TIDMPXS
RNS Number : 3258L
Provexis PLC
30 December 2022
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the UK Market Abuse Regulation.
With the publication of this announcement, this information is now
considered to be in the public domain.
30 December 2022
Provexis plc
UNAUDITED INTERIM RESULTS FOR SIX MONTHS TO 30 SEPTEMBER
2022
Provexis plc ("Provexis" or the "Company"), the business that
develops, licenses and sells the proprietary, scientifically-proven
Fruitflow(R) heart-health functional food ingredient, announces its
unaudited interim results for the six months ended 30 September
2022.
Highlights
-- Two new agreements secured with DSM in June 2022 for
Fruitflow, to replace the Alliance Agreement: (i) a Transfer of
Business agreement and (ii) a Premix and Market-Ready Solutions
supply agreement, both to take effect from 1 January 2023.
-- DSM's existing and prospective pipeline customers for
Fruitflow as a straight ingredient will transfer to become direct
customers of Provexis WEF 1 January 2023, and Provexis will take
over the outsourced supply chain / production process for Fruitflow
at that time. The customer transfer process from DSM to Provexis is
currently ongoing, and thus far it has seen a number of positive
interactions with existing and prospective new customers for direct
sales of Fruitflow by Provexis in 2023 and beyond.
-- New patent application filed in June 2022 relating to the use
of Fruitflow to confer health benefits in modulating the gut
microbiome of humans, following the completion of a successful
human study.
-- New partnership with DSM has been agreed relating to the gut
microbiome patent, subject to certain milestones which have been
agreed between the parties. Provexis and DSM are keen to progress
this encouraging new technology towards an early commercial launch
of products based on it.
-- Planned launch by By-Health, a circa GBP5bn listed Chinese
dietary supplement business, of a number of Fruitflow based
products in the Chinese market is progressing well, with potential
sales volumes remaining at a significant multiple of existing
Fruitflow sales. The exclusive Fruitflow supply and distribution
agreement which was agreed with By-Health in 2021 will take full
effect from 1 January 2023.
-- By-Health continues to work on an extensive regulatory
submission to the Chinese State Administration for Market
Regulation (SAMR) for Fruitflow, seeking to establish a new
permitted health function claim for foods such as Fruitflow that
can demonstrate an anti-platelet effect, addressing the aberrant
blood clots which can lead to heart attacks and strokes.
-- By-Health has made a significant investment in eight separate
studies in China, at its sole expense, in support of the Fruitflow
based products which it plans to launch in China. The five studies
which have been completed by By-Health showed excellent results in
use for Fruitflow, and provide strong evidence for By-Health in its
regulatory submissions to the SAMR for Fruitflow.
-- Total revenue for the period of GBP179k, 15% behind the prior
six month period (2021: GBP211k), primarily due to short term
lockdowns and other COVID-19 disruptions in some of the growing
markets for Fruitflow in the Asia Pacific region.
-- Cash of GBP745k at 30 September 2022 (30 September 2021: GBP982k).
Provexis Chairman Dawson Buck and CEO Ian Ford commented:
' The Company was delighted to announce the completion of two
significant agreements with DSM in June 2022, which will position
the Company extremely well for the next stage of its
development.
The Company was also pleased to announce the filing of a new
patent application for Fruitflow in June 2022, relating to the use
of Fruitflow to confer health benefits in modulating the gut
microbiome of humans. The patent application follows the completion
of a successful human study, the results of which strongly support
the use of Fruitflow for modulating gut microbiota to confer a
number of health benefits, to include a reduction in TMAO. It is
particularly encouraging to note that some potential new uses for
Fruitflow were identified in the study, and have been highlighted
in the patent application, looking to treat some major health
conditions which are beyond Fruitflow's long established and proven
use in heart-health.
The Company and DSM have had a strong long-term relationship
over the past twelve years, with the shared interest of both
companies always having been to maximise the commercial returns
that can be achieved from Fruitflow. The Company remains
appreciative of DSM's past help and support, and it looks forward
to building on this relationship in the coming years through the
new gut microbiome partnership, and through ongoing sales of
Fruitflow to DSM's Premix and Market-Ready Solutions
businesses.
The Company looks forward to welcoming and serving the majority
of DSM's existing customers for Fruitflow from January next year,
and is pleased to be taking over control of the supply chain /
production process for Fruitflow at the same time. There will be
some clear synergies from January 2023 as the Company will be
looking to sell Fruitflow to: (i) former DSM customers for
Fruitflow; (ii) DSM and its Premix and Market-Ready Solutions
businesses; (iii) new customers for Fruitflow as a straight
ingredient; and (iv) By-Health and its customers, through the
Company's long term supply and distribution agreement for Fruitflow
with By-Health. Provexis will continue to sell its Fruitflow+
Omega-3 dietary supplement product direct to consumers, and serve
its Chinese Cross-Border e-commerce distributor for this product in
China.
The Alliance Agreement business for Fruitflow is effectively now
in a period of transition and handover; the customer transfer
process from DSM to Provexis, for sales of Fruitflow from 1 January
2023 onwards, is currently ongoing and thus far it has seen a
number of very positive interactions with existing and prospective
new customers for direct sales of Fruitflow by Provexis in 2023 and
beyond.
The Company's supply and distribution agreement for Fruitflow
with By-Health, which was announced in November 2021, will take
full effect from 1 January 2023. By-Health will file its regulatory
submission to the SAMR for Fruitflow at the appropriate time,
seeking to obtain a new permitted health function claim for foods
such as Fruitflow that can demonstrate an anti-platelet effect. If
By-Health is successful in obtaining a new permitted health
function claim, it is currently expected that this would result in
some significant orders for Fruitflow, potentially at a multiple of
current total sales values.
