Sensyne Health Interim Results

Oxford, UK; 21 January 2021: Sensyne Health plc (LSE: SENS) (“Sensyne” or the “Company” or the “Group”), the UK Clinical AI company, today announces its Interim Results for the six months ended 31 October 2020.

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

“I am pleased to report that Sensyne has made significant commercial progress over the past six months and has achieved several key milestones in the development of its research partnerships with NHS Trusts and in its work for leading pharmaceutical companies applying Clinical AI to improve patient care and accelerate life sciences research. I am particularly pleased with the results we have been able to achieve during the COVID-19 pandemic.

“In January we completed a £27.5 million fund-raising, signed an important strategic collaboration with Phesi Inc and in December launched our GDm-Health product in the United States. We have made a strong start to the New Year and are well placed to build on this momentum in 2021.” 

OPERATING HIGHLIGHTS (INCLUDING POST PERIOD END)

Growth of anonymised NHS patient dataset to 6.8m records to achieve IPO target

• Four new strategic research agreements with Somerset, Hampshire, Milton Keynes University and Royal Wolverhampton NHS Trusts signed between October 2020 and January 2021 to provide access to an aggregate of 2.95m records
• Data access agreement with NHS Greater Glasgow and Clyde NHS Trust to provide access to 1.1m anonymised patient datasets in three specific disease areas including cardiovascular disease signed in October 2020

Discovery Sciences: New commercial agreements expand relationships with pharmaceutical industry

• Collaboration agreement with Alexion to study the prevalence and outcomes of patients in certain disease areas signed in May 2020
• Research collaboration signed with Bristol Myers Squibb in October 2020

Software Products: Clinical algorithm platform and remote monitoring products

• Launch of SENSE™ clinical algorithm platform to provide real-time clinical decision and operational support launched in September 2020
• First algorithm to provide personalised care for COVID-19 patients developed in partnership with the Chelsea and Westminster Hospital NHS Foundation Trust
• Launch in the US of GDm-Health™ for diabetes in pregnancy in December 2020
• Launch of MagnifEye™, a new software application using deep machine learning AI to automate the accurate reading of lateral flow diagnostic tests launched in January 2021

Planned scaling and industrialisation of data platforms

• Targeting an expansion of the NHS patient datasets to c.12.5m records by the end of December 2022 to provide critical mass to target post approval Phase 4 clinical trials
• Development of SENSIGHT™, a real-world-data analytics platform for the support of R&D from drug discovery through to clinical trials, post market approval and drug launch
• Rapid expansion of SENSE platform to expand offering to global healthcare providers and payers

Phesi Strategic Collaboration

• Strategic collaboration with Phesi, Inc., a US-based specialist clinical trials data company, commenced on 5 January 2021 (following the close of fundraising, see Financial highlights)
• Provides access to c.13.5m patient records from c.320,000 clinical trials completed since 2007 to create an enhanced offering to pharmaceutical and biotechnology clients including improving the design and efficiency of clinical programmes
• Initial five-year term for the collaboration with Sensyne making a $10m equity investment into Phesi with these proceeds contractually supporting collaboration activities and enhancing their clinical trials data analytics offering

Strengthening of Board and Senior Management team

• Several key appointments to strengthen the senior management team including Michael Macdonnell as Chief Operating Officer, Derek Baird as President of North America, Laura Hillier as General Counsel and Company Secretary and Dr Richard Pye as Chief Investment Officer
• Mr Tony Bourne to become a Non-Executive Director commencing 31 January 2021

FINANCIAL HIGHLIGHTS

·Successfully completed a £27.5 million fundraise post period end in January 2021 that is expected to enable the Group to industrialise its data analytics capability, enter into an exclusive strategic collaboration with Phesi and strengthen its balance sheet for future partnering discussions

·Total revenues of £2.3m for the six months ended 31 October 2020 (HY20: £0.4m)

·Total research and development expenditure of £7.7m, of which £0.3m was capitalised for the six months ended 31 October 2020 (HY20: £5.4m, of which £0.2m was capitalised)

·Adjusted operating loss from continuing operations of £9.5m for the six months ended 31 October 2020 (HY20: £7.4m)

·Cash used in operations of £12.5m for the six months ended 31 October 2020  (HY20: £7.7m)

·Operating loss of £13.6m for the six months ended 31 October 2020 (HY20: £9.8m)

·Cash and cash equivalents of £18.6m at 31 October 2020 (FY20: £31.7m)

Analyst and Investor briefing

Management will present the interim results for analysts and investors today at 13.00 GMT.  There will be a simultaneous live conference call and webcast. For more details please contact radu@consilium-comms.com at Consilium Strategic Communications.

