TIDMMTPH
RNS Number : 1405M
Midatech Pharma PLC
17 September 2021
17 September 2021
Midatech Pharma Plc
("Midatech" or the "Company")
Interim results for the six months ended 30 June 2021
Midatech Pharma PLC (AIM: MTPH.L; NASDAQ: MTP), a drug delivery
technology company focused on improving the bio-delivery and
biodistribution of medicines, announces its unaudited interim
results for the six months ended 30 June 2021.
OPERATIONAL HIGHLIGHTS
On 17 June 2021, the Company announced significant progress
across a number of R&D programmes including:
Q-Sphera
-- Breakthrough data on the successful encapsulation of an exemplar monoclonal antibody (mAb);
-- The delivery of proof of concept formulations of MTX214 and
MTX216 to the Company's collaboration partner for the partner's in
vivo studies; and
-- The successful development of MTD211, a long-acting
formulation of brexpiprazole which, in in vivo studies,
demonstrated therapeutic blood levels over a period of three
months.
MTX110
-- Demonstration, in vitro, of the potency of MTX110 in four
patient-derived Glioblastoma cell lines.
FINANCIAL HIGHLIGHTS (including post period end)
-- Total revenue in H1 2021 was GBP0.40m (1H20: GBP0.17m).
Total revenue represents income from R&D collaborations
plus grant revenue.
-- Research and development costs decreased by 50% to GBP2.01m
(1H20: GBP3.99m) as a result of the termination of MTD201
and focus on multiple earlier stage programmes.
-- Administrative expenses decreased 44% to GBP1.64m (1H20:
GBP2.93m) due to expenses incurred in connection with
the Strategic Review and restructuring in the prior period.
-- Net cash used in operating activities (after changes in
working capital) in 1H21 was GBP3.11m, compared with GBP7.09m
in 1H20.
-- In July, post period end, the Company raised GBP10.0m
before expenses in an UK Placing of 35.1m ordinary shares
at GBP0.285 per share.
-- The cash balance on 30 June 2021 was GBP4.20m.
.
Commenting, Stephen Stamp, CEO and CFO of Midatech said : "We
are pleased to report good progress throughout the Company and an
expanded and exciting pipeline of programmes and opportunities. The
disruption and costs of the restructuring in 2020 are now behind
us. The first half of 2021 has been highly productive with three
potentially viable Q-Sphera formulations, one internal and two for
a collaboration partner. We believe the breakthrough data on the
encapsulation of a protein could prove to be a very significant
opportunity for Midatech."
The Company will be hosting a webinar at 5.30pm BST / 12.30pm
EST on Monday 20 September 2021. The webinar is open to all
existing and potential shareholders and those interested in
attending may register via the following link where, following
registration, they will be provided with access details:
https://us02web.zoom.us/webinar/register/WN_vLpYaALlRYqUXveBsffy7w
Participants may submit questions during the webinar or in
advance via email to: midatech@investor-focus.co.uk
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
For more information, please contact:
Midatech Pharma PLC
Stephen Stamp, CEO, CFO
Tel: +44 (0)29 2048 0180
www.midatechpharma.com
Panmure Gordon (UK) Limited (Nominated Adviser and Joint
Broker)
Freddy Crossley, Emma Earl (Corporate Finance)
Rupert Dearden (Corporate Broking)
Tel: +44 (0)20 7886 2500
Turner Pope Investments (TPI) Limited (Joint Broker)
Andrew Thacker / James Pope (Corporate Broking)
Tel: +44(0)20 3657 0050
IFC Advisory Limited (Financial PR and UK Investor Relations)
Tim Metcalfe / Graham Herring
Tel: +44 (0)20 3934 6630
Email: midatech@investor-focus.co.uk
Edison Group (US Investor Relations)
Maxwell Colbert
Tel: +1 (646) 653 7028
Email: mcolbert @edisongroup.com
About Midatech Pharma PLC
Midatech Pharma PLC (dual listed on LSE AIM: MTPH; and NASDAQ:
MTP) is a drug delivery technology company focused on improving
the bio-delivery and biodistribution of medicines. The Company
combines approved and development medications with its proprietary
and innovative drug delivery technologies to provide compelling
products that have the potential to powerfully impact the
lives of patients.
