Preliminary Results for year ended 30 April 2018

RNS Number : 6487V

Angle PLC

25 July 2018

 

For Immediate Release

25 July 2018

ANGLE plc

("ANGLE" or "the Company")

Preliminary Results for the year ended 30 April 2018

STRENGTHENING A LEADING POSITION IN THE LIQUID BIOPSY MARKET

 OVARIAN CANCER CLINICAL STUDIES SUCCESSFULLY COMPLETED AND

FDA CLINICAL STUDY IN PROGRESS

ANGLE plc (AIM: AGL OTCQX: ANPCY), a world leading liquid biopsy company, today announces unaudited results for the year ended 30 April 2018.

Operational Highlights

·     FDA clinical study of 400 subjects set up and in progress with four leading US cancer centres, targeted for completion this year

·     Successful US and European ovarian cancer studies in 400 patients. Blood test delivered 95.1% accuracy in discriminating between benign and malignant pelvic masses significantly out-performing standard of care

·     Acquisition of the assets of Axela Inc. for £3.6 million.  The principal asset, the Ziplex^® platform allows multiplex gene expression analysis of cancer cells. This complements the Parsortix^TM system and, in time, will be offered to customers as a full 'sample to answer' solution

·     Collaborative agreements signed with three leading, global healthcare companies QIAGEN, Philips and Abbott

·     Research equipment installed base increased to 200 Parsortix systems (2017: 145)

·     Total of 10 peer-reviewed publications (30 April 2017: 4) and 21 publicly available posters (30 April 2017: 13)

Financial Highlights

·     Loss for the year £7.5 million (2017: loss £6.4 million) reflecting planned investment

 

·     Revenue and grant income £0.7 million (2017: £0.5 million)

·     £15.0 million fundraising during the year (£14.4 million net of expenses)

·     Cash balance at 30 April 2018 of £7.6 million (30 April 2017: £5.5 million)

·     Post year end fundraising of £12.7 million (£12.0 million net of expenses)

Garth Selvey, Non-Executive Chairman of ANGLE plc, commented:

"With two successful ovarian cancer studies, the initiation of our FDA clinical studies and three global healthcare companies secured as partners, ANGLE has established world-wide recognition and potential. The acquisition of downstream analysis technology complements the Parsortix system and will, in time, allow us to offer our customers a full 'sample to answer' solution.

We continue to invest heavily to pursue FDA clearance for the Parsortix system as the first ever FDA cleared clinical device to harvest intact circulating tumour cells for analysis from patient blood. Commencement of clinical trials at four prestigious US cancer centres marks a major step forward for the business."

Details of webcast

Please see http://www.angleplc.com/investor-information/investor-centre/ for details.

For further information ANGLE:

ANGLE plc	[phone]
Andrew Newland, Chief Executive Ian Griffiths, Finance Director
finnCap Ltd (NOMAD and Joint Broker) Corporate Finance - Adrian Hargrave, Simon Hicks, Max Bullen-Smith Corporate Broking - Alice Lane, Nikita Jain	[phone]
WG Partners (Joint Broker) Nigel Barnes, Nigel Birks, Andrew Craig, Chris Lee	[phone]
FTI Consulting Simon Conway, Mo Noonan, Stephanie Cuthbert Evan Smith, Anne Troy (US)	[phone] [phone]

For Frequently Used Terms, please see the Company's website on http://www.angleplc.com/the-parsortix-system/glossary/

This announcement contains inside information.

These Preliminary Results may contain forward-looking statements. These statements reflect the Board's current view, are subject to a number of material risks and uncertainties and could change in the future. Factors that could cause or contribute to such changes include, but are not limited to, the general economic climate and market conditions, as well as specific factors including the success of the Group's research and development and commercialisation strategies, the uncertainties related to regulatory clearance and the acceptance of the Group's products by customers. 

CHAIRMAN'S STATEMENT

Introduction

ANGLE has strengthened its leading position in the liquid biopsy market. Two successful ovarian cancer clinical studies were followed by the successful design and commencement of clinical and analytical studies in metastatic breast cancer specifically to support a submission to the FDA in pursuit of FDA marketing clearance.

ANGLE also acquired the assets of Axela Inc for £3.6 million. The principal asset, the Ziplex platform, provides multiplex gene expression analysis of cancer cells making it complementary to the Parsortix system and ultimately allowing ANGLE to offer a full 'sample to answer' solution.

Overview of Financial Results

Revenue and grant income of £0.7 million (2017: £0.5 million) came mainly from research use of the Parsortix system.  Planned investment in studies to develop and validate the clinical application and commercial use of the Parsortix system increased, resulting in operating costs of £9.4 million (2017: £7.8 million).  Thus, the loss for the year correspondingly increased as expected to £7.5 million (2017: £6.4 million).

