TIDMSPHR
RNS Number : 5027K
Sphere Medical Holding plc
22 September 2016
Dr Wolfgang Rencken, Chief Executive Officer, and Richard
Wright, Chief Financial Officer, will host a presentation for
analysts at 11.00am today at the Guildhall Room, 85 Gresham Street,
London, EC2V 7NQ. There will be a conference call for remote users
with a replay available afterwards. Dial-ins are: UK: +44 1452 555
566, ID: 63784001.
22 September 2016
Sphere Medical Holding plc
("Sphere Medical" or the "Company")
Interim Results for the six months ended 30 June 2016
Sphere Medical Holding plc (AIM: SPHR.L), an innovative
point-of-care monitoring and diagnostic devices company, announces
its unaudited interim results for the six months ended 30 June
2016.
Operational Highlights including Post Period End
-- Commercial sales of Proxima(TM) 3 in Germany and Belgium
-- Increasing Proxima usage, with patient connections up 52% on H2 2015
-- Proxima 4 CE marking well advanced
o CE marking completed for three of the four components
-- Proxima 4 commercial launch preparations underway
-- Exclusive distributor appointed for Proxima 4 in Italy
-- University Hospital Southampton time and motion study
demonstrates statistically significant workflow benefits of using
Proxima
-- Improved connectivity between Proxima and hospital data management systems
-- New production facility opened in Wales and product manufacture commenced
Financial Highlights
-- Continued tight financial control with operating expenses below budget
o Total operating expenses GBP3.7 million before capitalisation
(H1 2015: GBP3.5 million)
-- Increased confidence in commercial viability of Proxima
o Product development costs capitalised GBP1.1 million (H1 2015:
GBPnil)
-- Loss before taxation GBP2.6 million (H1 2015: GBP3.5 million)
-- Research and Development tax credit of GBP0.6 million received (H1 2015: GBPnil)
-- Cash and cash equivalents of GBP6.6 million (2015: GBP12.8 million) at 30 June 2016
Commenting on the interim results, Dr Wolfgang Rencken, Chief
Executive Officer of Sphere Medical, said: "The commercialisation
of Proxima is advancing well. With the Company now poised to launch
Proxima 4, we are at an exciting stage as we transition further
into being a commercial organisation centred on serving our
customers, generating growing revenues and moving towards the goals
of cash generation and profitability . We will be focused on
growing revenues as quickly as possible once Proxima 4 is launched.
Discussions are continuing with more potential regional partners
and over the coming months we aim to increase the geographic reach
of Proxima. We look forward to continuing the development of Sphere
Medical into a commercially successful company."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
- Ends -
For further information, please contact:
Sphere Medical Holding Tel: +44 (0)1223 875
plc 222
Dr Wolfgang Rencken, Chief
Executive Officer
Richard Wright, Chief Financial
Officer
Panmure Gordon Tel: +44 (0) 20 7886
2500
Freddy Crossley (Corporate
Finance)
Duncan Monteith (Corporate
Finance)
Tom Salvesen (Corporate
Broking)
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Mary-Jane Elliott spheremedical@consilium-comms.com
Chris Gardner
Ivar Milligan
Hendrik Thys
Notes for Editors
About Sphere Medical (AIM: SPHR.L)
Sphere Medical is an innovative point-of-care medical device
company. Its Proxima platform measures blood gases, electrolytes
and metabolites at the patient's bedside and aims to improve
patient care and reduce health system costs. The device is
currently sold directly to the critical care market via Sphere
Medical's sales force in the UK, Germany, The Netherlands and
Belgium. For further information, please visit
www.spheremedical.com.
Chief Executive's Report
Introduction
The commercialisation of our Proxima platform is advancing well.
We are now close to completing the CE-marking process, having
received CE marks for three of the four components, and are
preparing for the commercial launch of Proxima 4. This new
generation of the product is a major advancement for the sales
potential of the platform and incorporates additional analytes of
glucose and sodium, plus it brings a number of important usability
improvements, as well as enhanced connectivity.
Proxima 3 was launched primarily to obtain market feedback and
there has been a good level of interest expressed in Proxima by
clinicians, with more evaluations completed and increasing usage on
patients.
Expanding geographic reach is a key part of our strategy for
commercialising Proxima. In July 2016 we were very pleased to
appoint Burke and Burke as exclusive distributor for Italy, and
look forward to appointing more regional distributors in other key
markets in Europe over the coming months.
Sales
Sphere Medical has a dedicated sales force in the UK, Germany,
The Netherlands and Belgium focussing initially on obtaining direct
feedback from the market on Proxima 3. With the launch of Proxima 4
approaching, we are entering a phase of increasing our commercial
footprint by adding regional distributors.
