Proteome Regulatory News (PRM)

Proteome Sciences plc ("Proteome Sciences" or the "Company")

Preliminary results for the year ended31st December, 2014

29th May, 2014

Highlights

· Revenue increase 9% to £1.56m (2013:£1.43m) excluding equipment on loan £nil (2013: £0.71m)

· Licenses/Sales/Services revenue up 7% to £1.30m (2013:£1.21m) excluding equipment on loan

· TMT® sales rose 31% in 2014

· Loss after tax £3.57m (2013:£3.15m)

· Cash at year-end £1.87m (2013:£0.60m)

· Strong underlying growth in biomarker services

· $2m services contract from Genting TauRx - co- owners of companion diagnostic

· Excellent safety characteristics in toxicity screens for CK1d compounds

· First MCI/AD panel in blood - for clinical tests, stratification, drug development

· HUPO Science and Technology Award for TMT®

Outlook

· Facilities running at full capacity in 2015

· Significant demand for SysQuant® and TMTcalibrator™

· Strong engagement with CK1d outlicensing in Alzheimer's (AD)

· Two PS compounds in AD being tested by pharma

· Results from another MCI/AD cohort shortly to provide new IP - accelerate licensing of clinical diagnostic

· Stroke test to be launched by Randox before year end - CE marked product to follow in 2016

· TMT® tags performing strongly

Commenting on these results, Christopher Pearce, Chairman of Proteome Sciences, said

"Through our workflows, our biomarker services, our content and IP, Proteome Sciences is exceptionally placed to deliver many of the main components of personalised medicine.

We have seen a big increase in demand for SysQuant®, TMTcalibrator™ and biomarker services from major pharmaceutical customers and our facilities are running at full capacity with a strong pipeline in 2015 with excellent prospects of further growth.

In Alzheimer's our CK1d compounds are generating very positive feedback and certain of the major pharma have been provided with the PS compounds for testing in their in vivo models of AD. Results are expected shortly from another cohort of patient samples using our MCI/AD biomarker panel that should expand the intellectual property coverage and accelerate the development and licensing of the clinical diagnostic test. We have been informed by Randox that the first stroke test will be released before the end of the year with a CE marked product to follow in 2016. Proteome Sciences is due to receive further milestone payments at the launches and anticipate that similar license deals in stroke with other companies are likely to be forthcoming. Our TMT® tags continue to perform strongly in 2015 and that trend looks set to continue.

Our core activities are performing well against the current buoyant background and we expect to see this reflected in strong growth in revenue and news flow in 2015. This may also be complemented by further developments and progress from our two out-licensing programmes in Alzheimer's disease and in stroke."

For further information please contact

Proteome Sciences plc:

www.proteomics.com 

Tel: +44 (0)1932 865065

Christopher Pearce, Executive Chairman

Geoff Ellis, Finance Director

Ian Pike, Chief Operating Officer

Advisers:

Nominated Adviser:

Cenkos Securities plc

Mark Connelly/Callum Davidson

Tel: +44 (0)20 7397 8900

finnCap

Geoff Nash

Tel: +44 (0)20 7220 0563

Notes to Editors:

About Proteome Sciences:

Proteome Sciences, Cobham, UK is a global leader in applied proteomics and peptidomics offering high sensitivity, proprietary technologies for protein and peptide biomarker discovery, validation and assay development. PS Biomarker Services™ uses isobaric and isotopic Tandem Mass Tag® (TMT®) workflows developed on the latest Orbitrap® Fusion Tribrid, Orbitrap® Velos and TSQ Vantage mass spectrometers to deliver rapid, robust and reproducible biomarker assay development outsourcing solutions for customers in the pharmaceutical, diagnostic and biotechnology sectors. Services are provided from its ISO 9001: 2008 accredited facilities in Frankfurt, Germany. By combining Selected Reaction Monitoring (SRM) and TMT® workflows, highly multiplexed assays can be developed rapidly and are suitable for screening hundreds of candidate biomarkers in larger validation studies and transferred for immunoassay development. The Company's own research has discovered a large number of novel protein biomarkers in key human diseases primarily in neurological, neurodegenerative conditions and cancer and for chemical sensitizers. Patented blood biomarkers, including Alzheimer's disease, stroke, brain damage, cancers and chemical sensitizers are available to license for diagnosis, monitoring and treatment.