A replay of today’s webcast of the meeting 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.

-ENDS-

For more information please contact:

About Sensyne Health
Sensyne Health plc is a clinical AI company that works in partnership with the NHS to improve patient care and accelerate the discovery and development of new medicines. Sensyne Health is listed on the AIM Market of the London Stock Exchange (SENS.L).

For more information, please visit: www.sensynehealth.com

Operating Review

Overview
The half year and post period has been one of strong momentum across the business as Sensyne delivered on key operational and corporate milestones while expanding technology innovation and diversifying the therapeutic areas we work in. This progress enabled completion in December 2020 of a £27.5 million fundraise that will enable us to implement our plans for accelerating the growth and development of the business through the industrialisation and scaling of our data platforms to enhance our offering to the healthcare and life science industries. We were pleased by the level of support from new and existing institutional shareholders in the placing and our existing retail shareholders in the over-subscribed open offer.

Sensyne operates two business units. Sensyne’s Discovery Sciences division uses clinical AI to optimise clinical trials and undertake research and development of new medicines through the analysis of its growing real-world patient data. The Software Products division focuses on providing clinical AI tools and patient monitoring software to healthcare providers.

Underpinning these business units is our unique partnership with the NHS whereby the Group has access on an anonymised basis to a growing database of unique, longitudinal patient records. Our ethical and transparent partnership model sees the NHS Trust that partner with Sensyne receiving an equity stake in the Group and a royalty on revenues that are generated from research undertaken under the strategic research agreements (“SRAs”).  The progress made during the period shows this business model is working and is demonstrating its potential benefit to global health systems, clinicians and patients, along with the life science industry.  

The COVID-19 pandemic and associated disruption to the provision of healthcare and undertaking of medical research and development have accelerated the interest in and adoption of digital medicine towards improvement in healthcare outcomes and research and development.

Expansion of anonymised patient records to achieve IPO target of 5 million
In November 2020, Sensyne achieved its IPO target of procuring an anonymised patient dataset of 5 million records. This significant milestone was achieved with the signing of two new SRAs with Milton Keynes University Hospital NHS Foundation Trust and Somerset NHS Foundation Trust in October and November respectively, plus in October entering into a data sharing agreement with NHS Greater Glasgow and Clyde that provided access to 1.1 million patient records across three therapeutic areas including cardiovascular disease. Sensyne has since signed a further two SRAs with Hampshire Hospitals NHS Foundation Trust in November 2020 and Royal Wolverhampton Trust in January 2021 to increase the size of our anonymised patents data sets to 6.8 million records. This is expected to further enable Sensyne to apply clinical artificial intelligence research on anonymised patient data to improve patient care in an ethical way and accelerate research into new medicines.

The growing data set has a ‘multiplier effect’ both in driving additional pharmaceutical partners to enter into commercial research agreements with Sensyne, and in attracting further NHS Trusts and health systems to enter into additional SRAs. 

A key part of our industrialisation plans is the further growth in our real-world anonymised patient data sets. Sensyne is aiming to expand its NHS records to approximately 12.5 million unique patients by the end of December 2022. This enlarged figure represents approximately 20% of the UK population and is expected to provide the critical mass to expand its clinical tools offering to the life science industry to target involvement in post-approval Phase 4 clinical trials that can support reimbursement strategies, along with enhancing research into rare diseases. Sensyne is currently in discussions with multiple NHS Trusts who have access to an aggregate of c.27 million individual patient records.

Additionally, the Group is targeting the procurement of specialist datasets totalling approximately 5 million records by the end of December 2022. These additional records are intended to target both specific therapeutic areas while providing geographical diversity to support the regulatory requirements in different jurisdictions.

