TIDMNSCI
RNS Number : 8784K
NetScientific PLC
27 September 2016
NetScientific plc
("NetScientific" or the "Group")
NetScientific Interim Financial Information for the six months
ended 30 June 2016
London, UK - 27 September 2016: NetScientific plc (AIM: NSCI),
the transatlantic healthcare IP commercialisation Group, today
announces its interim results for the six months ended 30 June
2016.
Operational highlights
Portfolio progress
-- Vortex BioSciences
o Positive data presented at American Association for Cancer
Research (AACR) demonstrating the ability of Vortex's VTX-1
technology to rapidly collect highly enriched populations of
circulating tumour cells (CTCs), undamaged by labels or reagents,
for colorectal and prostate cancer research
o Co-founder, Professor Dino Di Carlo, received the US
Presidential Early Career Award for Scientists and Engineers, the
highest honour bestowed by the United States Government for
accomplishments in science and engineering
o Appointment of Dr Massimo Cristofanilli as Chairman of
Scientific Advisory Board
-- Wanda
o Collaboration with Dignity Health to launch the digital health
oncology care platform OncoVerse
o New contract with Health Resource Solutions to use WANDA's
chronic condition digital management platform to provide improved
at home care to its patients
o Formed Scientific Advisory Board including distinguished
physicians, health economists, scientists and technologists
-- ProAxsis
o Formed Scientific Advisory Board including world renowned
clinicians and researchers in the field of chronic respiratory
disease
-- Glycotest
o Formed Medical Advisory Board including leading experts in
liver disease to advise on the development of diagnostic test for
liver related diseases
-- PDS Biotechnology
o Positive Phase I study results for its PDS0101 immunotherapy
for HPV-related cancers and initiates planning for upcoming Phase
II clinical trials in several HPV-related cancers
o Signed a Co-operative Research and Development Agreement with
the National Cancer Institute, a division of the US National
Institutes of Health, to co-develop novel cancer immunotherapies
through Phase II clinical trials
o Appointed Dr Robert Shepard, M.D., F.A.C.P. as Chief Medical
Officer and Dr Panna L. Dutta, Ph.D. as Vice President of Drug
Development and Manufacturing
o NetScientific made further investment of $500,000 into PDS
Biotechnology
Corporate highlights
-- Board and management team bolstered with the appointment of
Professor Stephen Smith as Non-Executive Director and Ian
Postlethwaite as Chief Financial Officer and Board Director
Financial highlights
-- Loss after tax of GBP6.4m (H1 2015: loss GBP5.3m) reflecting development stage of portfolio
-- Available cash resources of GBP15.9m (at 31 December 2015: GBP23.2m)
Post period-end highlights
-- Wanda
o Launch of myWanda, the first and only mobile application aimed
at empowering women to improve heart health
o Two new sales contracts agreed with: A to Z Home Health Care,
Inc and 24Hr HomeCare demonstrating early commercial success
o Appointment of Dr Suzanne Steinbaum as Medical Director
-- Vortex BioSciences
o Exclusively licensed four patents covering a novel cell
electroporation technology from Harvard University
-- Glucosense
o Reproduction of earlier promising results proved difficult and
the Company has decided not to progress with further clinical
testing.
Sir Richard Sykes, Executive Chairman of NetScientific,
said:
"NetScientific has undergone a transformation under the
leadership of Francois Martelet, with the rationalisation of the
portfolio and restructuring of the management team, resulting in a
streamlined Group focused on IP commercialisation. The portfolio
focus has been totally revitalised with our core portfolio
companies, Wanda, Vortex Biosciences, Glycotest and ProAxsis,
making excellent progress on their paths towards value
realisation."
Francois R Martelet, CEO of NetScientific, said:
"During the period I am delighted to say that four of our core
portfolio companies made significant operational and development
progress, positioning themselves optimally to initiate external
financing rounds with the goal of providing significant value
inflection points upon completion."
Conference call for analysts
A briefing for analysts will be held at the offices of Stifel
Nicolaus Europe at 150 Cheapside, London EC2V 6ETat 12.00 on 27
September 2016.
There will be a simultaneous live conference call with Q&A
and the presentation will be available on the Group's website at
http://netscientific.net/
Please visit the website approximately 10 minutes before the
conference call to download the presentation slides. Conference
call details:
Participant dial-in: 08006940257
International dial-in: +44 (0) 1452 555566
Participant code: 61327404
An audio replay file will be made available shortly afterwards
via the Group's website: http://netscientific.net/investors
For more information, please contact:
NetScientific
François R. Martelet, M.D., CEO
Ian Postlethwaite, CFO Tel: +44 (0)20 3514 1800
Stifel Nicolaus Europe Limited (NOMAD and broker)
Jonathan Senior/ David Arch/ Ben Maddison Tel: +44 (0)20 7710 7600
Consilium Strategic Communications
Mary-Jane Elliott / Chris Gardner / Jessica Hodgson Tel: +44 (0)20 3709 5700
/ Chris Welsh / Laura Thornton
netscientific@consilium-comms.com
About NetScientific Plc
NetScientific is a transatlantic healthcare IP commercialisation
Group focused on improving the health and well-being of people with
chronic diseases.
For more information, please visit the website at
www.netscientific.net
Overview & Strategy
NetScientific's business strategy is based on funding and
building game changing life science companies towards value
inflection points and eventual exit, potentially through a trade
sale or public listing. The Group sources opportunities from global
institutions and its extensive healthcare network. In the early
stages of a portfolio company's development the Group provides
extensive management support including technical guidance,
administrative support, legal, IP, commercial expertise and finance
capabilities. As the portfolio companies mature through key
milestones the Group will recruit experienced industry leading CEOs
to drive the next phase of growth, attract additional external
capital and secure favourable exits.
