IP : IXICO plc - Half Year Report

Commercially-led growth strategy delivers strong H1 performance

Oversubscribed capital raise of £5.5m post the period end

IXICO plc (AIM: IXI), the digital technologies company serving neuroscience, today announces its unaudited interim results for the six months ended 31 March 2018.

Highlights

Financial

• Increased reported revenue of £2.9m (H1 2017: £2.3m) representing 30% growth or
• • 40% revenue growth to £2.8m (H1 2017: £2.0m) at project exchange rate
• Gross margin of 62% (H1 2017: 61%)
• Reduced EBITDA loss of £0.3m (H1 2017: £0.4m)
• Operating loss after tax reduced to £0.3m (H1 2017: £0.8m)
• Reduced loss per share of 1.1p (H1 2017: 2.6p)
• Cash of £2.7m at the period end (H1 2017: £2.8m)

Commercial

• Commercially-led growth strategy continues to build momentum
• First biosensor contracts demonstrate the commercialisation of new digital products and services
• • £0.5m contract for services in phase II clinical trial for a neurological disorder
  • £0.7m contract for services in late phase clinical trial for a psychiatric disorder
• Continued expansion of neuro-imaging specialist services
• • New $2.7m clinical study over seven-year term in supra nuclear palsy

Post period end

• Oversubscribed capital raise of £5.5m
• R&D tax credit of £0.4m received on 11 April 2018
• Existing contract for phase IIa clinical study in PSP increased in value from $1.2m to $2.0m
• Two existing contracts increased in value by £0.5m to £2.35m
• Signed a new £1.0m contract in a natural history study of people with early manifest Huntington's disease

Giulio Cerroni, CEO of IXICO, said: 'I am pleased to announce a third consecutive reporting period where we have delivered strong double-digit revenue growth and continued momentum in our commercially led growth strategy towards profitability. We believe that the successful capital raise reflects confidence in the ambitious goals that we have set ourselves to build a specialist technology business of scale with a diverse international client base'.

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About IXICO

IXICO is the digital technologies company serving neuroscience. Our mission is to transform the pursuit of improving brain health through the application of digital technologies to neuroscience. IXICO's specialist data analytics services are used by the global pharmaceutical industry to select participants for clinical trials, assess the safety and efficacy of new drugs in development and in post marketing surveillance. Our neurological disease focus includes Alzheimer's disease, Huntington's disease, Multiple Sclerosis, Parkinson's disease and our integrated digital platform encompasses the entire drug development lifecycle. It is a scalable and secure infrastructure for the capture and analysis of regulatory compliant clinical data to enable sponsors to make rapid, better informed decisions. IXICO is also collaborating with partners to develop new companion digital health products targeted at improving patient outcomes.

To learn more about IXICO, please visit: www.IXICO.com

CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT

Last year we defined our five-point growth plan to deliver double-digit revenue growth, targeting profitability. In the year to 30 September 2017, we delivered 20% revenue growth and have maintained our momentum in this current financial year. In the first six months to 31 March 2018, we have reported revenue of £2.9 million (2017: £2.3 million) which represents 30% growth over the prior period. Excluding the impact of foreign exchange, revenue of £2.8 million (2017: £2.0 million) represents an increase of 40%. This performance underpins our confidence in delivering further top-line growth this financial year.

For the year to date, we have announced c. £5.2 million of new contract wins or expansions, including our first two wearables contracts in October and November 2017. Other new contracts such as the $2.7 million project in supranuclear palsy (PSP), which was announced in January 2018, demonstrate the continued broadening of our presence into adjacent neurological conditions. We have also recently announced a £1.0 million contract in a natural history study of people with early manifest Huntington's disease to observe the natural progression of the disease. This is our third new contract win in this therapeutic area in recent months. We believe that these new contract wins, together with others announced in the last financial year, demonstrate our clear commercial focus on the biopharmaceutical market where our technology platform and capabilities provide mission critical value in:

• Selecting patients for clinical trials;
• Assessing safety and efficacy in clinical drug development ; and
• Post marketing surveillance of marketed medicines.

