Final Results

RNS Number : 7467S

SkinBioTherapeutics PLC

05 October 2017

 

SkinBioTherapeutics plc

Full year results

Manchester, UK - 5 October 2017 - SkinBioTherapeutics plc (AIM: SBTX or the "Company") a life sciences company focused on skin health, has announced its full year results for the year to 30 June 2017.

Key highlights

·    Research agreement with the University of Manchester for 'development of a bacterial lysate as a
novel agent to combat infections'

·    Successful demonstration of the three modes of action of the SkinBiotix® technology

·    Creating a strong Board and management team for the development and commercial phase of the Company

·     Admission to AIM in April 2017 raising £4.5m

·     Initiating scale up of lysate manufacture with third parties

·     Cash as at 30 June 2017 £3.9m (2016: £0.3m)

·     Post year end: SkinBiotix® passed cytotoxicity test, representing first key milestone post IPO

Cath O'Neill, CEO of SkinBioTherapeutics, said:

"This has been a significant year for the Company; from creating the infrastructure and team to support the growth and development of the Company, to the scientific progress around our proprietary skin platform, SkinBiotix®.

"During the year, we have demonstrated three significant properties - barrier improvement, anti-infection and repair - which form the foundations of our three development programmes. We are making good scientific headway and are starting initial discussions with partners.

"Operationally, we have made a good start to the new financial year, especially with the recent news around the third party cytotoxicity testing, and we look forward to reporting on the next phase of the Company's journey."

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

-Ends-

For more information, please contact:

SkinBioTherapeutics plc Dr. Cath O'Neill, CEO Doug Quinn, CFO	Tel: [phone]
Cairn Financial Advisers LLP Tony Rawlinson / Emma Earl / Richard Nash	Tel: [phone]
Turner Pope Investments Ben Turner / James Pope	Tel: [phone]
Instinctif Partners Melanie Toyne-Sewell / Deborah Bell	Tel: [phone] [e-mail]

Notes to Editors

About SkinBioTherapeutics plc

SkinBioTherapeutics is a life science company focused on skin health. The Company's proprietary platform technology, SkinBiotix®, is based upon discoveries made by CEO Dr. Catherine O'Neill and Professor Andrew McBain.

SkinBioTherapeutics' platform applies research discoveries made on the activities of lysates derived from probiotic bacteria when applied to the skin.  The Company has shown that the SkinBiotix® platform can improve the barrier effect of skin models, protect skin models from infection and repair skin models.  Proof of principle studies have shown that the SkinBiotix® platform has beneficial attributes applicable to each of these areas. 

SkinBioTherapeutics received seed funding from the Tech Transfer office of the University of Manchester for the discovery of SkinBiotix®. The platform was subsequently spun out of the University of Manchester in March 2016 and was funded by OptiBiotix (AIM: OPTI).

The Company joined AIM in April 2017 concurrent with raising £4.5 million from a placing of new ordinary shares.

The Company is based in Manchester, UK. For more information, visit www.skinbiotherapeutics.com.

Chairman's Statement

SkinBioTherapeutics' is reporting its first year of results as a public company for the year ended 30 June 2017.  FY2017 has been a significant year for the Company, peaking with its admission to AIM.

SkinBioTherapeutics is built around the technology, SkinBiotix®, which has been acquired from the University of Manchester. The management's focus for the year has been on creating the infrastructure to support SkinBiotix®'s application in the exciting and emerging field of science, the skin microbiome.

Key operational achievements which are described more fully in the CEO's report include:

·    Entering a research agreement with the University of Manchester for the 'development of a bacterial lysate as a novel agent to combat infections'

·    Successful demonstration of the three modes of action of the SkinBiotix® technology - barrier improvement, protection against Staphylococcus aureus (S. aureus) and skin repair

·     Initiating the scale-up of lysate manufacture and formulation with third parties

·     Progressing each of the development programmes in skin care, anti-infection and eczema

A new Board and management team was established prior to the admission of the Company to AIM. The Board comprises founder and CEO Dr. Catherine O'Neill, CFO Doug Quinn, Martin Hunt as Non-Executive Chairman and Non-Executive Directors Dr. Cathy Prescott and Stephen O'Hara, the CEO of OptiBiotix Health Plc, the Company's largest shareholder. The team has varied expertise and a strong commercial and technical track record, and has worked well together since IPO. 

Financially, the year included the Company's successful admission to AIM of the London Stock Exchange and Placing which raised £4.5m from the issue of 50,000,000 new ordinary shares. 

