Trading Update

RNS Number : 6433Z

Provexis PLC

31 May 2016

 

31 May 2016                                                            Provexis plc

Trading update

Provexis plc ("Provexis" or the "Company"), the business that develops and licenses the proprietary, scientifically-proven Fruitflow® heart-health functional food ingredient, is pleased to provide an update on trading following the end of its financial year on 31 March 2016.

In its preliminary results statement expected in early September the Company expects to report on another strong year of progress. Revenues for the year ended 31 March 2016 were £92k, a 140% year on year increase (2015: £38k). Profit sharing revenues from the Company's Alliance Agreement with DSM Nutritional Products for Fruitflow® are denominated in Euros, and the underlying profit share payable in Euros increased by 157% year on year, offset at actual exchange rates by a stronger average £ / Euro rate in the year to 31 March 2016.

The Company's Alliance partner DSM has continued to develop the market actively for the Company's novel, patented Fruitflow® heart-health ingredient in all global markets. More than 50 regional consumer healthcare brands have now been launched by direct customers of DSM, and a number of further regional brands have been launched through DSM's distributor channels.

An increasing number of further commercial projects have been initiated by DSM with prospective customers, including some prospective customers which are part of global businesses, with good prospects for these projects to be launched as consumer products. Interest in the technology exists in all major global markets, and the total value of the prospective sales pipeline has continued to increase.

The Company's Alliance Agreement with DSM Nutritional Products for Fruitflow® includes a financial model which is based upon the division of profits between the two partners on an agreed basis, linked to certain revenue targets, following the deduction of the cost of goods and a fixed level of overhead from sales. In June 2015 the Company announced it had agreed significantly enhanced financial terms for the Alliance Agreement with DSM, under which the fixed level of overhead deduction from sales permanently decreased with effect from 1 January 2015, backdated, thus significantly increasing the ongoing profit share payable to the Company.

The Group expects to report an underlying operating loss from continuing operations for the year ended 31 March 2016 of approximately £385k (2015: loss of £409k), a 6% year on year expected reduction and a record low for the Group, reflecting further increasing revenues set against the Group's low overhead licensing business model.

Fruitflow® + Omega-3 dietary supplement product

In June 2016 the Company expects to launch a high quality dietary supplement product containing Fruitflow® and Omega-3 which will be sold initially from a separate, dedicated website www.fruitflowplus.com on a mail order basis.

The new dietary supplement product is expected to provide the Company with an additional income and profit stream, and the fruitflowplus.com website will be able to accommodate further potential Fruitflow® combination product derivatives.

Fruitflow® and Omega-3 have separate, positive EFSA health claims and the packaging for the product reflects these strongly.

The first batch of the product was ordered several months ago and there has been a longer than first anticipated outsourced production lead time for this initial batch, a delay which is not expected to recur now that production has been established.

The Company has been working on the marketing, public relations, sales and fulfilment aspects of this new e-commerce channel with the judicious use of expert outsourced partners and with continuing support from DSM, and it has continued to seek to minimise setup costs.

The Company is keen to increase the brand awareness and potential sales of its new dietary supplement product, along with the brand awareness of Fruitflow® more widely, and further sales channel opportunities are under review.

Fruitflow® marketing initiatives

Marketing efforts for Fruitflow® have seen the product being promoted at several major food ingredient and dietary supplement trade shows. The product has been featured in numerous publications and it has been the subject of several trade seminars and presentations, some of which are available to view in the news section of the Company's website www.provexis.com.

The Company and DSM are keen to secure greater medical advocacy for the product, particularly with reference to the US Food and Drug Administration's guidance in May 2014 concerning the use of low dose Aspirin which remains a strong opportunity for Fruitflow®. Fruitflow® has accordingly been promoted at some major cardiovascular health events, including the European Society of Cardiology's annual congress in London which was attended by more than 30,000 healthcare professionals.

Marketing initiatives have also included DSM's product video for Fruitflow® which is primarily targeted at potential business customers for Fruitflow® in the consumer healthcare sector. The video has been a good opportunity to promote Fruitflow® more widely and it has been viewed by a wide variety of current and prospective customers for Fruitflow®. Further bespoke versions of the video have been released, and a new promotional video has also been shown to prospective customers in the US market. The product video is available to view via the Company's website www.provexis.com.

