Preliminary results for the year ended 31 Jan 2013

RNS Number : 4699E

Tissue Regenix Group PLC

13 May 2013

 

Tissue Regenix Group plc

Unaudited preliminary results for the year ended 31 January 2013

YORK, 13^th May 2013 - Tissue Regenix Group plc ("Tissue Regenix" or "the Group"), the regenerative medical devices company which uses animal or human tissue to replace damaged or worn out parts of the human body, today announces its unaudited preliminary results for the year ended 31 January 2013.

Operational Highlights

During the year, Tissue Regenix has:

·      Completed a successful pre-clinical study for dCELL® meniscus

·      Established its US subsidiary in order to target its growing regenerative medicine market

·      Added patents related to 'Acellular Arteries' to global exclusive licence portfolio

·      Produced positive interim clinical data for its dCELL® Dermis technology

·      Demonstrated a strong safety profile and effectiveness of its vascular patch in results from two year clinical study

·      Made a number of senior business development appointments across the company

·      Received endorsement of its dCELL® implant technology from Professor Alan Dardik of Yale University

·      Expanded the scope of development activities of its dCELL® technology with NHS Blood and Transplant , (NHSBT)

Financial Highlights

·      Planned increased loss after tax of £3.5m (2012: £2.7m) resulting from additional development expenditure and increased head count as multiple product programmes are moved forward

·      Cash and short term deposits as at 31 January 2013 of £24.2m (2011: £28.0m)

Antony Odell, Tissue Regenix Managing Director, commented:

"These results reflect our continued investment in broadening the dCELL® product offering and also our solid progress in moving them towards commercialisation. This foundation, built on our development and commercial capabilities, provides us with a strong position to move forward in our focus areas of wound care, orthopaedics, cardiology and vascular."

Enquiries

Tissue Regenix Group plc	[phone]
Antony Odell, Managing Director Ian Jefferson, Chief Financial Officer
Jefferies International Ltd.	[phone]
Simon Hardy Harry Nicholas
Newgate Communications	[phone]
Alistair Kellie Andrew Adie Andrew Jones

Chairman's Statement

Overview

The past year has seen Tissue Regenix continue to make good progress toward the commercialisation of our proprietary dCELL® regenerative medicine technology. The technology is patent protected and forms a platform for the development of a number of products in different therapy areas.

The successful fundraising achieved a year ago has given us the ability to develop different products in parallel and this year has seen us reach important milestones. Firstly, we have established a subsidiary in the USA which puts us on track to develop our international presence. It also complements our relationships with existing collaboration partners such as the Pontifical University of Parana in Brazil and with the NHS Blood and Transplant (NHSBT) in the U.K. Indeed it has been our relationship with the NHSBT that has enabled the successful development of our dCELL® Dermis product which will soon be undergoing trials in the USA.

Secondly, we have appointed a number of Business Development managers in our respective therapy areas. This adds significant sales and marketing experience to our already high levels of technical expertise.

Support for Life Sciences

We are well placed to capitalise on the UK Government's strategy to maintain a world-leading presence in life sciences by encouraging investment and research and innovation within the NHS and leading UK universities. In particular, we continue to have a strong relationship with Leeds University where the technology continues to be developed further. We translate that world leading research into commercial applications and by working with bodies such as the NHS we are capable of delivering global solutions to key and enormously costly medical problems.

The Board

In November we announced the appointment of Non-executive Director Dr Alison Fielding, Chief Operating Officer of IP Group. I am sure Alison's considerable experience and expertise in the healthcare sector will be of great benefit to the company as we continue to develop.

This year we have seen the departure of Alan Aubrey, Michael Bretherton and Alex Stevenson as Non-executive Directors. All three were founding first stage investors in the company and I would like to thank them for their contributions over the years. Their departure is part of our strategy of evolving the composition of the Board away from early stage investors and towards becoming more industry and market focused. We are actively seeking to complement the Board with two more non-executive directors.

Outlook

We continue to build a comprehensive body of data to support the validity of dCELL® technology's effectiveness in treating various conditions. Furthermore, we believe that regenerative medicine is capable of revolutionising healthcare and significantly improving patient outcomes.

