TIDMSKIN
RNS Number : 2142W
Integumen PLC
09 December 2019
The following announcement replaces announcement number 1221W of
700am on 9 December 2019. The only change relates to two numbers in
the Key Statistics section - the number of Ordinary Shares in issue
following Admission and the % of the Enlarged Share Capital
represented by the New Ordinary Shares have been corrected. The
correct announcement is set out below.
Integumen PLC
("Integumen", "Group" or "Company")
Integumen raises approximately GBP1.368 million to maintain
current pace of growth - replacement
Subscription and Placing of, in aggregate, 91,253,530 new
Ordinary Shares at 1.5 pence per share
Integumen plc (AIM: SKIN) is pleased to announce a subscription
for new Ordinary Shares and a placing of new Ordinary Shares
through its broker, Turner Pope, involving the issue of, in
aggregate, 91,253,530 new Ordinary Shares at 1.5 pence per share
which will raise approximately GBP1.368 million (before expenses)
for the Company, utilising all of the headroom currently
available.
Gerard Brandon, Chief Executive Officer, commented:
"The Company guided revenues of GBP1 million in 2019 and four
times that for 2020 to GBP4 million. Even with cash in the bank, a
very low-geared (8 per cent.) balance sheet and profitability in
sight, it is necessary for the Company to provide verifiable
assurances during a client's due diligence process that its cash
buffer is strong throughout the duration of each client's
engagement with the Company. The monies raised will provide this
buffer and enable this continued rapid growth of sales to many
leading global skincare companies through the expansion of both
facilities and employees. With the visibility we have of sales into
next year, 2020 is already looking to be a good year for
Integumen."
Funding to maintain current pace of growth into 2020
includes:
-- Providing working capital to help deliver GBP4 million in revenues, guided for 2020
-- Intending to double the size of the Labskin laboratory in
York, currently 3,162 square feet, which could provide an estimated
10-fold increase on 2019 turnover capacity
-- Managing tenders made jointly with commercial and academic consortium research partners for approximately GBP7 million in state supported grant funding and an application to a large US philanthropic foundation made together with other research partners for a vector skin, insect borne disease project with a combined value of US$7.7 million
-- Hiring additional laboratory, sales and data scientists
-- Increasing average sales per client to between GBP100,000 and
GBP500,000 for physical and AI services
-- Engaging technical support professionals to support Rinodrive
and its intelligent data management and analytics software services
in connection with the framework agreement to be entered into
between the Company and Parity Group plc
-- Increasing the financial robustness of the Group to assist client due diligence
Trading update Quarter 3, 2019 (unaudited)
In the nine months ended 30 September 2019, the Group has
achieved turnover of GBP0.591 million (compared with GBP0.116
million in the comparative period in 2018) with gross margins of 78
per cent. and posted an EBITDA loss of GBP0.668 million, a
reduction of GBP0.134 million on the comparative period in 2018.
Overheads for the nine-month period ended 30 September 2019
totalled GBP1.129 million, an increase of GBP0.249 million over the
comparative period in 2018. The increase in overheads is due to
incorporating Rinocloud operating costs since 2 May 2019 and the
appointment of additional laboratory and management staff. As at 30
September 2019, the Group had cash balances of GBP0.477
million.
All of the financial information referred to in the paragraph
above is unaudited. Financial information for the financial year
ended 31 December 2018 excludes discontinued operations.
Issue of new Ordinary Shares
The issue of 91,253,530 Ordinary Shares pursuant to the Placing
and the Subscription and the grant of warrants to Turner Pope over
5,279,999 Ordinary Shares is the maximum the Company is able to
issue without the need to convene a further general meeting of
Shareholders to approve a greater authority.
