27 April 2022

DeepMatter Group Plc

Results for the year ended 31 December 2021

DeepMatter Group Plc (AIM: DMTR, "DeepMatter" or the "Group), the digital chemistry data and software company, has published its audited results for the year ended 31 December 2021. 

Highlights

·      Increased focus on CRO market - trials with Dr Reddy's and Aurigene Pharmaceutical Services, two major Indian headquartered global CROs secured

·      Multi-year data licensing agreement signed with the Life Science business of Merck 

·      In Q1 2022, multi-year licencing and collaboration agreement with Standigm Inc - the leading South Korean AI drug discovery company for the provision of proprietary data and algorithms

·      Cost effective building of IP and capability via SmartChemistry™ platform deployments to university centres at Nottingham, Cambridge and Leeds

·      Positioning the Group as a key opinion leader with refreshed Scientific Advisory Board and appointment of two new NEDs

·      Cash as at 31 Dec 21 £0.3m (31 Dec 20: £2.6m).  Raised gross proceeds of £2.8m in Jan 22, enabling continued investment in Group's unique SmartChemistry™ platform to underpin revenue growth

·      Loss for the year £3.0m (2020: loss £2.4m) from revenues of £1.0m (2020: £1.3m).

Mark Warne, CEO of DeepMatter, said:

"There is a clear demand across our customer base for our SmartChemisty™ platform which brings together our algorithms, vast data base and real-time data capture capabilities into one unified platform.

"We secured a number of notable international deals last year and continue to grow from that base in 2022.

"The unique capabilities of our SmartChemisty™ platform provide our customers with easy access and the ability to exploit data in order to make chemical reaction discovery and design faster, safer, more efficiently and increasingly sustainable."

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About DeepMatter Group plc 

DeepMatter's SmartChemistry™ platform (the combination of proprietary data including data sourced from DigitalGlassware®, content from SPRESI and customer data combined with proprietary algorithms from ICSynth and the application of Machine Learning and AI) enables scientists across a range of industries, including pharma, biotech, agri-science, scientific publishers and contract research organisations (CROs), to easily capture, access and exploit the vast amounts of data created in chemical reactions.  

DeepMatter integrates its proprietary chemistry data and proprietary software to significantly improve productivity, efficiency, discovery, safety and sustainability of chemical reactions for its customers.

DeepMatter's SmartChemistry™ platform capitalises on the combination of its cloud technology, low cost-sensors, connectivity to laboratory hardware and high-performance computing trends such as artificial intelligence (AI).

Visit: www.deepmatter.io and follow @deepmattergroup

Strategic overview

DeepMatter brings together proprietary chemistry data and algorithms in order to significantly improve productivity, discovery and sustainability of chemical reactions.

Chemistry touches every aspect of our lives. Not just medicines and the hydrocarbon sectors, but also across the food, cosmetics and home products industry. Molecules generated from chemical reactions underpin the biggest industries in the world:  96% of all manufactured goods are touched by chemistry with $10 bn invested in R&D alone.

Despite the huge scale of chemistry in one form or another, the sector's infrastructure is not geared towards improving productivity, discovery and sustainability. The processes employed, and the equipment used in chemical reactions discovery to make molecules, resembles approaches from the 19th Century.  However, the ability to generate vast quantities of data from the experiments a scientist performs has exponentially changed, beyond all recognition, over the last few years.

Despite the ability to generate this huge amount of data, the industry has failed to make it readily available to scientists in a useful, cost effective and manageable form. Scientists labour the view there are lots of "new" ideas for chemistry.  However, most are not new.  Many chemical reactions that are assumed to be new, are actually already known with records lost or inaccessible, regardless of whether the reaction has any useful purpose nor not.

Our vision is to build the capabilities for scientists to easily produce, access and use vast amount of data.  Our SmartChemistry™ platform is structured to enable easy access and exploitation of the data in order to make chemical reaction discovery and design faster, safer, more efficient and increasingly sustainable.

With this data and software, DeepMatter is capitalising on cloud technology, low cost-sensors, connectivity to routinely used laboratory hardware and high-performance computing trends such as artificial intelligence (AI).