The cash balance was £7.6 million at 30 April 2018 (30 April 2017: £5.5 million) and an R&D tax credit of £1.1 million was received shortly after the year end. The financial position was strengthened during the year with a placing of shares with major institutional investors, which raised £15.0 million gross (£14.4 million net of expenses).

Post year end a further £12.7 million gross fundraising was completed (£12.0 million net of expenses).

Strategy

ANGLE has made strong progress in its four pronged strategy for achieving widespread adoption of its Parsortix system in the emerging multi-billion dollar liquid biopsy market:

1)  Completion of rigorous large scale clinical studies run by leading cancer centres, demonstrating the effectiveness of different applications of the system in cancer patient care

2)  Securing regulatory approval of the system with the emphasis on FDA clearance as the de facto global gold standard.  ANGLE is seeking to be the first company ever to gain FDA clearance for a system which harvests circulating tumour cells (CTCs) from blood for subsequent analysis

3)  Establishing a body of published evidence from leading cancer centres showing the effectiveness of the system through peer reviewed publications, scientific data and clinical research evidence, highlighting a wide range of potential applications

4)  Establishing partnerships with large healthcare companies for market deployment and development of multiple other clinical applications incorporating the Parsortix system.

Progress towards FDA clearance

ANGLE is seeking to become the first ever company to receive FDA Class II clearance for a product for harvesting intact circulating tumour cells (CTCs) from patient blood for subsequent analysis.  US regulatory clearance by the FDA is considered the global standard for approval of medical diagnostic systems and ANGLE believes that such clearance would provide ANGLE's Parsortix system with a further competitive differentiation, which would accelerate all forms of commercial adoption of the system in both research and clinical settings.   

ANGLE has sustained a high level of resource commitment on its efforts to progress towards FDA clearance over several years. Preparation for the analytical and clinical studies required to make a comprehensive submission to the FDA has necessitated an enormous amount of work to develop, test and finalise the protocols involved.  Optimisation of the techniques used to analyse cells harvested by the Parsortix system has required the development of know-how which, now successfully completed, adds to the overall capability and differentiation of the Parsortix system in the market. 

We are delighted that the FDA clinical study ANG-002 is in progress with four of the leading US cancer centres enrolling patients: University of Texas MD Anderson Cancer Center, University of Rochester Wilmot Cancer Center, University of Southern California Norris Comprehensive Cancer Center, and Robert H Lurie Comprehensive Cancer Center Northwestern University. 

We are also delighted that the global healthcare company Abbott has joined the study enabling us to use its proprietary PathVysion^TM HER-2 DNA FISH Probe kits. 

A key aim for the Company in the new financial year is to complete the FDA clinical and analytical studies.  Whilst the enrolment of patients and analysis of results are conducted by independent cancer centres and outside the control of the Company, current expectations continue to be that both the FDA studies will complete this year.

Large scale clinical studies

Ovarian cancer clinical application: triaging abnormal pelvic mass

During the year, the Company's first clinical application for the Parsortix system was advanced with two clinical studies designed as a Pelvic Mass Triage (PMT) test to detect the presence of ovarian cancer in women with an abnormal pelvic mass requiring surgery.

Both studies reported positively during the year and the detailed results of the US clinical study were reported at the Society of Gynecologic Oncology (SGO) Annual Meeting on Women's Cancer by the Principal Investigator, Dr Richard Moore, Director of the Gynecologic Oncology Division, University of Rochester Medical Center Wilmot Cancer Institute on 24 March 2018.  The results demonstrated a correct prediction of cancer with an accuracy (area under the curve) of 95.1% for the predictive assay. ANGLE's PMT test achieved higher sensitivity and specificity than any other test available for the same application. 

The excellent performance of ANGLE's Parsortix system in this large scale clinical study for the detection of ovarian cancer demonstrates the capability of ANGLE's CTC system to out-perform current approaches for the detection of ovarian cancer.  ANGLE is now working to optimise this assay by the end of the year and then complete a further clinical study in 2019/20 to progress commercialisation.  ANGLE estimates that the total addressable market for its PMT test is worth US$1 billion per annum.

Ziplex downstream analysis technology

Whilst both the 200 patient European and US ovarian studies outlined above utilised the Parsortix system to harvest cancer cells from the blood of patients where present, the European study used traditional PCR (polymerase chain reaction) techniques to undertake molecular analysis of the harvested cells whereas the US study used the novel multiplex gene and protein analysis platform, Ziplex system provided by Axela.

On comparison of the studies, the Ziplex platform was shown to offer key advantages over other technologies available on the market including high sensitivity enabling successful use on only a small number of cancer cells amongst a larger background population of blood cells and the ability to multiplex a large number (up to 200) of gene expression analyses in a single reaction.

All the Axela assets, including worldwide intellectual property in relation to the Ziplex platform, were acquired by ANGLE for £3.6 million on 1 November 2017. 

