Corporate News

Polarean Imaging plc (AIM: POLX), the clinical stage medical-imaging technology company, with a proprietary drug-device combination product for the visualisation of pulmonary function in the magnetic resonance imaging (MRI) market, announces its audited final results for the year ended 31 December 2018.

Chairman's Statement Chief Executive Officer's Statement Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes

Download To view a full version of the results in  PDF format click here

Polarean's AGM 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 25 July 2019.

Highlights

• First patient enrolled in Phase III FDA clinical trial during the period and trials nearing completion
• New licensing agreement with Duke University
• On track to file a New Drug Application with the FDA and to deliver first commercial sales by end of 2020
• Gross fundraise of US$1.064 million (c.£0.8 million) in July 2018 via a placing in response to investor demand
• Gross fundraise of US$4 million (c.£3.125 million) in December 2018 to support the Company's ongoing Phase III Clinical Trials and significantly strengthening the balance sheet

Post period end

• Two new System Orders from the University of British Columbia and The Hospital for Sick Children in Toronto respectively
• Total number of systems in use or on order now at 24
• Confirmed the third tranche of US$1 million from the US$3 million Small Business Innovation Research grant
• Currently at least 42 clinical trials ongoing into the use of ¹²⁹Xe MRI on the FDA website
• Appointment of new Chief Financial Officer

Richard Hullihen, CEO of Polarean, commented: "We are encouraged with the progress of our Phase III clinical trials and enrolment should conclude during the third quarter of this year. We have continued to invest in our intellectual property portfolio as part of our ongoing R&D and have added new key patent filings involving gas exchange and pulmonary vascular disease. We remain confident and excited for the future of Polarean and are grateful to our investors for their continued support."

The Company recently held its second successful investor symposium in London. Details can be found on the Company's website at https://www.polarean-ir.com/content/investors/videos

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
SP Angel Corporate Finance LLP	Tel: +44 (0)20 3470 0470
David Hignell / Lindsay Mair / Jamie Spotswood (Corporate Finance) Vadim Alexandre / Rob Rees (Corporate Broking)
Walbrook PR	Tel: +44 (0)20 7933 8780 or [email protected]
Paul McManus / Anna Dunphy	Mob: +44 (0)7980 541 893 / +44 (0)7879 741 001

 

Chairman's Statement

The most immediate challenge facing the Company upon completion of the IPO in March 2018 was the start of the clinical trials. Satisfactory completion of the clinical trials is a necessary condition for successful commercial development as we go forward, although it is far from being the only key to our success.

The trials are now nearing completion. No clinical trial is ever straight forward and the team has worked closely with the several advisors that have guided the design, launch and prosecution of the trials, to ensure that they are proceeding to plan. As we announced on 11 June 2019, we have elected to bring online a third trial site and we are grateful to our valued collaborators at the University of Cincinnati for their help with the initiation of this site, which we believe should ensure the timely completion of enrolment in both trials by the end of the third quarter of 2019. That should allow us to file our New Drug Application ("NDA) with the FDA and, assuming approval, is expected to enable us to make our first commercial unit sales by the end of 2020.

While the clinical trials we are conducting are a critical part of the business plan, they are not the only part. The Company has continued to meet expectations in relation to sales of additional pre-clinical units to existing and new institutional customers. This has brought the total number of systems in use or on order to 24 and the majority of those are with leading medical institutions who are conducting research and additional clinical trials into the use of hyperpolarized 129 Xenon using MRI (¹²⁹Xe MRI). At present there are at least 42 clinical trials into the use of ¹²⁹Xe MRI showing on the FDA website. We were particularly pleased to be able to announce on 21 May 2019 receipt of the third year of grant from the NIH / SBIR which is funding the work being done jointly with Cincinnati Children's Hospital into the use of ¹²⁹Xe MRI in paediatric populations. Alongside the work being done by SickKids in Canada, and others, into paediatric populations we believe we can look forward to ¹²⁹Xe MRI making a materially positive medical contribution to the diagnosis and monitoring of treatment of pulmonary health conditions in children, including those suffering from cystic fibrosis.