In addition, there are significant cost pressures on healthcare budgets around the world and the delivery of dCELL® solutions will make a significant and beneficial impact. For example the dCELL® Dermis product is aimed at tackling chronic wounds which it is estimated cost the UK alone over £1 billion every year.

The need for products employing tissue engineering is very large and growing quickly. The chronic shortage of human donor tissue will result in even more demand for animal tissue-based solutions. Our pipeline of products remains strong and continues to progress through the various demanding regulatory requirements and is moving towards commercialisation of the leading products in the coming year.

We continue to pursue our objective to become a global leader in our chosen field and are confident we will thereby create significant shareholder value.

John Samuel

Executive Chairman

13 May 2013

Managing Director's Review

Overview

This year has been transformational for Tissue Regenix and we are continuing to develop a growing body of data confirming the quality and efficacy of our technology, while taking the necessary steps in target markets as we prepare for full commercialisation. We have also been able to further develop our pipeline of products and portfolio of patents following the fundraising that we achieved at the end of the last financial year. 

Financial Review

Tissue Regenix maintains a strong cash position with a balance of £24.2m at the year-end (2012: £28.0m). We expect to continue to use our cash resources to fund our development programmes, and would expect cash utilisation to increase over the coming years as the programmes progress through pre-clinical and clinical trials. Income for the year of £0.05m (2012: £0.1m) continues to reflect grant income received. Furthermore, during the year a number of changes to the research and development corporation tax credit system were confirmed. These changes included the removal of the cap on the level of refund payable at the level of PAYE and NIC paid in the year. This change, along with the additional development expenditure incurred this year, has resulted in an increase in the corporation tax refund for the year to £0.5m (2012: £0.2m). This refund is expected to be received in 2013. As anticipated, administrative expenditure increased to £4.5m (2012: £3.1m), due to planned increases in development expenditure and head count, as we advanced our multiple product programmes.

International Expansion

In November 2012, we announced the establishment of our North American subsidiary. In this key market Tissue Regenix will use its patented dCELL® technology to target a number of areas, focusing initially on applying the dCELL® in human donor tissues to treat a number of chronic conditions initially in wound care. Over time we believe this could be developed for other applications including vascular repair, heart valve replacement and knee repair. As a part of this expansion we were delighted to welcome Greg Bila as President of our US business. Greg joins us from Kinetic Concepts Inc, where he has amassed two decades of sales and marketing experience in the pharmaceutical and medical device field. 

Product Development Pipeline

Translation/Pilot	Pre-clinical	Clinical	Commercial
Porcine Pulmonary Valve	Porcine Meniscus	Human Aortic Valve	Porcine Vascular Patch (EU)
Porcine General Surgery Patch	Porcine Dermis		Human Pulmonary Valve
Porcine Tendon	Bovine AV Graft		Human Dermis -       Chronic Wounds -       Rotator Cuff -       Hernia

The dCELL® process

Our proprietary platform technology, dCELL®, is protected by a library of patents. It is used to decellularise human or animal donor tissue to create biological scaffolds that are then implanted into patients to replace diseased or damaged parts of their body. These scaffolds are also capable of regeneration through natural healing mechanisms and, because they are inert when implanted, they are classified as medical devices. This means they are required to follow a regulatory pathway that is typically faster and less costly than, for example, a pharmaceutical product.

Looking Ahead

The past year has seen significant developments in a number of areas of the business, and we are confident of building on this further in the coming year. The development of the dCELL® platform using human tissues, (e.g. seven-year data in heart valves) provides early validation of the technology and revenue opportunities, with the animal-derived constructs following on behind them. We are also moving ahead with our expansion into the US, and are currently in discussions with prospective product manufacturers and distributors, as well as exploring the possibility of clinical trials with major academic institutions and key opinion leaders to support marketing efforts in the US in 2014. Tissue Regenix has a portfolio of dCELL® Scaffolds, enabling clinicians to get the right tissue for the application area rather than trying to make one tissue type perform a multiplicity of clinical roles that it was not designed to do. As we roll out this portfolio, this clear distinction from other approaches will become an important factor in our future success.