Discovery Sciences activity

Life Science Partnerships
Within Sensyne’s Discovery Science division, the growth of the anonymised patient data will potentially enable Sensyne to cover a broader range of research across different clinical areas, deliver powerful data insights to speed up the development of novel approaches to new medicines, and develop AI-powered clinical decision support tools to improve patient care.

Sensyne has continued to expand its commercial research partnerships with the pharmaceutical industry. In October 2020, we signed an agreement with Bristol Myers Squibb who became the fourth major industry partner we are working with. Our existing commercial research agreements with pharmaceutical partners either continue to progress well or have finished. There are a broad range of pharmaceutical partnership opportunities in the pipeline, with active discussions taking place, particularly around the use of Sensyne’s technology for clinical development and market access. Additionally there has been strong early interest and engagement with Phesi’s pharmaceutical clients on the joint offering and more detailed conversations are progressing well.

Development of SENSIGHT™
A key to being able to accelerate our future growth by industrialising our data platform is the development of SENSIGHT for the life science industry. SENSIGHT is a real-world data analytics platform that can integrate anonymised patient data sets across a large number of sources including NHS Trusts to provide access to fully anonymised data to support all stages of research and development from drug discovery through to clinical trials and post market approval and drug launch.   

SENSIGHT will standardise the anonymised patient data sets which Sensyne has access to, enabling the Group to accelerate the generation of insights, enhance existing products and offer new ones to the life science industry. For example, SENSIGHT will be able to support the development of ‘synthetic control arms’ in Phase 2 and Phase 3 clinical trials and drug target identification across a range of therapeutic areas. A crucial feature of SENSIGHT will be the significant increase in speed of interrogating these data to generate outputs for pharmaceutical clients. 

Strategic collaboration with Phesi, Inc.
In January 2021, we entered into an exclusive strategic collaboration with the US based private company Phesi, Inc. (“Phesi”) to provide a combined offering of clinical trial data and real-world data in synthetic clinical trial arms and clinical decision support tools. This strategic collaboration will also enhance Sensyne’s strategy of industrialising and scaling its SENSIGHT platform as Phesi has done with its own platform. 

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 patient records from an estimated 320,000 global clinical trials that have completed since 2007. Phesi has developed a clinical trial analytics platform, including a clinical trial investigator site management tool called ClinSite, which is used to improve the design and efficiency of any clinical programme across all phases of development and multiple therapeutic areas. 

A combination of the development of the SENSIGHT platform to develop new offerings for the pharmaceutical industry, including synthetic clinical trial control arms and clinical decision support tools and the collaboration with Phesi where joint discussions are taking place with existing and new pharmaceutical clients, is expected to drive a pipeline of future pharmaceutical commercial research collaborations.

The initial term of the exclusive strategic collaboration will be five years with an automatic renewal for successive two-year periods unless terminated. Joint projects with pharmaceutical company clients will be based on a revenue share model. Sensyne has made a $10 million investment into Phesi and received 10 per cent of Phesi’s fully-diluted share capital. The investment into Phesi will be used to enhance the Phesi clinical trials data analytics offering and activities that are connected to the strategic collaboration. Lord Drayson will join the Phesi board of directors.

Software Products activity

Sensyne’s Software Product division achieved a number of milestones during the period under review as the Group sought to support health systems’ response to the COVID-19 pandemic that has resulted in increased demand for the adoption of digital health solutions.

Launch of SENSE™­ Platform
In September 2020, Sensyne announced the UK launch of ‘SENSE’, a clinical algorithm engine that emerged as a new part of the Software Products business, that was created in partnership with Microsoft to provide a real-time decision support service. SENSE generates AI algorithms, called SYNEs, for real-time decision support across multiple medical conditions. Developed by analysing large, anonymised patient datasets, SYNEs provide transparent, predictive insights that improve patient care and operational productivity, particularly in the context of healthcare workforce shortages.

The first SYNE developed was SYNE-COV™ that aims to provide more personalised care for patients with COVID-19 by integrating data into an existing real-time dashboard allowing clinicians to augment their clinical decisions with near real-time risk predictions pertaining to ICU admission, mechanical ventilation and in-hospital mortality.

