TIDMALM
RNS Number : 2236X
Allied Minds PLC
27 August 2015
27 August 2015
Allied Minds plc
Half-Yearly Report for the six months ending 30 June 2015(1)
Overview
-- Named Peter Dolan, the former Chairman and CEO of
Bristol-Myers Squibb, as Chairman of the Board of Directors and
welcomed Kevin Sharer, the former Chairman and CEO of Amgen, to the
Board; Messrs. Dolan and Sharer bring a wealth of experience and
expertise to help oversee and guide our growing portfolio of
life-science and high-technology companies. In addition, we
appointed Richard Davis, an Allied Minds' Director since 2011, and
a Partner and Chief Operating Officer at Pegasus Capital Advisors,
to serve as our Senior Independent Director.
-- Launched two new projects: (i) entered into a license
agreement with Harvard University through Allied-Bristol Life
Sciences, to develop novel therapies for fibrotic and autoimmune
diseases, and (ii) created the new subsidiary company BridgeSat, to
develop an optical connectivity system for Low Earth Orbit
satellites.
-- Continued strong commercial progress across the subsidiary portfolio, led by:
o Spin Transfer Technologies entering into a co-development
contract with a major semiconductor original equipment manufacturer
(OEM);
o Federated Wireless receiving the necessary regulatory
authority to go to market with its proprietary Spectrum Access
System, by virtue of the Federal Communications Commission's (FCC)
unanimous decision to approve the formal Rule & Order governing
the dynamic sharing of federal spectrum in the 3.5 GHz band;
and
o SciFluor Life Sciences successfully completing a $30.0 million
equity financing, and adding Dr. William Koster, the former
President and CEO of Neurogen Corp. and 30-year veteran of
Bristol-Myers Squibb, as its Chairman of the Board.
-- Launched the Allied Minds Fellows Program, an initiative that
will enable an elite group of graduate students and post-doctoral
researchers from top-tier U.S. research institutions to assist the
Company with technology scouting, diligence, market discovery and
investment analysis in support of the Company's corporate and
subsidiary company activities.
"Since becoming a public company one year ago, Allied Minds has
made solid strategic progress and has delivered on multiple
commitments to shareholders. We have created six new subsidiaries,
formed a historic joint venture with Bristol-Myers Squibb,
attracted $75.2m in third party investment for subsidiary
acceleration, and made significant advancements in a number of our
key subsidiaries through strategic collaborations, licenses and
co-developments. We have had a strong first half of 2015 and have
delivered on the most important elements of our plan for the first
year post-IPO. Most importantly, Allied Minds is well positioned
for the remainder of this year and beyond."
- Chris Silva, Chief Executive Officer
1 Allied Minds plc is referred to as "Allied Minds" or "the
Company". "The Group" refers to Allied Minds plc and its
consolidated
subsidiaries.
Highlights
Period Highlights
-- Spin Transfer Technologies executed the first phase of a new,
unique partnership with a major electronics company. This joint
development agreement, the first phase of an anticipated two phase
structure, establishes early stage development cooperation, and
anticipates expanded, longer term co-development, manufacturing
support, and supply chain commitments. Technology development also
remains on track for producing demonstrator chips (DM1) in Q4 2015
that will generate commercially relevant data for evaluation by
potential partners and customers.
-- SciFluor successfully raised $30.0 million in a Series A
preferred stock financing. Further, Dr. William Koster joined as
the Chairman of the Board. Dr. Koster previously served as
President and Chief Executive Officer of Neurogen Corp., a
NASDAQ-listed biotechnology company engaged in neuroscience
R&D. He also spent 30 years with Bristol-Myers Squibb Co. in
various roles that included Senior Vice President overseeing
worldwide drug discovery research and early clinical
development.
-- Allied-Bristol Life Sciences entered into a license agreement
with Harvard University with respect to research and intellectual
property developed by Professor Malcolm Whitman, and commenced a
project to create novel therapeutics for the treatment of fibrotic
and autoimmune diseases.
-- Federated Wireless announced its support of the Federal
Communications Commission's (FCC) unanimous decision to approve the
formal Rule & Order governing the dynamic sharing of federal
spectrum in the 3.5 GHz band, thereby ensuring the necessary
regulatory authority for Federated Wireless to go to market with
its proprietary Spectrum Access System.
-- Allied Minds established BridgeSat, in collaboration with The
Aerospace Corporation, Draper Laboratory, Massachusetts Institute
of Technology Assistant Professor Dr. Kerri L. Cahoy and the
graduate student team in the Space, Telecommunications, Astronomy,
and Radiation (STAR) Laboratory, to develop an optical connectivity
system that aims to increase the speed, security and efficiency of
data transmissions from Low Earth Orbit satellites compared to
traditional radio frequency solutions.
-- SiEnergy Systems was awarded a grant for $300,000 through the
Massachusetts Clean Energy Center's AmplifyMass Program. The grant
is designed to supplement funding provided to recipients of the
Advanced Research Projects Agency-Energy (ARPA-E) program, which
SiEnergy won last year. The company is being recognised for its
efforts to develop a hybrid electrochemical system that performs as
both a fuel cell and battery.
-- Optio Labs purchased the assets of Maryland-based security
company Oculis Labs, and its CEO, Dr. Bill Anderson, joined Optio
Labs as Chief Product Officer. Oculis Labs develops products that
protect data displayed on a computer and mobile device screens from
visual eavesdroppers.
-- Biotectix announced that its Amplicoat(TM) electro-conductive
polymer coating had been licensed by Acutus Medical for use on the
their real-time 3D Cardiac Chamber Imaging and Dipole Density
Mapping system.
-- Recorded Group revenue during the first half 2015 of $1.5
million, down from $2.9 million during the same period last year;
the decrease primarily reflects slower than expected sales progress
at RF Biocidics.
-- Maintained strong balance sheet, with net cash and
investments at 30 June 2015 of $237 million (FY14: $262m), enabling
Allied Minds to further invest in forming, developing and
commercialising potentially disruptive technologies.
Post-period-end Highlights
-- Allied-Bristol Life Sciences entered into a license agreement
with Yale University with respect to research and intellectual
property developed in the laboratory of Dr. David Spiegel. The
proprietary platform, and associated lead molecules known as
Antibody-Recruiting Molecules (ARMs), provide a novel approach for
the treatment of cancer.
-- Tinnitus Treatment Solutions (TTS), executed a new, unique
partnership with Your Hearing Network. This partnership will
dramatically expand the reach of TTS by roughly 1,000 hearing
healthcare sites.
-- Percipient's STRONGARM product was selected by R&D
Magazine as a finalist for a 2015 R&D 100 Award in the
Software/Services category. An R&D 100 Award recognises the 100
most technologically significant products introduced in the past
year.
-- Optio Labs announced the release of PrivateEye Enterprise
5.0, a major upgrade to its data security and compliance software
product that protects computer screens against data leakage and
insider threats.
-- Whitewood Encryption Systems introduced the Entropy
Engine(TM) , a cost-effective, quantum-powered random number
generator, which is designed for any application that incorporates
cryptography or relies on high-quality random data.
HY15 Financial Highlights
-- Net cash and investments at 30 June 2015: $237 million (FY14: $262m).
-- Revenue: $1.5 million (HY14: $2.9m).
-- Net loss: $39.1 million (HY14: $27.2m), of which $30.4
million attributable to Allied Minds (HY14: $21.9m).
* includes excess cash in form of fixed income securities.
Interim Management Report
Summary
Allied Minds is an innovative U.S.-focused science and
technology development and commercialisation company. Allied Minds'
strategy is to build a significant and diversified group of
businesses and achieve strong growth over the medium to long term
through the maturation of its products over the commercialisation
cycle. Allied Minds' business model centralises the support
functions at Group level, thereby enabling its businesses to focus
efforts primarily on research and development activity whilst
achieving operational and financial efficiency.
The Board is encouraged by the performance of Allied Minds'
business in the first half of 2015. As detailed in this Half-Yearly
Report, a number of Allied Minds' businesses have continued to make
strong progress in their research and product development
programmes, and many of Allied Minds' existing businesses continue
to exhibit positive momentum.
The Directors continue to be very encouraged by advancements
across the Group, in particular the increasingly positive
engagement with potential industrial and financial partners to fund
and/or develop existing or new technologies.
Portfolio Review
Overview
During the first half of 2015, the Group invested $28.1 million
of capital into the Company's businesses and raised an additional
$25.2 million from third party investors into the subsidiary
businesses. Allied Minds currently controls all of its subsidiary
businesses and continues to invest in and support its businesses.
Below is an overview of existing subsidiary companies, the current
partner network, highlights for new company formation, key
financings completed and other updates as appropriate.
