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Final Results

18 June 2020

Polarean Imaging plc (AIM: POLX), a clinical stage medical imaging technology company developing a proprietary magnetic resonance imaging (MRI) drug-device combination, announces its audited final results for the year ended 31 December 2019.

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

In addition, Polarean confirms that the Annual Report and Accounts for the year ended 31 December 2019, the Notice of the Annual General Meeting ("AGM") and a Form of Proxy are now available on the Company's website (http://www.polarean-ir.com/content/investors/annual-reports) and will be posted to shareholders shortly.

Polarean's AGM will be held at 2 p.m. BST on 13 July 2020. 

Highlights

  • Raised £2.1 million (gross) via a placing of 11,666,667 ordinary shares at a placing price of 18p per share in July 2019
  • Third trial site added at University of Cincinnati, in addition to Duke University and the University of Virginia, to improve enrolment rates for its two pivotal Phase III Clinical Trials (the “Clinical Trials”)
  • Completion of patient enrolment for the Clinical Trials in November 2019
  • Sale and Installation of three new Polarean 9820 Xenon Polariser systems to the University of British Columbia, The Hospital for Sick Children in Toronto and the University of Iowa Hospitals and Clinics. Receipt of an order for a new Polarean 9820 Xenon Polariser system from the University of Kansas
  • Third tranche of US$1m confirmed from US$3m Small Business Innovation Research grant
  • Net cash of US$2.0 million at 31 December 2019

Post-period end

  • Positive top-line results from the Clinical Trials using hyperpolarised 129Xenon gas, where both trials met their primary endpoint
  • Raised £8.4 million (gross), including the £2.2 million subscription from new strategic investor Bracco Imaging S.p.A.
  • Appointment of Jonathan Allis as Chairman
  • Appointment of Cyrille Petit as Non-Executive Director
  • Completion of a pre-New Drug Application meeting (“pre-NDA meeting”) with the United States Food and Drug Administration (“FDA”)

Richard Hullihen, CEO of Polarean, commented: “2019 has been a year of great accomplishment for Polarean. Our critical goal of executing and managing our pivotal Phase III Clinical Trials was rewarded with a successful readout in January 2020, which is a major milestone for us. Following this we raised a further £8.4 million which will enable us focus on preparing our NDA submission to the FDA in Q3 2020. We remain hopeful that this will lead to regulatory approval in H2 2021.

“We also welcome our new strategic investor, Bracco Imaging S.p.A and look forward to growing this mutually beneficial relationship. We are confident and excited for the future of Polarean and are grateful to our shareholders and stakeholders for their continued support.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

Contacts:

Polarean Imaging plc www.polarean.com / www.polarean-ir.com
Richard Hullihen, Chief Executive Officer Via Walbrook PR
Jonathan Allis, Chairman


SP Angel Corporate Finance LLP Nomad and Broker Tel: +44 (0)20 3470 0470
David Hignell / Soltan Tagiev (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


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.               

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 than current methods. The annual burden of pulmonary disease in the US is estimated to be over US$150 billion.


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Chairman’s Statement

I am excited to have become Chairman of Polarean earlier in 2020. While I have been a Board member for some time, the opportunity to assume the Chairmanship has been the best combination of timing and opportunity having just come from the sale of my former company Blue Earth Diagnostics to Bracco Imaging S.p.A. ("Bracco"). I have a direct background in the history of hyperpolarised noble gas imaging and with the founder of Polarean, it has made for an easy transition.

The critical achievements for the Company for 2019 are the successful completion of its Phase III Clinical Trials and the positive top line readout, which was subsequently announced on 29 January 2020. The Company is now moving towards the submission of its New Drug Application (“NDA”) to the US Food and Drug Administration (“FDA”) and simultaneously beginning the process of preparing for commercial launch.  In the meanwhile, current events resulting from the COVID-19 pandemic have made clear that medicine is still not fully equipped to analyse and understand the many ways that pulmonary function can be affected by disease. Polarean has the unique ability to visualise and quantify the function of the lungs at the alveolar and capillary level. In this era of COVID-19, we believe that Polarean’s technology will become increasingly important in understanding this disease and in managing post-COVID patients.

The Company looks forward to working with its growing installed base of luminary researchers to help understand the diagnosis, methods of action and therapies for all pulmonary disease.

Polarean’s Directors have begun to engage with the Pharma industry. Our initial expectations of synergies and clinical trials are now in the early stages of development, leveraging our expanding installed base of top tier institutions and researchers, and we look forward to more fully exploring these potential relationships and perhaps capturing some early movers of those during 2020, based simply on the compelling ability of Polarean’s technology to contribute to their processes.

