Final Results

RNS Number : 6109U

SkinBioTherapeutics PLC

26 November 2019

 

SkinBioTherapeutics plc

Full year results

Manchester, UK - 26 November 2019 - SkinBioTherapeutics plc (AIM: SBTX - "SkinBioTherapeutics" or the "Company") a life sciences company focused on skin health, has announced its full year audited results for the year to 30 June 2019.

Key highlights

·    Successful completion of first human cosmetic study

·    Strengthened board and management team, including appointment of Stuart Ashman as CEO

·    Strategic review has identified five channels of focus for development, encompassing both existing and new technology

·    Cash as at 30 June 2019 of £3.1m (2018: £3.2m), cash levels raised by share placing raising an additional £1.5m

·    Post year end: first commercial and manufacturing agreement signed with Croda International Plc

Stuart Ashman, CEO of SkinBioTherapeutics, said:

"This has been an exciting year for the Company. The beginning of the year was about proving the sound scientific foundation of our SkinBiotix® technology and the positive effects of it on the barrier function of the skin. The successful results drove commercialisation discussions forward which resulted in our recent agreement with the world leader in skincare actives for the cosmetic industry, Croda International plc. We will continue to seek further commercial opportunities and build the development pipeline with new programmes in eczema and psoriasis during 2020." 

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 and has been arranged for release by Doug Quinn, CFO of the Company. 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 Stuart Ashman, CEO Doug Quinn, CFO	Tel: [phone]
Cairn Financial Advisers LLP (Nominated Adviser) Tony Rawlinson / Sandy Jamieson	Tel: [phone]
SP Angel Corporate Finance (Joint Broker) Vadim Alexandre / Abigail Wayne	Tel: [phone]
Turner Pope Investments (Joint Broker) Andy Thacker / Zoe Alexander	Tel: [phone]
Instinctif Partners Melanie Toyne-Sewell / Phil Marriage / Nathan Billis	Tel: [phone]    [e-mail]

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 Dr. Catherine O'Neill and Professor Andrew McBain.

The Company has demonstrated, through scientific testing, that the SkinBiotix® platform can improve the barrier effect of skin models, protect from infection and repair wounds. Proof of principle studies have also shown that the SkinBiotix® platform has beneficial attributes applicable to each of these areas. The technology achieved positive results in clinical studies in human volunteers in early 2019.

The Company listed on AIM in April 2017 and is based in Manchester, UK.  For more information, visit: www.skinbiotherapeutics.com.  

Chairman's Statement

2019 has been a transitional and exciting year for SkinBioTherapeutics, with the Company moving from a scientific focus - proving the SkinBiotix® technology works in humans - to commencing and, post year end, closing its first commercialisation deal. Overall, the Company has been building value through achieving its business objectives and, identifying and developing the future plans and opportunities for its technology platform.

The beginning of the year was dominated by the Company's first human study, looking at skin irritancy, moisturisation and impact on skin barrier. The positive results demonstrated SkinBiotix's safety and efficacy, and provided the data required to progress its cosmetic application.

Armed with the positive clinical data and as part of the Company's transition towards commercialisation, the Board took the decision to strengthen the management team with the appointment of Stuart Ashman as Chief Executive in April 2019. This has provided additional bandwidth for Dr Catherine O'Neil to focus on the scientific development of the Company and she transitioned into the non-board role of Chief Scientific Officer (CSO).

The other change has been the Non-Executive Director, Stephen O'Hara. On the back of the positive progress made by the Company since its admission to AIM in 2017 and his increasing commitments at OptiBiotix Health plc, he stepped down from the Board in July 2019. 

On behalf of the Board, I would like to take the opportunity to thank both Cath and Stephen for their valuable contributions to the Company to date and look forward to Cath's continuing scientific contribution in her role as CSO.

During the year, the Company also announced it had raised a total of £1.5m in gross proceeds through a placing of shares to funds managed by Seneca Partners Limited, an existing shareholder of the Company. Costs have continued to be carefully managed and the Company ended the year with a cash balance of £3.1m (2018: £3.2m), which is line with management's expectations. 