All of these activities, as well as evaluating the feasibility of applying our pioneering dCELL® technology for use in other applications, puts Tissue Regenix in a strong position to build upon the progress achieved this year.

Antony Odell

Managing Director

13 May 2013 

Advanced Wound Care

Tissue Regenix announced in April 2013 that approval had been given for a clinical research trial of dCELL® dermis matrix in treating acute wounds.

This is an important milestone in our plans to target the global market for both chronic and acute wound care, which research firm Kalorama estimates could be worth around $21 billion by 2015.

Finding more effective ways to treat acute wounds, including surgical incisions and traumatic injuries, would save healthcare systems significant sums of money, improve patient recovery times and promote more successful healing.

The clinical study will be conducted by University Hospital of South Manchester NHS Foundation Trust and will involve a series of six-week trials on 50 healthy human patients to investigate the responsiveness of acute wounds to Tissue Regenix's dCELL® dermis matrix, and to clarify if dCELL® dermis improves the closure of acute wounds compared to "normal" wound healing and other options.

The human dermis clinical trial on chronic wounds also continues to produce positive results. The final results of the study are due for release shortly, but interim data suggested that treatment of chronic wounds with Tissue Regenix dCELL® Dermis has led to a significant reduction in the size of all wounds, with 45% of patients being completely healed. We have also begun discussions on initiating a clinical study in the USA. Early discussions with potential suppliers of the human dermis material are underway, and we also continue to develop the equivalent porcine product.

Cardiac

Pilot pre-clinical activity is continuing as we move these products along the translation path.

Several options with regard to application of the dCELL® technology to bioprosthetic heart valves are being explored. We are continuing discussions with tissue banks for the commercialisation of the dCELL® human heart valve in the EU against the background of positive clinical data for the implant. A porcine pulmonary valve is being translated from the work done at the University of Leeds, and pre-clinical work is planned for H1 2013.

We also welcomed Andrea Rausch to the cardiac team at Tissue Regenix during the year as Business Development Manager. Andrea brings with her considerable experience of the cardiac field of medicine through a number of senior sales and marketing roles.

Furthermore, Professor Francisco da Costa, the internationally renowned cardiac surgeon from Pontifical University of Parana, Brazil, and one of the company's long term clinical collaborators, continues to be at the forefront of the cardiac research field in trialling Tissue Regenix's dCELL® technology. The findings of his latest study has focused on decellularised human 'dCELL®' heart valve. The study's findings will be published in H1 2013, and will demonstrate the use of decellularised tissue engineered valves emerging as a better alternative to Right Ventricular Outflow Tract (RVOT) reconstruction, using the patented 'dCELL®' technology of Tissue Regenix.

Vascular

During the year we added a patent application related to 'Acellular Arteries', the latest in Tissue Regenix's portfolio granted through its worldwide exclusive licence from the University of Leeds.

The patent relates to the development of products to address some major indications, such as Arteriovenous ('AV') dialysis grafts and coronary artery bypass grafts ('CABG').

Furthermore, a pilot study for the AV graft is now in progress, and we remain on course with our plans for a pre-clinical study in H2 2013. In 2012, two year data was released for the existing vascular patch, and we also met with the FDA during the year to progress US approval.

Furthermore, at our technology day in October 2012, the potential advantages of the Company's dCELL® technology over other types of decellularised tissue scaffolds was underpinned by Dr Alan Dardik, Associate Professor of Surgery at Yale University. Dr Dardik has conducted pre-clinical studies of the Tissue Regenix dCELL® vascular patch, and published the results in the scientific journal PLoS ONE.

Orthopaedic

During the year we completed the pre-clinical study of the meniscus repair product, in which the results were encouraging.

