Corporate News
Final Results
13 June 2018
Polarean Imaging plc (AIM: POLX), the medical-imaging technology company, with a proprietary drug-device combination product for the magnetic resonance imaging (MRI) market, announces its audited final results for the year ended 31 December 2017. These are the Group's maiden results following its successful Admission to AIM on 29 March 2018.
In addition, Polarean confirms that the Annual Report and Accounts for the year ended 31 December 2017 ("2017 Annual Report"), the Notice of the Annual General Meeting and a Form of Proxy will be posted to shareholders later in the week and are available on the Company's website:
http://www.polarean-ir.com/content/investors/annual-reports
Highlights
- £3m (before expenses) raised via a placing of 20,000,000 new ordinary shares at a placing price of 15p in March 2018;
- IPO proceeds will be used primarily to conduct Phase III trial in relation to the Company's drug-device combination;
- FDA have agreed trial design and the Group is currently targeting FDA approval during 2020;
- Good progress in R&D and manufacturing in support of trial, and improving polarizer performance;
- Financial performance in-line with management expectations:
- Revenues of US$ 1.24m; and
- Operating gross margins at over 50%; and
- Cash at 31 December 2017 of US$0.96m - not including the net proceeds from the IPO.
Notice of the Annual General Meeting
The first Annual General Meeting of Polarean Imaging plc will be held at the offices of Reed Smith LLP at The Broadgate Tower, 20 Primrose Street, London EC2A 2RS at 2.00 p.m. on 18 July 2018.
Richard Hullihen, CEO of Polarean, commented: "Following our Admission to trading on AIM at the end of Q1 2018, we look forward to commencing our clinical trial and the continued expansion of our installed base of systems through additional sales of research units to academic institutions. Our R&D focus now progresses to looking at the expanded applications of imaging gas exchange and the regional assessment of lung tissue function, beyond ventilation, using our patent protected techniques developed by the research of our founder and Chief Technology Officer, Dr. Bastiaan Driehuys at Duke University. The Directors have also seen tremendous interest in pulmonary vascular disease as an emerging application, which we believe is good news for the Group looking towards the future."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
Enquiries:
| Polarean Imaging plc | www.polarean.com / www.polarean-ir.com |
| Richard Hullihen, Chief Executive Officer | Via Walbrook PR |
| Richard Morgan, Chairman | |
| Northland Capital Partners Limited | Tel: +44 (0)20 3861 6625 |
| David Hignell / Gerry Beaney / Jamie Spotswood (Corporate Finance) John Howes / Rob Rees (Corporate Broking) |
|
| MC Services (European IR) | Tel: +49 (0)89 210 2280 |
| Raimund Gabriel | |
| The Life Sciences Division (Financial Adviser) | |
| Navid Malik, Director | Mob: 07957 224 730 |
| Alia Minhas, CEO | Mob: 07590 696 057 |
| Walbrook PR | Tel: +44 (0)20 7933 8780 or [email protected] |
| Paul McManus / Anna Dunphy Helen Cresswell |
Mob: +44 (0)7980 541 893 / +44 (0)7879 741 001 +44 (0)7841 917 679 |
About Polarean (www.polarean.com)
The Company and its wholly owned subsidiary, Polarean, Inc. (together the "Group") are revenue generating, medical drug-device combination companies operating in the high resolution medical imaging market.
The Group develops equipment that enables existing MRI systems to achieve an improved level of pulmonary function imaging and specialises in the use of hyperpolarised Xenon gas (129Xe) as an imaging agent to visualise ventilation and gas exchange regionally in the smallest airways of the lungs, the tissue barrier between the lung and the bloodstream and in the pulmonary vasculature. Xenon gas exhibits solubility and signal properties that enable it to be imaged within other tissues and organs.
The Group operates in an area of significant unmet medical need and the Group's technology provides a novel diagnostic approach, offering a non-invasive and radiation-free functional imaging platform which is more accurate and less harmful to the patient than current methods. The annual burden of pulmonary disease in the US is estimated to be over US$150 billion.
