TIDMPRM
RNS Number : 2316V
Proteome Sciences PLC
04 April 2023
4 April 2023
Proteome Sciences plc
("Proteome Sciences", the "Company" or the "Group")
Final results for the year ended 31 December 2022
The Company is pleased to announce its audited results for the
year ended 31 December 2022.
Highlights:
-- Total revenues of GBP7.78m (2021: GBP5.13m)
-- Proteomic (biomarker) services revenues of GBP2.75m (2021: GBP1.90m)
-- TMT(R) sales, royalties and milestones of GBP5.03m (2021: GBP3.23m)
-- Total costs of GBP6.05m (2021: GBP4.72m)
-- EBITDA of GBP2.13m (2021: GBP0.63m)
-- Adjusted EBITDA* of GBP2.43m (2021: GBP1.35m)
-- Profit after tax of GBP1.33m (2021: GBP0.07m)
-- Cash reserves at 31 December 2022 of GBP3.99m (2021: GBP2.39m)
Post year-end:
Dr. Mariola Soehngen, Chief Executive Officer of Proteome
Sciences plc, commented:
We are pleased to report the financial results of another
successful year. We have continued to show strong growth of our
revenues, both in service sales and the TMT(R) business despite the
backdrop of negative external factors, mainly the Russia-Ukraine
war and its global impact on supply chains, energy prices,
inflation rates and economic recessions. Total revenues increased
by 52% to GBP7.78m with services showing 45% revenue increase to
GBP2.75m and TMT(R) /TMTpro(TM) reagents by 56% to GBP5.03m. The
milestone we earned based on cumulative sales at Thermo Scientific
contributed to this positive development. EBITDA of GBP2.13m
increased by GBP1.50m or 239% on prior year mainly due to increased
revenues and including the sales milestone payment of GBP0.87m
received from Thermo Scientific.
We have continued to strategically invest in our workforce and
instruments by hiring 6 employees and adding various instruments to
support the promotion of new services including the CellenONE(R)
single cell proteomics (SCP) platform and made investments into new
reagents as future value drivers of our tag business. We are
looking forward to the SCP product launch later in the year and
remain confident of being one of the first contract research
organisations (CROs) providing a high-performance SCP service. The
new tag development programmes already meet high interest in the
market.
* EBITDA is a non-GAAP company specific measure which is
considered to be a key performance indicator of the Group's
financial performance. Adjusted EBITDA is calculated as operating
profit before depreciation (including right-to-use assets
amortisation), amortisation, non-recurring costs, and employee
share-based payment.
Report and Accounts and Notice of Annual General Meeting:
Copies of the Annual Report and Accounts together with notice of
the Annual General Meeting ("AGM") will be posted to shareholders
in early April and made available on the Company's website by then
( www.proteomics.com ).
The AGM of the Company will take place at 12 noon on Wednesday
17 May 2023 at Allenby Capital, 5 St Helen's Place, London, EC3A
6AB. Formal notice of the AGM will be sent to shareholders which
will contain further information and the resolutions which will be
proposed at this meeting.
For further information please contact:
Proteome Sciences plc
Dr. Mariola Soehngen, Chief Executive Tel: +44 (0)20 7043 2116
Officer
Dr. Ian Pike, Chief Scientific Officer
Richard Dennis, Chief Commercial Officer
Abdelghani Omari, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser & Broker)
John Depasquale / Jeremy Porter Tel: +44 (0) 20 3328 5656
About Proteome Sciences plc. ( www.proteomics.com )
Proteome Sciences plc is a specialist provider of contract
proteomics services to enable drug discovery, development and
biomarker identification, and employs proprietary workflows for the
optimum analysis of tissues, cells and body fluids. SysQuant(R) and
TMT(R) MS2 are unbiased methods for identifying and contextualising
new targets and defining mechanisms of biological activity, while
analysis using Super-Depletion and TMTcalibrator(TM) provides
access to over 8,500 circulating plasma proteins for the discovery
of disease-related biomarkers. Targeted assay development using
mass spectrometry delivers high sensitivity, interference-free
biomarker analyses in situations where standard ELISA assays are
not available.
Chief Executive Officer's Statement
Group revenues for the full year increased by 52% to GBP7.78m
(2021: GBP5.13m), services revenue increased 45% to GBP2.75m (2021:
GBP1.90m) and sales, royalties and milestones attributable to
TMT(R) /TMTpro(TM) reagents increased by 56% to GBP5.03m (2021:
GBP3.23m). In December 2022, the Group received a cumulative sales
milestone payment of GBP0.87m under the exclusive licence and
distribution agreement with Thermo Scientific. Excluding the
milestone payment received, TMT(R) /TMTpro(TM) sales and royalties
were GBP4.16m (2021: GBP3.23m) and showed underlying growth of c29%
in 2022.
In addition to the large carry over of orders from 2021 as
reported in last year's statement, we continued to generate further
orders for contract services in 2022, including a major contract
win from a leading US academic group in the neurodegenerative area.
The contract value is in excess of GBP0.5m and we finalised the
work and recognised the revenues in 2022.
All this has been achieved against a backdrop of negative
external factors. Whilst the COVID-19 pandemic has mainly
influenced our operations in the past three years from the
macro-economic perspective the main influencing factor is the
Russia-Ukraine war and its global impact on supply chains, energy
prices, inflation rates and economic recessions. As much as the
pandemic developed into an endemic situation, in most parts of
Germany quarantine regulations for those infected have been in
place throughout the year. This has led to a high number of absence
days in our Frankfurt laboratory in 2022. Despite this we have
continued to show strong growth of our revenues, both in service
sales and the TMT(R) business.
