Two new agreements with DSM & patent application

RNS Number : 7101P

Provexis PLC

22 June 2022

 

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

22 June 2022

Provexis plc

('Provexis' or the 'Company')

DSM Transfer of Business agreement for Fruitflow®

DSM Premix and Market-Ready Solutions supply agreement for Fruitflow®

Patent application - the use of Fruitflow® in modulating the gut microbiome

Provexis, the business that develops, licenses and sells the proprietary, scientifically-proven Fruitflow® heart-health solutions ingredient, entered into an Alliance Agreement (the 'Alliance Agreement') for Fruitflow® with DSM Nutritional Products ('DSM') in June 2010, with a contractual term which runs to 31 December 2022.

Provexis announced in September 2021 that the Company and DSM were engaged in constructive negotiations working towards a new agreement for Fruitflow for the period after 31 December 2022 to replace the Alliance Agreement, and the Company is pleased to announce that the parties have concluded their negotiations and have now entered into (i) a Transfer of Business agreement for Fruitflow and (ii) a Premix and Market-Ready Solutions supply agreement for Fruitflow, both to take effect from 1 January 2023.

The Company is also delighted to announce the filing of a new patent application relating to the use of Fruitflow to confer health benefits in modulating the gut microbiome of humans. This follows the completion of a successful human study, the results of which (as stated in the patent application) strongly support the use of Fruitflow for modulating gut microbiota to confer a number of health benefits.

Under the terms of the two new agreements with DSM, and the new patent application:

· DSM's existing and prospective pipeline customers for Fruitflow as a straight ingredient (not a Premix or Market-Ready solution) will transfer to become direct customers of Provexis WEF 1 January 2023. The customers which are set to be transferred to Provexis represent a significant majority of DSM's total sales of Fruitflow in the calendar year ended 31 December 2021; the total projected annual sales value of the prospective sales pipeline for Fruitflow continues to stand at a substantial multiple of existing annual sales.

· DSM will help facilitate the transfer of its wholly outsourced supply chain / production process for Fruitflow from DSM to Provexis with effect from 1 January 2023.

· A royalty will be payable to DSM on the gross profits generated from Fruitflow sales to customers transferred from DSM over the first four years of the Transfer of Business agreement.

· From 1 January 2023 the net profit accruing to Provexis on sales of Fruitflow in the calendar year - on a pro-forma basis, assuming like for like sales and margins - would be materially ahead of the net share of the profit that would have accrued to Provexis with like for like sales and margins under the existing 2010 Alliance Agreement; on the same pro-forma basis, assuming like for like sales and margins, the net profit accruing to Provexis would further increase in each of the subsequent three calendar years.

· A new partnership with DSM has been agreed relating to the gut microbiome patent, with digestive health and the gut microbiome being a key area of strategic focus for DSM as more fully set out here www.dsm.com/human-nutrition/en/customized-services/customized-solutions/health-benefit-solutions/improve-your-gut-health.html . This partnership will give DSM preferential access to the use, marketing, and sale of Fruitflow based products which are based on the patent, subject to certain milestones which have been agreed between the parties. Provexis and DSM are keen to progress this encouraging new technology towards an early commercial launch of products which are based on it.

· The results of the successful gut microbiome human study will be submitted in due course for publication in a peer reviewed scientific journal. The patent application (i) states that the results of the human study strongly support the use of Fruitflow for modulating gut microbiota to confer a number of health benefits, and (ii) sets out some potential new uses for Fruitflow in treating a wide variety of human health conditions, beyond Fruitflow's existing established use in heart-health. The global digestive health market size was US$38 billion in 2019 and it is projected to grow to US$72 billion in 2027 at a high single-digit CAGR in the 2020-2027 period (see www.fortunebusinessinsights.com/digestive-health-market-104750 ).