The Company has developed three in-house technology platforms,
each with its own unique mechanism to improve delivery of
medications to sites of disease. All of the Company's technologies
have successfully entered human use in the clinic, providing
important validation of the potential for each platform:
* Q-Sphera(TM) platform: a disruptive micro-technology
used for sustained release to prolong and control the
release of therapeutics over an extended period of
time (from weeks to months).
* MidaSolve(TM) platform: an innovative nanotechnology
used to dissolve insoluble drugs so that they can be
administered in liquid form directly and locally into
tumours.
* MidaCore(TM) platform: a leading-edge nanotechnology
used for targeting medications to sites of disease.
The platform nature of the technologies offers the potential
to develop multiple drug assets rather than being reliant
on a limited number of programmes. Midatech's technologies
are supported by 36 patent families including 120 granted
patents and an additional 70 patent applications. Midatech's
headquarters and R&D facility is in Cardiff, UK. For more
information please visit www.midatechpharma.com
Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking
statements" within the meaning of legislation in the United
Kingdom and/or United States Private Securities Litigation
Reform Act. All statements contained in this press release
that do not relate to matters of historical fact should be
considered forward-looking statements.
Reference should be made to those documents that Midatech
shall file from time to time or announcements that may be
made by Midatech in accordance with the London Stock Exchange
AIM Rules for Companies ("AIM Rules"), the Disclosure and
Transparency Rules ("DTRs") and the rules and regulations
promulgated by the US Securities and Exchange Commission,
which contains and identifies other important factors that
could cause actual results to differ materially from those
contained in any projections or forward-looking statements.
These forward-looking statements speak only as of the date
of this announcement. All subsequent written and oral forward-looking
statements by or concerning Midatech are expressly qualified
in their entirety by the cautionary statements above. Except
as may be required under the AIM Rules or the DTRs or by relevant
law in the United Kingdom or the United States, Midatech does
not undertake any obligation to publicly update or revise
any forward-looking statements because of new information,
future events or otherwise arising.
CHIEF EXECUTIVE'S REVIEW
In the 14 months following the announcement of our Strategic
Review, we have rationalised operations including the shutdown of
our Bilbao operations, thereby halving our monthly cash burn rate
and pivoted from a largely singular focus on one Phase III ready
asset (MTD201, Q-Sphera octreotide) to a "multiple shots on goal"
strategy with an expanded pipeline of 10 earlier stage programmes
as follows:
ID API Therapeutic Administration Formulation Pre-clinical Phase Phase Partnering
Area I II Status
Q-Sphera
Internal:MTD211 brexpiprazole Psychosis, Long acting X X
MDD (adjunct) Injectable
MTD214 tacrolimus Anti-rejection Long acting X X
Injectable
MTD220 Proteins Undisclosed Long acting Investigational
(incl Injectable
mAb)
---------------- -------------- ---------------- --------------- ---------------- ------------- ------ ------ -----------
External:
MTX213 Undisclosed Undisclosed Undisclosed X X
MTX214 Undisclosed Undisclosed Undisclosed X X
MTX216 Undisclosed Undisclosed Undisclosed X
---------------- -------------- ---------------- --------------- -----------
MidaSolve
MTX110 panobinostat Glioblastoma Direct X X
Multiforme to tumour
(GBM) via CED
---------------- -------------- ---------------- --------------- ---------------- ------------- ------ ------ -----------
MTX110 panobinostat Diffuse Direct X X X
Intrinsic to tumour
Pontine via CED
Glioma (DIPG)
---------------- -------------- ---------------- --------------- ---------------- ------------- ------ ------ -----------
MTX110 panobinostat Medulloblastoma Direct X X X
to tumour
---------------- -------------- ---------------- --------------- ---------------- ------------- ------ ------ -----------
MidaCore
MTX114 methotrexate Psoriasis Topical X X
---------------- -------------- ---------------- --------------- ---------------- ------------- ------ ------ -----------
The first half of 2021 was highly productive in terms of
advancing our R&D pipeline, culminating in the announcement of
breakthrough data on the successful encapsulation of a biologic
using Q-Sphera technology and significant progress across multiple
other R&D programmes on 17 June 2021.