We have continued to strategically invest in our workforce and
instruments by hiring six employees and adding various instruments
to support the promotion of new services including the Meso Scale
Discovery (MSD) multiplex ELISA system, the CellenONE(R) single
cell proteomics platform and investment into new reagents, all of
which led to an increase of costs. We have awarded options which
resulted in a share based payment charge of GBP0.30m (2021:
GBP0.57m). Consequently, total costs rose to GBP6.05m (2021:
GBP4.72m) and this has resulted in an operating profit of GBP1.73m
(2021: GBP0.41m) and a profit after tax of GBP1.33m (2021:
GBP0.07m). Cash reserves at the year-end increased to GBP3.99m
(2021: GBP2.39m). In addition, Adjusted EBITDA (a non-GAAP Group
specific measure which is considered to be a key performance
indicator of the Group's financial performance) increased as set
out below:
2022 2021
GBP'000 GBP'000
Revenue 7,780 5,124
Gross profit 4,767 2,960
Administrative expenses * (3,039) (2,548)
EBITDA 2,125 626
Other non-cash items and non-recurring costs 303 729
Adjusted EBITDA 2,428 1,355
Adjusted EBITDA increased 79% on prior year mainly due to
increased revenues and including the sales milestone payment of
GBP0.87m received from Thermo Scientific.
*Includes depreciation of GBP0.4m (2021: GBP0.2m)
Services
Our services business continued to show strong performance over
the year. As mentioned above, the COVID-19 pandemic has had a lower
impact on face-to-face client meetings as scientific based
conferences and exhibitions return to the pre-COVID-19 format of
on-site attendance. Once the US opened up to allow foreign
travellers to cross their border in Q1 2022, we re-started our
program of client visits. The majority of our customer base in US
biopharma were back at work and allowing sales visits to their
facilities.
As reported in 2021, we continue to experience delays in the
availability of samples for analysis primarily due to the pandemic
affecting on-going clinical trials. Cold chain shipping
availability was also a source of some sample delay as capacity was
prioritised for COVID-19 related samples and vaccines. This had a
real impact by delaying the arrival of samples from the large trial
we received in 2021. We can only start the analysis of these
samples once the whole cohort has been collected and delivered to
our Frankfurt facility. This prevents analytical bias in the data
generation if the analysis is performed in multiple batches.
Consequently delays in recruitment are directly translated into
delays in our project initiation and downstream revenue
recognition. Despite this the last of the samples were in house by
year end 2022 and we expect to complete this work by mid 2023.
With the revamp of the www.proteomics.com website in spring 2022
and in-person attendance of scientific and trade conferences and
exhibitions, we have continued to promote our services to new and
existing accounts. We succeeded in developing new accounts and
winning repeat business from our existing current customers. Just
under one quarter of these orders were from new clients.
Our results underline the increasing use of outsourced
proteomics in pharmaceutical and biotechnology research, and we
expect this to continue in 2023 as companies look to add more
functional value to their genomic data and the general awareness
that the proteome is the more important factor to consider in drug
development. Last year we expanded our activities in the analysis
of clinical research samples to discover new pharmacodynamic
biomarkers, signing up new clients and applying our
TMTcalibrator(TM) combined with abundant protein depletion to
address novel therapeutic areas. We also performed several targeted
assay development programs across a range of matrices. In 2023 we
expect to enhance our activities with the launch of our new Single
Cell Proteomics application area. These additions should lead to
the analysis of larger volume pre-clinical and clinical samples in
the future and we expect further larger scale clinical trial
related orders to be placed.
Licences
Tandem Mass Tags(R)
The exclusive agreement for sales and distribution of Tandem
Mass Tag(R) and TMTpro(TM) reagents with Thermo Scientific
continues to be the Company's most significant licensing activity.
After a strong performance in 2021 as global research activity
started to return to normal levels, we saw further growth in 2022
with total revenues (excluding the milestone payment) increasing
29% to GBP4.16m (2021: GBP3.23m), product sales growing 26% and
royalty receipts by 33%. As expected, the shift to TMTpro(TM)
accelerated, with sales of the newer product now accounting for 68%
(2021: 50%) of the total by value. At the end of the year we also
received a further milestone payment of GBP0.87m (2021: GBPNil)
following the attainment of the latest cumulative sales
milestone.
Whilst the earliest of the TMT(R) patents covering the original
technology expired in the US in 2022. TMT(R) and TMTpro(TM) tags
are covered by later generation patents running through until the
mid-2030s. We do not expect the expiration of these earlier cases
to affect TMT revenues.
Stroke Biomarkers
Our licensees Randox and Galaxy CCRO Inc. continue to pursue
trials of their respective stroke diagnostic products and remain
committed to launching them as in vitro diagnostic devices in due
course. Randox's ongoing clinical trial has begun recruiting again
after a long delay due to COVID-19 but they do not have a forecast
of when the product may be approved for clinical use. Galaxy CCRO
are developing a lateral flow device for assessing the time of
stroke onset based on kinetic measurement of blood levels of
glutathione-s-transferase pi (GSTP). They plan to perform an
initial clinical validation study initiating in Q2 2023 prior to
expanding this to meet the requirements for CE marking in
Europe.
Research
With the majority of resources dedicated to providing contract
services, we did not have capacity to undertake much internal
research during the year. Nevertheless, several initiatives have
been started that will continue into 2023. In particular, we are
investing in a number of process improvements that will increase
capacity in sample preparation. We are using our network of
international key opinion leaders to support these efforts and
expect to see a substantial improvement in throughput as we move
into the second half of 2023.
We started to develop capacity for Single Cell Proteomics (SCP)
in the second half of the year. SCP represents a major technical
challenge but offers a substantial market value as drug developers
and clinical scientists look to the role of cell heterogeneity in
determining treatment responses. We evaluated the CellenONE (R) SCP
platform in January and following some supply chain issues finally
installed our own machine in August. We recruited a dedicated SCP
scientist in September and we are now making progress in
establishing a robust sample preparation pipeline. With the delays
in procurement experienced in 2022 we now expect the process design
and optimization to be completed in the first half of 2023 as we
move towards a product launch later in the year. Whilst this is
slightly later than we had anticipated, we remain confident of
being one of the first contract research organisations (CROs)
providing a high-performance SCP service.
