Half-year Report

RNS Number : 3831U

SkinBioTherapeutics PLC

28 March 2023

 

SkinBioTherapeutics plc

Half year consolidated results

Newcastle, UK - 28 March 2023 - SkinBioTherapeutics plc (AIM: SBTX or the "Group") a life sciences company focused on skin health, announces its unaudited half year consolidated results for the six months to 31 December 2022.

Operational and financial highlights

· Good progress with the ongoing commercialisation of probiotic food supplement, AxisBiotix-Ps™ in the UK

o  Revenues increased consistently month on month and at period end, totalled £77k (H1 FY22: £22k)

o  Retention rates at 80%+ of month end subscribers

o  Post year end, health authority approval received for launch in Spain from 13 March; entry into other European markets, Italy and France, is anticipated during 2023

· Croda/Sederma project continues to progress with further potential claims being investigated

o  Exploring in-human studies to further validate potential additional claims

o  Successful scale-up of manufacturing to 600 litres and testing of scale-up to 20,000 litres as previously announced

o  Further formal discussions to commence regarding applications of other areas of SkinBioTherapeutics' technology

· Currently developing a stabilised bacterial blend for acne and working with formulation partners to develop an end product for consumer study in H2 2023

· Research programmes with the University of Manchester are progressing

o  Skin health and disease research programme - feasibility study outcome expected during 2023

o  Oral health and wellbeing - positive early indications; programme extended into next phase (formulation) with data anticipated in 2024 as previously announced

· Inorganic growth strategy: management remains actively engaged with due diligence ongoing.

· Cash as of 31 December 2022 £766k (30 June 2022: £3,154k)

o  Post period end, Placing and Open Offer raised £2.6m

Stuart Ashman, CEO of SkinBioTherapeutics, said:

"Our priority focus for the first half of FY23 to drive forward new product development and sales in AxisBiotix, with the ultimate goal being a partnership opportunity with a multinational, along with the continued progression of work with Croda and the research programmes with Manchester University and the pursuit of an accretive acquisition opportunity that could bring solid sales revenue. We are pleased to report advancements in all areas.

"For AxisBiotix-Ps™, we have grown our customer base in the UK consistently month on month. The sales in the UK are still at a relatively early stage; however, the customers who have adopted AxisBiotix-Ps™ into their daily regimes have shown fierce loyalty to the product, as demonstrated by their very positive feedback and the 80%+ retention rate. With continued targeted marketing in the UK and entry into new European geographical markets during 2023, the aim is to further expand sales.

"The next programme in the AxisBiotix pillar is in acne which has been progressing well with the consumer study anticipated to commence during H2 2023. The focus for the SkinBiotix programme with Croda/Sederma has been on manufacturing scale-up, and the development programmes in oral care and skin health are showing promise.

"As stated in the FY22 results, we are investigating external opportunities that provide synergies and accelerated routes to market, to run alongside our own product commercialisation. We continue to actively engage in discussions. However, we will only pursue such opportunities if they make sense for the business and create immediate value for our shareholders."

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 Manprit Randhawa, CFO of the Group. 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 J . Ashman, CEO Manprit Randhawa, CFO	Tel: [phone]
Cenkos Securities Plc (Nominated Adviser & Broker) Giles Balleny, Max Gould (Corporate Finance) Dale Bellis, Tamar Cranford-Smith (Sales)	Tel: [phone]
Instinctif Partners Melanie Toyne-Sewell / Tim Field / Adam Loudon	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 Professor Catherine O'Neill and Professor Andrew McBain.

The Company is targeting a number of skin healthcare sectors, the most advanced of which are cosmetic skincare and food supplements to modulate the immune system by harnessing the gut-skin axis. In each area SkinBioTherapeutics plans to exemplify its technology through human studies. The Company's first product, AxisBiotix-Ps™, a food supplement to address the symptoms of mild to moderate psoriasis.

The Company listed on AIM in April 2017 and is based in Newcastle, UK. For more information, visit: www.skinbiotix.com   http://www.axisbiotix.com .

Chairman and Chief Executive's Statement

The focus for the first half of FY23 was to drive forward new product development and sales in AxisBiotix, with the ultimate goal being a partnership opportunity with a multinational, along with the continued progression of work with Croda and the research programmes with Manchester University and the pursuit of an accretive acquisition opportunity that could bring solid sales revenue. The Board is pleased to report advancements in all areas.