We are also delivering on our commitment to build scale and operational excellence. This is demonstrated by an improved gross profit performance of 62% (2017: 61%) and a reduced operating loss after tax of £0.3 million (2017: £0.7 million). Consequently the loss per share has reduced to 1.1p (2017: 2.6p).

Cash of £2.7 million (2017: £2.8 million) at 31 March 2018 reflects a small reduction compared to the prior period and an increase of £0.3 million from the cash balance of £2.4 million at 30 September 2017. These important key performance indicators show that we are making clear progress on our path to profitability.

The capital raise of £5.5 million (before commissions and expenses) announced on 3 May, the completion of which is conditional upon the approval of shareholders at the general meeting to be held on 29 May 2018, will be used to further build commercial momentum and accelerate our growth plans. This investment will be used to support:

(i) an expansion of existing operations (via increased scale and potential expansion in the US);

(ii) the commercial roll-out of the Assessa companion platform; and

(iii) commercialisation of the wearables offering.

We are grateful for the support of existing shareholders and welcome our new shareholders.

Current trading and outlook

In summary, our financial year has started very well and, with strong growth and improved margins, we are making excellent progress on our path to profitability. We are confident we will be in a position to deliver double-digit revenue growth for the financial year and meet market expectations. Profitability is an important objective that we believe can be achieved without deferring or sacrificing planned investments in innovation, enhancing our infrastructure and commercial capabilities.

We would like to thank our new and existing shareholders, customers, partners and staff for their continued support and enthusiasm and look forward to providing further updates during the latter part of this financial year.

FINANCIAL REVIEW

The financial performance for the six-month period ending 31 March 2018 reflected increased revenue, improved gross profit and lower operating expenditure, which resulted in a significantly reduced loss after taxation.

Revenue

Revenue of £2.9 million (H1 2017: £2.3 million adjusted*) represented a growth of £0.6 million or 30% compared to the prior period. At project exchange rates, revenue was £2.8 million (2017: £2.0 million), representing growth of 40% when the impact of foreign exchange is excluded. This reflected an increased number of commercial projects, including three new contracts signed in the first half of the financial year.

Other income

Other income reduced to £0.3 million (H1 2017: £0.4 million) which reflected the completion of an Innovate UK grant funded project, which had been ongoing in the prior year.

Operating expenditure and loss after tax

Operating expenditure of £2.5 million (H1 2017: £2.6 million adjusted*) was in line with expectations. The Group invested £0.6 million in research, development and innovation, which was broadly in line with £0.7 million invested in H1 2017.

Non-recurring administrative expenses of £0.3 million in the period were accrued costs associated with the capital raise announced on 3 May 2018. Non-recurring administrative expenses in the prior period of £0.5 million represented the impairment of intangible assets, costs associated with the dissolution of Optimal Medicine SARL and the transfer of trade and assets from IXITech Limited and Optimal Medicine Limited to IXICO Technologies Limited.

The Group's loss after taxation for the six months reduced to £0.3 million (H1 2017: £0.7 million) which represented a 56% reduction compared to the prior period.

The loss per share decreased to 1.1 pence (2017: 2.6 pence).

Current assets

Trade and other receivables of £1.5 million (H1 2017: £1.6 million) were in line with expectations, reflect agreed payment terms and are not impaired.

The tax asset of £0.6 million (H1 2017: £0.7 million) included the R&D tax credit claim of £0.4 million in respect of the previous financial year ended 30 September 2017, which was received on 11 April.

Closing cash of £2.7 million at 31 March 2018 (H1 2017: £2.8 million) represented a modest cash decrease compared to the prior period and a net increase of £0.3 million from the cash balance of £2.4 million at 30 September 2017.

Current liabilities

Trade and other payables of £2.2 million were £0.6 million higher than prior period (H1 2017: £1.6 million) including £0.3 million accrued costs associated with the capital raise.

To read the full RNS release please go to: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/IXI/13651275.html