During the year a number of key advances were made in applications of the technology to gas exchange and beyond. Many of the medical issues that arise in patients with compromised pulmonary function occur as a result of deficiencies in the body's ability to absorb oxygen out of air and into the bloodstream. Some of these medical issues, like Idiopathic Pulmonary Fibrosis ("IPF), cannot readily be diagnosed accurately using existing techniques but they are serious conditions that are increasingly being targeted by the pharmaceutical companies for drug development. Accurate diagnosis and monitoring is one critical aspect of the effective medication of these conditions and we believe ¹²⁹Xe MRI can help to address this unmet medical need. In late 2018, we extended our collaboration with Duke University by securing the intellectual property rights to an entirely new application, in pulmonary vascular disease, including pulmonary arterial hypertension ("PAH). We are already in discussion with several companies that have developed medications for PAH and other conditions (COPD and asthma for example) in the expectation that ¹²⁹Xe MRI can make a significant difference in both the development of new drugs and in the management of these conditions in the clinic.

Our first nine months as a public company included the completion of two additional financing rounds, the second of which closed at the end of 2018. The capital market environment for small medical technology companies was challenging throughout the year and the Polarean IPO was one of very few successful public listings in the sector on the AIM market in 2018. We were fortunate to be able to complete those financing rounds, which provided additional support for the clinical trials. 

We believe that partnering with pharmaceutical and other companies to facilitate the development and use of their products is a key part of Polarean's future development. We already have relationships with several companies that have expressed an interest in partnering with us. Such relationships can help us expand our development activities in the near term and, following FDA approval, to expand access to and support a presence in deployment of Polarean's technology as we reach into the clinical setting and help expand the treatment options available to patients. We have also consistently stated our intention to access markets outside the United States through partnerships and we are pleased to note a growing interest in partnering opportunities to expand our geographical footprint in that way.

The team has done a great job in efficiently producing and shipping new systems to our customers, while working closely with our installed base to provide service and support to their existing systems. As our installed base grows, this becomes a proportionally larger challenge, in addition to the continuing work in hand to improve the design and performance of our systems and to plan for the future evolution of the product. The manufacture of the equipment was successfully outsourced and the last five machines have been built under the GMP standards which are required both for pivotal clinical trials and the clinical use of this technology.

We were delighted to be able to add Chuck Osborne to our team as Chief Financial Officer in April 2019 and welcome his help in addressing the many challenges that lie ahead as we grow the Company.

We hope to be able to announce the completion of our clinical trials in the next few months and look forward to working with the FDA when we seek approval to allow marketing of the technology next year. This will be another major and exciting phase change for the Company which we will report on more fully in the coming months. We continue to look forward with determination and high confidence in the strength of the technology and the commitment of the team.

 

Richard Morgan
Non-Executive Chairman

26 June 2019

 

Chief Executive Officer's Statement

2018 - Year of Development and Accomplishment

Polarean and its subsidiaries (the 'Group') began their first full year focused on preparation for the Phase III Clinical trials. Having finalised contracts with Contract Research Organisations and with the two university sites for the trial, we planned and executed a Pilot Study which closely matched the trial protocol in order to prove that the structure and specifications of the trials were met in the "non-inferiority structure of the trials. We conducted that study at one of the two trial sites, using the same equipment and methods of the Phase III trial protocol. That study was successful and gave the Group the confidence to initiate the trials.

The Opportunity

The US Healthcare system annual burden of pulmonary disease is US$150 billion and the Directors still see a tremendous opportunity to bring our technology's quantitative, reproducible, non-invasive method for diagnostic and therapeutic guidance to medicine. We have begun to develop the healthcare economic analyses to support the adoption by providers of our technology, working with experts in the field. Over the planning horizon of the first 48 months post commercial launch, the Group intends to address the high end of US academic and teaching hospital market segment, which comprises approximately the top 1,000 institutions nationally. The combined addressable market there for our products approaches US$500 million.

While working to achieve FDA approval for clinical use, Polarean continues to serve the medical imaging research market by providing xenon polarisers to enable functional MRI of the pulmonary system. This brings dynamic, high-resolution, regional, image-based information to pulmonary physicians and researchers 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 Trials

Our Phase III Clinical Trials are head-to-head, non-inferiority trials which are comparing our technology to an existing nuclear medicine technique using radioactive 133Xe and gamma cameras. The trials involve 80 patients in total and are being conducted at three of our closest collaborative sites, the University of Virginia Duke University ("Duke) and the University of Cincinnati. 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 has focused entirely on the pre-operative assessment and it makes no difference whether the patient is chosen for surgery. We are at an advanced stage in the trial and expect enrolment to conclude in the third quarter of 2019.

Our Operations

The Group completed the transition of manufacturing to a local certified medical device manufacturer. In 2018, we built and shipped five units and one upgrade. This is the largest production volume we have achieved. This included the transition to GMP level production for the Clinical Trial units and all units thereafter. We will continue to improve the production capability of our provider moving forward.

