RNS Number : 4397E
Vivomedica PLC
26 September 2008
For immediate release 26th September 2008
VivoMedica plc
("VivoMedica" or the "Company")
Interim Results for the six months ended 30 June 2008
VivoMedica (AIM: VVM), the pharma-ware company announces its interim results for the six months ended 30 June 2008.
Highlights include:
* VivoMedica and Cellular Dynamics International (CDI) presented new DrugPrint® data on the use of the DrugPrint® system with
hSC-derived human cardiomyocytes at the recent Safety Pharmacology Society conference in Madison WI, USA.
* New DrugPrint® data presented at the 6th International Conference on Substrate-Integrated micro-electrode arrays (MEA) in
Reutlingen, Germany
* Expansion of DrugPrint® into human Stem Cells (hSC) through a collaboration agreement with Cellartis AB to explore the combination
of hSC and the sophisticated analytical capabilities of the DrugPrint® system
* PathScoreTM partners shortlisted
* Partnership discussions for potential PathScoreTM sub-licensees at an advanced stage
Commenting on the interim results, CEO Peter Leyland said:
"At the beginning of the year we set out with clear strategic goals that would lead to increasing the value of VivoMedica. These were to
continue the development and enhance commercial interest in DrugPrint® particularly through collaboration with the leading hSC providers
from around the world; to identify and collaborate with a leading global partner to commercialise the PathScoreTM technology. I am pleased
to report at this time of our interim results that we are on track with all these goals and we look forward to reporting on further
progress."
For further information, please contact:
Buchanan Communications 020 7466 5000
Tim Anderson /
Catherine Breen
Brewin Dolphin Investment Banking (NOMAD) 0845 270 8600
Mark Brady / Alison Barrow
Chief Executive Officer's review
I am pleased to report on the significant progress we have made so far this year towards our goal to deliver high value solutions to the
pharmaceutical industry and to realise the commercial value of our exclusive worldwide technology licenses. In a market that continues to
offer significant challenges and unprecedented opportunities, the VivoMedica team has made great strides forward while preserving the lean
principles on which we run our business.
The global problems addressed by our two key technologies continue to be high profile in healthcare, and to offer opportunities for
VivoMedica to address as yet unmet needs in cancer diagnosis and in drug safety testing. We are well placed with these technologies and our
strengthening position in the marketplace allows us to take advantage of these opportunities over the coming months, and to increase value
to our shareholders.
DrugPrint® expansion into Human Stem Cells
As the acceptance of human stem cell (hSC) technologies widens, and their potential use in healthcare expands, DrugPrint® is
increasingly highly regarded as a technology that can realise value in this field, particularly in non-therapeutic applications such as
safety testing in drug development. A key development in this area is VivoMedica's collaboration with Cellartis AB (Goteborg), announced in
June this year, to explore the combination of hSC and the sophisticated analytical capabilities of VivoMedica's DrugPrint® system.
We strongly believe that the use of hSC are the way forward in the safety evaluation of medicines, particularly in the successful
development of new drugs where the cost of failure is exceptionally high and can prohibit further clinical development of innovative
medicines. Our extensive market research indicates that this view is supported by a wide industry consensus; creating a market opportunity
that VivoMedica is now well placed to exploit.
VivoMedica's intention is to be a leading player in the safety evaluation of medicines using hSC. Cellartis is the world's largest
single source of defined hSC and has developed more than 30 well documented hSC lines. The collaboration is expected to yield discriminatory
power needed by the pharmaceutical and biotech industries and increasingly expected by the regulatory authorities.
DrugPrint® presented to leading scientific conferences
In July 2008, VivoMedica presented DrugPrint® data at the 6th International Conference on Substrate-Integrated micro-electrode arrays
(MEA) in Reutlingen, Germany. DrugPrint® is the Company's pre-clinical tool to identify drug-induced cardio-toxicity. At this leading
conference, which showcases state of the art micro-electrode array technologies, VivoMedica was afforded the opportunity to present the
increased discriminatory power of DrugPrint® to an influential academic and scientific peer group audience. Feedback suggests that the
audience considered that the cardiac data presented was both interesting and of high quality.
Building on this success, VivoMedica presented hSC derived DrugPrint® data at the recent Safety Pharmacology Society conference in
Madison WI, USA, to further raise the profile and awareness of DrugPrint® in the pharmaceutical community. VivoMedica jointly presented data
with Cellular Dynamics International (CDI), Madison WI, USA, on the use of DrugPrint® with human cardiomyocytes. CDI is a world leader in
the production of hSC-derived human cardiomyocytes with a world renowned scientific team including Dr James Thompson, Dr Craig January and
Dr Tim Kamp. This was an exciting first opportunity to show data using human cells, and there is already significant interest from the
world's top pharmaceutical companies in this technology. We were able to progress discussions with the main pharmaceutical companies during
the conference.
