Physiomics PLC

Initiation of Coverage
27 October 2016
Adding value to the cancer drug development process
Key Statistics
Code PYC Following the decision not to proceed with the acquisition of oncology
Listing AIM therapeutics Company BioMoti, Physiomics is now 100% focused on growing
Sector Healthcare
Market Cap 1.43m the revenues and creating a path to profitability in the core modelling and
Share in issue 5,701.66m simulation business. The Companys Virtual Technology is being used by
Current Price* 0.025p several major pharmaceutical and biotech companies, and has demonstrated
12 mnth High/Low 0.06p/0.02p
*Priced at 14:31 on 27/10/2016 its ability to predict the outcome of pre-clinical and clinical cancer studies.
Stock Performance Last years signing of the Companys first clinical contract with a major
0.07 pharmaceutical Company, Merck Serono, represents an opportunity to move
0.06 up the value chain, and deliver larger projects with limited investment in
0.05
0.04 additional resource. There are several reasons why we believe the Company
0.03 is better placed than ever to accelerate its growth.
0.02
27-Nov-15

27-Apr-16
27-May-16
27-Jun-16
27-Oct-15

27-Dec-15
27-Jan-16
27-Feb-16
27-Mar-16

27-Jul-16
27-Aug-16
27-Sep-16

Recently strengthened Board (Jim Millen as CEO, ex GSK and Allergan)

and Scientific Advisory Board (Professor Mark Middleton, Lead Cancer
Source: Fidessa
Clinician for the Oxford University Hospitals NHS Trust and Deputy
Financials Director of the Cancer Research UK Oxford Centre) adds commercial
y/e Jun
'm 2013A 2014A 2015A 2016A focus coupled with further scientific weight.
Revenue 0.24 0.27 0.24 0.30
PBT -0.54 -0.46 -0.41 -0.43 The entry of Virtual Tumour into the clinic.al setting offers larger
Source: Company Results
potential cost savings and improved clinical outcomes for developers
Company Description
of oncology drugs. It has already landed the company with its largest
Physiomics is a company engaged in the provision of
outsourced systems and computational biology ever contract of circa 250k vs approximately 50k for pre-clinical
services to pharmaceutical companies. The contracts.
Company's scope comprises the operation of a sole
United Kingdom base and entirely United Kingdom-
based assets. The Company's lead service, Virtual Virtual Tumour has now been validated in a preclinical
Tumour, is used to optimise the dosing and
scheduling of oncology drugs in pre-clinical and more immunotherapy model enabling simulation and prediction of the
recently clinical studies. The Company also provides efficacy of immune-checkpoint blockers, alone and in combination
a Cardiac toxicity prediction service to predict
unwanted toxic side effects of drug candidates early
with conventional anti-cancer therapies. This is one of the fastest
in the drug discovery process, and drug growing oncology markets, estimated to nearly double by 2021 to
combinations database for researchers and clinicians
$119.4bn.
to access literature data on pre-clinical and clinical
regimens, and their effects. The Company's other
services include target validation, mechanism of There may also be an opportunity for Physiomics to enter the
action studies and lead selection. The Company
Personalised Medicine space enabling the optimisation of treatment
utilises the Virtual Tumour platform, which is a
mathematical model of a growing tumour that regimes for individual cancer patients based on their profile and
predicts the outcome of preclinical and early clinical diagnosis.
studies.
HYBRIDAN LLP We believe that Physiomics has developed a best in class biosimulation
20 Ironmonger Lane, London, EC2V 8EP
Website: www.hybridan.com capability for the large and growing drug discovery industry. Deals and
@HybridanLLP comparators in the space suggest revenue multiples in the mid to high single
Derren Nathan digits. The Company is well placed to grow the size and quality of its revenues
Tel: 020 3764 2344
Email: derren.nathan@hybridan.com and reach profitability.
For analyst certification and other important disclosures, refer to the Disclosure Section
Contents
1. Background ..................................................................................................................... 3
2. Investment case .............................................................................................................. 6
i. Validated platform moving up the value chain .............................................................. 6
ii. Personalised medicine software ................................................................................... 11
iii. Other products and services. .................................................................................... 11
iv. New management has the connections to expand customer base ......................... 12
v. The biosimulation market ............................................................................................. 12
vi. Valuation ................................................................................................................... 13
3. Final Results .................................................................................................................. 14
4. Board of Directors ......................................................................................................... 14
5. Significant Shareholders as at 10 October 2016........................................................... 16
6. Financial Statements..................................................................................................... 17
7. Research Disclaimer ...................................................................................................... 20
 1. Background
Physiomics was admitted to AIM in 2004, in order to accelerate the
commercialisation of its in-silico computer-based simulation tools which are
Trial failures are
particularly high in primarily used to model the response of tumours to prospective oncological
Oncology.
drug candidates, and specifically help pharmaceutical and biotechnology
Physiomics
simulation models companies to determine optimal doses, schedules and combinations for their
can help improve
research programmes. These tools are designed to reduce timelines and
the drug
development budgets for drug developers, as well as the quantity of pre-clinical animal
process.
models required for in vivo validation. The accuracy of the simulations also
lends itself to a reduction in the failure rate of drug trials. Oncology failure
rates are particularly high with oncology drugs, with comparative failures
being particularly evident at earlier stages as can be seen from the table
below.