Q-Sphera pipeline
The Company's Q-Sphera technology employs proprietary 3-D
printing techniques to encapsulate drugs in polymer-based
bioresorbable microspheres which may be injected to form depots in
the body which release drug over predictable, sustained periods
from one week to several months. Progress of the Q-Sphera pipeline
in 1H21 includes:
Proteins (incl mAb) formulation
There are no approved long-acting injectable formulations of
biologic products such as mAbs or other high molecular weight
proteins primarily because they are delicate and easily de-natured
in manufacture. We have been working on several proteins including
two exemplar mAbs and thus far, have demonstrated encapsulation of
the mAb and most importantly, preservation of its functional
integrity and antigen binding in vitro. We believe no other
commercial or academic organisation has been able to successfully
deliver therapeutic proteins over extended periods using methods
capable of commercial scaling.
We believe these results could open up very significant
opportunities for our Q-Sphera technology. A significant number of
latest generation medicines are protein based and reformulation as
long-acting injectables could provide significant benefits to
patients, physicians and at reduced cost to payors. In 2020, the
top 10 mAbs recorded aggregate sales of US$74.9 billion(1) and all
mAbs US$154 billion(1) globally.
The next steps will be to further optimise the drug loading and
dissolution profile for encapsulated mAbs. In parallel, we are
seeking to replicate the data seen with the first exemplar mAb and
we are evaluating multiple high value mAb therapeutics to add to
our internal pipeline.
MTX214 and MTX216
Both MTX214 and MTX216 are being developed under collaboration
agreements with the European affiliate of a global healthcare
company. We manufactured and delivered proof of concept
formulations of both MTX214 and MTX216 to the collaboration partner
who, in turn, is undertaking in vivo studies with both
formulations.
MTD211
As part of our internal pipeline, we have successfully developed
a long-acting formulation of brexpiprazole. In in vivo studies,
MTD211 was well tolerated and demonstrated that a single injection
of MTD211 is expected to deliver therapeutic blood levels of
brexpiprazole over a period of three months.
Marketed under the brand name Rexulti(R), brexpiprazole is
indicated for the treatment of schizophrenia and adjunctive
treatment of major depressive disorder (MDD) and is currently only
available as an immediate release oral tablet. The market for
anti-psychotic drugs is shifting towards long-acting formulations
for reasons of improved patient compliance and lowering of payor
costs associated with patient hospitalisation events as evidenced
by the recent approval of Invega Hafyera(TM) for schizophrenia.
Sales of long-acting anti-psychotic products in 2020 were
approximately US$5.7 billion(2) globally.
We have initiated discussions with third parties about a
potential licencing of MTD211. There can be no assurance on the
timing for concluding these discussions nor any assurance that the
parties will enter into definitive agreements.
MTX110
MTX110, a novel formulation of panobinostat administered through
convection enhanced delivery, is in clinical development for
intractable brain cancers including Diffuse Intrinsic Pontine
Glioma (DIPG) and Glioblastoma Multiforme (GBM).
Following a constructive pre-IND meeting with the FDA in June
2021, we are planning to initiate a Phase II study in DIPG as soon
as possible after the recruitment and treatment of the remaining
four patients in the ongoing Phase I study at Columbia University.
The Phase II study is expected to be open label with two doses in
newly diagnosed patients. Administration of MTX110 will be via
convection enhanced delivery (CED) over 48 hours in six cycles, two
to four weeks apart. Primary endpoints will be safety, tolerability
and overall survival at 12 months (OS12). Approximately 1,000
patients(3) globally are diagnosed with DIPG per annum and median
survival is approximately 10 months(4) .
Building on the in vivo data that were presented at the 2020
annual meeting of The Society of Neuro-Oncology which demonstrated
the efficacy of MTX110 against two GBM cell lines in an ectopic
tumour model, in 1H21 we demonstrated the potency, at therapeutic
concentrations, of MTX110 against a further four patient-derived
GBM cell lines in vitro. We are planning a Phase I pilot study in
GBM patients to begin enrolment in the next few months. There are
GBM diagnoses of 2 to 3 per 100,000 population per annum(5) and
survival ranges from 13 to 30 months depending on MGMT
methylation(6) .