PathScoreTM partners shortlisted
We are also pleased with progress on partnering discussions for PathScoreTM, the Company's computerised image analysis system with
patented applications that support cancer diagnosis and treatment pathways. The Company now has a shortlist of strategically important
potential partners for PathScoreTM and discussions are progressing well. It is envisaged that the partners will support the global
commercialisation of this transformational technology.
Financials
The Group continues to focus on ensuring that expenditure is appropriate to strategy.
The operating loss from continuing operations for the six months to 30 June 2008 was £787,000 compared to £713,000 for the six months to
30 June 2007.
At 30 June 2008, the Group had net debt of £3,368,000 compared to £2,974,000 at 31 December 2007. Excluding the Convertible Loan Notes
payable to Merlin BioSciences, the net debt was £1,004,000 compared to £669,000 at 31 December 2007.
The nature of the Group's business is such that there can be considerable unpredictable variation in the timing and amount of cash
inflows generated from planned product launches and therefore, as stated in our preliminary results for the year to 31 December 2007, in
order to continue the Group's progress to date, further funds will be required.
The directors remain confident that the Group will be able to raise additional funds through further debt or equity raisings when
required as we believe that the Group has demonstrated progress in achieving its milestones for the development of DrugPrint and PathScore.
Once again I would like to sincerely thank our shareholders for their continued support for VivoMedica, and look forward to an
increasingly fruitful and successful future for the Company.
Peter Leyland
Chief Executive Officer
Consolidated Income Statement
Note Unaudited Unaudited Audited
Six months to Six months to Year ended
30 June 2008 30 June 2007 31
December
2007
£000 £000 £000
Revenue - 45 63
Cost of sales - (14) (25)
Gross profit - 31 38
Administrative expenses (787) (2,644) (1,851)
Operating loss (787) (2,613) (1,813)
Financial costs - income 2 2 4
Financial costs - expense (155) (121) (274)
Loss before taxation (940) (2,732) (2,083)
Taxation 3 98 - 237
Loss after tax but before loss (842) (2,732) (1,846)
on sale of discontinued
operation
Loss on sale of discontinued - - (2,095)
operation, net of tax
Loss for the period (842) (2,732) (3,941)
attributable to equity holders
of the parent
Basic and diluted loss per 4 (0.42)pps (0.41)pps (0.75)pps
share from continuing
operations
Basic and diluted loss per 4 - (0.95)pps (1.22)pps
share from discontinued
operations
Basic and diluted loss per 4 (0.42)pps (1.36)pps (1.97)pps
share attributable to the
equity shareholders of the
parent
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 June 2008 30 June 2007 31 December 2007
£000 £000 £000
Non-current assets
Intangible assets 3,651 3,651 3,651
Goodwill 3,117 3,117 3,117
Plant and equipment 41 88 63
Total non-current assets 6,809 6,856 6,831
Current assets
Current tax receivable 90 90 320
Trade and other receivables 47 41 36
Cash and cash equivalents 5 5 66
Assets held for sale - 1,730 -
Total current assets 142 1,866 422
Total assets 6,951 8,722 7,253
Current liabilities
Interest bearing loans and 1,009 764 735
borrowings
Trade and other payables 1,846 1,618 1,670
Liabilities held for sale - 348 -
Total current liabilities 2,855 2,730 2,405
Net current liabilities (2,713) (864) (1,983)
Non-current liabilities
Convertible loan 2,364 2,258 2,305
Total non-current liabilities 2,364 2,258 2,305
Total liabilities 5,219 4,988 4,710
Total assets less total 1,732 3,734 2,543
liabilities
Equity
Issued ordinary share capital 4,011 4,011 4,011
Share premium 4,572 4,572 4,572
Equity element of convertible 224 224 224
loan note
Other reserve 4,604 4,604 4,604
Retained earnings (11,679) (9,677) (10,868)
Total equity attributable to 1,732 3,734 2,543
equity holders of the parent
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
30 June 2008 30 June 2007 31 December 2007
£000 £000 £000
Cash flows from operating
activities
Loss before taxation for the (940) (2,732) (4,178)
period
Depreciation and amortisation 27 42 58
Share based payment charge 31 34 52
Issue costs of convertible 17 - 35
loan note after amortisation
Net finance costs 153 119 270
Loss on sale of discontinued - - 2,095
operation
Provision for impairment of - 1,548 -
goodwill
Taxation received 328 40 113
(Increase) in inventories - (163) (163)
(Increase)/decrease in (12) 12 19
receivables
Increase in payables 86 84 28
Net cash outflow from (310) (1,016) (1,671)
operating activities
Cash flows from investing
activities
