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Corporate News

Half-year Report

22 August 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 unaudited interim results for the six months ended 30 June 2018.

Highlights

  • Successful admission to trading on AIM on 29 March 2018
  • £3m (gross) raised via a placing of 20,000,000 ordinary shares at a placing price of 15p in March 2018
  • Delivery of Xenon Polarisers to Cincinnati Children's Hospital and University of Virginia
    • University of Virginia Polariser to be used exclusively for Phase III Clinical Trials
  • Financial performance in-line with management expectations:
    • Revenues of US $0.75m (H1 '17: US $0.17m);
    • Operating gross margins, including grants, at over 70% margin
  • Net cash at 30 June 2018 of US $1.22m

Post-period end

  • Completion of successful Pilot Study prior to commencement of Phase III Trials
  • Phase III FDA Clinical Trials to commence shortly
  • US Patent Notice of Allowance received for polarization enhancing technology
  • Placing to raise £0.8m (gross) at 16p completed on 10 July 2018

Richard Hullihen, CEO of Polarean, commented: "The burden of pulmonary disease in the USA is approximately US $150bn, with pulmonary disease widespread and growing, affecting nearly 40 million Americans. Given the limitations of existing methods of diagnosis and lung disease monitoring, we believe that there is a significant unmet need for non-invasive, quantitative, and cost-effective image-based diagnosis technology. We believe that our unique medical drug-device combination utilizing 129Xe offers the ideal solution for improving pulmonary disease diagnosis and we are confident that this will be borne out during our Phase III trials."

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)
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 polarean@walbrookpr.com
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 functional magnetic resonance imaging market.

 

CEO Statement

Introduction

The six month period ending 30 June 2018 has seen Polarean make substantial progress towards its goal of undertaking and completing our Phase III Clinical Trials for our medical drug-device combination. This combination enables existing MRI systems to achieve an improved level of pulmonary function imaging through the use of hyperpolarised 129-Xenon gas (129Xe) as an imaging contrast agent.

Our Phase III trials will be used to demonstrate that our medical drug-device combination using 129Xe is capable of sharing the same claims as the approved comparator 133-Xenon (133Xe) gas scintigraphy. If the trials are successful the Company's ultimate goal will be to submit a New Drug Application ("NDA") with the same claim as 133Xe and seek FDA approval, allowing the launch of clinically approved systems to be used "for the evaluation of pulmonary function, for imaging the lungs" in early 2020.

The first half of the financial year was focussed on putting in place the funding, contracts, agreed protocols, equipment and supply agreements necessary to undertake our Phase III trials and details of these milestones were outlined in our Final Results statement announced in June. We expect the clinical trials to commence shortly and the data collection for the trials is expected to be completed during Q3 of 2019.

Admission to AIM
In March we successfully completed a £3m fundraising (before expenses) and the listing of our shares on the AIM Market of the London Stock Exchange. These funds provide us with the funding security needed to complete our Phase III clinical trials. In addition, the funds raised from our recent £0.8m (gross) placing will further support the clinical trials and support improvements to the Company's polarisers.

Results overview
Our financial performance, with sales being made on a research-use-only basis to academic institutions in the US and Europe, remains in-line with management expectations. Revenues for the first half increased significantly from US $0.21m to US $0.75m, with gross profits hitting US $0.47m (H1 '17: US $0.17m). Gross operating margins remain at well over 50%. With a sizeable uplift in Administrative Expenses, due in the main to fees associated with our AIM admission, our overall loss before tax increased to £3.1m from £1.4m in the same comparable period. Cash controls within the business remain robust and as at 30 June 2018 we held US $1.22m in net cash or cash equivalents.

The development of stronger recurring revenues are clearly targeted for the business, assuming FDA approval is achieved. In addition, the Company's longer term strategy is for our polarisers to be operational beyond the academic research market that Polarean currently serves.

Delivery of Xenon Polarisers
Whilst we seek clinical approval for our medical drug-device combination we continue to expand our installed base of systems through additional sales of research units to academic institutions.

In May 2018 we announced the delivery of the latest model of our Xenon polariser to the Center for Pulmonary Imaging Research at the Cincinnati Children's Hospital Medical Center, with whom we hold a Small Business Innovation Research grant awarded by the National Heart, Lung and Blood Institute.

Cincinnati Children's, a non-profit academic medical center globally-renowned for its paediatric teaching and research, is a recognized leader in using hyperpolarized 129Xe for paediatric pulmonary imaging through advanced imaging techniques.

Similarly in June 2018 we were pleased to announce the delivery of our latest polariser to the University of Virginia Health System (UVa), the site of one of our Phase III Clinical Trials. UVa has been a key clinical collaborator with Polarean and, as a result of this collaboration, the Department of Radiology & Medical Imaging at UVa now has three latest-generation 129Xe Polarean polarisers installed at their site with the latest system to be used exclusively for our Phase III clinical trials.