Preliminary results for the year ended 31st December 2014

Our service and main business activities made considerable progress in 2014 even though this was not fully reflected in revenues because of unavoidable delays in the timing of several contracts that will fall into the current year.

There were many highlights in 2014. In July we announced a major breakthrough in Alzheimer's disease (AD) with a panel of 10 proteins in blood that can predict whether a person with early symptoms of memory loss or mild cognitive impairment will develop AD within 12 to 18 months with a very high accuracy of 87%.

In September we reported further strong progress in the development of our AD compounds for CK1d which demonstrated excellent safety characteristics when tested in standard toxicity screens. This was an important milestone in pre-clinical development of potent and selective inhibitors of tau, a key protein involved in AD progression.

PS Biomarker Services was awarded a $2m contract in September by Genting Tau RX Diagnostic Centre to profile blood samples from 1000 patients in a phase 3 trial of LMTX, a drug targeting the tau pathway and to develop a protein panel for AD diagnosis and monitoring treatment efficiency. Work on the contract started in 2015 and Proteome Sciences will be joint owner of any companion diagnostic developed.

Our TMT ® mass tags received the prestigious Science and Technology Award at the HUPO World Congress in October. TMT ® 10-plex provides the highest multiplexing capability currently available and we will continue to deliver new reagents that further expand the range of TMT® tags.

We have experienced high levels of interest in our SysQuant® , TMTcalibrator™ and TMT® - MS3 biomarker workflows which increase the quality and number of biomarkers found in body fluids. This has been reflected by a strong underlying growth in biomarker services.

The accelerating drive for better drugs and diagnostics for personalised medicine in combination with these developments at Proteome Sciences provided a buoyant background for revenue growth to our business and prospects.

Revenue

The Group's operations are organised into three geographic regions: United Kingdom, Germany and US. Internal reporting on performance is allocated accordingly and to its major products and services, as set out below:

PS Biomarker Services™

There has been a significant increase in the biomarker services pipeline over the period that resulted with a 65% increase in sales helped by the development and adoption of the SysQuant® and TMTcalibrator™ workflows. These are attracting considerable interest from pharmaceutical customers with further SysQuant® contracts awarded at the end of November including two proof of concept studies.

We were delighted that PS Biomarker Services™ received the $2m contract from Genting Tau RX Diagnostics (GTD) to develop new diagnostic panels to detect Alzheimer's disease and monitor treatment efficiency of their LMTX drug that targets the tau tangles in the brain in Alzheimer's disease. GTD will obtain a licence to Proteome Sciences' existing blood biomarkers for AD and both parties will share commercialisation of the diagnostic assays developed.

The first SysQuant® study in pancreatic cancer was published in PLOS ONE in March 2014, in which we analysed the tumours of 12 patients with collaborators at King's College Hospital, London. The study reported a total of 6,284 unique phosphorylation sites and 2,101 individual proteins. We identified multiple cancer-generating pathways that were activated with some pathways highly active in all 12 patients whilst others were found in a small subset of the patients. In each case we identified unique combinations of targets for existing anti-cancer drugs which could potentially have provided a superior treatment outcome. A SysQuant® study of a further 20 cases of pancreatic cancer was completed in November that replicated the previous findings. As well as potential new drug targets, a new set of biomarkers predicting the likelihood and timescale of tumour recurrence after surgery was discovered that provides the ability to match patients to 'individual' drug treatments.

SysQuant® was used for the first time in a CNS application that was presented at the Alzheimer's Association International Conference in July where 100,000 peptide IDs and over 22,000 phosphopeptides were obtained from a single experiment. Several key signalling pathways were identified and these changes supported a much wider mode of action for our CK1d compounds in preventing tau mediated damage.

Having successfully completed SysQuant® commercial and pilot contracts, the high profile and attention that it is receiving at meetings and in publications have combined to build a substantial volume of customer interest and orders that should be strongly reflected in increased revenues in 2015.

TMT®

TMT® product sales increased 31% in 2014. Through the general introduction of TMT® 10-plex, TMT® became the global market leader in 2014 helped by considerable exposure at the American Society of Mass Spectrometry meeting (ASMS) and its profile continues to rise. TMT® mass tags received the Science and Technology Award at the HUPO World Congress in Madrid in October. This should further increase the visibility and penetration of TMT® in mainstream systems biology and will be further enhanced with the development of new tags with higher plexing rates.