(MORE TO FOLLOW) Dow Jones Newswires
August 27, 2015 02:04 ET (06:04 GMT)
Subsidiary Businesses of Allied Minds
Subsidiary Year Ownership Overview
Formed Interest
--------------------------------------------- -------- ---------- -------------------------------------------------
Life Sciences
--------------------------------------------- -------- ---------- -------------------------------------------------
Allied Bristol Life Sciences, LLC 2014 80.00% Created with Bristol-Myers Squibb to identify
and foster research and pre-clinical development
of biopharmaceutical innovations, and convert
discoveries from university research
institutions
into therapeutic candidates for clinical
development.
--------------------------------------------- -------- ---------- -------------------------------------------------
ABLS I, LLC 2014 80.00% Developing therapeutics for treating prostate
cancer based upon a proprietary platform and
associated lead molecules known as
Antibody-Recruiting Molecules (ARMs).
--------------------------------------------- -------- ---------- -------------------------------------------------
ABLS II, LLC 2014 80.00% Developing therapeutics for treating chronic
fibrotic and potentially autoimmune diseases
based on an active ingredient in the root of the
blue evergreen hydrangea (Dichroa febrifuga).
--------------------------------------------- -------- ---------- -------------------------------------------------
Biotectix, LLC 2007 64.35% Aiming to enable the next generation of
implantable electrostimulation and sensing
products
through the development of proprietary,
high-performance, conducting polymer coatings.
--------------------------------------------- -------- ---------- -------------------------------------------------
Cephalogics, LLC 2006 95.00% Developing a non-invasive, bedside neuroimaging
system, which seeks to improve monitoring
of patients with neurological injury.
--------------------------------------------- -------- ---------- -------------------------------------------------
CryoXtract Instruments, LLC 2008 93.24% A suite of automated product solutions that
seeks to allow the global scientific community
to access valuable frozen biosamples without
exposing them to damaging freeze/thaw cycles.
--------------------------------------------- -------- ---------- -------------------------------------------------
LuxCath, LLC 2012 98.00% A catheter-based real-time tissue and lesion
visualisation technology for potential use
during
cardiac ablation procedures initially focused on
atrial fibrillation ablation.
--------------------------------------------- -------- ---------- -------------------------------------------------
Precision Biopsy, LLC 2008 80.35% A medical device platform utilising tissue
spectroscopy, which seeks to distinguish tissue
characteristics in real-time and seeks to guide
clinicians toward areas of disease for optimum
therapy initially focused on prostate cancer.
--------------------------------------------- -------- ---------- -------------------------------------------------
ProGDerm, Inc., d/b/a Novare Pharmaceuticals 2008 90.38% A biologic that aims to represent a natural
approach to generate subcutaneous fat to enhance
the appearance of skin using the body's own
processes.
--------------------------------------------- -------- ---------- -------------------------------------------------
SciFluor Life Sciences, Inc. 2010 69.94% Developing a portfolio of proprietary compounds
by harnessing the transformational power of
fluorine with a view to optimising drug
discovery and accelerating the clinical
development
of innovative new therapeutics.
--------------------------------------------- -------- ---------- -------------------------------------------------
SoundCure, Inc. 2009 84.62% Developed an FDA-cleared consumer medical device
for tinnitus therapy offering customised
acoustic technology, including the
direct-to-patient model of Tinnitus Treatment
Solutions.
--------------------------------------------- -------- ---------- -------------------------------------------------
High Technology
--------------------------------------------- -------- ---------- -------------------------------------------------
Allied Minds Federal Innovations, Inc. 2012 100.00% Through a series of public-private partnerships
(PPPs) with the US federal government, aims
to develop and commercialise the next generation
of transformative technologies from US federal
research institutions.
--------------------------------------------- -------- ---------- -------------------------------------------------
BridgeSat, Inc. 2015 100.00% Developing an optical connectivity system that
aims to increase the speed, security and
efficiency
of data transmissions from Low Earth Orbit
satellites compared to traditional radio
frequency
solutions.
--------------------------------------------- -------- ---------- -------------------------------------------------
Federated Wireless, Inc. 2012 90.58% Focused on enabling technologies for the
next-generation of wireless communications by
seeking
to improve supply, demand, and delivery of
spectrum for future cellular communications.
--------------------------------------------- -------- ---------- -------------------------------------------------
Foreland Technologies, Inc. 2013 100.00% A cyber security platform company which aims to
discover, incubate and commercialise emerging
technologies.
(MORE TO FOLLOW) Dow Jones Newswires
August 27, 2015 02:04 ET (06:04 GMT)
--------------------------------------------- -------- ---------- -------------------------------------------------
Optio Labs, Inc. 2012 81.23% Developer of mobile security technologies for
the evolving cyber operating environment.
--------------------------------------------- -------- ---------- -------------------------------------------------
Percipient Networks, LLC 2014 100.00% Developing next-generation security technologies
for enterprise network defence.
--------------------------------------------- -------- ---------- -------------------------------------------------
RF Biocidics, Inc. 2008 67.14% Developer of equipment that seeks to disinfect
food from insects and pathogens through a
process
that does not use chemicals.
--------------------------------------------- -------- ---------- -------------------------------------------------
Seamless Devices, Inc. 2014 79.70% Developer of semiconductor devices using a novel
approach to analog signal processing, building
upon patented switched-mode signal processing
technology and algorithms.
--------------------------------------------- -------- ---------- -------------------------------------------------
SiEnergy Systems, LLC 2007 100.00% Developing thin film low temperature solid oxide
fuel cells that seek to bring efficient,
and affordable clean energy systems for broad
application.
--------------------------------------------- -------- ---------- -------------------------------------------------
Spin Transfer Technologies, Inc. 2007 48.40% MRAM computer memory that is being developed
with the aspiration of becoming a leading
universal
memory technology in the $60 billion per annum
worldwide computer memory market.
--------------------------------------------- -------- ---------- -------------------------------------------------
Whitewood Encryption Systems, Inc. 2014 100.00% Develop the next-generation systems of data
encryption that leverage advanced quantum
cryptography
technologies with the objective of meeting
intensifying market demand for secure,
computationally
efficient, and low-latency encryption.
--------------------------------------------- -------- ---------- -------------------------------------------------
Partner Network of Allied Minds
We have continued to expand our network of U.S. academic and
national lab partners. Dividing the U.S. into eight zones, we have
systematically engaged with the most prominent research
institutions in each of these geographic areas, sourcing over 4,000
university and federal lab opportunities from over 70 institutional
partners in 2015 to-date, and building one of the largest investor
opportunity funnels in the country.
A few highlights of our relationship expansion during the period
include:
-- Allied Minds Federal Innovations (AMFI) has developed a
comprehensive umbrella Cooperative Research and Development
Agreement (CRADA) with the Los Alamos National Laboratory (LANL)
that gives us the same rights as the engagement structure we have
with The MITRE Corporation.
-- BridgeSat optioned two patent filings from MIT as well as
signing a cooperative agreement with Draper Labs.
-- AMFI developed a new relationship with NASA Goddard,
specifically for joint testing and IP creation for BridgeSat.
-- To support our joint enterprise with Bristol-Myers Squibb,
Allied Minds forged new relationships with premiere institutions
exclusively focused on life sciences research, including Scripps,
Gladstone, Wistar, Mount Sinai, and Dana-Farber.
-- We have undertaken comprehensive reviews of several
university partner portfolios, including Purdue University,
University of Michigan, University of California (all campuses),
and Emory University.
In the past few years, there has been a marked increase in
interest and commitment of universities to promote spin-out
activity, leading to a proliferation of new institutes, centres,
and programs to educate and mentor faculty, students, and the
broader university ecosystem on topics relating to innovation,
entrepreneurship and research translation. In response to this
trend, we have extended the reach of our engagement, forging
partnerships with these new programs. For example, members of the
Allied Minds investment team serve on the boards of Boston
University's Ignition Awards program, Tufts University's
Entrepreneurial Leadership program, UC Davis Venture Catalyst's
Science Translation and Innovative Research program, New York
University's Technology Acceleration & Commercialization Awards
program and Therapeutics Alliance programs, as well as the Coulter
Translational Partners' programs at Columbia University and Emory
University/ Georgia Institute of Technology.
Additionally, as university research teams, particularly
students, become more actively and directly involved in
commercialisation activities, we have launched the Allied Minds
Fellows Program, an initiative that will provide scholars in the
science, technology, engineering and mathematics (STEM) disciplines
with a unique perspective on the business side of science and
early-stage technology commercialisation. The Allied Minds Fellows
are an elite group of PhD and post-doctoral trainees who hail from
top-ranking science, engineering, and medical schools across the
United States. They serve as embedded technology scouts and support
diligence of opportunities sourced from their academic and
professional networks.