The Group also develops and manufactures high performance MRI radiofrequency (RF) coils which are a required component for imaging 129Xe in the MRI system. The development of these coils by the Group facilitates the adoption of the Xenon technology by providing application-specific RF coils which optimise the imaging of 129Xe in MRI equipment for use as a medical diagnostic as well as a method of monitoring the efficacy of therapeutic intervention.
Chairman's Statement
The transition from a private company to a publicly traded one is never easy. Being a public company requires an entirely different standard of performance in areas that are not usually considered key to the success of the business when it is privately held. It is a great credit to the leadership of any company if this transition is successfully accomplished with new shareholders and additional capital being brought into the picture. It is notable that Polarean (the "Group") has the distinction, at the time of writing, of being the only life-science IPO to be completed in London so far this year.
Polarean's technology solutions promise to bring critical new tools to physicians helping patients suffering from a wide range of pulmonary issues. The tools available today remain either limited in scope and accuracy or invasive and expensive. The unmet medical need is enormous. Fortunately, the steady advance of the state of the art in MRI technology, particularly faster data acquisition times, has enabled most scanners to acquire images, in detail and in 3D, in less than ten seconds. The widespread use of Magnetic Resonance Imaging ("MRI") systems in the US and Europe, makes available a very large installed base of scanners that can be used to implement Polarean's proprietary technology in a cost-effective manner, once it is approved for clinical use. The clinical trials to gain such approval are scheduled to start very soon and we expect them to be concluded within twelve months, following which the Company will need to prepare the New Drug Application (NDA) for submission to the FDA. The protocol for the trials has been set in collaboration with the FDA and Polarean and its clinical and scientific advisors believe the non-inferiority margins agreed with the FDA are achievable with the trial size and timeframe indicated. We continue to expect to launch clinically approved systems in early 2020.
Polarean's technology has been in development for almost 20 years and the Group's systems are already in use by researchers at over a dozen leading academic and medical institutions in the United States and Europe. One of these is the Cincinnati Children's Hospital where the team is working closely with Polarean, with funding from a grant provided by the Small Business Innovation Research Program, to develop applications in cystic fibrosis. Cystic fibrosis is one of the most debilitating conditions, especially in children and is particularly hard to diagnose, monitor and manage. This network of key opinion leaders who are working closely with the Group, creates an expanding group of knowledgeable experts who will be crucial in effecting broad adoption of the clinically approved technology by leading medical institutions in the US and elsewhere.
The team at Duke University, led by one of Polarean's founders, Professor Bastiaan Driehuys, is actively advancing the state of the art with new developments in critical areas such as gas exchange. These developments promise to facilitate the application of the technology in a range of additional conditions beyond ventilation, such as pulmonary fibrosis and pulmonary vascular disease, two diseases of increasing prevalence for which current diagnostic methods are very invasive and not very effective.
We believe Polarean has immense promise and the fact that it has reached this critical juncture is a great credit to the team in North Carolina who have brought it this far. The road ahead will no doubt present challenges but we face that journey with determination and high confidence in the strength of the technology and the commitment of the team.
Richard Morgan
Non-executive Chairman
12 June 2018
Chief Executive Officer's Statement
2017- A Year of Preparation and Accomplishment
The Group was formed on 31 May 2017 when Polarean Imaging Plc (the "Company" or "Parent Company") Company acquired Polarean, Inc (the "Subsidiary") and spent the remainder of the year working towards the Company's listing on AIM, which was successfully completed in the first quarter of 2018.