Fruitflow is well placed to play an important role in the
Chinese cardiovascular health market under the permitted health
function claim legislation, and we look forward to working closely
with By-Health seeking to maximise the commercial success of this
agreement for the benefit of both companies.
The Company has developed a strong, long lasting and
wide-ranging patent portfolio for Fruitflow, and it owns outright
four existing patent families for Fruitflow. The new microbiome
patent application takes this to a potential total of five patent
families, with potential patent protection now running out to 2042.
The four existing patent families have a truly global footprint,
and the Company also holds other valuable intellectual property and
trade secrets for Fruitflow. The intellectual property for
Fruitflow is of fundamental importance to the Company and its
current and future commercial partners, to include DSM and
By-Health, and it underpins the numerous commercial opportunities
which the Company and its partners are pursuing for Fruitflow.
The Company expects that the new gut microbiome patent
application, and the other significant changes announced in June
2022 to the sales and supply chain structure for Fruitflow, will
have a strongly beneficial effect on the current and future
commercial prospects for Fruitflow and the business worldwide.
The Company would like to thank its customers and shareholders
for their continued support, and the Board remains positive about
the outlook for Fruitflow and the Provexis business for the second
half of the financial year and beyond. '
For further information please contact:
Provexis plc Tel: 07490 391888
Ian Ford, CEO enquiries@provexis.com
Dawson Buck, Non-executive Chairman
Allenby Capital Limited (Nominated Adviser Tel: 020 3328 5656
and Broker)
Nick Naylor / Freddie Wooding
Chairman and CEO's statement
The Company has had an active first six months of the year, and
it has made some further significant progress with the commercial
prospects of its innovative, patented Fruitflow(R) heart-health
ingredient.
DSM Nutritional Products
The Company's Alliance partner DSM Nutritional Products ('DSM')
has continued to develop the market for Fruitflow in all global
markets. More than 100 regional consumer healthcare brands have now
been launched by direct customers of DSM, and a number of further
regional brands have been launched through DSM's distributor
channels.
The Company's alliance agreement with DSM dates back to June
2010, with a contractual term which runs to 31 December 2022.
In September 2021 the Company announced that it was engaged in
constructive negotiations with DSM, working towards a new agreement
for Fruitflow for the period after 31 December 2022 to replace the
Alliance Agreement; in June 2022 the Company announced that the
parties had concluded their negotiations and had entered into (i) a
Transfer of Business agreement for Fruitflow and (ii) a Premix and
Market-Ready Solutions supply agreement for Fruitflow, both to take
effect from 1 January 2023.
The Company also announced the filing of a new patent
application in June 2022 relating to the use of Fruitflow to confer
health benefits in modulating the gut microbiome of humans. This
followed the completion of a successful human study, the results of
which strongly support the use of Fruitflow for modulating gut
microbiota to confer a number of health benefits, to include a
reduction in TMAO (trimethylamine-n-oxide).
Under the terms of the two new agreements with DSM, and the new
patent application:
-- DSM's existing and prospective pipeline customers for
Fruitflow as a straight ingredient (not a Premix or Market-Ready
solution) will transfer to become direct customers of Provexis WEF
1 January 2023.
-- DSM will help facilitate the transfer of its wholly
outsourced supply chain / production process for Fruitflow from DSM
to Provexis with effect from 1 January 2023.
-- A royalty will be payable to DSM on the gross profits
generated from Fruitflow sales to customers transferred from DSM
over the first four years of the Transfer of Business
agreement.
-- From 1 January 2023 the net profit accruing to Provexis on
sales of Fruitflow in the calendar year - on a pro-forma basis,
assuming like for like sales and margins - would be materially
ahead of the net share of the profit that would have accrued to
Provexis with like for like sales and margins under the existing
2010 Alliance Agreement; on the same pro-forma basis, assuming like
for like sales and margins, the net profit accruing to Provexis
would further increase in each of the subsequent three calendar
years.
-- A new partnership with DSM has been agreed relating to the
gut microbiome patent. This partnership will give DSM preferential
access to the use, marketing, and sale of Fruitflow based products
which are based on the patent, subject to certain milestones which
have been agreed between the parties. Provexis and DSM are keen to
progress this encouraging new technology towards an early
commercial launch of products which are based on it.
-- The results of the successful gut microbiome human study are
in the process of being submitted for publication in a peer
reviewed scientific journal. The patent application (i) states that
the results of the human study strongly support the use of
Fruitflow for modulating gut microbiota to confer a number of
health benefits, and (ii) sets out some potential new uses for
Fruitflow in treating a wide variety of human health conditions,
beyond Fruitflow's existing established use in heart-health. The
global digestive health market size was US$38 billion in 2019 and
it is projected to grow to US$72 billion in 2027 at a high
single-digit CAGR in the 2020-2027 period (see
www.fortunebusinessinsights.com/digestive-health-market-104750
).
-- Provexis will sell Fruitflow as a straight ingredient to DSM
exclusively for use in DSM's Premix Solutions and Market-Ready
Solutions businesses, with DSM then looking to sell the resulting
Premix and Market-Ready Solutions products on to its customers.
DSM's Premix and Market-Ready Solutions businesses are part of
DSM's Customized Solutions business which also offers personalised
nutrition solutions to customers, a rapidly developing growth area.
The Company looks forward to supporting DSM and its Premix and
Market-Ready Solutions customers for many years to come.