SYNE-COV was co-developed by Sensyne and critical care clinicians at the Chelsea and Westminster Hospital through the analysis of real-world data collected in their A&E department. Sensyne is now, under MHRA directions, organising a prospective Clinical Investigation to provide further clinical evidence which will support CE marking of the device.

This is a timely example of the real-time predictions that SENSE can provide to clinicians and operational managers.  Sensyne believes that the potential commercial opportunity for SENSE is substantial. As part of the Group’s industrialisation plans, it will be developing SENSE through the rapid expansion of the platform, whilst simultaneously benefiting from the increasing size of Sensyne’s real-world patient datasets. 

Remote monitoring products
The pandemic has also accentuated demand for Sensyne’s remote monitoring products. Customers for GDm-Healthä (for diabetes in pregnancy) have grown and, as at 31 December 2020, it is now in use in over 50 of the NHS Trusts in England and has helped to care for over 16,000 babies born to diabetic mothers since its launch in November 2018. In December 2020, Sensyne launched GDm-Health in the US following an agreement with Cognizant to support the sale of digital health software products in this territory. Consequently, Sensyne is in a number of discussions with health systems and insurance companies introduced by Cognizant.  Additionally, following the appointment of Derek Baird as President North America in November 2020 and the establishment of a US office, business development for GDm-Health in the US is being directly undertaken by Sensyne to complement Cognizant’s activity.       

In response to demand from our clinical partners, we also launched BPm-Health™ in May 2020, a remote monitoring system in the UK for the management of blood pressure in pregnancy, while DBm-Health™, a new software product for people with or at risk of diabetes was launched in August 2020.

In addition, Sensyne contributed to the UK’s pandemic response by launching CVm-Healthä a remote monitoring system for COVID-19.  This technology will support remote symptom data collection and analytics for a University of Oxford Phase 2 clinical trial in care homes of adalimumab to prevent respiratory failure due to COVID-19. The app is also being used by the University of Oxford in its FACTS clinical study evaluating the feasibility and acceptability of new point-of-care tests for regular asymptomatic COVID-19 testing amongst the student body. 

Corporate activity
The senior management team was strengthened during the period following a number of new appointments that bring additional experience and expertise. These included the appointment of Michael Macdonnell, former director of Global Development at Google Health, as Chief Operating Officer who brings NHS and global technology company experience; Laura Hillier as General Counsel and Company Secretary who brings significant experience of pharma and corporate governance; Derek Baird as President of North America to lead the expansion of Sensyne into the United States; and Richard Pye as Chief Investment Officer with corporate finance and investor relations experience in the UK and US.

In December it was announced that Tony Bourne will join the Board as Independent Non-Executive Director and Chair of the Remuneration Committee from 31 January 2021.

Impact of COVID-19
We continue to monitor and respond to the rapidly changing global situation caused by the COVID-19 pandemic, including guidance and policy changes implemented by governments around the world. We have adapted our business practices to meet the new restrictions and the entire workforce continues to work remotely, but digitally connected which has increased productivity and presented recruitment opportunities. Our senior management team continue to assess the impact of the pandemic on present and future operations.  

The pandemic is accelerating the interest in and adoption of digital medicine in both the healthcare and pharmaceutical sectors to improve healthcare outcomes and support research and development. 

Sensyne has the opportunity to (i) place itself at the forefront of enabling clinicians and other healthcare practitioners to make better decisions with the help of AI-powered tools; and (ii) deploy Clinical AI to discover new medicines, to inform the planning and running of clinical trials and to identify substantial cost and efficiency savings to the wider pharmaceutical industry, while improving the likelihood of new medicines reaching patients.

Summary and Outlook
Sensyne has made significant progress during this period as it seeks to capitalise on its position at the heart of a fundamental shift in the healthcare and life science sectors towards greater use of big data analytics and clinical AI, a shift that has been accelerated by the COVID-19 pandemic. This progress included the significant increase in the size of the anonymised patient database, the number of NHS Trusts working with Sensyne and the global pharmaceutical companies approaching Sensyne to validate the Group’s unique partnership model in clinical AI.

Sensyne plans to build on this progress by industrialising and scaling its datasets to power the SENSIGHT and SENSE platforms, as well as beginning to exploit the benefit of the strategic collaboration with Phesi, as Sensyne seeks to capitalise on the expanding number and range of commercial opportunities ahead of it. We look forward to reporting on our future progress.