Current trading and outlook

Although the Group made good progress in developing some new and key international partnerships, the overall commercial progress was behind the Board's initial expectations in 2021, as a result of deals slipping from H2 2021 into 2022.

Over the last few months, the Group has launched its SmartChemistry™ platform and signed up new partnerships.  

For example, since the year end, the Group entered into a multiyear licensing and collaboration agreement with AI-driven drug discovery company Standigm. DeepMatter provides access to its proprietary data and algorithms via its SmartChemisty™ platform. This will enable Standigm to be more efficient and productive in its drug discovery programmes through deeper data insights and analysis.

Operational Review

Markets

The Group's customer base encompasses enterprises and research operations from a wide range of industries including Pharma, Biotech, Agri Science, Fine Chemicals, Scientific Publishers and Contract Research Organisations (CROs). 

SmartChemistry™ platform

Our SmartChemistry™ platform is structured to encompass:

·    A user interface to enable analysis and control

·    An algorithm layer to enable data cleansing, monitoring, modelling and prediction

·    A data layer made up of digitalised proprietary and unique content along with published scientific research.

Our SmartChemistry™ platform enables discovery and design with speed and sustainable delivery. By linking the cloud with the laboratory we bring together all the key components a scientist needs including:

·    Protocols and recipes

•     Integration of literature and electronic laboratory notebook content

•     Data clean-up

·    Hardware integration

•     API linkage

•     Proprietary sensors

·    Data analysis, machine learning and AI insights, in-situ

•     Retrosynthesis and forward reaction

•     Speed and reproducible outcome optimisation

·    Control and automation

Commercial highlights

The CRO market was a focus in 2021 and we moved to trial with Dr Reddy's, a major Indian headquartered global CRO. Dr Reddy's manufactures and markets a wide range of pharmaceuticals worldwide, making it a good partner of choice in contract research, development, and manufacturing services. Dr Reddy's are using the platform to enhance reproducibility, which is paramount to accelerate the discovery of new drugs.

Aurigene Pharmaceutical Services is a fully integrated Contract Research, Development and Manufacturing Organization (CRO/CDMO) and it is using our platform to help screen, develop and scale up chemistry procedures and to accelerate custom drug discovery and development projects.

Other highlights in 2021 from the Group's customer base, included entering into a multi-year, data licensing agreement with the Life Science business of Merck, to provide proprietary chemical structure and reaction data content to Merck's selected applications.  This demonstrated the ability to monetise the data we hold and continue to enrich. 

Post the year end, the Group entered into a multiyear licensing and collaboration agreement with AI-driven drug discovery company Standigm. DeepMatter provides access to its proprietary data and algorithms via its SmartChemisty™ platform. This will enable Standigm to be more efficient and productive in its drug discovery programmes through deeper data insights and analysis.

Building Intellectual Property through academic engagement

The Group has continued to reinforce strong links with leading academic institutions and have deployments of our cloud based platform in active use. 

·    DeepMatter partnered with University of Leeds, in collaboration with University of Sheffield, AstraZeneca, Somaserve and Samsung to successfully win an EPSRC grant.  SmartChemisty™ is being used to share data in real-time and develop digitally enabled scale-up of advanced nanoparticle products. Nanoparticles are an important component in ensuring safe and effective drug delivery of new-generation (mRNA) vaccines and certain anti-cancer drugs.

·    The agreement with the University of Nottingham's Centre of Sustainable chemistry is focused on the development of machine learning models of sustainable chemistry for researchers in the pharmaceutical sector, and related chemical-based industries.  SmartChemisty™ is being used to build interactive machine learning models of sustainability. 

·    At The University of Cambridge's Innovation Centre in Digital Molecular Technologies (iDMT), an open innovation research centre co-funded by the University of Cambridge, AstraZeneca, Shionogi, and the European Regional Development Fund. The SmartChemisty™ platform is being used as part of the development of a fully digital workflow in the discovery and development of new molecules, materials, reactions and processes.

Our industry and academic partners are increasingly adopting our SmartChemistry™ platform as they join us in enabling our vision - 'because molecules matter'.

