Company Announcements

Financial results for the 12 months ended 30 April 2021 and Operational Update

Oxford, U.K. 01 October 2021: Sensyne Health plc (LSE: SENS) ("Sensyne" or the "Company" or the "Group"), the ethical clinical AI company, today announces its audited financial results for the 12 months ended 30 April 2021.

Lord (Paul) Drayson PhD, CEO of Sensyne Health, commented:

"Despite some significant headwinds and an increasingly competitive market environment, Sensyne delivered strong growth over the past year. Our business model for the application of ethical AI to the analysis of de-identified and anonymised patient data resonated with healthcare systems and the life sciences industry in both the UK and US, growing our patient dataset and revenues significantly."

Operational highlights:

·    Increased patient records to 8.9 million by 30 April 2021 (2.8 million at 30 April 2020) through signing of five new Strategic Research Agreements ("SRAs") in the UK.

·    Entered into a strategic collaboration with Phesi, Inc. ("Phesi"), a US-based specialist clinical trials data company that provides access to clinical trial patient records to enhance offering to pharmaceutical and biotechnology clients.

·    Launched MagnifEye™, a new software application using deep machine learning AI to automate the accurate reading of lateral flow diagnostic tests and signed an exclusive licensing deal with Excalibur Healthcare Services for the use of MagnifEye with lateral flow diagnostic tests.

·    Collaboration agreement with Alexion to study the prevalence and outcomes of patients in certain disease areas.

·    Research collaboration with Bristol Myers Squibb to apply machine learning for rare blood disease research.

·    Collaboration agreement with the University of Oxford to provide software for remote symptom data collection and analytics for a Phase 2 clinical trial in care homes.

·    Strategic partnership with Microsoft and co-development of cloud and machine learning capabilities to help improve, augment, and reduce the cost of patient care.

Post-Period Highlights:

·    Launched SENSIGHT platform to support rapid interrogation of the real-world patient database and industrialisation of our offering to life science companies.

·    Signed first three SRAs in the US, providing access to 13.4 million patient records and an SRA with Great Ormond Street Hospital for Children ("GOSH") to increase total patient records to 22.5 million

·    Expanded collaboration with Phesi, Sensyne now has access to Phesi dataset of approximately 42 million clinical trials patient records.

·    SRA with GOSH to improve paediatric clinical outcomes, and accelerate research into new medicines to find new and better ways to treat rare and complex childhood diseases.

·    Agreement with University of Oxford to conduct a multi-omics drug discovery research project in asthma.

Financial Highlights:

·    Successfully completed a £27.5 million fundraise in January 2021 by way of a placing, subscription and open offer to support industrialisation of the Company's data analytics capability, and invest $10 million into Phesi as part of strategic collaboration.

·    Total revenues of £9.1m for the year ended 30 April 2021 (2020: £2.1m).

·    Total research and development expenditure of £15.1m for the year ended 30 April 2021 (2020: £11.4m).

·    Adjusted EBITDA losses of £19.9m for the year ended 30 April 2021 (2020: £16.0m).

·    Operating loss of £27.9m for the year ended 30 April 2021 (2020: £22.4m).

·    Cash and cash equivalents of £23.6m as at 30 April 2021 (2020: £31.7m).

Analyst and Investor webinar today

Lord (Paul) Drayson, Chief Executive Officer, and Richard Pye, Chief Financial Officer, will present the financial results for the year ended 30 April 2021 for analysts and investors today via a webinar at 13:00 BST with a Q&A session. For more details please contact cscsensynehealth@consilium-comms.com at Consilium Strategic Communications.

A replay of today's webinar and the presentation slides will be available on the investor section of Sensyne Health's website after the event at https://www.sensynehealth.com/investors/investor-hub. 

For more information please contact:

About Sensyne Health

Sensyne Health plc (LSE: SENS) is a clinical artificial intelligence company operating a unique business model - a for-profit plc making a positive social impact, sharing the financial returns it makes with health systems.  The company applies clinical AI in the healthcare and life science industries. In healthcare, Sensyne delivers remote patient monitoring and real-time decision-making systems for healthcare organisations and their patients. In life sciences, Sensyne analyses large complex anonymized data sets to help life sciences companies accelerate the development of new medicines.

Sensyne Health is listed on the AIM Market of the London Stock Exchange (SENS.L).