The acquisition represents a major strengthening of ANGLE's position within the liquid biopsy market providing a key competitive differentiation of owning both a CTC harvesting technology and a downstream molecular analysis technology to interrogate the harvested CTCs. 

Prostate cancer: blood test alternative to prostate biopsy

During the year Barts Cancer Institute reported in the peer-reviewed journal, Clinical Cancer Research, results of their 40 patient study, which showed that combining the analysis of mesenchymal CTCs and megakaryocytes using Parsortix enabled the identification of patients 10 times more likely to die of their disease in the short term. 

Coupled with Barts' earlier work, this suggests that the use of the Parsortix system may enable not only the detection of prostate cancer but also an assessment of its aggressiveness.  The latter is a key point as currently many men have invasive treatment for prostate cancer which would have remained indolent.  It would be a big step forward in the treatment of prostate cancer if a forward looking assessment could identify those men who need and those who do not need invasive treatment.

At present, ANGLE is focusing resources primarily on breast cancer and ovarian cancer, with prostate cancer receiving smaller scale investment while plans are being developed.  However, a number of options are being explored to expedite further development in the prostate cancer area through partnering.

Establishing a body of published evidence

Further strong progress was made this year in establishing a body of published evidence. 

The Company's strategy to secure research use adoption of the Parsortix system by leading cancer research centres in order to get third parties driving development of new applications for Parsortix independent of ANGLE is working very well.

The installed base of Parsortix instruments is continuing to grow, standing at over 200 at 30 April 2018, up from c. 145 at 30 April 2017.  Over 49,000 blood separations have now taken place using the Parsortix system, up from c. 30,000 at 30 April 2017.

This deployment of Parsortix in research use now means that the system is widely presented and discussed at leading cancer conferences around the world and, during the year, paying customers have developed ground-breaking new research using the system. An example of this was the breakthrough research presented at the American Association for Cancer Research (AACR) Annual Meeting 2018 by the Robert H Lurie Comprehensive Cancer Center and the Feinberg School of Medicine, Northwestern University, Chicago (Northwestern) providing an optimised workflow for the recovery and culturing of CTCs from a simple blood test to produce an effective ex-vivo culture (cells growing outside the patient) of the individual patient's cancer cells. 

The development of CTC cultures is considered one of the hottest topics in cancer currently and the Principal Researcher, Professor Massimo Cristofanilli described it as "opening up a new frontier in the management of breast cancer" as it offers the prospect of testing cancer drugs outside the patient, avoiding unnecessary toxic side effects, to determine which will be most effective, thereby providing the patient with truly personalised cancer care.

During the year, there were a further six peer-reviewed publications and numerous posters and presentations at leading conferences.  Publications that have been released publicly are available at https://angleplc.com/library/publications/.  So far 17 separate cancer centres have published uniformly positive reports on their use of the Parsortix system. 

Leading independent cancer centres throughout Europe and North America using ANGLE's Parsortix system are working on developments in 21 different cancer types.  Developments announced during the year are summarised following the Chairman's Statement.

Progressing partnerships with large healthcare companies

Large scale deployment of the Parsortix system across numerous cancer types and application areas requires ANGLE to partner with large, global healthcare companies to take advantage of their distribution and sales channels and economic resources.

Discussions are ongoing with companies in relevant fields: medtech companies, pharma companies, contract research organisations and reference laboratories (laboratories offering clinical tests).  We expect to see our partnership programme accelerate as the FDA clearance process progresses.

During the year, three partnerships were signed. 

A co-marketing agreement was signed with world-leading molecular testing company QIAGEN.  QIAGEN employs 4,600 people in over 35 countries and has more than 500,000 customers with annual revenues exceeding US $1.3 billion.  The first area of focus is to couple the Parsortix system with QIAGEN's downstream technologies for use in prostate and breast cancer research.  Protocols are currently being developed and optimised to allow sales into QIAGEN's established customer base.

A collaborative research project was signed with Philips, a global leader in health technology, to develop liquid biopsy solutions as part of a four year European Union research grant funded programme worth €6.3 million, of which £0.4 million will flow to ANGLE.  Philips has selected the Parsortix system as the only system to be used for harvesting CTCs within the programme.  Breast and rectal cancers are being targeted.

An agreement was signed with global healthcare company Abbott in which Abbott will supply ANGLE with its proprietary PathVysion HER-2 DNA FISH Probe kits for ANGLE's ANG-002 FDA study for FISH (fluorescence in situ hybridization) analysis of circulating tumor cells (CTCs) in the form of a research grant.  The objective of this end-point is to demonstrate that harvested CTCs can be subjected to FISH analysis to determine their HER-2 status.  Assuming this is successful, we hope to be able to work with Abbott to extend PathVysion use into routine blood test analysis as an important downstream application of the Parsortix system in breast cancer.  Abbott is the global market leader for FISH testing in solid tissue biopsies, a market estimated to be worth $0.5 billion per annum in 2016 (source: Grand View Research).  A positive result in this clinical study would demonstrate the potential for Abbott to offer a Parsortix-based product for HER-2 analysis from a routine blood test.

