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Sphere Medical Interim Results for the Six Months ended 30 June 2014 [Global Data Point](Global Data Point Via Acquire Media NewsEdge) Highlights • Proxima 3 system granted CE marking under the EU Medical Devices Directive • Dr Wolfgang Rencken appointed as Chief Executive Officer - proven track record in developing and commercialising medical devices and driving significant product revenue growth • Progress on the development of Proxima 4 under the Collaboration Agreement with Ortho-Clinical Diagnostics continues to plan • Loss before taxation £3.0 million (2013: £2.9 million) • Cash and cash equivalents of £6.3 million (2013: £2.6 million) at 30 June 2014 and a further £523,000 of Research and Development tax credit received after period end Post-period end highlights • Launch of Proxima 3 to take place at the Association of Anaesthetists of Great Britain %7E Ireland Annual Congress on 17/18 September 2014 • Hospital evaluation leads received during presentation of Proxima 3 at the British Association of Critical Care Nurses conference in Cardiff earlier this month • Appointed an experienced VP Sales direct from Abbott Point of Care to lead the commercialisation of Proxima in the UK and Europe • The Proxima 3 Post Market Clinical Follow-up Study at the Queen Elizabeth Hospital, Birmingham continues to plan • Appointed Professor Jean-Louis Vincent to the Medical Advisory Board, a world authority on intensive care medicines Commenting on these interim results, Dr Wolfgang Rencken, Chief Executive Officer of Sphere Medical, said: "Since my appointment as CEO in February 2014 the Company has taken great strides towards becoming a commercially successful medical device group. Obtaining the CE marking for the Proxima system represented a significant milestone for the Company. It also paved the way for the commencement of the Proxima 3 Post Market Clinical Follow-up Study at the Queen Elizabeth Hospital, Birmingham. Throughout the period we have also progressed to plan the development of the next generation of Proxima alongside Ortho Clinical Diagnostics." "Lastly, and importantly, we began to put in place the infrastructure for the commercial launch of Proxima which is due to take place later this month. Encouragingly, we have already received initial hospital evaluation leads from Proxima 3's first industry presentation at a recent intensive care conference. This is an exciting time for the Company and I look forward to the future with ever-growing confidence." CHIEF EXECUTIVE'S REPORT INTRODUCTION The period since I joined as Chief Executive Officer in February 2014 has seen a significant transformation and acceleration of pace in the Company. We have focussed our efforts on preparing the Company for the commercialisation of Proxima, including hiring an experienced VP Sales, gathering evidence of market validation and progressing the development of the next generation of Proxima. I am delighted with the progress we are making and believe we are well on the way towards becoming a commercially successful company. READINESS FOR COMMERCIALISATION Our initial focus was on obtaining the required CE marks for the Proxima 3 system and understanding the target clinical markets which we plan to address. We then defined the sales process and the geographic markets of maximum sales potential. We have been successful in hiring a VP Sales with a successful track record and direct relevant commercial experience in intensive hospital care point of care products. This work has enabled us to set the date for the commercial launch of Proxima 3 in the UK. CE Mark Approval Proxima is a disposable patient dedicated arterial blood gas analyser which supports rapid and frequent measurements at critical times and delivers blood gas analysis results at the patient's bedside. In June 2014 the Company received each of the four individual CE marks which comprise the Proxima system, namely: Sensor - Class IIa medical device; Vials - Class I sterile medical device; Flush - Class III infused medical device; and Monitor - Class IIa medical device. Target Markets Proxima will be marketed to clinical segments where patient management requires frequent measurements. These areas include: • Severe sepsis and septic shock • Acute respiratory distress syndrome (ARDS) • Major trauma • Neuro trauma Sales Process Proxima will be sold in the UK directly by the Company's own field sales team. Due to our clear focus on the primary therapeutic areas where Proxima can make most impact, we have been able to identify the 83 hospitals across the UK which will offer greatest potential usage of Proxima and consequently where we will concentrate our sales efforts. During 2015 we plan to expand our direct commercial sales operations into the European market by launching Proxima in Germany and Benelux. Each prospective customer will be offered a short evaluation of Proxima, lasting a few weeks. Thereafter a razor/razor blade sales model will be adopted, where the monitor can either be purchased separately from the disposables or the monitor can be financed via a premium pricing on the disposables. Appointment of VP Sales In late August 2014 we appointed a VP Sales who will spearhead Proxima's commercial activities. Our new VP Sales has joined direct from Abbott and was responsible for sales and marketing across EMEA of Abbott's Point of Care product portfolio, including the i-STAT system, a point of care blood gas analyser. Commercial Launch Proxima 3 is to be launched at the Association of Anaesthetists of Great Britain %7E Ireland Annual Congress (AAGBI) on 17/18 September 2014. Following the launch and in parallel to selling Proxima, we will be engaging with key opinion leaders and clinicians to conduct case studies and publish results in our target market segments. MARKET VALIDATION While preparing the Company for commercial launch, emphasis was also placed on obtaining early market validation of Proxima and its potential within a US$900 million worldwide point of care blood