Chairman's statement

This Annual Report covers a difficult year. We entered the 2021 financial year in the sensitive business of healthcare data with a pioneering and ethical business model hampered by a diminished Board, an overhang on the shares remaining from the collapse of the Woodford fund, well-publicised issues of corporate governance and an incomplete Senior Management Team, whilst dealing with the consequences of the COVID-19 pandemic. A year later we have addressed these issues and emerged much stronger and more optimistic than many companies faced with the challenges of the pandemic alone.

The Board has overseen the successful and effective implementation of recommendations from a board effectiveness review conducted by A&O Consulting, a restructuring of the business and the appointments of a new General Counsel, Chief Financial Officer, Chief People Officer, Chief Scientific Officer and North American President. Simultaneously, we have recruited four new Independent Non-Executive Directors to our Board with relevant depth and breadth of experience in healthcare, regulation and managing or advising technically focused and fast-growing organisations.

The Board has also introduced processes to safeguard the health and wellbeing of Sensyne's committed staff. We have introduced an occupational health capability and trained almost 10% of our colleagues in mental health first aid. The pandemic accelerated a remote working policy that has ensured business continuity and seamless communication with our clients. The success of this has encouraged us to make this the default operating model for the organisation.

The Board's Committees have worked effectively throughout the year. The Audit and Risk Committee has worked with management to ensure a smooth handover to a new external auditor and has been pleased to see continued developments in risk management through a new Risk Management and Compliance Board.

The Remuneration Committee, consisting only of Independent Non-Executive Directors, has developed a remuneration policy in line with the Company's strategic objectives, specifically seeking to attract, retain and appropriately motivate the highest quality executives while ensuring that remuneration packages and potential incentive outcomes are appropriate and proportionate for the size and complexity of our business, are market competitive and are aligned across the whole workforce.

Sensyne has long had a Scientific Advisory Board, but this year we have introduced a Business Advisory Board and an NHS Partnership Board. The latter is constituted of board-level executives from our partner NHS Trusts to ensure that Sensyne continues to deliver value for the NHS. Through our Chief Medical Officer, we are establishing a similar group of NHS Medical Directors and a Patient Advisory Group. These partnerships are essential for ensuring trust between Sensyne, the NHS and patients.

As a consequence of these and other initiatives we have seen a period of financial growth and the successful delivery of key commercial and operational milestones powered by very significant growth in our diverse patient dataset.

We are a British company listed on the AIM segment of the London Stock Exchange, committed to the values of the NHS and determined to facilitate the development of new interventions and treatments to improve outcomes for patients. Since our flotation on AIM, we have witnessed huge growth in the global digital healthcare industry which is drawing high levels of attention and capital. It is clear that if we are to become a global leader in clinical AI we must supplement our organic growth and achieve greater scale through M&A and accessing deeper pools of healthcare and growth-oriented capital.

The Board believes that with our unparalleled patient data set and the recently launched SENSIGHT platform, Sensyne is now poised to become a global leader in one of the fastest growing segments in healthcare technology.

I very much look forward to supporting Sensyne's dedicated team in building a trusted, connected data community for improving patient outcomes, healthcare delivery and life sciences research with scale and impact, while remaining committed to our ethical principles.

Sir Bruce Keogh

Independent Non-Executive Chairman

Chief Executive Officer's statement

Despite some significant headwinds and an increasingly competitive market environment, Sensyne delivered strong growth over the past year. Our business model for the application of ethical AI to the analysis of de-identified and anonymised patient data resonated with healthcare systems and the life sciences industry in both the UK and US, growing our patient dataset and revenues significantly. The capital raised early in 2021 enabled us to secure a strategic collaboration with Phesi, Inc., ("Phesi") to extend our data coverage to include clinical trials data and to develop and launch the SENSIGHT analytics platform. The Company is well positioned to achieve its ambition over the next three years of being the leader in the ethical application of AI to patient data and deliver on its mission to improve patient care and accelerate the development of new medicines.

Patient data strategy

We grew our database of de-identified and anonymised electronic patient records from 2.8 million at the beginning of the year to 22.5 million as of September 2021, and we are on track to achieve our recently set goal of having 100 million patient records in our databases by December 2024.