Since year end, SkinBioTherapeutics has signed its first commercial deal with global specialist chemicals manufacturer Croda International plc ("Croda"). Details of the deal were announced recently and are included in the operational review section. This deal marks an important milestone for the Company and its proprietary technology, SkinBiotix®. The team is driving other commercialisation opportunities for 2020 and will update shareholders as soon as these are realised.

The Company has developed a longer term strategy which will encompass both existing and new technology. The detail is included in the strategic section below, but in summary, the Board and management team have identified five different channels in which the Company intends to develop its focus. Each channel offers the potential for multiple applications or sub-channels. This ties in with the body of science related to the microbiome and its impact on human physiology and diseases which continues to expand and is an area of increasing focus.

The 'science-led' approach will continue to underpin the Company's strategic focus and is a key element of the commercialisation strategy. We look forward to another exciting year ahead.

Martin Hunt

Chairman

Chief Executive's Statement

Overview

SkinBioTherapeutics seeks to harness the microbiome for human health. The best understood members of the microbiome are the bacteria that live in the gut and these have led to the rise in ingesting 'probiotics' to promote health. However, an increasing area of focus is the microbiome of the skin.

SkinBioTherapeutics' proprietary technology, SkinBiotix®, is 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 cells 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 the potential formulation difficulties of keeping bacteria alive in a cream.

Following a strategic review by the Board and new management team, upon appointment of Stuart Ashman, the Company has identified five channels in which it intends to develop its focus, encompassing both existing and new technology. Each channel offers the potential for multiple applications or sub-channels.

·    SkinBiotix®

This is the Company's core technology and the primary focus has been on completion of a first human study to generate data and agreeing terms for its commercialisation. The agreement with Croda currently extends to the applicability of the SkinBiotix® technology for use in cosmetic applications in active skincare. Croda, along with their speciality cosmetics division - Sederma, have a portfolio of over 12,000 global cosmetic customers and supply into a market of high growth estimated at $100+bn (Source: Euromonitor passport stats 2016).

Opportunities exist for the Company to explore the use of the technology in other areas, for example oral indications, toothpaste, mouthwash etc. to prevent the build-up of bacteria by reinforcing the gum barriers resistance. Work is underway to further explore this area.

·    AxisBiotix

 An emerging area of science is focussed on the gut-skin axis and its role in various diseases. One such disease that is considered to be influenced by the gut-skin axis is psoriasis. This is a chronic relapsing inflammatory condition of the skin with a prevalence of ~3% in the western world with a market value of $3.9bn and a CAGR of 3.8% (Source Reuters 2019).

Current treatments include emollients for relatively mild disease, through to the biologic therapies in severe disease. For the group in the middle, mild to moderate psoriasis, mainstay therapy tends to be steroid based. Steroids cannot be used long term and have side effects. Thus, there is an unmet clinical need for new, safer ways of treating patients in the mild to moderate group. 

Anecdotal evidence from patients, suggests that many of them have turned to oral probiotics as an 'alternative' therapy and report success in control of their disease. However, the effects of probiotics on psoriasis has been investigated in only two studies which did not make the choice of probiotic organisms based on known disease pathways.

SkinBioTherapeutics is currently in discussions with a specialist manufacturer of probiotic formulations, in order to design a probiotic blend based on known psoriasis disease pathways and the modifying properties of specific bacteria species on these pathways. Since these are existing approved formulations there will be little in the way of development work and, subject to agreeing the collaboration agreement and initiating the programme, the Company anticipates being able to commence a human study in 2020.

·    MediBiotix

This channel is targeted as the use of technology for medical device applications and currently the Company is focussing on the application of its existing SkinBiotix technology for the indication eczema.

The skin of eczema sufferers is commonly infected with Staphylococcus aureus (S. aureus) and there is documented evidence that this infection is the most common cause of eczema flares. On this basis, technologies that can reduce S. aureus load on skin have the potential to reduce the incidence of flares. The market for eczema is reported as $3.9bn with CAGR of 3.8% (Source Pharmapoint Global Data 2014).