Failure rates in oncology drug development remain high

Phase of development Cancer drugs Non-cancer drugs

Phase I 27% 17%
Phase II 60% 46%
Phase III 33% 29%
Regulatory authorisation rejection 9% 11%

Source: Quintiles White Paper: Oncology drug development

and value-based medicine 2014

According to an article in the Economist in 2014 The price of failure a large

chunk of the $2.6bn average cost of drugs developed between 1995 and
Core to its offering is
the Virtual Tumour 2007 is accounted for by failed programs.
Technology

Core to the Physiomics offering is its Virtual Tumour technology, a

sophisticated computer model that simulates tumour cell division and the

3
Virtual Tumour has effect on the tumour of various interventions. The Physiomics team works
been shown to have closely with its clients to identify relevant input data (e.g. concentration,
strong predictive
power of tumour biomarkers, tumour growth measurements) and simulate the outcome of
size in a pre-clinical single agents and therapy combinations including radiotherapy. This is
and more recently
clinical setting important as cancers are rarely treated on a single agent basis. As we will
discuss further, Virtual Tumour is powerful in that it has been shown as
effective in closely predicting the outcome of cancer trials in blinded tests.
The softwares main output is estimated tumour size. The technology can also
be used to estimate optimal dosage and timing of administration, and assess
use across different cancer types thereby maximising the potential value of
clients development candidates.

How Virtual Tumour can help optimise oncology development programs

Source: Company Presentation

Whilst there is some patent protection around certain elements of the

technology, much of Physiomics edge comes from its accumulated know
how and expertise. The decision of a number of major pharmaceutical
companies to work with Physiomics reflects the high regard in which the
Companys team and products are held within the industry, and the

4
difficulties that even a well-resourced global company would have in
replicating Virtual Tumour.

5
 2. Investment case

i. Validated platform moving up the value chain

Physiomics has executed over 50 projects in its lifetime including for Big
Virtual Tumour can Pharma (including Lilly, Merck Serono, Merck & Co). The majority of contracts
benefit the
so far have related to pre-clinical projects. For Big Pharma, which has such a
spectrum of
oncology big catalogue of potential development molecules, Physiomics can help
researchers, from
speed up the selection progress and optimise the likelihood of a successful
academics through
to biotech and big outcome in pre-clinical trials and help companies to extract the most value
pharma. Physiomics
out of their pool of drug candidates. Physiomics has also had success in
has serviced clients
in all these groups winning business from Biotech and Midcap Pharma companies, who with
shallower pockets need to save time and money, even when just progressing
a single candidate. By minimising the amount of experiments required to
optimise drug combinations and dosage schedules, Physiomics can save this
client group time and money. The Company has also won grant funded
business, as well as being engaged by leading academic institutions such as
the NIH, Oxford University and the institute of Cancer Research.

Source: Company Presentation

6
 In order to accurately simulate a given treatment regime for a particular
Virtual Tumour can
be populated by cancer type, the model needs to be calibrated using inputs which can include
data from a wide
tumour control growth data, pharmacokinetic profiles (data on how a drug
range of sources
from Physiomics might be absorbed, distributed, metabolised and excreted by an organism),
own data bank of
and pharmacodynamic profiles (data on how drugs inhibit tumour growth).
literature through to
clients earlier pre- This can come from various sources such as in-vitro (test tube/petri dish)
clinical work
experiments, literature, preclinical studies and previous clinical studies.