We were delighted to sign a data access agreement in NHS Scotland with the NHS Greater Glasgow and Clyde board in addition to signing five new Strategic Research Agreements (SRAs) across NHS England in the period, with Milton Keynes University Hospital and the Somerset, Hampshire, Royal Wolverhampton, and Royal Devon and Exeter NHS Trusts joining our network of NHS Trust relationships. Since the financial year end, we also signed an SRA with Great Ormond Street Hospital for Children NHS Foundation Trust bringing our total to 9.1 million patient records in the UK database. Our work over the past year to apply the Sensyne model in the US has also been successful as, since May 2021, we signed our first three SRAs with St. Luke's University Health Network, the Colorado Center for Personalized Medicine and with Sentara Healthcare in Virginia and North Carolina, together providing access to 13.4 million patient records in the US.

The combined dataset comprising high quality, deep, longitudinal sets of structured de-identified and anonymised data covering 22.5 million patient records is a highly attractive research asset for healthcare and life science organisations seeking to use real-world data to improve care and to develop new products.

Life Sciences activities

Sensyne continued to build its portfolio of commercial agreements with pharmaceutical companies during the year. Firstly, the Company signed an agreement with Alexion to study the prevalence of certain undisclosed diseases in patient populations and the outcomes of patients treated for those conditions. Secondly, we signed an agreement with Bristol Myers Squibb to apply our proprietary machine learning technology to conduct research into certain rare blood diseases. The two new agreements bring the total of pharmaceutical collaborations to four, including Bayer and Roche, providing further validation of our partnership business model whereby Sensyne acts as the "docking station" for the analysis of de-identified and anonymised patient data on behalf of its commercial pharmaceutical partners under strict information governance controls.

In January 2021, we entered into an exclusive strategic collaboration with the US based private company Phesi, to provide a combined offering of clinical trial data and real-world data in synthetic clinical trial arms and clinical decision support tools. The transaction with Phesi provides Sensyne with the benefit of a different type of data set: anonymised global clinical trials data and clinical investigator site information. Phesi has curated a large and highly structured clinical trial database of approximately 13.5 million as at January 2021 that has since grown to approximately 42 million patient records more recently. In May 2021 the first commercial agreement as part of the strategic collaboration was signed with a leading pharmaceutical company with an additional agreement anticipated during the current financial year.

Sensyne's new strategic partnership with Microsoft in health cloud computing further enhanced our ability to develop tools for data analysis at scale and speed and with state-of-the-art data privacy and data security protections. During the year the Company developed SENSIGHT, our new data analytics software platform that we were excited to launch in September 2021. SENSIGHT provides a trusted research environment for pharmaceutical and life science companies to analyse de-identified and anonymised patient data to support all stages of research and development from drug discovery through to clinical trials and market launch. SENSIGHT was developed to speed up our ability to on-board patient data and to scale our revenues by complementing our existing commercial agreements with a Software-as-a-Service (SaaS) subscription offer that makes our platform and tools available to a much wider market.

Healthcare and impact of COVID-19

The COVID-19 pandemic has had a major impact on both the healthcare and life sciences sectors with the additional pressures caused by COVID-19 disrupting care in other areas and leading to delays and cancellation of many clinical development programmes and very rapid increases in demand in certain areas. This affected the development of our SENSE™ clinical algorithm platform. Our ability to engage collaboratively to build algorithms and new software products for the new healthcare customers was hampered and our partners were consequently restricted in making commercial progress, particularly in the US. Following the period end, our Chief Operating Officer, Michael Macdonnell, left the business.

Against this challenging operating environment for the Company, our team responded well. Our data and medical scientists contributed to the fight against COVID-19 by developing software tools to help mitigate the impact of the pandemic. Working closely with clinicians from the University of Oxford, we provided software for remote symptom data collection and analytics for a Phase 2 clinical trial in care homes of the anti-TNF drug adalimumab, to prevent respiratory failure due to COVID-19.

We developed and launched MagnifEye, a new software application which uses AI to automate the accurate reading of lateral flow diagnostic tests, with a first application to COVID-19 antigen testing. MagnifEye was exclusively licensed to Excalibur Healthcare Services in February for use with lateral flow diagnostic tests. The UK Department of Health and Social Care (DHSC) also signed an agreement with Sensyne to pilot the MagnifEye technology for use with COVID-19 lateral flow diagnostic tests as part of its national testing programme. MagnifEye was granted Authorisation of Special Use by the UK's Medicines and Healthcare products Regulatory Agency (MHRA) for use with certain COVID-19 lateral flow diagnostic tests.