Initial work in the lab has demonstrated that SkinBiotix® fulfils a 'physical mode of action' with regard to S. aureus - it prevents the attachment of S. aureus to the skin. The physical mode of action of SkinBiotix® would allow the Company to progress the eczema programme as a medical device rather than a pharmaceutical treatment. This regulatory pathway is potentially a faster route to market.

In recent months the Company has conducted further lab work to demonstrate the physical mode of action and is currently reviewing this data with its regulatory adviser before seeking to engage with the regulatory notified body on the matter. Additionally, the Company is in discussions with a number of global advanced woundcare companies to further explore the potential for the use of probiotic lysates in the treatment of various categories of wounds.

·    CleanBiotix

Healthcare acquired infections (HAI) remains an area of critical concern for healthcare providers. The growing resistance of certain infection strains and the lack of new antibiotics is driving the need to discover and develop new methods of controlling bacterial growth, colonisation and infection. The market for HAI is reported at $17.1bn with a CAGR of 6.1% (Source BCC 2015).

Opportunities exist in this regard due to the ability of the SkinBiotix® technology preventing the adherence of the pathogen Staphylococcus aureus. The Company is working with a third party seeking to initiate exploratory discussions in regard to both HAI and Domestic Hygiene.

·    PharmaBiotix

As an extension to medical device and Axis applications, the Company has the potential to pursue medicinal prescription registration routes for current and future technologies. This is a time consuming and expensive pathway, but subject to positive clinical outcomes, has the potential for significantly higher financial returns.

Whilst SkinBioTherapeutics is not currently targeting this channel it is a future potential pathway for both the eczema and psoriasis opportunities and a natural progression from both MediBiotix and AxisBiotix.

Financial review

Operating expenditure continued to increase during the course of the year, in line with management forecasts. In February 2019, the Company raised £1.5m in gross proceeds through a share placing at
16 pence per share. The Company held £3.1m of cash at year-end (2018: £3.2m).

Research and development expenditure was £708k (2018: £416k) comprising development work with the University of Manchester, ongoing manufacture, scale-up and formulation work as well as the costs for the cosmetic human study. All such expenditure was expensed in the period.

Ongoing operating costs were £652k (2018: £526k) covering employment, consultancy, PLC support costs and marketing.

Overall the Company made a loss before tax of £1,360k (2018: £941k).

Operational review

·    Clinical update

The human study for the cosmetic application incorporating the SkinBiotix® technology was the primary focus of the Company for 2019, the results of which were detailed in the RNS of 8 April 2019. The study, which commenced in September 2018, was primarily undertaken to show the effects of SkinBiotix® on the barrier of healthy skin. The secondary endpoint was to demonstrate that the technology is safe and well tolerated in a large group of people (129) using it twice a day for an extended period of time (29 days). The SkinBiotix® technology was incorporated within a cream formulation for application by the study subjects.

The study design involved three groups:

·    Group 1 applied the active (cream containing SkinBiotix®) to one leg and nothing to the other

·    Group 2 applied the vehicle (cream containing no SkinBiotix®) to one leg and nothing to the other

·    Group 3 applied the vehicle to one leg and active to the other.

Measures of the barrier were then performed in all groups at 15 days and 29 days. The primary measures were Corneometry - a measure of how hydrated the skin is, and Transepidermal water loss ("TEWL") - a measure of water loss from the skin. A change to the barrier might be expected to be reflected in an increase in skin hydration or a reduction in TEWL. Some additional measurements of skin elasticity were also taken.

The data showed:

1)    None of the 129 volunteers experienced any adverse skin reactions to the active.

2)    A statistically significant increase in skin hydration at day 15 with the active, which was better than that produced by the vehicle. This effect was seen in the group under 50 years old. At day 29 there was no difference in skin hydration between any of the groups.

3)    A small but statistically significant decrease in TEWL with the active at day 29 in the group over 60 years old.

4)    In other age groups and, also, in measures of skin elasticity there was no difference between the vehicle and the active.

The results of this independent study demonstrated that SkinBiotix® is safe, well tolerated and has efficacy in certain age groups and time points. The change in skin hydration and water loss are in line with expectations from laboratory studies which have shown that SkinBiotix® increases the levels of proteins within the skin that are crucial for a healthy barrier. The increase in skin hydration in the younger group at day 15 may reflect the ability of younger skin to respond to the SkinBiotix® faster than older skin.