Therefore rather than an off the shelf product Virtual Tumour is, at present
Virtual Tumour is
constantly evolving primarily sold as a bespoke project by project service based proposition with
with the scientific
Physiomics ultimately delivering a report predicting the outcome of
communities
understanding of preclinical animal studies or early stage clinical trials. The expertise
cancer and its
accumulated by Physiomics in this field would be challenging to replicate in-
treatments.
house. Virtual Tumour is constantly evolving with the scientific communitys
understanding of cancer and its treatments.

The ability of Virtual Whereas some models seek to simulate the internal dynamics of dozens or
Tumour to deliver hundreds of proteins within a cell, this sort of complexity makes models
results is
underpinned by the difficult to calibrate, and leads to challenges in making quantitative
Companys ability to predictions about tumour growth. Virtual Tumour adopts an agent-based
identify a small
number of key approach. Each cell in the tumour is described by a separate software agent,
inputs that make the which uses a relatively simple set of equations. The aim is to capture the
model predictive yet
manageable overall effect of the drug on a cell population, rather than the precise
processes within each cell. A number of other simplifications are also made.
The complexity of the model is thus deliberately constrained, so that it can
be parameterised with the available data.

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 Physiomics has demonstrated significant evidence of helping researchers and
Case studies have
provided evidence drug developers to meet their objectives, and of the predictive efficacy of
of Virtual Tumours Virtual Tumour. In one case study aimed at blind validation of the
predictive power
technology, a customer provided 21 proposed dosing regimens for
combinations of DNA repair inhibitors, targeted agent and standards of care.
In 19 out of 21 regimens, virtual tumour correctly predicted the outcomes of
the mice experiments. Such predictive behaviour can massively reduce the
number of animal experiments required to extract the relevant pre-clinical
data. Blind tests like these can give researchers the confidence they need to
engage Physiomics on new projects. Whilst some pharmaceutical companies
might seek to replicate this activity in house, we believe Physiomics track
record, combined with its third party independence, makes Virtual Tumour a
compelling addition to any oncology companys drug development toolset.

In another example, Virtual Tumour has suggested an optimal administration

and ability to
regime of two established chemotherapy agents (Gemcitabine and
predict optimised
dosing schedules Docetexal) that predicted a 50% more efficient dosing schedule than the
original schedule as verified by a xenograft experiment. This shows how
critical timing can be when administrating drugs having different mechanisms
Virtual tumour has
of action, and how predictive models could be used for optimisation.
also been validated
in a preclinical Importantly, Virtual Tumour has now been validated in an immunotherapy
immunotherapy
model enabling simulation and prediction of the efficacy of immune-
model. A rapidly
growing area of drug checkpoint blockers, alone and in combination with conventional anti-cancer
development.
therapies. This is one of the fastest growing oncology markets estimated to
nearly double by 2021 to $119.4bn, according to a report by Research and

Physiomics first Markets.

contract for a
clinical version of
Virtual tumour with In March 2015 Physiomics, entered a new era with Virtual Tumour with its
a Global first contract for a clinical version of the model. The client is Merck Serono,
Pharmaceutical
company was signed the biopharmaceutical division of Merck, Germany. This is Physiomics largest
with Merck Serono contract to date, with a value we estimate at circa 250k. It involved
in March 2015

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Clinical projects Physiomics scientists working closely with Merck Serono scientists to develop
have revenue and calibrate a model that can predict optimal combination partners for both
potential of 150k+
vs 50k+ for pre- marketed and pipeline drugs. Earlier pre-clinical projects typically generated
clinical revenues in excess of 50k, whilst the revenue potential of clinical projects is
typically 150k plus per project.

Previously Physiomics had generated proof of concept data of translation of

Virtual Tumours predictive ability in pre-clinical xenografts to human clinical
Case studies have trials. We highlight a project carried out for Oxford University in 2014,
provided evidence concerning Docetaxel-Selumetinib combination treatment in metastatic
of Virtual Tumours
predictive power in melanoma. Physiomics demonstrated that Virtual Tumour Clinical can make
human trials. accurate predictions of the mean change in lesion size over time for a phase
II clinical study using preclinical PK/PD and clinical PK data. Furthermore, it
should be noted that primary xenografts were not required for this study,
indicating further potential cost savings to drug developers choosing to use
Virtual Tumour.