Portfolio Review
As at 30 June 2016, the Group had five investments in which it
has a controlling interest: Vortex Biosciences, Inc., Wanda, Inc.,
ProAxsis Ltd, Glycotest, Inc. and Glucosense Diagnostics Limited.
It also has a material investment in PDS Biotechnology
Corporation., and five seed stage Investments: EpiBone Inc., G-Tech
Inc., Longevity Biotech Inc., Neumitra Inc., CytoVale Inc.
The Group will continue to focus on its portfolio companies and
manage the remaining portfolio, seeking to maximise shareholder
return in the form of capital growth. However, there are no fixed
targets for the length of time during which an investment may be
held, as this will be dependent both on progress and availability
of funding, with a view to maximising shareholder value and
generating funds for re-investment in the pipeline.
Portfolio Companies
During the first six months of the year, the Group's core
portfolio companies have made significant progress.
Vortex Biosciences
Vortex Biosciences is a US based cancer diagnostic company,
developing a novel liquid biopsy automated instrument (VTX-1) and
microfluidic cartridge for the isolation of circulating tumour
cells from whole blood without the need for any pre-processing of
the blood.
The label-free technology enables high purity and collection
efficiency of intact circulating tumour cells in less than an hour.
The technology enables researchers and clinicians to non-invasively
capture, identify, analyse and enumerate tumour cells for use in
downstream clinical applications, such as cancer diagnosis and
monitoring, personalised medicine, drug development, and cancer
research in the estimated US$28.6 billion US liquid biopsy market
(Piper Jaffrey Investment 2015 Liquid Biopsy Report, September
2015).
In the first half of 2016, Vortex evolved into a more structured
company implementing the phase gate methodology into the research
and development process. The VTX-1 instrument and the integrated
microfluidic cartridge moved from feasibility into late stage
development. The Company engaged with an engineering services and
manufacturing partner and are progressing with them on systems
integration and design for manufacturability. The Company has
successfully completed the safety testing of the VTX-1 and is
proceeding with FDA and CE Mark registrations.
Vortex has successfully completed a freedom to operate analysis
of its patent portfolio and determined it is in a strong IP
position. Additionally, Vortex has recently completed the
submission of two additional patents bringing the patent pending
total to 10 patents.
Vortex has made five announcements this period including the
reporting of the presentation of clinical data at the AACR
Conference and the introduction of the VTX-1 liquid biopsy system
and the formation of a world class SAB chaired by Dr Massimo
Cristofanelli to help direct clinical strategy.
Vortex continues to drive towards its key milestone of
commercial launch into the clinical research market in the first
quarter of 2017.
NetScientific shareholding in Vortex is 95% and as at 30 June
2016, the Group has invested GBP9.4 million. Grant funding received
to develop the underlying technology, prior to Vortex's formation
was GBP1.6 million.
Post period end events
In August, Vortex licensed a series of four patents that cover a
novel cell electroporation technology from Harvard University.
Vortex will be combining the cell electroporation technology with
their CTC enrichment technology to offer rapid CTC bioassays and
other applications where CTC permeabilisation would be valuable.
Cell electroporation is a technique in which an electrical field is
applied to cells in order to increase the permeability of the cell
membrane, allowing chemicals, drugs, proteins, or DNA to be
introduced into the cell. The novel approach licensed by Vortex
leverages the microscale vortices created by the Vortex technology.
Since the cells are orbiting through the electric field, the
intensity applied to each cell is equivalent, resulting in more
consistent electroporation without damaging the cells. The
microscale vortices also serve to increase flow through the
membrane pores created, resulting in improved uptake into the
cells.
Additionally, in August, Vortex appointed leading experts to its
newly formed SAB: Jonathan Goldman, Director of Clinical Trials in
Thoracic Oncology and the Associate Director of Drug Development at
UCLA Health; Stanley Frankel, M.D., Corporate Vice President, Head,
Immuno-oncology Clinical Research & Development, Celgene; and
Dino Di Carlo, Ph. D., Director, Cancer Nanotechnology Program
Jonsson Comprehensive Cancer Center and Professor in the Department
of Bioengineering, UCLA. These leading experts join Massimo
Cristofanilli, SAB Chairman, with the mission of providing valuable
scientific and clinical insights, along with strategic guidance in
decision-making to support the development and commercialization of
Vortex's CTC enrichment system for both the research and diagnostic
markets.
Wanda
Wanda is a San Francisco-based digital health company
commercialising advanced clinical decision support software. Wanda
aims to significantly reduce hospitalisation risk, and improve the
quality of life, for people with chronic conditions, with the
initial target indication being congestive heart failure (CHF). In
the US chronic disease accounts for over 80% of the total health
care bill and represents a US$1.4 trillion expenditure, a
significant proportion of which is avoidable through better
management and appropriate clinical interventions.
In H1 2016 Wanda signed a contract with a leading US hi-tech
home nursing and therapy services agency, Health Resource Solutions
('HRS') for the use of its chronic condition management product and
the agreement is demonstrating early signs of commercial success.
In addition, Wanda signed a collaborative agreement with the fifth
largest health provider organisation in the US (Dignity Health) to
launch its new oncology platform (Oncoverse).
With a new experienced CEO in place, a world-class Silicon
Valley team recruited and commercial products on the market, Wanda
now plans to seek external funding to capitalise on the significant
opportunities in the digital healthcare space.
Wanda formed a scientific advisory board to provide thought
leadership and strategic guidance to the management team. Board
members include distinguished physicians, health economists,
scientists, and technologists committed to advancing clinical
outcomes for individuals with chronic disease.
NetScientific shareholding in Wanda is 71.3% and as of 30 June
2016, the Group has invested GBP8.0 million. Grant funding received
to develop the underlying technology, prior to Wanda's formation,
was GBP7.7 million.