Following on from the first commercial sale of Proxima in the UK
in 2015, in January 2016 we achieved the first commercial sale in
Germany and in August 2016 this was followed by a first sale in
Belgium.
Interest in Proxima continues to grow, with more hospitals
evaluating Proxima in the first six months of 2016 than in the same
period in 2015, and the number of patients being connected to the
product increasing by 52% over the second half of 2015. To date
Proxima has been connected to around 150 patients. Our marketing
and sales activities have led to a healthy pipeline for Proxima 4,
with a large proportion of hospitals that have evaluated Proxima 3
indicating an interest in the enhanced Proxima 4 product.
Development
Proxima 4 is Sphere Medical's next generation of
patient-attached blood gas analyser. The sensor panel has been
expanded to include glucose and sodium. This will significantly
expand the list of conditions for which monitoring with Proxima is
best suited, expanding the market opportunity for its application.
In addition, there are a number of important usability
improvements. Connectivity has also been improved, with
connectivity now available between Proxima and Conworx and CliniSys
data management systems. These systems are used extensively in
European hospitals and beyond and this improvement will enable the
seamless transfer of test results from Proxima into patient records
and laboratory information systems. We believe Proxima 4 will
increase the addressable market fourfold compared to Proxima 3.
Proxima 4 is a major step forward in the product evolution. We
have a strong development pipeline focusing on adding further
workflow improvements and lactate as the next step. As with glucose
and sodium, adding lactate will further expand the range of
conditions for which Proxima is best suited.
Distribution strategy
We recognise that the quickest and most economical way of
achieving a rapid roll-out of Proxima into major markets around the
world is to establish partnering arrangements. Our strategy is to
put in place distributors for the key European markets first while
keeping a direct sales presence for continued market feedback, and
then expand into other major markets as we complete registration in
those territories.
In July 2016, we were pleased to appoint our first European
distributor, Burke and Burke, in Italy. Burke and Burke has
considerable experience in point of care devices and already
markets a number of medical devices, including complex ventilation
devices and anaesthesia monitoring devices, to critical care units
in hospitals throughout Italy. Under the terms of the distribution
agreement, Burke and Burke will commence marketing of Proxima 4 as
soon as it is launched and will place an initial order for Proxima
4 monitors and consumables.
Over the coming months, we will aim to put in place distributors
for other key European markets. In the longer term, we plan to
distribute Proxima in major markets around the world. We have
initiated a project to look at the regulatory options for
registering in the US.
Time and motion Study
In conjunction with University Hospital Southampton, we have
conducted a time and motion study to investigate the workflow
impacts of Proxima in a highly optimised cardiac intensive care
unit. Results were presented at the British Association of Critical
Care Nurses annual conference earlier this month. The study
involved 20 patients and showed a statistically significant
reduction in total time taken to deliver results to the bedside by
using Proxima compared with the existing standard process in a
highly optimised, well equipped cardiac ICU involving near-patient
benchtop blood gas analysers. This confirms the significant
workflow benefits from using Proxima on unstable patients requiring
frequent blood gas measurements.
Production
Our production facility in St Asaph, North Wales, opened in
February 2016 and has already commenced production of Proxima
components within a very short space of time. Over the next 12 to
18 months the Company plans to gradually transfer more elements of
the production process from its site at Harston, Cambridge to St
Asaph. Over the next couple of years, we plan to substantially
lower the cost of goods.
Intellectual property
Work continues to maintain and strengthen the Company's
intellectual property portfolio. The Proxima trademark is now
registered across the EU and we have over 20 patents granted or
in-application.
Financial review
Operating expenses were GBP3.7 million (H1 2015: GBP3.5 million)
before capitalisation. Reflecting the commercialisation stage of
Proxima, sales and marketing expenses increased from GBP0.5 million
in H1 2015 to GBP0.7 million in H1 2016 and production overheads
increased over the same period by GBP50,000 to GBP0.7 million.
Administrative expenses remained stable at GBP1.0 million. Product
development costs of GBP0.1 million (H1 2015: GBP1.2 million) were
expensed in the period and GBP1.1 million (2015 H1: GBPnil) of
product development costs were capitalised, reflecting increased
confidence in the commercial viability of Proxima.
The loss for the period was GBP2.6 million (H1 2015: GBP3.5
million). The basic and fully diluted loss per share for the period
was 1.4 pence (H1 2015: 4.0 pence).