R&D

We continued to invest in our intellectual property portfolio during the year. Key new patent filings involving gas exchange and pulmonary vascular disease were added, and an expanded and enhanced license agreement with Duke was achieved.

2018 Financial Results

Broadly speaking, our operating performance was as we expected in 2018, with revenues slightly higher than expected at US$2.439 million and expenses slightly lower than expected. In addition, we raised US$1 million (before expenses) in July 2018 in a placing based on investor demand and US$4 million (before expenses) in December 2018 (a significant majority of the proceeds from the December 2018 placement were received by the Company in early 2019) in a placing designed to fund the Company through our Clinical Trial enrolment. During the period, we benefitted from the Year 2 proceeds of the NIH SBIR Grant which we have jointly with the University of Cincinnati Children's Hospital. Our pricing and margins have maintained throughout the year. It is still the case that the majority of our research systems are procured via grant mechanisms and while the outcomes are typically known with some certainty, the ultimate fiscal timing of these projects is difficult to predict with certainty.

2019 and Beyond

We plan to complete enrolment of our Phase III trials in the third quarter of 2019 and look forward to the readout of both indications with confidence, based on the results of our Pilot Study. We will proceed with filing our NDA and continue to cautiously plan to receive regulatory approval in the second half of 2020. In the meantime, we continue to collaborate with researchers in the US and abroad and look to expand our installed base of research systems. The exciting new developments in cardiology and pulmonary vascular disease are expanding and our knowledge base about these conditions is expanding.

We have begun early discussions with potential strategic partners in the pharmaceutical industry and in other geographic markets that could lead to important developments in new applications and uses for our technology, expansion into new territories, and which may bring economic benefits to the Group going forward.

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, 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

26 June 2019

 

Consolidated Statement of Comprehensive Income

		2018	2017
	Notes	US$	US$
Revenue	4	2,439,139	1,237,163
Cost of sales		(633,463)	(297,215)
Gross profit		1,805,676	939,948
Administrative expenses		(6,161,916)	(4,051,000)
Depreciation	11	(10,140)	(7,478)
Amortisation	12	(616,852)	(361,746)
Selling and distribution expenses		(31,766)	(28,752)
Share-based payment expense	19	(251,790)	(414,866)
Total administrative expenses		(7,072,464)	(4,863,842)
Operating loss	6	(5,266,788)	(3,923,894)
Finance income	7	184	129
Finance expense	7	(188,055)	(34,056)
Loss before tax		(5,454,659)	(3,957,821)
Taxation	10	-	-
Loss for the year and total other comprehensive expense		(5,454,659)	(3,957,821)
Loss per share
Basic and diluted (US$)	9	(0.078)	(0.139)

The results reflected above relate to continuing activities.

There is no recognised income or expense for the year other than the loss above and therefore no separate statement of other comprehensive income has been presented.

 

Consolidated Statement of Financial Position

	Notes	2018	2017
		US$	US$
ASSETS
Non-current assets
Property, plant and equipment	11	17,752	21,341
Intangible assets	12	4,044,398	4,661,250
Trade and other receivables	14	12,539	12,539
		4,074,689	4,695,130
Current assets
Inventories	15	651,781	649,860
Trade and other receivables	14	4,226,585	488,861
Cash and cash equivalents	16	875,601	960,217
		5,753,967	2,098,938
TOTAL ASSETS		9,828,656	6,794,068
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital	17	49,427	23,291
Share premium	18	11,063,075	1,448,037
Group re-organisation reserve	18	7,813,337	7,813,337
Other equity	18	-	87,305
Share-based payment reserve	19	1,078,335	826,545
Accumulated losses	18	(12,212,767)	(6,758,108)
		7,791,407	3,440,407
Non-current liabilities
Provision for contingent consideration	20	316,000	316,000
Deferred income	21	70,726	-
		386,726	316,000
Current liabilities
Trade and other payables	22	1,590,482	1,906,376
Borrowings	23	5,213	1,104,723
Deferred income	21	54,828	26,562
		1,650,523	3,037,661
TOTAL EQUITY AND LIABILITIES		9,828,656	6,794,068

 

Company Statement of Financial Position

	Notes	2018	2017
		US$	US$
ASSETS
Non-current assets
Investment in subsidiary	13	4,342,848	4,342,848
		4,342,848	4,342,848
Current assets
Trade and other receivables	14	9,370,611	1,891,495
Cash and cash equivalents	16	235,766	23,106
		9,606,377	1,914,601
TOTAL ASSETS		13,949,225	6,257,449
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital	17	49,427	23,291
Share premium	18	11,063,075	1,448,037
Merger reserve	18	4,322,527	4,322,527
Other equity	18	-	87,305
Share-based payment reserve	19	773,304	521,514
Accumulated losses	18	(2,287,282)	(956,714)
		13,921,051	5,445,960
Current liabilities
Trade and other payables	22	28,174	25,742
Borrowings	23	-	785,747
		28,174	811,489
TOTAL EQUITY AND LIABILITIES		13,949,225	6,257,449

The loss for the financial year dealt with in the financial statements of the parent Company was US$1,330,568 (2017: US$956,714).