To support the momentum of both our university and national lab
engagement activities, we closed a key hire in the second quarter,
Teresa Fazio, PhD. Dr. Fazio brings both deep university technology
transfer experience and knowledge of the federal innovation
infrastructure. She was a Technology Licensing Officer at Columbia
University's tech transfer office, served as a Communications
Officer in the United States Marine Corps, and is a member of the
Truman National Security Project Defense Council. Dr. Fazio earned
her BS in Physics from MIT and a PhD from Columbia University in
Applied Physics and Applied Mathematics with a concentration in
materials science. Her doctoral research focused on building
nanoscale devices to monitor single-molecule biological
interactions.
Current Period Notable Developments
The following is a list of notable developments during the
period:
Spin Transfer Technologies, Inc.
Spin Transfer Technologies is developing magneto-resistive RAM
computer memory, with the aspiration of becoming a leading
universal memory technology in the $60+ billion per annum worldwide
computer memory market.
Spin Transfer Technologies executed the first phase of a new
partnership with a major electronics company. This joint
development agreement establishes early stage development
cooperation, and sets the stage for longer term co-development,
manufacturing support, and supply chain commitments.
Under the first phase agreement, the partnership provides for
exchange of semiconductor wafers and advanced wafer processing to
facilitate technology development by both partners. The
collaboration may be expanded to add product development,
manufacturing capacity and logistics, licensing, and other
inter-company support.
Using funds from last year's Series A preferred stock financing,
Spin Transfer Technologies embarked on an expansion of clean room
facilities and procurement of processing and analytical equipment
that would improve the quality of fabrication steps and reduce
turnaround time. Construction work on the clean room is largely
complete and major new equipment has been installed, with remaining
pieces at various stages of being built by the vendor, tested, and
delivered.
Development of the technology has progressed well, toward the
goal of completing a diagnostic memory demonstrator (DM1). Data
from this commercially relevant memory chip will be the basis for
detailed discussions with and evaluation by potential partners and
customers. The DM1 circuit design has been completed. Fabrication
and testing are in process.
SciFluor Life Sciences, Inc.
(MORE TO FOLLOW) Dow Jones Newswires
August 27, 2015 02:04 ET (06:04 GMT)
SciFluor engages in drug discovery and development using
fluorine and is building a portfolio of proprietary fluorinated
compounds serving billion dollar markets. Fluorine modification of
the underlying chemical structure of a drug has been demonstrated
to improve potency, selectivity, rates of absorption and metabolic
stability in many cases, and approximately 25% of drugs currently
marketed or in the pipeline contain fluorine. SciFluor's principal
products comprise two lead compounds:
-- SF0166, a patented small molecule integrin antagonist wholly
owned by SciFluor and intended to treat eye conditions including
age-related macular degeneration, diabetic macular edema and
retinal vein occlusion, representing an estimated 50 million
patients worldwide. SF0166 is a topical drug intended to replace
drugs requiring injection into the eye.
-- SF0034, a KCNQ2/3 modulator and a fluorinated derivative of
ezogabine, is also patented and is wholly owned by SciFluor. SF0034
could eliminate key safety issues associated with ezogabine and
serve markets totaling $5.0 billion in aggregate including:
epilepsy/seizures; tinnitus; amyotrophic lateral sclerosis (ALS or
Lou Gehrig's disease); and channelopathies (genetic orphan rare
diseases).
In April 2015, SciFluor successfully raised $30.0 million in a
Series A preferred stock financing. For the remainder of 2015, the
company expects to advance the pre-clinical research so that SF0166
and SF0034 will be ready to enter Phase I clinical trials. It is
envisaged that the Phase I trials will cover up to four indications
for these two drugs. Additionally the company will execute
pre-clinical tests on its existing pipeline compounds in
respiratory disease, pain therapy, fibrosis, cardiovascular
disease, and neurology.
SciFluor named William Koster, PhD, a seasoned executive in drug
discovery research and early clinical development, as Chairman of
the Board. Koster previously served as President and Chief
Executive Officer of Neurogen Corp., a NASDAQ-listed biotechnology
company engaged in neuroscience research and development. He also
spent 30 years with Bristol-Myers Squibb Co. in various roles that
included Senior Vice President overseeing worldwide drug discovery
research and early clinical development through Phase 2a.
Federated Wireless, Inc.
Federated Wireless, which is developing scalable wireless
infrastructure solutions to extend the access of carrier networks,
announced its support for the new Report and Order by the U.S.
Federal Communications Commission (FCC) regarding Spectrum Access
System (SAS) for the 3550-3700 MHz band (3.5 GHz band). Following
this decision, Federated Wireless announced plans for a pilot
program with several U.S. government agencies that aims to
standardise and certify the dynamic sharing of 3.5GHz spectrum.
Allied-Bristol Life Sciences, LLC
Allied-Bristol Life Sciences (ABLS) is a partnership between
Allied Minds and Bristol-Myers Squibb Company (BMY) created to
identify and foster research and pre-clinical development of
biopharmaceutical innovations from leading university research
institutions across the U.S. In June 2015, ABLS entered into a
license agreement with Harvard University with respect to research
and intellectual property developed in Professor Malcolm Whitman's
lab, and commenced a project to create novel therapeutics for the
treatment of fibrotic and autoimmune diseases.
Optio Labs, Inc.
Optio Labs creates technology products that make mobile devices
more secure. Optio Labs purchased Maryland-based security company
Oculis Labs, and its CEO, Dr. Bill Anderson, joined the company as
Chief Product Officer. Oculis is developer of the award-winning
products PrivateEye and Chameleon. The acquisition, which includes
the security software products, intellectual property and patents,
as well as the integration of the development team, will allow
Optio Labs to provide comprehensive data security solutions for
corporations, government institutions and wireless carriers.
BridgeSat, Inc.
BridgeSat is developing an optical connectivity system that aims
to increase the speed, security and efficiency of data
transmissions from Low Earth Orbit (LEO) satellites at a reduced
cost compared with traditional radio frequency solutions. BridgeSat
co-invented this innovation with The Aerospace Corporation as part
of a commercialisation collaboration for the federally funded
research and development centre's extensive portfolio of small
satellite technologies. BridgeSat has partnered with Draper
Laboratory, and is also collaborating with Massachusetts Institute
of Technology Assistant Professor of Aeronautics and Astronautics,
Dr. Kerri L. Cahoy and the graduate student team in the Space,
Telecommunications, Astronomy, and Radiation (STAR) Laboratory, to
further expand development of its downlink system and provide an
alternative downlink mechanism that is faster, more secure, and
available at a lower cost to traditional radio-frequency
transmissions.
RF Biocidics
RF Biocidics (RFB) manufactures equipment and processes that use
specialised radio frequency (RF) technology to safely eliminate
harmful contaminants from foods. The resulting process is an
effective, chemical-free and environmentally friendly alternative
to conventional steam heat or chemical pasteurisation methods.
Through June 2015, RFB recorded sales of $0.5 million, as compared
with $2.2 million during the same period one year earlier. These
results were driven primarily by (i) delays in obtaining regulatory
approvals for a new generation, higher capacity machine and (ii)
delays in product modifications to enable the processing of certain
freshly harvested raw materials.
Subsequent to the period end, in July 2015, RF Biocidics'
state-of-the-art food safety equipment received long-awaited
validation by the Almond Board of California Technical Expert
Review Panel (TERP). The TERP decision confirms third-party test
results that demonstrates the capabilities of RFB's chemical-free
process in use at Madera-based Ready Roast Nut Company, effectively
eliminating pathogens such as Salmonella from almonds, making them
safer to eat.
The Company believes that the U.S. food industry must meet the
requirements of the U.S. Food Safety Modernization Act of 2010
(Food Safety Act), which focuses on the prevention of contamination
rather than responding to outbreaks. The Company believes the
increase in regulatory pressure is likely to result in a consumer
preference for foods that are chemical-free and not processed by
ionising radiation. RF technology provides a chemical-free food
treatment methodology that proposes to be an economical alternative
to existing technologies. The Company continues to believe that
RFB's technology will prove to be an attractive means for
disinfestation and disinfection of food commodities.
Allied Minds Devices, LLC
In April 2015, Allied Minds terminated and dissolved its
subsidiary Allied Minds Devices, LLC (AMD). The company was
initially formed to develop commercially viable medical device
products. Allied Minds determined that the two technologies in the
development stage did not meet key milestones which were designed
to measure technological and commercial progress. At the time of
dissolution, Allied Minds had invested $1.3 million in AMD, and had
an Ownership Adjusted Value (OAV) in the investment of $nil.
Broadcast Routing Fountains, LLC
In April 2015, Allied Minds terminated and dissolved its
subsidiary Broadcast Routing Fountains, LLC (BRF). The company was
initially formed to develop an internet infrastructure technology
that would supplement the border gateway protocol with a view to
improving the way networks communicate. Allied Minds determined
that the technology did not meet key milestones which were designed
to measure technological and commercial progress. At the time of
dissolution, Allied Minds had invested $0.6 million in BRF, and had
an Ownership Adjusted Value (OAV) in the investment of $nil.