Financial review

Revenue

Group revenue for the six months ended 31 October 2020 increased by £1.9m to £2.3m (HY20: £0.4m). The main growth factors are our clinical development projects in the Discovery Sciences segment such as with Bayer, Alexion and Roche. The strong performance of Discovery Sciences represents a change to the expected revenue mix at the beginning of the current financial year and is due to the delays the pandemic has caused to the launch of software products in the US and the Company’s strategic decision to make its software free to use by the NHS for a 12-month period. The Group’s ongoing contracts and business development activities provide confidence in meeting consensus revenue estimates for FY21.

Gross profit

Gross profit for the six months ended 31 October 2020 has increased by £1.1m to £1.3m (HY20: £0.2m) due to the increase in revenues. There was a slight decline in the gross margin to 57.5% (HY20: 62.2%). This is driven by the mix of clinical development services which yield varying margins on fixed fee contracts. 

Operating expenses

Operating expenses for the six months ended 31 October 2020 increased by £4.8m to £14.9m (HY20: £10.1m).

Total research and development expenditure increased by £2.2m to £7.7m, of which £0.3m has been capitalised (HY20: £5.4m, of which £0.2m has been capitalised). This increase was primarily due to the continued investment in new R&D activities alongside ongoing development investment in live products, the operational cost of offering GDm-Heath and BPm-Health free of charge for one year to support the NHS during the COVID-19 pandemic as well an investment to improve NHS IT infrastructure to NHS Trust as part of on our ongoing commitment under SRAs.

Sales and marketing expenditure decreased by £0.1m to £0.6m (HY20: £0.7m). The decrease relates primarily to the impact of COVID-19 on attendance at national and international healthcare events and conferences.

Other general and administrative expenditure increased by £1.7m to £5.9m (HY20: £4.2m).
The increase is driven by the continued investment to support the growth and development of the Group. This has included the strengthening of the senior management team with a number of key appointments being made during the period, alongside the continued use of interim contractors to support the execution of the Group’s strategy across the business.

Exceptional items of £1.0m (HY20: £Nil) relate to professional fees and final payments incurred in the settlement of the legal case with the former CFO.

Adjusted operating loss

Adjusted operating loss is stated before interest, taxation, depreciation, amortisation, share-based payments, share of joint ventures losses and exceptional items.

Adjusted operating loss for the period increased by £2.2m to £9.5m (HY20: £7.4m) driven primarily by the increased costs described above.

Operating loss

The reported operating loss for the period was £13.6m (HY20: £9.8m).

The depreciation charge, including right of use assets, of £0.4m (HY20: £0.2m) increased by £0.2m, driven principally by the additional depreciation of £0.2m (HY20: £Nil) following the completion of the fit out and installation of IT infrastructure of our data centre at our Oxford Science Park leased premises in December 2019.

The amortisation of intangible assets of £2.2m (HY20: £2.0m) includes £1.8m (HY20: £1.8m) relating to acquired intangible assets, primarily the strategic research agreements, and £0.4m (HY20: £0.2m) relating to other intangible assets, primarily acquired and internally developed software.

Share based payment expenses for the period increased to £0.4m (HY20: £0.2m) because of the surrendering of options under our Group Share Option Plan 2018 (‘CSOP 2018’) which led to an acceleration of the remaining share option value in July 2020. A new Group Share Option Plan 2020 has since been introduced to all staff, except for Directors and Senior Management, which includes new terms and conditions.

Net finance costs

Finance costs for the period of £0.2m (HY20: £0.2m) relates to interest in respect of our Oxford Science Park lease liabilities. Finance income of £0.01m (HY20: £0.2m) relates to bank interest received over its cash balances. Net finance costs have increased by £0.2m (HY20: £Nil) due to the decrease in its cash balances and the Bank of England’s cut in the base rates.

Cash flow

The Group had net cash outflows of £13.1m for the six months ended 31 October 2020 (HY20: £8.8m). The most significant movements relate to net cash flows used in operating activities of £12.4m (HY20: £7.5m) driven by the operating loss and a net working capital outflow of £1.9m (HY20: £0.3m).