The Company remains in the process of submitting some of the underlying scientific studies for Fruitflow® for publication in appropriate scientific journals, to include the Company's Aspirin Comparison Human Trial for Fruitflow® and a separate 'Fruitflow® review' paper. The Fruitflow® review paper includes a scientific summary of the entire Fruitflow® project from its inception. The publication of these two studies is expected to be a significant opportunity to promote Fruitflow® further, with further study publications envisaged in due course.

Fruitflow® and Blood Pressure - Collaboration with University of Oslo

In November 2014 the Company signed a two stage collaboration agreement with the University of Oslo to undertake further research into the relationship between Fruitflow® and blood pressure regulation. Recent work undertaken by the University has shown that Fruitflow® has a potential new bioactivity, leading to blood pressure lowering effects which would be of relevance to a large number of consumers and patients with a wide range of cardiovascular conditions.

The first stage of the collaboration work, completed in 2015, was focussed on developing the science and the key results from this stage were very encouraging, with strong evidence from the laboratory based work that a standard 150mg dose of Fruitflow® in powder format has the potential to give a clinically relevant reduction in systolic blood pressure.

The Company and the University are now in the process of conducting the second stage of the collaboration work which is seeing the parties undertake a small clinical trial in Oslo by way of a proof of principle study. Study designs were submitted for ethics approval before finalisation, with a potential dosage for the study of 150mg Fruitflow® in powder format twice per day. The Company and the University expect to be able to complete the clinical trial in the next few months and the results of the proof of principle study will be announced as soon as possible thereafter.

The University of Oslo's research team is led by Professor Asim Duttaroy, Group Leader of Chronic Disease at the Faculty of Medicine and a member of the Company's Scientific Advisory Board. Professor Duttaroy was the original inventor of Fruitflow®.

Intellectual property

The Company is responsible for filing and maintaining patents and trade marks for Fruitflow® as part of the Alliance Agreement with DSM. We are pursuing a strategy to strengthen the breadth and duration of our patent coverage to maximise the commercial returns that can be achieved from the technology. Trade marks were originally registered in the larger global territories, and new registrations are typically now sought in additional territories in response to requests from current or prospective DSM customers for Fruitflow®.

In December 2013 British and international patent applications were filed for the use of Fruitflow® in mitigating exercise-induced inflammation and for promoting recovery from intense exercise, seeking to enhance further the potential of the technology in the sports nutrition sector. Patents are being sought in Europe, the US, China and ten other territories, and this patent application has now entered the national phase, with potential patent protection out to December 2033.

The Company's patent application for Fruit Extracts, relating to part of the production process for Fruitflow®, is now expected to proceed to grant in Europe in the coming months, giving patent protection out to November 2029.

Crohn's disease intellectual property

The Group continues to maintain the Crohn's disease intellectual property registered in Provexis (IBD) Limited, a company which is 75% owned by Provexis plc and 25% owned by The University of Liverpool. Provexis (IBD) Limited has recently acted at minimal cost as the commercial partner for an academic grant application which was ultimately not successful. The Group continues to investigate further options for the Crohn's disease project, seeking to maximise its value.

Capital structure and funding

The Company is seeking to maximise the commercial returns that can be achieved from its Fruitflow® technology, and the Company's cost base and its resources continue to be very tightly managed. The Company remains keen to minimise dilution to shareholders and it is focussed on moving into profitability as Fruitflow® revenues increase, but while the Company remains in a loss making position it will need to raise working capital on occasions.

In June 2015 the Company joined PrimaryBid.com (www.primarybid.com), the online platform dedicated to equity crowdfunding for AIM-listed companies. In July 2015 the Company announced that it had raised net proceeds of £267k through the new PrimaryBid.com platform. PrimaryBid.com provides a new channel for the Company to raise equity from investors, allowing investors to bid directly for new shares in the Company at prices of their choosing, subject to certain limited restrictions. Full details can be found on www.primarybid.com.

The Group's cash at bank at 31 March 2016 was £190k, and current cash at bank is £113k. On 22 December 2015 as part of its interim results the Company stated that it would be seeking to raise funds between March and September 2016. The Company currently has a number of funding options available to it, including but not limited to PrimaryBid.com, and the Directors expect to be able to make a further announcement during the course of June. The proposed funding is expected to be sufficient to provide adequate resources for the Company and the Group to continue in business as a going concern for a period of more than twelve months from September 2016, being the expected date of approval of the 31 March 2016 financial statements.