The Company worked in partnership with the Chelsea and Westminster Hospital NHS Foundation Trust to develop and deploy SYNE-COV™, a clinical algorithm to provide real-time clinical decision and operational support in the management of patients with COVID-19 infection. It is the first algorithm generated from our SENSE platform to exemplify the potential of this clinical algorithm engine. The Company also received regulatory approval for use in the UK for the SYNE-COV machine learning algorithm for COVID-19 risk prediction. While the development of the SENSE platform was affected by the pandemic, post the period under review Sensyne entered into a collaboration with Sentara Healthcare to develop new clinical algorithms for chronic kidney disease and congestive heart failure.

In December 2020, we launched in the US our GDm-Health™ product for the management of diabetes in pregnancy and launched in the UK our DBm-Health™ product for people with or at risk of diabetes to enable them and their physicians to monitor and record their blood glucose levels. With the uptake of GDm-Health in the US having been slower than expected due to the impact of the pandemic on US healthcare systems and the competitive market environment, we are exploring other partnership opportunities to support use of the software solution in the US market.

Current trading and outlook

Sensyne has a unique opportunity to capitalise on the value of deep, longitudinal patient data to generate valuable insights for the life sciences and healthcare sectors, and, most importantly, support better care for patients. 

During the first part of the current financial year, the Company has strengthened its business development activities and has created a commercial pipeline of depth that is anticipated to generate commercial agreements over the remainder of the current financial year and beyond. The pipeline contains an increasingly diverse range of pharmaceutical, biotechnology and contract research organisations around the world seeking to access the Company's AI and ML capabilities. The recent launch of the SENSIGHT platform is expected to have a significant impact on the efficiency of our business development activities.

Trading during the first half of the current financial year has, however, been slower than expected for two main reasons. Firstly, due to continuing policy uncertainty around the use of mass testing for COVID-19 that has slowed the public and private sector adoption of the MagnifEye technology. Secondly, the Company has been focused on the conversion of a small number of contracts with life sciences companies which remain under negotiation (these have material upfront contract values, but are harder to predict by their nature), as well as the development and launch of the SENSIGHT platform.  First half revenues for the current financial year are expected to be below the £2.1 million achieved in the equivalent six-month period of the financial year ended 30 April 2021.

The business however remains confident of strong revenue growth over the full financial year due to the depth and breadth of opportunity of the business development pipeline. With over 25 opportunities in the pipeline with life science customers that have potential contract value (capable of revenue recognition in the 2022 financial year) in excess of current market expectations, there is substantial scope over the remainder of the current financial year to meet such expectations. The Company recognises there is much to deliver in the second half, remains confident of the opportunity and looks forward to providing further updates in due course.

Sensyne's progress over the past year, amid the unprecedented challenges posed by COVID-19, could not have been achieved without the hard work and dedication of our highly dedicated and talented staff and that of our colleagues in the NHS Trusts and US healthcare providers with whom we work. I am enormously grateful to all of them for their hard work, perseverance and determination which have shone through.

Lord Drayson

Chief Executive Officer

Financial review

Overview

Over the past financial year, the digital healthcare sector has drawn significant levels of attention and capital and we are pleased to see that Sensyne has solidified its position as one of the key players in its industry. With the growth in our patient data records and the development and launch of our SENSIGHT platform we have a strong foundation to make further financial progress in the year ahead.

Revenue

Group revenue for the year ended 30 April 2021 increased by £7.0 million to £9.1 million (2020: £2.1 million).

The strong revenue growth was driven by existing and new agreements with life science companies. This includes £5.1 million being recognised from the MagnifEye AI technology contracts with Excalibur Healthcare Services and the Department for Health and Social Care, and £3.6 million from our clinical development projects with pharmaceutical and biotechnology companies such as Bayer, Alexion, BMS and Roche. Revenues generated from the remote monitoring software product for diabetes in pregnancy, GDm-Health, were £0.2 million (2020: £0.2 million). This was driven by GDm-Health's later and slower than expected US launch as a result of the impact of the pandemic on US healthcare systems, a competitive market environment, and the Company's strategic decision to make its remote monitoring software free to use by the NHS for a 12-month period.