· Provexis will sell Fruitflow as a straight ingredient to DSM exclusively for use in DSM's Premix Solutions ( www.dsm.com/human-nutrition/en/customized-services/customized-solutions/premix-solutions.html ) and Market-Ready Solutions ( www.dsm.com/human-nutrition/en/customized-services/customized-solutions/market-ready-solutions.html ) businesses, with DSM then looking to sell the resulting Premix and Market-Ready Solutions products on to its customers. DSM's Premix and Market-Ready Solutions businesses are part of DSM's Customized Solutions business which also offers personalised nutrition solutions to customers, a rapidly developing growth area. The Company looks forward to supporting DSM and its Premix and Market-Ready Solutions customers for many years to come.

· A number of DSM's customers for Fruitflow which are set to be transferred to Provexis have been Fruitflow customers for several years, including some distributor customers which sell Fruitflow on to third parties. The Company greatly looks forward to progressing these existing sales relationships, and confirms it will be able to generate new customers for Fruitflow outside the royalty arrangements with DSM, in addition to its existing supply and distribution agreement for Fruitflow with By-Health. The Company is in discussion with a number of third parties seeking to progress new sales and distribution opportunities for Fruitflow, and it can be contacted for all Fruitflow sales enquiries by email at [e-mail] .

By-Health Co., Ltd. ('By-Health')

On 4 November 2021 the Company announced it had entered into a supply and distribution agreement (the 'By-Health Agreement') for Fruitflow with By-Health, a listed Chinese dietary supplement business with a market capitalisation of approximately £4 billion.

The By-Health Agreement, which followed the Company's extensive work with By-Health over the last five years, will take full effect from 1 January 2023 and it gives By-Health exclusive supply and distribution rights to commercialise Fruitflow in Mainland China, Hong Kong, Macau, Taiwan and Australia (the 'Territories').

Under the By-Health Agreement Provexis will be responsible for the manufacture, supply and sale of Fruitflow to By-Health, and By-Health will be responsible for the manufacture, marketing, and sale of Fruitflow based functional food and dietary supplement finished products in the Territories, through By-Health's extensive sales network. By-Health will also have exclusive rights to act as the distributor of Fruitflow as an ingredient in the Territories.

Provexis and By-Health will seek to collaborate on research and development projects which may result in the development and approval of Fruitflow as a drug, for potential sale and distribution in the Territories.

Regulatory progress in China - new permitted health function claim

The Company has previously announced it has been working with By-Health to support the planned launch of a number of Fruitflow based products in the Chinese market, with potential volumes at a significant multiple of current Fruitflow sales.

The planned launch of Fruitflow based products in the Chinese market has been progressing well. Clinical studies conducted in China are typically required to obtain the necessary regulatory clearances in China, and a significant investment in eight separate Fruitflow studies has been undertaken at By-Health's expense.

Five studies have been successfully completed in China, and two clinical studies and one animal study are currently ongoing.

The five completed studies showed excellent results in use for Fruitflow, and they provide strong evidence for its efficacy on platelet function. The Chinese regulatory system for functional health food ingredients such as Fruitflow is governed by the State Administration for Market Regulation (SAMR), China's top market regulator, and it is based on a defined list of 27 permitted health function claims which brand owners are permitted to use on product labels.

Health function claims are based on test methods and criteria that have been systematically evaluated and verified, and it is currently envisaged that the existing list of 27 permitted health function claims might be reduced to a revised list of 24 permitted claims. The SAMR provides the possibility of adding new health function claims to the list, as long as the claim can be evaluated and verified by the SAMR.

Under SAMR regulations functional health foods need to indicate a relationship between a food or nutrient and a consequent health improvement which falls under one of the permitted health function claims.

SAMR certified functional health foods are required to use a blue cap / blue hat logo on their product packaging, which identifies products as approved functional health foods.

By-Health's regulatory clearance preparations for Fruitflow were originally focussed on obtaining blue cap health claim status for some Fruitflow based products in China, under the existing 27 permitted health function claim structure.

