RNS Number:6447N
Osmetech PLC
11 July 2000
OSMETECH PLC
Preliminary Results For The Year Ended 30 April 2000
Osmetech plc, the world leader in electronic nose technology,
today announces the preliminary results for the year to 30
April 2000.
Highlights
* scientific proof of concept obtained for the detection
of pathogenic bacteria in human urine
* scientific proof of concept obtained for the detection
of bacterial vaginosis
* established trial sites at internationally renowned
hospitals in US and UK
* structured protocols in place for clinical studies in
support of US FDA (Food and Drug Administration) applications
* FDA submissions anticipated by the end of 2000
* good progress made in longer term projects, which
include the detection of pneumonia in intensive care patients
and pharyngitis
* management team strengthened
* a significantly improved cash position of #6,426,000 at
30 April 2000, following the rights issue and placing in
February
Gordon Hall, Chairman, commented:
"Osmetech has made excellent progress this year towards its
goal of commercially exploiting its exciting technology.
Over the next year we will be running more clinical studies
to support FDA approval applications which should ultimately
lead to product launches and commercial partnerships".
For further information, please contact:
Osmetech plc 01270 216 444
Wang Chong, CEO
James White, Chief Operating Officer
Square Mile Communications Limited 020 7601 1000
Nick Oborne /Mike Wort /Carys Jones
OSMETECH PLC
Preliminary Results For The Year Ended 30 April 2000
Chairman's Statement
Introduction
My first full year as Chairman has seen the completion of the
fundamental changes necessary to position Osmetech for the
proper development and exploitation of its multi sensor array
based gas sensing technology. The Company has a clear
business strategy focussed on healthcare applications.
Highlights
* scientific proof of concept obtained for the detection
of pathogenic bacteria in human urine
* scientific proof of concept obtained for the detection
of bacterial vaginosis
* established trial sites at internationally renowned
hospitals in US and UK
* structured protocols in place for clinical studies in
support of FDA applications
* strengthening of the management team
* a significantly improved cash position of #6,426,000 at
30 April 2000
Results
Shareholders will note that as the overall focus is on
developing applications for the healthcare market, resources
have been allocated away from the traditional industrial
business in the United States, and as anticipated, sales
revenues have declined.
Losses of #4,471,000 include various 'non-cash' items
including:
* #287,000 financing costs relating to the issue of
#2,500,000 convertible debentures in June 1999 and their
subsequent conversion.
* #147,000 exceptional stock provisions and #145,000
tangible fixed asset write downs in light of the Company's
current commercial strategy.
* #279,000 write down of intangible assets including a
rationalisation of patent costs to focus upon the core
technology and healthcare applications. The majority of the
assets written off were acquired prior to the Company's
flotation in 1994.
Cash outflow before financing increased to #3,648,000 with
#2,107,000 of this occurring during the second half of the
year. This is more representative of the 'cash burn rate'
going forward as clinical study activity increases
significantly on the major healthcare projects.
Management Changes
Over the last year the Company has made various board
changes. The appointments of Dr Wang Chong as Chief
Executive Officer, James White as Chief Operating Officer and
David Sandilands as Chief Financial Officer mean that the
Company now has a strong team of executive directors with
relevant experience to carry out the Company's strategy and
to exploit the opportunities arising in the healthcare
sector.
I am delighted to welcome Roy Davis as a non-executive
Director. Roy joined us in February and has considerable
experience of product development and supply chain
management. He is a vice president and director of Arthur D
Little Inc. and a non-executive director of Gyrus plc.
At the same time Richard Griffiths stood down as a non-
executive director, having played a major role in the re-
financing of the Company from September 1998. This was also
an appropriate stage in the Company's development for my role
as Chairman to become a non-executive position.
Strategy
The initial commercial focus is on applications where there
is a clear unmet medical need and that are most likely to
yield significant returns. The healthcare market has been
identified as providing the best opportunities. We are
currently targeting a number of projects that are discussed
below although, in time, other applications will follow.
These projects incorporate clinical studies designed to yield
statistically proven results providing support for US FDA
(Food and Drug Administration) approval and European CE
marking for the product. The projects have been divided into
near term and longer term.
Near Term Projects
General Healthcare Applications
I am pleased to announce that the first of several peer
reviewed medical publications planned for 2000 has been
accepted by the Journal of Antimicrobial Chemotherapy. The
article by Professor Ian Chopra of Leeds University
demonstrates that the Osmetech Microbial AnalyserTM can
detect the presence and growth of Staphylococcus aureus.