Gross profit

Gross profit for the year ended 30 April 2021 increased by £4.7 million to £5.9 million (2020: £1.2 million) due to the increase in revenues.

Gross margin for the year was 64.9% (2020: 56.4%) with this increase driven by a year-on-year change in sales mix from the development of our MagnifEye technology platform, which was launched in the current year, and the agreements with pharmaceutical and biotech clients, which yield varying margins on fixed fee contracts.

Operating expenses

Operating expenses for the year ended 30 April 2021 increased by £10.3 million to £33.9 million (2020: £23.6 million).

Excluding depreciation, amortisation, impairments and share-based payment charges, operating expenses have increased by £8.4 million since the previous year to £27.0 million (2020: £18.6 million). This is primarily a result of a new investment in our proprietary software product platforms, growing our real-world database and expansion in the US. In helping achieve growth, our average headcount has increased by 64 which has resulted in an additional payroll cost for the year of £6.0 million and hiring cost of £0.7 million during the year.

Research and development

Research and development expenditure increased by £4.9 million to £16.0 million (2020: £11.1 million). This increase was primarily due to new investment into the development of our SENSIGHT and SENSE technology platforms, expansion of our real-world datasets to 8.9 million patient records as of 30 April 2021, and our ongoing investment in existing products including the operational cost of offering GDm-Health and BPm-Health™ free of charge for one year to support the NHS during the COVID-19 pandemic. A further £1.0 million was invested to improve NHS IT infrastructure to the NHS Trust partners as part of our ongoing commitments under the SRAs.

Excluding depreciation and amortisation, research and development costs increased to £11.1 million (2020: £6.9 million) which is mainly due to higher headcount and our investment to improve NHS IT infrastructure and the curation of health data suitable for analysis by machine learning.

Capitalisation of research and development expenditure decreased to £nil during the year (2020: £0.9 million). This decrease was due to the accounting treatment of the investment in the year into the MagnifEye technology platform, which has since been licensed exclusively, perpetually and globally to Excalibur Healthcare Services Limited and expensed in cost of sales; no costs in relation to SENSIGHT were capitalised in the year as the development phase primarily occurred during the current financial year ending 30 April 2022.

Sales and marketing

Sales and marketing expenditure increased by £0.4 million to £1.8 million (2020: £1.4 million), which was due to an increase in headcount.

Other general and administrative expenditure

Underlying administrative expenditure, which includes overheads relating to corporate functions, centrally managed support functions and corporate costs increased by £5.2 million to £15.0 million (2020: £9.8 million). This was mainly driven by an increase in headcount, including the strengthening of the senior management team and increase in board appointments, and higher professional costs to support the ongoing corporate activities of the Group.

Exceptional items of £1.1 million (2020: £1.4 million) relate to professional fees and final payments incurred in the settlement of the legal case with the former Chief Financial Officer.

Adjusted EBITDA

Adjusted EBITDA is stated before interest, taxation, depreciation, amortisation, impairment of intangible assets, impairment of investment accounted for using the equity method, share-based payments and exceptional items.

Adjusted EBITDA losses for the year increased by £3.9 million to £19.9 million (2020: £16.0 million) driven primarily by the increased operating costs described above.

Operating loss

The reported operating loss for the year was £27.9 million (2020: £22.4 million).

The depreciation charge, including right of use assets, increased by £0.2 million to £0.8 million (2020: £0.6 million), driven principally by the additional depreciation following the completion of the fit-out and installation of IT infrastructure at our data centre at our Oxford Science Park leased premises in December 2019.

The amortisation of intangible assets of £4.9 million (2020: £4.2 million) includes £4.0 million (2020: £3.5 million) relating to acquired intangible assets, primarily in respect of the contracts that provide Sensyne with a time-based licence to access de-identified and anonymised patient data under the SRAs and clinical trials data under the Phesi collaboration, and £0.9 million (2020: £0.7 million) relating to other intangible assets, such as acquired and internally developed software.

Share-based payment expenses for the period increased to £0.8 million (2020: £0.2 million) because of the surrendering of options under our Sensyne Health Share Option Plan 2018, which led to an acceleration of the remaining share option value in July 2020. Additional share-based payment expenditure was due to an award of units to Executive Directors and qualifying senior management under the Company's Value Creation Plan, and a grant of share options to certain employees under the Company's Share Option Plan during the year.