Alzheimer's disease

Major milestones were achieved in our two main research programmes in Alzheimer's - the panel of 10 proteins in blood to predict MCI/AD and the CK1d compounds against tau. These have provided the necessary results and data for us to complete and distribute the marketing documentation to secure license agreements for Proteome Sciences' IP for the treatment and diagnosis of Alzheimer's disease. Following the sharp increase in numbers of people expected to have AD by 2050, the size and value of AD products has grown rapidly and has been highlighted by the recent $1bn deal between Eli Lilly and Astra Zeneca for an AD drug where revenue will be split jointly.

The potential for AD diagnostic and prognostic test in blood is also considerable with industry estimates of around $1-2bn per annum.

There are three main applications:

· Patient stratification for clinical trials

· Research assays for doing development/testing

· Clinical diagnostics

Discussions to outlicense the diagnostic application of the MCI/AD panel are under way with a number of the major diagnostics companies and the licensing programme is being actively advanced under confidentiality agreements.

We have received very positive engagement and feedback for our CK1d compounds from a broad cross section of pharmaceutical companies with non-disclosure agreements in place and discussions progressing well.

In both AD licensing programmes, we have maximised the opportunity to cross-market SysQuant® and TMTcalibrator™ services with prospective licensees who have been highly impressed with the breadth and quality of data generated. We believe that this interest should lead to a number of additional biomarker services contracts.

Stroke

We have been informed by Randox Laboratories that the development of the stroke test is now progressing well in spite of earlier technical issues. Randox is fully committed to the stroke programme and has invested significant resources to ensure release of a research use product for clinical studies by the end of 2015. A CE marked product will follow in 2016 with Proteome Sciences due to receive further milestone payments under the license.

IP portfolio

Our 600 plus patent IP portfolio of key biomarkers across a broad range of diseases, applications and technologies that supports our extensive asset base has been further extended. Another 13 patents were granted in 2014 with a further 20 applications filed over the period. Our IP estate underpins the value that has been created through our research and this will be reflected by licence fees, milestones and royalties.

Financial review

Financial performance

Revenue for the twelve month period ended 31st December, 2014 increased 9% to £1.56m (2013: £1.43m) excluding equipment on loan £nil(2013:£0.71m). Total revenue including equipment on loan was £1.56m (2013:£2.14m). In the breakdown of revenue, Licences/Sales/Services revenue rose 7% to £1.30m (2013: £1.21m) excluding equipment on loan of which TMT® sales increased 31%. Grant services were £0.27m (2013: £0.22m). The loss before tax was £4.23m (2013: £3.60m).

Costs and available cash

Administrative expenses in 2014 were £4.95m (2013:£4.92m) and are likely to remain relatively constant in 2015. After the tax credit of £0.66m (2013:£0.45m), the loss after taxation for the period was £3.57m (2013: £3.15m). The net cash outflow from operating activities was £3.27m (2013: £2.77m).

Cash at the year-end was £1.87m (2013:£0.60m).

Outlook

We are pleased to have got off to a good start in 2015. There has been a big increase in demand for SysQuant®, TMT calibrator™ and TMT MS3 services from major pharmaceutical customers and this is reflected by a growing pipeline of orders and enquiries with a further four biomarker services contracts signed since the five that were last announced in March. The background to the services business is now very buoyant with our facilities running at full capacity in 2015 and with strong prospects for future growth.

The increasing prominence and rise of Alzheimer's disease is instigating considerable global media and commercial activity together with high profile political interest as the global drive to tackle dementia gains momentum. With the number of cases projected to treble by 2050, the economic and social burden has to be addressed and this is being reflected by a sharp increase in the perceived value of successful drugs and early diagnostic tests.

Considerable progress has been made to outlicense two of our programmes for the treatment and diagnosis of Alzheimer's disease. The CK1d marketing dossier for PS110 and PS 278-05 against tau aggregation in AD continues to generate very positive feedback, with certain of the major pharma having been provided with the PS compounds for further confidential evaluation and testing in their own in vivo models of AD.