The net cash outflow from operating and investing activities in
the period was GBP3.3 million, in line with H1 2015. This was after
the receipt of a research and development tax credit of GBP0.6
million (H1 2015: GBPnil). Net cash and cash equivalents at 30 June
2016 was GBP6.6 million (30 June 2015: GBP12.8 million).
The Team at Sphere Medical
Sphere Medical continues to benefit from the hard work and
expertise of its employees who, with the Board, are fully committed
to making Sphere Medical a successful commercial medical device
company.
We would like to take this opportunity to thank all our
employees and management for their continued commitment and
shareholders for their on-going support of Sphere Medical.
Outlook
With the Company now close to completing the CE-marking process
and launch of Proxima 4, it is at an exciting stage of its
transition into a commercial organisation centred on serving its
customers, generating growing revenues and moving towards the goals
of substantial cash generation and profitability. We will be
focused on growing revenues as quickly as possible once Proxima 4
is launched. The coming months will also bring discussions with
more potential distribution partners to increase the geographic
reach of Proxima. We look forward to continuing the development of
Sphere Medical into a commercially successful company.
Dr Wolfgang Rencken
Chief Executive Officer
Consolidated Statement of Comprehensive Income
for the 6 months to 30 June 2016
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Notes Unaudited Unaudited Audited
------------------------------ ------ ------------------- ---------------------- -------------
Revenue 6 10 15
Cost of sales (3) - (2)
------------------------------ ------ ------------------- ---------------------- -------------
Gross profit 3 10 13
------------------------------ ------ ------------------- ---------------------- -------------
Product development (117) (1,174) (1,328)
Quality and Regulatory
expenses (175) (177) (347)
Production overheads (670) (620) (1,279)
Selling and marketing
expenses (681) (508) (978)
Administrative expenses (1,003) (1,016) (2,194)
Operating expenses
(net) (2,646) (3,495) (6,126)
------------------------------ ------ ------------------- ---------------------- -------------
Operating loss (2,643) (3,485) (6,113)
Finance income 45 19 91
Finance costs - - -
------------------------------ ------ ------------------- ---------------------- -------------
Loss before taxation (2,598) (3,466) (6,022)
Tax credit 556 - 557
------------------------------ ------ ------------------- ---------------------- -------------
Loss and total comprehensive
income for the period
attributable to the
equity holders of
the parent (2,042) (3,466) (5,465)
------------------------------ ------ ------------------- ---------------------- -------------
Loss per share attributable
to the equity holders
of the parent
Basic and diluted 4 (1.4p) (4.0p) (4.8p)
------------------------------ ------ ------------------- ---------------------- -------------
Total comprehensive income equates to the loss for the period
reported above.
All amounts derive from continuing operations.
The accompanying notes form an integral part of this
Consolidated Statement of Comprehensive Income.
Consolidated Statement of Financial Position
at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Notes Unaudited Unaudited Audited
------------------------------ ------ ----------- ----------- ------------
ASSETS
Non-current assets
Property, plant and
equipment 214 101 103
Intangible assets 2,030 13 896
------------------------------ ------ ----------- ----------- ------------
2,244 114 999
Current assets
Inventories 433 275 384
Trade and other receivables 150 182 127
Cash and cash equivalents 6,637 12,751 10,028
------------------------------ ------ ----------- ----------- ------------
Total assets 9,464 13,322 11,538
------------------------------ ------ ----------- ----------- ------------
EQUITY
Called up share capital 5 1,418 1,418 1,418
Share premium account 58,031 58,102 58,102
Other reserve 2,803 2,835 2,786
Profit and loss account (53,611) (49,845) (51,693)
------------------------------ ------ ----------- ----------- ------------
Equity shareholders'
funds 8,641 12,510 10,613
------------------------------ ------ ----------- ----------- ------------
LIABILITIES
Current liabilities
Trade and other payables 823 812 925
Total liabilities 823 812 925
------------------------------ ------ ----------- ----------- ------------
Total equity and liabilities 9,464 13,322 11,538
------------------------------ ------ ----------- ----------- ------------
The accompanying notes form an integral part of this
Consolidated Statement of Financial Position.