Post period end events
In July, Wanda appointed Dr Suzanne Steinbaum as Chief Medical
Officer. Dr Steinbaum is a Fellow of the American College of
Cardiology and a Fellow of the American Heart Association, and has
been trained in both Cardiology and Preventative Cardiology. She is
also a national spokesperson for the American Heart Association's
'Go Red for Women' campaign and chairs 'Go Red for Women' in New
York City. She will lend her world-class expertise and leadership
to further Wanda's mission of empowering users to improve their own
health through data-driven insights and personalised guidance.
Wanda has broadened its commercialisation strategy to include a
direct to consumer offering with the launch of myWanda, the first
and only mobile application specifically aimed at empowering women
to improve the health of their hearts, an innovative technology
solution that stands out among health apps and demonstrates the
potential to improve health, quality care, and convenience for
women. myWanda is the company's first consumer app, featuring a
leading-class personalised communication strategy that makes it
easy for women to receive support, education, and guidance.
myWanda is already enjoying interest from large employers,
especially those in healthcare, hoping to promote myWanda to their
employees, members and communities. Such relationships with
healthcare organisations are expected to facilitate the
introduction and adoption of Wanda's core commercial solutions,
which are designed to prevent costly and disruptive hospital
readmissions for those suffering with chronic diseases. The launch
of myWanda expands Wanda's mission to proactively interact with
people at various phases in the progression of disease from
earliest risk identification and prevention through diagnosis and
treatment. Most importantly, Wanda directly addresses the growing
demand for science-driven solutions for post-acute and home-centred
care.
Additionally, Wanda continued to display success in the business
to business segment by announcing a further new customer, US based
A to Z Home Health Care, Inc. who plan to deploy Wanda's predictive
analytics and behavioural guidance to improve outcomes and enhance
patient satisfaction.
ProAxsis
ProAxsis is a Northern Ireland-based medical diagnostics
company, developing a range of laboratory assays and point-of-care
tests designed for the capture, detection and measurement of active
protease biomarkers of diseases. The rapid and easy-to-use tests
ProAxsis has developed incorporate patented ProteaseTags(TM); smart
molecules which trap an active protease within a complex biological
sample and enable a visual readout of its presence. While the
potential users are wide-ranging, the initial applications for the
technology are focused on managing chronic respiratory diseases
such as bronchiectasis, cystic fibrosis (CF) and chronic
obstructive pulmonary disease (COPD), where exacerbations have a
major impact on the long-term prognosis of patients, as well as
creating a huge burden on healthcare services.
Since the start of 2016, Dr David Ribeiro (CEO) has built the
core management team, with the permanent appointments of one of the
company co-founders, Professor Brian Walker, as Chief Scientific
Officer, and Dr Kelly Moffitt as Senior Project Manager. In
addition, the company has recruited three R&D scientists and
its first field-based commercial team member. ProAxsis will move in
to a new purpose-built laboratory at Catalyst Inc. (formerly the
Northern Ireland Science Park) in August 2016.
ProAxsis has continued to make excellent progress in the first
half of 2016 with the company's ProteaseTag(TM) Active Neutrophil
Elastase Immunoassay gaining significant traction amongst both
academic research centres and respiratory-focused pharmaceutical
companies. The company has presented abstracts on its
ProteaseTag(TM) technology at a variety of scientific congresses,
including the American Thoracic Society (San Francisco, May 2016)
and the European Cystic Fibrosis Society (Basel, June 2016). In
addition, the company remains on track to commercialise its
point-of-care test for neutrophil elastase (NEATstik) in the first
half of 2017, and has immunoassays for several other protease
targets in the late stages of R&D. In March 2016, ProAxsis
announced the formation of its first Scientific Advisory Board,
with Professor Stuart Elborn, formerly President of the European
Cystic Fibrosis Society, as the chairman.
NetScientific's shareholding in ProAxsis is 56.5% and as at 30
June 2016, the Group has invested GBP0.78 million. The company will
seek to raise further funds in the second half of 2016, principally
to allow commercialisation of its point-of-care test for neutrophil
elastase.
Glycotest
Glycotest is a US based liver diagnostics company seeking to
commercialise new and unique blood tests for life threatening liver
cancers and fibrosis-cirrhosis with exclusive worldwide rights to
over 50 patent-protected serum protein biomarkers. Glycotest's lead
product is its HCC panel, a biomarker panel driven by a proprietary
algorithm for curable early-stage hepatocellular carcinoma (HCC),
the most common form of primary liver cancer. The market for HCC
testing is large and growing with, currently three million patients
and in excess of US$800m in the US alone.
In H1 2016, Glycotest carried out a head-to-head clinical
evaluation of the HCC Panel compared with alpha-fetoprotein(AFP,
the current standard) in a 127 patient sample set independent of
the 208 patient sample set originally used in the 2015 feasibility
study. The objective of the clinical study was to assess the
ability of the HCC Panel or AFP to discriminate patients with HCC,
stratified by stage, from 'at-risk' patients in the control group
without HCC. Consistent with the experience from the feasibility
study performed in 2015, the results of this study demonstrated the
excellent performance of the Glycotest HCC Panel and its ability to
detect early-stage liver cancer significantly better than the AFP
blood test.
In the first quarter of 2016, Glycotest created a Medical
Advisory Board consisting of experts in hepatology and molecular
diagnostics and has subsequently had meetings to discuss the use of
the HCC Panel. In addition, Glycotest has had several meetings with
other Key Opinion Leaders (KOL) from several countries that are
specialized in liver cancer to garner support and feedback on the
HCC Panel and its potential use as a surveillance tool used to
monitor patients at a higher risk for hepatocellular carcinoma
(HCC). The aim is to accelerate commercialisation by seeking
additional external financing to develop commercial grade kits for
use in a CLIA laboratory to be opened in 2017/2018. Glycotest has
been meeting with potential investors and is hoping to close a
Series A financing by the end of 2016.