To further support our research efforts, we have applied for
several grants including a follow-on EU Doctoral Network grant
around novel molecular imprinted polymers (MIPs), as well as an
application relating to amyotrophic lateral sclerosis (ALS)
biomarker and drug target discovery. We expect to receive results
of the first rounds of review in Q2 2023. If successful, the grants
will allow us to add research staff and perform targeted research
projects that could lead to new products and services in the
future.
Operating Environment
We were adversely affected by the delayed arrival of samples
from our clients whether directly pandemic related or not. We
started the year with a strong order book which partly helped to
compensate for such delays. In spite of this we successfully
attracted a lot of market interest and activity exemplifying the
rising importance of proteomics in drug development and medical
decision making. This translated into a constant flow of other
contracts in addition to the two major contract wins 2021 and
2022.
The implementation of the results of our strategic review in
2021 have led to organic development internally expanding areas of
our technical expertise by adding the high need, high value
services that we identified including Single Cell Proteomics (see
Services and Research Section above) to our services capabilities
and expanding our capacity to meet the continued growth in demand
for high level proteomics services. As anticipated our new reagents
programmes have progressed well and we have attracted considerable
interest in the market. These developments will allow us to
increase and extend the growth and internationalisation of our
business.
Volatility in foreign exchanges during the year affected
non-sterling denominated revenues, the overall effect on operating
profit was positive at GBP0.24m.
At the end of another year of solid growth across our business
and the substantial strategic investments that have been made for
the future, we would like to thank all our teams for their
contribution, passion and hard work to make all this happen. Our
services business and our TMT(R) /TMTpro(TM) reagents are well set
for further growth.
We successfully managed ongoing relationships in 2022 and also
continued to attract new customers both from the US and Europe
undertaking pilot studies with good potential for expansion via
repeat orders in the coming year. As mentioned above, close to one
quarter of the service orders won were from new clients.
We started the year with record value of orders that were
carried over into 2022. Strategic investment was made in new
equipment and additional staff that have increased our capacity and
revenue generating potential. This investment has already proved
successful with a record revenue in Service and TMT(R) /TMTpro(TM)
tags being achieved, and this has provided the foundation for
increased revenue growth in 2023.
Outlook
We are continuing to work on the substantial commercial
opportunity from SCP where automated sample preparation combined
with TMTpro(TM) can deliver high throughput analysis. Technically
this is challenging, but we expect to launch this service later in
2023. We are also seeing that the return to on-site working in
academia and the pharmaceutical industry is driving sales of
TMTpro(TM) reagents and we have ensured we have sufficient stock on
hand to meet this growing demand.
The Board is confident that the progress over the recent years
has created an excellent platform for the further development of
the Group. The strong order book, new projects (SCP and new
reagents), high customer interest and our cash position in 2023
provide a strong starting point. Proteome Sciences is well set to
achieve a step-change in growth and gives the Board increased
confidence that the business can grow revenue and EBITDA (both
adjusted for the milestone received in 2022) in 2023.
We would like to thank our shareholders and team for their
continuing support, and we look forward to communicating further
progress during 2023.
Dr. Mariola Söhngen
Chief Executive Officer
3 April 2023
STRATEGIC REPORT
Review of the Business
The principal activities of the Group involve protein biomarker
research and development. As a leader in applied proteomics, we use
high sensitivity proprietary techniques to detect and characterise
differentially expressed proteins in biological samples for
diagnostic, prognostic and therapeutic applications. In addition,
we invented and developed the technology for TMT(R) and TMTpro(TM),
and manufacture these small, protein-reactive chemical reagents
which are sold for multiplex quantitative proteomics under
exclusive license by Thermo Scientific.
Proteome Sciences is a major provider of contract research
services for the identification, validation and application of
protein biomarkers. Our clients are predominantly pharmaceutical
and biotechnology companies, but we also perform services for other
sectors including academic research. While we have several
well-established workflows that meet the needs of many customers,
we retain our science-led business focus wherever possible,
developing new analytical methods, new reagents and data analysis
tools to provide greater flexibility in the types of studies we can
deliver. Our contract service offering remains centred on mass
spectrometry-based proteomics, and this is becoming more widely
implemented in drug development projects as the pharmaceutical
industry seeks to expand biological knowledge beyond genomics.
These services are fully aligned with the drug development process,
can be used in support of clinical trials and in vitro diagnostics,
and include proprietary bioinformatics capabilities.
Progress during 2022
Growing Our Services Business
In early 2022 we invested in a Meso Scale Discovery multiplex
ELISA platform. This platform enables Proteome Sciences to offer an
additional service to our clients to detect and quantify proteins
in samples from normal healthy subjects that would be generally
undetectable by mass spectrometry. These proteins, usually
cytokines and chemokines, are generally of interest in a study in a
variety of diseases. The service was first used in connection with
the large contract from a European pharma client that we won in
2021. We expect to offer these additional services to other clients
in the future.
In connection with the large European based pharma client
mentioned above much of this contract had been completed and
invoiced by the year end. This project enabled our services group
to operate at a sample volume greater than we have seen before.
Over 3,000 samples were received, processed and reported throughout
2022. As scientific studies move into larger sample cohorts, this
experience places us in a stronger position moving forward, both in
the logistics of handling and storing these samples through to the
practicalities of processing the samples through analysis and
reporting. In relation to the sample processing, we will be looking
at improving internal workflows connected with these large scale
samples in 2023, thereby making us even more efficient in the
future.
Expanding beyond the core proteome
The shift from genomic-led drug development to a protein-centric
strategy is increasing the demand for a wide range of services and
driving development of new technologies. With this increased
activity comes a greater appreciation of the complex relationship
between protein expression, post-translational modification and
biological function. Whilst this is something we were promoting a
decade ago, the wider acceptance within the pharmaceutical industry
is creating significant new opportunities for Proteome Sciences.