Cash flows used in investing activities has decreased to £0.4m (HY20: £1.2m). Capital expenditure related primarily to the fit-out costs to provision our growing staff headcount with IT and office equipment to ensure safe remote working following a permanent change in our working arrangements in response to the COVID-19 pandemic. Software products invested a further £0.3m (HY20: £0.2m) in capitalised software development costs. Cash used in investment in Lab10x joint venture has decreased to £Nil (HY20: £0.6m) as the participants have jointly agreed to defer future payments until further notice.

Cash flows used in financing activities which relate to payments against lease liabilities has increased to £0.2m (HY20: £0.1) primarily due to the rent-free period ending in the previous year.

Financial position
As at 31 October 2020, cash and cash equivalents held were £18.6 million (30 April 2020: £31.7 million).

On 5 January 2021, post the period under review, 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, approximately £2.0m were incurred in transaction-related fees and an investment of $10m (£7.7m including fees) was provided in relation to the equity acquisition and five-year strategic collaboration with Phesi, Inc that became effective on this date.

Share capital
On 5 January 2021, post the period under review, the Group issued 30,513,341 new £0.10 ordinary shares at a price of £0.90 per ordinary share as part of the Transaction. Following completion of the Transaction, the number of ordinary shares in issue was 159,084,855.

Independent review report to Sensyne Health Plc

Introduction
We have reviewed the condensed set of financial statements in the half-yearly financial report of Sensyne Health Plc (the ‘company’) for the six months ended 31 October 2020 which comprises the condensed consolidated interim statement of comprehensive income and consolidated interim statement of financial position. We have read the other information contained in the half-yearly financial report, and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors.

As disclosed in the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility
Our responsibility is to express a conclusion to the company on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

The impact of macro-economic uncertainties on our review
Our review of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of macro-economic uncertainties such as COVID-19 and Brexit. All reviews assess and challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the company’s future prospects and performance.

COVID-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the company’s future prospects and performance. However, no review should be expected to predict the unknowable factors or all possible future implications for a company associated with these particular events.

Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

In our evaluation of the directors' conclusions, we considered the risks associated with the company's business, including effects arising from macro-economic uncertainties such as COVID and Brexit, and analysed how those risks might affect the company's financial resources or ability to continue operations over the period of at least twelve months from the date when the financial statements are authorised for issue. In accordance with the above, we have nothing to report in these respects. 

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this review report is not a guarantee that the company will continue in operation.

Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Use of our report
This report is made solely to the company, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company as a body, for our review work, for this report, or for the conclusion we have formed.

Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Reading
20 January 2021

The notes are an integral part of these Condensed Consolidated Interim Financial Statements.

The notes are an integral part of these Condensed Consolidated Interim Financial Statements.

Share premium represents the excess of the issue price over the par value on shares issued less transaction costs arising on the issue.

Other reserves include share option reserve, translation reserve and capital redemption reserve.

The notes are an integral part of these Condensed Consolidated Interim Financial Statements.

The notes are an integral part of these Condensed Consolidated Interim Financial Statements.

Notes to the Condensed Consolidated Interim Financial Information
For the six-month period ended 31 October 2020

1.       Summary of significant accounting policies

General information

Sensyne Health plc (the “Company”) is a public company limited by shares, registered in England and Wales, incorporated and domiciled in the United Kingdom, whose shares are publicly traded on the AIM segment of the London Stock Exchange. The address of its registered office is Schrödinger Building, Heatley Road, Oxford Science Park, Oxford, England OX4 4GE.

The Company and its subsidiary undertakings are referred to in this report as the Group.

The Condensed Consolidated Interim Financial Statements were approved for issue on 20 January 2021.

The financial information for the six months ended 31 October 2020 is unaudited and does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006, but has been reviewed in accordance with ISRE 2410 by the Group’s statutory auditors. The Group's statutory financial statements for the year ended 30 April 2020 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498 of the Companies Act 2006.

Basis of preparation

The Condensed Consolidated Interim Financial Statements for the six months ended 31 October 2020 included in this Interim Report have been prepared in accordance with IAS 34 “Interim Financial Reporting” (IAS 34) as adopted by the European Union and have been prepared on a going concern basis as described further below.