We now have 15 Polarean Xenon polarisers in use at research institutions across the US and Europe.

Post-period end events

Following the close of the first half we provided shareholders with an update on additional progress made in preparation for the imminent start of our clinical trials, as well as additional patent protection and further funding support.

(i) Completion of successful Pilot Study prior to Phase III Clinical Trials

In last month's update we announced the completion of a Pilot Study at one of our trial sites, which validated the study design and the proposed analytical methods that will be used in the trials. The successful conclusion of the pilot has provided us with the confidence that the chosen methodology, agreed with the FDA, is appropriate and should maximise the probability that both the primary and secondary endpoints of our trials should clearly demonstrate non-inferiority of 129Xe against 133Xe.

(ii) Phase III Clinical Trials scheduled to start this month and due to complete in Q3 2019

In addition, we were also able to announce that our 'head to head' non-inferiority trials against 133Xe scintigraphy, a 40 year old nuclear medicine technique using radioactive 133Xe and gamma cameras, will commence very shortly. We expect to provide an announcement to investors as soon as the trial starts.

The Phase III Trials will evaluate two patient populations – candidate patients for lung lobe resection, and candidates for lung transplant procedures – and will encompass a total of 80 patients, across two sites: the University of Virginia and Duke University. We currently expect data collection for the Phase III Trials to complete during Q3 of 2019 and if successful, we will submit our NDA with the same claim as 133Xe soon after.

(iii) US Patent Notice of Allowance received

We also were pleased to announce receipt of a Notice of Allowance for the U.S. Patent covering "Hyperpolarized Noble Gas Production Systems with Nanocluster Suppression, Detection, and/or Filtering and Related Methods and Devices" to which we have the exclusive rights. This patent, together with our know-how, has led to increasing levels of polarisation for our MRI gas-hyperpolarisation platform and is key to advancing image quality, exploring new applications and increasing the overall efficiency of our systems. This patent adds to our IP portfolio of 29 patents with a broad area of coverage around our technology and extending into 2034.

(iv) Placing to raise £0.8m (gross) at 16p completed

On the 10 July we announced the successful completion of a Placing to raise an additional £0.8 million at a price of 16 pence (before expenses) in response to strong demand from institutional and EIS/VCT investors. We are very pleased with support shown by new and existing shareholders and these additional funds will further support our clinical trials in the US and the improvements we continue to make to our polarisers.

(v) Delivery of Polariser to Duke for Clinical Trial

in August 2018 we were pleased to announce the delivery of our latest polariser to the Duke Unversity (Duke), the site of one of our Phase III Clinical Trials. Duke has been a key technology and clinical collaborator with Polarean and, as a result of this collaboration, the Department of Radiology at Duke now has three 129Xe Polarean polarisers installed at their site with the latest system to be used exclusively for our Phase III clinical trials.

Outlook
I am excited that we will shortly start our FDA Phase III clinical trials and I look forward to updating shareholders once it commences and with our progress.

The burden of pulmonary disease in the USA is approximately US $150bn, with pulmonary disease widespread and growing, affecting nearly 40 million Americans. Given the limitations of existing methods of diagnosis and lung disease monitoring, we believe that there is a significant unmet need for non-invasive, quantitative, and cost-effective image-based diagnosis technology. We believe that our unique medical drug-device combination utilizing 129Xe offers the ideal solution for improving pulmonary disease diagnosis and we are confident that this will be borne out during our Phase III trials.

 

Richard Hullihen
Chief Executive Officer

22 August 2018

 

Consolidated unaudited statement of comprehensive income
for the six months ended 30 June 2018

  Note Unaudited
6 months
ended
30.6.18
US$
  Unaudited
6 months
ended
30.6.17
US$
  Audited
12 months
ended
31.12.17
US$
Revenue   1,026,926   205,085   1,237,163
Cost of sales   (279,455)   (33,712)   (297,215)
Gross profit   747,471   171,373   939,948
             
Administrative expenses   (3,106,922)   (1,502,079)   (4,051,000)
Depreciation   (4,489)   (2,885)   (7,478)
Amortisation   (308,426)   (2,300)   (361,746)
Selling and distribution expenses   (20,998)   (15,474)   (28,752)
Share based payment expense   (87,400)   (402,007)   (414,866)
Loss from operations   (2,780,764)   (1,753,372)   (3,923,894)
             
Finance Charges   (52,654)   (7,160)   (34,056)
Finance Income   27   -   129
Loss on ordinary activities before taxation 3 (2,833,391)   (1,760,532)   (3,957,821)
             
Taxation   -   -   -
Loss and total other comprehensive expense   (2,833,391)   (1,760,532)   (3,957,821)
Basic and fully diluted loss per share (US$) 3 (0.057)   (0.062)   (0.139)