Net finance costs

Finance costs for the year of £0.3 million (2020: £0.3 million) primarily relate to interest in respect of our Oxford Science Park lease liabilities.

Finance income of £0.04 million (2020: £0.3 million) relates to bank interest received over its cash balances, and interest on a financing component of a revenue contract as prescribed under IFRS 15 'Revenue from Contracts with Customers'.

Net finance costs have increased to £0.3 million (2020: £0.1 million) due to the decrease in average daily cash balances.

Share of loss of investments accounted for using equity method

The share of loss from investments increased by £0.2 million to £0.3 million (2020: £0.1 million) following a full financial year since investment in the Lab10x joint arrangement. An impairment loss of £0.2 million, as included in operating losses, has been provided for against the carrying value of the investment following a mutual decision to close the fund to future investment.

Taxation

During the year, a claim of £0.9 million (2020: £0.8 million) in relation to claims made under the Small and Medium-sized Enterprise Research and Development Tax Credit programme was included in income tax credit, and £0.1 million (2020: £nil) in relation to claims made under the Research and Development Expenditure Credit programme was recognised and included within other income.

Cash flow

For the year ended 30 April 2021, the Group had net cash outflows of £8.1 million (2020: £17.6 million).

Operating activities

The most significant movement in cash during the year related to net cash flows used in operating activities of £25.1 million (2020: £14.7 million), which tracks the adjusted EBITDA set out above and our management of working capital.

Investing activities

Net cash used in investing activities increased to £8.2 million (2020: £2.7 million), which was driven principally by the Phesi transaction, which comprised of an equity investment at fair value through other comprehensive income of £2.3 million and an acquisition of other intangible assets of £5.6 million that combine for a total of £7.9 million.

Cash invested in Lab10x joint venture has decreased to £nil (2020: £0.6 million) as the participants have jointly agreed to close the fund to future investment as previously stated.

Purchasing of property, plant and equipment decreased to £0.3 million (2020: £1.1 million) following the completion of the fit-out of Oxford Science Park headquarters in the prior year. The balance related to the continued provisioning of IT and home office equipment for the growth in the remote working workforce.

Acquisition of other intangible assets has increased by £4.6 million to £5.6 million (2020: £1.0 million) due to the acquisition of time-based licences to access Phesi's clinical trial data platforms.

Financing activities

Net cash generated in financing activities increased to £25.1 million (2020: £0.2 million outflow) of which £25.5 million (net of expenses of £2.0 million) was from a placing, subscription and open offer of new Ordinary Shares in January 2021. Payments against our Oxford Science Park lease liabilities were £0.4 million (2020: £0.2 million).

Statement of financial position

As of 30 April 2021, cash and cash equivalents held were £23.6 million (2020: £31.7 million).

On 5 January 2021, total proceeds of £27.5 million were raised (before expenses) through a placing, subscription and open offer (the "Transaction") of new Ordinary Shares. Of these gross proceeds, there were approximately £2.0 million in Transaction-related fees and $10 million (£7.7 million including fees) was provided in relation to the equity investment and five-year strategic collaboration with Phesi that became effective on this date.

Other than cash, the largest balance at year end is intangible assets of £25.5 million (2020: £14.9 million). The largest component is the carrying value of our SRAs, which is £19.0 million (2020: £12.8 million).

Our investment in a minority interest in Phesi of £2.3 million (2020: £nil) is included in financial assets at fair value through other comprehensive income, and the accounting of the MagnifEye technology exclusive licence agreement with Excalibur Healthcare Services has resulted in an unbilled receivable of £4.2 million (2020: £nil).

Share capital

On 5 January 2021, the Group issued 30,513,341 new 10 pence nominal value Ordinary Shares at a price of 90 pence per Ordinary Share as part of the Transaction. On 15 April 2021, the Group issued 5,714,284 new Ordinary Shares for a non-cash consideration value of 175 pence per Ordinary Share or a total consideration of £10.0 million in respect to the acquisition and settlement of SRAs with four NHS Trusts.

Headcount

During the period under review, the average monthly number of Group employees, including Executive Directors, increased by 64 to 144 (2020: 80).