Last year we introduced a new version of SysQuant(R) for the
analysis of protein ubiquitylation. This has been quite successful
in bringing us to the attention of companies using new classes of
drugs to hijack the ubiquitylation machinery in cells to cause
targeted degradation of a single protein. Alongside our SysQuant(R)
phosphoproteomics service, we now offer our customers a range of
tools to move beyond the core proteome and explore the role that
different post-translational modifications play in disease and
response to drug treatment. We are continuing to expand the numbers
of post-translational modifications we can characterise using
iterative computational search strategies, and further extending
utility through development of targeted assays for specific
proteoforms created in a disease or treatment response context that
can be used to support drug development and clinical trials.
In expanding the mapping of post-translational modifications and
different proteoforms, the power of sample multiplexing becomes
increasingly important as it provides more intense spectra and
higher localisation scores than are often seen with label-free
methods. This is particularly important when looking beyond the
core proteome in peripheral fluids such as plasma and cerebrospinal
fluid, which can be further enhanced using tissue triggers in our
TMTcalibrator(TM) workflow.
Single Cell Proteomics (SCP)
SCP represents a major technical challenge but offers a
substantial market value as drug developers and clinical scientists
look to the role of cell heterogeneity in determining treatment
responses. It has widely been suspected that the different cell
populations within diseased tissues affects how individuals respond
to treatment, and this is increasingly the case with highly
targeted medicines. Building on the success of other single cell
omics, the field of SCP has evolved rapidly within the academic
sector, but challenges around reproducibility and throughput
limitations are restricting wider adoption. During the last year we
have continued to explore ways to develop a robust SCP service but
delays in product availability and recruiting have restricted
progress against our planned timeline.
Using very small amounts of bulk digested cell lines, we have
optimised the mass spectrometry workflow for SCP samples. However,
there remains a challenge in delivering robust and reproducible
sample preparation and we evaluated the commercially available
CellenONE (R) SCP platform in January. Results were promising and
following some supply chain issues we finally installed our own
machine in August. We also recruited a dedicated SCP scientist who
started work in September and we are now making progress in
establishing a robust sample preparation pipeline. With the delays
in procurement experienced in 2022 we now expect the process design
and optimization to be completed in the first half of 2023 as we
move towards a product launch later in the year. Whilst this is
somewhat later than we had anticipated, we remain confident of
being one of the first CROs providing a high-performance SCP
service.
We are also working on alternative strategies and reagents for
SCP that may deliver further benefits in throughput and data
quality. Early results are encouraging and we expect to establish
collaborations with key opinion leaders in the field to drive the
project forward.
Status of the Tandem Mass Tag(R) Product Portfolio
The signs of revival in research activity seen in 2021 were
continued in 2022 and this is reflected in strong growth from the
TMT portfolio. Total revenues from TMT(R) product sales and
royalties (excluding the milestone payment) increased 29% to
GBP4.16m (2021: GBP3.23m), product sales growing 26% and royalty
receipts by 33%. As expected, the shift to TMTpro(TM) was further
accelerated, with sales of the newer product now accounting for 68%
of the total by value (2021: 50%). We also received a milestone
payment of GBP0.87m (2021: GBPNil) following the attainment of the
latest cumulative sales milestone. We stand to receive further
milestone payments in the future but do not expect this in the
short term.
The continued growth in TMT(R) sales comes against the backdrop
of alternative methods for mass spectrometry proteomics,
particularly data-independent acquisition (DIA) gaining popularity.
It is encouraging that the value of the 18plex TMTpro(TM) reagents
in increasing sample throughput and overall data quality is
increasingly seen by researchers and we still anticipate strong
growth in the number of TMT(R) users and value of sales.
Importantly, there are preliminary data from academic users that a
subset of the TMTpro(TM) reagents can be used in DIA applications,
where tagging was not previously possible. This opens up a further
opportunity to drive adoption of TMTpro(TM) in groups that were
previously using label-free methods. As the uptake of TMTpro(TM)
continues to drive sales, we are continuing to review the TMT
portfolio and specifically looking at the market interest in
further increases to plexing rates.
As reported previously, the earliest of the TMT(R) patents
covering the original technology, expired in the US in mid-2022.
TMT(R) and TMTpro(TM) tags are covered by later generation patents
running through until the mid-2030s. These cases also cover
potential next-generation tag designs that can deliver sets of
isobaric tags in excess of 30 plex.
Stroke biomarkers
Our licensees Randox and Galaxy CCRO Inc. continue to pursue
trials of their respective stroke diagnostic products that
incorporate several biomarkers licensed from Proteome Sciences. In
the case of Randox, their ongoing clinical trial has begun
recruiting again after a long delay due to COVID-19. Recent changes
in the European regulations concerning in vitro diagnostics will
have some impact on approval times, but until the trial has
completed recruitment we will not have a forecast of when the
product may be approved for clinical use.
Galaxy CCRO Inc. are developing a lateral flow device for
measuring GSTP, a biomarker linked to time of stroke onset. They
plan to perform an initial clinical validation study prior to
expanding this to meet the requirements for CE marking in Europe.
As part of the development work, Proteome Sciences developed a
high-performance mass spectrometry assay for GSTP and this was used
to confirm excellent linearity of signal of the lateral flow device
relative to absolute GSTP concentration in a small group of stroke
patients. This work was recently showcased on Galaxy's booth at the
2023 International Stroke Conference in Dallas, US.
Patent Applications and Proprietary Rights
During the year we received allowance of 23 individual patents
relating to six different inventions. Five of these relate to
different aspects of TMT(R) and TMTpro(TM) reagents and methods of
their use. The remainder were from the clusterin and tryptophan
biomarker families. The final national member of the TMT1 patent
family expired in the United States but we do not expect this to
affect our ongoing TMT revenues. Whilst the cost of patent
prosecution and maintenance saw a moderate increase during the
year, we expect this to remain relatively constant in 2023.
Strategic evaluation
The implementation of the results of our strategic review in
2021 has led to internal expansion in areas of our technical
expertise adding high need, high value services that we identified
(like SCP see Research Section above) to our portfolio and
expanding our capacity to meet the continued growth in demand for
high level proteomics services. As anticipated our new reagents
programmes have progressed well and have attracted considerable
interest from the market. These will increase and extend the growth
and internationalisation of our business.