NetScientific shareholding in Glycotest is 87.5% and as at 30
June 2016, the Group has invested GBP1.8 million. Grant funding
received to develop the underlying technology, prior to Glycotest's
formation, was GBP5.9 million.
Glucosense
Glucosense is developing a non-invasive glucose sensor, which
has a number of potential applications as a replacement for current
invasive tests that are inconvenient and uncomfortable for the
patient. These include a partial replacement for finger-prick
testing, continuous non-invasive glucose monitoring and as a
wearable hypoglycaemia (low blood sugar)-alert device. According to
the International Diabetes Federation, in 2015 there were an
estimated 415 million adults worldwide with diabetes, including 193
million who are undiagnosed, and a further 318 million adults
estimated to have impaired glucose tolerance.
In the period, the company completed the planned in vitro
testing of a more advanced generation prototype to evaluate the
change in fluorescence lifetime over a range of photonic chips in
order to select the optimum composition for clinical testing.
However, it has proven difficult to reproduce the promising early
results showing a correlation of the fluorescence lifetime with the
glucose levels in blood. Based on the results of these in vitro
experiments the Company has decided not to progress with further
clinical testing.
NetScientific shareholding in Glucosense is 60.7% and as at 30
June 2016, the Group has invested GBP0.7 million.
Minority Investments
PDS Biotechnology
PDS Biotechnology is a clinical stage immuno-oncology company
committed to the development of simpler, safer and more effective
immunotherapies. An example of the company's approach is the
Versamune(R) T-cell activating platform, the first immuno-oncology
technology to successfully combine the three critical attributes of
effective immunotherapies in a simple nanoparticle, whilst also
eliminating the potentially debilitating toxicities of some of the
leading immunotherapy approaches. PDS Biotechnology's oncology
pipeline includes products for prostate, ovarian, breast and
colorectal cancers with its lead PDS0101 program for several
HPV-related cancers.
In the period, the Company appointed Dr Robert Shepard, M.D.,
F.A.C.P. as Chief Medical Officer, and Dr Panna L. Dutta, Ph.D. as
Vice President of Drug Development and Manufacturing. The Company
has also signed a Cooperative Research and Development Agreement
(CRADA) with the National Cancer Institute (NCI), an Institute of
the U.S. National Institutes of Health. Under the CRADA, PDS and
NCI aim to co-develop several immunotherapies through Phase II
clinical trials to be initiated in 2016 and 2017, utilising
combinations of Versamune(R) with NCI- and PDS-sourced
tumour-related proteins or their fragments recognized by the immune
system (antigens) in prostate, breast, and HPV-related cancers.
PDS Biotechnology completed a successful Phase I clinical study
of its lead cancer immunotherapy, PDS0101, focused on the treatment
of HPV-induced cancers. These include head and neck, anal and
cervical cancer, as well as anal, vaginal, penile, vulvar and
cervical pre-cancerous neoplasias. PDS0101 is based on the
company's proprietary Versamune(R) platform, which is being applied
to multiple immuno-oncology products. The PDS010 Phase I study was
performed in subjects with cervical neoplasia infected with
high-risk cancer-causing strains of HPV. Key study goals included
evaluation of human safety and tolerability, and confirmation of
the Versamune(R) platform's mechanism of action that causes
induction of high levels of active HPV-specific killer T-cells. The
Phase I study demonstrated that PDS0101 successfully overcomes a
key immunotherapy obstacle by efficiently accessing the
immunological pathway known as MHC Class-I, necessary in humans to
train and activate a population of T-cells known as killer T-cells
to target cancers containing specific 'cancer proteins'.
NetScientific shareholding in PDS Biotechnology is 14.85% and as
at 30 June 2016, the Group has invested a total of GBP2.1 million -
GBP1.8 million in shares and GBP375k in loans.
Seed Investments
In line with the refocused strategy on IP commercialisation, the
Group intends to source future opportunities from global
institutions and its extensive healthcare network. Going forward
the Group does not intend to source seed stage investments from
technology incubators in which it does not act as an active manager
with a significant shareholding in the company. The legacy seed
investment portfolio will continue to be monitored and
announcements made when appropriate.
Seed Investment Portfolio
G-Tech: US digital health company developing disposable
wearable patches for monitoring functional
gastric disorders.
EpiBone: US spin-out of Columbia University, focussed
on producing patient specific, living bone
and osteochondral tissues for anatomically
challenging defects.
Longevity US developer of a novel class of therapeutics
Biotech: which incorporate non-natural amino acids
called Hybridites(TM) used in clinical trials
for CNS.
CytoVale: US diagnostics company developing an instrument
to measure the mechanical properties of
cells for use in diagnosing and monitoring
certain conditions such as sepsis (severe
infections).
Neumitra: Develops embedded biomodules to accurately
and continuously measure how the autonomic
nervous system is affected by daily stresses,
to establish the relationship between brain
health and performance. Their internet-based
analytics platform is designed to preserve
participant anonymity while uncovering health
risk factors worldwide.
Strengthened Board and Management Team
The Group was pleased to announce the appointment of Professor
Stephen Smith as Non-Executive Director in February 2016. Stephen
has held senior leadership roles in the NHS and academia. He has
had a long and distinguished career as a clinician scientist, Head
of Department, Dean and CEO with the Medical Research Council,
University of Cambridge, Imperial College, London and Imperial
College Healthcare NHS Trust. During his career, Stephen has also
spun two companies out of Cambridge - Metris Therapeutics Ltd and
GNI Group Ltd. GNI was established as a start up in Japan in 2001
and successfully achieved an Initial Public Offering (IPO) on the
Tokyo Stock Exchange six years later.
