Allied Minds Release: Annual Results Release
Allied Minds plc (LSE: ALM) (“Allied Minds” or the “Group” or the “Company”), an innovative US-focused science and technology development and commercialisation company, today announces its annual results for the year ended 31 December 2014.
HIGHLIGHTS
PERIOD HIGHLIGHTS
Corporate
Completed successful initial public offering (IPO), and admission to the premium listing segment of the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange (LSE), raising proceeds of $155.0 million.
New Businesses
Formed and funded four new businesses:
• Allied-Bristol Life Sciences (ABLS), in collaboration with Bristol-Myers Squibb, to identify and foster research and pre-clinical development of biopharmaceutical innovations
• Seamless Devices, with technology from Columbia University, to develop a novel signal processing technique for analog to digital converters
• Percipient Networks, with technology from The MITRE Corporation, to develop next-generation security technologies for enterprise network defence
• Whitewood Encryption Systems, with technology from Los Alamos National Laboratory, to develop the next-generation systems of data encryption that leverage advanced quantum cryptography technologies
Team
Hired additional key senior leadership at Allied Minds and its subsidiaries, including the first General Counsel of the Group, a new Vice President to lead the partnerships with US research universities, and new experienced CEOs at each of ABLS, Federated Wireless, Novare Pharmaceuticals and Optio Labs, as well as an overall increase of more than 90 new employees and consultants during the year
Investment
Attracted third-party investment and grants directly into several subsidiaries, including:
• Spin Transfer Technologies, in connection with a $70.0 million equity financing
• Optio Labs, in connection with a $10.0 million equity financing
• SiEnergy, which was awarded a $2.65 million US government ARPA-E REBELS grant Valuation
Increased Group Subsidiary Ownership Adjusted Value (GSOAV) from $367.3 million to $488.0 million, an increase of $120.7 million, or 32.9%
Subsidiary Milestones
Achieved numerous technical milestones, including:
• STT completing its first phase of integration of magnetic and CMOS wafer technology to demonstrate the technology’s capability to integrate with existing fabrication processes standard in the industry
• SciFluor advancing two lead compounds through key in-vivo, pre-clinical tests, successfully testing its retinal disease lead in a leading choroid neovascular study in rabbits, and successfully testing its lead focused on neurological disease through an agency within the US National Institutes of Health (NIH)
• RF Biocidics quadrupling revenues during 2014 to $6.5 million, acquiring a 28.5% interest in its supplier Stalam SpA in Italy, a manufacturer of radio frequency equipment, and successfully launching its new fourth generation APEX machine
• Precision Biopsy continuing development of its commercial system in preparation for eventual regulatory submissions, successfully completing in-vivo human feasibility study in patients undergoing prostatectomies, and additional testing of ex-vivo post-prostatectomy showing favourable results when compared to traditional pathology
• LuxCath demonstrating real time heart lesion visualisation proof of concept system in large animals using LuxCath catheter system, expanding potential applications by incorporating LuxCath optics into leading 3rd party ablation catheters, and demonstrating real-time tissue contact assessment as well as cardiac lesion progression monitoring in animals, all while preparing for First-In-Man studies with a leading cardiologist in 2015
Intellectual Property
Received grant of numerous patents, including two patents granted by the US Patent and Trade Office to SciFluor for claims covering novel compounds for retinal and neurological diseases
Partner Network
Welcomed three new universities and seven new federal laboratories to the Allied Minds partner network
FINANCIAL HIGHLIGHTS
Net cash and deposits*: $261.5m (2013: $104.6m)
Revenue: $7.7m (2013: $2.9m)
Net loss: $57.9m (2013: $42.7m), of which $45.6m (2013: $34.5m) attributable to Allied Minds
Group Subsidiary Ownership Adjusted Value (GSOAV): $488.0m (2013: $367.3m), an increase of 32.9%
Share price performance: 367p at 31 December 2014, an increase of 93.2% over the initial public offering price of 190p at 25 June 2014; welcomed to the FTSE 250 in December 2014
* includes excess cash in form of fixed income securities
POST-YEAR-END HIGHLIGHTS
• In February 2015, Allied Minds formed and funded 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 (LEO) satellites compared to traditional radio frequency solutions
• In April 2015, SciFluor successfully raised $30.0 million in a Series A preferred stock financing. Significant participants in the funding round were Invesco Asset Management and Woodford Investment Management, demonstrating their continued support for the commercialisation model of academic and federal research pioneered in the US by Allied Minds
• In April 2015, 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 user’s computer and mobile device screen from visual eavesdroppers
• In April 2015, the Federal Communications Commission (FCC), in a unanimous decision, approved 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
Commenting on the Group’s annual results, Mark Pritchard, Executive Chairman of Allied Minds, and Chris Silva, Chief Executive Officer of Allied Minds, jointly said:
“2014 was a year of significant milestones for the Group, with strong performance and third-party equity investments driving a meaningful increase in the value of the Group.