Secura Bio, Inc. ("Secura Bio"), the owner of Panobinostat,
terminated the Company's licence to certain panobinostat patents in
June 2020. Notwithstanding Secura Bio refusing in writing three
times to withdraw that termination, the Company has received
further correspondence claiming termination in May 2021, this time
for material breach of the terms of the licence and is demanding,
among other things, that the Company grant Secura Bio a
non-exclusive, free licence to its intellectual property and
know-how. The Company believes that such claims and demands are
without any merit and will defend them robustly.
Contract negotiations with a third party in respect of a
potential co-development deal are continuing, although at a slower
pace than anticipated due to issues associated with COVID-19.
Funding
Following the announcement of the R&D Update on 17 June
2021, we announced a UK Placing on 29 June 2021 which closed on 6
July 2021. The Company issued 35.1 million new Ordinary Shares of
0.1p each at GBP0.285 per share raising GBP10.0 million (GBP9.0
million net of expenses). The additional working capital is
expected to extend the Company's cash runway into the first quarter
of 2023 assuming zero inflows from licensing deals. The proceeds of
the UK placing will be used to continue to develop the Group's
pipeline including, inter alia, to initiate the Phase II clinical
study of MTX110 in DIPG and initiate the pilot phase I clinical
study in MTX110 in GBM.
COVID-19
We established an internal COVID-19 Task Force in mid-March 2020
with the dual objectives of safeguarding the health and wellbeing
of our staff members and monitoring the impact of COVID-19 on our
vendors and collaborators. We reorganised, as far as possible, the
layout of our offices and laboratories in Cardiff to conform to
social distancing policies and allow our employees to return to the
workplace. Notwithstanding these actions, there was some disruption
to internal workplans, delays in the recruitment of ongoing
clinical trials and, in limited circumstances, delays in delivery
of laboratory equipment and supplies. These difficulties are
largely resolved.
Outlook
Overall, we are pleased with the progress we have made in the
first half of 2021. We have moved forward our R&D pipeline and
created several opportunities for licensing. Our current funding
position buys us time and flexibility to convert opportunities into
licenses and we are fully focused on meeting that challenge over
the coming months.
Sources:
1. Source: Global Data
2. Source: Global Data, combined 2020 sales of Abilify
Maintena(R), Risperdal Consta(R), Zyprexa Relprevv(R), Invega
Sustenna(R)
3. Source: Louis DN, Ellison DW, et al. The 2016 World Health
Organisation Classification of Tumors of the Central Nervous
System
4. Source: Jansen et al, 2015. Neuro-Oncology 17(1):160-166
5. Source: American Association of Neurosurgeons
6. Source: Radke et al (2019). Predictive MGMT status in a
homogeneous cohort of IDH wildtype glioblastoma patients
FINANCIAL REVIEW
The results for the six months ended 30 June 2021 reflect the
Company's "multiple shots on goal" R&D strategy. The prior
period includes the clinical and other costs associated with MTD201
(terminated in April 2020) and the operating costs of the Bilbao
operations (closed in June 2020).
Key performance indicators:
1H 2021 1H 2020
Total revenue(1) GBP0.43m GBP0.17m
R&D costs GBP 2.01 GBP3.99m
m
R&D as % of operating costs 55 % 58%
Impairment of intangible assets - GBP11.59m
Loss from operations GBP 3.23 GBP18.35m
m
Net cash (outflow)/inflow for the GBP( 3.34 GBP(6.79)m
period )m
(1) Total revenue represents income from R&D collaborations
plus grant revenue.
Midatech's KPIs focus on the key areas of operating results,
R&D spend and cash management. These measures provide
information on the core R&D operations. Additional financial
and non-financial KPIs may be adopted in due course.
Revenues
Total revenue for the six months to 30 June 2021 was GBP 0.43 m
compared to GBP0.17m in the first six months of 2020, an increase
of 157%. Revenue in 1H21 was entirely comprised of income from
R&D collaborations compared to GBP8,000 in the corresponding
period last year. There was no grant income in 1H21 compared with
GBP160,000 in 1H20.