At IPO the management team identified the following objectives to build value for shareholders:

§ Continued development of its SkinBiotix® technology platform

§ Cytotoxicity testing in 2017 prior to preparation of the human study

§ Completion of a cosmetic human study in 2018

§ Secure partnering and licensing opportunities

§ Further development targeting treatments for infection control and eczema

The IPO has been transformational for the business in terms of providing the funding and resources to support the Company through its initial stage of development.

Since the year end, the focus has been on achieving positive third party validation of the SkinBiotix® technology with respect to toxicity, and the manufacture and scale-up of the lysate. In October 2017, the Company achieved positive cytotoxicity results, and therefore has cleared an important hurdle before the technology can continue into human studies. In the accompanying scientific update, good progress was reported with respect to formulation and manufacturing scale-up.

As the programmes progress and the collection of robust and efficacious scientific data builds, partnerships and licensing agreements will be key aspects of the business model; very early discussions have begun. The Company will continue to actively seek to develop relationships in the industry. 

Conclusion

The microbiome, and in particular the skin microbiome, is an area gaining an increasing level of interest and attention. The Board believes that a strong scientific grounding of the technology is key for differentiation in what will become an increasingly competitive market, particularly for the cosmetic applications. The Board has confidence in the management team to establish a strong position as a prominent 'science led' business and thus building long term value for its shareholders.

Martin Hunt

Chairman

CEO's STATEMENT

Overview

SkinBioTherapeutics was established in March 2016 with the acquisition of technology and intellectual property called SkinBiotix® from the University of Manchester. SkinBiotix® is based upon discoveries made at the university by CEO and co-founder, Dr. Catherine O'Neill and co-founder, Professor Andrew McBain. 

Proof of principle studies have shown that the molecules found in the human microbiome can be used to protect, manage and restore the skin. On the basis of this data, the Company has identified potential applications for the technology in the areas of cosmetics, the prevention of S. aureus infection and as treatment to reduce the incidence of eczema flares. The Company is looking to demonstrate viability for these applications through continued development and human studies as a route to commercialise the technology through partnerships and licencing opportunities.

This financial year has been one of securing the SkinBiotix® technology and intellectual property, building the team, and creating the financial and scientific infrastructure to build future value. The IPO and placing in April 2017 was a major achievement for the Company and will support the strategy in the short to medium term. 

The early strategic goals have been achieved this year and the Company is on track to take its first application for cosmetic use into human trials in 2018.

Financial results

The Company is an early stage life science company and therefore is pre-revenue. In October 2016 the Company drew down a loan of £400k from Optibiotix Health Plc to provide working capital in anticipation of an IPO. Having completed the transfer of intellectual property from the University of Manchester and having available working capital the Company began incurring expenditure.

Ongoing operating costs were £305k (period ended 30 June 2016: £6k) covering employment, consultancy fees, recruitment and marketing. R&D expenditure was £157k (period ended 30 June 2016: £1k) comprising primarily work from the development agreement contracted to the University of Manchester. Overall the Company made a loss before tax of £688k (period ended 30 June 2016: £4k). 

In April, the Company was admitted to AIM on the London Stock Exchange with the ticker, SBTX, at a market capitalisation of c. £6m. At the same time, it raised £4.5m from the placing of 50,000,000 new ordinary shares at 9 pence per share. Of the costs related to the AIM admission £211k were expensed with a further £545k written off against the share premium reserve. Included within the costs expensed was a non-cash charge of £80k related to the issue of warrants.   

As a result of the fund raising, the Company has significantly improved its cash position and held £3.9m at the year end (at 30 June 2016: £0.3m). These funds will be used to progress the Company's three development programmes and support the other operating costs of the business. 

Technology

SkinBioTherapeutics proprietary technology, SkinBiotix® is based on the properties of the human microbiome.

The microbiome encompasses the genetic content of all the bacteria in and on the human body. Whereas humans possess around 23,000 genes, the human microbiome contains roughly 1,000,000 genes and consequently has a huge potential to be able to change the way the body functions.

The best understood aspects of the microbiome are the bacteria that live in the gut and has led to the rise in ingesting 'probiotics' to promote health. These probiotics are live micro-organisms which are usually members of the gut microbiota where they are well known for their positive effects.

To date, the majority of focus within the probiotics industry has been placed upon ingestible applications of probiotics. However, microbiologists, immunologists and dermatologists are now beginning to unlock the importance of how skin interacts with bacteria.