Going concern

The Board has prepared the Condensed Consolidated Interim Financial Information on a going concern basis, which is considered to be appropriate.

In January 2021, the Company completed a Placing, Open Offer and Subscription equity fund raise that led to the receipt of net proceeds of £25.5m after transaction-related fees of approximately £2m.

In assessing the appropriateness of the going concern assumption, the Board has considered the cash requirements of the Group and Company, taking into account but not limited to, the unprecedented circumstances caused by the COVID-19 pandemic and the UK’s departure from the EU on the future viability of the Group for the 15 month period ended 30 April 2022.

The Board have prepared and reviewed detailed financial forecasts (as part of the longer term plan), that have been sensitised, to reflect the plausible downside scenarios caused by the COVID-19 pandemic and UK’s exit from the EU as well as the risks and uncertainties associated with the Group as set out in the Group’s latest Annual Report. These forecasts demonstrate that the Group and Company has sufficient cash runway to meets its obligations as they fall due for a period of at least 12 months from the date of signing this interim report.

As such, the Board are satisfied that the Group and Company has adequate resources to continue to operate for the foreseeable future. For this reason they continue to adopt the going concern basis for preparing the interim financial statements.

Accounting policies

The accounting policies and methods of computation followed in these Condensed Consolidated Interim Financial Statements are the same as applied in the Group's latest annual audited Financial Statements.

Critical accounting judgements and sources of estimation uncertainty

The preparation of Interim Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results might differ from these estimates.

In preparing these condensed interim financial statements, 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 Statements for the year ended 30 April 2020 apart from the additional policy outlined below:

Critical judgement – share based payments
In the period, some employees surrendered their existing share options and were then subsequently granted new options under revised terms and conditions.

The directors of the Group assessed whether or not these events constituted a modification of the existing scheme or a cancellation and re-grant of options under a new scheme. In making their judgement, the directors considered the substance of the underlying transaction and relevant terms and conditions of each scheme. After assessment, the directors concluded that the surrendering of options and subsequent grant of options was a cancellation and a new grant. Therefore under IFRS 2 Share Based Payments the remaining total fair value of the surrendered options was expensed immediately, reflecting an acceleration of the vesting period for those options, and a separate charge accounted for to reflect a new scheme.

2.       Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity owners of the Company by the weighted average number of Ordinary Shares in issue during the period.

As net losses were recorded in the six months ended 31 October 2020 and in each of the comparative periods, the dilutive potential shares are anti-dilutive and therefore were excluded from the loss per share calculation.

3.       Segmental operations

In accordance with IFRS 8, the Group’s operating segments are based on the information reviewed by the Board of Directors, which represents the chief operating decision maker who is responsible for allocating resources and assessing performance. The business comprises two operating segments:

• Software Products - product licensing revenue earned from licences granted under licensing agreements, including upfront payments.
• Discovery Sciences - consultant services revenue earned through contracts with pharmaceutical companies to develop Clinical AI technology.

Costs shared between the segments are not allocated to individual segments for decision making purposes. These are disclosed under the column headed “Corporate & Support”.

Six months ended 31 October 2020

Revenue is analysed geographically by region as follows:

The Group has applied the European Securities and Markets Authority (ESMA) “Guidelines on Alternative Performance Measures” in these annual results. In the context of these results, an alternative performance measure (APM) is a financial measure of historical or future financial performance, position or cash flows of the Group which is not a measure defined or specified in IFRS.

Six months ended 31 October 2019

Year ended 30 April 2020

4.       Exceptional items

In the six months to 31 October 2020 professional fees were incurred in respect to the legal claim started in the previous financial year.

During the year ended 30 April 2020 a legal claim was made by the former CFO, Lorimer Headley.  Professional fees were incurred by the Company to represent the Company and its Directors and to conduct an independent internal investigation in respect to claims made against the Company and its Directors. In August 2020, the Company agreed to make a payment as compensation for loss of office of £150,000 (plus £17,000 in employers national insurance contributions) and a contribution of £200,000 towards legal fees. As part of that settlement the Board has also agreed to provide outplacement assistance up to a value of £30,000.

There were no exceptional costs in the six months to 31 October 2019.