-- A number of DSM's customers for Fruitflow which are set to be
transferred to Provexis have been Fruitflow customers for several
years, including some distributor customers which sell Fruitflow on
to third parties. The Company has been progressing these sales
relationships since the Transfer of Business agreement was
announced in June 2022, and confirms it will be able to generate
new customers for Fruitflow outside the royalty arrangements with
DSM, in addition to its existing supply and distribution agreement
for Fruitflow with By-Health. The Company is in discussions with a
number of third parties seeking to progress new sales and
distribution opportunities for Fruitflow.
From 1 January 2023 the Group's sales channels for Fruitflow
will therefore include:
1. Former DSM customers for Fruitflow;
2. DSM and its Premix and Market-Ready Solutions businesses,
which will leverage the resources and relationships of DSM in some
of the major global markets;
3. New customers for Fruitflow as a straight ingredient;
4. By-Health and its customers, through the Company's long term
supply and distribution agreement for Fruitflow with By-Health;
and
5. The Group's Fruitflow+ Omega-3 dietary supplement product
which is sold direct to consumers, the Group will also look to
serve its Chinese Cross-Border e-commerce distributor for this
product in China.
An increasing number of commercial projects have been initiated
by DSM with prospective customers in recent years, including some
prospective customers which are part of global businesses, and the
total projected annual sales value of the prospective sales
pipeline for Fruitflow continues to stand at a substantial multiple
of existing annual sales.
The Alliance Agreement business for Fruitflow is now in a period
of transition and handover; the customer transfer process from DSM
to Provexis, for sales of Fruitflow from 1 January 2023 onwards, is
currently ongoing and thus far it has seen a number of very
positive interactions with existing and prospective new customers
for direct sales of Fruitflow by Provexis in 2023 and beyond.
The Company can be contacted for all Fruitflow sales enquiries
by email at fruitflow@provexis.com .
Trading summary - six months ended 30 September 2022
In the six months ended 30 September 2022 total revenues were
GBP179k, 15% behind the prior six month period (2021: GBP211k),
reflecting:
-- A decrease in the net income received from the Company's
Alliance Agreement with DSM, which fell by 28% to GBP97k in the
period (2021: GBP135k). The decrease was primarily due to short
term lockdowns and other COVID-19 disruptions in some of the
growing markets for Fruitflow in the Asia Pacific region, leading
to more erratic demand in the short term; and
-- An increase in revenue, net of sales rebates, from the
Company's Fruitflow+ Omega-3 business, including the Company's
website www.fruitflowplus.com , Amazon UK, Holland & Barrett,
and the Company's distributor for Fruitflow+ Omega-3 in China
through the CBEC channel. This business grew by 8% to GBP82k in the
period (2021: GBP76k).
Loss from operations for the period was GBP174k, 20% higher than
the prior period (2021: GBP145k).
By-Health Co., Ltd.
In November 2021 the Company announced it had entered into a
supply and distribution agreement (the 'By-Health Agreement') for
Fruitflow with By-Health, a listed Chinese dietary supplement
business with a market capitalisation of approximately GBP5
billion.
The By-Health Agreement, which followed the Company's extensive
work with By-Health over the last five years, will take full effect
from 1 January 2023 and it gives By-Health exclusive supply and
distribution rights to commercialise Fruitflow in Mainland China,
Hong Kong, Macau, Taiwan and Australia (the 'Territories').
Under the By-Health Agreement Provexis will be responsible for
the manufacture, supply and sale of Fruitflow to By-Health, and
By-Health will be responsible for the manufacture, marketing, and
sale of Fruitflow based functional food and dietary supplement
finished products in the Territories, through By-Health's extensive
sales network. By-Health will also have exclusive rights to act as
the distributor of Fruitflow as an ingredient in the
Territories.
Provexis and By-Health will seek to collaborate on research and
development projects which may result in the development and
approval of Fruitflow as a drug, for potential sale and
distribution in the Territories.
Regulatory progress in China - new permitted health function
claim
The Company has previously announced it has been working with
By-Health to support the planned launch of a number of Fruitflow
based products in the Chinese market, with potential volumes at a
significant multiple of current Fruitflow sales.
The planned launch of Fruitflow based products in the Chinese
market has been progressing well. Clinical studies conducted in
China are typically required to obtain the necessary regulatory
clearances in China, and a significant investment in eight separate
Fruitflow studies has been undertaken at By-Health's expense.
Five studies have been successfully completed in China, and two
clinical studies and one animal study are currently ongoing.
The five completed studies showed excellent results in use for
Fruitflow, and they provide strong evidence for its efficacy on
platelet function. The Chinese regulatory system for functional
health food ingredients such as Fruitflow is governed by the State
Administration for Market Regulation (SAMR), China's top market
regulator, and it is based on a defined list of 27 permitted health
function claims which brand owners are permitted to use on product
labels.
Health function claims are based on test methods and criteria
that have been systematically evaluated and verified, and it is
currently envisaged that the existing list of 27 permitted health
function claims might be reduced to a revised list of 24 permitted
claims. The SAMR provides the possibility of adding new health
function claims to the list, as long as the claim can be evaluated
and verified by the SAMR.
Under SAMR regulations functional health foods need to indicate
a relationship between a food or nutrient and a consequent health
improvement which falls under one of the permitted health function
claims.
SAMR certified functional health foods are required to use a
blue cap / blue hat logo on their product packaging, which
identifies products as approved functional health foods.
By-Health's regulatory clearance preparations for Fruitflow were
originally focussed on obtaining blue cap health claim status for
some Fruitflow based products in China, under the existing 27
permitted health function claim structure.
By-Health is now working on an extensive regulatory submission
to the SAMR for Fruitflow, seeking to establish a new permitted
health function claim for foods such as Fruitflow that can
demonstrate an anti-platelet effect, inhibiting platelet function
and conferring beneficial effects for people who are at risk of
platelet hyperactivity-associated thrombosis.