Post-period-end Notable Developments
The following is a list of important developments which have
occurred since the period-end:
Allied-Bristol Life Sciences, LLC
In August 2015, ABLS entered into a license agreement with Yale
University with respect to research and intellectual property
developed in the laboratory of Dr. David Spiegel. The proprietary
platform, and associated lead molecules known as
Antibody-Recruiting Molecules (ARMs), provide a novel approach for
the treatment of cancer.
Tinnitus Treatment Solutions, Inc.
Tinnitus Treatment Solutions (TTS), sister company of SoundCure,
executed a new partnership between Your Hearing Network (YHN). This
cross-marketing agreement will dramatically expand the reach of TTS
by roughly 1000 hearing health care sites. YHN is an affiliate of
Oticon, one of the largest hearing aid companies in the world.
The partnership will have two key aspects to it that leverage
both companies expertise. In the first part, TTS will offer Oticon
tinnitus hearing aids to TTS patients. In the second part, Your
Hearing Network will offer its patients access to TTS'
tele-audiologists for the provision of all tinnitus care,
counselling, education and habituation follow-up through
tele-homecare for that patient. This allows Oticon through YHN to
focus on the amplification aspects and the sale of the hearing aid,
and puts all the tinnitus care aspects onto the TTS tinnitus
expert. This is expected to enable excellent tinnitus care for the
patient, and increased patient flow for both parties.
Outlook
(MORE TO FOLLOW) Dow Jones Newswires
August 27, 2015 02:04 ET (06:04 GMT)
While the risks inherent in early-stage businesses are
challenges, the Board remains confident that there are significant
opportunities to form, fund, manage and build companies to
undertake research and product development and commercialise
scientific research and innovations emerging from U.S. universities
and U.S. federal research institutions and laboratories. The
favourable long-term macro environment, coupled with the Group's
available capital, access to diversified intellectual property
assets, and portfolio of maturing subsidiary companies, gives the
Directors confidence that the Group remains well placed to achieve
its objectives.
Financial Review
Condensed Consolidated Statement of Comprehensive Loss
For the six months ended: 30 June 2015 30 June 2014
$'000 $'000
---------------------------------------------- ------------- -------------
Revenue 1,475 2,910
Cost of revenue (746) (1,940)
Selling, general and administrative expenses (20,684) (18,446)
Research and development expenses (19,663) (9,697)
Finance income/(cost), net 530 (11)
Loss for the year (39,088) (27,184)
Other comprehensive loss, net of tax (12) (4)
------------- -------------
Total comprehensive loss (39,100) (27,188)
============= =============
Revenue was lower by $1.4 million, at $1.5 million for the six
months ended 30 June 2015 (HY14: $2.9m), when compared to the same
period in the prior year. This decrease is primarily attributable
to the lower product revenue at RF Biocidics, offset by the grant
revenue at SiEnergy from the ARPA-E award. Revenues at CryoXtract
and SoundCure remained relatively consistent when compared to the
same period in the prior year. Cost of revenue was lower by $1.2
million, at $0.7 million for the six months ended 30 June 2015
(HY14: $1.9m) as a result of the lower sales in the period, when
compared to the same period in the prior year.
Selling, general and administrative (SG&A) expenses
increased by $2.3 million, to $20.7 million for the six months
ended 30 June 2015 (HY14: $18.4m), of which $10.1 million relates
to personnel expenses (HY14: $10.6m), $3.4 million to professional
services (HY14: $2.6m) and $7.2 million to other SG&A costs
(HY14: $5.2m). The increase is attributed to the overall growth of
the Group compared to the six months preceding the IPO in 2014,
namely by increase in headcount, selling and advertising
initiatives, and associated travel costs.
Research and development (R&D) expenses increased by $10.0
million, to $19.7 million for the six months ended 30 June 2015
(HY14: $9.7m). The increase is attributed to the overall growth of
the Group's research and development activities, attributed to the
ramp up of the operations at Seamless Devices and Whitewood
Encryption Systems incorporated in the second half of 2014, and the
acceleration of development activities at Federated Wireless,
Cephalogics, Precision Biopsy, and Spin Transfer Technologies. This
increase was reflected by higher R&D headcount, related
employee costs and increased external R&D professional services
costs.
As a result of the above discussed factors, total comprehensive
loss for the year increased by $11.9 million to $39.1 million for
the six months ended 30 June 2015 (HY14: $27.2m).
Condensed Consolidated Statement of Financial Position
As of the period ended: 30 June 2015 31 December 2014
$'000 $'000
------------------------------------ ------------- -----------------
Non-current assets 99,944 44,039
Current assets 181,243 248,991
------------- -----------------
Total assets 281,187 293,030
============= =================
Non-current liabilities 778 717
Current liabilities 9,978 12,499
Equity 270,431 279,814
Total liabilities and equity 281,187 293,030
============= =================
Significant performance-impacting events and business
developments reflected in the Company's financial position at the
half year end include:
-- Non-current assets increased by $55.9 million, to $99.9
million at 30 June 2015 (FY14: $44.0m), mainly due to the increase
of $46.9 million in the balance of excess cash invested in fixed
income securities in the form of government agencies and corporate
bonds. Property and equipment increased by $8.1 million to $24.4
million as of 30 June 2015 (FY14: $16.3m), mainly reflecting
capital purchases for the period of approximately $9.5 million, of
which $8.2 million at Spin Transfer Technologies, net of
depreciation of $1.4 million. Intangible assets, net as of 30 June
2015, remained relatively consistent at $3.9 million compared to
$3.4 million as of 31 December 2014, increasing mainly due to the
asset purchase of Oculis Labs by Optio Labs.
-- Current assets decreased by $67.8 million, to $181.2 million
as of 30 June 2015 (FY14: $249.0m), mainly due to the decrease in
cash and cash equivalents of $108.6 million, offset by the increase
of $37.3 million in investment of excess cash in the form of fixed
income securities with maturities greater than one year. Cash and
cash equivalents decreased by $108.6 million to $115.5 million at
30 June 2015 from $224.1 million at 31 December 2014 due to
investment of excess cash of $84.1 million in fixed income
securities, acquisition of property and equipment and intangibles
of $10.3 million and operating cash outflows of $39.3 million,
offset by $25.2 million proceeds from the financing round at
SciFluor in April 2015 and $0.1 million repayment of loan at
CryoXtract. Trade and other receivables increased by $4.0 million,
reflecting the timing of collections of receivables and
amortisation of prepayments.
-- Non-current liabilities remained relatively consistent at
$0.8 million as of 30 June 2015, compared to $0.7 million at 31
December 2014.
-- Current liabilities decreased by $2.5 million, to $10.0
million at 30 June 2015 (FY14: $12.5m) mainly reflecting the
decrease of $2.1 million in bonus accrual at 31 December 2014 that
are paid out in January of the current period.
-- Net equity decreased by $9.4 million, to $270.4 million at 30
June 2015 (FY14: $279.8m) reflecting the net loss for the period of
$39.1 million, offset by the new funds into non-controlling
interest of $25.2 million from the financing round at SciFluor,
$3.2 million charge to other reserve from equity-settled share
based payments, and $1.3 million exercise price of stock options
exercised in the period.
Condensed Consolidated Statement of Cash Flows
For the six months ended: 30 June 2015 30 June 2014
$'000 $'000
--------------------------------------------------------- ------------- -------------
Net cash outflow from operating activities (39,312) (19,081)
Net cash outflow from investing activities (94,401) (1,200)
Net cash inflow from financing activities 25,115 144,215
Net (decrease)/increase in cash and cash equivalents (108,598) 123,934
Cash and cash equivalents at beginning of period 224,075 104,551
------------- -------------
Cash and cash equivalents at end of the period 115,477 228,485
============= =============
The Group's net cash outflow from operating activities of $39.3
million in the six months ended 30 June 2015 (HY14: $19.1m) was
primarily due to the net operating losses for the year of $39.6
million (HY14: $27.2m), plus increase in working capital and other
finance costs of $4.6 million (HY14: decrease of $1.1m), offset by
adjustment for non-cash accounting entries such as depreciation,
amortisation, and share-based expenses of $4.9 million (HY14:
$7.0m)
The Group had a net cash outflow from investing activities of
$94.4 million in the six months ended 30 June 2015 (HY14: $1.2m)
predominately reflecting the purchase of fixed income securities as
discussed above with some of the excess cash raised in the IPO.
Purchases of property and equipment were higher in the first half
of 2015 compared to the same period last year due to capital
purchases at Spin Transfer Technologies to support the operations
in the newly built 'clean room' facility.