The emergence of Virtual Tumour has been the subject of several poster and oral presentations
drug resistance has including several at the Annual Meeting for American Association for Cancer
recently been added
as an output of the Research. This year Physiomics presented on new developments of the
model. Drug Virtual Tumour platform in drug resistance, concentrating on a case study
resistance is a major
cause of treatment that demonstrated that Virtual Tumour can be applied to model the
failure in cancer, emergence of resistance in patient-derived xenografts. Furthermore, it
and understanding
and overcoming showed that the model can be used to identify and optimise therapeutic
mechanisms of strategies for delaying the emergence of drug resistance. These findings were
resistance is a key
challenge in the subject of a presentation delivered this month, at the Seventh American
advancing cancer Conference on Pharmacometrics, the main US conference for PK/PD
therapy.
modelling.

The pre-clinical version of Virtual Tumour is still an essential part of the

Physiomics offering, and has continued to make good commercial progress of
late with a fourth large pharma customer and multiple extensions to a project

9
 with another major global pharmaceutical company with whom Physiomics
has been working for over four years.

According to a 2014 report by the US Department of Health and Human

Whilst the pre- Services, the average phase 1 trial in oncology costs $4.5m. According to an
clinical version of
article in nature.com from March 2014, animal models are significantly
Virtual Tumour is
still an important cheaper, with mice models in particular being estimated at less than 1% of
part of the product
the cost of early stage human studies. From this perspective alone there is
mix, the significantly
higher cost of potentially significantly higher value to drug developers in applying a
human trials helps
predictive model to a clinical setting as opposed to pre-clinical which has until
to write a
compelling sales recently been the Companys focus. It is also important to note that animal
pitch for this newer
models have been relatively unsuccessful in translating their results into
market.
human trials due to the limited ability to mimic the extremely complex
process of human carcinogenesis, physiology and progression. Therefore, the
ongoing validation of Virtual Tumours predictive ability in human trials, has
the potential to further enhance the Companys position as a provider of
services that improve the outcomes of its clients development programmes.
We understand that the Companys sales strategy has previously focussed
largely on cost savings for its clients, but in targeting the likelihood of clinical
success, finding new indications for candidates, selecting the most effective
leads and optimising their dosing regimes, we believe Physiomics can
generate higher value long term agreements such as that with Merck Serono,
with new clients as well as building upon this long-established relationship.

10
 ii. Personalised medicine software
Physiomics experience of using Virtual Tumour to evaluate drug

The predictive combinations and dosing schedules has led it to assess the feasibility of
power of the developing a software tool to determine which cancer treatment to provide
Companys models
may in time be able to which groups of patients based on individual patient data. The software
to optimise the would use as its inputs pharmacological information about the drugs coupled
treatment regimes
of individual cancer with physiological, genomic, and metabolic information about the patient.
patients The focus on forecasting would be on which treatment and schedule are likely
to lead to an increase in survival. The Company is in talks with leading
clinicians and collaborators regarding the required data and is seeking grant
funding to develop a prototype software tool.

iii. Other products and services.

Whilst Virtual Tumour is the core focus of the Physiomics teams sales effort
the Company has a number of complementary services that generate smaller
revenue streams. We detail some of these below.
Physiomics Cardiac
Toxicity model has
EasyAP / Cardiac Toxicity Service
been shown to have
50% greater
Cardiac toxicity is a leading cause of attrition in clinical studies and post-
predictive power
than its closest marketing withdrawal. Under FDA requirements, all candidate drugs must be
competitor
screened against the hERG potassium channel. Physiomics' technology takes
into account activity against hERG and two additional ion channels to deliver
50% greater predictive power than the best published model currently
available according to a review by Physiomics of available published
literature.