For FY23, the main pillar of the corporate strategy has been focused around the Company's first product, AxisBiotix-Ps™ probiotic food supplement. Sales and marketing have continued in the first half of the year, with a focus on the UK market, where we continue to see excellent retention rates at 80%+ (being the number of subscribers remaining at the end of each monthly period, compared to those at the start of month period) and total subscriptions overall growing on a month by month basis. Revenues have increased at a higher rate than in the year ending 30 June 2022, despite lower marketing spend as the business has adapted and focused its marketing strategy.

As previously announced to the market, AxisBiotix-Ps™ will be released for sale into Europe in the first half of 2023, with Spain and Italy the first countries to be targeted, followed by France. The business expects to see a gradual uplift in sales following the launches in these countries through the second half of 2023.

The oral programme, the use of probiotic-derived, screened, and selected actives has progressed into development. A lead complex has been selected with research progressing in collaboration with Professor Andrew McBain at the University of Manchester.

Part of the strategy of the Company is to investigate inorganic opportunities that would provide synergies and accelerated routes to market. We continue to pursue such deals and remain actively engaged with the previously announced accretive and synergistic opportunity, where due diligence and negotiations are continuing. However, there is no certainty of timing or execution, as the Company would need to agree additional funding using debt and/or equity and any acquisition would be conditional on satisfactory diligence and agreement on terms.

Financial review

Revenue and gross margins

The Company reported revenues of £77k (H1 FY22: £22k) during the first half of FY23, which reflects an increase on the revenues achieved in FY22 from launch date of October 2021 through to June 2022. 90% of the revenues achieved were derived from the UK market, with subscribers accounting for 39% of overall revenues. Gross margins for the period increased to 67% (H1 FY22: 61%) which reflects less discounting from the initial launch phase of AxisBiotix-Ps™ which ran from October 2021 through to February 2022.

Research and development

Research and development costs for the first half of FY23 amounted to £445k (H1 FY22: £397k), with the increase in expenditure relating to the Company entering into the next phase of the Oral research programme with the University of Manchester, which began in 2021.

Administrative expenses

Administrative expenses for the first half of FY23 were £958k (H1 FY22: £775k), highlighting the increase in the operational footprint of the Company. These expenses include £40k (H1 FY22: £10k) of shipping and distribution costs; during H1 FY23, the Company decided to service the UK customer base from a dedicated warehouse in the UK, thus decreasing shipping costs and customs charges as well as improving the time and efficiency of deliveries in the UK. The warehouse in the Netherlands currently serves the US customers and will also be the distribution hub for all European (non-UK) country shipping.

Other increases in expenses largely related to an increase in headcount (H1 FY22: 8 to H1 FY23: 12) from the prior period, as the business had to bring in commercial and operational support for AxisBiotix-Ps™, as well as the recruitment of a full time CFO. The operational footprint also increased with the use of offices and labs in Newcastle in 2022.

Cash

Net cash decrease for the period was £1,039k (H1 FY22: £1,456k). Cash as at the end of the period at 31 December 2022 was £766k (H1 FY22: £3,154k). Post period end on 4 January 2023, the Company successfully raised gross proceeds of £2.6m to fund future operations.

Operational review

During the first half of the financial year, the Company's strategy was driven by ongoing developments within AxisBiotix-Ps™, as well as research and development activities within the Acne and Oral health areas. 

SkinBiotix Pillar (skincare/cosmetics)

SkinBiotix is the Company's core technology and since late November 2019 has been subject to an agreement with Croda International Plc (Croda) and its specialist cosmetic division Sederma, whereby Sederma is responsible for the development, manufacture and commercialisation of the technology.

Sederma has successfully scaled-up manufacture to 600 litres and is testing the scale-up to 20,000 litres in a custom built vessel in Widnes. The project with Sederma continues to progress with further potential claims as previously communicated. Sederma is exploring in-human studies to further validate this additional activity and potential additional claims. It should be noted that the Company is subject to strict confidentiality agreements with Croda and as such is limited in what information it can publish.

In the spirit of the "smart partnership" that the Company has with Croda, it is now preparing for further, formal discussions with Croda regarding applications of other areas of the Company's technology.

AxisBiotix Pillar (gut-skin axis)

AxisBiotix-Ps™

During the full year results announcement on 23 December 2022, the Company announced that the strategy for AxisBiotix-Ps™ had evolved, with a shift away from long ranging regional distribution-related deals to exclusive deals with multi-national partners being the better long-term strategy to enhance shareholder value. As such, the Company has continued to market for sale its AxisBiotix-Ps™ food supplement with a reduction in marketing expenditure.

