RNS Number:5594T
Tepnel Life Sciences PLC
26 March 2002
FOR IMMEDIATE RELEASE
26th March 2002
Tepnel Life Sciences plc ('Tepnel') Interim Results
Manchester, UK. 26th March 2002...Tepnel is a global biotechnology company with
a "tripolar" strategy focused on providing the biomedical industry with
high-throughput automated DNA purification systems, manual DNA kits, as well as
services for nucleic acid purification, drug analysis, genotyping and
genetically modified foods.
Highlights
• Worldwide launch of the T1000 instrument, Tepnel's first automated system
for DNA purification
• Signed distribution agreement with Takara Biomedical for sales and
distribution of the T1000, Nucleon manual kits and future automated DNA
purification systems in the Far East
• Developing worldwide distribution and direct sales capabilities
• £7.45m (net) raised in July 2001 from a placing and open offer of 40.26m
new ordinary shares which expanded Tepnel's institutional investor base
• Extended high throughput genotyping capabilities through purchase of
SNPstreamTM 25K genotyping system and a licence to the proprietary databases of
Orchid Biosciences - Orchid Biosciences has taken a 1.83% stake in Tepnel
• Formation of Tepnel Scientific Services Ltd through the acquisition of
the Medicines Testing Laboratory (MTL) from The Royal Pharmaceutical Society of
Great Britain
• Growth in sales of Tepnel BioSystems' DNA kits, allergen testing kits and
services.
• Strengthened the Board with the appointment of two new Directors
Financial Results
In the six months to 31 December 2001, turnover almost doubled to £1.42m (2001:
£729,000). Pre-tax losses for the period, excluding acquisitions, increased 24%
to £1.50m (2001: £1.21m) primarily due to the costs associated with the launch
of our T1000 system. The total loss for the period was £1.95m (2001: £1.21m) and
included £288,000 of exceptional non-recurring redundancy and restructuring
costs relating to the acquisition of the Medicines Testing Laboratory (MTL).
However, the loss per share has decreased to 2.1p (2001: 2.3p).
Overview
In the first half of the current financial year Tepnel has continued to pursue
its tripolar strategy. This strategy is based on providing its pharmaceutical
customers with automated DNA purification systems, manual DNA kits and reagents,
as well as a range of scientific services.
To support this strategy, Tepnel raised £7.45m (net of expenses) in July 2001.
Our ability to raise this money during difficult equity market conditions
provides a strong endorsement of our strategy, management and prospects going
forward.
These funds have enabled the Company to:
• Support the commercialisation of the T1000 and development of
subsequent automated systems
• Develop our manual kits product offering
• Expand our scientific services business focusing on genetic analyses
for the pharmaceutical industry and academic and biotechnology research markets
Following the appointment of Don Marvin as Non-Executive Director in May 2001,
Tepnel has further strengthened its Board with the appointment of two new
Directors in March 2002, providing access to the international experience needed
to deliver our strategy. Marvin Miller, who recently retired as the CEO of
Nextran, a subsidiary of Baxter International Inc. joined the Board as a Non
-Executive Director, along with Gron Ffoulkes-Davies, who became Group Finance
Director.
Automated DNA Purification Systems
The key event for the reporting period was the worldwide launch of our first
automated DNA purification system, the T1000 system for plasmid DNA
purification. The T1000, targeted at academic laboratories and research
laboratories within pharmaceutical and biotechnology industries is a
cost-effective, dedicated system that combines ease-of-use with complete
automation and excellent performance. Initial feedback on the system's
performance has exceeded expectations and has resulted in a number of favourable
articles in key publications such as Medical Laboratory World, Laboratory News,
International Labmate and International Biotechnology Laboratory.
At our AGM in December 2001, we announced that we had signed Heads of Agreement
with a major Japanese distributor covering the sales and distribution of the
T1000 in the Far East. In March 2002, we completed a major milestone for the
Company with the signing of this first distribution agreement for the T1000.
Takara Biomedical Group is a division of the $1.5 billion Japanese beverage
company Takara Shuzo Co., Ltd. Takara Biomedical Group is a major supplier of
reagents, instruments, and analytical services to the Japanese biomedical market
and has its own sales/distributor network in other Asian countries. In Japan
Takara Biomedical has gained over 50% of the domestic market of reagents for use
in genetic engineering research, such as PCR-related enzymes and kits,
restriction endonucleases and modifying enzymes. Therefore the T1000 instrument
will be an important, highly complementary product offering to researchers
working in the field of DNA analysis. Also, its success in offering many types
of service business makes Takara Biomedical a comprehensive supplier to the
biotech industry.