By-Health has recently updated its website (see
www.by-health.com/en/aboutus ) stating that it has completed:
'Research comprehensively in the cardiovascular health area. We
have developed a new product made with Fruitflow(R), popularly
known as 'natural Aspirin'. It helps to maintain normal platelet
aggregation.'
By-Health will file its regulatory submission to the SAMR for
Fruitflow at the appropriate time, seeking to obtain a new
permitted health function claim which would be in addition to the
currently defined list of 27 (reducing to 24) permitted claims.
Subject to the timing the new anti-platelet claim, if approved,
would therefore represent the 28th - or the 25th - permitted health
function claim in China.
If By-Health is successful in obtaining a new permitted health
function claim for functional health foods such as Fruitflow that
can demonstrate an anti-platelet effect, it is currently expected
that this would result in some significant orders for Fruitflow,
potentially at a multiple of current total sales values.
COVID-19
Fruitflow was recognised in a review article by the Frontiers in
Nutrition journal
www.frontiersin.org/articles/10.3389/fnut.2020.583080/full in 2020
which stated that nutraceuticals such as Fruitflow may serve
as:
'A safe antiplatelet prophylactic treatment for those at high
risk of COVID-19 who may also be at increased risk of thrombotic
complications and an alternative to pharmacological compounds that
may cause greater risk of bleeding.'
A review article , titled 'Platelet hyperactivity in COVID-19:
Can the tomato extract Fruitflow(R) be used as an antiplatelet
regime?'
www.sciencedirect.com/science/article/pii/S0306987720333715 was
published in 2021 by the peer-reviewed journal Medical Hypotheses ,
a leading journal which advances new discussion and innovation in
medical treatments.
The article was written by Professor Asim K Duttaroy, the
original inventor of Fruitflow, and Dr Niamh O'Kennedy, Provexis
plc's Chief Scientific Officer, and it concluded with the
suggestion that:
'Consuming Fruitflow(R), especially before or during the early
stages of COVID-19 illness, may have an effect on the severity of
illness experienced. It may particularly benefit people who are
more vulnerable to the development of endothelial / platelet
dysfunction. It is a safe dietary antiplatelet and should be
investigated as a potentially useful intervention for prevention of
thrombotic disorders in COVID-19.'
Market opportunity
A study backed by scientists from the National Center for
Cardiovascular Diseases in China which was updated in 2020 (
www.ncbi.nlm.nih.gov/pmc/articles/PMC7008101/# ) stated that:
-- the prevalence of Cardiovascular Disease ('CVD') in China has
been increasing continuously since 2006; approximately 290 million
patients in China now have CVD; and
-- two in five deaths in China are attributed to CVD, with CVD
remaining the leading cause of death in 2016.
In December 2020 the World Health Organisation reported (
www.who.int/news/item/09-12-2020-who-reveals-leading-causes-of-death-and-disability-worldwide-2000-2019
): 'Heart disease has remained the leading cause of death at the
global level for the last 20 years. However, it is now killing more
people than ever before. The number of deaths from heart disease
increased by more than 2 million since 2000, to nearly 9 million in
2019. Heart disease now represents 16% of total deaths from all
causes. More than half of the 2 million additional deaths were in
the WHO Western Pacific region.' The WHO Western Pacific region
includes China.
By-Health's long-term goal of science-based nutrition is to
achieve 'comprehensive intervention for human health' (
www.by-health.com/en/aboutus ), and Fruitflow is well placed to
provide such intervention in the Chinese cardiovascular health
market.
Fruitflow+ dietary supplement products
Fruitflow+ Omega-3 is available to purchase from the Company's
subscription focussed e-commerce website www.fruitflowplus.com ,
Amazon UK and Holland & Barrett.
The Fruitflow+ Omega-3 business grew by 8% to GBP82k in the
period (2021: GBP76k), reflecting further growth in subscriber
numbers on the www.fruitflowplus.com website, and a further order
from the Company's Chinese Cross-Border e-commerce ('CBEC')
channel.
The CBEC distribution agreement in China is separate but wholly
complementary to the Company's work with By-Health, with the CBEC
regulations enabling sales of Fruitflow+ Omega-3 in China now,
prior to the health function claim which By-Health is seeking to
secure.
Fruitflow+ Omega-3 has a social media presence on Facebook
www.facebook.com/FruitflowPlus , Instagram
www.instagram.com/fruitflowplus and Twitter
https://twitter.com/FruitflowPlus .
The Company is seeking to expand further its commercial
activities with Fruitflow+ Omega-3 and other Fruitflow+ combination
products, and it is currently in dialogue with some other potential
international direct selling customers.
Intellectual property
The Company is responsible for filing and maintaining patents
and trade marks for Fruitflow, and patent coverage for Fruitflow
now includes the following patent families which are all owned
outright by Provexis:
Patent family
Improved Fruitflow / Fruit Extracts
Improved Fruitflow / Fruit Extracts, with patents granted by the
European Patent Office in January 2017 and September 2020.
Patents have been granted in eleven other major territories to
include China and USA; and applications are at a late stage of
progression in a further six global territories, with potential
patent protection out to November 2029.
Antihypertensive (blood pressure lowering) effects
This patent was originally developed in collaboration with the
University of Oslo, and it has now been granted for Fruitflow in
Europe, the US and two other major territories. Patent applications
are being progressed in a further four major territories to include
the US and China, with potential patent protection out to April
2033.
In August 2020 the Company announced it had agreed to purchase
the background and joint foreground blood pressure lowering IP
owned by Inven2 AS, the technology transfer office at the University
of Oslo, and Provexis now owns these important patents outright,
with the licensing option originally held by Inven2 having been
cancelled.