DrugCARD Regimen Database

The DrugCARD Regimen Database is a repository of preclinical and clinical

regimen data from relevant oncology specific literature. This database
facilitates inputs into Virtual Tumour where established targets or drugs are
part of the model. It is searchable by drug, regimen, company/investigator,
tumour type/indication, combination and mechanism of action. As well as

11
 helping to drive Virtual Tumour simulations, the database is available to
researchers and clinicians on a standalone basis on an annual subscription.

iv. New management has the connections to expand customer base

We believe that Physiomics has developed a bio-simulation tool that fulfils a

large unmet need for drug developers in the oncology field, and has done well
to get it adopted by a selection of major pharmaceutical companies, including
by Merck Serono for the clinical version. However, the Companys financial
We believe that results to date suggest that the Company has not yet achieved critical mass
Physiomics can build nor positioned the product as the value adding proposition it deserves. Jim
on the validation of
its work through Millens appointment as CEO brings a seasoned professional to the helm with
collaborations with a strong commercial focus. He has experience of drug development and of
Big Pharma to gain
sales traction. licensing deals in global pharma companies (GSK and Allergan) and we believe
he has the appropriate network in place, to drive home the message that
Physiomics can not only save time and money in the development of cancer
drugs, but also improve the likelihood of successful trials and enhancing the
value of successful trials by optimising dosage, and screening other tumour
types for a potential response.

v. The biosimulation market

According to MarketsandMarkets, the bio-simulation market is set to grow to
$2.1bn by 2020, a CAGR of 15.29% from 2015 levels. Within this market, there
are various subsectors from molecular modelling through to pharmacokinetic
and pharmacodynamics simulation (i.e. the key drivers of a drugs
bioavailability).

12
 We believe that Physiomics edge is its specific therapeutic focus on oncology
and the bespoke approach with validated predictive power. For drug
The closest listed
comparator trades developers, cancer is a high risk and high return field and any software that
at 7.4x trailing
revenues can lessen that risk and improve potential returns is something that has the
potential to become an important high value tool to the industry. There are
few listed comparators. Simulations Plus (NASDAQ:SLP) offers an arguably
more commoditised off the shelf product range than Physiomics and is not
involved in the simulation anti-cancer trials. With a market capitalisation of
$147.8m, it is trading on 7.4x trailing revenues and a 32x trailing PE ratio.

In 2014 Dassault Systmes acquired San Diego-based Accelrys, a provider of

scientific innovation lifecycle management software for chemistry, biology
and materials for circa $750m, a revenue multiple of 6.1x. We understand
that Accelrys was loss making at the time of the acquisition.

vi. Valuation

The adaptation of Virtual Tumour to a clinical setting, and Immunotherapy

targets represents significant new opportunities. It has been a long journey
for the Company so far, but scientific and commercial validation is firmly
We see the
established. The change at the top, we believe, will give the sales effort a new
Company having the
potential to reach a impetus. The current market cap of 1.4m does not reflect this potential.
revenue footprint in
Should Virtual Tumour start to gain more widespread acceptance as part of
the millions rather
than the hundreds the oncology drug discovery process, we see the Company having the
of thousands
potential to reach a revenue footprint in the millions rather than the
hundreds of thousands. The Company is tightly run with a small skilled team
of permanent staff, plus contract resources familiar with the Physiomics
products. This suggests a business model with inherent operational gearing
which should see any increase in revenues translate into an improved
operating performance. As the product offering evolves to be more value
enhancing for its clients, we understand the company will seek to explore
longer term revenue models as opposed to a fee for service model that has
been predominant throughout the Companys history.

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 Given the revenue multiples above, investors who get in now, at a time when
little upside is priced into the valuation, stand the chance of making a return
a multiple of the current share price.

3. Final Results
The Companys recently published results for the year ending June 2016
showed a 26% increase in revenues to 297k and a 6% decrease in operating
underlying losses (pre-share based payments and exceptional items) to
371k. Working capital was broadly neutral with operating cash out flows of
347k. The company ended the period with cash of 139k which will have
been strengthened by the 555k placing completed in September 2016.

4. Board of Directors

Dr Jim Millen, Chief Executive Officer

Jim joined Physiomics in April 2016, bringing over 15 years experience in
pharmaceuticals and biotechnology gained at a number of blue chip global
companies as well as smaller UK-based organisations. At Allergan, Jim was
responsible for corporate development in its Europe, Africa and Middle East
region where he was pivotal in expanding the companys geographical
footprint before moving to a senior role responsible for commercial strategy
and market access. Prior to that, at GSK, Jim held business development roles
of increasing responsibility including within the Companys Innovative Centre
of Excellence for External Drug Discovery. In the last 18 months, Jim has
supported a number of smaller companies in fund raising and strategic
partnering activities. Over the course of his career, he has completed an array
of deals worth many hundreds of millions of dollars, spanning licencing,
acquisition, divestment, development and commercialisation. Jim studied
medicine at Queens College, Cambridge University and qualified as a doctor
from the London Medical School. He holds an MBA from INSEAD.