We were also busy making arrangements for our Phase III Clinical Trials and we achieved several critical milestones in research and development ("R&D") and manufacturing in support of those trials, including:
- engaging contract research organizations ("CROs") specializing in medical imaging non-inferiority trials like ours at the institutions where we are conducting the trials and then continuing to develop the plans for the trials in conjunction with those selected CROs;
- entering into contracts with the trial sites;
- preparing our quality systems and product documentation in order to outsource production to a local professional manufacturer who is already GMP-certified;
- continuing to develop and protect important intellectual property, adding to our dominant patent position; and
- identifying, evaluating and selecting a candidate, Linde who are one of the largest global industrial gas suppliers, and entering into agreements to package and distribute our proprietary 129Xe drug, in preparation for the Phase III clinical trials. We are fortunate to have Nukem Isotopes GmbH as a strategic investor and supplier of our enriched 129Xe raw material and we thank them for their support.
In addition, in late 2017 our R&D group significantly improved the performance of our polariser product, which has resulted in better images and has potentially reduced the amount of xenon required to be inhaled by the patient to make the images, thereby improving patient acceptance as well as our product economics, which your Directors and your clinical team consider to be a tremendous accomplishment.
The Opportunity
The US Healthcare annual burden of pulmonary disease is US$150 billion and your Directors see a tremendous opportunity to bring our technology's quantitative, reproducible, non-invasive method for diagnostic and therapeutic guidance to medicine. We believe it will benefit patients, improve outcomes and reduce costs. This is important as the current cumulative global costs of asthma, COPD, emphysema, cystic fibrosis, idiopathic pulmonary fibrosis, interstitial lung disease, and pulmonary vascular disease are huge.
While working to achieve FDA approval for clinical use, Polarean continues to serve the medical imaging research market by providing xenon polarizers to enable functional MRI of the pulmonary system. This brings dynamic, high-resolution, regional, image based information to pulmonary physicians whose best alternative tool is spirometry, a relatively inaccurate measurement of expired breath. Current imaging technologies are not often used for assessing lung function, despite the revolutionary effects of MRI in other medical applications.
Our Clinical Trial
Our Phase III Clinical Trial is a head-to-head, non-inferiority trial which is comparing our technology to the 40 year old nuclear medicine technique using radioactive 133Xe and gamma cameras. The trial involves 80 patients in total, and will be conducted at two of our closest collaborative sites, the University of Virginia and Duke University. We are characterising ventilation in two sets of patients being evaluated for surgical procedures: those who are being evaluated for lung lobar resection surgery and those being evaluated for lung transplant. In each case their pre-operative expired vital capacity is measured through spirometry. Our technology and the existing nuclear medicine standard of care are used to assess the remaining post-operative vital capacities. Our trial focuses entirely on the pre-operative assessment and it makes no difference whether the patient is chosen for surgery or not. We have to allow for an equivalence margin in order to be non-inferior. We expect the trial to proceed as planned to a successful outcome and anticipate the trial to result, in due course, in the Group receiving FDA approval to commercialise the product and process.
2017 Financial Results
We encountered difficult market conditions when looking to quote the Company but we were pleased to raise £3 million (before expenses), in addition to the £0.7 million that was raised in December 2017 via the issue of convertible loan notes, in order to fund the clinical trial. In this phase of our development, with sales to academic institutions that are acquiring the technology predominantly by way of grant funding, our forecasting of revenue and price is typically on target but there are challenges in estimating the timing of the receipt of orders. We partly mitigate this by way of payment terms that include significant deposits, minimizing working capital timing effects. Operationally, our performance has been as expected, with revenue of US$1.24 million and operating gross margins at over 50%.
2018 and Beyond
In 2018, we look forward to commencing our clinical trial and the continued expansion of our installed base of systems through additional sales of research units to academic institutions. Our R&D focus has shifted slightly and is now mainly looking at the imaging of gas exchange and the regional assessment of lung tissue function, beyond ventilation, led by our founder and Chief Technology Officer, Dr. Bastiaan Driehuys at Duke University. The Directors have seen tremendous interest in pulmonary vascular disease as an emerging application, which is good news for the Group looking towards the future.