Our successful initial public offering (IPO) on the Main Market of the London Stock Exchange, raising gross proceeds of $155.0 million, was the highlight of the first half of 2014 and provided the necessary capital to support our business strategy and long- term growth.
Our significant expertise across science and technology disciplines, highly skilled workforce and capital resources enabled Allied Minds to further build upon our strong foundations. Since the beginning of 2014, Allied Minds has attracted third-party investment and grants into Spin Transfer Technologies (STT), Optio Labs, SiEnergy, Allied-Bristol Life Sciences (ABLS) and SciFluor. Allied Minds formed the ABLS partnership with Bristol-Myers Squibb (BMS), to create 10 new businesses that aim to develop novel biopharmaceutical assets. Further, we established collaborations with additional US universities and US federal laboratories that led to the formation of new businesses, including Seamless Devices, Percipient Networks, Whitewood Encryption Systems and BridgeSat, and enabled further progress in scientific research and development for the commercialisation of products in our portfolio.
Allied Minds is building a diversified portfolio of businesses in the life and high-technology sectors. We believe that the US continues to produce a wealth of potentially world-class intellectual property from its universities and federal government laboratories. Leveraging our unparalleled network of universities and federal government laboratories and our proven management approach, Allied Minds is well-positioned to continue backing and developing IP-based early-stage projects and businesses to achieve growth and value creation over the medium and long-term.”
In compliance with Listing Rule 9.6.3, the following documents have today been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM :
• Annual Report and Accounts for the year ended 31 December 2014; and
• Notice of 2015 Annual General Meeting.
Printed copies of these documents together with the Form of Proxy have been posted to shareholders today. Copies are also available electronically on the Investor Relations section of the Company’s website at http://www.alliedminds.com/investors/reports-presentations.
The 2015 Annual General Meeting will be held at 2pm on Thursday 28 May 2015 at the offices of DLA Piper UK LLP, 3 Noble Street, London, EC2V 7EE.
The Company also announces today that Mr. Peter Dolan will be appointed to the role of Non-Executive Chairman of the board of directors of the Company, with effect from the conclusion of the Company’s Annual General Meeting on 28 May 2015. Mr. Dolan will replace the current Executive Chairman, Mr. Mark Pritchard, who will remain on the Board in an executive capacity in the short term but intends to step down from the Board later in the year, although he is expected to continue to be actively engaged with the Company. A separate RIS announcement has been released to the market at the same time as the release of the Company’s full year results.
For more information, please contact:
Allied Minds plc www.alliedminds.com
Mark Pritchard, Executive Chairman +1 617 419 1800
Chris Silva, Chief Executive Officer +1 617 419 1800
FTI Consulting
Ben Atwell, Matthew Cole +44 (0) 20 3727 1000
Further information on Allied Minds is available on our website: www.alliedminds.com
Notes
(i) Nature of announcement
This Annual Results Release was approved by the directors on 28 April 2015. The financial information set out in this Annual Results Release does not constitute the company's statutory accounts for 2014 or 2013. Any references to page numbers in this announcement are to pages within the Annual Report and Accounts. Statutory accounts for the years ended 31 December 2014 and 31 December 2013 have been reported on by the Independent Auditor. The Independent Auditor’s Reports on the Annual Report and Financial Statements for 2014 and 2013 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar when due.
(ii) Forward looking statements
This Annual Results Release and the Annual Report and Accounts contain statements that are or may be forward-looking statements, including statements that relate to the company’s future prospects, developments and strategies. The forward-looking statements are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results, performance and achievements to differ materially from current expectations, including, but not limited to, those risks and uncertainties described in the risk management section. These forward-looking statements are based on assumptions regarding the present and future business strategies of the company and the environment in which it will operate in the future. Each forward-looking statement speaks only as at the date of this Annual Results Release. Except as required by law, regulatory requirement, the Listing Rules and the Disclosure and Transparency Rules, neither the company nor any other party intends to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
STRATEGIC REPORT
CHAIRMAN’S REPORT
It gives me great pleasure to present our first annual results release as a public company and to welcome you as a shareholder in Allied Minds plc.
I am pleased to note that 2014 was a year of significant milestones for the Group, with strong performance and third-party equity investments driving a meaningful increase in the value of the Group. Both the Group and its subsidiary businesses had a very active year. The execution of a successful initial public offering (IPO) on the Main Market of the London Stock Exchange, raising gross proceeds of $155.0 million, was the highlight of the first half of 2014, and provided the Group with the capital necessary to support its business strategy and long- term growth.
Investment Model and Opportunity
The funding of basic research to generate new intellectual property (IP) is now largely driven by government sources, be it through higher education systems or directly funded research bodies. Once created, these ideas require an effective, efficient and sustainable channel to develop and mature into products or services which can benefit the wider economy. A strong economy requires innovation to drive new products, new markets and ultimately enhance productivity and promote employment. There are a number of paths to commercialising promising technology, the most obvious being the formation of a new company. The disruptive force of start-ups has been shown to be a significant driver of innovation and an important and necessary feature of productive, growing economies.