By-Health is now working on an extensive regulatory submission to the SAMR for Fruitflow, seeking to establish a new permitted health function claim for foods such as Fruitflow that can demonstrate an anti-platelet effect, inhibiting platelet function and conferring beneficial effects for people who are at risk of platelet hyperactivity-associated thrombosis.

By-Health has recently updated its website (see www.by-health.com/en/aboutus ) stating that it has completed: 'Research comprehensively in the cardiovascular health area. We have developed a new product made with Fruitflow®, popularly known as 'natural Aspirin'. It helps to maintain normal platelet aggregation.'

By-Health currently expects to be in a position to complete the last of its eight studies in 2022, and it will file its regulatory submission to the SAMR for Fruitflow at the appropriate time seeking to obtain a new permitted health function claim which would be in addition to the currently defined list of 27 (reducing to 24) permitted claims. Subject to the timing the new anti-platelet claim, if approved, would therefore represent the 28th - or the 25th - permitted health function claim in China.

If By-Health is successful in obtaining a new permitted health function claim for functional health foods such as Fruitflow that can demonstrate an anti-platelet effect, it is currently expected that this would result in some significant orders for Fruitflow, potentially at a multiple of current total sales values.

Provexis plc - preliminary results for the year ended 31 March 2022

The Company expects to release its preliminary results for the year ended 31 March 2022 in September 2022. The Company expects to report total revenue for the year of £426k and an underlying operating loss of £173k. The expected £173k underlying operating loss for the year is 23% ahead of the prior year (2021: an underlying operating loss of £225k) and is an all-time low number for the business.

Ian Ford, CEO of Provexis, commented:

'We are very pleased to announce the completion of these two new agreements with DSM, which will position the Company extremely well for the next stage of its development.

We are also delighted to announce the filing of a new patent application for Fruitflow, relating to the use of Fruitflow to confer health benefits in modulating the gut microbiome of humans. The patent application follows the completion of a successful human study, the results of which strongly support the use of Fruitflow for modulating gut microbiota to confer a number of health benefits. It is particularly encouraging to note that some potential new uses for Fruitflow were identified in the study, and have been highlighted in the patent application, looking to treat some major health conditions which are beyond Fruitflow's long established and proven use in heart-health.

The Company and DSM have had a strong long-term relationship over the past twelve years, with the shared interest of both companies always having been to maximise the commercial returns that can be achieved from Fruitflow. The Company is very appreciative of DSM's past help and support, and it looks forward to building on this relationship in the coming years through the new gut microbiome partnership, and through ongoing sales of Fruitflow to DSM's Premix and Market-Ready Solutions businesses.

The Company looks forward to welcoming and serving the majority of DSM's existing customers for Fruitflow from January next year, and is very pleased to be taking over control of the supply chain / production process for Fruitflow at the same time. There will be some clear synergies from January 2023 as the Company will be looking to sell Fruitflow to: (i) former DSM customers for Fruitflow; (ii) DSM and its Premix and Market-Ready Solutions businesses; (iii) new customers for Fruitflow as a straight ingredient; and (iv) By-Health and its customers, through the Company's long term supply and distribution agreement for Fruitflow with By-Health. Provexis will continue to sell its Fruitflow+ Omega-3 dietary supplement product direct to consumers, and serve its Chinese Cross-Border e-commerce distributor for this product in China. Subscriber numbers on the www.fruitflowplus.com website remain at an all-time high level.

The Company has developed a strong, long lasting and wide-ranging patent portfolio for Fruitflow, and it owns outright four existing patent families for Fruitflow. The new microbiome patent application takes this to a potential total of five patent families, with potential patent protection now running out to 2042. The four existing patent families have a truly global footprint, and the Company also holds other valuable intellectual property and trade secrets for Fruitflow. The intellectual property for Fruitflow is of fundamental importance to the Company and its current and future commercial partners, to include DSM and By-Health, and it underpins the numerous commercial opportunities which the Company and its partners are pursuing for Fruitflow.

