PIL
27/02/2015 14:23
FLLYR
PRICE SENSITIVE
REL: 1423 HRS Promisia Integrative Limited
FLLYR: PIL: Unaudited Financial Results for the Year Ended 31 Dec 2014
FINANCIAL SUMMARY
REPORT OF THE CHAIRMAN AND CHIEF EXECUTIVE
The Chairman and Chief Executive have pleasure in presenting the Annual
Report for Promisia Integrative Limited and its subsidiaries ("the Group")
for the year ended 31 December 2014.
Promisia Integrative Group Results to 31 December 2014
The Group incurred a loss of $828,000, including non-cash expenses of $32,619
and interest expenses of $44,805, for the year ended 31 December 2014 (2013:
$510,000 loss). Whilst another trading loss may be disappointing for
shareholders, much has been achieved to position the company for growth in
the years ahead.
Revenue from the domestic sales of Arthrem were $216,800 in fiscal 2014,
representing a 36% improvement on the $160,000 recorded the previous year.
Highlights from 2014
United States Initiative
Shareholders will recall that our Chief Executive temporarily based himself
in the United States for 9 months, in order to set up a sustainable
commercial path for the sale of Arthrem in that market. During that period,
Promisia set up the logistical support to allow the sale of Arthrem to U.S.
customers. Over $120,000 of the loss recorded was taken up with the
development of a highly-automated sales and marketing e-commerce platform,
which will be fully operational in the coming months. The company believes a
pipeline that sells Arthrem direct to consumers, using a subscription-based
model, is superior to a traditional distribution agreement using retail
outlets to sell the product, and will result in higher profit margins. More
importantly, communication channels with our customers will already be
established, which is highly beneficial when we introduce new products to
that market. For example, if a customer is already receiving Arthrem via our
subscription e-commerce model and is satisfied with the product and service,
then marketing other formulations to them will be straightforward.
Stock Build Up
The company undertook another full crop supercritical extraction process
during 2014, and has additional raw material on hand for further extraction
to meet market demand. Approximately $350,000 of cost has been invested in
the building up of raw material stock to meet the company's ambitious growth
plans. The challenge for Promisia is to match, as far as possible, the supply
chain characteristics of growing, harvesting, drying, and extracting its
proprietary plant extract to the expected demand for its products. Lead times
are in excess of 18 months.
Marketing Expenditures
There have also been a number of integrated developments where marketing
expenditures are concerned. $171,000 has been spent to support market
development of the company's principal product Arthrem.
A number of marketing initiatives, including television advertisements, have
been created during the year under review. The television advertisements had
limited air time prior to Christmas and can be viewed here
https://vimeo.com/112306976. The New Zealand website also shows some of the
new marketing media and can be viewed here http://arthrem.co.nz/ .
Promisia will use all of these sales and marketing elements in radio,
television, print media, and online digital advertising in tandem, early in
the second quarter. It is important to coordinate marketing and any relevant
clinical elements so that the company attains the maximum market leverage
possible. Pharmabroker Sales Ltd, the company's New Zealand distributor, will
also help to ensure cohesive coordination of all the different advertising
elements.
Clinical Trial
As previously reported in prior announcements to the NZX, the company is
conducting a double-blind, randomised, placebo-controlled clinical trial at
the Rheumatology Research Department at Dunedin Hospital. The trial is
progressing well and results are expected to be released in the early part of
the 2nd quarter of this year. In 2014, over $170,000 was spent on the trial.
Callaghan Innovation, a stand-alone Crown Entity, is funding 40% of the
entire trial costs.
Research and Development Expenditure
There is an ongoing cost to the company for research and development
expenditure, including salaries for professional staff. Callaghan Innovation
is funding the salary for a 6 month scientific internship, which starts in
March 2015. Promisia believes that it is essential to validate the
therapeutic efficacy and safety of Arthrem and other products under
development, with a comprehensive scientific research and development
programme. This is a key strategic platform for our company and a defining
point of difference for the company.
Research Paper Published for In Vitro Studies of Arthrem
Again, as previously reported, a research paper was published in January
2015. The paper's first author is the company's Principal Scientist, Dr
Sheena Hunt. The article reports on laboratory studies that were conducted by
Trinity Bioactives Limited at their Lower Hutt-based facilities.
The research paper was published in the Journal of Inflammation Research, a
recognised and authoritative international peer-reviewed journal. It is
listed in PMC (PubMed Central), an archive of biomedical and life sciences
journals at the U.S. National Institutes of Health's National Library of
Medicine NIH/NLM, and can be viewed using the following link
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4298291/.
The results from this research clearly show that the primary ingredient of
Arthrem, Promisia's proprietary plant extract, has potent anti-inflammatory
activity in vitro. Concentrations as low as 0.05% completely inhibited
production of the inflammatory mediator, tumour necrosis factor-alpha. The
extract was also a strong inhibitor of the cyclooxygenase (COX) inflammatory
marker, prostaglandin E2.
Capital Raising from SPP and Additional Placement
Promisia Integrative Limited launched a successful Share Purchase Plan (SPP),
together with the placement of additional shares issued at the same price as
offered in the SPP, being 4.08 cents per share.
The SPP raised $567,000 resulting in 13,897,025 shares being allotted, and
the placement raised an additional $1,282,564 which resulted in the allotment
of a further 31,435,394 shares.
Board of Directors
The board of directors was stable for 2014, following a number of changes in
the previous year. The board developed and approved a Promisia Corporate
Governance Code, a copy of which is loaded on the company's website.
Dividend
The Company does not intend to pay dividends until a time when recurring
profit streams can be seen. The Board will review the dividend position when
the Company achieves a sustainable level of profitability. In the interim,
any profits will be reinvested in the growth of the Company.
Outlook
The board and management of Promisia Integrative are pleased with progress
made last year. During the current year we should see further growth in sales
revenues in New Zealand, but more importantly, we should see the company's
platform of selling Arthrem direct to consumers in the US become established.
This pipeline will be the company's gateway for new products to be sold
direct to customers in the US and potentially around the world.
In order for Promisia to become a global leader in developing and marketing
unique therapeutic natural products, it must demonstrate commercial success
with its first-to-market product, Arthrem.
The Board is excited about Promisia Integrative's growth potential through
increasing revenues from its flagship product Arthrem and the development of
its pipeline of new products. It still believes that even without positive
results from the scientific research being conducted, sales will continue to
grow. If results from our scientific research are positive, sales growth will
likely accelerate due to endorsement and recommendation of the product by
healthcare professionals, along with increased trust and confidence of
consumers.
End CA:00261278 For:PIL Type:FLLYR Time:2015-02-27 14:23:35