In our experience there is no shortage of high-quality IP being generated by research institutions, particularly in the United States where Allied Minds operates. What is often lacking is an active and supportive eco-system to enable start-ups to mature and evolve into high-growth, impactful and valuable companies. Building a successful start-up is not easy and requires not only great ideas, but also high-quality management and consistent access to capital, ideally delivered within a model which can also ensure high-fidelity control and governance. Above all, start-ups often require considerable time to mature in order to truly deliver value.
Competition for investment funds amongst different asset classes is driving the need for shorter investment time frames. Few venture funds have the flexibility or the operational emphasis to focus on early-stage investment in IP-centric projects. This has meant that many venture investors, particularly in the US, have increasingly focused on internet and media deals with the inevitable escalation of asset valuations. True early-stage investment in IP-based start-ups still remains a relatively rare commodity.
I believe we are seeing the emergence of a new type of investment model to help address this problem, which is better suited for building the next generation of technology companies and seeks to deliver above average returns for investors. These public venture companies focus on developing portfolios of IP-based early-stage start-ups and seek to help build them into companies over a much longer time horizon, providing capital and management support along the way. I am proud to say that Allied Minds has been at the forefront of pioneering this model in the US and is its leading proponent. The United States is the most important market in the world for both generating valuable technology and in consuming the end product or services. The market opportunity facing our company is truly enormous; we are the market leader in the leading market.
In utilising the strengths of our investment model and successfully executing to our strategic plan, I believe there is every opportunity to take Allied Minds to the next level as one of the most significant and valuable global technology driven businesses.
People
During the year and in anticipation of our IPO, we reviewed the Board composition and welcomed two new independent Directors, Peter Dolan and Jeff Rohr. Peter has 30 years of operating experience, including 18 years at Bristol-Myers Squibb, where he served as Chairman and CEO. He is currently the Chairman of the Board of Trustees of Tufts University in Massachusetts. Jeff has 30 years of senior management experience at Deloitte LLP, having last served in the role of Vice Chairman and Chief Financial Officer.
In order that we fully comply with UK corporate governance guidelines, the Group Chairman needs to be an independent director and accordingly I will be standing down at our forthcoming Annual General Meeting. I am delighted to report that Peter, who currently serves as the Senior Independent Director, has agreed to transition to the role of Non-Executive Chairman. I will remain on the Group Board in an executive capacity in the short term but intend to step down from the Board later in the year, although I expect to stay actively engaged with the Group. The Nomination Committee is actively considering adding an additional independent director in the near future.
We are fortunate at Allied Minds to have a dynamic and dedicated group of people both at the corporate level and at our subsidiary businesses who are all determined to build further on the success we have had to date. The Group would not be in the position it is today without the contributions of our employees and, as always, I am proud of and thankful for their efforts. On behalf of the Board I also want to express our particular thanks to those employees directly involved in the stock market listing for their tremendous hard work and dedication.
Finally, I would like to formally note my thanks to all the Group’s stakeholders, but particularly for the strong support from shareholders for the Group’s IPO and subsequent subsidiary financings.
Outlook
It has been both a highly active and exciting year for the Group. I believe that the Group’s track record and expertise in its field, coupled with extensive US university and US federal research institution partnerships, and strong balance sheet, leaves Allied Minds well placed to continue to generate significant value for shareholders over the medium and long term. I look forward to the future with much confidence.
Mark Pritchard
Executive Chairman
CEO’S REPORT
I am pleased to present my first report as Allied Minds plc’s CEO. Allied Minds has been at the forefront of developing a US-based public venture company that creates, invests in, and actively manages high-potential technology businesses. Prior to our London Stock Exchange listing on 25 June 2014, Allied Minds dedicated itself to building a strong foundation to this purpose. Before our listing, we created and managed 18 subsidiary businesses; employed more than 200 people, of which 125 held advanced degrees, including 65 PhDs; and developed a robust pipeline emanating from a network of 64 leading US universities and federal research centers of excellence. During the IPO roadshow, the Chairman and I outlined Allied Minds’ near-term objectives, which were: to invest in (with third party participation) the acceleration of key subsidiary businesses; to create the Group’s first corporate partnership with a major international conglomerate; to progress the commercial development across our portfolio of businesses; and to create new high-impact businesses. I am happy to report that Allied Minds accomplished all of these objectives.
The Group’s significant expertise across a range of science and technology disciplines, its highly skilled workforce, as well as its capital resources, allowed it to expand upon its strong foundations. Since mid-2014, Allied Minds attracted third-party investment and grants and co-invested $123 million into Spin Transfer Technologies (STT), Optio Labs, SiEnergy, Allied-Bristol Life Sciences (ABLS) and SciFluor. In August 2014, we formed ABLS, a partnership with Bristol-Myers Squibb (BMS), to create 10 new businesses that aim to develop novel biopharmaceutical assets. Further, the Group established collaborations with additional university and federal labs that led to the formation of new businesses; and continued to progress ongoing scientific research and development for the commercialisation of products in its portfolio.