The Group's net cash inflow from financing activities of $25.1
million in the six months ended 30 June 2015 (HY14: $144.2m)
largely reflects the net proceeds of $25.2 million from the
financing round at SciFluor received in April as compared to
significantly larger net inflows from financing as a result of the
IPO in June 2014.
Total cash and deposits, including the investments in fixed
income security, in total reflecting the available funds to the
Group for future investments decreased to $237.0 million at 30 June
2015 from $261.5 million at 31 December 2014.
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The Group's strategy is to maintain healthy, highly liquid cash
balances that are readily available to support the activities of
its subsidiaries in terms of supporting working capital,
maintaining the level of research and development activities
required to achieve the set milestone goals, and acquiring capital
equipment where necessary to support those research and development
activities To further minimise its exposure to risks, the Group
does not maintain any material borrowings or cash balances in
foreign currency.
Portfolio Overview and Valuation
One of Allied Minds' key performance metrics (KPIs) is the
number of subsidiary businesses within the Group at any point in
time. The table below sets out the number of subsidiary businesses
at the end of the most recent fiscal year and current half year
ended 30 June 2015:
30 June 2015 31 December 2014
-------------------------------------------------------- ------------- -----------------
Number of subsidiary businesses at beginning of period 23 17
New subsidiary businesses formed 1 6
Subsidiary businesses closed 2 0
Number of subsidiary businesses at end of period 22 23
-------------------------------------------------------- ------------- -----------------
The Directors have identified the Group's progress in
'graduating' subsidiaries to the next development level as another
KPI for the overall business. The table below sets out the number
of subsidiary businesses in each of the lifecycle categories at the
end of the most recent fiscal year and current half year ended 30
June 2015:
30 June 2015 31 December 2014
------------------ ------------- -----------------
Early stage 19 20
Commercial stage 3 3
Total 22 23
------------------ ------------- -----------------
Approximately $313.5 million of capital has been allocated to
the Group's subsidiary businesses, of which $188.4 million was
raised and deployed by Allied Minds, $116.9 million is contributed
by third party investors directly into the subsidiary companies and
$8.2 million has been raised by subsidiaries in the form of loans
from banks and federal grants.
All of the Company's subsidiary companies are currently
controlled and therefore fully consolidated in the Company's
consolidated financial statements prepared in accordance with
International Financial Reporting Standards (IFRS). As a result,
the Consolidated Statements of Financial Position incorporated
within the Company's consolidated financial statements do not
include current valuations of the Company's subsidiary
companies.
At the close of each annual financial period, the Directors
approve the value of all subsidiary businesses in the Group which
is used to derive the "Group Subsidiary Ownership Adjusted Value".
The Group Subsidiary Ownership Adjusted Value was $488.0 million as
at 31 December 2014 (which reflects the increase in valuation as a
result of the $30.0 million Series A preferred stock financing
completed by SciFluor Life Sciences in April 2015). The Directors
believe that there has been no significant change in the Group
Subsidiary Ownership Adjusted Value since 31 December 2014, and
through 30 June 2015.
There can be no guarantee that the aforementioned valuation of
the Group will be considered to be correct in light of the future
performance of the various Group businesses, or that the Group
would be able to realise proceeds in the amount of such valuations,
or at all, in the event of a sale by it of any of its
subsidiaries.
Principal Risks and Uncertainties
The principal risks and uncertainties surrounding the Group
businesses are set out in detail in the Risk Management section of
the Strategic Report included in the 2014 Annual Report and
Accounts. Those risks can be summarised as follows:
-- The science and technology being developed or commercialised
by the Group's businesses may fail and/or the Group's business may
not be able to develop their intellectual property into
commercially viable products or technologies. There is also a risk
that certain of the subsidiary businesses may fail or not succeed
as anticipated, resulting in an impairment of the Group's
value.
-- The Group expects to continue to incur substantial
expenditure in further research and development activities of its
businesses. There is no guarantee that the Group will become
profitable and, even if it does so, it may be unable to sustain
profitability.
-- If any of the Group's relationships with US universities and
federal government institutions were to break down or be terminated
or expire then the Group would lose any rights that it has to act
as a private sector partner in the commercialisation of
intellectual property being generated by such universities, other
research intensive institutions or US federal research
institutions.
-- A majority of the Group's intellectual property relates to
technologies originated in the course of research conducted in, and
initially funded by, US universities or other federally-funded
research institutions. Although the Group has been granted
exclusive licences to use this intellectual property there are
certain limitations inherent in these licences, for example as
required by the Bayh-Dole Act of 1980.
-- The Group currently has in place cooperative research and
development agreements with certain US Department of Defence
laboratories and federal funded government institutions. Certain
regulatory measures apply to these agreements which restrict the
export of information and material that may be used for military or
intelligence applications by a foreign person.
-- The Group operates in complex and specialised business
domains and requires highly qualified and experienced management to
implement its strategy successfully. All of the operations of the
Group and its subsidiary businesses are located in the United
States which is a highly competitive employment market. There is a
risk that the Group may lose key personnel, or fail to attract or
retain new personnel. Furthermore, given the relatively small size
of the senior management at the corporate level, the Group is
reliant on a small number of key individuals.
-- A large proportion of the overall value of the Group's
businesses may be concentrated in a small proportion of the Group's
businesses. If one or more of the intellectual property rights
relevant to a valuable business was terminated this would have a
material adverse impact on the overall value of the Group's
businesses.
-- Clinical studies and other tests to assess the commercial
viability of the product are typically expensive, complex and
time-consuming, and have uncertain outcomes. If the Company fails
to complete or experiences delays in completing tests for any of
its product candidates, it may not be able to obtain regulatory
approval or commercialise its product candidates on a timely basis,
or at all.
A copy of the 2014 Annual Report and Accounts is available on
the Company's website at www.alliedminds.com under "Investors -
Reports & Presentations".
Condensed Consolidated Statement of Comprehensive Loss
For the six months ended: Note 30 June 2015 30 June 2014
(unaudited) (unaudited)
$'000 $'000
---------------------------------------------------------------- ----- ------------- -------------
Revenue 1,475 2,910
Operating expenses:
Cost of revenue (746) (1,940)
Selling, general and administrative expenses (20,684) (18,446)
Research and development expenses (19,663) (9,697)
Operating loss (39,618) (27,173)
Finance income/(cost), net 530 (11)
Loss before tax (39,088) (27,184)
Taxation - -
Loss for the period 2 (39,088) (27,184)
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences (12) (4)
Other comprehensive loss, net of taxation (12) (4)
------------- -------------
Total comprehensive loss (39,100) (27,188)
------------- -------------
Loss attributable to:
Equity holders of the parent (30,443) (21,901)
Non-controlling interests 6 (8,645) (5,283)
(39,088) (27,184)
------------- -------------
Total comprehensive loss attributable to:
Equity holders of the parent (30,455) (21,905)
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Non-controlling interests (8,645) (5,283)
(39,100) (27,188)
============= =============
Loss per share $ $
Basic 3 (0.14) (0.14)
------------- -------------
Diluted 3 (0.14) (0.14)
------------- -------------
Condensed Consolidated Statement of Financial Position
As of the period ended: Note 30 June 2015 31 December 2014
(unaudited) (audited)
$'000 $'000
---------------------------------------------- ----- ------------- -----------------
Non-current assets
Property and equipment 24,405 16,330
Intangible assets 3,923 3,409
Investment in equity accounted investees 1,560 1,560
Other investments 69,072 22,176
Other financial assets 583 418
Other non-current assets 401 146
------------- -----------------
Total non-current assets 99,944 44,039
------------- -----------------
Current assets
Cash and cash equivalents 115,477 224,075
Other investments 52,465 15,231
Inventories 2,492 2,919
Trade and other receivables 10,286 6,305
Other financial assets 523 461
------------- -----------------
Total current assets 181,243 248,991
------------- -----------------
Total assets 281,187 293,030
============= =================
Equity
Share capital 3,423 3,411
Share premium 154,762 153,442
Merger reserve 185,544 185,544
Other reserve 31,956 28,753
Translation reserve (73) (61)
Accumulated deficit (139,309) (123,186)
------------- -----------------
Equity attributable to owners of the Company 5 236,303 247,903
Non-controlling interests 6 34,128 31,911
------------- -----------------
Total equity 270,431 279,814
------------- -----------------
Non-current liabilities
Loans 227 338
Deferred revenue 384 197
Other non-current liabilities 167 182
Total non-current liabilities 778 717
------------- -----------------
Current liabilities
Trade and other payables 8,912 11,339
Deferred revenue 845 947
Loans 221 213
------------- -----------------