Financial Review
Results and Dividends
Key Performance Indicators (KPI's)
-- The directors consider that revenue, adjusted EBITDA, and
profit before/after tax are important in measuring Group
performance. The performance of the Group is set out in the Chief
Executive Officer's Statement.
-- The directors believe that the Group's rate of cash
expenditure and its effect on Group cash resources are important.
Net cash inflows from operating activities for 2022 were GBP2.14m
(2021: GBP0.79m). The costs in 2022 were higher when compared to
2021 due to the investment in our strategic process, building
internal capacity and investment in new instrumentation. We
achieved strong growth in biomarker services revenues and TMT(R)
revenues as compared to 2021. Cash at 31 December 2022 was GBP3.99m
(31 December 2021: GBP2.39m).
-- Contract revenues from our proteomics (biomarker) services
should increase both in absolute terms and as a proportion of total
Group revenues; in 2022 we increased service revenues by 45% to
GBP2.75m (2021: GBP1.90m). As a proportion of total Group revenue
(excluding the milestone revenue) service revenues in 2022 was 40%
compared to 37% in 2021.
Financial Performance
For the twelve-month period ended 31 December 2022 revenue
increased 52% to GBP7.78m (2021: GBP5.13m)
-- Licences, sales and services revenue (adjusted for the
milestone) increased 35% to GBP6.91m (2021: GBP5.12m). This is
comprised of two revenue streams: TMT(R) -related revenue and
Proteomic (Biomarker) Services. Sterling values of our sales and
royalties received for TMT(R) tags increased by 29% to GBP4.16m
(2021 GBP3.23m)
-- Adjusted EBITDA increased to GBP2.43m (2021: GBP1.35m)
-- The profit after tax was GBP1.33m (2021: GBP0.07m)
Taxation
Owing to the changing nature of our services business, with a
stronger focus on commercial activities, we have not fully assessed
our available R&D tax credit for 2022, and such amounts are
only recognised when reasonably assured.
Costs and Available Cash
-- The Group maintained a positive cash balance in 2022 and
continues to seek improved cash flows from commercial income
streams. Even though operating costs have increased year on year,
the Group generated a positive cash flow in the year.
Administrative expenses in 2022 were GBP 3.04m (2021: GBP2.55m)
-- Staff costs for the year were GBP3.12m (2021: GBP2.99m) of
which GBP0.30m was a share based payment charge (2021:
GBP0.57m)
-- Property costs without charges on rent of GBP0.16m were lower than previous years
-- Other administrative costs which relate to the UK only
remained stable at GBP0.11m (2021: GBP0.14m). Finance costs relate
to interest due on loans from two major investors in the Company
and lease interest. Costs of GBP0.47m were higher than the prior
year (2021: GBP0.29m)
-- Trade and other payables were GBP0.82m (2021: GBP0.60m)
-- Trade and other receivables were GBP1.44m (2021: GBP0.60m)
-- Profit after tax for 2022 was GBP1.33m (2021: GBP0.07m)
-- Adjusted EBITDA for the year was GBP2.43m (2021: GBP1.35m)
-- Adjusted EBITDA conversion to operating cash inflows before
working capital movements was 94% (2021: 86%)
-- The net cash inflow from operating activities was GBP2.14m (2021: GBP0.79m)
-- Cash at the year-end was GBP3.99m (2021: GBP2.39m)
Principal Risks and Uncertainties
Commercialisation Activities
It is uncertain whether our range of contract proteomic services
will generate sufficient revenues for the Group ultimately to be
successful in an increasingly competitive commercial market which
generally favours companies with a broader technology platform than
our own. Progress in 2022 was encouraging as both interest and
orders increased substantially when compared to the previous year.
This reflects the growing recognition that proteomics requires a
high level of expertise only generally available in specialised
service providers.
Management of Risk: The Group has sought to manage this risk by
broadening its proteomic services offering by increasing the
coverage of unbiased discovery experiments and broadening
capabilities for analysis of very small samples including single
cells, investing in our own sales by dedicating more staff time to
direct business development activities in our principal commercial
territories and adopting conventional service-based metrics
directed at speed, cost and quality.
Adding new services bears the risk that competitors are already
more advanced and it will be difficult to find and retain new
customers.
Management of risk: We believe the technology we are developing
for single cell proteomics has a high demand in the market and
hence we believe there is sufficient room for many players to
satisfy the demand. Moreover, Proteome Sciences has a USP (Unique
Selling Point) as we are the owner of TMT(R) which gives us a
number of advantages (including cost control) vis à vis
competitors.
Dependence on Key Personnel
The Group depends on its ability to retain a limited number of
highly qualified scientific, commercial and managerial personnel,
the competition for whom is strong. While the Group has entered
into conventional employment arrangements with key personnel and
staff turnover is low, their retention cannot be guaranteed as
evidenced by 1 resignation during 2022.
Management of Risk: The Group has a policy of organising its
work so that projects are not dependent on any one individual, and
we have strong managerial oversight and support for our
laboratory-based staff. Retention is also sought through annual,
role-based reviews of remuneration packages, performance related
bonus payments, and the opportunity for share option grants.
Investment Limitations
Sales and royalties from TMT(R) have historically been key to
revenue and working capital for the Group to invest in the
business. Over the last 3 years the development and compound growth
in proteomics services revenues are starting to generate additional
working capital for further investment through internationalisation
and expansion of the business activities. Despite
remaining cash positive, making a net profit and seeing strong
growth in our proteomics services revenues in 2022 we are still
currently reliant on TMT(R) sales and royalties for the majority of
our revenues and working capital to invest in growing the business
remains limited.
Management of Risk: In addition to previous cost reduction and
ongoing containment measures which have significantly changed the
cost profile of the business over the last four years, we also
actively engage with our major creditors to manage the Company's
debt.