Allied Minds is building a diversified portfolio of businesses in the life and high-technology sectors. I believe that the US continues to produce a wealth of potentially world-class intellectual property from its universities and federal government laboratories, and that the Group is well-positioned to continue to back IP-based early-stage projects and businesses given its strong track record, patient development timelines, strong management and cash position. The Group aims to achieve growth and value creation over the medium and long term as its subsidiary businesses’ products and services mature through the commercialisation cycle.
Milestones Achieved
Allied Minds has access to an extensive array of intellectual property and technology opportunities in the US through its network of universities and federal government laboratories. In 2014, our partner network grew to 68 partners, to include the addition of three new universities and seven new federal laboratories: University of Massachusetts, Lowell; Worcester Polytechnic Institute; University of Texas, San Antonio; Los Alamos National Laboratory; Oak Ridge National Laboratory; Pacific Northwest National Laboratory; Sandia National Laboratories; Georgia Tech Research Institute; MITRE National Cyber Security Centre of Excellence; and Charles Stark Draper Laboratory.
The partner network and technology pipeline led the Group to form three new businesses:
• Seamless Devices, with technology from Columbia University, to develop a novel signal processing technique for analog to digital converters;
• Percipient Networks, with technology from The MITRE Corporation, to develop next-generation security technologies for enterprise network defence; and
• Whitewood Encryption Systems, with technology from Los Alamos National Laboratory, to develop next- generation systems of data encryption that leverage advanced quantum cryptography technologies.
2014 also marked the year that we completed our first corporate partnership. We teamed with BMS to form ABLS to identify and foster research and pre-clinical development of biopharmaceutical innovations. ABLS plans to create 10 subsidiary companies, each developing a novel biopharmaceutical asset with the intention of exiting the subsidiary business to BMS at the end of pre-clinical development.
Our subsidiary businesses progressed well in 2014, achieving numerous technical milestones. Notably, STT completed its first phase of integration of magnetic and CMOS wafer technology, demonstrating the technology’s capability to integrate with existing fabrication processes that are standard in the industry. The Group also saw significant growth in its intellectual property estate, receiving grant of numerous patents, including two by the US Patent and Trade Office to SciFluor for claims covering the novel compounds for retinal and neurological diseases.
Allied Minds attracted third-party investment and grants directly into several subsidiaries, including a $70.0 million equity financing in STT, a $10.0 million investment in the formation of ABLS, a $10.0 million equity financing in Optio Labs, and a $2.65 million US government ARPA-E REBELS grant for SiEnergy.
The Group Subsidiary Ownership Adjusted Value increased to $488.0 million as of 31 December 2014 from $367.3 million at 31 December 2013, an increase of $120.7 million, or 32.9%.
Continuing Momentum
Allied Minds has continued this progress into 2015. The Group recently announced the formation and funding of BridgeSat, which is developing an optical connectivity system that aims to increase the speed, security and efficiency of data transmissions from Low Earth Orbit (LEO) satellites compared to traditional radio frequency solutions. BridgeSat was formed 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.
In addition, SciFluor recently raised a $30.0 million equity financing, which included $25.2 million of third- party funds, to commence clinical trials of its patent-protected compounds in retinal and neurological diseases.
The Group also has two additional transactions near completion. ABLS I, LLC was formed to execute on the first project approved for investment under our ABLS partnership with BMS. This project involves licensing intellectual property with respect to prostate oncology from an Ivy League institution, and proceeding to pre-clinical evaluation and development. In addition, ABLS II, LLC was formed to execute on a second project approved for investment. This project involves licensing intellectual property with respect to fibrotic diseases from a second Ivy League institution, and proceeding to pre-clinical evaluation and development.
The Group is currently assessing new technologies we believe can have a significant commercial impact. We have 13 technologies in final due diligence and 89 technologies in early due diligence. The Group expects that its significant technology pipeline is likely to lead to the creation of a number of new subsidiaries during the remainder of 2015, and aims to form and fund 5 to 10 new projects annually.
We continue to scale and add resources at the Group and its subsidiary businesses. Since the IPO, we have added an additional 98 employees and contractors across our businesses. Our total workforce has reached 298 employees and contractors, of which 180 hold advanced degrees, including 87 PhDs. We intend to strengthen our highly skilled workforce as business needs require.
Outlook
As we continue to build from our strong foundation, the momentum we achieved with a successful IPO, and the meeting of the near-term goals set out during the IPO process, I believe Allied Minds is well positioned for meaningful further growth. In 2015, we will continue to focus on the commercial advancement of our subsidiary businesses; intend to invest further in our businesses and together with third-party investment where appropriate; expand our portfolio of high-impact businesses; and add key industry managers and expertise to the Group. Importantly, as the Group and the subsidiary businesses mature, we aspire to attract new corporate alliances, which we believe will further validate our model and the commercial potential of the subsidiaries. Future corporate collaborations could include co-development agreements, licensing, joint ventures, and direct equity investment. The Company and its businesses are well positioned for continued execution excellence, commercial maturation and expansion, which should result in increased value for shareholders over the medium and long term. In closing, I believe the outlook for Allied Minds is strong.