These results illustrate the use of the instrument in a
clinical point of care environment to detect the presence of
an infection and also to monitor the response to treatment.
Urinary Tract Infections (UTI)
We have expanded upon the original work performed by
Professor Andrew Onderdonk at Harvard Medical School, Boston,
by carrying out a proof of concept study with Professor Gary
French at St Thomas' Hospital, London. This study confirmed
that Osmetech's Microbial AnalyserTM can reliably detect the
six most common pathogens, responsible for 98% of all UTIs,
above the clinical threshold of 105 cfu/ml. We have also
been able to reproduce the results at Harvard, a first for an
electronic nose company.
We anticipate publication of the proof of concept study in a
peer reviewed medical journal later this summer. Following
meetings with the FDA, we also anticipate commencing FDA
clinical trials for UTIs late this calendar year.
Bacterial Vaginosis (BV)
We obtained very strong results from our initial study at
South Manchester University Hospital Trust in January 2000.
We are confirming the potential of Osmetech's Microbial
AnalyserTM in detecting BV by conducting a large proof of
concept study comprising 1038 patients with Dr. Phillip Hay
at St George's Hospital, London. This study is currently in
progress and should be completed later this summer. If this
study is positive and we can reproduce the positive results
in the US, we will commence BV FDA clinical trials later in
2000.
Longer Term Projects
Respiratory Tract Infections
Our more advanced projects in this therapeutic area include
pneumonia in intensive care unit (ICU) patients and
pharyngitis.
We have consolidated on the initial pioneering work in
pneumonia in ICU patients conducted in previous years by Dr.
William Hanson at the University of Pennsylvania,
Philadelphia, by studying patients with Dr. Duncan Young at
the John Radcliffe Hospital, Oxford. The initial work has
been promising, and we will be conducting further clinical
studies at both locations. However, this medical area is
technically complex and will require a longer-term approach
to developing a diagnostic device for a medical area of high
unmet need.
We have started research with Professor Edward Kaplan, the
World Health Organisation's leading Streptococcal expert, on
pharyngitis, another medical area with high unmet need. This
project is also technically complex, but initial findings
suggest that we should be able to detect at least 2 common
and important pathogens, which would improve medical practice
significantly.
Non-healthcare Applications
Whilst the current business focus is upon the healthcare
market, the Company's exciting technology provides a platform
for progressing opportunities in other markets. The
collaboration with Mitsubishi continues to develop certain
industrial applications. We anticipate that other strategic
alliances and projects will be initiated at an appropriate
stage in the Company's development.
Fund Raising
Interim fund raising of #2.2m, net of expenses, was obtained
in June 1999 with the issue of convertible debentures to a
number of US institutions. These had all been converted into
ordinary shares by the balance sheet date.
In February 2000, the Company raised #6.9m net of expenses
from a 2 for 19 Rights Issue at 23p per share and a Placing
of 11,500,000 new shares at 25p.
With cash of #6,426,000 at 30 April 2000, we expect these
funds to be sufficient to enable the Company to secure its
first major licensing deal or joint venture.
Outlook
The Company is well placed to progress towards the goal of
commercially exploiting it's 'electronic nose' technology.
Through carefully selected projects we aim to demonstrate
technological success through:
* providing proven results and clinical data
* facilitating the publication of research papers for peer
review
* obtaining FDA approval and/or European CE marking
and commercial viability through:
* meeting a market need
* providing cheaper, quicker and more objective results
than conventional tests.
This will ultimately lead to contractual arrangements with
selected commercial partners capable of exploiting the
opportunities.
Gordon J Hall
11 July 2000
For further information, please contact:
Osmetech plc 01270 216 444
Wang Chong, CEO
James White, Chief Operating Officer
Square Mile Communications Limited 020 7601 1000
Nick Oborne /Mike Wort /Carys Jones
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 April 2000
2000 1999
# #
Turnover 480,185 759,140
Cost of sales 245,455 402,994
------------ ------------
Gross profit 234,730 356,146
Administrative expenses 4,577,528 3,143,928
------------ ------------
(4,342,798) (2,787,782)
Other operating income 4,994 62,720
------------ ------------
Operating loss (4,337,804) (2,725,062)
Exceptional item - credit on
fundamental reorganisation - 132,254
------------ ------------
(4,337,804) (2,592,808)
Interest receivable 179,075 74,126
Interest payable and similar charges (311,798) (24,767)
------------ ------------
Loss on ordinary activities before
taxation (4,470,527) (2,543,449)
Taxation - -
------------ ------------
Loss for the year (4,470,527) (2,543,449)
============ ============
Loss per share - basic (2.42p) (2.54p)
============ ============
All amounts relate to continuing
activities.