The Company expects that the new gut microbiome patent application, and the other significant changes announced today to the sales and supply chain structure for Fruitflow, will have a strongly beneficial effect on the current and future commercial prospects for Fruitflow and the business worldwide.'

For further information please contact:

Provexis plc Dawson Buck, Chairman Ian Ford, CEO	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 solutions ingredient.

Fruitflow is a natural, breakthrough ingredient that helps with platelet aggregation. This helps promote normal blood flow and circulation, which in turn benefits cardiovascular health. Fruitflow helps the platelets to circulate freely and smoothly throughout your blood, without sticking to one another or to the blood vessels themselves. Freely flowing blood helps reduce stress on your cardiovascular system.

Fruitflow is a highly concentrated form of bioactives which is lycopene-free and contains over 30 known anti-platelet compounds. Published clinical studies have shown that Fruitflow works to maintain healthy blood flow in a similar way to 75mg aspirin but with a milder and reversible action; Fruitflow has a similar antiplatelet effect to a single dose of aspirin - but when taken daily, it has none of aspirin's side effects.

In April 2022 the U.S. Preventive Services Task Force www.uspreventiveservicestaskforce.org/uspstf/recommendation/aspirin-to-prevent-cardiovascular-disease-preventive-medication recommended against initiating low-dose aspirin use for the primary prevention of CVD in adults 60 years or older.

The science behind Fruitflow has been validated by leading peer review publications and regulatory authorities. Fruitflow is the only natural antiplatelet to have a health claim approved by the European Food Safety Authority, stating that 150mg of Fruitflow 'helps maintain normal platelet aggregation, which contributes to healthy blood flow'.

Provexis entered into a long-term Alliance Agreement with DSM Nutritional Products in 2010 to commercialise Fruitflow through sales as an ingredient to brand owners in the food, beverage and dietary supplement categories. More than 100 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.

Fruitflow has a number of specific health benefits which have been reflected in separate patent filings for the use of Fruitflow in:

· mitigating exercise-induced inflammation;

· managing blood pressure; and

· protecting against the adverse effects of air pollution on the body's cardiovascular system. 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.

Provexis sells a high quality dietary supplement product containing Fruitflow and Omega-3 from its website www.fruitflowplus.com on a mail order basis. The product is also available to purchase from Amazon.co.uk and from Holland & Barrett.

In November 2021 Provexis entered into a long term supply and distribution agreement for Fruitflow with By-Health Co., Ltd. ('By-Health'), a £4bn listed Chinese dietary supplement business, to support the planned launch of some Fruitflow based products in the Chinese market.

The planned launch is progressing well with potential sales volumes remaining at a significant multiple of existing Fruitflow sales.

By-Health has made a significant investment in eight separate studies in China, at its sole expense, in support of the Fruitflow based products which it plans to launch in China.

The five completed studies showed excellent results in use for Fruitflow, and they provide strong evidence for its efficacy on platelet function. The Chinese regulatory system for functional health food ingredients such as Fruitflow is governed by the State Administration for Market Regulation (SAMR), China's top market regulator, and it is based on a defined list of 27 permitted health function claims which brand owners are permitted to use on product labels.

By-Health is working on an extensive regulatory submission to the SAMR for Fruitflow, seeking to establish a new permitted health function claim for food ingredients such as Fruitflow that can demonstrate an anti-platelet effect, inhibiting platelet function and conferring beneficial effects for people who are at risk of platelet hyperactivity-associated thrombosis.

If By-Health is successful in obtaining a new permitted health function claim it is currently expected that this would result in some significant orders for Fruitflow, potentially at a multiple of current total sales values.

COVID-19

In September 2020 Fruitflow was recognised in a review article by the Frontiers in Nutrition journal www.frontiersin.org/articles/10.3389/fnut.2020.583080/full which stated that nutraceuticals such as Fruitflow may serve as:

'A safe antiplatelet prophylactic treatment for those at high risk of COVID-19 who may also be at increased risk of thrombotic complications and an alternative to pharmacological compounds that may cause greater risk of bleeding.'

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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