Fruitflow with nitrates in mitigating exercise-induced inflammation
and for promoting recovery from intense exercise
Patents have been granted around Europe and in the US, Australia,
Brazil, China, Hong Kong, Israel, Japan, South Korea, the Philippines,
New Zealand and Mexico.
Further patent protection is being sought in six territories, with
potential patent protection out to December 2033.
Fruitflow for air pollution
The use of Fruitflow in protecting against the adverse effects
of air pollution on the body's cardiovascular system.
Laboratory work has shown that Fruitflow can reduce the platelet
activation caused by airborne particulate matter, such as that
from diesel emissions, by approximately one third.
US, Australian, Indonesian, Israeli and Japanese patents have been
secured and there are pending applications in 12 jurisdictions
(including the US where a further application has been filed) with
potential patent protection out to November 2037.
Fruitflow to confer health benefits in modulating the gut microbiome
of humans
The Company announced the filing of a new patent application in
June 2022 relating to the use of Fruitflow to confer health benefits
in modulating the gut microbiome of humans. This followed the completion
of a successful human study, the results of which strongly support
the use of Fruitflow for modulating gut microbiota to confer a
number of health benefits, to include a reduction in TMAO (trimethylamine-n-oxide).
This patent filing extends potential patent protection for Fruitflow
out to June 2042.
Capital structure and funding
The Company is seeking to maximise the commercial returns that
can be achieved from its Fruitflow technology, and the Company's
cost base and its resources continue to be very tightly managed.
The Company remains keen to minimise dilution to shareholders and
it is focussed on moving into profitability as Fruitflow revenues
increase, but while the Company remains in a loss-making position
it may need to raise funds in the future to meets its working
capital requirements.
Under the terms of the DSM Transfer of Business agreement which
was announced in June 2022, DSM's existing and prospective pipeline
customers for Fruitflow as a straight ingredient (not a DSM Premix
or DSM Market-Ready solution) will transfer to become direct
customers of Provexis WEF 1 January 2023.
The Company will need to hold Fruitflow in stock from 1 January
2023 onwards, to sell to new and existing customers, and the
Company has therefore agreed to purchase from DSM the remaining
stocks of Fruitflow which DSM holds on 31 December 2022. It is
intended that the Company will pay DSM for this inventory over the
course of a three month sale back period, commencing on 1 January
2023, with payments due equally (amounting to one third of DSM's 31
December 2022 inventory) on 31 January 2023, 28 February 2023 and
31 March 2023. The amount of inventory which DSM will hold at 31
December 2022 will depend primarily on DSM's sales of Fruitflow in
2022, which will be notified to the Company in late January 2023,
hence it is not currently possible to state with any certainty how
much inventory will remain at 31 December 2022, or therefore the
amount which the Company would need to pay DSM for this inventory
on 31 January 2023, 28 February 2023 and 31 March 2023.
Under the terms of the DSM Transfer of Business agreement, the
Company can elect in the first quarter of 2023 to purchase some but
not all of DSM's remaining stocks of Fruitflow at 31 December 2022,
being a decision which the Company will seek to make in the first
quarter of 2023 once the Company has a clearer understanding of (i)
the amount of stock remaining at 31 December 2022, (ii) the best
before dates of this inventory, which are currently estimated to be
favourable / long dated in light of recent production runs of new
Fruitflow material in 2022, (iii) likely customer demand in 2023
and beyond and (iv) the Company's financial resources at that
time.
The amount of stock which will remain at 31 December 2022
clearly remains uncertain as set out above, although it is
currently expected to be in excess of EUR1m (one million Euros), an
amount which - if the Company elected in the first quarter of 2023
to purchase this inventory in its entirety, which is likely to be
in the Company's best interests - would require further equity or
loan finance. Subject to the outcome of ongoing negotiations with a
third party, the Company might also be able to hold some of this
stock on a consignment basis, only paying for the stock when it was
required for sale.
Based on its current level of cash it is expected that the Group
will therefore need to raise further equity finance, or potentially
new loan finance, in the coming months, a situation which is deemed
to represent a material uncertainty related to going concern.
Considering the success of previous fundraisings and the current
performance of the business, the Directors have a reasonable
expectation of raising sufficient additional equity capital or new
loan finance to continue in operational existence for the
foreseeable future. Subject to the outcome of ongoing negotiations
with a third party, the Company might also be able to hold some of
its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale. For these reasons the
Directors continue to adopt the going concern basis in preparing
the Group's financial statements.
Outlook
The Company is pleased to report on another strong period of
progress.
The Company was delighted to announce the completion of two
significant agreements with DSM in June 2022, which will position
the Company extremely well for the next stage of its
development.
The Company was also pleased to announce the filing of a new
patent application for Fruitflow in June 2022, relating to the use
of Fruitflow to confer health benefits in modulating the gut
microbiome of humans. The patent application follows the completion
of a successful human study, the results of which strongly support
the use of Fruitflow for modulating gut microbiota to confer a
number of health benefits, to include a reduction in TMAO. It is
particularly encouraging to note that some potential new uses for
Fruitflow were identified in the study, and have been highlighted
in the patent application, looking to treat some major health
conditions which are beyond Fruitflow's long established and proven
use in heart-health.
The Company and DSM have had a strong long-term relationship
over the past twelve years, with the shared interest of both
companies always having been to maximise the commercial returns
that can be achieved from Fruitflow. The Company remains
appreciative of DSM's past help and support, and it looks forward
to building on this relationship in the coming years through the
new gut microbiome partnership, and through ongoing sales of
Fruitflow to DSM's Premix and Market-Ready Solutions
businesses.