Our primary focus for the coming year will be the planning and preparation for commercial launch, post anticipated FDA approval. This is an important phase in the Company’s development, and we have resource coupled with some skilled service providers engaged in this effort. We look forward to the unique combination of technology and opportunity that defines the future for hyperpolarised noble gas imaging of pulmonary function.

The Company has been fortunate in its ability to attract and retain long term professional and institutional investors who I thank for their continued support. I would also like to welcome Bracco to the Company as an investor and Board member. I am aware of their specific insight into the global market for the technologies that so dramatically enhance the contributions of medical imaging equipment to medicine and patient care.

On behalf of the Board, I would like to thank the employees, stakeholders, and shareholders for their support, without which none of this would have been possible.

Jonathan Allis
Non-Executive Chairman

17 June 2020


Chief Executive Officer’s Statement

2019 – Year of Accomplishment of Critical Goals

The Group spent the majority of the year focused on the execution and management of its critical Phase III Clinical Trials. Once launched, discovery of key issues in enrolment required adapting and adjusting to the conditions and environments at each site versus original plans. We added a third site at the University of Cincinnati to accelerate completion of one pathway in the trial. Ultimately, we successfully completed our Trials which had a positive top line readout, and this is a major milestone towards our submission of our New Drug Application to the FDA and towards approval and commercialisation of hyperpolarised noble gas imaging for the assessment of pulmonary function.

The Opportunity

The US Healthcare system’s annual burden of pulmonary disease continues unabated costing approximately US$150 billion and your Directors still see a tremendous opportunity to bring our technology’s quantitative, reproducible, non-invasive method for diagnostic and therapeutic guidance to medicine. If anything, the events of the global COVID-19 pandemic seem likely to create additional demand for managing post infection patients through extended recovery and therapeutic regimes. We have refined and extended our development of 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 maintains its intent to address the high end of the US academic and teaching hospital market segment, which comprises approximately the top 1,000 institutions nationally having multiple Centers of Excellence in Pulmonary Medicine and Radiology. The combined addressable market there for our products approaches US$500m in equipment sales alone.

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, with its weaknesses in use for measurement of expired breath. Current imaging technologies using ionizing radiation are not widely used for assessing pulmonary function, despite their revolutionary use in other medical applications. During 2019, our additional new developments in the assessment of pulmonary vascular disease indicate early promise of the extension of our technology into Cardiology via the assessment of microvascular hemodynamics. We expanded our installed base of systems at luminary academic research centers at SickKids Hospital, Toronto, BC Children’s Hospital in Vancouver, and at University of Iowa Hospitals and Clinics.

Our Organisation

The Group encountered material changes in its shareholder base during the year and as a result its Board composition and Chairmanship changed. Jonathan Allis, PhD - an existing Board member and CEO of Blue Earth Diagnostics, a PET tracer contrast agent company recently acquired by Bracco - became Chairman in February 2020. Dr. Allis, who has direct experience in hyperpolarised noble gas imaging, and whose experience in the commercialisation and launch of medical imaging contrast agents will be invaluable to Polarean in the next phases of development in submission, FDA approval, and commercialisation. In addition, following Bracco’s participation in the Company’s recent £8.4m fundraise (before expenses), we welcomed Mr. Cyrille Petit to the Company's Board as a Non-Executive Director and representative of Bracco. Mr. Cyrille Petit is also on the Audit Committee.

Our Operations

In 2019, we built and shipped three of our 9820 polariser systems. As we have previously explained, our production tracks the award of grants to major institutions and is historically 3-5 units per year. We see that pattern continuing and welcome the expansion of our installed base in top tier institutions. We made planned advances in our quality systems and engineering infrastructure as we move toward maturing in our new regulated environment.

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 finalised including all of the most recent developments in pulmonary vascular disease assessment and data and image analysis software. Our group has continued to push the design of the systems forward, with key advances in ease of use and manufacturability making progress in accordance with our plan. We made valuable progress on our performance and ease of use projects, which will come into play in the future.

2019 Financial results

Broadly speaking, our 2019 results are consistent with market expectations, with revenues slightly below expectations but with expenses diligently managed to also be lower than expectations. In addition, we raised US$2.62m (before expenses) in July 2019 in a placing designed to provide additional support for the Company’s Clinical Trials as patient enrolment neared completion. We benefitted from the Year 3 proceeds of the NIH SBIR Grant which we have jointly with the Cincinnati Children’s Hospital Medical Center. We have maintained our pricing and margins throughout the year on equipment, albeit timing of grant receipts slightly diluted overall margins. It is still the case that the majority of our research systems are procured via grant mechanisms and while the outcomes are typically known as their process unfolds, the ultimate fiscal timing of these projects is difficult to predict with certainty as many involve public procurement cycles.