Ian Postlethwaite was appointed as Chief Financial Officer (CFO)
and Board Director in June 2016. He brings over 14 years'
experience of the healthcare sector and capital markets and has a
proven track record to delivering revenue growth and funding
clinical development. Ian had been the Finance Director of Allergy
Therapeutics plc for 14 years and was a significant contributor to
the success of the company. During this time Allergy Therapeutics
listed on AIM, successfully concluded a number of fund raises, and
grew revenue to c. GBP48m. Peter Thoms resigned as CFO and departed
from the Board in January 2016 in order to pursue new challenges.
Peter had been with the Group since inception and has been heavily
involved in building the current business.
We wish to thank the past Director for his valuable
contributions to NetScientific.
Financial Results
Revenue booked in in the period of GBP359k (H1 2015: GBP55k)
mainly constitutes sales made by Wanda to its associate
Oncoverse.
Research and development expenditure for the period, which was
largely by the subsidiary portfolio companies, was GBP3.7 million
(H1 2015: GBP3.0 million). The rise reflects the increased level of
investment undertaken to drive the underlying technologies/products
towards commercialisation, primarily due to third party R&D
costs at Vortex on the development of the VTX-1 instrument. Other
administrative costs include central costs incurred in managing the
portfolio companies and pipeline investments, corporate costs and
sales and marketing/administrative costs incurred by the portfolio
companies. These costs for the period increased to GBP2.4 million
(H1 2015: GBP1.5 million). The increase was due to the recruitment
of CEO's in late 2015/early 2016 in all core portfolio companies
apart from Glucosense and the recruitment/creation of sales,
marketing and customer services departments in Wanda and
Vortex.
Share of loss in associates of GBP122k (H1 2015: GBPnil)
represents the Group's share of Oncoverse's loss for the period,
which incidentally principally arises from the supply of software
by Wanda.
Following a review of the Group's strategy and portfolio to
focus on core projects, Triventis Health LLC and SwissScientific SA
were disposed of during the period. Loss in the period from
discontinued operations of GBP258k (H1 2015: GBP961k).
The after-tax loss before discontinued operations was GBP6.1
million (H1 2015: GBP4.4 million).
The cash balance as at 30 June 2016 was GBP15.9 million (30 June
2015: GBP11.1 million, 31 December 2015: GBP23.2 million) and the
cash outflow for the period was GBP7.6 million (H1 2015: GBP5.8
million).
Outlook
Over the six-month period under review, the Group made
significant progress with its portfolio companies, some of which
are reaching commercialisation and which offer scope for
significant value creation. The Group has ambitions to strengthen
its transatlantic focus through organic and strategic growth,
actively managing the portfolio and replenishing the pipeline with
disruptive chronic disease opportunities. Delivering near-term
milestones remains a focus with key deliverables including:
completing external financing for Wanda/Glycotest, a product launch
for Vortex and ProAxsis achieving a CE mark for its NEATstik
point-of-care device.
Sir Richard Sykes François R. Martelet, M.D.
Non-Executive Director and Chairman Chief Executive Officer
27 September 2016 27 September 2016
Unaudited
Unaudited Six months Audited
Six months ended Year ended
Continuing Operations ended 30 June 31 December
Notes 30 June Restated Restated
2016 2015 2015
GBP GBP GBP
Revenue 359,243 55,000 76,160
Cost of sales (149,690) (39) (6,447)
------------------------------------- -------- -------------- -------------- ---------------
Gross profit 209,553 54,961 69,713
Other operating income 3,575 36,604 43,864
Research and development
costs (3,729,685) (2,960,972) (7,256,285)
Selling, general and administrative
costs (2,403,353) (1,462,270) (2,863,056)
Other costs 2 (140,530) (92,758) (886,479)
Loss from operations (6,060,440) (4,424,435) (10,892,243)
Finance income 52,495 37,544 77,691
Finance expense (2,493) - (137)
Share of loss of associate (122,078) - -
Loss before taxation (6,132,516) (4,386,891) (10,814,689)
Income tax credit 11,682 30,456 93,550
------------------------------------- -------- -------------- -------------- ---------------
Loss for the period from
continuing operations (6,120,834) (4,356,435) (10,721,139)
Discontinued Operations
------------------------------------- -------- -------------- -------------- ---------------
Loss for the period from
discontinued operations (258,356) (960,782) (2,025,307)
------------------------------------- -------- -------------- -------------- ---------------
Loss for the period 4 (6,379,190) (5,317,217) (12,746,446)
------------------------------------- -------- -------------- -------------- ---------------
Loss attributable to:
Owners of the parent (5,535,795) (4,633,101) (10,841,924)
Non-controlling interests (843,395) (684,116) (1,904,522)
------------------------------------- -------- -------------- -------------- ---------------
(6,379,190) (5,317,217) (12,746,446)
------------------------------------- -------- -------------- -------------- ---------------
Basic and diluted loss per
share from continuing and
discontinued operations
attributable to owners of
the parent during the period:
Continuing operations (10.3p) (10.9p) (24.9p)
Discontinued operations (0.5p) (2.0p) (3.5p)
From loss for the period (10.8p) (12.9p) (28.4p)
------------------------------------- -------- -------------- -------------- ---------------
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June Restated
Notes 2016 Restated 2015
GBP 2015 GBP
GBP
Loss for the period (6,379,190) (5,317,217) (12,746,446)
Items that may be subsequently
reclassified to profit or
loss:
Exchange differences on
translation of foreign operations 273,163 30,179 134,340
----------------------------------------------- -------------- -------------- ---------------
Total comprehensive loss
for the period (6,106,027) (5,287,038) (12,612,106)
----------------------------------------------- -------------- -------------- ---------------
Attributable to:
Owners of the parent (5,054,831) (4,602,922) (10,596,481)
Non-controlling interests (1,051,196) (684,116) (2,015,625)
---------------------------- ---------------- ---------------- -----------------
(6,106,027) (5,287,038) (12,612,106)
--------------------------- ---------------- ---------------- -----------------
All other comprehensive income will be reclassified to retained
earnings on the ultimate sale of any relevant subsidiary
company.