The Company looks forward to welcoming and serving the majority
of DSM's existing customers for Fruitflow from January next year,
and is pleased to be taking over control of the supply chain /
production process for Fruitflow at the same time. There will be
some clear synergies from January 2023 as the Company will be
looking to sell Fruitflow to: (i) former DSM customers for
Fruitflow; (ii) DSM and its Premix and Market-Ready Solutions
businesses; (iii) new customers for Fruitflow as a straight
ingredient; and (iv) By-Health and its customers, through the
Company's long term supply and distribution agreement for Fruitflow
with By-Health. Provexis will continue to sell its Fruitflow+
Omega-3 dietary supplement product direct to consumers, and serve
its Chinese Cross-Border e-commerce distributor for this product in
China.
The Alliance Agreement business for Fruitflow is effectively now
in a period of transition and handover; the customer transfer
process from DSM to Provexis, for sales of Fruitflow from 1 January
2023 onwards, is currently ongoing and thus far it has seen a
number of very positive interactions with existing and prospective
new customers for direct sales of Fruitflow by Provexis in 2023 and
beyond.
The Company's supply and distribution agreement for Fruitflow
with By-Health, which was announced in November 2021, will take
full effect from 1 January 2023. By-Health will file its regulatory
submission to the SAMR for Fruitflow at the appropriate time,
seeking to obtain a new permitted health function claim for foods
such as Fruitflow that can demonstrate an anti-platelet effect. If
By-Health is successful in obtaining a new permitted health
function claim, it is currently expected that this would result in
some significant orders for Fruitflow, potentially at a multiple of
current total sales values.
Fruitflow is well placed to play an important role in the
Chinese cardiovascular health market under the permitted health
function claim legislation, and we look forward to working closely
with By-Health seeking to maximise the commercial success of this
agreement for the benefit of both companies.
The Company has developed a strong, long lasting and
wide-ranging patent portfolio for Fruitflow, and it owns outright
four existing patent families for Fruitflow. The new microbiome
patent application takes this to a potential total of five patent
families, with potential patent protection now running out to 2042.
The four existing patent families have a truly global footprint,
and the Company also holds other valuable intellectual property and
trade secrets for Fruitflow. The intellectual property for
Fruitflow is of fundamental importance to the Company and its
current and future commercial partners, to include DSM and
By-Health, and it underpins the numerous commercial opportunities
which the Company and its partners are pursuing for Fruitflow.
The Company expects that the new gut microbiome patent
application, and the other significant changes announced in June
2022 to the sales and supply chain structure for Fruitflow, will
have a strongly beneficial effect on the current and future
commercial prospects for Fruitflow and the business worldwide.
The Company would like to thank its customers and shareholders
for their continued support, and the Board remains positive about
the outlook for Fruitflow and the Provexis business for the second
half of the financial year and beyond.
Dawson Buck Ian Ford
Chairman CEO
Consolidated statement of comprehensive
income Unaudited Unaudited Audited
Six months ended 30 September 2022 six months six months year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
GBP GBP GBP
Notes
----------------------------------------- ------ ------------- ------------- ----------
Revenue 179,369 211,195 426,168
Cost of goods (26,730) (24,287) (46,119)
----------------------------------------- ------ ------------- ------------- ----------
Gross profit 152,639 186,908 380,049
Selling and distribution costs (23,974) (24,170) (45,268)
Research and development costs (107,398) (140,866) (249,694)
Administrative costs - share based
payment charges (11,318) (28,039) (67,119)
Administrative costs - other (183,955) (139,062) (317,173)
----------------------------------------- ------ ------------- ------------- ----------
Loss from operations (174,006) (145,229) (299,205)
Finance income 264 40 73
Loss before taxation (173,742) (145,189) (299,132)
Taxation - R&D tax relief: receivable
tax credit 16,108 650 58,905
Loss and total comprehensive loss for
the period (157,634) (144,539) (240,227)
------------------------------------------------- ------------- ------------- ----------
Attributable to:
Owners of the parent (155,759) (130,164) (224,250)
Non-controlling interest (1,875) (14,375) (15,977)
Loss and total comprehensive loss for
the period (157,634) (144,539) (240,227)
------------------------------------------------- ------------- ------------- ----------
Loss per share to owners of the
parent
Basic and diluted - pence 3 (0.01) (0.01) (0.01)
----------------------------------------- ------ ------------- ------------- ----------
Consolidated statement of financial
position Unaudited Unaudited Audited
30 September 2022 30 September 30 September 31 March
2022 2021 2022
Notes GBP GBP GBP
------------------------------------- ------- ------------- ------------- -------------
Assets
Current assets
Inventories 63,964 107,640 85,808
Trade and other receivables 140,809 94,349 104,443
Corporation tax asset 61,268 14,610 72,865
Cash and cash equivalents 744,551 981,657 863,873
-------------
Total current assets 1,010,592 1,198,256 1,126,989
---------------------------------------------- ------------- ------------- -------------
Total assets 1,010,592 1,198,256 1,126,989
---------------------------------------------- ------------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables (152,728) (172,568) (157,909)
Total current liabilities (152,728) (172,568) (157,909)
---------------------------------------------- ------------- ------------- -------------
Total liabilities (152,728) (172,568) (157,909)
---------------------------------------------- ------------- ------------- -------------
Total net assets 857,864 1,025,688 969,080
---------------------------------------------- ------------- ------------- -------------
Capital and reserves attributable
to
owners of the parent company
