Trading Update

RNS Number : 2832H

Provexis PLC

31 July 2019

 

31 July 2019

Provexis plc

("Provexis" or the "Company")

Trading update

Provexis, the business that develops, licenses and sells 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 2019.

In its preliminary results statement currently scheduled for early September the Company expects to report on another strong year of progress.

The Company expects to report revenues for the year ended 31 March 2019 of £322k, a 37% year on year increase (2018: £236k), reflecting:

·    An increase in the net income received from the Company's Alliance Agreement with DSM, which grew by 22% to £198k in the year (2018: £163k);

·    An increase in revenue net of sales rebates from the Company's Fruitflow+ Omega-3 business, including Holland & Barrett, the Company's website www.fruitflowplus.com and Amazon UK. This business grew by 34% to £98k, net of sales rebates, in the year (2018: £73k).

·    Amounts in excess of £26k which were received in the year for marketing support, compared to amounts of £Nil which were received in the prior year.

Underlying operating loss for the year was £385k (2018: £362k), reflecting a £48k year on year increase in research and development costs which was primarily due to Fruitflow blood pressure lowering patents entering the national phase of the patent application process, a one-off event in the process which represents the most significant pre-patent grant costs.

BY-HEALTH Co., Ltd.

The Company has previously announced it was working with DSM and BY-HEALTH Co., Ltd ('By-Health'), a £3bn listed Chinese dietary supplement business, to support the planned launch of some Fruitflow based products in the Chinese market.

The Company stated in its interim results in December 2018 that further potential research projects for Fruitflow between the Company and By-Health were under active discussion, and the Company can now confirm that Provexis and By-Health have been working on a proposed new framework research collaboration agreement for Fruitflow, which is planned to be at By-Health's sole expense. It is envisaged that the proposed agreement will assist By-Health in its commercialisation plans for Fruitflow, and strengthen further the close relationship between By-Health and Provexis. The Company expects to be able to announce further details of this proposed new collaboration in the near future, but there is no certainty at the time of writing that a collaboration agreement will be entered into.

The planned launch of a number of Fruitflow based products in the Chinese market, with potential volumes at a significant multiple of existing Fruitflow sales, is progressing well, with activities driven at present by the need to obtain 'blue cap' health claim status for Fruitflow as a dietary supplement with the State Administration for Market Regulation (SAMR), a new Chinese market regulator which has taken over the responsibilities of the former China Food and Drug Administration (CFDA).

Clinical studies conducted in China are typically required to obtain blue cap health claim status, and a significant investment in seven separate studies, in support of the Fruitflow based products which By-Health plans to launch in China, is being undertaken at By-Health's expense.

Three studies have been successfully completed in China, three studies are currently ongoing at Chinese clinical sites and a further planned human study in 2019 has been confirmed by By-Health.

The three completed studies (a human study and two animal studies) showed excellent results in use for Fruitflow, and they provide strong evidence for By-Health in its blue cap and other regulatory submissions to the SAMR for Fruitflow, supported by the Company's existing European Food Safety Authority ('EFSA') health claim for Fruitflow.

If a successful blue cap health claim is achieved for Fruitflow it would currently be expected to result in some significant orders for the product, potentially at a multiple of current total sales values. The Company will provide shareholders with as much information as it can on the timing of this highly commercially sensitive and potentially transformative process, subject to the multi-party confidentiality arrangements which inevitably surround the process.

Fruitflow - DSM Nutritional Products

The Company's Alliance partner DSM Nutritional Products ('DSM') has continued to develop the market actively for Fruitflow in all global markets. More than 90 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.

The Company and DSM have seen an encouraging increase in brand awareness and customer interest in Fruitflow over the last three years, with an increasing number of further commercial projects being initiated with prospective customers, including some prospective customers which are part of global businesses.

The Company continues to work closely with DSM, seeking to support various prospective customers globally with their commercialisation plans for Fruitflow, and the total projected annual sales value of the prospective sales pipeline for Fruitflow continues to stand at a substantial multiple of existing annual sales.

Fruitflow+ dietary supplement products

In August 2018 Fruitflow+ Omega-3 was launched in more than 660 Holland & Barrett stores across the UK and Ireland, giving Fruitflow+ Omega-3 widespread consumer exposure.

The product listing has been supported by a number of ongoing staff training, consumer marketing and promotional initiatives, to include Holland & Barrett's in-house Healthy magazine and its website www.hollandandbarrett.com.

Fruitflow+ Omega-3 is available to purchase from Amazon UK and from the Company's e-commerce website www.fruitflowplus.com which is particularly focussed on subscription orders. The product has a Facebook page at www.facebook.com/FruitflowPlus and a newly developed Instagram page at www.instagram.com/fruitflowplus.