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
Notes GBP GBP GBP
--------------------------------- -------- -------------- -------------- --------------
Assets
Non-current assets
Intangible assets - 235,376 513
Property, plant and equipment 408,566 350,086 285,015
Investments in equity accounted
associates 3(a) 241,125 - -
Available for sale investments 1,806,608 1,806,608 1,806,608
Derivative financial assets - 526,159 100,159
Loans to non-group companies 1,178,335 907,697 753,583
--------------------------------- -------- -------------- -------------- --------------
Total non-current assets 3,634,634 3,825,926 2,945,878
--------------------------------- -------- -------------- -------------- --------------
Current assets
Inventories 148,387 78,655 -
Trade and other receivables 807,247 664,955 559,775
Derivative financial assets 100,159 - -
Cash and cash equivalents 15,931,855 11,057,681 23,239,047
--------------------------------- -------- -------------- -------------- --------------
Total current assets 16,987,648 11,801,291 23,798,822
--------------------------------- -------- -------------- -------------- --------------
Total assets 20,622,282 15,627,218 26,744,700
--------------------------------- -------- -------------- -------------- --------------
Liabilities
Current liabilities
Trade and other payables (1,638,754) (1,317,172) (2,156,180)
Loans and borrowings (102,630) (3,250) (50,137)
--------------------------------- -------- -------------- -------------- --------------
Total current liabilities (1,741,384) (1,320,422) (2,206,317)
--------------------------------- -------- -------------- -------------- --------------
Non-current liabilities
Trade and other payables - (52,133) -
Loans and borrowings - (712,656) -
Total non-current liabilities - (764,789) -
--------------------------------- -------- -------------- -------------- --------------
Total liabilities (1,741,384) (2,085,211) (2,206,317)
--------------------------------- -------- -------------- -------------- --------------
Net assets 18,880,898 13,542,007 24,538,383
--------------------------------- -------- -------------- -------------- --------------
Issued capital and reserves
Attributable to the parent
Called up share capital 2,553,785 1,795,101 2,553,785
Share premium account 47,232,755 30,844,552 47,232,755
Capital reserve account 236,745 236,745 236,745
Foreign exchange reserve 1,172,527 476,299 691,563
Retained earnings (29,766,283) (18,143,043) (24,371,018)
--------------------------------- -------- -------------- -------------- --------------
Equity attributable to the
owners of the parent 21,429,529 15,209,654 26,343,830
Non-controlling interests (2,548,631) (1,667,647) (1,805,447)
--------------------------------- -------- -------------- -------------- --------------
Total equity 18,880,898 13,542,007 24,538,383
--------------------------------- -------- -------------- -------------- --------------
Shareholders' equity
--------------------------------------------------------------------------------------
Foreign Non-
Share Share Capital Retained exchange controlling Total
capital premium reserve earnings reserve Total interests equity
GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- ----------------
1 January
2015 1,795,101 30,844,552 236,745 (13,529,442) 446,120 19,793,076 (1,097,509) 18,695,567
Comprehensive
Income
Loss for
the period - - - (4,633,101) - (4,633,101) (684,116) (5,317,217)
Other
comprehensive
income -
foreign
exchange
differences - - - (27,793) 30,179 2,386 27,793 30,179
Increase
in subsidiary
shareholding - - - (45,465) - (45,465) 86,185 40,720
Share-based
payments - - - 92,758 - 92,758 - 92,758
--------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- ----------------
Total
comprehensive
income - - - (4,613,601) 30,179 (4,583,422) (570,138) (5,153,560)
--------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- ----------------
30 June
2015 1,795,101 30,844,552 236,745 (18,143,043) 476,299 15,209,654 (1,667,647) 13,542,007
--------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- ----------------
Comprehensive
Income
Loss for
the period - - - (6,208,823) - (6,208,823) (1,220,406) (7,429,229)
Other
comprehensive
income -
foreign
exchange
differences - - - 27,793 215,264 243,057 (138,896) 104,161
Increase
in subsidiary
shareholding - - - (125,055) - (125,055) 134,055 9,000
Disposal
of
subsidiaries - - - - - - 1,087,447 1,087,447
Issue of
share capital 758,684 17,449,727 - - - 18,208,411 - 18,208,411
Costs of
share issue - (1,061,524) - - - (1,061,524) - (1,061,524)
Share-based
payments - - - 78,110 - 78,110 - 78,110
---------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- --------------
Total
comprehensive
income 758,684 16,388,203 - (6,227,975) 215,264 11,134,176 (137,800) 10,996,376
31 December
2015 2,553,785 47,232,755 236,745 (24,371,018) 691,563 26,343,830 (1,805,447) 24,538,383
---------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- --------------
Comprehensive
Income
Loss for
the period - - - (5,535,795) - (5,535,795) (843,395) (6,379,190)
Other
comprehensive
income -
foreign
exchange
differences - - - - 480,964 480,964 (207,801) 273,163
Disposal
of
subsidiaries - - - - - - 308,012 308,012
Share-based
payments - - - 140,530 - 140,530 - 140,530
---------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- --------------
Total
comprehensive
income - - - (5,395,265) 480,964 (4,914,301) (743,184) (5,657,485)
30 June
2016 2,553,785 47,232,755 236,745 (29,766,283) 1,172,527 21,429,529 (2,548,631) 18,880,898
---------------- ------------ ------------- ---------- --------------- ------------ -------------- -------------- --------------
Notes Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 GBP
GBP GBP
----------------------------------- ------- ------------ ------------ -------------
Cash flows from operating
activities
Loss before income tax including
discontinued operations (6,390,872) (5,370,613) (12,854,407)
Adjustments for:
Depreciation of property,
plant and equipment 55,623 67,288 129,831