Total current liabilities 9,978 12,499
------------- -----------------
Total liabilities 10,756 13,216
Total equity and liabilities 281,187 293,030
============= =================
Condensed Consolidated Statement of Cash Flows
For the six months ended: Note 30 June 2015 30 June 2014
(unaudited) (unaudited)
$'000 $'000
------------------------------------------------------------------------------ ----- ------------- -------------
Cash flows from operating activities:
Net operating loss (39,618) (27,173)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 1,386 1,129
Amortisation 296 279
Share-based compensation expense 4 3,203 5,546
Changes in working capital:
Decrease/(increase) in inventory 427 (1,438)
(Increase)/decrease in trade and other receivables (3,167) 1,058
(Decrease)/increase in trade and other payables (2,427) 2,817
Increase/(decrease) in other non-current liabilities 285 (41)
Decrease in deferred revenue (216) (1,247)
Interest received 553 113
Interest paid (22) (124)
Other finance cost (12) -
Net cash used in operating activities (39,312) (19,081)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment, net of disposals (9,461) 457
Purchases of intangible assets, net of disposals (810) (135)
Purchases of investment in equity accounted investees - (1,522)
Purchases of other investments (84,130) -
Net cash used in investing activities (94,401) (1,200)
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of stock options 37 10,550
Repayment of notes payable (104) (525)
Proceeds from issuance of share capital - 131,849
Proceeds from issuance of share capital in subsidiaries 6 25,182 2,341
Net cash provided by financing activities 25,115 144,215
------------- -------------
Net (decrease)/increase in cash and cash equivalents (108,598) 123,934
Cash and cash equivalents at beginning of period 224,075 104,551
Cash and cash equivalents at end of period 115,477 228,485
============= =============
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Condensed Consolidated Statement of Changes in Equity
Share Capital
Note Total Non-
Share Merger Other Translation Accumulated parent controlling Total
Shares Amount premium reserve reserve reserve deficit equity interests equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 31
December 2013 157,463,790 2,445 - 185,544 19,814 98 (90,648) 117,253 2,606 119,859
Total
comprehensive
loss for the
period
Loss from
continuing
operations - - - - - - (21,901) (21,901) (5,283) (27,184)
Foreign
currency
translation - - - - - (4) - (4) - (4)
Total
comprehensive
loss for the
period (4) (21,901) (21,905) (5,283) (27,188)
Issuance of
ordinary shares 44,373,211 754 131,095 - - - - 131,849 - 131,849
New funds into
non-controlling
interest - - - - - - - - 2,341 2,341
Gain/(loss)
arising from
change in
non-controlling
interest - - - - - - 983 983 (983) -
Exercise of
stock options 7,662,424 130 10,420 - - - - 10,550 - 10,550
Equity-settled
share based
payments - - - - 5,546 - - 5,546 - 5,546
Balance at 30
June 2014
(unaudited) 209,499,425 3,329 141,515 185,544 25,360 94 (111,566) 244,276 (1,319) 242,957
=========== ====== ======= ======= ======= =========== =========== ======== =========== ========
Balance at 31
December 2013
(audited) 157,463,790 2,445 - 185,544 19,814 98 (90,648) 117,253 2,606 119,859
Total
comprehensive
loss for the
period
Loss from
continuing
operations - - - - - - (45,478) (45,478) (12,228) (57,706)
Foreign
currency
translation - - - - - (159) - (159) - (159)
Total
comprehensive
loss for the
period (159) (45,478) (45,637) (12,228) (57,865)
Issuance of
ordinary shares 48,164,365 818 142,243 - - - - 143,061 - 143,061
New funds into
non-controlling
interest - - - - - - - - 54,473 54,473
Gain/(loss)
arising from
change in
non-controlling
interest - - - - - - 12,940 12,940 (12,940) -
Exercise of
stock options 8,817,424 148 11,199 - - - - 11,347 - 11,347
Equity-settled
share based
payments - - - - 8,939 - - 8,939 - 8,939
Balance at 31
December 2014
(audited) 214,445,579 3,411 153,442 185,544 28,753 (61) (123,186) 247,903 31,911 279,814
=========== ====== ======= ======= ======= =========== =========== ======== =========== ========
Total
comprehensive
loss for the
period
Loss from
continuing
operations - - - - - - (30,443) (30,443) (8,645) (39,088)
Foreign
currency
translation - - - - - (12) - (12) - (12)
Total
comprehensive
loss for the
period (12) (30,443) (30,455) (8,645) (39,100)
New funds into
non-controlling
interest 6 - - - - - - - - 25,182 25,182
Gain/(loss)
arising from
change in
non-controlling
interest 6 - - - - - - 14,320 14,320 (14,320) -
Exercise of
stock options 4,5 758,150 12 1,320 - - - - 1,332 - 1,332
Equity-settled
share based
payments 4 - - - - 3,203 - - 3,203 - 3,203
Balance at 30
June 2015
(unaudited) 215,203,729 3,423 154,762 185,544 31,956 (73) (139,309) 236,303 34,128 270,431
=========== ====== ======= ======= ======= =========== =========== ======== =========== ========
Notes to the Condensed Consolidated Interim Financial
Statements
1. General information
a) Reporting entity
Allied Minds Group comprises of Allied Minds plc and its
subsidiaries ("Allied Minds", the "Group" or the "Company"). The
Company is publicly listed on the Main Market of the London Stock
Exchange ("LSE"). Allied Minds plc is engaged in the development of
various technologies for commercial applications. As of 30 June
2015, Allied Minds had 24 active subsidiaries to which the Company
provided funding, comprising 22 operating businesses. The
subsidiaries have entered into agreements with universities,
scientists, and U.S. federal research institutions to develop and
commercialise products. In exchange for licenses, time, and
expertise already provided, the universities and/or scientists
received an equity ownership in the subsidiaries. The cash
contributed by Allied Minds is used to fund additional research and
to create a management structure and operations. Allied Minds
dissolved two subsidiaries in the first half of 2015 to which
funding had previously been provided, and no subsidiaries in the
year ended 31 December 2014.
b) Basis of preparation
These interim financial statements have been prepared in
accordance with International Accounting Standard ("IAS") 34
Interim Financial Reporting. They do not include all the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual consolidated financial
information included in the annual report and accounts as at and
for the year ended 31 December 2014.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control and
continue to be consolidated until the date when such control
ceases. The financial information of the subsidiaries is prepared
for the same reporting period as the parent Company, using
consistent accounting policies. All intra-group balances,
transactions, unrealised gains and losses resulting from
intra-group transactions and dividends are eliminated in full.
Investments in associates are carried at cost less impairment
unless it is demonstrated that the group exercises significant
influence over the entity and then it is equity accounted.
Non-controlling interests ("NCI") are measured at their
proportionate share of the acquiree's identifiable net assets at
the acquisition date. Changes in the Group's interest in a
subsidiary that do not result in a loss of control are accounted
for as equity transactions.
This financial information presented in these half-yearly
results has been prepared under the historical cost convention. The
reporting currency adopted by Allied Minds is U.S. dollar ('$') as
this is the functional currency of the entities in the Group. In
preparing these interim financial statements, management has made
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated
financial information included in the Group annual report and
accounts as at and for the year ended 31 December 2014.
The Company has prepared trading and cash flow forecasts for the
Group covering the period to 31 December 2016. After making
enquiries and considering the impact of risks and opportunities on
expected cash flows, the Directors have a reasonable expectation
that the Group has adequate cash to continue in operational
existence for the foreseeable future. For this reason, they have
adopted the going concern basis in preparing the half-yearly
results.
The financial information contained in this half-yearly report
does not constitute full statutory accounts as defined in section
434 of the Companies Act 2006. The condensed consolidated financial
statements are neither audited nor reviewed and the results for the
six months ended 30 June 2015 are not necessarily indicative of
results for future operating periods.
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Certain financial information has been extracted from the annual
report and accounts as at and for the period ended 31 December 2014
and has been included for comparative purposes in this Half-Yearly
Report.
These interim financial statements are unaudited and were
approved by the Board of Directors and authorised for issue on 27
August 2015 and are available on the Company's website at
www.alliedminds.com under "Investors - Reports and
Presentations".
c) Accounting policies
The accounting policies applied by the Group in these
half-yearly results are the same as those which formed the basis of
the 2014 Annual Report and Accounts. No new standards that have
become effective in the period have had a material effect on the
Group's financial statements.
2. Operating segments
a) Information about reportable segments
For management purposes, the Group's principal operations are
currently organised in two reportable segments:
i. Early stage companies - subsidiary businesses that are in the
early stage of their lifecycle characterised by incubation,
research and development activities; and
ii. Commercial stage companies - subsidiary businesses that have
substantially completed their research and development activities
and that have developed one or more products that are actively
marketed.
Due to their size and nature, Spin Transfer Technologies, Inc
(or "STT", an early stage company) and RF Biocidics, Inc (or "RFB",
a commercial stage company) are not aggregated and presented as two
additional separate reportable segments. The Group's principal
operations are therefore presented as four reportable segments
being early stage company - STT, early stage companies - other,
commercial stage company - RFB, and commercial stage companies -
other. Other operations include the management function of the head
office at the parent level of Allied Minds.