 

Consolidated unaudited statement of financial position
As at 30 June 2018

    Unaudited
As at
30.6.18
US$
  Unaudited
As at
30.6.17
US$
  Audited
As at
31.12.17
US$
Assets Note          
Non-current assets            
Property, plant and equipment   23,403   16,398   21,341
Intangible assets   4,352,824   5,020,696   4,661,250
Trade and other receivables   12,536   5,539   12,539
    4,388,763   5,042,633   4,695,130
Current assets            
Inventories   1,069,342   392,932   649,860
Trade and other receivables   1,148,306   22,209   488,861
Cash and cash equivalents   1,374,866   1,712,073   960,217
    3,592,514   2,127,214   2,098,938
Total assets   7,981,277   7,169,847   6,794,068
             
Equity            
Share capital 4 36,396   23,291   23,291
Share premium   6,432,812   1,808,587   1,448,037
Group reorganisation reserve   7,813,337   7,813,337   7,813,337
Other equity   -   -   87,305
Share based payment reserve   913,945   813,686   826,545
Retained losses   (9,591,499)   (4,560,819)   (6,758,108)
Total equity   5,604,991   5,898,082   3,440,407
             
Liabilities            
Non-current liabilities            
Deferred revenue   -   36,152   -
Contingent consideration   316,000   316,000   316,000
    316,000   352,152   316,000
Current liabilities            
Trade and other payables   1,908,079   521,719   1,906,376
Borrowings 5 149,878   379,541   1,104,723
Deferred revenue   2,329   18,353   26,562
    2,060,286   919,613   3,037,661
Total equity and liabilities   7,981,277   7,169,847   6,794,068

 

Consolidated unaudited statement of changes in equity
As at 30 June 2018

  Share
capital
Share
premium
Group re-
organisation
Other
equity
Share
based
payment
reserve
Retained
earnings
Total
equity
               
               
Balance as at 31 December 2016 (audited) 1 - 1,976,367 - 238,172 (2,800,287) (585,747)
               
Loss and total comprehensive income for the year - - - - - (3,957,821) (3,957,821)
Transaction 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
               
Balance as at 31 December 2017 (audited) 23,291 1,448,037 7,813,337 87,305 826,545 (6,758,108) 3,440,407
               
Loss and total comprehensive income for the period - - - - - (2,833,391) (2,833,391)
Transaction with owners              
Issue of shares 13,105 5,124,897 - (87,305) - - 5,050,697
Share issue costs - (140,122) - - - - (140,122)
Share-based payments - - - - 87,400 - 87,400
               
Balance as at 30 June 2018 (unaudited) 36,396 6,432,812 7,813,337 - 913,945 (9,591,499) 5,604,991

 

Consolidated unaudited cash flow statement
for the six months ended 30 June 2018

    Unaudited
6 months
ended
30.6.18

US$
Unaudited
6 months
ended
30.6.17

US$
Audited
12 months
ended

31.12.17
US$
Cashflows from operating activities        
Loss for the period before taxation   (2,833,391) (1,760,532) (3,957,821)
Adjustments for non-cash/non-operating items:        
Depreciation of plant and equipment   4,489 2,884 7,478
Amortisation of intangible assets   308,426 2,300 361,746
Increase in provision for contingent consideration   - - -
Share based compensation   87,400 402,007 414,866
Interest paid   52,654 2,160 34,056
Interest received   (27) - (129)
Write off of share issuance costs   - 156,953 -
    (2,380,449) (1,194,228) (3,139,804)
Changes in working capital:        
(Increase) in inventories   (419,482) (71,271) (328,199)
(Increase) in trade and other receivables   (659,448) (7,753) (440,931)
Increase/(decrease) in trade and other payables   10,026 (12,121) 1,343,861
Decrease in deferred revenue   (24,233) (22,675) (50,618)
         
Taxation   - - -
Net cash flows used from operating activities   (3,473,586) (1,308,048) (2,615,691)
         
Investing activities        
Purchase of plant and equipment   (6,551) (7,298) (16,834)
Net cash used in investing activities   (6,551) (7,298) (16,834)
         
Financing activities        
(Repayment of) proceeds from borrowings   (116,126) 275,000 1,047,014
Issue of shares   4,063,539 2,656,732 2,481,808
Interest paid   (52,654) (2,160) (34,056)
Interest received   27 - 129
Net cash from financing activities   3,894,786 2,929,572 3,494,895
         
Net increase in cash and equivalents   414,649 1,614,226 862,370
Cash and equivalents at beginning of period   960,217 97,847 97,847
Cash and equivalents at end of period   1,374,866 1,712,073 960,217

 

Notes

The notes to the financial statement are available in the PDF download.

 

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