Chris Silva
Chief Executive Officer
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HIGHLIGHTS
PERIOD HIGHLIGHTS
Corporate
Completed successful initial public offering (IPO), and admission to the premium listing segment of the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange (LSE), raising proceeds of $155.0 million.
New Businesses
Formed and funded four new businesses:
• Allied-Bristol Life Sciences (ABLS), in collaboration with Bristol-Myers Squibb, to identify and foster research and pre-clinical development of biopharmaceutical innovations
• Seamless Devices, with technology from Columbia University, to develop a novel signal processing technique for analog to digital converters
• Percipient Networks, with technology from The MITRE Corporation, to develop next-generation security technologies for enterprise network defence
• Whitewood Encryption Systems, with technology from Los Alamos National Laboratory, to develop the next-generation systems of data encryption that leverage advanced quantum cryptography technologies
Team
Hired additional key senior leadership at Allied Minds and its subsidiaries, including the first General Counsel of the Group, a new Vice President to lead the partnerships with US research universities, and new experienced CEOs at each of ABLS, Federated Wireless, Novare Pharmaceuticals and Optio Labs, as well as an overall increase of more than 90 new employees and consultants during the year
Investment
Attracted third-party investment and grants directly into several subsidiaries, including:
• Spin Transfer Technologies, in connection with a $70.0 million equity financing
• Optio Labs, in connection with a $10.0 million equity financing
• SiEnergy, which was awarded a $2.65 million US government ARPA-E REBELS grant Valuation
Increased Group Subsidiary Ownership Adjusted Value (GSOAV) from $367.3 million to $488.0 million, an increase of $120.7 million, or 32.9%
Subsidiary Milestones
Achieved numerous technical milestones, including:
• STT completing its first phase of integration of magnetic and CMOS wafer technology to demonstrate the technology’s capability to integrate with existing fabrication processes standard in the industry
• SciFluor advancing two lead compounds through key in-vivo, pre-clinical tests, successfully testing its retinal disease lead in a leading choroid neovascular study in rabbits, and successfully testing its lead focused on neurological disease through an agency within the US National Institutes of Health (NIH)
• RF Biocidics quadrupling revenues during 2014 to $6.5 million, acquiring a 28.5% interest in its supplier Stalam SpA in Italy, a manufacturer of radio frequency equipment, and successfully launching its new fourth generation APEX machine
• Precision Biopsy continuing development of its commercial system in preparation for eventual regulatory submissions, successfully completing in-vivo human feasibility study in patients undergoing prostatectomies, and additional testing of ex-vivo post-prostatectomy showing favourable results when compared to traditional pathology
• LuxCath demonstrating real time heart lesion visualisation proof of concept system in large animals using LuxCath catheter system, expanding potential applications by incorporating LuxCath optics into leading 3rd party ablation catheters, and demonstrating real-time tissue contact assessment as well as cardiac lesion progression monitoring in animals, all while preparing for First-In-Man studies with a leading cardiologist in 2015
Intellectual Property
Received grant of numerous patents, including two patents granted by the US Patent and Trade Office to SciFluor for claims covering novel compounds for retinal and neurological diseases
Partner Network
Welcomed three new universities and seven new federal laboratories to the Allied Minds partner network
FINANCIAL HIGHLIGHTS
Net cash and deposits*: $261.5m (2013: $104.6m)
Revenue: $7.7m (2013: $2.9m)
Net loss: $57.9m (2013: $42.7m), of which $45.6m (2013: $34.5m) attributable to Allied Minds
Group Subsidiary Ownership Adjusted Value (GSOAV): $488.0m (2013: $367.3m), an increase of 32.9%
Share price performance: 367p at 31 December 2014, an increase of 93.2% over the initial public offering price of 190p at 25 June 2014; welcomed to the FTSE 250 in December 2014
* includes excess cash in form of fixed income securities
POST-YEAR-END HIGHLIGHTS
• In February 2015, Allied Minds formed and funded 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 (LEO) satellites compared to traditional radio frequency solutions
• In April 2015, SciFluor successfully raised $30.0 million in a Series A preferred stock financing. Significant participants in the funding round were Invesco Asset Management and Woodford Investment Management, demonstrating their continued support for the commercialisation model of academic and federal research pioneered in the US by Allied Minds
• In April 2015, 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 user’s computer and mobile device screen from visual eavesdroppers
• In April 2015, the Federal Communications Commission (FCC), in a unanimous decision, approved 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
Commenting on the Group’s annual results, Mark Pritchard, Executive Chairman of Allied Minds, and Chris Silva, Chief Executive Officer of Allied Minds, jointly said:
“2014 was a year of significant milestones for the Group, with strong performance and third-party equity investments driving a meaningful increase in the value of the Group.
Our successful initial public offering (IPO) on the Main Market of the London Stock Exchange, raising gross proceeds of $155.0 million, was the highlight of the first half of 2014 and provided the necessary capital to support our business strategy and long- term growth.