The Group's chief operating decision maker ("CODM") reviews
internal management reports on these operating segments at least
quarterly in order to make decisions about resources to be
allocated to the segment and to assess its performance.
The following provides detailed information of the Group's
reportable segments:
For the six months
ended: 30 June 2015
(unaudited)
Other
Early stage Commercial operations Consolidated
STT Other RFB Other
$'000 $'000 $'000 $'000 $'000 $'000
------------------------------- -------- --------- -------- -------- ------------ -------------
Statement of Comprehensive
Loss
Revenue - 600 464 411 - 1,475
Cost of revenue - (2) (583) (161) - (746)
Selling, general and
administrative expenses (3,172) (5,518) (2,276) (2,329) (7,389) (20,684)
Research and development
expenses (4,973) (13,963) (141) (586) - (19,663)
Finance income/(cost),
net 13 - - (22) 539 530
Loss for the year (8,132) (18,883) (2,536) (2,687) (6,850) (39,088)
-------- --------- -------- -------- ------------ -------------
Other comprehensive
income - - (27) - 15 (12)
Total comprehensive
loss (8,132) (18,883) (2,563) (2,687) (6,835) (39,100)
-------- --------- -------- -------- ------------ -------------
Total comprehensive loss
attributable to:
Equity holders of
the parent (3,874) (16,011) (1,431) (2,304) (6,835) (30,455)
Non-controlling interests (4,258) (2,872) (1,132) (383) - (8,645)
Total comprehensive
loss (8,132) (18,883) (2,563) (2,687) (6,835) (39,100)
======== ========= ======== ======== ============ =============
For the six months
ended: 30 June 2014
(unaudited)
Early stage Commercial Other operations Consolidated
STT Other RFB Other
$'000 $'000 $'000 $'000 $'000 $'000
--------------------- ------------ -------- ----------- -------- --------------- -------------
Statement of
Comprehensive Loss
Revenue - 250 2,194 466 - 2,910
Cost of revenue - - (1,753) (187) - (1,940)
Selling, general
and administrative
expenses (2,457) (2,587) (2,769) (1,854) (8,779) (18,446)
Research and
development
expenses (3,372) (5,703) (87) (535) - (9,697)
Finance
income/(cost), net (94) - - (27) 110 (11)
Loss for the
year (5,923) (8,040) (2,415) (2,137) (8,669) (27,184)
Other comprehensive
income - - (12) - 8 (4)
------------ -------- ----------- -------- --------------- -------------
Total
comprehensive
loss (5,923) (8,040) (2,427) (2,137) (8,661) (27,188)
------------ -------- ----------- -------- --------------- -------------
Total comprehensive loss
attributable to:
Equity holders
of the parent (3,217) (6,799) (1,408) (1,820) (8,661) (21,905)
Non-controlling
interests (2,706) (1,241) (1,019) (317) - (5,283)
Total
comprehensive
loss (5,923) (8,040) (2,427) (2,137) (8,661) (27,188)
============ ======== =========== ======== =============== =============
As of the period ended: 30 June 2015
(unaudited)
Early stage Commercial Other operations Consolidated
STT Other RFB Other
$'000 $'000 $'000 $'000 $'000 $'000
------------------------- -------- -------- -------- ------ ----------------- -------------
Statement of Financial
Position
Total assets 74,403 50,919 10,210 2,660 142,995 281,187
Total liabilities (2,141) (4,448) (1,087) (991) (2,089) (10,756)
Net assets 72,262 46,471 9,123 1,669 140,906 270,431
======== ======== ======== ====== ================= =============
As of the period
ended: 31 December 2014
(audited)
Early stage Commercial Other operations Consolidated
STT Other RFB Other
$'000 $'000 $'000 $'000 $'000 $'000
------------------- ------------ -------- ----------- -------- ----------------- -------------
Statement of
Financial Position
Total assets 83,104 19,903 11,435 2,922 175,666 293,030
Total liabilities (3,453) (3,036) (2,888) (1,030) (2,809) (13,216)
Net assets 79,651 16,867 8,547 1,892 172,857 279,814
============ ======== =========== ======== ================= =============
b) Portfolio valuation
At the close of each annual financial period, the Directors
approve the value of all subsidiary businesses in the Group, which
is used to derive the "Group Subsidiary Ownership Adjusted Value".
This Group Subsidiary Ownership Adjusted Value is a
sum-of-the-parts ("SOTP") valuation of all the subsidiaries that
make up the Group.
Ownership adjusted value represents Allied Minds' interest in
the equity value of each subsidiary: = (Business Enterprise Value -
Long Term Debt + Cash) x Allied Minds' percentage ownership plus
the value of debt provided by Allied Minds plc to each subsidiary
business. Allied Minds commits post-seed funding to its
subsidiaries in the form of loans. Further details about the Group
valuation methodology are disclosed in 2014 Annual Report and
Accounts.
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The Group Subsidiary Ownership Adjusted Value ("GSOAV") was
$488.0 million as at 31 December 2014. The Directors believe there
has been no significant change in the Group Subsidiary Ownership
Adjusted Value since 31 December 2014 and through 30 June 2015.
There can be no guarantee that the aforementioned valuation of
the Group will be considered to be correct in light of the future
performance of the various Group businesses, or that the Group
would be able to realise proceeds in the amount of such valuations,
or at all, in the event of a sale by it of any of its subsidiaries.
Whilst the Board considers the methodologies and assumptions
adopted in the valuation are supportable, reasonable and robust,
because of the inherent uncertainty of valuations, those estimated
values may differ significantly from the values that would have
been used had a ready market for the investment existed and the
differences could be significant.
In addition to the Group Subsidiary Ownership Adjusted Value,
the Directors believe that Allied Minds' established partner
network and significant pipeline of future opportunities to form
and develop new subsidiary companies will enable it to create and
realise further value for Shareholders. The Directors believe that
Allied Minds has created significant brand value and name
recognition providing access to new deal opportunities and
potential partners for its subsidiaries, together with a suite of
operational standards, processes and know-how that enable the Group
to apply its business model and create shareholder value in a
capital efficient manner.
3. Earnings per share
The calculation of basic and diluted earnings per share has been
calculated by dividing the loss for the period attributable to
ordinary shareholders of $30.4 million (HY14: $21.9m), by the
weighted average number of ordinary shares outstanding of
214,495,830 (HY14: 159,192,293) during the six-month period ended
30 June 2015:
Loss attributable to ordinary shareholders:
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
--------------------------------- -------------------- --------------------
Basic Diluted Basic Diluted
$'000 $'000 $'000 $'000
--------- --------- --------- ---------
Loss for the year attributed to
the owners of the Company (30,443) (30,443) (21,901) (21,901)
Loss for the year attributed to
the ordinary shareholders (30,443) (30,443) (21,901) (21,901)
--------- --------- --------- ---------
Weighted average number of ordinary shares:
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
--------------------------- -------------------------- --------------------------
Basic Diluted Basic Diluted
$'000 $'000 $'000 $'000
------------ ------------ ------------ ------------
Issued ordinary shares
on 1 January 214,445,579 214,445,579 157,463,790 157,463,790
Effect of share capital
issued - - 1,265,389 1,265,389
Effect of share options
exercised 50,251 50,251 463,114 463,114
------------ ------------ ------------ ------------
Weighted average ordinary
shares 214,495,830 214,495,830 159,192,293 159,192,293
------------ ------------ ------------ ------------
Loss per share:
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
--------------------------- ----------------- -----------------
Basic Diluted Basic Diluted
$ $ $ $
------- -------- ------- --------
Loss per share (0.14) (0.14) (0.14) (0.14)
------- -------- ------- --------
The Group has only one class of potentially dilutive ordinary
shares. These are contingently issuable shares arising under the UK
Long Term Incentive Plan ("LTIP"). Based upon information available
at the end of the reporting period, no portion of the awards under
the LTIP has vested. Consequently, there are no potentially
dilutive shares outstanding at the period end.