Amortisation of intangible
assets 513 14,538 55,336
(Gain) / Loss on disposal
of property, plant and equipment (1,195) 1,663 3,432
Share of loss of associates
and joint venture 131,204 345,823 399,656
Gain on sale of associates
and joint venture - (11,215) (214,331)
Loss on disposal of subsidiaries 312,743 - 508,046
Impairment of intangible
assets - - 190,631
Provision against recoverability
of loan - - 176,677
Share-based payments 140,530 92,758 170,868
Bad debt written off - - 3,557
Foreign exchange gains (138,801) - (84,145)
Finance income (52,495) (37,549) (77,695)
Finance costs 2,493 28,010 51,397
(5,940,257) (4,869,297) (11,541,147)
Changes in working capital
Increase in trade and other
receivables (508,795) (212,331) (54,880)
(Decrease) / Increase in
trade and other payables (603,962) (195,816) 881,717
Increase in inventories (138,095) (78,655) -
-------------------------------------------- ------------ ------------ -------------
Cash used in operations (7,191,109) (5,356,099) (10,714,310)
-------------------------------------------- ------------ ------------ -------------
Income tax received - 33,456 83,119
-------------------------------------------- ------------ ------------ -------------
Net cash used in operating
activities (7,191,109) (5,322,643) (10,631,191)
-------------------------------------------- ------------ ------------ -------------
Cash flows from investing
activities
Investment in joint venture - (14,033) (34,981)
Investment in associate (346,432) (24,999) (24,999)
Proceeds from sale of associate - - 24,999
Purchase of derivative financial
assets - (426,000) (426,000)
Proceeds from sale of derivative
financial assets - - 426,000
Disposal of discontinued
subsidiaries, net of cash
disposed of - 720 (109,431)
Purchase of property, plant
and equipment (157,756) (73,616) (136,460)
Proceeds from sale of property,
plant and equipment 12,859 500 650
Purchase of intangible assets - - (163,672)
Interest received 32,360 22,074 37,786
Proceeds on change in subsidiary
shareholding - - 720
Net cash used in investing
activities (458,969) (515,354) (405,388)
-------------------------------------------- ------------ ------------ -------------
Cash flows from financing
activities
Proceeds from borrowings 50,000 - 50,000
Proceeds from share issue - - 18,208,411
Share issue cost - - (1,061,524)
-------------------------------------------- ------------ ------------ -------------
Net cash from financing
activities 50,000 - 17,196,887
-------------------------------------------- ------------ ------------ -------------
(Decrease) / increase in
cash and cash equivalents (7,600,078) (5,837,997) 6,160,308
Cash and cash equivalents
at beginning of the period 23,239,047 16,867,198 16,867,198
Exchange gains on cash and
cash equivalents 292,886 28,480 211,541
------------------------------ ------------- ------------- -------------
Cash and cash equivalents
at end of the period 15,931,855 11,057,681 23,239,047
------------------------------ ------------- ------------- -------------
1. ACCOUNTING POLICIES
Basis of preparation
The interim results, which are unaudited, have been prepared on
the basis of the accounting policies expected to apply for the
financial year to 31 December 2016 and in accordance with
recognition and measurement principles of International Financial
Reporting Standards (IFRSs) as endorsed by the European Union. The
accounting policies applied in the preparation of these interim
results are consistent with those used in the financial statements
for the year ended 31 December 2015.
The financial information for the year ended 31 December 2015
does not constitute the full statutory accounts for that period.
The Annual Report and Financial Statements for the year ended 31
December 2015 have been filed with the Registrar of Companies. The
Independent Auditor's Report on the Report and Financial Statements
for the year ended 31 December 2015 was unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
Going Concern
The Directors have prepared and reviewed financial forecasts.
After due consideration of these forecasts and current cash
resources the Directors consider that NetScientific has adequate
financial resources to continue in operational existence for the
foreseeable future (being at least twelve months from the date of
this report), and for this reason the financial statements have
been prepared on a going concern basis.
2. OTHER COSTS
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 GBP
GBP GBP
---------------------------------- ------------ ------------ -------------
Restructure costs (i) - - 538,934
Provision against recoverability
of loan - - 176,677
Share-based payments 140,530 92,758 170,868
---------------------------------- ------------ ------------ -------------
140,530 92,758 886,479
---------------------------------- ------------ ------------ -------------
(i) Represents redundancy costs associated with the restructure
of the management team and review of portfolio to focus on core
projects.
3. INVESTMENTS
a) Associates
On 26 February 2016, the Group's subsidiary company Wanda, Inc.
subscribed for 35.9% of the issued share capital of Oncoverse LLC,
a San Francisco digital health company. The price paid for the
shares subscribed far was US$500,000, in cash.
b) Discontinued operations
A discontinued operation is a component of the Group's business
that represents a separate line of business or area of operation
that has been disposed of or is held for sale. The results of
operations disposed during the period are included in the
consolidated income statement up to the date of disposal and are
presented in the consolidated income statement as a single line
which comprises the post-tax profit or loss of the discontinued
operations along with the post-tax gain or loss recognised on
disposal of the operations. When an operation is classified as a
discontinued operation, the comparative consolidated income
statement is presented as if the operation had discontinued from
the start of the comparative period.