2020 and Beyond

On 4 May 2020 we had our Pre-NDA meeting with the FDA. In that meeting we discussed many items relating to our submission. We have now received the minutes of that meeting from them and confirm that the market expectation we have previously set with regard to the timing of submission and the expected times for review of the submission and Hatch Waxman request are as previously stated. We plan to file our New Drug Application with the FDA in Q3 2020 and continue to cautiously plan to receive regulatory approval twelve months after filing the NDA. In the meantime, we continue to collaborate with researchers in the US and abroad and look to expand our installed base of research systems, and have a pipeline supporting that plan. The exciting new developments in cardiology and pulmonary vascular disease are deepening, and our knowledge base about these conditions is expanding.

We are also excited by and grateful for the investment we received from Bracco in our most recent financing announced in March 2020. We welcome Bracco, who bring a wealth of direct experience in medical imaging contrast agents to the Board of Polarean and we have already benefitted from that relationship even in this short time.

The “129Xe MRI Clinical Trials Consortium” is studying the application of our technology to the case of post infection COVID-19 patients to assess the long-term effects and case management of these patients. As this process unfolds, we will make future announcements.

We continue to explore opportunities with potential strategic partners in Pharma 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 research collaborators and research 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.

Polarean has a dedicated team of professionals without whose efforts these accomplishments would not be possible. On behalf of the entire staff of Polarean Imaging, I would like to thank our shareholders for their 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

17 June 2020

Consolidated Statement of Comprehensive Income

2019 2018

Notes

US$

US$

Revenue

4

2,301,093

 

2,439,139

Cost of sales

(925,612)

(633,463)

Gross profit

1,375,481

 

1,805,676

 

 

 

 

Administrative expenses

(6,010,119)

(6,161,916)

Depreciation

11

(63,121)

(10,140)

Amortisation

6

(683,873)

(616,852)

Selling and distribution expenses

(324,791)

(31,766)

Share-based payment expense

19

(305,747)

(251,790)

Total administrative expenses

(7,387,651)

 

(7,072,464)

Operating loss

6

(6,012,170)

 

(5,266,788)

Finance income

7

508

184

Finance expense

7

(91,678)

(188,055)

Loss before tax

(6,103,340)

 

(5,454,659)

Taxation

10

-

-

Loss for the year and total other comprehensive expense

(6,103,340)

 

(5,454,659)

 

Loss per share

 

 

 

Basic and diluted (US$)

9

(0.057)

(0.078)

 

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.


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Consolidated Statement of Financial Position

 

Notes

2019
US$

2018
US$

ASSETS

Non-current assets

Property, plant and equipment

11

355,958

17,752

Intangible assets

12

3,427,547

4,044,398

Right-of-use asset

24

98,263

-

Trade and other receivables

14

5,539

12,539

 

3,887,307

4,074,689

Current assets

 

 

Inventories

15

554,211

651,781

Trade and other receivables

14

636,783

4,226,585

Cash and cash equivalents

16

1,961,869

875,601

 

3,152,863

5,753,967

TOTAL ASSETS

7,040,170

9,828,656

 

 

EQUITY AND LIABILITIES

 

 

Equity attributable to holders of the parent

 

 

Share capital

17

55,776

49,427

Share premium

18

13,659,912

11,063,075

Group re-organisation reserve

18

7,813,337

7,813,337

Share-based payment reserve

19

1,370,734

1,078,335

Accumulated losses

18

(18,309,681)

(12,212,767)

 

4,590,078

7,791,407

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

Deferred income

21

192,817

70,726

Lease liability

24

50,455

-

Contingent consideration

20

316,000

316,000

 

559,272

386,726

 

 

Current liabilities

 

 

Trade and other payables

22

1,773,582

1,590,482

Lease liability

24

70,914

-

Borrowings

23

-

5,213

Deferred income

21

46,324

54,828

 

1,890,820

1,650,523

TOTAL EQUITY AND LIABILITIES

7,040,170

9,828,656

 

 

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Company Statement of Financial Position

Notes

2019
US$

2018
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

11,543,854

9,370,611

Cash and cash equivalents

16

56,765

235,766

 

11,600,619

9,606,377

TOTAL ASSETS

15,943,467

13,949,225

 

 

EQUITY AND LIABILITIES

 

 

Equity attributable to holders of the parent

 

 

Share capital

17

55,776

49,427

Share premium

18

13,659,912

11,063,075

Merger reserve

18

4,322,527

4,322,527

Share-based payment reserve

19

1,065,703

773,304

Accumulated losses

18

(3,213,450)

(2,287,282)

 

15,890,468

13,921,051

 

 

 

 

Current liabilities

 

 

Trade and other payables

22

52,999

28,174

 

52,999

28,174

TOTAL EQUITY AND LIABILITIES

15,943,467

13,949,225

 

As permitted by section 408 of the Companies Act 2006, no separate statement of Comprehensive Income is presented in respect of the parent Company. The loss for the financial year dealt with in the financial statements of the parent Company was US$939,516 (2018: US$1,330,568).