 

Consolidated Statement of Changes in Equity

	Share capital US$	Share premium US$	Other equity US$	Share- based payment reserve US$	Group re-org reserve US$	Accumulated losses US$	Total equity US$
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 payment expense	-	-	-	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
Comprehensive income
Loss for the year	-	-	-	-	-	(5,454,659)	(5,454,659)
Transactions with owners
Issue of shares	26,136	10,161,474	(87,305)	-	-	-	10,100,305
Share issue costs	-	(546,436)	-	-	-	-	(546,436)
Share-based payment expense	-	-	-	251,790	-	-	251,790
As at 31 December 2018	49,427	11,063,075	-	1,078,335	7,813,337	(12,212,767)	7,791,407

 

Company Statement of Changes in Equity

	Share capital US$	Share premium US$	Other equity US$	Share- based payment reserve US$	Merger reserve US$	Accumulated losses US$	Total equity US$
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 payment expense	-	-	-	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
Comprehensive income
Loss for the year	-	-	-	-	-	(1,330,568)	(1,330,568)
Transactions with owners
Issue of shares	26,136	10,161,474	(87,305)	-	-	-	10,100,305
Share issue costs	-	(546,436)	-	-	-	-	(546,436)
Share-based payment expense	-	-	-	251,790	-	-	251,790
As at 31 December 2018	49,427	11,063,075	-	773,304	4,322,527	(2,287,282)	13,921,051

 

Consolidated Statement of Cash Flows

	2018 US$	2017 US$
Cash flows from operating activities
Loss before tax	(5,454,659)	(3,957,821)
Adjustments for non-cash/non-operating items:
Depreciation of plant and equipment	10,140	7,478
Amortisation of intangible assets	616,852	361,746
Share-based payment expense	251,790	414,866
Interest paid	188,055	34,056
Interest received	(184)	(129)
Operating cash flows before movements in working capital	(4,388,006)	(3,139,804)
Increase in inventories	(1,921)	(328,199)
Increase in trade and other receivables	(69,517)	(440,931)
(Decrease)/increase in trade and other payables	(315,894)	1,343,861
Increase/(decrease) in deferred income	98,992	(50,618)
Net cash used in operations	(4,676,346)	(2,615,691)
Cash flows from investing activities
Purchase of plant and equipment	(6,551)	(16,834)
Interest received	184	129
Net cash used in investing activities	(6,367)	(16,705)
Cash flows from financing activities
Issue of shares	5,093,775	2,481,808
Interest paid	(188,055)	(34,056)
Issue of notes and loans	5,213	1,047,014
Repayment of notes and loans	(312,836)	-
Net cash generated by financing activities	4,598,097	3,494,766
Net (decrease)/increase in cash and cash equivalents	(84,616)	862,370
Cash and cash equivalents at the beginning of year	960,217	97,847
Cash and cash equivalents at end of year	875,601	960,217

 

Company Statement of Cash Flows

	Year ended 31 December 2018 US$	Year ended 31 December 2017 US$
Cash flows from operating activities
Loss before tax	(1,330,568)	(956,714)
Adjustments for non-cash/non-operating items:
Share-based payment expense	251,790	348,007
Operating cash flows before movements in working capital	(1,078,778)	(608,707)
Increase in trade and other payables	2,433	25,742
Net cash used by operations	(1,076,345)	(582,965)
Cash flows from financing activities
Issue of shares	5,099,914	1,624,514
Loans to intercompany	(3,810,909)	(1,851,022)
Issue of notes and loans	-	832,579
Net cash generated by financing activities	1,289,005	606,071
Increase in cash and cash equivalents	212,660	23,106
Cash and cash equivalents at the beginning of period	23,106	-
Cash and cash equivalents at end of period	235,766	23,106

 

These Financial Statements were approved and authorised for issue by the Board of Directors on 26 June 2019 and were signed on its behalf by:

Richard Morgan
Non-executive Chairman

 

Notes on Financial Statements

The notes are available in the printable pdf of the results. To download it, please click here.