·    First commercialisation agreement signed

Having completed the study and generated positive data, the Company progressed discussions with third parties interested in licencing the technology, culminating in an agreement earlier this month with Croda International Plc. With turnover of c.£1.38bn and a market cap of £6.1bn, Croda is a FTSE 100 company using Smart Science to Improve Lives™. Croda delivers innovative, sustainable ingredients across a range of industries: Personal Care, Life Sciences, Performance Technologies and Industrial Chemicals. A world leader in the field of skincare actives for the cosmetic industry, Croda offers a wide range of ingredients for skin and hair care products that are sold to major cosmetic brands across the world.

Under the terms of the agreement, SkinBioTherapeutics' proprietary SkinBiotix® platform will be paired with Croda's expertise in the development and commercialisation of unique, sustainable, cosmetic ingredients, focusing specifically on the growing skincare actives market. Sederma, part of Croda International, is a specialist manufacturer of bioactive ingredients for the cosmetic industry, and will be responsible for the development and commercialisation of the SkinBiotix® technology.

Croda will be establishing a separate manufacturing line for the technology and as design and manufacture of the active ingredient is carried out there will be concurrent testing in focussed ingredient application areas which will be detailed in further, additional agreements.

Any licensed products resulting from this agreement will be sold to Croda's global portfolio of Personal Care customers. SkinBioTherapeutics will be paid tiered royalties based on global sales revenues on any licensed products derived from the partnership which will be covered in individual ingredient application agreements. Recognising the development activity required by Croda, the Company anticipates revenue generation to commence from these additional agreements from 2021.

Sales and distribution rights are for the cosmetic sector alone, leaving SkinBioTherapeutics to focus on further applications of its technology in other sectors. A key component of this agreement is access to a reliable supply of material and Croda will supply SkinBiotix® for the Company to be able to use in sectors outside of those covered by this agreement.

Outlook

Having successfully completed the human safety study and subsequently executed a commercial ingredient and manufacturing agreement with Croda, the Company will focus on its identified five core areas over the course of 2020 as well as seeking further commercialisation opportunities.  

The successful completion of the human safety study for the SkinBiotix® technology was an important milestone this year. The quality of the scientific data and the readout from the study have proved to be prerequisites to reaching agreement with Croda. The project will commence in early 2020 and supporting its progress will be an important ongoing activity for SkinBioTherapeutics.

Next in development will be the progression of the eczema programme as a medical device, following the preliminary regulatory assessment. This will continue to be a significant workstream in 2020 as will the commencement of the psoriasis programme, something the Company expects to be able to announce further progress on early in the new year. The Company will also explore additional application areas in fields that include woundcare, skincare, healthcare acquired infections (HAI) and surface cleaning.

Strong progress has been made this year across the business and the Board and management team are optimistic for the outlook in 2020.

Stuart J. Ashman

CEO

Income statement

For the year ended 30 June 2019

			Notes	2019		2018
				£		£
Continuing operations
Research and development				(708,081)		(415,902)
Operating expenses				(652,400)		(525,549)
Loss from operations			2	(1,360,481)		(941,451)
Finance costs				-		-
Loss before taxation				(1,360,481)		(941,451)
Taxation				212,388		97,033
Loss for the year				(1,148,093)		(844,418)
Other comprehensive income				-		-
Total comprehensive loss for the year				(1,148,093)		(844,418)
Basic and diluted loss per share (pence)			3	(0.94)		(0.71)

Statement of financial position

As at 30 June 2019

					Notes	2019			2018
						£			£
Assets
Non-current assets
Property, plant and equipment						6,800			-
Intangible assets						346,870			287,672
Total non-current assets						353,670			287,672
Current assets
Other receivables						242,580			93,421
Corporation tax receivable						210,351			86,272
Cash and cash equivalents						3,124,864			3,182,898
Total current assets						3,577,795			3,362,591
Total assets						3,931,465			3,650,263
Equity and liabilities
Equity
Capital and reserves
Called up share capital						1,280,835			1,187,085
Share premium						4,923,890			3,577,640
Other reserves						247,672			170,418
Accumulated deficit						(2,642,266)			(1,494,173)
Total equity						3,810,131			3,440,970
Liabilities
Current liabilities
Trade and other payables						121,334			209,293
Total current liabilities						121,334			209,293
Total liabilities						121,334			209,293
Total equity and liabilities						3,931,465			3,650,263