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Dr Christophe Chassagnole, Chief Operating Officer
Dr Christophe Chassagnole has been involved in systems biology and bio-
computing projects since the mid-nineties, with experience in both academic
and industrial environments. His Doctorate was achieved at the Victor
Segalen-Bordeaux II University, and then he held a post doctorate position
with IBVT at Stuttgart University. Before Joining Physiomics, Dr Chassagnole
worked in France as a senior researcher for CRITT Bio-Industries (Toulouse)
for 3 years. He joined Physiomics in May 2004 as project leader to develop
the model portfolio of the Company. He was appointed Chief Operating
Officer of Physiomics in May 2007.

Dr Paul Harper, Chairman

Dr Paul Harper has over 35 years' experience in the life sciences industry
covering both drug development and medical devices. He is Chairman of
Physiomics plc, and a NED of Reneuron Holdings plc, both AIM quoted
companies. In addition, he is chairman of Oval Medical Technology Ltd and
an adviser to the Board of CamStent Ltd. Paul has served as Chief Executive
of Cambridge Antibody Technology Limited, and founded Provensis Limited.
He has also served as Corporate Development Director of Unipath Limited,
then the medical diagnostics business of Unilever PLC, and as Director of
Research and Development for Johnson & Johnson Limited. Formerly head of
Antimicrobial Chemotherapy for Glaxo PLC, Paul has a PhD in Molecular
Virology and is the author of over 50 publications.

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5. Significant Shareholders as at 10 October 2016

Investor Nam e Holding

W B Nominees Limited 11.60%
Barclayshare Nominees
10.40%
Limited
SVS (Nominees) Limited 8.50%
HSDL Nominees Limited 8.40%
TD Direct Investing Nominees 7.40%
Investor Nominees Limited 6.90%
Nomura PB Nominees Limited 4.60%
Hargreaves Lansdow n
4.40%
(Nominees)
Stifel Nicolaus Europe Limited 3.90%
Peel Hunt Holdings Limited 3.80%

Source: Physiomics website

16
 6. Financial Statements
Profit & Loss
Year ended Year ended Year ended Year ended
30-Jun-13 30-Jun-14 30-Jun-15 30-Jun-16

Revenue 240,000 267,903 235,486 297,120

Net operating expenses -776,520 -733,168 -630,815 -668,501
Share-based compensation -11,822 - -19,426 -37,233
Operational exceptional costs -22,947

Operating loss -548,342 -465,265 -414,755 -431,561

Presented as:
Loss after net operating expenses -395,329 -371,381
Share-based compensation -19,426 -37,233
Operating exceptional costs 0 -22,947
Operating loss -414,755 -431,561

Finance income 4,551 1,013 304 143

Finance costs - - - -8

Loss before taxation -543,791 -464,252 -414,451 -431,426

UK corporation tax 43,220 38,631 56,795 52,729

Loss for the year attributable to equity shareholders -500,571 -425,621 -357,656 -378,697
Loss per share (pence)
Basic and diluted -0.033 -0.026 -0.017 -0.0130

Source: Physiomics PLC published accounts

17
Cash Flow Statement

Year ended Year ended Year ended Year ended

30-Jun-13 30-Jun-14 30-Jun-15 30-Jun-16

Cash flows from operating activities:
Operating loss -548,342 -465,265 -414,755 -431,561
Amortisation and depreciation 8,540 7,925 6,616 6,439
Share-based compensation 11,822 - 19,426 37233
Decrease in receivables -47,994 85,833 3,725 -60,005
Decrease in payables 19,114 -16,939 -54,458 45,910

Cash generated from operations -556,860 -388,446 -439,446 -401,984

UK corporation tax received 32,373 36,939 46,795 55,123

Interest paid - - - -8

Net cash generated from operating activities -524,487 -351,507 -392,651 -346,869

Cash flows from investing activities:

Interest received 4,551 1,013 304 143
Sale of non-current assets 725
Purchase of non-current assets -1,852 -2,597 -625 -1835

Net cash received by investing activities 2,699 -1,584 -321 -967

Cash outflow before financing -521,788 -353,091 -392,972 -347,836

Cash flows from financing activities:

Issue of ordinary share capital (net of expenses) 10,000 306,287 527,360 220,000

Net cash from financing activities 10,000 306,287 527,360 220,000

Net increase / (decrease) cash and cash equivalents -511,788 -46,804 134,388 -127,836
Cash and cash equivalents at beginning of year 690,950 179,162 132,358 266,746

Cash and cash equivalents at end of year 179,162 132,358 266,746 138,910

Source: Physiomics PLC published accounts

18
 Balance Sheet
Year ended Year ended Year ended Year ended
30-Jun-13 30-Jun-14 30-Jun-15 30-Jun-16

Non-current assets
Intangible assets 16,336 11,669 7,025 2,381
Property, plant and equipment 4,250 3,589 2,242 1,557
Investments 1 1 1 1
20,587 15,259 9,268 3,939
Current assets
Trade and other receivables 180,717 96,576 47,851 107,856
Taxation recoverable 55,000 52,606
Cash and cash equivalents 179,162 132,358 266,746 138,910
359,879 228,934 369,597 299,372

Total assets 380,466 244,193 378,865 303,311

Current liabilities
Trade and other payables -124,645 -107,706 -53,248 -99,158

Total liabilities -124,645 -107,706 -53,248 -99,158

Net assets 255,821 136,487 325,617 204,153

Capital and reserves

Share capital 602,620 687,663 992,663 1,032,663
Capital reserves 3,796,358 4,017,602 4,259,388 4,476,621
Retained earnings -4,143,157 -4,568,778 -4,926,434 -5,305,131
Equity shareholders' funds 255,821 136,487 325,617 204,153

Source: Physiomics PLC published accounts

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 7. Research Disclaimer
This document should not be relied upon as being an impartial or objective assessment of the subject matter and is not deemed to be
independent research for the purposes of the Financial Conduct Authority rules. As a consequence the research (a) has not been prepared
in accordance with legal requirements designed to promote the independence of investment research; and (b) is not subject to any
prohibition on dealing ahead of the dissemination of investment research (although Hybridan does impose restrictions on personal account
dealing in the run up to publishing research as set out in our Conflicts of Interest Policy).

Hybridan LLP is involved in providing other financial services to Physiomics PLC (the Company) and as a result Hybridan LLP may have
responsibilities that conflict with the interests of the persons who receive this document.

This document has been issued by Hybridan LLP for information purposes only and should not be construed in any circumstances as an
offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the
basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment
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transactions in any investment or related investment mentioned herein and may provide financial services to the issuers of such
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Research Disclosures

Investment analyst certification:

All research is issued under the regulatory oversight of Hybridan LLP. Each Investment Analyst of Hybridan LLP whose name appears as the
Author of this Investment Research hereby certifies that the opinions expressed in the Investment Research accurately reflect the
Investment Analysts personal and objective views about any and all of the companies or the Company discussed herein that are within such
Investment Analysts coverage universe.

The Investment Analyst who is responsible for the preparation of this Investment Research is an employee of Hybridan that has been
engaged by Hybridan LLP to produce this document.

Investment Research Disclosures:

1. In the past 12 months, Hybridan LLP has had corporate finance mandates as Corporate Broker or managed or co-managed a
public offering of the Companys securities or received compensation for Corporate Finance services from the Company.

2. Hybridan LLP may receive compensation for Corporate Finance services from this Company in the next twelve months.

3. Hybridan LLP acts as Corporate Broker for the Company.

4. Hybridan may provide investment banking services to the Company and in that capacity may have received confidential
information relevant to the securities mentioned in this research report which is not known to the researcher who has compiled
this research report.

Hybridan, its partners, officers or employees or any connected persons may at the time of publication have an interest in the equity of the
Company through the holding of warrants, securities, futures, options, derivatives and any other financial instrument of any of the
companies referred to in this document. Hybridan at the time of publication currently has no interest of this nature in the Company discussed
herein. If exercised this interest would not be required to be notified as it would comprise less than 3% of the Companys issued share
capital. Hybridan reserves the right to increase or dispose of this interest and / or the underlying shares resulting from exercise, without
further notice. Any disposal or acquisition of warrants or shares will be undertaken under the FCA guidelines regarding Closed Periods and
Public Disclosure as required.

Research recommendations:

In line with our conflicts of interest policy Hybridan LLP does not produce recommendations or publish target prices on companies who are
corporate clients of Hybridan LLP.

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