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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 2018

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

Change in accounting policy

-

-

-

-

-

(6,922)

(6,922)

Restated total equity at 1 January 2019

49,427

11,063,075

-

1,078,335

7,813,337

(12,219,689)

7,784,485

Comprehensive income

 

 

 

 

 

 

 

Share based payment – lapsed share options

-

-

-

(13,348)

-

13,348

-

Loss for the year

-

-

-

-

-

(6,103,340)

(6,103,340)

Transactions with owners

 

 

 

 

 

 

 

Issue of shares

6,349

2,756,289

-

-

-

-

2,762,638

Share issue costs

-

(159,452)

-

-

-

-

(159,452)

Share-based payment expense

-

-

-

305,747

-

-

305,747

As at 31 December 2019

55,776

13,659,912

-

1,370,734

7,813,337

(18,309,681)

4,590,078

 

 

 

 


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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 2018

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

Comprehensive income

 

 

 

 

 

 

 

Share based payment – lapsed share options

-

-

-

(13,348)

-

13,348

-

Loss for the year

-

-

-

-

-

(939,516)

(939,516)

Transactions with owners

 

 

 

 

 

 

 

Issue of shares

6,349

2,756,289

-

-

-

-

2,762,638

Share issue costs

-

(159,452)

-

-

-

-

(159,452)

Share-based payment expense

-

-

-

305,747

-

-

305,747

As at 31 December 2019

55,776

13,659,912

-

1,065,703

4,322,527

(3,213,450)

15,890,468

 

 

 


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Consolidated Statement of Cash Flows

 

Year ended
31 December
2019
US$

Year ended
31 December
2018

US$

 

Cash flows from operating activities

 

 

Loss before tax

(6,103,340)

(5,454,659)

Adjustments for non-cash/non-operating items:

 

 

Depreciation of plant and equipment

63,121

10,140

Amortisation of intangible assets and right-of use-asset

683,873

616,852

Share-based payment expense

305,747

251,790

Interest paid

91,678

188,055

Interest received

(508)

(184)

Operating cash flows before movements in working capital

(4,959,429)

(4,388,006)

Increase/(decrease) in inventories

97,570

(1,921)

Increase in trade and other receivables

(14,737)

(69,517)

Decrease in trade and other payables

(285,074)

(315,894)

Increase in deferred income

595,961

98,992

Net cash used in operations

(4,565,709)

(4,676,346)

Cash flows from investing activities

 

 

Purchase of plant and equipment

(401,327)

(6,551)

Interest received

-

184

Net cash used in investing activities

(401,327)

(6,367)

Cash flows from financing activities

 

 

Issue of shares

6,373,919

5,640,211

Cost of issue

(159,452)

(546,436)

Interest paid

-

(188,055)

Interest paid on lease liabilities

(91,678)

-

Interest received

508

5,213

Principal elements of lease payments

(69,993)

(312,836)

Net cash generated by financing activities

6,053,304

4,598,097

Net (decrease)/increase in cash and cash equivalents

1,086,268

(84,616)

Cash and cash equivalents at the beginning of year

875,601

960,217

Cash and cash equivalents at end of year

1,961,869

875,601

 

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Company Statement of Cash Flows


Year ended
31 December
2019
US$

Year ended
31 December
2018
US$

Cash flows from operating activities

 

 

Loss before tax

(939,516)

(1,330,568)

Adjustments for non-cash/non-operating items:

 

 

Share-based payment expense

305,747

251,790

Interest received

(508)

-

Operating cash flows before movements in working capital

(634,277)

(1,078,778)

Decrease in trade and other receivables

(6,275)

-

Increase in trade and other payables

24,824

2,433

Net cash used by operations

(615,728)

(1,076,345)

Cash flows from financing activities

 

 

Issue of shares

6,373,918

5,646,350

Cost of issue

(159,452)

(546,436)

Interest received

508

-

Loans to intercompany

(5,778,247)

(3,810,909)

Net cash generated by financing activities

436,727

1,289,005

Decrease in cash and cash equivalents

(179,001)

212,660

Cash and cash equivalents at the beginning of period

235,766

23,106

Cash and cash equivalents at end of period

56,765

235,766

 

Notes on Financial Statements

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