Position DeepMatter as a Key Opinion Leader

We have also strengthened the Board of Directors to further building our industrial knowledge and experience.  Dr Bryn Roberts joined the board as Non-executive Director in summer 2021, bringing a wealth of experience in the pharmaceutical sector having spent 15 years at Roche. He is currently Senior Vice President and Head of Data Services at Roche Information Solutions and until recently was Global Head of Operations, Pharmaceutical Research & Early Development. 

As a member of the Pharmaceutical Research & Early Development Leadership Team he led innovation in disciplines such as Data Science and Laboratory Automation, including diverse applications of Digital and Artificial Intelligence (AI) technologies.

We have also refreshed and strengthened our Scientific Advisory Board to ensure we continue to benefit from external verification of our strategy, priorities and direction of travel.  The Board is led by Dr Richard Bourne, Professor of Digital Chemical Manufacturing at the University of Leeds. 

Working with Richard are:

·    Dr Nessa Carson, Principal Automation Scientist at Syngenta. 

·    Dr Natalie Fey, an expert in computational approaches as Associate Professor at the Centre for Computational Chemistry, University of Bristol.

·    Dr David Parry, Head of Research at DeepMatter. 

·    Dr Bryn Roberts, SVP and Head of Data Services at Roche Information Solutions and non-executive director at DeepMatter. 

Dr Mark Warne was invited to chair the Industrial Advisory Board (IAB) at Imperial College's EPSRC Centre for Doctoral Training in Next Generation Synthesis & Reaction Technology (CDT). In 2022 he was also invited to join the Industrial Advisory Board of University of Leeds Process Chemistry and Chemical Engineering school. 

All these appointments cement DeepMatter as a thought leader in the space, enabling close relationships with a number of multinational pharma companies and Key Opinion Leaders - all of whom are committed to integrating chemistry with technology and sharing their expertise and experience with the chemists of the future.

Financial review

The Group's results reflect the stage of the business as it continues to invest in new products while building out a team consisting of capability and expertise, to deliver the service customers expect.

Revenue

Revenue for the year was £1.0m (2020: £1.3m) as we continued to renew profitable business while trialing products with new customers and exploring cross selling opportunities with existing customers.  The number of new paid evaluations of platform, retrosynthesis and data capabilities during the year provides a route to conversion and new contracted revenues in 2022.

Operating performance

As a group, enhancing our products in line with market trends and customer feedback have been the key drivers during 2021.

R&D costs were £1.8m in 2021 (2020: £1.6m) in addition to which, £0.1m of ICSynth development was capitalised.  This demonstrates the focus of the business in enhancing our products and continuing to add functionality.

General and administrative expenses were unchanged at £2.0m (2020: £2.0m) as we continued to tightly control costs. 

In addition to these variances, the business claimed Furlough/COVID scheme support in 2020 which reduced costs by £0.2m in the prior year.

Capitalised software

In addition to further significant development of the SmartChemistry™ platform, our retrosynthesis capability was also invested in, adding further capability.  This development work on ICSynth has been capitalised.  A total of £0.1m was capitalised which will be amortised over two years in line with our accounting policy.

Result

The Group incurred a total loss after tax for the year ended 31 December 2021 of £3.03 million (2020: loss £2.41 million) reflecting our larger R&D spend and reduced revenue. 

Cash

The Group's overall cash position at 31 December 2021 was £0.3 million (2020: £2.6 million) which reflects the continued investment in products and the necessary funding to support a controlled level of operating costs. 

In December 2021 the Group announced a fundraise of £2.75m net of costs which was completed in January 2022. 

Net assets

The reduction in cash balance at the end of December 2021 translated to a decline in net assets.  At 31 December 2021, net assets were £5.95 million (2020: £8.90 million).

Post balance sheet financing activities

The Group raised gross proceeds of £2.8m after placing shares at a price 0.1p in January 2022 from new and existing investors. This discount was required to secure the future of the business both in terms of cash runway and introducing new investors to the register who are supportive of the business' strategy at this early stage of development.

The Consolidated Financial Statements have been prepared for the year to 31 December 2021.

Key Group financial performance indicators are set out below:

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2021

Consolidated Statement of Financial Position

As at 31 December 2021