Polarean is fortunate to have an outstanding collection of world-class collaborators and customers in both the US and Europe. Additionally, we support the "129Xe MRI Clinical Trials Consortium" and the crucial work they do in collaborative research, training investigators, providing infrastructure for evaluating new techniques, and multi-institution sharing of magnetic resonance (MR) techniques and image analysis methods. We would like to thank the National Heart Lung and Blood Institute for their continued support of our Small Business Innovation Research Program grant with Cincinnati Children's Hospital Medical Center. In addition, we have developed solid working relationships with MRI systems manufacturers and exclusive relationships with global industrial gas suppliers, all key to our future as we scale the business.
On behalf of the entire staff of Polarean Imaging Plc, I would like to thank you for your investment in and support of the Group and we look forward to continuing to develop and deliver this critical life-saving and life-improving technology to physicians and patients everywhere.
Richard Hullihen
Chief Executive Officer
12 June 2018
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
| Year ended 31 December 2017 US$ |
Year ended 31 December 2016 US$ |
|
| Revenue | 1,237,163 | 880,645 |
| Cost of sales | (297,215) | (488,888) |
| Gross profit | 939,948 | 391,757 |
| Administrative expenses | (4,051,000) | (1,282,313) |
| Depreciation | (7,478) | (4,747) |
| Amortisation | (361,746) | (4,600) |
| Selling and distribution expenses | (28,752) | (35,238) |
| Loss on contingent consideration revaluation | - | (5,000) |
| Share-based payment | (414,866) | (115,399) |
| Total administrative expenses | (4,863,842) | (1,447,297) |
| Operating loss | (3,923,894) | (1,055,540) |
| Finance income | 129 | 147 |
| Finance expense | (34,056) | (4,320) |
| Loss before tax | (3,957,821) | (1,059,713) |
| Taxation expense | - | - |
| Loss for the year and total other comprehensive expense | (3,957,821) | (1,059,713) |
| Loss per share | ||
| Basic and diluted (US$) | (3.71) | (0.99) |
The results reflected above relate to continuing activities.
Consolidated Statement of Financial Position
as at 31 December 2017
| 2017 | 2016 | |
| US$ | US$ | |
| ASSETS | ||
| Non-current assets | ||
| Intangible assets | 4,661,250 | 23,000 |
| Property, plant and equipment | 21,341 | 11,985 |
| Trade and other receivables | 12,539 | 3,961 |
| 4,695,130 | 38,946 | |
| Current assets | ||
| Inventories | 649,860 | 321,661 |
| Trade and other receivables | 488,861 | 16,035 |
| Cash and cash equivalents | 960,217 | 97,847 |
| 2,098,938 | 435,543 | |
| TOTAL ASSETS | 6,794,068 | 474,489 |
| EQUITY AND LIABILITIES | ||
| Equity attributable to holders of the parent | ||
| Share capital | 23,291 | 1 |
| Share premium | 1,448,037 | - |
| Group re-organisation reserve | 7,813,337 | 1,976,367 |
| Other equity | 87,305 | - |
| Share based payment reserve | 826,545 | 238,172 |
| Retained losses | (6,758,108) | (2,800,287) |
| 3,440,407 | (585,747) | |
| Non-current liabilities | ||
| Provision for contingent consideration | 316,000 | 316,000 |
| Deferred revenue | - | 10,257 |
| 316,000 | 326,257 | |
| Current liabilities | ||
| Trade and other payables | 1,906,376 | 562,515 |
| Borrowings | 1,104,723 | 104,541 |
| Deferred revenue | 26,562 | 66,923 |
| 3,037,661 | 733,979 | |
| TOTAL EQUITY AND LIABILITIES | 6,794,068 | 474,489 |
These Financial Statements were approved and authorised for issue by the Board of Directors on 12 June 2018 and were signed on its behalf by:
Richard Morgan
Non-executive Chairman
Company Statement of Financial Position
as at 31 December 2017
| 2017 US$ |
2016 US$ |
|
| ASSETS | - | |
| Non-current assets | ||
| Investment in subsidiaries | 4,342,848 | - |
| 4,342,848 | ||
| Current assets | ||
| Trade and other receivables | 1,891,495 | 1 |
| Cash and cash equivalents | 23,106 | - |
| 1,914,601 | 1 | |
| TOTAL ASSETS | 6,257,449 | 1 |
| EQUITY AND LIABILITIES | ||
| Equity attributable to holders of the parent | ||
| Share capital | 23,291 | 1 |
| Share premium | 1,448,037 | - |
| Merger reserve | 4,322,527 | - |
| Other Reserve | 87,305 | - |
| Share based payment reserve | 521,514 | - |
| Retained losses | (956,714) | - |
| 5,445,960 | 1 | |
| Current liabilities | ||
| Trade and other payables | 25,742 | - |
| Borrowings | 785,747 | - |
| 811,489 | - | |
| TOTAL EQUITY AND LIABILITIES | 6,257,449 | 1 |
The loss for the financial year dealt with in the financial statements of the Parent Company was US$956,714 (2016: US$nil).