Given the paucity of advanced drug development options currently available, Proteome Sciences intends to capitalise on the strong interest now focused in the tau pathway in AD through its unique position in CK1d. A license is expected to attract considerable signature fees, milestones and royalties.

A similar background has developed for the MCI/AD diagnostic panel of proteins in blood. Results are expected shortly from another cohort of patient samples that should add new intellectual property and accelerate the development of the clinical diagnostic for MCI/AD. We have received serious engagement and licensing interest from a number of major diagnostics companies and these opportunities are being actively pursued.

The first stroke test will be released by Randox before the end of the year as a research use product in clinical studies and a CE marked product will follow in 2016. Under the license agreement, Proteome Sciences is due to receive further milestone payments and anticipates that similar license deals for the same stroke biomarker content are likely to be concluded with other global diagnostic companies.

TMT® tags have continued to perform strongly in 2015 as evidenced by the largest ever order dispatched during the quarter and that trend is expected to continue.

Through our workflows, our biomarker services, our content and IP, Proteome Sciences is exceptionally placed to deliver many of the main components of personalised medicine. Proteins should now play a much larger and more long-lasting role driven by this increasing momentum and will be amongst the key value drivers for drug development, early diagnosis and transforming patient care that will impact nearly every aspect of our lives.

Our core activities are performing well against a buoyant background and we expect to see this reflected in revenue growth and news flow with the prospect of these complemented by potential high profile licenses in Alzheimer's disease and stroke.

Unaudited consolidated income statement

For the year ended 31st December 2014

Unaudited consolidated statement of comprehensive income

For the year ended 31st December 2014

Unaudited consolidated balance sheet

As at 31st December 2014

Unaudited consolidated statement of changes in equity

For the year ended 31st December 2014

Unaudited consolidated cash flow statement

For the year ended 31st December 2014

Notes to the unaudited consolidated cash flow statement

Notes to the financial information

1. Basis of Preparation

The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 31st December 2014 or 2013. Statutory accounts for the year ended 31 December 2013 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The results for 2014 are unaudited. Statutory accounts for the year ended 31 December 2014 will be finalised based on the information presented in this announcement. The Independent Auditors' Report will form their opinion on those statutory accounts once they are complete.

Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar in due course and once delivered, will be available at the Company's registered office: Coveham House, Downside Bridge Road, Cobham, Surrey KT11 3EP.

While the financial information included in their preliminary announcement has been computed in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU, this announcement does not itself contain sufficient information to comply with IFRS. The Group intends to publish full financial statements that comply with IFRS.

The financial information in these preliminary unaudited results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standard and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies adopted have been consistently applied to all the years presented and are consistent with the policies that will be adopted in the statutory accounts for the year ended 31 December 2014 and those that were applied in the group's statutory accounts for the year ended 31 December 2013.

2. Liquidity and going concern

The appropriateness of the Group's going concern basis remains reliant upon the generation of commercial revenues and intends to achieve this by sub-licensing its discoveries and products to third parties and being able to raise sufficient additional finance in order to maintain sufficient working capital to support its activities. There can be no assurances that such licensing arrangements will be successful and hence the timings and amounts of related revenue are uncertain. Furthermore, the raising of further funding through a placing to raise further funds or sourcing of other external finance for the development of the Group's activities is not currently guaranteed too. The Directors have concluded that these circumstances represent a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern and that, therefore, the Group may be unable to satisfy the settlement of its ongoing and future liabilities in the normal course of business.

Nevertheless, in view of the Group's current cash resources and the operational cash outflows and inflows anticipated over the next twelve months after making enquiries and considering this uncertainty and the measures that can be taken to mitigate the uncertainty, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the financial statements. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.

3. Revenue

The Group's major products and services, as set out below:

4. Loss per share from continuing operations

The calculations of basic and diluted loss per ordinary share are based on the following losses and numbers of shares.

In 2014 and 2013 the loss attributed to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of share options that are out of the money would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of the International Financial Reporting Standard 33.

5. Cautionary statement on forward-looking statements

Proteome Sciences ('the group') has made forward-looking statements in this preliminary announcement. The Group considers any statements that are not historical facts as "forward-looking statements". They relate to events and trends that are subject to risk and uncertainty that may cause actual results and the financial performance of the Group to differ materially from those contained in any forward-looking statement. These statements are made in good faith based on information available to them and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.