Share capital 2,217,822 2,210,822 2,210,822
Share premium reserve 18,703,321 18,675,221 18,675,221
Merger reserve 6,599,174 6,599,174 6,599,174
Retained earnings (26,130,579) (25,931,132) (25,986,138)
---------------------------------------------- ------------- ------------- -------------
1,389,738 1,554,085 1,499,079
Non-controlling interest (531,874) (528,397) (529,999)
Total equity 857,864 1,025,688 969,080
---------------------------------------------- ------------- ------------- -------------
Consolidated statement of cash flows Unaudited Unaudited Audited
30 September 2022 six months six months year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
GBP GBP GBP
Cash flows from operating activities
Loss after tax (157,634) (144,539) (240,227)
Adjustments for:
Finance income (264) (40) (73)
Tax credit receivable (16,108) (650) (58,905)
Share-based payment charge - share options 11,318 28,039 67,119
Changes in inventories 21,844 (47,064) (25,232)
Changes in trade and other receivables (36,292) 46,614 36,475
Changes in trade and other payables (5,181) 21,887 7,228
----------
Net cash flow from operations (182,317) (95,753) (213,615)
-------------------------------------------- ------------- ------------- ----------
Tax credits received 27,705 - -
Total cash flow from operating activities (154,612) (95,753) (213,615)
-------------------------------------------- ------------- ------------- ----------
Cash flow from investing activities
Interest received 190 - 78
Total cash flow from investing activities 190 - 78
-------------------------------------------- ------------- ------------- ----------
Cash flow from financing activities
Proceeds from issue of share capital
- share options 35,100 - -
Total cash flow from financing activities 35,100 - -
-------------------------------------------- ------------- ------------- ----------
Net change in cash and cash equivalents (119,322) (95,753) (213,537)
Opening cash and cash equivalents 863,873 1,077,410 1,077,410
Closing cash and cash equivalents 744,551 981,657 863,873
-------------------------------------------- ------------- ------------- ----------
Consolidated statement Total
of changes in equity Share Share Merger Retained equity Non- Total
30 September 2022 attributable
to owners controlling
capital premium reserve earnings of interests equity
the parent
GBP GBP GBP GBP GBP GBP GBP
------------------------ ---------- ----------- ---------- ------------- ------------- ------------- ----------
At 31 March 2021 2,210,822 18,675,221 6,599,174 (25,829,007) 1,656,210 (514,022) 1,142,188
Share-based charges -
share options - - - 28,039 28,039 - 28,039
Total comprehensive
expense
for the period - - - (130,164) (130,164) (14,375) (144,539)
At 30 September 2021 2,210,822 18,675,221 6,599,174 (25,931,132) 1,554,085 (528,397) 1,025,688
------------------------ ---------- ----------- ---------- ------------- ------------- ------------- ----------
Share-based charges -
share options - - - 39,080 39,080 - 39,080
Total comprehensive
expense
for the period - - - (94,086) (94,086) (1,602) (95,688)
At 31 March 2022 2,210,822 18,675,221 6,599,174 (25,986,138) 1,499,079 (529,999) 969,080
------------------------ ---------- ----------- ---------- ------------- ------------- ------------- ----------
Share-based charges -
share options - - - 11,318 11,318 - 11,318
Issue of shares - share
options exercised
23-May-22 7,000 28,100 - - 35,100 - 35,100
Total comprehensive
expense
for the period - - - (155,759) (155,759) (1,875) (157,634)
At 30 September 2022 2,217,822 18,703,321 6,599,174 (26,130,579) 1,389,738 (531,874) 857,864
------------------------ ---------- ----------- ---------- ------------- ------------- ------------- ----------
1. General information, basis of preparation and accounting
policies
General information
Provexis plc is a public limited company incorporated and
domiciled in the United Kingdom (registration number 05102907). The
address of the registered office is 2 Blagrave Street, Reading,
Berkshire RG1 1AZ, UK.
The main activities of the Group are those of developing,
licensing and selling the proprietary, scientifically-proven
Fruitflow(R) heart-health functional food ingredient.
Basis of preparation
This condensed financial information has been prepared using
accounting policies consistent with International Financial
Reporting Standards in the European Union (IFRS).
The same accounting policies, presentation and methods of
computation are followed in this condensed financial information as
are applied in the Group's latest annual audited financial
statements, except as set out below. While the financial figures
included in this half-yearly report have been computed in
accordance with IFRS applicable to interim periods, this
half-yearly report does not contain sufficient information to
constitute an interim financial report as that term is defined in
IAS 34.
Use of non-GAAP profit measure - underlying operating profit
The directors believe that the operating loss before share based
payments measure provides additional useful information for
shareholders on underlying trends and performance. This measure is
used for internal performance analysis. Underlying operating loss
is not defined by IFRS and therefore may not be directly comparable
with other companies' adjusted profit measures. It is not intended
to be a substitute for, or superior to IFRS measurements of
profit.
The interim financial information does not constitute statutory
accounts as defined in section 434 of the Companies Act 2006 and
has been neither audited nor reviewed by the Company's auditors
James Cowper Kreston pursuant to guidance issued by the Auditing
Practices Board.
The results for the year ended 31 March 2022 are not statutory
accounts. The statutory accounts for the last year ended 31 March
2022 were approved by the Board on 29 September 2022 and are filed
at Companies House. The report of the auditors on those accounts
was unqualified, contained an emphasis of matter with respect to
going concern, and did not contain a statement under section 498 of
the Companies Act 2006.
The interim report for the six months ended 30 September 2022
can be downloaded from the Company's website www.provexis.com.
Further copies of the interim report and copies of the 2022 annual
report and accounts can be obtained by writing to the Company
Secretary, Provexis plc, 2 Blagrave Street, Reading, Berkshire RG1
1AZ, UK.