These Financial Statements were approved and authorised for issue by the Board of Directors on 12 June 2018 and were signed on its behalf by:
Richard Morgan
Non-executive Chairman
Consolidated Statement of Changes in Equity
for the year ended 31 December 2017
| Share capital US$ |
Share premium US$ |
Other equity US$ |
Share based payment reserve US$ |
Group re-org reserve US$ |
Retained losses US$ |
Total equity US$ |
|
| As at 1 January 2016 | - | - | - | 122,773 | 1,976,367 | (1,740,574) | 358,566 |
| Comprehensive income | |||||||
| Loss for the year | - | - | - | - | - | (1,059,713) | (1,059,713) |
| Transactions with owners | |||||||
| Issue of shares | 1 | - | - | - | - | - | 1 |
| Share-based payment expense | - | - | - | 115,399 | - | - | 115,399 |
| As at 31 December 2016 | 1 | - | - | 238,172 | 1,976,367 | (2,800,287) | (585,747) |
| As at 1 January 2017 | 1 | - | - | 238,172 | 1,976,367 | (2,800,287) | (585,747) |
| Comprehensive income | |||||||
| Loss for the year | - | - | - | - | - | (3,957,821) | (3,957,821) |
| Transactions with owners | |||||||
| Issue of shares | 2,970 | 1,982,094 | - | - | - | - | 1,985,064 |
| Share issue costs | - | (534,057) | - | 173,507 | - | - | (360,550) |
| Share-based payments | - | - | - | 414,866 | - | - | 414,866 |
| Group re-organisation | 20,320 | - | - | - | 5,836,970 | - | 5,857,290 |
| Convertible loans | - | - | 87,305 | - | - | - | 87,305 |
| As at 31 December 2017 | 23,291 | 1,448,037 | 87,305 | 826,545 | 7,813,337 | (6,758,108) | 3,440,407 |
Company Statement of Changes in Equity
for the year ended 31 December 2017
| Share capital US$ |
Share premium US$ |
Other equity US$ |
Share based payment reserve US$ |
Merger reserve US$ |
Retained losses US$ |
Total equity US$ |
|
| As at 1 January 2016 | - | - | - | - | - | - | - |
| Comprehensive income | |||||||
| Loss for the year | - | - | - | - | - | - | - |
| Transactions with owners | |||||||
| Issue of shares | 1 | - | - | - | - | - | 1 |
| As at 31 December 2016 | 1 | - | - | - | - | - | 1 |
| As at 1 January 2017 | 1 | - | - | - | - | - | 1 |
| Comprehensive income | |||||||
| Loss for the year | - | - | - | - | - | (956,714) | (956,714) |
| Transactions with owners | |||||||
| Issue of shares | 23,290 | 1,982,094 | - | - | 4,322,527 | - | 6,327,911 |
| Share issue costs | - | (534,057) | - | 173,507 | - | - | (360,550) |
| Share-based payments | - | - | - | 348,007 | - | - | 348,007 |
| Convertible loans | - | - | 87,305 | - | - | - | 87,305 |
| As at 31 December 2017 | 23,291 | 1,448,037 | 87,305 | 521,514 | 4,322,527 | (956,714) | 5,445,960 |
Consolidated Statement of Cash Flows
for the year ended 31 December 2017
| Year ended 31 December 2017 US$ |
Year ended 31 December 2016 US$ |
|
| Cash flows from operating activities | ||
| Loss before tax | (3,957,821) | (1,059,713) |
| Adjustments for non-cash/non-operating items: | ||
| Depreciation of plant and equipment | 7,478 | 4,747 |
| Amortisation of intangible assets | 361,746 | 4,600 |