Outlook

With two successful ovarian cancer studies, the initiation of our FDA clinical studies and three global healthcare companies secured as partners, ANGLE has established world-wide recognition and potential. The acquisition of downstream analysis technology complements the Parsortix system and will, in time, allow us to offer our customers a full 'sample to answer' solution.

We continue to invest heavily to pursue FDA clearance for the Parsortix system as the first ever FDA cleared clinical device to harvest intact circulating tumour cells for analysis from patient blood. Commencement of clinical trials at four prestigious US cancer centres marks a major step forward for the business.

Garth Selvey

Chairman

24 July 2018

Summary: Published research during the year using the Parsortix system

Leading independent cancer centres throughout Europe and North America using ANGLE's Parsortix system are working on developments in 21 different cancer types. Key developments achieved during the year, which were described in Company announcements at the time, included:

·      June 2017: MD Anderson demonstrated ability to measure meEGFR on CTCs in colorectal cancer, which is an indicator of whether a patient will respond to EGFR inhibitor drugs.

·      June 2017: Barts Cancer Institute's discovery of the role of megakaryocytes in prostate cancer. ANGLE subsequently acquired a worldwide exclusive option over the resulting intellectual property.

·      July 2017: Western University, Canada demonstrated use of Parsortix in mouse models of human cancer.

·      September 2017: Heinrich Heine University Duesseldorf published in the International Journal of Molecular Science work showing the Parsortix system captures clinically relevant CTCs in the waste of antibody-based CTC systems (i.e. cells missed by competing systems).

·      October 2017: Heinrich Heine University Duesseldorf demonstrated the ability to culture CTCs (grow the cells) harvested from DLA blood product. 

·      October 2017: University of Maryland demonstrated the use of live CTCs harvested from patient blood to test the efficacy of drugs outside the patient by observing the response of the micro-tentacles on the living cancer cell surface.

·      October 2017: University Hospital Muenster published results evaluating four CTC systems in clear cell renal carcinoma (kidney cancer) showing that Parsortix out-performed all the other systems.

·      October 2017: The Center for Women's Health Tuebingen, Germany demonstrated a protocol for harvesting disseminated tumour cells (DTCs) from cancer patient bone marrow samples.

·      November 2017: Medical University of Vienna published peer-reviewed research in the journal Oncotarget showing molecular characterisation of CTCs with positive results in 95% primary and 100% recurrent gynaecological cancers and 92% in metastatic breast cancer.

·      December 2017: University of Southern California Norris Comprehensive Cancer Center demonstrated comparable gene expression of CTCs obtained from a simple blood test when compared to the invasive tissue biopsy of the metastatic site.  This will be an important potential use of the Parsortix system post FDA clearance.

·      January 2018: University of Hamburg, Medical University of Graz and Stockholm University demonstrated measurement of the expression of ARV7 (androgen receptor splice variant 7) in CTCs, which is correlated with prostate cancer patient response to novel hormone therapy (NHT) drugs such as Enzalutamide and Abiraterone.

·      April 2018: Robert H Lurie Comprehensive Cancer Center and the Feinberg School of Medicine, Northwestern University presented an optimised work flow for culturing CTCs from blood of metastatic breast cancer patients at AACR 2018.  This is now an area of focus for use of Parsortix post FDA clearance.

·      May 2018: ANGLE and QIAGEN jointly presented protocols for the measurement of ARV7 in prostate cancer blood.

ANGLE PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 APRIL 2018

		2018		2017
		(Unaudited)		(Audited)
	Note	£'000		£'000
Revenue		628		498
Cost of sales		(169)		(123)
Gross profit		459		375
Other operating income		52		-
Operating costs		(9,444)		(7,810)
Operating profit/(loss)		(8,933)		(7,435)
Net finance income/(costs)		8		25
Profit/(loss) before tax		(8,925)		(7,410)
Tax (charge)/credit	5	1,387		1,018
Profit/(loss) for the year		(7,538)		(6,392)
Other comprehensive income/(loss)
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations		(99)		139
Other comprehensive income/(loss)		(99)		139
Total comprehensive income/(loss) for the year		(7,637)		(6,253)
Profit/(loss) for the year attributable to:
Owners of the parent		(7,556)		(6,567)
Non-controlling interests		18		175
Profit/(loss) for the year		(7,538)		(6,392)
Total comprehensive income/(loss) for the year attributable to:
Owners of the parent		(7,702)		(6,414)
Non-controlling interests		65		161
Total comprehensive income/(loss) for the year		(7,637)		(6,253)
Earnings/(loss) per share attributable to owners of the parent Basic and Diluted (pence per share)	6	(10.09)		(8.95)
All activity arose from continuing operations.