Under the terms of this multiple year distribution agreement, Takara Biomedical
will immediately purchase a number of T1000 systems and has committed to
on-going purchases for additional instruments. As well as the T1000, Takara
Biomedical will also distribute Tepnel's Nucleon manual DNA purification
products as well as future automated systems. We are also in discussions with
potential European and US distributors.
In January 2002, Tepnel completed a major market research study that enabled it
to finalise specifications for new genomic DNA purification systems.
Manual DNA Purification Kits
In line with our tripolar strategy, we are continuing to develop and expand our
Nucleon range of manual DNA purification kits. Tepnel has developed new
chemistries for the purification of DNA from blood with excellent results.
Scientific Services
In the reporting period we also took a number of initiatives to position us at
the forefront of the growing market for the outsourcing of analytical services.
In July 2001, we acquired the Medicines Testing Laboratory (MTL) and
successfully merged it with our existing BioAnalytical Services business to
create Tepnel Scientific Services Ltd (TSS). Not only does MTL bring significant
turnover to the Tepnel group, it also expands the range of analytical and
microbiological services that we can offer to the pharmaceutical, biotechnology
and healthcare industries.
In October 2001, we extended our service offering downstream of DNA
purification, to the field of genotyping through the purchase of a SNPstreamTM
25K genotyping system and database licence from Orchid Biosciences. We are
collaborating with Orchid to market these genotyping services alongside our own
NAP (nucleic acid purification) service for use in the clinical phase of the
drug development process throughout the UK and Ireland.
Tepnel BioSystems
Tepnel BioSystems (TBS) has also made progress during the period. This is the
result of several factors, including the rapid market growth for the testing of
allergens in food. In addition, new products have been launched that test for
EU-approved genetically modified organisms (GMOs), and for sesame and milk
allergens in food. TBS continues to develop new test kits for additional GMOs
and other allergens. TBS was awarded a SPUR grant of £106,000 in December 2001
to support the development of rapid food-testing kits.
Prospects
In the past nine months, we have made considerable progress in moving ahead with
our tripolar strategy of providing pharmaceutical and biotechnology customers
with a comprehensive range of DNA purification products, both automated and
manual, analytical services and genomics services.
The launch of the new T1000 system and our initial distribution deal with Takara
Biomedical in Japan highlight Tepnel's truly competitive global position in the
rapidly growing market for automated DNA purification and analysis.
Similarly, the initiatives that we have taken in the UK to extend our service
offering put us at the forefront of the rapidly growing market for outsourced
scientific services from pharmaceutical, biotechnology, healthcare and food
companies.
Looking ahead we believe that by continuing to deliver our tripolar strategy we
will be able to generate considerable value for our shareholders.
Consolidated Profit and Loss Accounts for the Six months ending 31 December 2001
Continuing Operations Total
Acquisitions Unaudited Unaudited Audited
Unaudited
Unaudited 6 months to 6 months to 6 months to Year To
6 months to 31st December 31st December 31st December 30th June
31st December
2001 2001 2001 2000 2001
£'000 £'000 £'000 £'000 £'000
Turnover 858 562 1,420 729 1,759
Cost of Sales (496) (372) (868) (407) (923)
Gross Profit 362 190 552 322 836
Research and Development (917) (917) (841) (2,055)
Sales and Marketing (433) (24) (457) (465) (908)
Administrative expenses (614) (325) (939) (276) (606)
Administrative (288) (288)
expenses-exceptional item
Total administrative expenses (1,964) (637) (2,601) (1,582) (3,569)
Operating loss (1,602) (447) (2,049) (1,260) (2,733)
Interest payable (1) (1) (29)
Interest Receivable 102 52 69
Loss on ordinary activities (1,948) (1,209) (2,693)
before taxation
Tax credit 45
Loss on ordinary activities (1,903) (1,209) (2,693)
after taxation