Retention rates remain high for subscribers at 80%+ ( being the number of subscribers who are remaining as a subscriber at the end of each monthly period, compared to the same cohort that were in existence at the start of a month period). The positive impact is also evident in the effect the product has on the lives of psoriasis sufferers through customer testimonials.

Post period end, the Company commenced its Spanish launch following regulatory clearance in February 2023. The Spanish market for psoriasis incidence rates is similar to the UK in that between 1%-3% of people suffer from psoriasis. The Company will initiate marketing activities to target this group of people specifically in its first rollout across the country.

Following the launch in Spain, the Company will target Italy and France as its next territories. The Company awaits Italian regulatory clearance for launch, whilst activities to operate in France are at an early stage.

In addition, the Company is working with its formulation partner, Winclove, to investigate other vehicles for
AxisBiotix-Ps™ product delivery such as capsules, tablets etc following feedback from consumers. This work is on-going and testing will take place in H2 2023 to identify the optimum delivery method for the food supplement.

Acne

The next product in the AxisBiotix pillar will be a food supplement for alleviating the symptoms associated with acne.

As announced in December 2022, the Company is working on a stabilised bacterial blend, and is now engaged both internally and externally (with formulation partners) on an end product which is expected to be tested in a consumer study in H2 2023. Assuming a positive outcome from the study, the Company will then seek to commercialise the product.

MediBiotix Pillar (medtech applications e.g. woundcare)

The MediBiotix Pillar is focusing on applying SkinBiotix technology in topical medical device applications, looking at targeting eczema in the first instance. This development route is still being explored by management.

As announced in December 2022, the other areas for this pillar involve advanced wound management, which has the potential to be a significant opportunity for the Company. Early discussions with several potential global partners in the woundcare space are ongoing, and a positioning paper is currently being scoped into a partnered project plan.

CleanBiotix Pillar (anti-infection)

With the impact of the pandemic coupled with the increasing incidence of healthcare acquired infections, such as MRSA, preventing infection is of paramount concern to healthcare practitioners. From early studies of SkinBiotix, there is data demonstrating its effectiveness in preventing the most common skin pathogen, Staphylococcus aureus (SA), from adhering to and growing on skin surfaces. The potential for SkinBiotix technology in this area is exciting, but is also challenging, therefore, this would be another area where management is investigating opportunities to out license the programme.

Other Research Programmes

The Company has two additional programmes of work underway at the University of Manchester - the first, running until the end of 2023 is focusing on how the microbiome can influence and rebalance the body's response to inflammation in skin health and skin disease. This programme is progressing in line with expectations and management expects to see an outcome of the feasibility study during 2023.

The second programme is exploring the use of different bacteria, including SkinBioTherapeutics' proprietary lysate SkinBiotix along with other strains of bacteria and lysates, for oral health and wellbeing.  This programme looks to identify methods to assist in the prevention of gum disease, tooth decay and halitosis that could ultimately be commercialised in a toothpaste or mouthwash. This programme has progressed into development and a lead complex has been selected with research progressing in collaboration with Professor Andrew McBain at the University of Manchester.

Working in collaboration with a UK-based formulation, material, and manufacturing provider, prototype formulation formats have been generated. Laboratory performance of the specialist formats, selected to maximize the oral epithelia contact time are underway, using established biological performance assay platforms. The format has been selected to address consumer needs that can be tuned to specific market segments. In parallel product features and consumer prototyping work is progressing at the Company's formulation suite at its Newcastle-Upon-Tyne facilities. 

There can be no guarantees that any of these formats will meet the strict criteria set by the Company for advancing into scale-up and consumer testing, but management remains encouraged by the progress made in demonstrating the technology in commercially acceptable formats. 

Outlook

The Company has made significant strides over the past year with developments in three out of the five pillars of strategy, with what is still a small but growing team. Management continues to progress the partnership with Croda and anticipates that 2023 will see the commercial launch of the cosmetic ingredient. The launch of AxisBiotix-Ps™ has shown some traction with a relatively modest marketing budget, and management expects to increase sales at a steady  pace following the launch into Europe over the coming months. Work continues with the University of Manchester on a range of programmes, including feasibility of the technology in inflammation and oral applications.