Consolidated statement of total recognised gains and losses
# #
Loss for the financial year after
taxation (4,470,527) (2,543,449)
Exchange gains on consolidation 6,418 7,357
------------ ------------
Total recognised losses for the year (4,464,109) (2,536,092)
============ ============
CONSOLIDATED BALANCE SHEET
at 30 April 2000
2000 1999
# # # #
Fixed assets
Intangible assets 812,994 1,034,297
Tangible assets 320,991 569,951
----------- -----------
1,133,985 1,604,248
Current assets
Stocks 152,532 450,571
Debtors - due within
one year 234,212 271,301
Cash at bank and in hand 6,426,241 1,036,594
---------- ----------
6,812,985 1,758,466
Creditors: amounts falling
due within one year 448,654 847,939
---------- ----------
Net current assets 6,364,331 910,527
---------- ----------
Total assets less
current liabilities 7,498,316 2,514,775
========== ==========
Capital and reserves
Called up share capital
- equity 2,136,025 1,661,222
Share premium account
- equity 21,503,587 12,530,740
Profit and loss account
- equity (16,141,296) (11,677,187)
------------ ------------
Shareholders' funds 7,498,316 2,514,775
============ ============
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 April 2000
Reconciliation of operating loss to net cash outflow from
operating activities
2000 1999
# #
Operating loss (4,337,804) (2,725,062)
Amortisation 36,441 59,445
Depreciation 394,895 213,142
Decrease in stocks 202,374 14,677
Decrease/(increase) in debtors 102,006 (50,518)
(Decrease) in creditors (295,107) (52,144)
Loss on disposal of fixed assets 424,086 48,785
------------- ------------
Net cash outflow from operating
activities (3,473,109) (2,491,675)
============= ============
Consolidated cash flow statement
2000 1999
# #
Net cash outflow from operating
activities (3,473,109) (2,491,675)
Returns on investments and
servicing of finance 109,552 43,655
Capital expenditure (284,400) (241,326)
------------ ------------
Net cash outflow before financing (3,647,957) (2,689,346)
Financing 9,036,170 2,450,842
------------ ------------
Increase/(decrease) in cash 5,388,213 (238,504)
============ ============
Reconciliation of net cash flow to movement in net funds
2000 1999
# #
Increase/(decrease) in cash in the
year 5,388,213 (238,504)
Finance lease repayments 2,280 26,274
Exchange differences 1,377 1,296
------------ ------------
Change in net funds 5,391,870 (210,934)
Net funds at beginning of year 1,034,371 1,245,305
------------ ------------
Net funds at end of year 6,426,241 1,034,371
============ ============
Notes
1. Results
This statement presents results for the year ended 30 April
2000 and was approved by the Board on 10 July 2000. It
does not constitute full accounts for the purpose of
Section 240 of the Companies Act 1085. The figures have
been prepared on the basis of the accounting policies set
out in the most recently published set of financial
statements.
The audit report on the full final statements for the year
ended 30 April 2000 is yet to be signed.
The information relating to the year ended 30 April 1999 is
based on the full financial statements which have been
delivered to the Registrar of Companies and on which the
auditors' opinion was unqualified.
2. Loss per share
The basic loss per share has been calculated on the
weighted average number of shares in issue during the year
namely 184,627,231 (1999 - 99,955,124) and losses of
#4,470,527 (1999 - #2,543,449).
3. Operating loss
2000 1999
# #
This is arrived at after
charging:-
Amortisation of intangible fixed assets 36,441 59,445
Depreciation 394,895 213,142
Auditors' remuneration - audit services 25,891 22,300
- non audit services 49,228 11,236
Operating lease rentals 165,978 155,148
Research and Development 1,951,927 1,093,606
Loss on disposal of fixed assets 424,085 48,785
============ ============
4. Exceptional item - credit on fundamental reorganisation
2000 1999
# #
This reflects the subsequent
recognition of certain fixed
assets in 1999, following the
fundamental reorganisation of
the business in 1998
- 132,254
============ ============
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