ANGLE PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 APRIL 2018

	Note	2018		2017
		(Unaudited)		(Audited)
		£'000		£'000
Non-current assets
Intangible assets	7	5,588		1,918
Property, plant and equipment		1,475		824
Total non-current assets		7,063		2,742
Current assets
Inventories		599		665
Trade and other receivables		828		714
Taxation		2,147		1,261
Cash and cash equivalents		7,645		5,536
Total current assets		11,219		8,176
Total assets		18,282		10,918
Current liabilities
Trade and other payables		(2,398)		(2,112)
Total current liabilities		(2,398)		(2,112)
Total liabilities		(2,398)		(2,112)
Net assets		15,884		8,806
Equity
Share capital	9	11,709		7,482
Share premium		43,449		33,285
Share-based payments reserve		1,072		822
Other reserve		2,553		2,553
Translation reserve		(14)		132
Retained earnings		(42,129)		(34,647)
ESOT shares		(102)		(102)
Equity attributable to owners of the parent		16,538		9,525
Non-controlling interests		(654)		(719)
Total equity		15,884		8,806

ANGLE PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 APRIL 2018

	2018		2017
	(Unaudited)		(Audited)
	£'000		£'000
Operating activities
Profit/(loss) before tax from continuing operations	(8,925)		(7,410)
Adjustments for:
Depreciation of property, plant and equipment	446		267
(Profit)/loss on disposal of property, plant and equipment	1		5
Amortisation and impairment of intangible assets	344		245
Share-based payments	324		254
Exchange differences	(33)		(50)
Net finance (income)/costs	(8)		(25)
Operating cash flows before movements in working capital	(7,851)		(6,714)
(Increase)/decrease in inventories	(83)		(575)
(Increase)/decrease in trade and other receivables	(106)		(290)
Increase/(decrease) in trade and other payables	727		131
Operating cash flows	(7,313)		(7,448)
Research and development tax credits received	501		65
Net cash from/(used in) operating activities	(6,812)		(7,383)
Investing activities
Purchase of property, plant and equipment	(1,031)		(70)
Purchase of intangible assets	(830)		(374)
Acquisition of assets and business (Note 8)	(3,613)		-
Interest received	8		26
Net cash from/(used in) investing activities	(5,466)		(418)
Financing activities
Net proceeds from issue of share capital	14,391		9,570
Net cash from/(used in) financing activities	14,391		9,570
Net increase/(decrease) in cash and cash equivalents from continuing operations	2,113		1,769
Discontinued operations
Net cash from/(used in) operating activities	-		(5)
Net increase/(decrease) in cash and cash equivalents from discontinued operations	-		(5)
Net increase/(decrease) in cash and cash equivalents	2,113		1,764
Cash and cash equivalents at start of year	5,536		3,764
Effect of exchange rate fluctuations	(4)		8
Cash and cash equivalents at end of year	7,645		5,536

ANGLE PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 APRIL 2018

	------------ Equity attributable to owners of the parent -----------------
			Share-based
	Share	Share	payments	Other	Translation
	capital	premium	reserve	reserve	reserve
	£'000	£'000	£'000	£'000	£'000
At 1 May 2016 (Audited)	5,898	25,299	629	2,553	(21)
For the year to 30 April 2017
Consolidated profit/(loss)
Other comprehensive income/(loss):
Exchange differences on translating foreign operations					153
Total comprehensive income/(loss)					153
Issue of shares (net of costs)	1,584	7,986
Share-based payments			254
Released on exercise			(1)
Released on forfeiture			(60)
	___ ______	___ _______	___ ______	___ ______	___ ______
At 30 April 2017 (Audited)	7,482	33,285	822	2,553	132
For the year to 30 April 2018
Consolidated profit/(loss)
Other comprehensive income/(loss):
Exchange differences on translating foreign operations					(146)
Total comprehensive income/(loss)					(146)
Issue of shares (net of costs)	4,227	10,164
Share-based payments			324
Released on forfeiture			(74)
	___ ______	___ _______	___ ______	___ ______	___ ______
At 30 April 2018 (Unaudited)	11,709	43,449	1,072	2,553	(14)
	==========	==========	==========	==========	=========