Financial income (22) - (41)
Payment to acquire plant and (3) - (2)
equipment
Proceeds from sale of plant - 7 -
and equipment
Disposal of discontinued - - 796
operation (net of cash
disposed)
Net cash (outflow)/inflow from (25) 7 753
investing activities
Cash flows from financing
activities
Repayment of loans - - (11)
Net cash outflow from - - (11)
financing activities
Net decrease in cash and cash (335) (1,009) (929)
equivalents
Opening cash and cash (669) 260 260
equivalents
Closing cash and cash (1,004) (749) (669)
equivalents
Statement of changes in equity attributable to equity holders of the parent
Unaudited 30 June 2008 Share capital Share Other reserves Equity element of Retained earnings Total
premi convertible loan
um note
accou
nt
£000 £000 £000 £000 £000 £000
Loss for the financial period - - - - (842) (842)
Total recognised income and - - - - (842) (842)
expense
Option expense - - - 31 31
Opening shareholders' funds 4,011 4,572 4,604 224 (10,868) 2,543
Closing shareholders' funds 4,011 4,572 4,604 224 (11,679) 1,732
Unaudited 30 June 2007 Share capital Share Other reserves Equity element of Retained earnings Total
premi convertible loan
um note
accou
nt
£000 £000 £000 £000 £000 £000
Loss for the financial period - - - - (2,732) (2,732)
Total recognised income and - - - - (2,732) (2,732)
expense
Option expense - - - 34 34
Opening shareholders' funds 4,011 4,572 4,604 224 (6,979) 6,432
Closing shareholders' funds 4,011 4,572 4,604 224 (9,677) 3,734
Audited 31 December 2007 Share capital Share Other reserves Equity element of Retained earnings Total
premi convertible loan
um note
accou
nt
£000 £000 £000 £000 £000 £000
Loss for the financial period - - - - (3,941) (3,941)
Total recognised income and - - - - (3,941) (3,941)
expense
Option expense - - - 52 52
Opening shareholders' funds 4,011 4,572 4,604 224 (6,979) 6,432
Closing shareholders' funds 4,011 4,572 4,604 224 (10,868) 2,543
Notes
1. Basis of preparation
The consolidated interim financial statements of the Group for the period ended 30 June 2008 are unaudited and do not comprise statutory
accounts within the meaning of Section 240 of the Companies Act 1985
This interim financial information has been prepared on the basis of the recognition and measurement requirements of adopted IFRS.
These interim financial statements have not been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include
all the information required for full annual financial statements, and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2007.
Standards currently in issue and adopted by the EU are subject to interpretation issued from time to time by the International Financial
Reporting Interpretations Committee (IFRIC). Further standards may be issued by the International Accounting Standards Board that will be
adopted for financial years beginning on or after 1 January 2007. Accordingly, the accounting policies for that annual period will be
determined finally only when the annual financial statements are prepared for the year ending 31 December 2008.
The comparative figures for the financial year ended 31 December 2007 are not the Group's statutory accounts for that financial year.
Those accounts, which were prepared under IFRS, have been reported on by the Group's auditor and delivered to the Registrar of Companies.
The report of the Auditor was (i) unqualified, (ii) included a reference to going concern to which the auditors drew attention by way of
emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985
Going concern
The interim financial statements have been drawn up on a going concern basis which the Directors believe to be appropriate for the
following reasons.
The Group incurred a net loss of £842,000 during the period ended 30 June 2008 and, at that date, the Group's current liabilities
exceeded its current assets by £2,713,000. The Group's operations are focused on the development of PathScoreTM and DrugPrint which provide
pharma-ware solutions for customers. Given the research and development and sales and marketing phase of the Group's life cycle and the
continual work to develop further applications of the PathScore and DrugPrint® products, significant research, development, sales and
marketing costs have been incurred to date in excess of revenue.
As at 30 June 2008, a draw down of £1,004,000 had been made against overdraft facilities. The Group is now meeting its day to day
working capital requirements through secured overdraft facilities. The existing overdraft facilities of £1.25m are repayable on demand and
are subject to expiry on 29 April 2009.
The bank has indicated that on expiry they would consider extending these facilities for a further period of not less than six months.