Our significant expertise across science and technology disciplines, highly skilled workforce and capital resources enabled Allied Minds to further build upon our strong foundations. Since the beginning of 2014, Allied Minds has attracted third-party investment and grants into Spin Transfer Technologies (STT), Optio Labs, SiEnergy, Allied-Bristol Life Sciences (ABLS) and SciFluor. Allied Minds formed the ABLS partnership with Bristol-Myers Squibb (BMS), to create 10 new businesses that aim to develop novel biopharmaceutical assets. Further, we established collaborations with additional US universities and US federal laboratories that led to the formation of new businesses, including Seamless Devices, Percipient Networks, Whitewood Encryption Systems and BridgeSat, and enabled further progress in scientific research and development for the commercialisation of products in our portfolio.
Allied Minds is building a diversified portfolio of businesses in the life and high-technology sectors. We believe that the US continues to produce a wealth of potentially world-class intellectual property from its universities and federal government laboratories. Leveraging our unparalleled network of universities and federal government laboratories and our proven management approach, Allied Minds is well-positioned to continue backing and developing IP-based early-stage projects and businesses to achieve growth and value creation over the medium and long-term.”
In compliance with Listing Rule 9.6.3, the following documents have today been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM :
• Annual Report and Accounts for the year ended 31 December 2014; and
• Notice of 2015 Annual General Meeting.
Printed copies of these documents together with the Form of Proxy have been posted to shareholders today. Copies are also available electronically on the Investor Relations section of the Company’s website at http://www.alliedminds.com/investors/reports-presentations.
The 2015 Annual General Meeting will be held at 2pm on Thursday 28 May 2015 at the offices of DLA Piper UK LLP, 3 Noble Street, London, EC2V 7EE.
The Company also announces today that Mr. Peter Dolan will be appointed to the role of Non-Executive Chairman of the board of directors of the Company, with effect from the conclusion of the Company’s Annual General Meeting on 28 May 2015. Mr. Dolan will replace the current Executive Chairman, Mr. Mark Pritchard, who will remain on the Board in an executive capacity in the short term but intends to step down from the Board later in the year, although he is expected to continue to be actively engaged with the Company. A separate RIS announcement has been released to the market at the same time as the release of the Company’s full year results.
For more information, please contact:
Allied Minds plc www.alliedminds.com
Mark Pritchard, Executive Chairman +1 617 419 1800
Chris Silva, Chief Executive Officer +1 617 419 1800
FTI Consulting
Ben Atwell, Matthew Cole +44 (0) 20 3727 1000
Further information on Allied Minds is available on our website: www.alliedminds.com
Notes
(i) Nature of announcement
This Annual Results Release was approved by the directors on 28 April 2015. The financial information set out in this Annual Results Release does not constitute the company's statutory accounts for 2014 or 2013. Any references to page numbers in this announcement are to pages within the Annual Report and Accounts. Statutory accounts for the years ended 31 December 2014 and 31 December 2013 have been reported on by the Independent Auditor. The Independent Auditor’s Reports on the Annual Report and Financial Statements for 2014 and 2013 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar when due.
(ii) Forward looking statements
This Annual Results Release and the Annual Report and Accounts contain statements that are or may be forward-looking statements, including statements that relate to the company’s future prospects, developments and strategies. The forward-looking statements are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results, performance and achievements to differ materially from current expectations, including, but not limited to, those risks and uncertainties described in the risk management section. These forward-looking statements are based on assumptions regarding the present and future business strategies of the company and the environment in which it will operate in the future. Each forward-looking statement speaks only as at the date of this Annual Results Release. Except as required by law, regulatory requirement, the Listing Rules and the Disclosure and Transparency Rules, neither the company nor any other party intends to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
STRATEGIC REPORT
CHAIRMAN’S REPORT
It gives me great pleasure to present our first annual results release as a public company and to welcome you as a shareholder in Allied Minds plc.
I am pleased to note that 2014 was a year of significant milestones for the Group, with strong performance and third-party equity investments driving a meaningful increase in the value of the Group. Both the Group and its subsidiary businesses had a very active year. The execution of a successful initial public offering (IPO) on the Main Market of the London Stock Exchange, raising gross proceeds of $155.0 million, was the highlight of the first half of 2014, and provided the Group with the capital necessary to support its business strategy and long- term growth.
Investment Model and Opportunity
The funding of basic research to generate new intellectual property (IP) is now largely driven by government sources, be it through higher education systems or directly funded research bodies. Once created, these ideas require an effective, efficient and sustainable channel to develop and mature into products or services which can benefit the wider economy. A strong economy requires innovation to drive new products, new markets and ultimately enhance productivity and promote employment. There are a number of paths to commercialising promising technology, the most obvious being the formation of a new company. The disruptive force of start-ups has been shown to be a significant driver of innovation and an important and necessary feature of productive, growing economies.