Gerard Brandon, Camillus Glover and Fionán Murray have agreed to
subscribe equally for, in aggregate, 3,253,531 new Ordinary Shares
pursuant to the Subscription.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Enquiries:
+44 (0) 7340 055
Integumen plc Gerard Brandon, CEO 648
SPARK Advisory Partners
Limited Neil Baldwin/Vassil
(Nominated Adviser) Kirtchev +44 (0) 113 370 8974
Turner Pope Investments
(TPI) Limited
(Broker) Andy Thacker/Zoe Alexander +44 (0) 20 3657 0050
About Integumen: www.integumen.com
Integumen is a vertically integrated product and services
company for skin related diseases, treatments and therapies with
four business units:
-- Labskin AI's technology platform incorporates artificial
intelligence within clinical research for medical device,
pharmaceuticals, cosmeceuticals and related life science test
services. Labskin allows skincare, healthcare, pharmaceutical
manufacturers and cosmetic companies to test their products on
human-like skin in a real-world environment with full access to
multiple state-of-the-art partner technologies.
-- Rinodrive is a data aggregation, refining and AI analysis
open-source eco-system designed to provide third-party service
providers the ability to offer their clients valuable insights that
support clinical, operational and financial decisions in healthcare
services, third-level education, government departments and the
financial sector.
-- Wound pHase is developing skin and wound care products using
its proprietary wound dressing technology. Working in collaboration
with CBD providers creating a CBD infused diabetic wound care
product range.
-- Stoer-for-men skin products e-commerce division offers a
range of skincare products derived from 5 natural super-ingredient
plant extracts specifically for men to reduce the signs of ageing
and is also used as a control for client testing within Labskin
laboratories.
Subscription and Placing of, in aggregate, 91,253,530 new
Ordinary Shares at 1.5 pence per share
Introduction
The Company is pleased to announce that it has raised GBP1.368
million (before expenses) by a subscription for and placing of, in
aggregate, 91,253,530 new Ordinary Shares at a price of 1.5 pence
per Ordinary Share. The Placing was undertaken by the Company's
brokers, Turner Pope, as agent for the Company with existing and
new investors in the Company.
The Placing is conditional upon Admission and the Placing
Agreement not being terminated in accordance with its terms prior
to Admission. The Subscription is also conditional upon
Admission.
Admission is expected to take place on or around 16 December
2019.
Background
The following explains the background to the Placing and
Subscription:
Integumen's business units
Integumen is a vertically integrated product and services
company specialising in skin related diseases, treatments and
therapies with four business units.
1. Labskin AI's technology platform incorporates artificial
intelligence within clinical research for medical devices,
pharmaceuticals, cosmeceuticals and related life science testing
and R&D services. Labskin allows skincare, healthcare and
cosmetics companies and pharmaceutical manufacturers to test their
products on human-like skin in a real-world environment with full
access to multiple state-of-the-art partner technologies. The
platform is also starting to be used by large customers to conduct
R&D into the skin microbiome.
2. Rinodrive is a data aggregation, refining and AI analysis
open-source eco-system that has been designed to provide
third-party service providers with the ability to offer their
clients operational data management and valuable insights to
support clinical, operational and financial decisions in healthcare
services, third-level education, government departments and the
financial sector.
3. Wound pHase is developing skin and wound care products using
its proprietary wound dressing technology.
4. Stoer-For-Men skin products offers a range of skincare
products derived from five natural super-ingredient plant extracts
specifically for men to reduce the signs of ageing and is also used
as a control for client testing within Labskin laboratories.
Significant growth since August 2018, guiding 2020 revenues of
GBP4 million
Following a strategic review by new management in August 2018,
the Company repositioned its Labskin offering from selling GBP1,500
skin kits as consumables for the product testing departments of
large customers to offering a complete service where tests would be
undertaken in accredited Labskin labs by experienced Labskin
scientists.
During the current financial year, this has seen average sales
to large clients increase to, on average, approximately GBP46,000
for R&D services. It has seen engagement at clients move to
C-level personnel where Labskin is increasingly carrying out IP
impacting R&D work into the holistic impact on the skin
microbiome.
