PLANT HEALTH CARE plc
("Plant Health Care" or the "Company")
Plant Health Care®, a leading provider of novel patent-protected biological products to the global agriculture markets, issues the following post year-end trading update ahead of the announcement of the Company's audited full year financial results for the year ended 31st December 2016, which is expected no later than the second week of April. All results provided are preliminary and subject to completion of the 2016 audit.
Financial and Commercial Highlights
- Revenue of approximately $6.3million; sales in the United States decreased by approximately $1.1million, due to the decision to reduce in-market inventories. Growth outside the United States was 15% in constant currency
- Sales of core Harpin™ αβ products decreased by roughly 12%, driven by lower sales in the United States; Harpin αβ sales outside the United States increased by approximately 23%. Harpin αβ and Myconate® products represented 59% of sales in 2016 (2015: 57%)
- Gross Margin was steady at 62% in 2016
- Cash and cash equivalents at 31st December 2016 were $10.1 million
- Revenue growth in Mexico of approximately 9% in local currency
- New distribution agreements signed during the second half of 2016 show potential for growth in Commercial sales during 2017
- In August 2016, the Company successfully raised £7.6 million ($10.0 million) and is well funded to execute its plan
New Technology Highlights
- Trials with Innatus™ 3G (the first platform of PREtec peptides) in 2016 continued to show good results, in Plant Health Care's own trials and in field trials run by partners
- All four evaluation partners have now extended the terms of their contracts into 2018 We are on track for the first competitive licensing process to conclude in early 2018
- Two new PREtec peptide platforms - T-Rex 3G and Y-Max 3G - have been presented to selected industry players. First agreements are in place and field trials have begun
- More partners are expected to sign up to evaluate PREtec peptides over the coming months. We are targeting a revenue-generating licence before the end of 2017
- Plant Health Care is making solid progress in building its capability to make, to formulate and to register PREtec peptides
- Facilities in Seattle have been further expanded and are operating well. This was accompanied by an increase in R&D expenditure to $4.5M ($4.1M in 2015)
Chris Richards, Interim CEO, commented:
"In 2016, Plant Health Care continued to show solid progress towards our key strategic objectives.
We are excited by the strong field data that our evaluation partners have generated in their 2016 trials of Innatus 3G. It has been rewarding to see their enthusiasm building through the year as they come to understand the power of our technology and its potential value to them. They are beginning to focus their attention on preparing for the planned competitive licensing process of first rights in early 2018. We look forward to an expanded programme of evaluation in 2017.
The existing Innatus 3G partners were among the first to move forward to evaluate the new PREtec platforms. We had originally intended only to advance with one new PREtec platform, but their active encouragement and the strength of our supporting data persuaded us to advance with two: T-Rex 3G and Y-Max 3G. These are now attracting the interest of other companies. We are aiming to enter into at least one revenue-generating licence during 2017.
On the commercial side, our distributors have continued to grow sales of Harpin αβ. Sales by Plant Health Care to distributors, however, were disappointing. This was due to our decision to decrease channel inventory in the United States during the second half of 2016. On the ground, Sym-Agro increased sales by more than 20% in the Pacific North West and continue to grow. Outside the USA, sales grew by 15% in constant currency, in spite of drought in South Africa and the disappointing delay to first sales into sugar cane in Brazil. The launch of Harpin αβ in Italy was very encouraging, while sales in Spain increased by 64%. In Mexico, Harpin αβ was launched in early 2016 and this led to sales growth of 49% (in local currency) of Harpin products in 2016, compared with 2015. In addition to growth through existing distributors, new agreements concluded during the second half of 2016 are expected to drive sales growth in 2017 and 2018. The gross margin remained steady, reflecting the stability of the commercial business.
In August, we completed an equity raise which generated $10 million, largely from existing investors. We anticipate that existing cash reserves, together with forecast commercial revenues and cost savings already put in place, will now fund the business at least until the end of 2018. As a result, we are confident that the next two years will see a step change in the position of Plant Health Care.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information, please contact:
Plant Health Care plc
Chris Richards, Interim Chief Executive Officer Tel: +1 919 926 1600
Jeffrey Hovey, Chief Financial Officer
Liberum Capital - Nomad and Broker
Clayton Bush / Chris Clarke Tel: +44 (0) 20 3100 2000
Company website: www.planthealthcare.com