Consolidated Statement of Cash Flow
for the 6 months to 30 June 2016
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Notes Unaudited Unaudited Audited
--------------------------- ------ ----------- ----------- -------------
Operating activities 6 (2,069) (3,253) (5,117)
--------------------------- ------ ----------- ----------- -------------
Cash flows from investing
activities
Purchase of property,
plant and equipment (157) (57) (101)
Purchase of intangible
assets (1,139) (7) (892)
Interest received 45 19 91
--------------------------- ------ ----------- ----------- -------------
(1,251) (45) (902)
--------------------------- ------ ----------- ----------- -------------
Cash flows from financing
activities
Issue of share capital - 13,176 13,176
Issue expenses (71) (830) (830)
(Discharge) of finance
lease liabilities - - (2)
(71) 12,346 12,344
--------------------------- ------ ----------- ----------- -------------
Net change in cash
and cash equivalents
in the period (3,391) 9,048 6,325
Cash and cash equivalents
at beginning of period 10,028 3,703 3,703
--------------------------- ------ ----------- ----------- -------------
Cash and cash equivalents
at end of period 6,637 12,751 10,028
--------------------------- ------ ----------- ----------- -------------
The accompanying notes form an integral part of this
Consolidated Statement of Cash Flow.
Consolidated Statement of Changes in Equity
for the 6 months to 30 June 2016
Share
capital
(Note Share Other Retained Total
5) premium reserve loss equity
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ --------- --------- --------- --------- ---------
12 months ended 31 December
2015 - Audited
Balance as at 31
December 2014 594 46,580 2,933 (46,503) 3,604
Loss for the year
ended 31 December
2015 - - - (5,465) (5,465)
------------------------ --------- --------- --------- --------- ---------
Total comprehensive
income for the year
ended 31 December
2015 - - - (5,465) (5,465)
Employee share-based
compensation - - 128 - 128
Issue expenses - (830) - - (830)
Issue of share capital 824 12,352 - - 13,176
Reclassification
following lapse of
options - - (275) 275 -
------------------------ --------- --------- --------- --------- ---------
Transactions with
owners 824 11,522 (147) 275 12,474
------------------------ --------- --------- --------- --------- ---------
Balance as at 31
December 2015 1,418 58,102 2,786 (51,693) 10,613
------------------------ --------- --------- --------- --------- ---------
6 months ended 30 June
2016 - Unaudited
Total comprehensive
income for the 6
months ended 30 June
2016 - - - (2,042) (2,042)
Issue of share capital - - - - -
Issue expenses - (71) - - (71)
Employee share-based
compensation - - 141 - 141
Reclassification
following lapse of
options - - (124) 124 -
------------------------ --------- --------- --------- --------- ---------
Transactions with
owners - (71) 17 (1,918) (1,972)
------------------------ --------- --------- --------- --------- ---------
Balance as at 30
June 2016 1,418 58,031 2,803 (53,611) 8,641
------------------------ --------- --------- --------- --------- ---------
Share
capital
(Note Share Other Retained Total
5) premium reserve loss equity
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ --------- --------- --------- --------- ---------
6 months ended 30 June
2015 - Unaudited
Balance as at 31
December 2014 594 46,580 2,933 (46,503) 3,604
------------------------ --------- --------- --------- --------- ---------
Total comprehensive
income for the 6
months ended 30 June
2015 - - - (3,466) (3,466)
Issue of share capital 824 12,352 - - 13,176
Issue expenses (830) (830)
Employee share-based
compensation - - 26 - 26
Reclassification
following lapse of
options - - (124) 124 -
------------------------ --------- --------- --------- --------- ---------
Transactions with
owners 824 11,522 (98) 124 12,372
------------------------ --------- --------- --------- --------- ---------
Balance as at 30
June 2015 1,418 58,102 2,835 (49,845) 12,510
------------------------ --------- --------- --------- --------- ---------
The accompanying notes are an integral part of this Consolidated
Statement of Changes in Equity.
Notes to the Interim Financial Statements
1. Nature of financial information
These half year financial statements, which were approved by the
Board on 21 September 2016, are unaudited and do not constitute
statutory accounts as defined in section 434 of the Companies Act
2006.
The financial statements have been prepared under the historical
cost convention and in accordance with the recognition and
measurement principles of International Financial Reporting
Standards (IFRSs) as adopted by the European Union. These interim
financial statements do not contain all the information required
for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group
as at the year ended 31 December 2015.
Statutory accounts for the Group and the Company for the year
ended 31 December 2015, which contain an unqualified audit report
from Grant Thornton UK LLP, have been delivered to the Registrar of
Companies and did not contain statements under section 498(2) or
section 498(3) of the Companies Act 2006. The comparative financial
information for that period has been extracted from such
accounts.
The comparative information for the six months ended 30 June
2015 has been extracted from the unaudited management accounts and
is correspondingly shown as unaudited.
Going concern
At 30 June 2016 the cash balance available to the Group was
GBP6.6 million and the net cash outflow from operating activities
and investing activities in the six months ended 30 June 2016 was
GBP3.3 million.