Turnover for the Group has increased from GBP0.274 million
(audited) for the year ended 31 December 2018, to an expectation of
over GBP1 million in the current financial year. In the nine months
ended 30 September 2019, the Group posted (unaudited) revenues of
GBP0.591 million.
In its recent trading update on 13 November 2019, the Company
gave guidance in relation to the financial year ending 31 December
2020 as follows:
"Since 2018, the Company has seen average sales grow from GBP5k
for consumable, one-off sales to 2019 average sales of GBP50k as a
service contract. Heading into 2020, Integumen is engaging with
multiple top 20 global skin and personal care companies and
believes average sales are likely to range between GBP100k to
GBP500k for data as a service to skincare R&D framework
multi-year agreements, providing good visibility of revenue.
Therefore, excluding developments that may arise from Integumen
entering into the agreement with Parity Group plc, the Company is
guiding 2020 revenues of GBP4 million."
Trading update Quarter 3, 2019 (unaudited)
In the nine months ended 30 September 2019, the Group has
achieved turnover of GBP0.591 million (compared with GBP0.116
million in the comparative period in 2018) with gross margins of 78
per cent. and posted an EBITDA loss of GBP0.668 million, a
reduction of GBP0.134 million on the comparative period in 2018.
Overheads for the nine-month period ended 30 September 2019
totalled GBP1.129 million, an increase of GBP0.249 million over the
comparative period in 2018. The increase in overheads is due to
incorporating Rinocloud operating costs since 2 May 2019 and the
appointment of additional laboratory and management staff. As at 30
September 2019, the Group had cash balances of GBP0.477
million.
All of the financial information referred to in the paragraph
above is unaudited. Financial information for the financial year
ended 31 December 2018 excludes discontinued operations.
Increasing revenue per client
In the "Outlook" section of the Company's Interim Report for the
six months ended 30 June 2019, which was published on 11 September
2019, the Company stated that the current level of pipeline
activity continues to be significantly higher than the Company has
experienced in the past and demand continues to increase for the
Company's products and services.
The objective of increasing the average revenue per client is
being met with the Board believing that average sales in 2020 are
likely to range from GBP100,000 to GBP500,000 for services that
combine Labskin's physical living skin equivalent and LabskinAI
analysis capabilities. As stated above, the Company is guiding
revenues for the financial year ending 31 December 2020 of GBP4
million.
Tender applications for grant supported research partnerships,
leveraging AI and skin microbiome
Labskin is currently engaged in three drug remedy and discovery
process tender applications with commercial and academic consortium
partners from EU countries (Ireland and the UK). These are for
state supported grant funding provided by the UK, Ireland and
Horizon 2020 and are subject to approval. If successful, the
combined value of the funding provided to these research
partnerships will be in excess of GBP7 million.
In addition, an application for a vector skin, insect borne
disease project to be undertaken by Labskin with other research
partners which has a combined value of US$7.7 million is under
review from a large US philanthropic foundation. Labskin
flexibility will be essential for achieving the complex objectives
of this project and the amount allocated to Labskin for its
participation would be agreed upon award of the contract.
Other projects for blood borne ailments, skin microbiome
reaction and skin absorption are being prepared for submission and
will involve EU and US commercial partners and academic research
institutions.
New staff members being recruited
As a consequence of increased demand, the Group has recruited
one new member of staff and is in the process of recruiting more
new staff members for the Labskin laboratories over the coming
months. The Company intends to recruit additional senior sales
executives in the new year to maintain the current pace of growth
as the Company adds clients from the United States and the Far
East.
Rinocloud AI acquisition
In May 2019, Integumen acquired Rinocloud Limited for GBP3
million to enable LabskinAI to use the Rinodrive AI platform to
provide cloud-based data services to some of Integumen's leading
global skincare clients. By the end of June 2019, Rinocloud had
reached monthly profitability and, over the six-month period to 31
October 2019 (inclusive), revenue from Rinocloud's AI software has
exceeded revenue from Labskin services.