	---------- Equity attributable to owners of the parent -----
			Total	Non-
	Retained	ESOT	Shareholders'	controlling	Total
	earnings	shares	equity	interests	equity
	£'000	£'000	£'000	£'000	£'000
At 1 May 2016 (Audited)	(28,141)	(102)	6,115	(880)	5,235
For the year to 30 April 2017
Consolidated profit/(loss)	(6,567)		(6,567)	175	(6,392)
Other comprehensive income/(loss):
Exchange differences on translating foreign operations			153	(14)	139
Total comprehensive income/(loss)	(6,567)		(6,414)	161	(6,253)
Issue of shares (net of costs)			9,570		9,570
Share-based payments			254		254
Released on exercise	1		-		-
Released on forfeiture	60		-		-
	___ ________	___ ______	___ _______	__ _______	___ _______
At 30 April 2017 (Audited)	(34,647)	(102)	9,525	(719)	8,806
For the year to 30 April 2018
Consolidated profit/(loss)	(7,556)		(7,556)	18	(7,538)
Other comprehensive income/(loss):
Exchange differences on translating foreign operations			(146)	47	(99)
Total comprehensive income/(loss)	(7,556)		(7,702)	65	(7,637)
Issue of shares (net of costs)			14,391		14,391
Share-based payments			324		324
Released on forfeiture	74		-		-
	___ ________	___ ______	___ _______	___ ______	___ _______
At 30 April 2018 (Unaudited)	(42,129)	(102)	16,538	(654)	15,884
	===========	==========	==========	==========	==========

ANGLE PLC

NOTES TO THE PRELIMINARY ANNOUNCEMENT

FOR THE YEAR ENDED 30 APRIL 2018

1       Preliminary announcement

The preliminary announcement set out above does not constitute ANGLE plc's statutory Financial Statements for the years ended 30 April 2018 or 2017 within the meaning of section 434 of the Companies Act 2006.

The financial information for the year ended 30 April 2018 is unaudited and an auditor's report has not yet been issued. Statutory audited financial statements for the year will be finalised on the basis of the financial information presented by the directors in this preliminary announcement.

The financial information for the year ended 30 April 2017 is derived from the audited financial statements for that year, which have been delivered to the registrar of companies, and the auditor's report on the consolidated Financial Statements for the year ended 30 April 2017 is unqualified and does not contain statements under s498(2) or (3) of the Companies Act 2006.

The format of the financial information has been amended to incorporate "Other operating income" (being grant income), the acquisition completed in the year, and a re-ordering of the Consolidated Statement of Financial Position. The accounting policies used for the year ended 30 April 2018 are unchanged from those used for the statutory Financial Statements for the year ended 30 April 2017, except as referred to in Note 2. The 2018 statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

2       Compliance with accounting standards

While the financial information included in this preliminary announcement has been computed in accordance with the measurement principles of IFRS, this announcement does not itself contain sufficient information to comply with IFRS.

Accounting standards adopted in the year

No new accounting standards that have become effective and adopted in the year have had a significant effect on the Group's Financial Statements.

Accounting standards issued but not yet effective

At the date of authorisation of the Financial Statements, there were a number of other Standards and Interpretations (International Financial Reporting Interpretation Committee - IFRIC) which were in issue but not yet effective, and therefore have not been applied in these Financial Statements. Other than for IFRS 15, the Directors have not yet assessed the impact of the adoption of these standards and interpretations for future periods.

IFRS 15 Revenue from Contracts with Customers (effective for accounting periods commencing on or after 1 January 2018) will be adopted by ANGLE in the next financial year. During the year, ANGLE have reviewed all income streams against the requirements of IFRS 15. The review concluded that there were no material contracts which would require different treatment under IFRS 15 versus current standards. Consequently, the introduction of IFRS 15 is not expected to materially impact the financial statements in future periods other than additional disclosure requirements.

Accounting policies have been added and/or updated to address acquisition accounting in relation to business combinations, acquired intangible assets and goodwill. A number of other accounting policies have been slightly amended and updated for readability. 

3       Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and financial position are set out in the Chairman's Statement. 

The Directors have prepared and reviewed the financial projections for the 12 month period from the date of signing of these Financial Statements. Based on the level of existing cash, agreed funding, the projected income and expenditure (the timing of some of which is at the Group's discretion) and other potential sources of funding, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in business for the foreseeable future. Accordingly the going concern basis has been used in preparing the Financial Statements.

4       Critical accounting estimates and judgements

The preparation of the Financial Statements requires the use of estimates, assumptions and judgements that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates, assumptions and judgements are based on the Directors' best knowledge of the amounts, events or actions, and are believed to be reasonable, actual results ultimately may differ from those estimates.

The estimates, assumptions and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are described below.

Valuation and amortisation of internally-generated intangible assets (Note 7)

IAS 38 Intangible Assets contains specific criteria that if met mean development expenditure must be capitalised as an internally generated intangible asset. Judgements are required in both assessing whether the criteria are met (for example, differentiating between enhancements and maintenance) and then in applying the rules (for example, determining an estimated useful life). Intangible assets are amortised over their useful lives. Useful lives are assessed by reference to observable data (for example, remaining patent life) and taking into consideration specific product characteristics (for example, product life cycle) and market characteristics (for example, estimates of the period that the assets will generate revenue).  Each of these factors is periodically reviewed for appropriateness. Changes to estimates in useful lives may result in significant variations in the amortisation charge.