gas and electrolyte testing market. Proxima 3 Post Market Clinical Follow-up Study The Proxima 3 Post Market Clinical Follow-up Study has commenced at the Queen Elizabeth Hospital, Birmingham. Subject to the continuation of current patient recruitment rates, we expect the preliminary results to be available, as planned, in October 2014. It is an open and non-randomised study that will be used to assess the performance of the Proxima system on a wide range of patients treated in the Intensive Care Unit, High Dependency Unit or Operating Room with a variety of conditions. The primary endpoint of the study is to compare blood gas readings from Proxima with those obtained from a standard commercially available blood gas analyser in a clinical environment. Each patient fitted with the Proxima system will be assessed up to three days (72 hours). A minimum of 20 and maximum of 40 patients and a minimum 100 valid method comparison measurements will be required for this study. Medical Advisory Board A significant endorsement of Proxima's potential was obtained when Professor Jean-Louis Vincent was appointed to the Medical Advisory Board (MAB) in August 2014. Professor Vincent is Professor of Intensive Care at the Université Libre de Bruxelles and the Head of the Department of Intensive Care, Erasme University Hospital (University of Brussels). Professor Vincent is a world authority on intensive care medicines, is President of the World Federation of Societies of Intensive and Critical Care Medicine and a member of the editorial board of approximately 30 international journals on intensive and critical care. Initial Market Interest Earlier this month, the Company attended the British Association of Critical Care Nurses conference in Cardiff at which it exhibited Proxima 3. The response to Proxima was very encouraging and has led to several requests for a more detailed evaluation follow up, once Proxima has been officially released for sale. FUTURE PRODUCT DEVELOPMENT As part of the Collaboration Agreement with Ortho-Clinical Diagnostics (OCD), work has been progressing to plan on the development of Proxima 4. Furthermore, studies with Pelorus were supported to assess its commercial potential. Our intellectual property portfolio is being continuously updated to include the latest product developments and so strengthen the Company's competitive position. Proxima 4 Proxima 4 will incorporate enhancements which will expand the analytes on the sensor panel and facilitate integration with Hospital Information System, Laboratory Information System and Patient Data Services connectivity. These enhancements, which are proceeding to plan, are expected to lead to stronger sales penetration as well as significantly expand the geographical reach of Proxima. Proxima 4 is being developed alongside OCD under the Collaboration Agreement which was signed in June 2013. This agreement covers all aspects of Proxima 4, including market assessment, product development and the enhancement of Sphere's operational and production capabilities. The successful completion of the Proxima 4 development programme will allow OCD the opportunity to exercise its option under the Collaboration Agreement to negotiate a proposed global commercialisation deal for Proxima 4 which we would expect to take place in H2 2015. Pelorus and Cardiopulmonary Bypass Monitor We continue to support clinical studies aimed at evaluating the use of Pelorus 1500 propofol analyser to monitor intravenous propofol levels, including the study at Great Ormond Street Hospital for Children and the University Medical Centre Groningen in the Netherlands. These clinical studies are expected to result in the development of the next generation of infusion protocols and control systems which would be a significant opportunity to improve patient care and consequently represents a large commercial opportunity for Sphere Medical. Sphere Medical is also developing an in-line continuous blood monitoring system for cardiopulmonary bypass procedures with our partner, Sorin Group Italia S.r.l., a global medical devices company and a leader in the treatment of cardiovascular diseases. The development of the sensor is taking place concurrently with the Proxima 4 sensor development. Intellectual Property Our intellectual property portfolio is a key asset and we continue to invest in the maintenance and development of our IP estate. We currently have 28 patents covering chip design, manufacture of miniaturised sensor arrays, sensor design, monitoring and analytical systems and calibration. FINANCIAL REVIEW In the six months ended 30 June 2014 revenue was £8,000 (H1 2013: £31,000). Operating expenses were £3.1 million (H1 2013: £3.0 million). Included in operating expenses are product development and product realisation costs of £1.5 million (H1 2013: £2.0 million) associated with the development of the Proxima disposable patient-attached arterial blood gas analyser. Administrative expenses were £1.1 million (H1 2013: £0.8 million) and include the one-off costs associated with the change of CEO. Finance income (net) was £nil (H1 2013: £0.1 million) representing interest earned on term deposits. During the period no research and development tax credit refund was received (H1 2012: £nil) although a refund of £523,000 was received after 30 June 2014. The loss for the period was £3.0 million (H1 2013: £2.9 million). The basic and fully diluted loss per share for the period was 5.0 pence (H1 2013: 7.8p). As at 30 June 2014 cash and cash equivalents was £6.3 million (30 June 2013: £2.6 million). THE SPHERE MEDICAL TEAM Sphere Medical continues to benefit from the hard work and expertise of its employees who, with the Board, are fully committed to transforming Sphere Medical into a successful commercial medical device company. We would like to take this opportunity to thank all our employees and management for their continued commitment and shareholders for their on-going support of Sphere Medical. (c) 2014 GlobalData Provided by SyndiGate Media Inc. (Syndigate.info). |