LabskinAI digital hub, Cork, Ireland
In June 2019, following the Rinocloud acquisition and
integration of data management and analytic services into
LabskinAI, the Company opened a digital hub in Cork, Ireland to
centralise global IT operations for the Group. This hub manages IT
and further AI development, incorporating LabskinAI, the virtual
laboratory-as-a-service that complements the Labskin laboratory
services in York, UK, and provides online customer support to
clients around the world.
New management appointments
In June 2019, Paul Ryan was appointed Head of Enterprise Sales
at LabskinAI. Paul has managed strategic partnering programmes and
initiatives with companies such as Siemens, Microsoft, Accenture
and IBM and joins the Company from 8 West Consulting, a company
with more than 240 personnel, where he was Head of New Business
Development. He has worked with a network of clients that include
Avon, Image Skincare, Estée Lauder and Anthem Inc., a Fortune 50 US
health insurer.
In June 2019, Colin O'Sullivan was appointed Chief Information
Officer (CIO). Colin has 20 years' experience and joins the team
from the Australian Medical Association where he was Group
Information Officer. He brings extensive cross-platform software
experience in medical and science applications ranging from
enterprise applications, cloud computing, artificial intelligence,
IT operations, customer experience and development operations. Over
a six-year period Colin was responsible for transforming the online
business of the Australian Medical Association.
Labskin York laboratory physical operations - scaling to meet
demand
On 7 November 2019, the Company announced the official opening
of the enlarged York, UK, Labskin laboratory. This is now 3,162
square foot having increased from 941 square foot in 2018. As part
of the most recent laboratory expansion, GBP400,000 of laboratory
equipment was installed. Heading into 2020, the Company requires
additional laboratory space to meet the continued increases in
client services.
The Board intends to expand further into the available
laboratory space in the same corridor at the site in York which the
Board believes should provide:
-- additional tissue culture labs for Labskin production;
-- additional microbiology labs for microbiome testing;
-- a dedicated analytical service laboratory, including next generation sequencing equipment;
-- dedicated immunohistochemistry and media preparation labs to
support production and services; and
-- additional office space available for shared services centre.
Additional equipment for the expanded laboratory would also need
to be installed and commissioned.
To meet the rapid demand from clients, the Board estimates that
increasing the size of the Labskin laboratory further could provide
an estimated 10-fold increase on 2019 turnover capacity within six
to 12 months.
Heads of terms signed with Parity Group plc
As announced on 13 November 2019, a multi-year framework
agreement is expected to be completed on or before 18 December
2019, for the supply of AI software across Parity's National Health
Service, Central Government and private institutional clients.
The Board believes this framework agreement will create an
opportunity to cross-sell intelligent data management, extracting
value using analytics, with a focus on proving return on
investment, to Parity's 150+ institutional clients. Rinodrive will
provide the platform for Parity to satisfy its own compliance with
the General Data Protection Regulation, with secure cloud data
migration from existing legacy systems to a digital workplace
through the military grade encryption "Drive4Growth" AI platform
powered by Rinodrive.
The Placing and the Subscription
The Company is proposing to raise GBP1.368 million gross
(approximately GBP1.245 million net of expenses) by the placing of
the Placing Shares (GBP1.320 million) and the subscription for the
Subscription Shares (GBP0.048 million) at the Issue Price. The
Issue Price represents a discount of approximately 4 per cent. to
the closing middle market price of 1.56 pence per Ordinary Share on
6 December 2019, being the business day prior to the date of this
announcement.
Following Admission, the New Ordinary Shares will represent
approximately 8.5 per cent. of the Enlarged Issued Share
Capital.
The New Ordinary Shares will be credited as fully paid and, when
issued, will rank in full for all dividends and other distributions
declared, made or paid on the Ordinary Shares following Admission
and otherwise rank pari passu in all respects with the Existing
Ordinary Shares.