Business combinations - identification, valuation and amortisation of acquisition-related assets (Notes 7 and 8)

In accounting for business combinations, the Group is required to determine the fair value of the identifiable assets acquired and allocate the purchase price accordingly. In determining the fair value of the intangible assets acquired, judgement is required in determining and valuing the identifiable intangible assets through the use of appropriate valuation techniques and discount rates. Assumptions on future cash flows, length of life of the assets, reproduction and replacement cost are, where possible, based on information available to management at the time of acquisition. Future cash flows include significant subjective assumptions in relation to market demand, success in obtaining regulatory clearance, pricing, levels of reimbursement and gross margins and getting in national guidelines. The Group considers that for each of these variables there is a range of reasonably possible alternative values, which results in a range of fair value estimates, and determining values requires considerable judgement and there remain inherent uncertainties in forecasting. Changes to key assumptions may result in significant variations to fair values of the identifiable assets. The amount of goodwill initially recognised is dependent on the allocation of the fair value of the identifiable assets acquired.

Impairment (Note 7)

The Group is required to review, at least annually, whether there are indications (events or changes in circumstances) that intangible assets have suffered impairment and that the carrying amount may exceed the recoverable amount. If there are indications of impairment then an impairment review is undertaken. The recoverable amount is the higher of the asset's fair value less costs to sell and its value-in-use. The value-in-use method requires the estimation of future cash flows and the selection of a suitable discount rate in order to calculate the present value of these cash flows. When reviewing intangible assets for impairment the Group has had to make various assumptions and estimates of individual components and their potential value and potential impairment impact. The Group considers that for each of these variables there is a range of reasonably possible alternative values, which results in a range of fair value estimates. None of these estimates of fair value is considered more appropriate or relevant than any other and therefore determining a fair value requires considerable judgement.

Share-based payments

In calculating the fair value of equity-settled share-based payments the Group uses an options pricing model. The Directors are required to exercise their judgement in choosing an appropriate options pricing model and determining input parameters that may have a material effect on the fair value calculated. These input parameters include, among others, expected volatility, expected life of the options taking into account exercise restrictions and behavioural considerations of employees, the number of options expected to vest and liquidity discounts.

Research and development tax credit (Note 5)

The Directors make their best estimate of qualifying R&D expenditure to calculate the R&D tax credit. The interpretation of qualifying expenditure requires judgement.

5       Tax

The Group undertakes research and development activities. In the UK these activities qualify for tax relief and result in research and development tax credits.

6       Earnings/(loss) per share

The basic and diluted earnings/(loss) per share is calculated by dividing the after tax loss for the year attributable to the owners of the parent of £7.6 million (2017: £6.6 million).

In accordance with IAS 33 Earnings per share 1) the "basic" weighted average number of ordinary shares calculation excludes shares held by the Employee Share Ownership Trust (ESOT) as these are treated as treasury shares and 2) the "diluted" weighted average number of ordinary shares calculation considers potentially dilutive ordinary shares from instruments that could be converted. Share options are potentially dilutive where the exercise price is less than the average market price during the period. Due to the losses in 2018 and 2017, share options are non-dilutive for those years as adding them would have the effect of reducing the loss per share and therefore the diluted loss per share is equal to the basic loss per share.

The basic and diluted earnings/(loss) per share are based on 95,500,762 weighted average ordinary 10p shares (2017: 73,350,486).

7       Intangible assets

						Total
						£'000
Cost
At 1 May 2016						1,787
Additions						672
Disposals						(5)
Exchange movements						194
At 30 April 2017						2,648
Additions						651
Acquisition of assets (Note 8)						3,421
Disposals						(1)
Exchange movements						(105)
At 30 April 2018						6,614
Amortisation and impairment
At 1 May 2016						441
Charge for the year						156
Disposals						(5)
Impairment						89
Exchange movements						49
At 30 April 2017						730
Charge for the year						341
Disposals						(1)
Impairment						3
Exchange movements						(47)
At 30 April 2018						1,026
Net book value
At 30 April 2018						5,588
At 30 April 2017						1,918

Intangible assets arising as a result of the business combination are described in Note 8 and comprise the fair value of the identifiable intangible assets and the goodwill arising at the date of acquisition. Identifiable intangible assets are amortised over their estimated useful economic life. Goodwill is deemed to have an indefinite useful life and is not amortised.

Internally-generated intangible assets comprises intellectual property (patents) and product development costs capitalised in accordance with IAS 38 Intangible Assets. Capitalised product development costs are directly attributable costs comprising cost of materials, specialist contractor costs, labour and overheads. Product development costs are amortised over their estimated useful lives commencing when the related new product is in commercial production. Development costs not meeting the IAS 38 criteria for capitalisation continue to be expensed through the Statement of Comprehensive Income as incurred.