SkinBiotix® is an innovative technology, designed to promote skin health by harnessing the beneficial properties of probiotic bacteria and the active components derived from them. The approach taken is to use a 'lysate' of probiotic bacteria as a topical agent.

The use of a lysate rather than live bacteria circumvents the possible safety considerations associated with applying live bacteria to the skin, and also the potential formulation difficulties of keeping bacteria alive in a cream.

Development programmes 


SkinBioTherapeutics has three development programmes underway based on the positive properties of SkinBiotix®.

1) Skin Protection - Cosmetic

With a relatively quick route to market, the first application for the SkinBiotix® technology is a cosmetic cream for skin health.

Proof of principle studies, in skin models, have demonstrated that the SkinBiotix® technology improves the function of 'tight junctions' and consequently the protective barrier offered by skin. Tight junctions enable the skin's ability to function as a tough, waterproof protective barrier. These structures physically block the spaces between adjacent skin cells and prevent the entry of pathogens, and toxins etc. as well as reducing the loss of water from within the body.

The barrier-enhancing features of SkinBiotix® will be to promote general skin health and improve moisture retention along with skin smoothness.

During the year, the priorities have been to continue building the scientific data pack in preparation for future clinical trials, as well as scaling up manufacture. These developments have progressed well and are on track. The recent positive cytotoxicity result, reported in October 2017, confirm SkinBiotix®'s benign properties towards skin cells and is a major step forward on the road to moving this programme towards human studies in 2018.

2) Skin Management - anti-infection

Early data shows that SkinBiotix® prevents the attachment of the most common of skin pathogens, S.aureus to skin cells. This property forms the basis for the Company's second programme to reduce the risk of Healthcare Acquired Infections (HCAIs).

S.aureus is implicated in a range of skin conditions from relatively mild diseases such as impetigo, to life threatening septicemia. Infections can be treated successfully with antibiotics, but resistant strains, such as Methicillin-Resistant Staphylococcus Aureus ("MRSA"), are emerging. Growing resistance and the lack of new antibiotics is driving the need for new methods of controlling bacterial growth, colonisation and infection, particularly in the hospital environment. Infection protection and management is an ever-increasing absorber of resources for healthcare providers.

The priority for SkinBioTherapeutics' programme is testing SkinBiotix's inhibitory activity in skin cells against a panel of bacterial strains known to be of importance in HCAIs. This activity profiling will direct the development and clinical testing of formulations and product positioning approaches which target harmful infectious bacterial strains. Albeit at an early stage compared to the cosmetic programme, good progress has been made.

3) Skin Restoration - Eczema

The properties of the SkinBiotix® technology create opportunities for demonstrating its efficacy in the prevention and management/treatment of skin diseases for example, adult and paediatric atopic dermatitis or eczema. This is the focus of the third development programme.

The importance of an intact skin barrier is demonstrated by the body's response to a breach in the barrier i.e. a wound or burn where there is an increase in infection risk. When the skin is wounded, the skin cells (keratinocytes) proliferate and migrate across the wound site to attempt to fill in the gap. This happens quickly in healthy individuals but in some patients with underlying problems e.g. eczema, diabetes, the skin can be slow to heal. A delay in healing can leave the body exposed to potential infection.

The Company has yet to fully validate an indication, although SkinBiotix® has properties that indicate it could be used as a supportive treatment in eczema.

This is the earliest programme in development and again, progress is being made to plan.

The long term intention is for pre-clinical testing to be performed to validate the indication prior to entering human study programmes. Due to the size of the market, the Company will seek a partner for development and commercialisation.

Scientific and development update

To date SkinBioTherapeutics has completed studies using human skin models, successfully demonstrating the three modes of action of the SkinBiotix® technology to protect, manage and restore skin.

The immediate priorities for the cosmetic application are to progress the technology through the manufacture upscaling of the SkinBiotix® lysate and prototype formulation.  These are key milestones which must be passed prior to the start of human studies and to complete the validation stage. Further updates are expected by the end of the calendar year.

Lysate production so far has been in small batches with further work completed to assess performance following extended storage and at varying temperatures. The Company has begun engaging with third parties for the external production of lysate that achieves the same performance results and with commercial scale production in mind.

Formulation is critical because SkinBiotix® activity must be maintained whilst in a cream or gel form. The Company has engaged a formulation specialist who has started work on this.