The funding proceeds which the Company expects to receive will help the Company fund the launch of its Fruitflow® + Omega-3 dietary supplement product, particularly to include the additional working capital required to hold stock of the product. The Company expects to incur some limited, judicious and proportionate marketing and PR costs for the product launch, aided as best possible by DSM.

The Company intends to hold its Annual General Meeting in London at 2:00pm on 30 September 2016.

Dawson Buck, Chairman of Provexis, commented:

"We are pleased to be able to report a 140% increase in revenue for the year ended 31 March 2016, along with other significant progress for the Company.

The Company's Alliance partner DSM Nutritional Products has continued to develop the market actively for Fruitflow® in all global markets, with over 50 regional consumer healthcare brands now having been launched by direct customers of DSM, and with a number of further regional brands having been launched through DSM's distributor channels.

An increasing number of further commercial projects have been initiated by DSM with prospective customers, including some prospective customers which are part of global businesses, with good prospects for these projects to be launched as consumer products. Interest in the technology exists in all major global markets and the total value of the prospective sales pipeline continues to increase.

In June 2016 the Company expects to launch a high quality dietary supplement product containing Fruitflow® and Omega-3 which is expected to provide the Company with an additional income and profit stream, and help to increase the brand awareness of Fruitflow® more widely.

The Company and DSM are committed to a number of ongoing marketing initiatives for Fruitflow® seeking to give the product further global exposure. The Company is very pleased with the results from the first stage of its blood pressure collaboration with the University of Oslo with strong evidence that a standard dose of Fruitflow® has the potential to give a clinically relevant reduction in systolic blood pressure. The Company and the University are now in the process of conducting a small clinical trial by way of a proof of principle study.

The Company's trading update today includes a number of very positive developments for the business. With the Company's low operational costs we remain well positioned to drive value for shareholders, and we are positive about the outlook for the business."

-ends-

For further information please contact:

Provexis plc                                                                    Tel:         [phone]

Dawson Buck, Chairman                                                  [e-mail]

Ian Ford, Finance Director

Cenkos Securities plc                                                      Tel:         [phone]

Bobbie Hilliam

Notes for editors

About Provexis plc

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

In May 2009, the Company's Fruitflow® technology was the first to be substantiated by the European Food Safety Authority ("EFSA") under the new Article 13(5) for proprietary and emerging science. In December 2009 the European Commission authorised the health claim "Helps maintain normal platelet aggregation, which contributes to healthy blood flow", which was the first wording to be authorised under Article 13(5).

In June 2010 it was announced that the Company had entered into a long-term Alliance Agreement with DSM Nutritional Products to commercialise Fruitflow®, and in June 2015 the Company confirmed it had agreed significantly enhanced financial terms for its Alliance Agreement with DSM for Fruitflow®.

The Company's Alliance partner DSM Nutritional Products has developed the market actively for the Company's novel, patented Fruitflow® heart-health ingredient in all global markets, with over 50 regional consumer healthcare brands now having been launched by direct customers of DSM, and with a number of further regional brands having been launched through DSM's distributor channels.

An increasing number of further commercial projects have been initiated by DSM with prospective customers, including some prospective customers which are part of global businesses, with good prospects for these projects to be launched as consumer products. Interest in the technology exists in all major global markets.

In June 2016 the Company expects to launch a high quality dietary supplement product containing Fruitflow® and Omega-3 which will be sold initially from a separate, dedicated website www.fruitflowplus.com on a mail order basis.

The Company is engaged in a two stage collaboration agreement with the University of Oslo ('the University') to undertake further research into the relationship between Fruitflow® and blood pressure regulation. The Company is very pleased with the encouraging results from the first stage of the collaboration with strong evidence that a standard dose of Fruitflow® has the potential to give a clinically relevant reduction in systolic blood pressure. The Company and the University are now in the process of conducting a small clinical trial by way of a proof of principle study.

On 4 June 2015 the Company announced it had joined PrimaryBid.com (www.primarybid.com), the online platform dedicated to equity crowdfunding for AIM-listed companies.

PrimaryBid.com provides a new channel for the Company to raise equity from investors, allowing investors to bid directly for new shares in the Company at prices of their choosing, subject to certain limited restrictions. Full details can be found on www.primarybid.com.

Provexis was founded in 1999 and is headquartered in Reading, Berkshire.

Provexis shares are traded on the AIM market of the London Stock Exchange under the ticker symbol PXS.

For further information, please visit www.provexis.com

 

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