The carrying value of intangible assets is reviewed for indications of impairment whenever events or changes in circumstances indicate that the carrying value may exceed the recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and its "value-in-use". The key assumptions to assess value-in-use are the estimated useful economic life, future revenues, cash flows and the discount rate to determine the net present value of these cash flows. Where value-in-use exceeds the carrying value then no impairment is made.  Where value-in-use is less than the carrying value then an impairment charge is made.

Amortisation and impairment charges are charged to operating costs in the Consolidated Statement of Comprehensive Income.

8       Acquisition

On 1 November 2017, the Group acquired the assets and business of Axela Inc, a private corporation based in Toronto, Canada, with a novel multiplex gene and protein analysis platform. The assets and business were acquired as the Axela technology had been used over a two year period in ANGLE's US ovarian cancer studies and had shown key advantages over other established downstream analysis technologies on the market. The acquisition also represented a major strengthening of ANGLE's position within the liquid biopsy market providing a key competitive differentiation of owning both a CTC harvesting technology and a downstream molecular analysis technology thereby enabling a "sample-to-answer" solution, and also allowing ANGLE to capture more of the value chain. The Chairman's Statement provides more details.

The deal was structured as an asset purchase whereby specific assets were purchased, liabilities were excluded and key people transferred such that the business could continue. The transaction is treated as a business combination within the scope of IFRS 3 Business Combinations.

The amounts recognised in respect of the identifiable assets acquired on 1 November 2017 are as set out in the table below:

	Fair value
	£'000
Intangible assets	3,421
Property, plant and equipment	89
Inventories	86
Other tangible assets	17
Total consideration	3,613

The total consideration was paid entirely in cash in full and final settlement in the amount of CAD$6.2 million (£3.6 million).

The acquired intangible assets comprise separately identifiable assets and goodwill.

The acquired identifiable intangible assets primarily relate to technology assets, comprising patents, developed and in-process products, documented trade secrets such as technical know-how and manufacturing and operating procedures, methods and processes.

The goodwill arising represents the highly knowledgeable, skilled and specialised workforce, cost savings and operating synergies expected to result from having a larger R&D base in North America, the ability to access new markets and the advantages of the combination of Parsortix and Ziplex technologies enabling "sample-to-answer".

The fair value of acquired property, plant and equipment primarily relates to the residual values of the assets acquired.

The fair value of acquired inventories represents inventories valued at the sales price less provision to take account of the condition of the inventory and any costs needed to bring the product up to current regulations and standards.

Acquisition-related expenses of £0.1 million (2017: £0.3 million) are included in operating costs in the Consolidated Statement of Comprehensive Income, which includes internal costs as well as expenditure on market research, IP advice, legal and accounting services.

Included in the Consolidated Statement of Comprehensive Income in the period 1 November 2017 to 30 April 2018 for the newly acquired business was revenue of £0.1 million and a loss before tax of £0.6 million.

9       Share capital

The Company has one class of ordinary shares which carry no right to fixed income and at 30 April 2018 had 117,086,522 ordinary shares of £0.10 each allotted, called up and fully paid (2017: 74,815,774).

The Company issued 1) 7,481,570 new ordinary shares with a nominal value of £0.10 at an issue price of £0.375 per share in a subscription for shares realising gross proceeds of £2.8 million and 2) 34,789,178 new ordinary shares with a nominal value of £0.10 at an issue price of £0.35 per share in a placing and subscription for shares realising gross proceeds of £12.2 million. Total gross proceeds of the fundraise were £15.0 million. The shares were admitted to trading on AIM in October and November 2017 respectively.

Post the reporting date the Company completed a Fundraise. The General Meeting of 18 July 2018 approved the transaction. HMRC Advance Assurance has now been received and the transaction is in the process of closing. The proposed Placing and Subscription will result in the issue of 25,400,000 new ordinary shares with a nominal value of £0.10 at an issue price of £0.50 per share in a placing and subscription for shares realising gross proceeds of £12.7 million. Shares are expected to be admitted to trading on AIM in late July and/or early August.

10    Shareholder communications

Copies of this announcement are posted on the Company's website www.ANGLEplc.com.

The Annual General Meeting of the Company will be held at 2:00pm on Tuesday 30 October 2018 at ANGLE plc, 10 Nugent Road, the Surrey Research Park, Guildford, GU2 7AF. Notice of the meeting will be enclosed with the audited Statutory Financial Statements.

The audited Statutory Financial Statements for the year ended 30 April 2018 are expected to be distributed to shareholders by 5 October 2018 and will subsequently be available on the Company's website or from the registered office, 10 Nugent Road, Surrey Research Park, Guildford, GU2 7AF.

This preliminary announcement was approved by the Board on 24 July 2018.

 

END

 

 

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