This announcement was approved by the Board of Provexis plc for
release on 30 December 2022.
Going concern
Under the terms of the DSM Transfer of Business agreement which
was announced in June 2022, DSM's existing and prospective pipeline
customers for Fruitflow as a straight ingredient (not a DSM Premix
or DSM Market-Ready solution) will transfer to become direct
customers of Provexis WEF 1 January 2023.
The Company will need to hold Fruitflow in stock from 1 January
2023 onwards, to sell to new and existing customers, and the
Company has therefore agreed to purchase from DSM the remaining
stocks of Fruitflow which DSM holds on 31 December 2022. It is
intended that the Company will pay DSM for this inventory over the
course of a three month sale back period, commencing on 1 January
2023, with payments due equally (amounting to one third of DSM's 31
December 2022 inventory) on 31 January 2023, 28 February 2023 and
31 March 2023. The amount of inventory which DSM will hold at 31
December 2022 will depend primarily on DSM's sales of Fruitflow in
2022, which will be notified to the Company in late January 2023,
hence it is not currently possible to state with any certainty how
much inventory will remain at 31 December 2022, or therefore the
amount which the Company would need to pay DSM for this inventory
on 31 January 2023, 28 February 2023 and 31 March 2023.
Under the terms of the DSM Transfer of Business agreement, the
Company can elect in the first quarter of 2023 to purchase some but
not all of DSM's remaining stocks of Fruitflow at 31 December 2022,
being a decision which the Company will seek to make in the first
quarter of 2023 once the Company has a clearer understanding of (i)
the amount of stock remaining at 31 December 2022, (ii) the best
before dates of this inventory, which are currently estimated to be
favourable / long dated in light of recent production runs of new
Fruitflow material in 2022, (iii) likely customer demand in 2023
and beyond and (iv) the Company's financial resources at that
time.
The amount of stock which will remain at 31 December 2022
clearly remains uncertain as set out above, although it is
currently expected to be in excess of EUR1m (one million Euros), an
amount which - if the Company elected in the first quarter of 2023
to purchase this inventory in its entirety, which is likely to be
in the Company's best interests - would require further equity or
loan finance. Subject to the outcome of ongoing negotiations with a
third party, the Company might also be able to hold some of this
stock on a consignment basis, only paying for the stock when it was
required for sale.
Based on its current level of cash it is expected that the Group
will therefore need to raise further equity finance, or potentially
new loan finance, in the coming months, a situation which is deemed
to represent a material uncertainty related to going concern.
Considering the success of previous fundraisings and the current
performance of the business, the Directors have a reasonable
expectation of raising sufficient additional equity capital or new
loan finance to continue in operational existence for the
foreseeable future. Subject to the outcome of ongoing negotiations
with a third party, the Company might also be able to hold some of
its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale.
For these reasons the Directors are of the opinion that at 30
December 2022, the Group and Company's liquidity and capital
resources are adequate to deliver the current strategic objectives
and 2023 business plan and that the Group and Company remain a
going concern.
Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 31 March 2022, as
described in those annual financial statements.
2. Segmental reporting
The Group's operating segments are determined based on the
Group's internal reporting to the Chief Operating Decision Maker
(CODM). The CODM has been determined to be the Board of Directors
as it is primarily responsible for the allocation of resources to
segments and the assessment of performance of the segments. The
performance of operating segments is assessed on revenue.
The CODM uses revenue as the key measure of the segments'
results as it reflects the segments' underlying trading performance
for the financial period under evaluation. Revenue is reported
separately to the CODM and all other reports are prepared as a
single business unit.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
DSM Alliance Agreement 97,194 135,188 281,899
Fruitflow+ Omega-3 82,175 76,007 144,269
179,369 211,195 426,168
------------------------ ------------- ------------- ---------
3. Earnings per share
Basic earnings per share amounts are calculated by dividing the
profit attributable to owners of the parent by the weighted average
number of ordinary shares in issue during the period.
The loss attributable to equity holders of the Company for the
purpose of calculating the fully diluted loss per share is
identical to that used for calculating the basic loss per share.
The exercise of share options would have the effect of reducing the
loss per share and is therefore anti-dilutive under the terms of
IAS 33 'Earnings per Share'.
Basic and diluted loss per share amounts are in respect of all
activities.
There were 171,500,000 share options in issue at 30 September
2022 (2021: 168,500,000) that are currently anti-dilutive and have
therefore been excluded from the calculations of the diluted loss
per share.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Loss for the period attributable
to owners of the parent - GBP 155,759 130,164 224,250
Weighted average number of shares 2,215,794,201 2,210,821,523 2,210,821,523
Basic and diluted loss per share
- pence 0.01 0.01 0.01
----------------------------------- -------------- -------------- --------------
4. Share capital and Total Voting Rights
At 30 December 2022, the date of this announcement, the
Company's issued share capital comprises 2,217,821,523 ordinary
shares of 0.1 pence each, each with equal voting rights. The
Company does not hold any shares in treasury and therefore the
total number of ordinary shares and voting rights in the Company is
2,217,821,523.
The above figure may be used by shareholders in the Company as
the denominator for the calculations by which they will determine
if they are required to notify their interest in, or change to
their interest in, the share capital of the Company under the FCA's
Disclosure Guidance and Transparency Rules.
5. Cautionary statement
This document contains certain forward-looking statements with
respect to the financial condition, results and operations of the
business. These statements involve risk and uncertainty as they
relate to events and depend on circumstances that will incur in the
future. Nothing in this interim report should be construed as a
profit forecast.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
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END
IR WPGBCPUPPURU
(END) Dow Jones Newswires
December 30, 2022 03:53 ET (08:53 GMT)
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