We will be submitting regulatory application to start a clinical trial in Europe in H1 2014 when we have completed biomechanical testing and refined the suturing technique. The ligament repair product will be in pre-clinical studies by the end of H2 2013, and we have begun discussions with the FDA in respect of approval requirements for the US market. As we move nearer to clinical and pre-clinical trials we are developing health economic models to support later commercialisation.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 JANUARY 2013

		2013	2012
		£000	£000
OPERATING INCOME		49	109
Administrative expenses		(4,461)	(3,097)
OPERATING LOSS		(4,412)	(2,988)
Finance income		440	62
LOSS BEFORE TAXATION		(3,972)	(2,926)
Taxation		474	239
LOSS AFTER TAX ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		(3,498)	(2,687)
LOSS AND TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR		(3,498)	(2,687)
LOSS PER SHARE
Basic and diluted on loss from continuing operations		(0.55)p	(0.57)p

There are no items of other comprehensive income.  The loss for the period arises from the Group's continuing operations.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR TO 31 JANUARY 2013

	Share Capital	Share Premium	Merger Reserve	Reverse Acquisition Reserve	Issued Equity Capital	Share Based Payment Reserve	Revenue Deficit Reserve	Total
	£000	£000	£000	£000	£000	£000	£000	£000
At 31 January 2011	2,343	8,655	10,884	(7,148)	14,734	332	(8,848)	6,218
Loss and total comprehensive expense for the year	-	-	-	-	-	-	(2,687)	(2,687)
Issue of shares	919	24,094	-	-	25,013	-	(4)	25,009
Expenses on issue of shares	-	(784)	-	-	(784)	-	-	(784)
Employee interest in jointly owned shares	-	-	-	-	-	-	1	1
Share based payment expense	-	-	-	-	-	122	-	122
At 31 January 2012	3,262	31,965	10,884	(7,148)	38,963	454	(11,538)	27,879
Loss and total comprehensive expense for the year	-	-	-	-	-	-	(3,498)	(3,498)
Issue of shares	2	1	-	-	3	-	-	3
Share based payment expense	-	-	-	-	-	82	-	82
At 31 January 2013	3,264	31,966	10,884	(7,148)	38,966	536	(15,036)	24,466

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 JANUARY 2013

		2013	2012
		£000	£000
ASSETS
Non-current assets
Property, plant and equipment		238	157
TOTAL NON-CURRENT ASSETS		238	157
Current assets
Trade and other receivables		707	350
Cash and cash equivalents		24,206	28,021
TOTAL CURRENT ASSETS		24,913	28,371
TOTAL ASSETS		25,151	28,528
LIABILITIES
Current liabilities
Trade and other payables		(685)	(649)
TOTAL LIABILITIES		(685)	(649)
NET ASSETS		24,466	27,879
EQUITY
Share capital		3,264	3,262
Share premium		31,966	31,965
Merger reserve		10,884	10,884
Reverse acquisition reserve		(7,148)	(7,148)
Issue equity capital		38,966	38,963
Share based payment reserve		536	454
Revenue reserve		(15,036)	(11,538)
TOTAL EQUITY		24,466	27,879

Approved by the Board and authorised for issue on 13 May 2013

John Samuel (Executive Chairman)                  Ian Jefferson (Chief Financial Officer)

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 JANUARY 2013

		2013	2012
		£000	£000
Operating activities
Operating loss		(4,412)	(2,988)
Adjustment for non-cash items:
Depreciation of property, plant and equipment		74	62
Share based payment		82	122
Tax refunded		239	280
Operating cash outflow		(4,017)	(2,524)
(Increase)/decrease in trade and other receivables		(122)	2
Increase in trade and other payables		36	396
Net cash outflow from operations		(4,103)	(2,126)
INVESTING ACTIVITIES
Interest received		440	62
Purchases of property, plant and equipment		(155)	(30)
Net cash outflow from investing activities		285	32
FINANCING ACTIVITIES
Proceeds from issue of share capital		3	25,009
Sale of joint interest in shares to employees		-	1
Expenses on of issue of share capital		-	(784)
Net cash inflow from  financing activities		3	24,226
Increase in cash and cash equivalents		(3,815)	22,132
Cash and cash equivalents at start of year		28,021	5,889
CASH AND CASH EQUIVALENTS AT END OF YEAR		24,206	28,021

The Company's annual report and accounts for the year ended 31 January 2013 have been published today and will be posted to shareholders shortly.  The annual report and accounts are also available in electronic form for download on the Company's website, www.tissueregenix.com.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JANUARY 2013

1. Basis of preparation

The preliminary results of the year ended 31 January 2013 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies. The Financial Statements set out in this announcement do not constitute statutory accounts for the year ended 31 January 2013. The report of the auditors on the statutory accounts for the year ended 31 January 2013 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The Financial Statements for the year ended 31 January 2013 included in this announcement were authorised for issue in accordance with a resolution of the Board of Directors on 13 May 2013.