During the year, the Company initiated independent cytotoxicity testing on the lysate. In October 2017, the Company announced that the lysate had passed the cytotoxic tests. This result is an important key requirement of the Product Information File (PIF) required for regulatory purposes and marks the achievement of a major milestone highlighted at IPO.

Outlook

SkinBioTherapeutics' admission to AIM was a big step forward for the Company and it has made significant progress in the short time since April as detailed above and in the Scientific Update released in October 2017.

The Company is now in an important development phase as it looks to establish manufacture scale-up, prototype formulation and prepare for the initial human study with the skin care programme. The human study, in particular, will be performed at a contract research organisation, both for regulatory purposes and to ensure the skin benefits that were evidenced through laboratory testing are also apparent within the final formulation.

Given that all three programmes are targeting multi-billion pound markets, each one will require a development and commercial partner for the longer term. As highlighted at IPO, the Company and its programmes are still at a relatively early stage for commercial discussions. However, there are early signs of industry interest in the Company's progress and the management team will be using their extensive connections to develop these relationships further.

The Board and management team are confident about the progress made to date and the outlook of the business.

Dr Cath O'Neill

CEO

 

Income statement

For the year ended 30 June 2017

			Notes	For the year ended 30 June 2017		For the period from 10 June 2015 to 30 June 2016
Continuing Operations				£		£
Other income				5		3,000
Research and development costs				(156,726)		(1,400)
Initial public offering costs				(211,477)		-
Operating expenses				(304,501)		(5,801)
Loss from operations			2	(672,699)		(4,201)
Finance costs				(15,540)		-
Loss before taxation				(688,239)		(4,201)
Taxation				42,685		-
Loss for the year				(645,554)		(4,201)
Other comprehensive income				-		-
Total comprehensive loss for the year				(645,554)		(4,201)
Basic and diluted loss per share (pence)			3	(1.11)		(0.03)

 

Statement of financial position

As at 30 June 2017

					Notes		As at 30 June 2017				As at 30 June 2016
							£				£
Assets
Non-current assets
Intangible assets							215,412			136,214
Total non-current assets							215,412			136,214
Current assets
Other receivables							151,189			30,607
Other current assets							42,685			-
Cash and cash equivalents							3,922,903			256,667
Total current assets							4,116,777			287,274
Total assets							4,332,189			423,488
Equity and liabilities
Equity
Capital and reserves
Called up share capital							1,187,085			1,000
Share premium							3,577,640			393,048
Other reserves							98,559			-
Accumulated deficit							(649,755)			(4,201)
Total equity							4,213,529			389,847
Liabilities
Current liabilities
Trade and other payables							118,660			33,641
Total current liabilities							118,660			33,641
Total liabilities							118,660			33,641
Total equity and liabilities							4,332,189			423,488

 

Statement of cash flows

For the year ended 30 June 2017

				For the year ended 30 June 2017		For the period from 10 June 2015 to 30 June 2016
				£		£
Cash flows from operating activities
Loss before tax for the period				(688,239)		(4,201)
Convertible loan interest paid as equity				15,540		-
Share option expenses				98,559		-
(lncrease) in trade and other receivables				(120,582)		(30,607)
Increase in trade and other payables				85,019		33,641
Net cash used in operating activities				(609,703)		(1,167)
Cash flows from investing activities
Payments for intangible assets				(79,198)		(136,214)
Net cash used in investing activities				(79,198)		(136,214)
Cash flows from financing activities
Net proceeds from issue of equity instruments of the Company				3,955,137		394,048
Net proceeds from issue of convertible loan notes				400,000		-
Net cash generated by financing activities				4,355,137		394,048
Net increase in cash and cash equivalents				3,666,236		256,667
Cash and cash equivalents at the beginning of the period				256,667		-
Cash and cash equivalents at the end of the period				3,922,903		256,667

 

Statement of changes in equity

For the year ended 30 June 2017

				Share capital	Share premium	Other reserves	Retained earnings	Total
				£	£	£	£	£
As at 10 June 2015								-
Loss for the period							(4,201)	(4,201)
Issue of shares				1,000	393,048			394,048
As at 30 June 2016				1,000	393,048	-	(4,201)	389,847
Loss for the period							(645,554)	(645,554)
Issue of shares				893,048	3,062,089			3,955,137
Issue of convertible loan notes						93,151		93,151
Conversion of convertible loan notes				293,037	122,503	(93,151)		322,389
Share-based payments						98,559		98,559
As at 30 June 2017				1,187,085	3,577,640	98,559	(649,755)	4,213,529
Share capital is the amount subscribed for shares at nominal value.
Share premium is the amount subscribed for share capital in excess of nominal value.
Other reserves arise from the equity element of a convertible loan issued and converted in the period to 30 June 2017, and from share options granted on 5 April 2017
Retained earnings represents accumulated profit or losses to date.