Basic loss per share 2.1p 2.3p 5.2p
Fully diluted loss per share 2.1p 2.3p 5.2p
Consolidated Balance Sheet as at 31 December 2001
Unaudited Unaudited Audited
6 months to 6 months to Year To
31st December 31st December 30th June
2001 2000 2001
£'000 £'000 £'000
Fixed Assets
Intangible assets 1,649 1,597 1,574
Tangible assets 1,263 532 548
2,912 2,129 2,122
Current Assets
Stocks 724 323 450
Debtors and prepayments 910 518 720
Investments 20 20 20
Cash at bank and in hand 4,593 922 352
6,247 1,783 1,542
Creditors: amounts falling due within (1,053) (723) (1,938)
one year
Net current assets / (liabilities) 5,194 1,060 (396)
Total assets less current liabilities 8,106 3,189 1,726
Creditors: amounts falling due (12) (21)
greater than one year
Total assets less liabilities 8,094 3,189 1,705
Capital and Reserves
Called up share capital 958 520 520
Share premium account 26,426 18,572 18,572
Profit and loss account (19,290) (15,903) (17,387)
Shareholders' funds 8,094 3,189 1,705
Consolidated Cash Flow Statement for 6 months ended 31 December 2001
Unaudited Unaudited Audited
6 months to 6 months to Year To
31st December 31st December 30th June
2001 2000 2001
£'000 £'000 £'000
Reconciliation of operating Loss to net cash
flow from operating activities
Operating Loss (2,049) (1,260) (2,733)
Depreciation 129 88 158
Amortisation 32 24 48
(Increase) / Decrease in stocks (172) 33 (94)
Increase in debtors (190) (26) (228)
Increase in creditors 115 52 261
Net cash outflow from operating activities (2,135) (1,089) (2,588)
Cash flow statement
Net cash outflow from operating activities (2,135) (1,089) (2,588)
Return on Investment - interest received 67 51 40
Acquisitions (275)
Tax Credit 45
Investing activities (500) (75) (131)
Net cash outflow before financing (2,798) (1,113) (2,679)
Management of liquid resources 838 1,608
Financing 7,039 (3) 994
(Decrease)/Increase in cash 4,241 (278) (77)
Reconciliation of net cash flow to movement
in net funds
(Decrease)/increase in cash 4,241 (278) (77)
Cash inflow from short term deposits (838) (1,608)
Cash outflow from decrease in lease 9 3 6
financing
Convertible Loan 1,000 (1,000)
Change in net funds resulting from cash flow 5,250 (1,113) (2,679)
New finance leases (30)
Net funds at beginning of period (686) 2,023 2,023
Net funds at end of period 4,564 910 (686)
Notes
1 The interim Report for the six months ended 31st December 2001 is unaudited
and was approved by the directors. The financial information set out above does
not constitute statutory accounts within the meaning of Section 240 of the
Companies act 1985. The information as at 30th June 2001 has been extracted from
the statutory accounts for the year ended 30th June 2001 which have been
delivered to the Registrar of Companies and contains an unqualified
auditor's report.
2 The directors do not recommend the payment of an interim dividend.
3 The operating loss is arrived at after writing off research and development
expenditure to the profit and loss account in the period in which it incurred.
4 The accounting policies used are consistent with those applied in the
latest published company accounts.
5 Turnover
Turnover by Geographic Unaudited Unaudited Audited
Destination
6 months to 6 months to Year To
31st December 31st December 30th June
2001 2000 2001
£'000 £'000 £'000
UK 1148 442 1007
Rest of Europe 219 194 534
Americas 44 45 83
Asia 30 53
Rest of the World 9 18 82
1420 729 1759
Turnover by Geographical
Origin
UK 1420 729 1759
6 Exceptional costs in the 6 months ended 31st December 2001 of
£288,000 (2000: £nil) relate to non-recurring redundancy and restructuring costs
incurred after the acquisition of the Medicines Testing Laboratory.
7 The basic loss per share has been calculated on the following
basis :
6 months to 6 months to Year To
31st December 31st December 30th June
2001 2000 2001
£'000 £'000 £'000
Loss for the period (1,903) (1,209) (2,693)
Average No. of Shares 90893034 51988999 51988999
In the current period the average number of ordinary shares is the same on a
diluted basis.
8 Copies of this statement are being sent to all shareholders and
will be available to the public at the Company's Registered office at Heron
House, Oaks Business Park, Crewe Road, Wythenshawe, Manchester M23 9HZ
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