The Company believes that Fruitflow has an important role to play in women's cardiovascular health, and it has recently launched a dedicated new section of its consumer website here www.fruitflowplus.com/womens-health. The Company sponsored the annual MegsMenopause conference in May 2019, and delivered a high-profile presentation at the conference.

A dedicated product video for Fruitflow+ Omega-3 was launched in March 2019, and a Fruitflow App is also being developed, primarily for use on mobile device platforms.

Further interest in the role of Fruitflow in exercise was generated by Team Sunweb Pro Cycling's use of Fruitflow in the 2018 Tour de France, and the Company is progressing the formulation and launch of a Fruitflow+ nitrates dietary supplement product which was used by Team Sunweb in the 2019 Tour de France www.fruitflowplus.com/sportrecovery.

The Company's Fruitflow+ Omega-3 dietary supplement business is complementary to its Alliance Agreement with DSM and it is supported by DSM, reflecting the continued strength of the long term relationship between Provexis and DSM. The Company is seeking to expand further its commercial activities with Fruitflow+ Omega-3 and other Fruitflow+ combination products, and it is currently in dialogue with some potential direct brand owner customers.

Intellectual property

The Company is responsible for filing and maintaining patents and trade marks for Fruitflow as part of the Alliance Agreement with DSM, and patent coverage for Fruitflow now includes the following patent families:

·    Improved Fruitflow / Fruit Extracts, which was granted by the European Patent Office in January 2017. The patent has been granted in seven other major territories to include China, and patent applications are at a late stage of progression in a further seven global territories, with potential patent protection out to November 2029.

·    Antihypertensive (blood pressure lowering) effects in collaboration with the University of Oslo, which have now been granted for Fruitflow in Europe and three other major territories. Patent applications are being progressed in a further five major territories to include the US and China, with potential patent protection out to April 2033.

·    The use of Fruitflow with nitrates in mitigating exercise-induced inflammation and for promoting recovery from intense exercise. The patent was first granted by the UK IPO (Intellectual Property Office) in May 2017, and a further patent was granted in Australia in December 2018. Patents are being sought in Europe, the US, China and eleven other territories, with potential patent protection out to December 2033.

·    The use of Fruitflow in protecting against the adverse effects of air pollution on the body's cardiovascular system, which extends potential patent protection for Fruitflow out to November 2037. Recent laboratory work has shown that Fruitflow can reduce the platelet activation caused by airborne particulate matter, such as that from diesel emissions, by approximately one third.

Capital structure and funding

On 27 September 2018 the Company announced it had raised proceeds of £395,000 via the placing of 98,750,000 new ordinary shares of 0.1p each at a gross 0.40p per share with investors, with no commissions payable. The placing shares were admitted to trading on AIM on 5 October 2018.

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 funds to support working capital on occasions. The Company is expected to report cash at bank of £326k at its 31 March 2019 year end, and based on its current level of cash it will be seeking to raise further limited funds in the coming months.

Dawson Buck, Chairman of Provexis, commented:

'In its preliminary results statement currently scheduled for early September the Company expects to report on another strong year of progress, to include revenues for the year ended 31 March 2019 of £322k, a 37% year on year increase.

The Company has developed a strong, long lasting and wide ranging patent portfolio for Fruitflow, a wholly natural cardiovascular health product which is backed by numerous published human studies, and the Company is well placed to maximise the numerous commercial opportunities which the Company and DSM have been pursuing for Fruitflow, to include the Company's planned collaboration with By-Health in the vast Chinese market.

The clinical studies which By-Health has been conducting in China, seeking to obtain blue cap health claim status for Fruitflow in China, have been progressing well and the completed studies have shown excellent results in use for Fruitflow, providing strong evidence for By-Health in its blue cap and other regulatory submissions to the Chinese SAMR. If a successful blue cap health claim is achieved for Fruitflow it would currently be expected to result in some significant orders for the product, potentially at a multiple of current total sales values. The Company will provide shareholders with as much information as it can with regard to the timing of this highly commercially sensitive and potentially transformative process.

The Company would like to thank its customers and shareholders for their continued support, and it remains positive about the outlook for Fruitflow and the Provexis business for the coming year and beyond.'

For further information please contact:

Provexis plc Dawson Buck, Chairman Ian Ford, CFO & COO	Tel:        [phone]                 [e-mail]
Allenby Capital Limited Nick Naylor / Liz Kirchner	Tel:        [phone]

Notes for editors

About Provexis plc

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

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 and www.fruitflowplus.com.

 

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