 

Extracts of the notes to accounts

1.   General information

These financial statements reflect the financial performance and position of SkinBioTherapeutics plc for the period from 10 June 2015 to 30 June 2017 (made up of the period from 10 June 2015 to 30 June 2016 and the year ended 30 June 2017.

SkinBioTherapeutics is a public limited company incorporated in the United Kingdom under the Companies Act and quoted on the AIM market of the London Stock Exchange (AIM: SBTX).  The address of its registered office is given on page 1.
 
The principal activity of the Company is the development of technology to protect, manage and restore skin utilising proteins found in the human microbiota.

	2.   Operating loss
						30 June 2017	30 June 2016
						£	£
	An analysis of the Company's operating loss has been arrived at after charging/(crediting):
	Other income					(5)	(3,000)
	Research and development					156,726	1,400
	Directors remuneration (including share based compensation)					41,843	-
	Auditors remuneration
		- audit fees				14,000	2,750
		- other services				11,049	-
	Foreign exchange differences					69	-
	Other operating costs					237,540	3,051
	IPO expenses					211,477	-
	Total operating expenses					672,699	4,201
	The Company has one reportable segment, namely the research and development of the Skinbiotix® technology, all within the United Kingdom.
	3.   Loss per share
						30 June 2017	30 June 2016
						£	£
	Basic and diluted loss per share
	Loss after tax (£)					(645,554)	(4,201)
	Weighted average number of shares					58,307,324	13,654,221
	Basic and diluted loss per share (pence)					(1.11)	(0.03)
	As the Company is reporting a loss from continuing operations for the year then, in accordance with IAS 33, the share options are not considered dilutive because the exercise of the share options would have an anti-dilutive effect.  The basic and diluted earnings per share as presented on the face of the income statement are therefore identical.
	4.   Convertible loans
	On 31 October 2016, the Company drew down a loan of £400,000 ("Loan") under a term loan facility agreed on 13 October 2016 with its parent company to fund its ongoing working capital requirements.  The Loan was unsecured, bearing interest at a rate of 5% per annum, and repayable in full on 30 September 2020.  The Loan was converted into 1 ordinary share in the company for every £0.01365 of the Loan prior to admission to AIM on 5 April 2017.
	Value of liability component and equity conversion component
	The values of liability component and equity conversion component were determined at issuance of the convertible loan. The liability component of the Loan was calculated using a market interest rate for an equivalent non-convertible loan with effective interest rates of 12% at initial recognition. The residual amount, representing the value of the equity conversion component, was included and presented in equity under the heading of "other reserves".
							£
	Proceeds of issue						400,000
	Liability component at the date of issue						(306,849)
	Equity component						93,151
	Conversion
	The effective interest was calculated immediately prior to conversion and recognised in the Statement of Comprehensive Income, and the remaining liability component of the Loan converted to equity.
							£
	Liability component at the date of issue						306,849
	Interest charged up to conversion date at an effective interest rate of 12%						15,540
	Interest paid						-
	Liability component immediately before conversion on 5 April 2017						322,389
							£
	Liability component immediately before conversion on 5 April 2017						322,389
	Equity component						93,151
	Total converted to equity						415,540
						Share Capital	Share Premium
					Number	£	£
	Equity converted into:				29,303,694	293,037	122,503

The financial information set out in this announcement does not constitute the company's statutory accounts for the period ended 30 June 2016 or the year ended 30 June 2017. The financial information for the period ended 30 June 2016 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006.

The financial information for the year ended 30 June 2017 is derived from Group's financial statements for the year ended 30 June 2017 which were approved by the directors on 4 October 2017. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006. These accounts will be delivered to the registrar in due course.

Whilst the financial information included in this announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement does not in itself contain sufficient information to comply with IFRS. The accounting policies used in preparation of this announcement are consistent with those in the full financial statements that have yet to be published.

Full Notes to this statement are contained in the Company's Annual Report and Accounts. A copy of this announcement may be found on the Company's website today and the Company's Annual Report and Accounts will be published in due course.

 

END

 

 

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