Competition and Technology
The international bioscience sector is subject to rapid and
substantial technological change. There can be no assurance that
developments by others will not render the Group's service
offerings and research activities obsolete or otherwise
uncompetitive. Proteomics remains a growth area where increasing
demand from the pharmaceutical industry remains ahead of the growth
in service provider capacities.
Management of Risk: The Group employs highly experienced
research scientists and senior managerial staff who monitor
developments in technology that might affect the viability of its
service business or research capability. This is achieved through
access to scientific publications, attendance at conferences and
collaboration with other organisations.
Licensing Arrangements
The Group intends to continue sub-licensing new discoveries and
products to third parties, but there can be no assurance that such
licensing arrangements will be successful.
Management of Risk: The Group manages this risk by a thorough
assessment of the scientific and commercial feasibility of proposed
research projects which is conducted by an experienced management
team. Risk has also been reduced by decreasing the overall number
of research projects and re-distributing available resources.
Patent Applications and Proprietary Rights
The Group seeks patent protection for identified protein
biomarkers which may be of diagnostic, prognostic or therapeutic
value, for its chemical mass tags, and for its other proprietary
technologies. The successful commercialisation of such biomarkers,
chemical tags and proteomic workflows is likely to depend on the
establishment of such patent protection. However, there is no
assurance that the Group's pending applications will result in the
grant of patents, that the scope of protection offered by any
patents will be as intended, or whether any such patents will
ultimately be upheld by a court of competent jurisdiction as valid
in the event of a legal challenge. If the Group fails to obtain
patents for its technology and is required to rely on unpatented
proprietary technology, no assurance can be given that the Group
can meaningfully protect its rights. All patents have a limited
period of validity and competing products may be sold by third
parties on expiry in each territory. The final TMT1 patent expired
in the US in September. This was the last case with broad claims to
the field of isobaric tagging, but the patents covering the TMT(R)
and TMTpro(TM) products themselves, along with several proprietary
methods such as TMTcalibrator(TM) and MS3 quantification remain in
force. Whilst the expiration of the earliest TMT patent results in
a reduced royalty rate under the exclusive licence and distribution
agreement with Thermo Scientific, we do not expect this to impact
our total revenue growth in 2023 and beyond. We continually monitor
the implications of patent expiry and have not seen any generic
isobaric tags enter the markets so far.
Management of Risk: The Group retains limited but experienced
patent capability in house, supplemented by external advice, which
has established controls to avoid the release of patentable
material before it has filed patent applications. Maintenance of
the existing patent portfolio is subject to biannual review
ensuring that its ongoing cost is proportional to its perceived
value. We seek to prolong the value of our proprietary technologies
by patenting improved chemical tags and superior biomarker panels
when we are able to do so, and we monitor the impact of patent
expiry by monitoring of market share of licensed products such as
TMT(R) and TMTpro(TM).
Coronavirus (COVID-19) Pandemic
As much as the pandemic has developed into an endemic situation,
in most parts of Germany quarantine regulations for those infected
were still in place during 2022. This has led to a high number of
absence days in our Frankfurt Laboratory in 2022. We continue to
support staff with the provision of a safe working environment
through the use of safety measures according to national
regulations and control of visitors. Whilst we still have
contingency planning in case of further temporary restrictions, we
are expecting all aspects of our business to continue getting back
to pre-pandemic modalities.
Management of Risk: We have implemented social distancing and
enhanced cleaning measures for our laboratories and implemented
home working for all UK staff and those capable of doing so in
Frankfurt. Site visits were restricted to only essential visitors,
distancing measures were in place and the compulsory wearing of
personal protective equipment.
Section 172 statement
The Board recognises the importance of the Group's wider
stakeholders when performing their duties under Section 172(1) of
the Companies Act and their duties to act in the way they consider,
in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing so
have regard (amongst other matters) to:
(a) the likely consequences of any decision in the long
term,
(b) the interests of the company's employees,
(c) the need to foster the company's business relationships with
suppliers, customers and others,
(d) the impact of the company's operations on the community and
the environment,
(e) the desirability of the company maintaining a reputation for
high standards of business conduct, and
(f) the need to act fairly as between members of the
company.
The Board considers that all their decisions are taken with the
long-term in mind, understanding that these decisions need to
regard the interests of the company's employees, its relationships
with suppliers, customers, the communities and the environment in
which it operates. I t is the view of the Board that these
requirements are addressed in the Corporate Governance Statement
which can also be found on the company's website www.proteomics.com
.
For the purpose of this statement detailed descriptions of the
decisions taken are limited to those of strategic importance. The
Board believes that two decisions taken during the year fall into
this category and were made with full consideration of both
internal and external stakeholders as follows:
-- Annual General Meeting (AGM)
The Board encourages engagement with the Group's shareholders
took the decision to hold the AGM as both an in person meeting as
well as to arrange access via an online portal which allowed
shareholders to attend the meeting virtually so as to make the
meeting as accessible as possible.
-- Board visit to German subsidiary
The Board considers the interests and wellbeing of all its
employees to be important to the ongoing success of the
organisation. The Board took the decision that it would make a two
day visit to the Frankfurt site of the organisation in 2022, during
which the directors were able to spend time observing operational
activities and to meet with employees.
