (2,812) Bank interest receivable 115 217 Interest payable (54) (20) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,847) (2,615) Tax on ordinary activities 228 285 RETAINED LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (2,619) (2,330) Basic and diluted loss per ordinary share (pence) 11.8p 10.5 All amounts relate to continuing operations. There were no recognised gains and losses for the current or preceding period other than those included in the profit and loss account. No dividend has been paid or is payable in either the current or prior periods. Tissue Science Laboratories plc Consolidated Balance Sheet as at 31 December 2003 Year Ended Year Ended 31 December 31 December 2003 2002 (Audited) (Audited) #000s #000s Fixed Assets Tangible assets 2,035 1,576 Current Assets Stocks 599 386 Debtors 1,372 1,005 Cash at bank and in hand 2,466 5,445 4,437 6,836 Creditors: amounts falling due within one year (2,230) (1,824) NET CURRENT ASSETS 2,207 5,012 Total assets less current liabilities 4,242 6,588 Creditors: amounts falling due after more than one year (482) (346) NET ASSETS 3,760 6,242 CAPITAL & RESERVES Called up share capital 2,230 2,212 Share premium account 12,535 12,477 Shares to be issued 146 104 Merger reserve 545 545 Profit & loss account (11,696) (9,096) EQUITY SHAREHOLDERS' FUNDS 3,760 6,242 Tissue Science Laboratories plc Consolidated Cash Flow Statement for the year ended 31 December 2003 Year Ended Year Ended 31 December 31December 2003 2002 (Audited) (Audited) #000s #000s Net cash outflow from operating activities (2,723) (2,889) Returns on investment and servicing of Finance 65 195 Taxation 228 285 Capital expenditure & financial investment (400) (1,018) Cash outflow before use of liquid resources & financing (2,830) (3,427) Financing Net cash (outflow)/inflow from financing (169) 205 Decrease in cash in the period (2,999) (3,222) RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET FUNDS Decrease in cash in the period (2,999) (3,222) Cash outflow/(inflow) from movement in debt & lease financing 245 (205) Change in net funds resulting from cash flows (2,754) (3,427) New finance leases (630) (18) Currency translation difference (5) (44) Movement in net funds in the period (3,389) (3,489) Net funds brought forward 4,946 8,435 Net funds carried forward 1,557 4,946 Tissue Science Laboratories plc Notes 1. ACCOUNTING POLICIES AND BASIS OF PREPARATION The financial information set out in this announcement does not constitute the Company's statutory accounts for the year ended 31 December 2003 or for the year ended 31 December 2002, but is derived from those accounts. Statutory accounts for the year ended 31 December 2002 have been delivered to the Registrar of Companies and those for the year ended 31 December 2003 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237(2) of (3) Companies Act 1985. 2. TURNOVER Year ended Year ended 31 December 31 December 2003 2002 (Audited) (Audited) #000s #000s A geographical analysis of turnover by destination is as follows: United Kingdom 830 383 Europe 601 634 USA 3,514 2,150 4,945 3,167 An analysis of turnover by class of business is as follows: Product sales 4,884 3,105 Milestone Income 61 62 4,945 3,167 3. EXCEPTIONAL ITEMS Year ended Year ended 31 December 31 December 2003 2002 (Audited) (Audited) #000s #000s Stock written off 461 - 4. LOSS PER SHARE Year ended Year ended 31 December 31 December 2003 2002 (Audited) (Audited) #000s #000s Basic and diluted loss per ordinary share has been calculated based on the weighted average number of ordinary shares in issue during the period Loss for the period (2,619) (2,330) Basic and diluted loss attributable to ordinary shareholders (2,619) (2,330) Weighted average number of ordinary shares 22,152,537 22,119,338 Basic and diluted loss per share 11.8p 10.5p 5. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Year ended Year ended 31December 31 December 2003 2002 (Audited) (Audited) #000s #000s Operating loss (2,908) (2,812) Depreciation and impairment of tangible fixed assets 571 322 Increase in debtors (368) (127) Increase in stocks (213) (214) Increase/(decrease) in creditors 129 (155) Profit on disposal of fixed assets - (5) Foreign exchange movement 5 44 Shares to be issued 61 58 (2,723) (2,889) 6. TAX ON ORDINARY ACTIVITIES Year ended Year ended 31 December 31 December 2003 2002 (Audited) (Audited) #000s #000s UK tax receivable 237 290 US tax payable (9) (5) Tax credit for the current year 228 285 This information is provided by RNS The company news service from the London Stock Exchange END FR GGGZZMKMGDZZ
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