The Group's revenues from sales of products are not expected to
be sufficient for the Group to become cash generative from
commercial operations over the next 12 months. The Board's
confidence that the development and commercialisation of the
Group's principal product, Proxima, will prove to be successful has
been increased by positive feedback Proxima has received in the
market, including its first sales, and by the good progress that
has been made towards launching Proxima 4 in Europe.
The Group may need to raise additional finance before it becomes
cash generative. The Group has a good track record of being able to
raise additional finance when it has needed to do so. The Board of
Directors has concluded that the combination of these circumstances
represents a material uncertainty which may cast significant doubt
about the Group's ability to continue as a going concern and,
therefore that it may be unable to realise its assets and discharge
its liabilities in the normal course of business.
Nevertheless, based on the GBP6.6 million of cash and cash
equivalents as at 30 June 2016, the 2016 budget approved by the
Board of Directors, the business plan for the next several years
and the Company's track record in raising additional finance, the
Board of Directors continues to believe it is appropriate to adopt
the going concern basis of accounting in preparing these financial
statements.
2. Significant accounting estimates and judgements
Share options and warrants
Share options are granted over a discretionary period and vest
in tranches over a three-year period. The fair value of options is
determined using the Black-Scholes valuation model, which requires
a number of estimates and assumptions. The significant inputs into
the model are the share price at the date of grant, the exercise
price, the expected option life, the expected volatility and the
risk-free interest rate.
Deferred tax asset
The Board uses its judgement in the assessment of the extent, if
any, to which to recognise the deferred tax asset, based on the
forecast trading performance and the expected use of trading
losses.
Research and development expenditure
The Board uses its judgement in the assessment of the extent, if
any, to which expenditure is identified as development expenditure
rather than research expenditure. Key to this judgement is
assessing whether or not the asset will generate probable future
economic benefits and determining that the Group has adequate
technical, financial and other resources to complete the
development. Having launched Proxima 3 and achieved the first
commercial sale the Directors reassessed the technical and
commercial feasibility of the Proxima system and decided that the
conditions for capitalising development costs had been met.
3. Principal accounting policies
The accounting policies for the six months ended 30 June 2016
are unchanged from those set out in the financial statements for
the year ended 31 December 2015.
The financial statements consolidate the financial statements of
Sphere Medical Holding plc and its subsidiary undertaking Sphere
Medical Limited.
4. Loss per share
Fully diluted loss per share is calculated after showing the
effect of outstanding options in issue. As the effect of the
options would be to reduce the loss per share, the diluted loss per
share is the same as the undiluted loss per share.
Calculation of loss per share is based on the following loss and
numbers of shares:
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
----------------------------- ----------- ----------- -------------
Loss attributable to equity
holders in the Company (2,042) (3,466) (5,465)
----------------------------- ----------- ----------- -------------
Number Number Number
('000) ('000) ('000)
----------------------------- -------- -------- --------
Weighted average number
of equity shares in issue:
----------------------------- -------- -------- --------
For basic loss per share 141,758 86,704 114,457
----------------------------- -------- -------- --------
5. Share capital
6 months to 12 months to
6 months to 30 June 2015 31 December
30 June 2016 Unaudited 2015
Unaudited Audited
------------- ---------------------------- -------------------------- ------------- -------------
Number Start End of Start End of Start End of
of shares of period period of period period of period period
------------- ------------- ------------- ----------- ------------- ------------- -------------
Issued
and
fully
paid
Ordinary
Shares
of GBP0.01 141,757,872 141,757,872 59,405,290 141,757,872 59,405,290 141,757,872
------------- ------------- ------------- ----------- ------------- ------------- -------------
Nominal
value
Ordinary GBP1,417,579 GBP1,417,579 GBP594,052 GBP1,417,579 GBP594,052 GBP1,417,579
Shares
of GBP0.01
------------- ------------- ------------- ----------- ------------- ------------- -------------
6. Reconciliation of operating loss to operating cash flows
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
----------------------------- ----------- ----------- -------------
Operating activities -
loss for the period before
interest and tax (2,643) (3,485) (6,113)
Depreciation included in
expenses 45 64 106
Amortisation included in
expenses 6 6 8
Share-based payments 141 26 128
Change in inventory (49) (60) (169)
Change in trade and other
receivables (23) 22 77
Change in trade and other
payables (102) 174 289
Taxes received 556 - 557
----------------------------- ----------- ----------- -------------
(2,069) (3,253) (5,117)
----------------------------- ----------- ----------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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