4. Share-based payments
The share-based payments expense for the period was $3.2 million
(HY14: $5.5m) comprising charges related to the LTIP and the other
subsidiary plans. The primary changes affecting the half year
period were related to the following:
a) UK Long Term Incentive Plan
On 19 June 2014, Allied Minds plc established the UK Long Term
Incentive Plan. Under the LTIP, awards over ordinary shares may be
made to employees, officers and Directors of, and other individuals
providing services to the Company and its subsidiaries. Awards may
be granted in the form of share options, share appreciation rights,
restricted or unrestricted share awards, performance share awards,
restricted share units, phantom-share awards and other share-based
awards. Awards were made under the LTIP upon the Company's
admission to the LSE in respect of a total of 4,618,842 ordinary
shares. It is intended that awards will normally vest only after a
minimum period of three years from the date of grant. Vesting will
normally be subject to the achievement of performance conditions
and continued services of the participant. In respect of the
initial awards which have been made conditionally on Admission,
vesting is dependent upon performance metrics as follows:
-- 60 per cent of each award will be subject to performance
conditions based on the Company's total shareholder return ("TSR")
performance over a three year period; and
-- 40 per cent of each award will be subject to performance
conditions based on a basket of shareholder value metrics ("SVM"),
including but not limited to: (i) the increase in quality of
pipeline intellectual property reviewed; (ii) the increase in
quality of the partnership pipeline; and (iii) subsidiary level
performance (assessed by reference to such matters as external
funding raised, corporate collaborations, product co- development
and proof of principal commercial pilots and revenues). Performance
will be assessed on these measures on a scorecard basis over a
three year period.
In respect of the initial awards, at the end of the three year
period, performance against the relevant measures will be
calculated to determine the number of ordinary shares which have
satisfied the vesting criteria and 50 per cent of the award will
then vest at that time. The remaining 50 per cent will vest in two
equal tranches in years 4 and 5 subject to the relevant participant
still being employed within (or being a director of a company
within) the Group at the relevant vesting date (or being an earlier
good leaver as described further in the LTIP).
Subsequently, annual awards are made under the LTIP that vest
100 per cent after the three year measurements period for both the
TSR and SVM performance conditions.
A summary of stock option activity under the UK LTIP for the six
months ended 30 June 2015 and 2014, respectively, is shown
below:
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
------------------------------ ---------------- ----------------
TSR SVM TSR SVM
------- ------- ------- -------
Number of shares granted at
maximum ('000) 170 280 2,771 1,848
Weighted average fair value
(GBP) 7.01 5.99 1.14 1.90
Monte Market Monte Market
Fair value measurement basis Carlo Value Carlo Value
The share grants that vest upon the occurrence of a market
condition (i.e. the TSR performance) and service condition were
adjusted to current market price at the date of the grant to
reflect the effect of the market condition on the non-vested
shares' value. The Company used a Monte Carlo simulation analysis
utilising a Geometric Brownian Motion process with 50,000
simulations to value those shares. The model takes into account
share price volatilities, risk-free rate and other covariance of
comparable UK public companies and other market data to predict
distribution of relative share performance. This is applied to the
reward criteria to arrive at expected value of the TSR awards.
The share grants that vest only upon the occurrence of a
performance condition (i.e. the SVM grants) and service condition
were valued at the fair value of the shares on the date of the
grants. The SVM grants in the six months ended 30 June 2015
included 24,508 restricted units issued to the non-executive
Directors of the Company that vest in three years conditional on
their continued participation on the Board of Allied Minds.
Accounting charge does not necessarily represent the intended
value of share-based payments made to recipients, which are
determined by the Remuneration Committee according to established
criteria. The share-based payment charge for the period or related
to the UK LTIP was $1.4 million (HY14: $nil).
b) U.S. Stock Option/Stock Issuance Plan
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The U.S. Stock Option/Stock Issuance Plan ("U.S. Stock Plan")
was originally adopted by Allied Minds, Inc in 2008. The U.S. Stock
Plan provides for the grant of share option awards, restricted
share awards, and other awards to acquire common stock of Allied
Minds, Inc. (now Allied Minds, LLC). All stock options granted to
employees under this plan are equity settled, for a ten-year term.
In 2014, Allied Minds plc adopted and assumed the rights and
obligations of Allied Minds, Inc. (now Allied Minds LLC) under this
plan except that the obligation to issue Common Stock is replaced
with an obligation to issue ordinary shares to satisfy awards
granted under the U.S. Stock Plan.
A summary of stock option activity in the U.S. Stock Plan for
the six months ended 30 June 2015 and 2014, respectively, is
presented in the following table:
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
-------------------------------- --------------------------------- --------------------------------
Number of Weighted average Number of Weighted average
options exercise price options exercise price
-------------- ----------------- ------------- -----------------
Outstanding as of 1 January 10,396,496 $2.09 17,505,368 $1.61
Granted during the period - - 1,708,652 $2.49
Exercised during the period (758,150) $1.75 (7,662,424) $1.38
Forfeited during the period - - - -
Outstanding as of period end 9,638,346 $2.12 11,551,496 $1.90
-------------- ----------------- ------------- -----------------
Exercisable at period end 9,638,346 $2.12 11,551,496 $1.90
Intrinsic value of exercisable $61.8 million $6.2 million
The fair value of the stock option grants awarded under the U.S.
Stock Plan was estimated as of the date of grant using a
Black-Scholes-Merton option valuation model that uses the following
weighted average assumptions for the six months ended 30 June 2015
and 2014, respectively:
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
--------------------------------- -------------- -------------
Expected option life (in years) - 5.51
Expected stock price volatility - 37.40%
Risk-free interest rate - 1.85%
Expected dividend yield - -
Grant date option fair value - $0.93
Share price at grant date - $2.49
Exercise price - $2.49
As of 19 June 2014, the maximum number of options reserved under
the plan were issued and outstanding and fully vested. The Company
does not intend to make any further grants under the U.S. Stock
Plan.
For the six months ended 30 June 2015, employees exercised
options to purchase and sold 758,150 shares of the Company stock,
resulting in $1.3 million additional share premium for the
period.
Restricted share awards for 118,800 ordinary shares are
outstanding, which were granted under the U.S. Stock Plan to the
non-executive Directors. These ordinary shares vest in three equal
tranches on each of the first three anniversaries of the Company's
admission to the Main Market of the LSE ("Admission") provided that
the non-executive Director in question is still providing services
to the Group on the relevant vesting date.
5. Share capital, share premium and reserves
As noted in note 4(b), various option holders in the U.S. Stock
Plan exercised their options, resulting in additional share premium
of $1.3 million most of which was received by the Company in July
2015. Movements below explain the movements in share capital:
As of the period ended: 30 June 2015 31 December 2014
(unaudited) (audited)
--------------------------------------------------------- ------------- -----------------
Equity
Share capital, GBP0.01 par value, issued and fully paid
215,203,729 and 214,445,579, respectively 3,423 3,411
Share premium 154,762 153,442
Merger reserve 185,544 185,544
Other reserve 31,956 28,753
Translation reserve (73) (61)
Accumulated deficit (139,309) (123,186)
Equity attributable to owners of the Company 236,303 247,903
Non-controlling interests 34,128 31,911
------------- -----------------
Total equity 270,431 279,814
============= =================
6. Non-controlling interests
The following summarises the changes in the non-controlling
ownership interest in subsidiaries by reportable segment:
Early stage Commercial Consolidated
STT Other RFB Other
$'000 $'000 $'000 $'000 $'000
Non-controlling interest
as of
31 December 2014 (audited) 41,101 (2,752) (4,064) (2,374) 31,911
New funds into non-controlling
interest - 25,182 - - 25,182
Share of comprehensive
loss (4,258) (2,872) (1,132) (383) (8,645)
Effect of change in Company's
ownership interest 446 (14,810) 42 2 (14,320)
Non-controlling interest
as of
30 June 2015 (unaudited) 37,289 4,748 (5,154) (2,755) 34,128
======= ======== ======= ======= ============
In April 2015, SciFluor Life Sciences, LLC completed a $30.0
million financing round for 3,136,588 Series A preferred shares, of
which $25.2 million came from existing investors of the Group and
the remainder was provided by Allied Minds.
7. Related party transactions
a) Key management personnel compensation
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
$'000 $'000
------------- -------------
Short-term employee benefits 2,394 1,198
Share-based payments 1,708 1,154
Total 4,102 2,352
============= =============
Compensation of the Group's key management personnel includes
salaries, health care and other non-cash benefits. Share-based
payments are subject to vesting terms over future periods.
b) Key management personnel transactions
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
$'000 $'000
------------- -------------
Non-executive Directors' fees 147 64
Non-executive Directors' share-based payments 225 295
Total 372 359
============= =============
Executive management and Directors of the Company control 12.6%
(FY14: 12.7%) of the voting shares of the Company as of 30 June
2015.
The Group has not engaged in any other transactions with key
management personnel.
c) Other related party transactions
Condensed Consolidated Statement of Comprehensive Loss
For the six months ended: 30 June 2015 30 June 2014
(unaudited) (unaudited)
$'000 $'000
------------- -------------
Purchase of goods
Equity-accounted investee 1,200 692
Condensed Consolidated Statement of Financial Position
As of the period ended: 30 June 2015 31 Dec 2014
(unaudited) (audited)
$'000 $'000
------------- ------------
Purchase of goods outstanding balance
Equity-accounted investee 171 33
8. Acquisition of trade and assets
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