Placing
The Placing is conditional upon, inter alia:
-- the Company allotting, subject only to Admission, the Placing
Shares in accordance with the Placing Agreement;
-- Admission of the Placing Shares to trading on AIM becoming
effective by no later than 8.00 a.m. on 16 December 2019 (or such
other time and/or date, being no later than 8.00 a.m. on 23
December 2019, as Turner Pope, SPARK and the Company may
agree);
-- the conditions in the Placing Agreement relating to the
Placing being satisfied or (if applicable) waived; and
-- the Placing Agreement not having been terminated in
accordance with its terms prior to Admission.
If any of the conditions is not satisfied, the Placing Shares
will not be issued.
Placing Agreement
The Placing Agreement contains warranties from the Company in
favour of Turner Pope and SPARK in relation to, inter alia, the
accuracy of the information in this document and other matters
relating to the Company and its business. In addition, the Company
has agreed to indemnify Turner Pope and SPARK in relation to
certain liabilities they may incur in respect of the Placing.
Turner Pope and SPARK each have the right to terminate the Placing
Agreement in certain circumstances prior to Admission, in
particular, in the event of a material breach of the
warranties.
In addition, under the terms of the Placing Agreement, Turner
Pope will be issued with warrants to subscribe for an aggregate of
5,279,999 new Ordinary Shares at an exercise price equal to the
Issue Price per Ordinary Share. The warrants are exercisable at any
time up to the date three years following Admission. No application
is being made for these warrants to be admitted to trading on
AIM.
The Placing is not being underwritten.
Subscription
Gerard Brandon, Camillus Glover and Fionán Murray have agreed to
subscribe equally, in aggregate, GBP48,802 for 3,253,531 new
Ordinary Shares pursuant to the Subscription.
The Subscription Shares will be issued at the Issue Price,
raising GBP48,802 for the Company. The Directors who have
subscribed pursuant to the Subscription have subscribed directly
with the Company for the Subscription Shares, which are issued on
the same terms and conditions as the Placing Shares.
The Subscription is conditional upon Admission of the
Subscription Shares to trading on AIM becoming effective. If this
condition is not satisfied, the Subscription Shares will not be
issued.
The Subscription is not being underwritten.
Settlement and dealings
Application has been made for the New Ordinary Shares to be
admitted to trading on AIM. The Placing and the Subscription are
expected to become effective, and dealings in the New Ordinary
Shares are expected to commence, by no later than 8.00 a.m. on 16
December 2019. Settlement of the New Ordinary Shares is expected to
take place within the CREST system following Admission.
Placees and subscribers who elect to receive their Placing
Shares or Subscription Shares in CREST will have their CREST
account credited with their Placing Shares or Subscription Shares
following Admission, which is expected to be on 16 December
2019.
Use of proceeds
The Placing and the Subscription will strengthen the Company's
balance sheet and provide a further GBP1.245 million (net of
expenses) for working capital purposes, which will accommodate the
increased growth in the Company's core areas of expertise in both
Labskin and data.
The growth in demand for Labskin services from small, medium,
and large skincare companies continues to accelerate and requires
additional resources, including more laboratory space expected to
be brought online in 2020. As detailed above, additional members of
the scientific team are currently in the process of being
recruited.
New technical support professionals will be added to support
Rinodrive and its software services in connection with the
framework agreement to be entered into between the Group and Parity
Group plc and other partnership agreements as they develop. Rapid
growth requires continual improvements to be made to internal
systems and controls in order to maintain and upgrade
accreditations as further laboratories come on stream.
The Company has quickly gained an industry thought leadership
role with many leading global skincare companies and its physical
presence at microbiome conferences in the US, Europe and South East
Asia, as skin microbiome experts is essential to reinforce that
position and as a powerful marketing tool, assisting in closing
ever larger agreements for Labskin and LabskinAI services.
In addition, Rinodrive, as an industry agonistic solution, is
being promoted as a revenue shared service, through partners with
large sales, marketing and distribution channels. The first such
agreement is the framework agreement to be entered into between the
Group and Parity Group plc. Dedicated partner managers will be
hired as new clients and partners in new sectors come onstream.