The Company is a limited liability company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

2. Significant accounting policies

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 January 2013 and applied in accordance with the Companies Act 2006.

The accounting policies adopted are consistent with those followed in the preparation of the audited financial statements of Tissue Regenix Group Plc for the year ended 31 January 2013 and are disclosed in those statements.

3. Segmental reporting

At 31 January 2013, the Group operated in one business segment, that of the development and commercialisation of innovative platform technologies in the field of tissue engineering and regenerative medicine.

To date all significant revenues comprise grant income earned in the UK.  All of the Group's assets are held in the UK and all of its capital expenditure arises in the UK.

4. Taxation

	Year to	Year to
	31 January 2013	31 January 2012
	£000	£000
Current tax:
UK corporation tax credit on losses of year	(474)	(239)
	(474)	(239)
Deferred tax:
Origination and reversal of temporary timing differences	-	-
Tax credit on loss on ordinary activities	(474)	(239)

The Group has accumulated losses available to carry forward against future trading profits of £6,850k (2012: £4,624k).  No deferred tax asset has been recognised in respect of tax losses as their recoverability is uncertain.  The unrecognised deferred tax asset would equate to £1,370k (2012: £925k)

NOTES TO THE FINANCIAL STATEMENTS continued

FOR THE YEAR ENDED 31 JANUARY 2013

5. Loss per share (basic and diluted)

Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the year excluding own shares held jointly by the Tissue Regenix Employee Share Trust and certain employees. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the year to assume conversion of all dilutive potential ordinary shares.

	Year to 31 January 2013	Year to 31  January 2012
	£000	£000
Total loss attributable to the equity holders of the parent	(3,498)	(2,687)
	No.	No.
Weighted average number of ordinary shares in issue during the period	635,276,123	366,159,076
Loss  per share
Basic and diluted on loss for the period	(0.55)p	(0.57)p

The Company has issued employee options over 18,100,725 ordinary shares and there are 17,540,386 jointly owned shares which are potentially dilutive. There is however, no dilutive effect of these issued options as there is a loss for each of the years concerned.

6. Share Capital

		Share capital	Share premium	Merger reserve	Reverse acquisition reserve	Total
	Number	£000	£000	£000	£000	£000
Total Ordinary shares of 0.5 p each as at 31 January 2011	468,597,903	2,343	8,655	10,884	(7,148)	14,734
Issued for cash	181,818,182	909	24,091	-	-	25,000
Share options exercised	1,136,376	6	3	-	-	9
Issued to Tissue Regenix Employee Share Trust	827,586	4	-	-	-	4
Expenses of issue of shares	-	-	(784)	-	-	(784)
Total Ordinary shares of 0.5p each as at 31 January 2012	652,380,047	3,262	31,965	10,884	(7,148)	38,963
Share options exercised	444,972	2	1	-	-	3
Total Ordinary shares of 0.5p each as at 31 January 2013	652,825,019	3,264	31,966	10,884	(7,148)	38,966

NOTES TO THE FINANCIAL STATEMENTS continued

FOR THE YEAR ENDED 31 JANUARY 2013

7. Movement in revenue reserves and own shares

	Retained Earnings Deficit	Own shares	Deficit Revenue Reserve
	£000	£000	£000
At 31 January 2011	(8,020)	(828)	(8,848)
Purchase of own shares	-	(4)	(4)
Employee interest in jointly owned shares	-	1	1
Loss for the year	(2,687)	-	(2,687)
At 31 January 2012	(10,707)	(831)	(11,538)
Loss for the year	(3,498)	-	(3,498)
At 31 January 2013	(14,205)	(831)	(15,036)

8. Annual report and accounts

The Company's annual report and accounts for the year ended 31 January 2013 have been published today and will be posted to shareholders shortly.  The annual report and accounts are also available in electronic form for download on the Company's website, www.tissueregenix.com.

 

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