The focus of 2023 and beyond is to reach commercial traction with Croda, launch AxisBiotix-Ps™ into Europe, develop a product for acne, continue engagement with potential multi-national commercial partners for the AxisBiotix pillar, and strike a deal with a large global partner within the MediBiotix pillar. In addition, the Company will continue to pursue inorganic accretive opportunities, specifically with one such target which management has been in discussions with since the end of 2022. This target has the potential to be transformative for the Company from both financial as well as operational perspectives.

This year has started well and Management looks forward to updating shareholders on the Company's progress.

Martin Hunt (Non-executive Chairman)

Stuart J. Ashman (Chief Executive Officer)

27 March 2023

Consolidated Statement of Comprehensive Income

For the 6 months ended 31 December 2022

			Notes	6 months to 31 Dec 2022	6 months to 31 Dec 2021	12 months to 30 Jun 2022
				Unaudited	Unaudited	Audited
				£	£	£
Continuing operations
Revenue				76,985	21,949	74,761
Cost of sales				(25,248)	(8,560)	(29,424)
Gross profit				51,737	13,389	45,337
Selling and distribution				(40,136)	(10,408)	(43,804)
Research and development				(444,588)	(396,695)	(861,383)
Operating expenses				(918,103)	(764,750)	(2,122,238)
Loss from operations				(1,351,090)	(1,158,464)	(2,982,088)
Finance costs				(4,739)	(5,274)	(10,135)
Loss before taxation				(1,355,829)	(1,163,738)	(2,992,223)
Taxation			4	70,826	88,812	199,622
Loss for the period				(1,285,003)	(1,074,926)	(2,792,601)
Total comprehensive loss for the period				(1,285,003)	(1,074,926)	(2,792,601)
Basic and diluted loss per share (pence)			5	(0.82)	(0.69)	(1.78)

Consolidated Statement of Financial Position

As at 31 December 2022

			Note	As at 31 Dec 2022	As at 31 Dec 2021	As at 30 Jun 2022
				Unaudited	Unaudited	Audited
				£	£	£
ASSETS
Non-current assets
Right-of-use assets				110,702	128,752	126,903
Intangible assets				652,548	570,478	625,504
Total non-current assets				763,250	699,230	752,407
Current assets
Inventories				88,257	412,064	122,571
Trade and other receivables				126,274	191,893	138,150
Corporation tax receivable				244,555	156,106	266,916
Cash and cash equivalents				765,976	3,153,631	1,804,923
Total current assets				1,225,062	3,913,694	2,332,560
Total assets				1,988,312	4,612,924	3,084,967
EQUITY AND LIABILITIES
Equity
Capital and reserves
Called up share capital			6	1,567,802	1,567,802	1,567,802
Share premium				8,758,037	8,758,037	8,758,037
Other reserves				459,471	405,914	437,316
Accumulated deficit				(9,572,797)	(6,570,119)	(8,287,794)
Total equity				1,212,513	4,161,634	2,475,361
Liabilities
Non-current liabilities
Lease liabilities				82,823	101,473	100,647
Total non-current liabilities				82,823	101,473	100,647
Current liabilities
Trade and other payables				666,290	323,723	481,742
Lease liabilities				26,686	26,094	27,217
Total current liabilities				692,976	349,817	508,959
Total liabilities				775,799	451,290	609,606
Total equity and liabilities				1,988,312	4,612,924	3,084,967

Consolidated Statement of Cash Flows

For the 6 months ended 31 December 2022

			6 months to 31 Dec 2022	6 months to 31 Dec 2021	12 months to 30 Jun 2022
			Unaudited	Unaudited	Audited
			£	£	£
Cash flows from operating activities
Loss before tax for the period			(1,355,828)	(1,163,738)	(2,992,223)
Right-of-use assets depreciation and interest			20,938	19,850	39,557
Amortisation of IP			150	-	250
Share based payments charge			22,155	21,302	52,704
			(1,312,585)	(1,122,586)	(2,899,712)
Changes in working capital
Decrease/(Increase) in inventories			34,314	(412,064)	(122,571)
Decrease/(Increase) in trade and other receivables			7,138	71,779	130,796
Increase/(decrease) in trade and other payables			184,016	(56,097)	101,922
Cash used in operations			225,468	(396,382)	110,147
Taxation received			93,188	116,534	116,534
Net cash used in operating activities			(993,929)	(1,402,434)	(2,673,031)
Cash flows from investing activities
Purchase of IP			(27,194)	(41,537)	(96,813)
Net cash used in investing activities			(27,194)	(41,537)	(96,813)
Cash flows from financing activities
Lease payments made			(17,824)	(12,287)	(35,122)
Net cash used by financing activities			(17,824)	(12,287)	(35,122)
Net decrease in cash and cash equivalents			(1,038,947)	(1,456,258)	(2,804,966)
Cash and cash equivalents at the beginning of the period			1,804,923	4,609,889	4,609,889
Cash and cash equivalents at the end of the period			765,976	3,153,631	1,804,923