Discontinued operations in the prior year have been restated to
include the results of discontinued operations that have become
discontinued in the current year.
4. DISCONTINUED OPERATIONS
Following a review of the Group's strategy and portfolio to
focus on core projects, certain subsidiaries were disposed of
during the period.
The results of the discontinued operations, which have been
included in the consolidated income statement, were as follows.
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 GBP
GBP GBP
------------------------------------ ------------ ------------ -------------
Revenue - 12,845 53,344
Cost of sales - (36) (21,937)
------------ ------------ -------------
Gross profit - 12,809 31,407
Other operating income 86,606 348,024 404,001
Research and development costs - (589,125) (1,149,716)
General and administrative
costs (32,220) (381,602) (390,153)
Impairment of intangible assets - - (190,631)
Gain / (Loss) from operations 54,386 (609,894) (1,295,092)
Finance income - 5 5
Finance expenses - (28,010) (51,260)
Share of loss of associates
and joint venture - (345,823) (399,656)
Gain / (Loss) before taxation 54,386 (983,722) (1,746,003)
Attributable tax credit - 22,940 14,411
------------ ------------ -------------
Gain / (Loss) after tax 54,386 (960,782) (1,731,592)
------------ ------------ -------------
Gain on sale of associates
and joint venture - - 214,331
Loss on divestment of subsidiaries (312,742) - (508,046)
Attributable tax expense - - -
------------ ------------ -------------
Loss from sale of discontinued
operations after tax (312,742) - (293,715)
------------ ------------ -------------
Loss for the period (258,356) (960,782) (2,025,307)
------------ ------------ -------------
4. DISCONTINUED OPERATIONS (Continued)
Subsidiaries disposed of during the six months ended 30 June
2016:
Proportion
Proportion of ownership
of interest
Country ownership held by non-controlling
of interest interests
incorporation at 31 December at 31 December
Name or registration 2015* 2015*
------------------- ------------------ --------------- ------------------------
Triventis Health
LLC USA 55% 45%
SwissScientific
SA Swiss 100% -
* Interests were unchanged at time of disposal.
Subsidiaries disposed of during the year ended 31 December
2015:
Proportion
Proportion of ownership
of interest
Country ownership held by non-controlling
of interest interests
incorporation at 31 December at 31 December
Name or registration 2014* 2014*
--------------------------- ------------------ --------------- ------------------------
MOF Technologies
Limited UK 51% 49%
RoboScientific
Limited UK 80% 20%
Nearfield Communications
Limited UK 100% -
Watermass Limited UK 100% -
Advanced BioSensors,
Inc. USA 37% 63%%
Advanced Cardiotech,
Inc. USA 87.5% 12.5%
Cardio-Scientific,
Inc. USA 100% -
Moftek, Inc. USA 100% -
Qlida Diagnostics,
Inc. USA 51.2% 48.8%
Morphodyne SA Swiss 60% 40%
* Interests were unchanged at time of disposal.
Associates disposed of during the year ended 31 December
2015:
Name
----------------------- -------- --- ---
DName-iT NV Belgium 38% 62%
Frontier BioSciences
Limited UK - -
Joint venture disposed of during the year ended 31 December
2015:
Name
------------------------ ---- --- ---
Butterfly BioSciences
LLC USA 50% 50%
5. LOSS PER SHARE
The basic and diluted loss per share is calculated by dividing
the loss for the financial period by the weighted average number of
ordinary shares in issue during the period. Potential ordinary
shares from outstanding options at 30 June 2016 of 3,522,161 (30
June 2015: 2,642,916; 31 December 2015: 3,081,936) are not treated
as dilutive as the entity is loss making.
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 GBP
GBP GBP
----------------------------- ------------ ------------ -------------
Loss attributable to equity
holders of the Company
Continuing operations 5,270,917 3,919,645 9,490,774
Discontinued operations 264,878 713,456 1,351,150
------------ ------------ -------------
Total (5,535,795) (4,633,101) (10,841,924)
------------ ------------ -------------
Number of shares
Weighted average number of
ordinary shares in issue 51,075,695 35,902,020 38,228,552
Introduction
We have been engaged by the Company to review the interim
financial information in the interim results for the six months
ended 30 June 2016 which comprises the Consolidated Income
Statement, Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Financial Position, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of Cash
Flows and the related notes 1 to 5.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim results, including the financial information
contained therein, is the responsibility of and has been approved
by the directors. The Directors are responsible for preparing the
interim results in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM which require that
the interim results be presented and prepared in a form consistent
with that which will be adopted in the Company's annual accounts
having regard to the accounting standards applicable such
accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the interim financial information in the interim results based on
our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial information in the
interim results for the six months ended 30 June 2016 is not
prepared, in all material respects, in accordance with the rules of
the London Stock Exchange for companies trading securities on
AIM.
BDO LLP
Chartered Accountants and Registered Auditors
Southampton
United Kingdom
27 September 2016
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
DIRECTORS: Sir R Sykes
F R Martelet M.D.
I Postlethwaite
B W Wilson
J Paisner
S Smith
SECRETARY: E Schneider
REGISTERED OFFICE: Anglo House,
Bell Lane Office Village
Bell Lane
Amersham
Buckinghamshire
HP6 6FA
REGISTERED NUMBER: 08026888 (England and Wales)
AUDITORS: BDO LLP
Arcadia House
Maritime Walk
Ocean Village
Southampton
Hampshire
SO14 3TL
SOLICITORS: DLA Piper UK LLP
3 Noble Street
London
EC2V 7EE
NOMINATED ADVISOR AND BROKER: Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DBGDCDUDBGLL
(END) Dow Jones Newswires
September 27, 2016 02:01 ET (06:01 GMT)
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