Research and Development
R&D costs in 1H21 decreased GBP1.98m or 50% to GBP2.01m
compared with GBP3.99m in 1H20. R&D costs in 1H21 reflected
reductions in MTD210 clinical costs of GBP1.9m, redundancy costs of
GBP0.9m and accelerated depreciation of GBP0.5m, all of which were
associated with the Strategic Review and restructuring costs
incurred in 1H20. These decreases were offset by increases in
MTX110 clinical costs of GBP0.2m, pre-clinical costs of various
programmes of GBP0.6m, share based payment charge of GBP0.4m and
other items of GBP0.1m. The increase in R&D expense on
pre-clinical programmes reflected the Company's "multiple shots on
goal strategy" in 1H21.
Administrative Costs
Administrative expenses in 1H21 decreased GBP1.29m or 44% to
GBP1.64m compared to GBP2.93m in 1H20. Administrative costs in 1H21
reflected decreases in legal and professional fees of GBP0.4m,
interest on soft Spanish Government loans of GBP0.4m, personnel
costs of GBP0.2m, legal settlement costs of GBP0.2m and other items
of GBP0.2m. These increases were offset by an increase in share
based payments of GBP0.1m. The decrease in legal and professional
fees, interest on soft Spanish Government loans and personnel costs
reflected the Strategic Review, including the closure of Bilbao
operations, in 1H20.
Impairment of Intangible Assets
Following the termination of further in-house development of
MTD201, the Company recognised an impairment of intangible assets
of GBP11.59m in 1H20. The impairment included the write off of
in-process research and development connected to the Midatech
Pharma (Wales) Limited ("MPW") cash generating unit of GBP9.30m and
goodwill arising on the acquisition of Q-Chip Limited (subsequently
re-named MPW) of GBP2.29m.
Cash Flows
Cash outflows used in operations (before changes in working
capital) in 1H21 were GBP3.06m compared to GBP6.55m in 1H20. The
decreased cash outflow was principally due to a decrease in
operating loss from GBP17.42m in 1H20 to GBP3.15m in 1H21 although
the 1H20 operating loss included a non-cash impairment of
intangible assets of GBP11.59m. Other adjustments for non-cash
items included increases in net finance income of GBP0.6m, share
based payments of GBP0.5m and taxation of GBP0.2m offset by
decreases in depreciation and amortisation of GBP0.4m. Outflow from
net changes in working capital in 1H21 of GBP14,000 (1H20: GBP0.52m
outflow) and de minimis tax inflows in both periods resulted in net
cash used in operations in 1H21 of GBP3.11m (1H20: GBP7.09m).
Net cash used in investing activities in 1H21 of GBP0.15m (1H20:
GBP88,000) included purchases of property, plant and equipment of
GBP0.19m.
Net cash used in financing activities in 1H21 was GBP81,000
(1H20: GBP0.39m) reflecting principally the repayment of government
loans of GBP0.1m offset by the proceeds from the exercise of
warrants of GBP0.08m. The 1H20 prior period included cash raised
from share issues, net of expenses, of GBP3.73m offset by the
repayment of government loans and grants of GBP3.27m and other
items of GBP0.08m.
Overall, cash decreased by GBP3.37m in 1H21 compared to a
decrease of GBP6.79m in 1H20. This resulted in a cash balance at 30
June 2021 of GBP4.20m compared with GBP4.33m at 30 June 2020 and
GBP7.55m at 31 December 2020.
Post-period end
On 6 July 2021 the Company closed a successful UK Placing of
35.1m ordinary shares at GBP0.285 per share for aggregate gross
proceeds of GBP10.0m, or GBP9.0m net of expenses. The net proceeds
of the UK Placing extended the Company's cash runway into the first
quarter of 2023 assuming all programmes are progressed according to
plan and zero milestone payments are received from potential
licensees.
Going concern
Midatech has experienced net losses and significant cash
outflows from cash used in operating activities over the past years
as it has developed its portfolio. As at 30 June 2021 the Group had
total equity of GBP3.75m (GBP6.72m at 31 December 2020), it
incurred a net loss after tax for the six months to 30 June 2021 of
GBP3.15m (1H20: GBP17.42m) and used cash in operating activities of
GBP3.11m (1H20: GBP7.09m) for the same period. As at 30 June 2021,
the Company had cash and cash equivalents of GBP4.20m.
The future viability of the Company is dependent on its ability
to generate cash from operating activities, to raise additional
capital to finance its operations or to successfully obtain
regulatory approval to allow marketing of the Company's development
products. The Company's failure to raise capital as and when needed
could have a negative impact on its financial condition and ability
to pursue its business strategies.