5.    Share Capital

6.         Related parties

Included within trade and other payables is a balance due to Drayson Technologies (Europe) Limited of £1,000 (31 October 2019: £165,000; 30 April 2020: £nil). This company was demerged from the Group during the year ended 30 April 2019 and is a related party by virtue of common control.

Expenditure of £14,000 incurred on behalf of the Group were recharged from Drayson Technologies (Europe) Limited (31 October 2020: £Nil; 30 April 2020: £359,000).

Oxford Sciences Innovation Plc (OSI) is a related party through the joint venture for LAB10x. During the period, revenue of £47,000 (31 October 2019: £120,000; 30 April 2020: £162,000) was recognised in relation to support and maintenance and consultancy services provided to OSI. In addition, £60,000 (31 October 2019: £Nil; 30 April 2020: £73,000) was billed to OSI for the reimbursement of expenditure incurred on behalf of the joint venture, Lab10x.

Included within trade and other receivables at 31 October 2020, is a trade receivable balance of £92,000 (31 October 2019: £Nil; 30 April 2020: £23,000) and accrued income balance of £22,000 (31 October 2019: £120,000; 30 April 2020: £54,000) due from OSI.

During the period, £Nil (31 October 2019: £Nil, 30 April 2020: £555,000) was paid to OSI in relation to the Lab10x joint venture agreement. In agreement with all members of the joint venture, future payments as obligated under this arrangement have been deferred.

7.         Principal risks and uncertainties

The 2020 Annual Report sets out on pages 25 to 28 the principal risks and uncertainties that could impact the business. There are no changes to these risks and uncertainties.

8.         Subsequent events

On 13 November 2020, Sensyne announced the appointment of Derek Baird to its senior management team as President, North America from 1 December 2020.

On 16 November 2020, Sensyne announced a five-year non-exclusive Strategic Research Agreement (“SRA”) with Somerset NHS Foundation Trust for which they will be issued with 1,428,571 £0.10 ordinary shares in the Company at a price of £1.75 per share, subject to the satisfaction of certain conditions including receipt of a s593 report by the Company.

On 25 November 2020, Sensyne announced a five-year non-exclusive SRA with Hampshire Hospitals NHS Foundation Trust for which they will be issued with 1,428,571 £0.10 ordinary shares in the Company at a price of £1.75 per share, subject to the satisfaction of certain conditions including receipt of a s593 report by the Company.

On 18 December 2020, Sensyne announced the appointment of Tony Bourne to the Board as Independent Non-Executive Director with effect from 31 January 2021. He will also serve as Chair of the Remuneration Committee.

On 5 January 2021, Sensyne completed a placing, subscription and open offer (the “Transaction”) on the AIM market of the London Stock Exchange issuing 30,513,341 new £0.10 ordinary shares at a price of £0.90 per share.  Aggregate gross proceeds of £27.5 million were raised for the Company and directly attributable transaction costs of £2.0 million were incurred. On 5 January 2021, a strategic collaboration with Phesi, Inc, a specialist clinical trials company incorporated in United States of America, became effective following the completion of the Transaction.  The Phesi agreement comprises a strategic alliance agreement and a securities purchase agreement.  Under the strategic alliance agreement, Phesi and Sensyne will collaborate on an exclusive basis to offer synthetic clinical trial arms and clinical decision support tools combining clinical trial data with real world data.  The initial term of the exclusive strategic collaboration will be 5-years with an automatic renewal for successive two-year periods unless terminated. Joint projects with pharmaceutical company clients will be based on a revenue share model. Under the terms of the securities purchase agreement, Sensyne has made a $10 million equity investment into Phesi for 10% of its fully-diluted share capital, the proceeds of which are to be used for specific purposes aimed towards enhancing the Phesi clinical trials data analytics offering and activities that are connected to the strategic collaboration. The securities purchase agreement also provides that Lord Drayson will join Phesi's board of directors.

On 20 January 2021, Sensyne announced a five-year non-exclusive SRA with The Royal Wolverhampton NHS Trust for which they will be issued with 1,428,571 £0.10 ordinary shares in the Company at a price of £1.75 per share, subject to the satisfaction of certain conditions including receipt of a s593 report by the Company.

Appendix – Recent News