Dr Richard Pye

Chief Financial Officer

Notes to the Accounts

Year ended 30 April 2021

1.     Basis of Preparation

The financial information in this preliminary announcement has been extracted from the Group audited financial statements for the year ended 30 April 2021 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group financial statements and this preliminary announcement were approved by the Board of Directors on 30 September 2021.

The auditors have reported on the Group's financial statements for the year ended 30 April 2021 under s495 of the Companies Act 2006. The Auditors' report is unqualified and does not contain a statement under section 498(2) or (3) of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 April 2021 will be filed with the Registrar of Companies following the Company's Annual General Meeting.

The Group's financial statements have been prepared under the historical cost convention in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

The same accounting policies, presentation and computation methods are followed in this preliminary announcement as in the preparation of the Group financial statements. The accounting policies have been applied consistently by the Group year-on-year.

2.     Going concern

Although the Group and the Company has recognised revenue from commercial deals during the year, it is still largely reliant on its cash reserves to fund on-going operations.

The Group made adjusted EBITDA losses for the year ended 30 April 2021 of £19.9m (2020: £16.0m) and had cash balances as of 30 April 2021 of £23.6m (2020: £31.7m) with an underlying cash burn during the year of £8.1m following net proceeds of £25.5m received from a capital fundraise (2020: net cash burn of £17.6m).

In assessing the appropriateness of the going concern assumption, the Board has considered the availability of funding alongside the possible cash requirements of the Group and Company.

We have prepared financial forecasts and cash flows looking beyond 12 months from the date of approval of these financial statements to 31 October 2022 under different scenarios, which we considered an appropriate approach to our assessment and are reasonably possible outcomes.

We have prepared a base case based on our full budgeted growth forecast. Our base case includes the achievement of our expected revenue forecast, expansion, and a continuing investment in our product portfolio. In this scenario, the Group and the Company have adequate resources to meet its liabilities as they fall due for at least 12 months from the date of this report.

However, the Group and Company are subject to a number of risks similar to those of other development stage companies working across the life sciences and healthcare sectors. These risks include, amongst others, generation of revenues from its product portfolio, and risks associated with its research, development activities, and obtaining regulatory approvals, where applicable, of its products. Ultimately, the attainment of profitable operations is dependent on future uncertain events which include our ability to generate a level of revenue, over and above our contracted revenue as at the date of this report, or obtaining other sources of funding, that are required to support the Group's cost structure required to fulfil the Group's commercial and development activities. As such, a downside case financial forecast has been prepared to adjust for these risks and uncertainties as a worst-case scenario.

The downside case is a projection of a severe but plausible scenario where our revenue is significantly risk-adjusted down to contracted revenue and our budgeted costs commensurately reduced by deploying a programme of significant cost mitigation actions, that are within the control of the board, which includes slowing down or minimising certain research and development activities, but only to the extent that these actions do not compromise the viability of the core business.

In the scenario of the Group and the Company not being able to generate any new revenues, we would need to seek alternative sources of funding to the support the Group and the Company through a combination of some, or all, of the following: equity offerings, collaborations, strategic alliances, grants, debt financings, and marketing, distribution of licensing arrangements. Although we consider that there are strong grounds for believing that such funding could be secured, as demonstrated by the successful fund raise in January 2021, there can be no guarantee that would be the case. While the Group and the Company believes it will be able to enter into new commercial agreements to generate new revenues or secure alternative sources of funding within the next 12 months, there can be no assurances that the Group and the Company will be able to do so on a timely basis, or at all. These circumstances mean a material uncertainty exists that may cast significant doubt on the entity's ability to continue as a going concern.

Other licences relate to contracts with third parties that carry certain rights as follows:

·   Strategic Research Agreements (SRAs) with a right to request the use of certain anonymised patient data over their contractual term; 

·   contractual rights linked to the Phesi investment made during the year that provide Sensyne the right to access clinical trials data over its contractual term; and

·   rights to further develop and commercialise healthcare software products.

The Group has capitalised eight SRAs, with remaining useful economic lives of seven years and three months; four years and nine months; four years and six months; four years and seven months; four years and seven months; two years and three months; two years and three months; and one year and one month. Additions of £10,000,000 in the current year were acquired through the issue of shares. At the year-end, the eight SRAs have carrying amounts of £3,625,000, £2,456,000, £2,455,000, £2,455,000, £2,454,000, £2,250,000, £2,250,000 and £1,083,000 respectively.