By Order of the Board
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
V Birse
Company Secretary
3 April 2023
Consolidated income statement
For the year ended 31 December 2022
Note Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Revenue
Licences, sales and services 7,780 5,124
Grant services - 5
-------------------------------------- ------------- -------------
Revenue - total 7,780 5,129
Cost of sales (3,013) (2,169)
-------------------------------------- ------------- -------------
Gross profit 4,767 2,960
Administrative expenses (3,039) (2,548)
-------------------------------------- ------------- -------------
Operating profit 1,728 412
Finance costs (473) (294)
-------------------------------------- ------------- -------------
Profit before taxation 1,255 118
Tax credit/(charge) 70 (46)
-------------------------------------- ------------- -------------
Profit for the year 1,325 72
-------------------------------------- ------------- -------------
Profit per share
Basic 3 0.45p 0.02p
Diluted 0.43p 0.02p
------------- -------------
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Profit for the year 1,325 72
-------------------------------------------- ------------ ----------------
Other comprehensive income for the
year
Items that will or may be reclassified
to profit or loss:
Exchange differences on translation of
foreign operations 158 (37)
Re-measurement of Defined Benefit Pension
Scheme 145 (22)
Profit and total comprehensive income
for the year 1,628 13
-------------------------------------------- ------------ ----------------
Owners of parent 1,628 13
-------------------------------------------- ------------ ----------------
Consolidated balance sheet
As at 31 December 2022
2022 2021
GBP'000 GBP'000
Non-current assets
Goodwill 4,218 4,218
Property, plant and equipment 444 219
Right-of-use asset 873 1,050
-------------------------------- --------- -------------
5,535 5,487
------------------------------- --------- -------------
Current assets
Inventories 901 1,088
Trade and other receivables 1,443 604
Contract assets 560 479
Cash and cash equivalents 3,994 2,387
-------------------------------- --------- -------------
6,898 4,558
------------------------------- --------- -------------
Total assets 12,433 10,045
-------------------------------- --------- -------------
Current liabilities
Trade and other payables (823) (599)
Contract liabilities (104) (35)
Borrowings (11,262) (10,825)
Lease liabilities (300) (260)
-------------------------------- --------- -------------
(12,489) (11,719)
------------------------------- --------- -------------
Net current liabilities (5,591) (7,161)
-------------------------------- --------- -------------
Non-current liabilities
Lease liabilities (353) (602)
-------------------------------- --------- -------------
Pension provisions (434) (499)
-------------------------------- --------- -------------
Total non-current liabilities (787) (1,101)
-------------------------------- --------- -------------
Total liabilities (13,276) (12,820)
-------------------------------- --------- -------------
Net liabilities (843) (2,775)
-------------------------------- --------- -------------
Equity
Share capital 2,952 2,952
Share premium 51,466 51,466
Share-based payment reserve 4,495 4,193
Merger reserve 10,755 10,755
Translation reserve and other
reserve 31 (128)
Retained loss (70,542) (72,013)
-------------------------------- --------- -------------
Total equity (deficit) (843) (2,775)
-------------------------------- --------- -------------
Consolidated statement of changes in equity
For the year ended 31 December 2022
Share Share Equity
Share premium based attributable Total
capital account payment Translation Merger Retained to owners (deficit)
reserve reserve reserve loss of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2022 2,952 51,466 4,193 (128) 10,755 (72,013) (2,775) (2,775)
Profit for
the
year - - - - - 1,325 1,325 1,325
Exchange
differences
on translation
of foreign
operations - - - 158 - - 158 158
Re-measurement
of Defined
Benefit
Pension
Schemes - - - - - 145 145 145
Profit and
total
comprehensive
expense
for the year - - - 158 - 1,470 1,628 1,628
---------------- ---------- --------- --------- ------------- ---------- ----------- ------------- -----------
Credit to
equity
for
share-based
payment - - 303 - - - 303 303
At 31 December
2022 2,952 51,466 4,495 31 10,755 (70,542) (843) (843)
---------------- ---------- --------- --------- ------------- ---------- ----------- ------------- -----------
Consolidated statement of changes in equity
For the year ended 31 December 2022
Share Share Equity
Share premium based attributable Total
capital account payment Translation Merger Retained to owners (deficit)
reserve reserve reserve loss of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2021 2,952 51,466 3,623 (91) 10,755 (72,063) (3,358) (3,358)
Profit for the
year - - - - - 72 72 72
Exchange
differences
on translation
of foreign
operations - - - (37) - - (37) (37)
Re-measurement
of Defined
Benefit
Pension
Schemes -- - - - - (22) (22) (22)
---------------- ---------- --------- --------- ------------- ---------- ----------- ------------- -----------
Profit and
total
comprehensive
income
for the year - - - (37) - 50 (13) (13)
---------------- ---------- --------- --------- ------------- ---------- ----------- ------------- -----------
Credit to
equity
for
share-based
payment - - 570 - - - 570 570
At 31 December
2021 2,952 51,466 4,193 (128) 10,755 (72,013) (2,775) (2,775)
---------------- ---------- --------- --------- ------------- ---------- ----------- ------------- -----------
Consolidated cash flow statement
For the year ended 31 December 2022
Group Group
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Profit/(loss) after tax 1,325 72
Adjustments for:
Finance costs 437 294
Depreciation of property, plant
and equipment 106 213
Revaluation of lease 178 (28)
Tax charge/(credit) (70) 46
Share-based payment expense 303 570
---------------------------------------- ---------------------------- --------------------------------
Operating cash flows before movements
in Working capital 2,279 1,168
Decrease/(Increase) in inventories 187 (211)
(Increase)/Decrease in receivables (920) 163
Increase/(Decrease) in payables 293 (287)
(Decrease)/Increase in provisions 80 7
Foreign exchange 151 -
Cash generated from operations 2,070 (840)
Tax received/(paid) 70 (46)
Net cash inflow from operating
activities 2,140 793
Cash flows from investing activities
Purchases of property, plant
and equipment (319) (204)
Loans advanced to subsidiary - -
undertakings)
Net cash (outflow)/inflow from
investing activities (319) (204)
---------------------------------------- ---------------------------- --------------------------------
Financing activities
Lease payments (209) (400)
---------------------------------------- ---------------------------- --------------------------------
Net cash outflow from financing
activities (209) (400)
---------------------------------------- ---------------------------- --------------------------------
Net increase in cash and cash
equivalents 1,612 189
Cash and cash equivalents at
beginning of year 2,387 2,210
Effect of foreign exchange rate
changes (5) (12)
Cash and cash equivalents at
end of year 3,994 2,387
Notes to the Financial Information
1. Basis of Preparation
The financial information set out in this document does not
constitute the Company's statutory accounts for the years ended 31
December 2022 or 2021 within the meaning of Section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2022, which were approved by the directors on 3 April
2023, have been reported on by the Independent Auditors. The
Independent Auditor's reports on the Annual Report and Financial
Statements for years ended 31 December 2022 and 2021 were
unqualified and did not contain a statement under 498(2) or 498(3)
of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2021 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2022 will be delivered to the Registrar
of Companies in due course and will be posted to shareholders
shortly, and thereafter will be available from the Company's
registered office at Coveham House, Downside Bridge Road, Cobham,
Surrey KT11 3EP and from the Company's website
http://www.proteomics.com/investors .