The Directors have prepared cash flow forecasts and considered
the cash flow requirement for the Company for the next three years
including the period 12 months from the date of approval of this
interim financial information. These forecasts show that the
Company has sufficient cash resources for the next 12 months from
the date of approval of these consolidated interim financial
statements. The Directors therefore consider it appropriate to
continue to adopt the going concern basis in preparing the
financial information.
Stephen Stamp
Chief Executive Officer and Chief Financial Officer
Consolidated Statements of Comprehensive Income
For the year six month period ended 30 June
2021 2020
unaudited unaudited
Note GBP'000 GBP'000
------------------------------------------ ---- ---------- ----------
Revenue 401 8
Grant revenue - 160
------------------------------------------ ---- ---------- ----------
Total revenue 401 168
Other income 31 -
Research and development costs (2,010) (3,989)
Distribution costs, sales and marketing (20) (8)
Administrative costs (1,636) (2,925)
Impairment of intangible assets - (11,591)
------------------------------------------ ---- ---------- ----------
Loss from operations (3,234) (18,345)
Finance income 2 - 508
Finance expense 2 (156) (22)
------------------------------------------ ---- ---------- ----------
Loss before tax (3,390) (17,859)
Taxation 3 236 439
------------------------------------------ ---- ---------- ----------
Loss for the period attributable to the
owners of the parent (3,154) (17,420)
Other comprehensive income:
Items that will or may be reclassified
subsequently to profit or loss:
Exchange gains arising on translation of
foreign operations - 143
Total other comprehensive gain net of tax - 143
------------------------------------------ ---- ---------- ----------
Total comprehensive loss attributable to
the owners of the parent (3,154) (17,277)
------------------------------------------ ---- ---------- ----------
Loss per share
Basic and diluted loss per ordinary share
- pence 4 (5)p (64)p
The accompanying notes form part of these financial
statements
Consolidated Statements of Financial Position
As at As at
30 June 31 December
2021 unaudited 2020
Note GBP'000 GBP'000
----------------------------------------- ---- --------------- ------------
Assets
Non-current assets
Property, plant and equipment 5 1,248 542
1,248 542
----------------------------------------- ---- --------------- ------------
Current assets
Trade and other receivables 1,399 572
Taxation 1,424 1,157
Cash and cash equivalents 4,204 7,546
------------------------------------------ ---- --------------- ------------
7,027 9,275
----------------------------------------- ---- --------------- ------------
Total assets 8,275 9,817
------------------------------------------ ---- --------------- ------------
Liabilities
Non-current liabilities
Borrowings 6 682 60
Provisions - 50
682 110
----------------------------------------- ---- --------------- ------------
Current liabilities
Trade and other payables 2,038 1,230
Borrowings 6 130 200
Provisions 50 -
Derivative financial liability 7 1,623 1,559
------------------------------------------ ---- --------------- ------------
3,841 2,989
----------------------------------------- ---- --------------- ------------
Total liabilities 4,523 3,099
------------------------------------------ ---- --------------- ------------
Issued capital and reserves attributable
to owners of the parent
Share capital 8 1,063 1,063
Share premium 74,515 74,364
Merger reserve 53,003 53,003
Warrant reserve 720 720
Accumulated deficit (125,549) (122,432)
------------------------------------------ ---- --------------- ------------
Total equity 3,752 6,718
------------------------------------------ ---- --------------- ------------
Total equity and liabilities 8,275 9,817
------------------------------------------ ---- --------------- ------------
The accompanying notes form part of these financial
statements
Consolidated Statements of Cash Flows
For the six month period ended 30 June
2021 2020
unaudited unaudited
Note GBP'000 GBP'000
---------------------------------------------- ---- ---------- -----------
Cash flows from operating activities
Loss for the period (3,154) (17,420)
Adjustments for:
Depreciation of property, plant and equipment 5 117 474
Depreciation of right of use asset 5 62 89
Amortisation of intangible fixed assets - 10
(Profit)/Loss on disposal of fixed assets (42) 30
Impairment of intangible assets - 11,591
Finance income 2 - (508)
Finance expense 2 156 22
Share-based payment expense/(credit) 37 (473)
Taxation 3 (236) (439)