The Group has capitalised £5,349,000 in the year in respect to the acquisition of the licences to access clinical trials database as included within the strategic alliance agreement that is linked to the equity investment in Phesi. It has a remaining useful economic life of six years and eight months and carrying value at the year-end of £4,992,000.

The development costs are capitalised development costs in relation to our digital health operating system to support our software products that meet the criteria for capitalisation set out in the accounting policies. Amortisation is charged from the month the product goes live.

Patents and trademarks are capitalised legal and application costs for various registrations that the business obtains to protect its intellectual property. Amortisation is charged once the application is granted and secured.

An amount of £97,000 capitalised in the prior year relating to the development of one of our Healthcare products has been impaired as this product has been discontinued from the market. There were no other indications for impairment during the 2021 financial year (2020: £nil).

Material non-cash items

Material non-cash investing and financing activities disclosed include the settlement of acquisition of other intangible assets, namely the acquisition of licences to access data through Strategic Research Agreements with NHS partners, through the issue of shares.

Reconciliation of liabilities arising from financing activities

The changes in the Group's liabilities from financing activities can be classified as follows:

6. Subsequent events

On 21 May 2021, Sensyne Health plc signed an SRA with St. Luke's University Health Network ("St. Luke's"). Under the terms of the agreement, St. Luke's will receive 115,541 Ordinary Shares in Sensyne Health plc subject to receipt of a Section 593 valuation report by the Company. In addition, St. Luke's will receive 346,621 warrants to subscribe for Ordinary Shares at a subscription price of 10 pence per warrant subject to the achievement of specific performance conditions. From the date of admission to trading on AIM, the new Ordinary Shares will be subject to lock-in and orderly market provisions for 12 months. St. Luke's will receive a royalty on revenues that are generated by Sensyne from the research undertaken under this agreement.

On 24 May 2021, Sensyne Health plc signed an SRA with the Colorado Center for Personalized Medicine (CCPM). Under the terms of the agreement, should the medical research undertaken by Sensyne using CCPM's data lead to medical discoveries commercialised by Sensyne, CCPM will share a proportion of Sensyne's revenues generated from that research.

On 28 May 2021, Sensyne Health plc announced the grant of options over 829,207 new Ordinary Shares to certain employees under the Sensyne Health Share Option Plan 2018.

On 18 June 2021, Sensyne Health plc announced the appointment of Dr Ian Hudson to the Board as Independent Non-Executive Director with effect from 28 June 2021.

On 30 July 2021, Dr Vishal Gulati resigned from the Board of Directors of the Company. Dr Vishal Gulati will act as an adviser to the Company on a part-time consultancy basis.

On 19 August 2021, Sensyne Health plc signed an SRA with Sentara Healthcare. Under the terms of the agreement, Sentara Healthcare will receive 121,084 Ordinary Shares in Sensyne Health plc subject to receipt of a Section 593 valuation report by the Company. In addition, Sentara Healthcare will receive 363,249,621 warrants to subscribe for Ordinary Shares at a subscription price of 10 pence per warrant subject to the achievement of specific performance conditions. From the date of admission to trading, the new Ordinary Shares will be subject to lock-in and orderly market provisions for 12 months. Sentara will share a proportion of Sensyne's revenues generated from the research undertaken under this agreement.

On 2 September 2021, Sensyne Health plc signed an SRA with Great Ormond Street Hospital for Children NHS Foundation Trust ("GOSH"). Under the terms of the agreement, GOSH will receive 1,428,571 Ordinary Shares in Sensyne Health plc subject to receipt of a Section 593 valuation report by the Company. GOSH is also eligible to receive a further 1,428,570 Ordinary Shares, payable in three tranches that are each dependent on the achievement of specific discovery research project milestones. GOSH will also receive from Sensyne an investment of up to £250,000 per year over the five-year term of the contract for specific investments in information technology to enable the curation and analysis of data under the SRA. GOSH will also receive a royalty on revenues that are generated by Sensyne from the research undertaken under the SRA. GOSH has entered into a lock-up agreement whereby it has agreed not to dispose of any shares for a period of two years from the date the shares are issued.