The financial information set out in these results has been
prepared using the recognition and measurement principles of UK
adopted international accounting standards in conformity with the
requirements of the Companies Act 2006. The accounting policies
adopted in these results have been consistently applied to all the
years presented and are consistent with the policies used in the
preparation of the financial statements for the year ended 31
December 2021, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2022. Other new standards, amendments and
interpretations to existing standards, which have been adopted by
the Group have not been listed, since they have no material impact
on the financial statements.
2. Liquidity and Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive Officer's Statement and
Strategic Report. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are described in
the notes to the financial statements, in particular in the
consolidated cash flow statement.
These financial statements have been prepared on the going
concern basis which remains reliant on the Group achieving an
adequate level of sales in order to maintain sufficient working
capital to support its activities. The directors have reviewed the
Company's and the Group's going concern position, taking account of
current business activities, budgeted performance and the factors
likely to affect its future development, as set out in the Annual
report, and including the Group's objectives, policies and
processes for managing its working capital, its financial risk
management objectives and its exposure to credit and liquidity
risks.
In particular, the directors have considered the potential
challenges from the macro environment on international business,
especially the Russia-Ukraine Conflict and the general inflationary
pressure on costs, may have on the ability to achieve adequate
level of sales.
Group revenues for the year ended 31 December 2022 increased by
52% to GBP7.78m (2021: GBP5.13m). Proteomics services increased 45%
to GBP2.75m (2021: GBP1.90m). Sales and royalties attributable to
TMT(R) and TMTpro(TM) reagents were GBP4.16m (2021: GBP3.23m).
Total costs were GBP6.05m (2021: GBP4.72m) and resulted in
Operating Profits increasing by 322% to GBP1.73m (2021: GBP0.41m)
and a profit after tax of GBP1.33m (2021: GBP0.07m). Adjusted
EBITDA increased to GBP2.43m (2021: GBP1.35m). Cash reserves at the
year-end increased to GBP3.99m (2021: GBP2.39m)
The Group is also dependent on the unsecured loan facility
provided by the Chairman of the Group, which under the terms of the
facility, is repayable on demand. The amount owed as of 31 December
2022, including interest, was GBP10,459k (2021: GBP10,054k).
The directors have received a legally binding written
confirmation from the Chairman that he has no intention of seeking
its repayment, with the facility continuing to be made available to
the Group, on the existing terms, for at least 12 months from the
date of approval of these financial statements or until at least 30
April 2024.
On 29 March 2021, the loan facility with Vulpes Investment
Management Private Limited ("VIM") (the "Loan") was amended such
that the Loan and all accrued interest is now repayable on 1 May
2022 (previously 1 May 2021). On the 17 June 2021 the Loan
Agreement was amended to allow for conversion into ordinary shares
such that until 30 April 2022, VIM may convert part (being not less
than GBP50,000 or a multiple thereof) or all of the Drawn Loan and
accrued interest to 31 December 2021 (being GBP51,538) into new
ordinary shares of the Company. The conversion price was 7.16p per
share, which is the average of the closing middle market price for
the ordinary shares of the Company during the five consecutive
trading days immediately prior to entering into the Loan Amendment.
The amount owed as of 31 December 2022, including interest, was
GBP802k (2021: GBP771k). On 30 March 2022, the Company signed the
Third Amendment to the VIM Loan Agreement which extended the term
of the loan to 30 June 2023.
Following a detailed review of forecasts, budgets, sales order
book and with the knowledge of how the Group has traded in the
second year post the global pandemic, the directors have a
reasonable expectation the Group as a whole, has adequate financial
and other resources to continue in operational existence for the
period of at least twelve months post approval of these financial
statements. For this reason, the Directors continue to adopt the
going concern basis in preparing the Financial Statements.
3. Profit per Share from Continuing Operations
The calculations of basic and diluted loss per ordinary share
are based on the following profits and numbers of shares.
2022 2021
GBP'000 GBP'000
Profit for the financial year 1,325 72
2022 2021
Number Number
of of
shares shares
Weighted average number of ordinary shares
for the purposes of calculating basic and
diluted earnings per share: 295,182,056 295,182,056
Weighted average number of ordinary shares
and outstanding options for the purposes
of calculating diluted earnings per share: 309,020,565 301,850,775
The weighted average number of ordinary shares outstanding was
calculated applying the treasury stock method to an amount of 18.3m
shares options which were in the money at the 31 December 2022. An
average share price for 2022 of 4.10p per share added by the
outstanding service amounts for these options and resulting in a
number of shares of 13.838,509 added to the existing issued share
stock for the purpose to calculate the diluted EPS. A number of
6.1m shares were not considered in the calculation of the weighted
number of outstanding shares used for the diluted EPS calculation
as these options were at the 31 December 2022 not dilutive.
4. Cautionary Statement on Forward-looking Statements
Proteome Sciences has made forward-looking statements in this
preliminary announcement. The Group considers any statements that
are not historical facts as "forward-looking statements". They
relate to events and trends that are subject to risk and
uncertainty that may cause actual results and the financial
performance of the Group to differ materially from those contained
in any forward-looking statement. These statements are made in good
faith based on information available to them and such statements
should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any
such forward-looking information.
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FR IJMPTMTAMBBJ
(END) Dow Jones Newswires
April 04, 2023 02:00 ET (06:00 GMT)
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