Statement of cash flows

For the year ended 30 June 2019

							2019		2018
							£		£
Cash flows from operating activities
Loss before tax for the period							(1,360,481)		(941,451)
Depreciation of property, plant and equipment							3,400		-
Share option expenses							77,254		71,859
							(1,279,827)		(869,592)
Changes in working capital
(lncrease)/decrease in trade and other receivables							(146,159)		57,768
Increase in trade and other payables							(90,959)		90,633
Cash generated by/(used in) operations							(237,118)		148,401
Taxation received							88,309		53,446
Net cash used in operating activities							(1,428,636)		(667,745)
Cash flows from investing activities
Payments for property, plant and equipment							(10,200)		-
Payments for intangible assets							(59,198)		(72,260)
Net cash used in investing activities							(69,398)		(72,260)
Cash flows from financing activities
Net proceeds from issue of shares							1,440,000		-
Net cash generated by financing activities							1,440,000		-
Net (decrease)/increase in cash and cash equivalents							(58,034)		(740,005)
Cash and cash equivalents at the beginning of the period							3,182,898		3,922,903
Cash and cash equivalents at the end of the period							3,124,864		3,182,898

Statement of changes in equity

For the year ended 30 June 2019

				Share capital	Share premium	Other reserves	Retained earnings	Total
				£	£	£	£	£
As at 1 July 2017				1,187,085	3,577,640	98,559	(649,755)	4,213,529
Loss for the period				-	-	-	(844,418)	(844,418)
Share-based payments				-	-	71,859	-	71,859
As at 30 June 2018				1,187,085	3,577,640	170,418	(1,494,173)	3,440,970
Loss for the period				-	-	-	(1,148,093)	(1,148,093)
Issue of shares				93,750	1,406,250	-	-	1,500,000
Costs of share issue				-	(60,000)	-	-	(60,000)
Share-based payments				-	-	77,254	-	77,254
As at 30 June 2019				1,280,835	4,923,890	247,672	(2,642,266)	3,810,131
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 and 18 April 2019.
Retained earnings represents accumulated profit or losses to date.

Extracts of the notes to accounts

1.    General information

SkinBioTherapeutics plc is a public limited company incorporated in England under the Companies Act and quoted on the AIM market of the London Stock Exchange (AIM: SBTX).  
 
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
																			2019			2018
																			£			£
	An analysis of the Company's operating loss has been arrived at after charging/(crediting):
	Other income																		(42)			(84)
	Research and development																		708,081			415,902
	Directors remuneration (including share-based compensation)																		294,412			38,881
	Auditors remuneration
					- audit fees														9,500			14,000
					- other services														1,750			11,049
	Foreign exchange differences																		1,745			69
	Other operating costs																		345,035			300,002
	Total operating expenses																		1,360,481			941,451
	The Company has one reportable segment, namely the research and development of the Skinbiotix® technology, all within the United Kingdom.
	3.    Loss per share
																			2019				2018
																			£				£
	Basic and diluted loss per share
	Loss after tax (£)																		(1,148,093)				(844,418)
	Weighted average number of shares																		122,047,535				118,708,494
	Basic and diluted loss per share (pence)																		(0.94)				(0.71)
	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.    Posting of the Annual Report and notice of AGM

A copy of this announcement may be found on the Company's website today and the Annual Report and Accounts will be published later today.

The Company's Annual General Meeting will be held on 19 December 2019 at 11am at Centurion House, Deansgate, Manchester, M3 3WR.

The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 30 June 2018 or 30 June 2019. The financial information for the year ended 30 June 2018 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 2019 is derived from Group's financial statements for the year ended 30 June 2019 which were approved by the directors on 25 November 2019. 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.

 

END

 

 

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