In our experience there is no shortage of high-quality IP being generated by research institutions, particularly in the United States where Allied Minds operates. What is often lacking is an active and supportive eco-system to enable start-ups to mature and evolve into high-growth, impactful and valuable companies. Building a successful start-up is not easy and requires not only great ideas, but also high-quality management and consistent access to capital, ideally delivered within a model which can also ensure high-fidelity control and governance. Above all, start-ups often require considerable time to mature in order to truly deliver value.
Competition for investment funds amongst different asset classes is driving the need for shorter investment time frames. Few venture funds have the flexibility or the operational emphasis to focus on early-stage investment in IP-centric projects. This has meant that many venture investors, particularly in the US, have increasingly focused on internet and media deals with the inevitable escalation of asset valuations. True early-stage investment in IP-based start-ups still remains a relatively rare commodity.
I believe we are seeing the emergence of a new type of investment model to help address this problem, which is better suited for building the next generation of technology companies and seeks to deliver above average returns for investors. These public venture companies focus on developing portfolios of IP-based early-stage start-ups and seek to help build them into companies over a much longer time horizon, providing capital and management support along the way. I am proud to say that Allied Minds has been at the forefront of pioneering this model in the US and is its leading proponent. The United States is the most important market in the world for both generating valuable technology and in consuming the end product or services. The market opportunity facing our company is truly enormous; we are the market leader in the leading market.
In utilising the strengths of our investment model and successfully executing to our strategic plan, I believe there is every opportunity to take Allied Minds to the next level as one of the most significant and valuable global technology driven businesses.
People
During the year and in anticipation of our IPO, we reviewed the Board composition and welcomed two new independent Directors, Peter Dolan and Jeff Rohr. Peter has 30 years of operating experience, including 18 years at Bristol-Myers Squibb, where he served as Chairman and CEO. He is currently the Chairman of the Board of Trustees of Tufts University in Massachusetts. Jeff has 30 years of senior management experience at Deloitte LLP, having last served in the role of Vice Chairman and Chief Financial Officer.
In order that we fully comply with UK corporate governance guidelines, the Group Chairman needs to be an independent director and accordingly I will be standing down at our forthcoming Annual General Meeting. I am delighted to report that Peter, who currently serves as the Senior Independent Director, has agreed to transition to the role of Non-Executive Chairman. I will remain on the Group Board in an executive capacity in the short term but intend to step down from the Board later in the year, although I expect to stay actively engaged with the Group. The Nomination Committee is actively considering adding an additional independent director in the near future.
We are fortunate at Allied Minds to have a dynamic and dedicated group of people both at the corporate level and at our subsidiary businesses who are all determined to build further on the success we have had to date. The Group would not be in the position it is today without the contributions of our employees and, as always, I am proud of and thankful for their efforts. On behalf of the Board I also want to express our particular thanks to those employees directly involved in the stock market listing for their tremendous hard work and dedication.
Finally, I would like to formally note my thanks to all the Group’s stakeholders, but particularly for the strong support from shareholders for the Group’s IPO and subsequent subsidiary financings.
Outlook
It has been both a highly active and exciting year for the Group. I believe that the Group’s track record and expertise in its field, coupled with extensive US university and US federal research institution partnerships, and strong balance sheet, leaves Allied Minds well placed to continue to generate significant value for shareholders over the medium and long term. I look forward to the future with much confidence.
Mark Pritchard
Executive Chairman
CEO’S REPORT
I am pleased to present my first report as Allied Minds plc’s CEO. Allied Minds has been at the forefront of developing a US-based public venture company that creates, invests in, and actively manages high-potential technology businesses. Prior to our London Stock Exchange listing on 25 June 2014, Allied Minds dedicated itself to building a strong foundation to this purpose. Before our listing, we created and managed 18 subsidiary businesses; employed more than 200 people, of which 125 held advanced degrees, including 65 PhDs; and developed a robust pipeline emanating from a network of 64 leading US universities and federal research centers of excellence. During the IPO roadshow, the Chairman and I outlined Allied Minds’ near-term objectives, which were: to invest in (with third party participation) the acceleration of key subsidiary businesses; to create the Group’s first corporate partnership with a major international conglomerate; to progress the commercial development across our portfolio of businesses; and to create new high-impact businesses. I am happy to report that Allied Minds accomplished all of these objectives.
The Group’s significant expertise across a range of science and technology disciplines, its highly skilled workforce, as well as its capital resources, allowed it to expand upon its strong foundations. Since mid-2014, Allied Minds attracted third-party investment and grants and co-invested $123 million into Spin Transfer Technologies (STT), Optio Labs, SiEnergy, Allied-Bristol Life Sciences (ABLS) and SciFluor. In August 2014, we formed ABLS, a partnership with Bristol-Myers Squibb (BMS), to create 10 new businesses that aim to develop novel biopharmaceutical assets. Further, the Group established collaborations with additional university and federal labs that led to the formation of new businesses; and continued to progress ongoing scientific research and development for the commercialisation of products in its portfolio.