Consolidated Statement of Changes in Equity

For the 6 months ended 31 December 2022

			Share capital	Share premium	Other reserves	Retained earnings	Total
			£	£	£	£	£
As at 1 Jul 2021			1,567,802	8,758,037	384,612	(5,495,193)	5,215,258
Loss for the period			-	-	-	(1,074,926)	(1,074,926)
Share-based payments			-	-	21,302	-	21,302
As at 31 Dec 2021			1,567,802	8,758,037	405,914	(6,570,119)	4,161,634
As at 1 Jan 2022			1,567,802	8,758,037	405,914	(6,570,119)	4,161,634
Loss for the period			-	-	-	(1,717,675)	(1,717,675)
Share-based payments			-	-	31,402	-	31,402
As at 30 Jun 2022			1,567,802	8,758,037	437,316	(8,287,794)	2,475,361
As at 1 Jul 2022			1,567,802	8,758,037	437,316	(8,287,794)	2,475,361
Loss for the period			-	-	-	(1,285,003)	(1,285,003)
Share-based payments			-	-	22,155	-	22,155
As at 31 Dec 2022			1,567,802	8,758,037	459,471	(9,572,797)	1,212,513

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 share options granted and exercised.

Retained earnings represents accumulated profit or losses to date.  

Notes to the Consolidated Financial Statements

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 address of its registered office is The Core Bath Lane, Newcastle Helix, Newcastle Upon Tyne, England, NE4 5TF.

The principal activity of the Group is the identification and development of technology that harnesses the human microbiome to improve health.

The financial information set out in this half yearly report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The statutory financial statements for the year ended 30 June 2022, prepared under International Financial Reporting Standards ("IFRS"), have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified but included a reference to the material uncertainty related to going concern in respect of the outcome of the fundraise which completed in January 2023 and did not contain statements under Sections 498(2) and 498 (3) of the Companies Act 2006.

Copies of the annual statutory accounts and the Interim Report can be found on the Company's website at www.skinbiotherapeutics.com.

2.  Significant accounting policies and basis of preparation

2.1  Statement of compliance

This Interim Report has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the United Kingdom, IFRS Interpretations Committee (IFRIC) and the Companies Act 2006 applicable to companies reporting under IFRS, using accounting policies which are consistent with those set out in the financial statements for the year ended 30 June 2022.

2.2  Application of new and revised International Financial Reporting Standards (IFRSs)

There are no IFRSs or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the Group.

3.  Segmental reporting

In the opinion of the Directors, the Group has one class of business, in three geographical areas, namely that of the identification and development of technology that harnesses the human microbiome to improve health.

Revenue analysed by geographical market							6 months to 31 Dec 2022	6 months to 31 Dec 2021	12 months to 30 Jun 2022
UK							70,328	16,860	57,687
Europe							560	-	-
US							6,097	5,089	17,074
							76,985	21,949	74,761

4.	Taxation
Income taxes recognised in profit or loss									6 months to 31 Dec 2022		6 months to 31 Dec 2021			12 months to 30 Jun 2022
Current tax
R&D tax credit									70,826		88,812			173,729
R&D tax credit - prior year									-		-			25,893
Tax credit for the period									70,826		88,812			199,622
5.	Loss per share
									6 months to 31 Dec 2022		6 months to 31 Dec 2021			12 months to 30 Jun 2022
Basic and diluted loss per share
Loss after tax (£)									(1,285,002)		(1,074,926)			(2,792,601)
Weighted average number of shares									156,780,236		156,780,236			156,780,236
Basic and diluted loss per share (pence)									(0.82)		(0.69)			(1.78)
As the Group is reporting a loss from continuing operations for the period 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.
6.	Share capital
Issued share capital comprises									31 Dec 2022		31 Dec 2021			30 Jun 2022
156,780,236 ordinary shares of £0.01 each									1,567,802		1,567,802			1,567,802
7.	Events after the reporting date
The Group has evaluated all events and transactions that occurred after 31 December 2022 up to the date of signing of the financial statements. On 4 January 2023 the Group raised £2.6m of gross proceeds following a placing of ordinary shares which were admitted onto AIM on 5 January 2023.

 

END

 

 

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