Finally, many of the Group's clientele are large corporations
that are adopting the Group's services and increasingly using the
output of results from Labskin and LabskinAI. Their due diligence
process often includes a review of the financial robustness of the
Group for the duration of the client's engagement and a certain
proportion of funds will be retained as a liquid asset.
KEY STATISTICS
Issue Price 1.5 pence
Number of Existing Ordinary Shares 981,163,373
Number of Placing Shares 87,999,999
Number of Subscription Shares 3,253,531
Number of Ordinary Shares in issue immediately 1,072,416,903
following Admission
Percentage of Enlarged Issued Share Capital 8.5 per cent.
represented by the New Ordinary Shares
Market capitalisation of the Company following GBP16.086 million
Admission*
Estimated net proceeds of the Placing and the GBP1.245 million
Subscription receivable by the Company
*at the Issue Price
DEFINITIONS AND GLOSSARY
The following definitions apply throughout this announcement,
unless the context requires otherwise.
"Admission" admission of the New Ordinary Shares to trading on
AIM becoming effective in accordance with Rule 6 of the AIM
Rules;
"AIM" AIM, a market operated by the London Stock Exchange;
"AIM Rules" the rules for AIM companies as published by the
London Stock Exchange from time to time;
"AI" artificial intelligence or artificially intelligent;
"Company" or "Integumen" Integumen plc, a public limited company
incorporated in England and Wales with registered number
10205396;
"Board" or "Directors" the directors of the Company;
"EBITDA" earnings before interest, taxation, depreciation and
amortisation;
"Enlarged Issued Share Capital" the entire issued share capital
of the Company immediately following Admission;
"Existing Ordinary Shares" the 981,163,373 Ordinary Shares in
issue at the date of this document;
"Group" the Company and its subsidiaries and subsidiary
undertakings from time to time;
"IP" intellectual property;
"Issue Price" 1.5 pence per Ordinary Share;
"IT" information technology;
"Labskin" Labskin is a lab-grown full thickness human skin model
that naturally mimics the skins microbiome. The good and bad
bacteria that naturally exist on human skin is present on Labskin
when testing skincare, cosmetics, healthcare, drug delivery or
wound care products. The Labskin test platform and protocols help
maintain an optimum real-world environment that shows the positive
or negative impact on skin's natural microflora;
"LabskinAI" Labskin has a 12-year track record of developing
human skin models and since the acquisition of Rinocloud in May
2019, now includes a range of test and experimental services
available online with technologies such as AI and machine learning.
These are maintained in a repository of data/knowledge offering
bigdata research and predictive analysis related to skin for
industry and academia;
"London Stock Exchange" London Stock Exchange plc;
"New Ordinary Shares" the Placing Shares and the Subscription
Shares;
"Ordinary Shares" ordinary shares of 0.01 pence each in the
capital of the Company;
"Placing" the placing of the Placing Shares pursuant to the
Placing Agreement which is being undertaken using existing
shareholder authorities;
"Placing Agreement" the conditional agreement dated 9 December
2019 between the Company, SPARK and Turner Pope relating to the
Placing in relation to the Placing Shares;
"Placing Shares" the 87,999,999 new Ordinary Shares placed on
behalf of the Company pursuant to the Placing;
"R&D" research and development;
"Rinocloud" Rinocloud Limited, a company registered in Ireland
with registered number 581277 which is a subsidiary of the Company
and was acquired in May 2019;
"Shareholder(s)" holder(s) of Ordinary Shares;
"SPARK" SPARK Advisory Partners Limited, the Company's nominated
adviser;
"Subscription" the subscription for the Subscription Shares by
three of the Directors pursuant to the Subscription;
"Subscription Shares" the 3,253,531 new Ordinary Shares
subscribed pursuant to the Subscription; and
"Turner Pope" Turner Pope Investments (TPI) Ltd, the Company's
broker.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IOEFSEFFUFUSESE
(END) Dow Jones Newswires
December 09, 2019 06:05 ET (11:05 GMT)
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