The Board are currently not in possession of any information that would lead the Directors to believe that an extension would not be
granted.
The Directors have prepared projected cash flow information for the period ending 31 December 2009. Those cash flow forecasts include
certain assumptions regarding the trading performance of the business and the management of working capital. The most significant of these
are discussed below:
The nature of the Group's operations means that future income is dependent on securing collaboration agreements and/or
sales/sub-licensing contracts within the markets it currently operates in and on developing new applications for the PathScoreTM and
DrugPrint products. The group is currently in advanced discussions with potential sub-licensees for the PathScore patents. The Group
anticipates receiving, in advance of the sub-license agreement, sums for an exclusive negotiating period of 60 days (refundable on
successful conclusion of a negotiated agreement).
The projections include assumed net placement proceeds of £0.9m. The nature of the Group's business is such that there can be
considerable unpredictable variation in the timing and amount of cash inflows generated from planned product launches. The directors are
confident that the Group will be able to raise additional funds through further debt or equity raisings when required to secure further
development funds and believe that the Group has demonstrated progress in achieving its milestones for the development of DrugPrint and
PathScore and is able to attract investors.
Included within the Group's net current liabilities are trade creditors of £1,274,000. The Group is currently in discussion with the
trade creditor representing the majority of this balance. Unless the balance is repaid out of cash flows generated by the sub-license
agreement or placement described above, the creditor has agreed in principle to convert a large proportion of the outstanding amount into
ordinary share capital of the company.
On the basis of the cash flow forecasts the Directors consider that the Group and Company will continue to operate within the facility
currently agreed and within that which they expect to be agreed prior to expiry of the existing facilities, when the Group's bankers will
consider renewing the facility for a further period of not less than six months.
However, the margin of facilities over requirements is not large and there can be no certainty in relation to the adequacy and continued
availability of the overdraft facility, the potential proceeds from the planned placement, the validity of the trading assumptions used in
the cash flow forecasts or the conversion of the trade creditor into new ordinary shares should this be necessary which may cast significant
doubt on the Group's and Company's ability to continue as a going concern. The Group and Company may therefore, be unable to continue
realising their assets and discharging their liabilities in the normal course of business. The financial statements do not include any
adjustments that would result from the basis of preparation being inappropriate.
2. Discontinued operations
The comparative income statements showing the analysis between continuing and discontinued operations are set out below:
Unaudited Unaudited Unaudited
Six months to 30 Six months to 30 June 2007 Six months to 30 June 2007
June 2007
Continuing Discontinued Total
£000 £000 £000
Revenue - 45 45
Cost of sales - (14) (14)
Gross profit - 31 31
Administrative expenses (713) (1,931) (2,644)
Loss on ordinary activities (713) (1,900) (2,613)
before interest
Audited Audited Audited
Year ended Year ended Year ended
31 31 December 31
December 2007 December
2007 2007
Continuing Discontinued Total
£000 £000 £000
Revenue - 63 63
Cost of sales - (25) (25)
Gross profit - 38 38
Administrative expenses (1,463) (388) (1,851)
Loss on ordinary activities before (1,463) (350) (1,813)
interest
In the six months to 30 June 2008, all amounts relate to continuing operations.
3. Taxation
As a result of taxation losses in prior years, no provision for taxation is required.
Unaudited Unaudited Audited
30 June 30 June 31 December 2007
2008 2007
£000 £000 £000
Loss on ordinary activities before (940) (2,732) (4,178)
tax
Loss on ordinary activities
multiplied by the small companies (179) (519) (793)
rate of corporation tax of 19% (2007:
19%)
Losses not utilised or recognised as 179 519 793
deferred tax assets
Research and development tax credits 98 - 237
receivable
Current year tax credit 98 - 237
4. Loss per share
The calculation of the basic and diluted earnings per share is based on the loss for the period of £842,000 (six months to 30 June 2007
£2,732,000) and on the weighted average number of shares in issue during the period of 200,555,662 (six months to 30 June 2007 200,555,662)
The calculation of diluted loss per share has not been adjusted for 105,589,114 shares in respect of the convertible loan note and
employee share options.
5. Analysis of changes in net financial liabilities
At 31 Cash Non cash movements At 30 June 2008
Decembe flows
r
2007
£000 £000 £000 £000
Cash and cash equivalents 66 (61) - 5
Bank overdrafts (735) (274) - (1,009)
(669) (335) - (1,004)
Debt due greater than 1 year (2,305) - (59) (2,364)
(2,974) (335) (59) (3,368)
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END
IR EAANKASDPEFE