| Increase in provision for contingent consideration | - | 5,000 |
| Share based compensation | 414,866 | 50,213 |
| Issue of warrants in lieu of fees | - | 65,186 |
| Interest paid | 34,056 | 4,320 |
| Interest received | (129) | (147) |
| Write off share issuance costs | - | - |
| Operating cash flows before movements in working capital | (3,139,804) | (925,794) |
| (Increase)/Decrease in inventories | (328,199) | 80,403 |
| (Increase)/Decrease in trade and other receivables | (440,931) | 119,492 |
| Increase in trade and other payables | 1,343,861 | 67,031 |
| Decrease in deferred revenue | (50,618) | (101,119) |
| Cash used in operations | (2,615,691) | (759,987) |
| Income taxes | - | - |
| Net cash used in operating activities | (2,615,691) | (759,987) |
| Cash flows from investing activities | ||
| Purchase of plant and equipment | (16,834) | (10,933) |
| Net cash used in investing activities | (16,834) | (10,933) |
| Cash flows from financing activities | ||
| Issue of shares | 2,481,808 | - |
| Interest paid | (34,056) | (4,320) |
| Interest received | 129 | 147 |
| Proceeds from (repayment of) borrowings | 1,047,014 | (39,459) |
| Net cash generated by/(used in) financing activities | 3,494,895 | (43,632) |
| Net increase/(decrease) in cash and cash equivalents | 862,370 | (814,552) |
| Cash and cash equivalents at the beginning of year | 97,847 | 912,399 |
| Cash and cash equivalents at end of year | 960,217 | 97,847 |
Company Statement of Cash Flows
for the year ended 31 December 2017
| Year ended 31 December 2017 US$ |
Year ended 31 December 2016 US$ |
|
| Cash flows from operating activities | ||
| Loss before tax | (956,714) | - |
| Adjustments for non-cash/non-operating items: | ||
| Share based payment expense | 348,007 | - |
| Operating cash flows before movements in working capital | (608,707) | - |
| Increase in trade and other receivables | - | - |
| Increase in trade and other payables | 25,742 | - |
| Cash used by operations | (582,965) | - |
| Income taxes | - | - |
| Net cash used by operating activities | (582,965) | - |
| Cash flows from financing activities | ||
| Loans to related parties | (1,851,022) | - |
| Issue of notes and loans | 832,579 | - |
| Issue of shares | 1,624,514 | - |
| Net cash generated by financing activities | 606,071 | - |
| Increase in cash and cash equivalents | 23,106 | - |
| Cash and cash equivalents at the beginning of period | - | - |
| Cash and cash equivalents at end of period | 23,106 | - |
Annual Report & Accounts
The 2017 Annual Report including notes to the Financial Statements is available on the Company's website here:
http://www.polarean-ir.com/content/investors/annual-reports
Notice of Annual General Meeting
The first Annual General Meeting of Polarean Imaging plc will be held at the offices of Reed Smith LLP at The Broadgate Tower, 20 Primrose Street, London EC2A 2RS at 2.00 p.m. on 18 July 2018. The Notice of the Annual General Meeting is also available on the Company's website.
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