Allied Minds is building a diversified portfolio of businesses in the life and high-technology sectors. I believe that the US continues to produce a wealth of potentially world-class intellectual property from its universities and federal government laboratories, and that the Group is well-positioned to continue to back IP-based early-stage projects and businesses given its strong track record, patient development timelines, strong management and cash position. The Group aims to achieve growth and value creation over the medium and long term as its subsidiary businesses’ products and services mature through the commercialisation cycle.
Milestones Achieved
Allied Minds has access to an extensive array of intellectual property and technology opportunities in the US through its network of universities and federal government laboratories. In 2014, our partner network grew to 68 partners, to include the addition of three new universities and seven new federal laboratories: University of Massachusetts, Lowell; Worcester Polytechnic Institute; University of Texas, San Antonio; Los Alamos National Laboratory; Oak Ridge National Laboratory; Pacific Northwest National Laboratory; Sandia National Laboratories; Georgia Tech Research Institute; MITRE National Cyber Security Centre of Excellence; and Charles Stark Draper Laboratory.
The partner network and technology pipeline led the Group to form three new businesses:
• Seamless Devices, with technology from Columbia University, to develop a novel signal processing technique for analog to digital converters;
• Percipient Networks, with technology from The MITRE Corporation, to develop next-generation security technologies for enterprise network defence; and
• Whitewood Encryption Systems, with technology from Los Alamos National Laboratory, to develop next- generation systems of data encryption that leverage advanced quantum cryptography technologies.
2014 also marked the year that we completed our first corporate partnership. We teamed with BMS to form ABLS to identify and foster research and pre-clinical development of biopharmaceutical innovations. ABLS plans to create 10 subsidiary companies, each developing a novel biopharmaceutical asset with the intention of exiting the subsidiary business to BMS at the end of pre-clinical development.
Our subsidiary businesses progressed well in 2014, achieving numerous technical milestones. Notably, STT completed its first phase of integration of magnetic and CMOS wafer technology, demonstrating the technology’s capability to integrate with existing fabrication processes that are standard in the industry. The Group also saw significant growth in its intellectual property estate, receiving grant of numerous patents, including two by the US Patent and Trade Office to SciFluor for claims covering the novel compounds for retinal and neurological diseases.
Allied Minds attracted third-party investment and grants directly into several subsidiaries, including a $70.0 million equity financing in STT, a $10.0 million investment in the formation of ABLS, a $10.0 million equity financing in Optio Labs, and a $2.65 million US government ARPA-E REBELS grant for SiEnergy.
The Group Subsidiary Ownership Adjusted Value increased to $488.0 million as of 31 December 2014 from $367.3 million at 31 December 2013, an increase of $120.7 million, or 32.9%.
Continuing Momentum
Allied Minds has continued this progress into 2015. The Group recently announced the formation and funding of BridgeSat, which is developing an optical connectivity system that aims to increase the speed, security and efficiency of data transmissions from Low Earth Orbit (LEO) satellites compared to traditional radio frequency solutions. BridgeSat was formed 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.
In addition, SciFluor recently raised a $30.0 million equity financing, which included $25.2 million of third- party funds, to commence clinical trials of its patent-protected compounds in retinal and neurological diseases.
The Group also has two additional transactions near completion. ABLS I, LLC was formed to execute on the first project approved for investment under our ABLS partnership with BMS. This project involves licensing intellectual property with respect to prostate oncology from an Ivy League institution, and proceeding to pre-clinical evaluation and development. In addition, ABLS II, LLC was formed to execute on a second project approved for investment. This project involves licensing intellectual property with respect to fibrotic diseases from a second Ivy League institution, and proceeding to pre-clinical evaluation and development.
The Group is currently assessing new technologies we believe can have a significant commercial impact. We have 13 technologies in final due diligence and 89 technologies in early due diligence. The Group expects that its significant technology pipeline is likely to lead to the creation of a number of new subsidiaries during the remainder of 2015, and aims to form and fund 5 to 10 new projects annually.
We continue to scale and add resources at the Group and its subsidiary businesses. Since the IPO, we have added an additional 98 employees and contractors across our businesses. Our total workforce has reached 298 employees and contractors, of which 180 hold advanced degrees, including 87 PhDs. We intend to strengthen our highly skilled workforce as business needs require.
Outlook
As we continue to build from our strong foundation, the momentum we achieved with a successful IPO, and the meeting of the near-term goals set out during the IPO process, I believe Allied Minds is well positioned for meaningful further growth. In 2015, we will continue to focus on the commercial advancement of our subsidiary businesses; intend to invest further in our businesses and together with third-party investment where appropriate; expand our portfolio of high-impact businesses; and add key industry managers and expertise to the Group. Importantly, as the Group and the subsidiary businesses mature, we aspire to attract new corporate alliances, which we believe will further validate our model and the commercial potential of the subsidiaries. Future corporate collaborations could include co-development agreements, licensing, joint ventures, and direct equity investment. The Company and its businesses are well positioned for continued execution excellence, commercial maturation and expansion, which should result in increased value for shareholders over the medium and long term. In closing, I believe the outlook for Allied Minds is strong.
Chris Silva
Chief Executive Officer
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