Foreign exchange (gains)/losses (3) 70
---------------------------------------------- ---- ---------- -----------
Cash flows from operating activities before
changes in working capital (3,063) (6,554)
(Increase) /Decrease in trade and other
receivables (859) (493)
Increase/(Decrease) in trade and other
payables 814 69
(Decrease)/Increase in provisions - (97)
---------------------------------------------- ---- ---------- -----------
Cash used in operations (3,108) (7,075)
Taxes payments - (13)
---------------------------------------------- ---- ---------- -----------
Net cash used in operating activities (3,108) (7,088)
---------------------------------------------- ---- ---------- -----------
Consolidated Statements of Cash Flows (continued)
For the six month period ended 30 June
2021 2020
unaudited unaudited
Note GBP'000 GBP'000
-------------------------------------------- ---- ---------- ----------
Investing activities
Purchases of property, plant and equipment 5 (189) (89)
Proceeds from disposal of fixed assets 42 -
Interest received - 1
-------------------------------------------- ---- ---------- ----------
Net cash used in investing activities (147) (88)
Financing activities
Interest paid (11) (22)
Receipts from sub-lessors - 45
Amounts paid on lease liabilities (47) (98)
Repayment of Government grant - (165)
Repayment of Government loan (104) (3,109)
Share issues including warrants, net of
costs 8 81 3,734
-------------------------------------------- ----
Net cash (used in)/generated from financing
activities (81) 385
Net decrease in cash and cash equivalents (3,336) (6,791)
Cash and cash equivalents at beginning
of period 7,546 10,928
Exchange (losses)/gains on cash and cash
equivalents (6) 191
-------------------------------------------- ---- ---------- ----------
Cash and cash equivalents at end of period 4,204 4,328
-------------------------------------------- ---- ---------- ----------
The accompanying notes form part of these financial
statements
Consolidated Statements of Changes in Equity (unaudited)
Foreign
Share Share Merger Warrant exchange Accumulated Total
capital premium reserve reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- --------- --------- ----------- --------
At 1 January 2021 1,063 74,364 53,003 720 - (122,432) 6,718
Loss for the period - - - - - (3,154) (3,154)
-------- -------- -------- --------- --------- ----------- --------
Total comprehensive loss - - - - - (3,154) (3,154)
----------------------------
Transactions with owners:
Exercise of warrants on
16 February 2021 - 161 - - - - 161
Costs associated with share
issue on 16 February2021 - (10) - - - - (10)
Share-based payment charge - - - - - 37 37
---------------------------- -------- -------- -------- --------- --------- ----------- --------
Total contribution by and
distributions to owners - 151 - - - 37 188
---------------------------- -------- -------- -------- --------- --------- ----------- --------
At 30 June 2021 1,063 74,515 53,003 720 - (125,549) 3,752
---------------------------- -------- -------- -------- --------- --------- ----------- --------
Foreign
Share Share Merger Warrant exchange Accumulated Total
capital premium reserve reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------- --------- ----------- --------
At 1 January 2020 1,023 65,879 53,003 - (508) (99,839) 19,558
Loss for the period - - - - - (17,420) (17,420)
Foreign exchange translation - - - - 143 - 143
----------------------------- -------- -------- -------- --------- --------- ----------- --------
Total comprehensive loss 1,023 65,879 53,003 - (365) (117,259) 2,281
----------------------------- -------- -------- -------- --------- --------- ----------- --------
Transactions with owners:
Shares issued on 18 May
2020 16 2,527 - 720 - - 3,263
Costs associated with share
issue on 18 May 2020 - (524) - - - - (524)
Share-based payment charge - - - - - (473) (473)
-------- -------- -------- --------- --------- ----------- --------
Total contribution by and
distributions to owners 16 2,003 - 720 - (473) 2,266
----------------------------- -------- -------- -------- --------- --------- ----------- --------
At 30 June 2020 1,039 67,882 53,003 720 (365) (117,732) 4,547
----------------------------- -------- -------- -------- --------- --------- ----------- --------
The accompanying notes form part of these financial
statements
Notes Forming Part of The Consolidated Unaudited Interim
Financial Information
For the six month period ended 30 June 2021
1. Basis of preparation
The unaudited interim consolidated financial information for the
six months ended 30 June 2021 has been prepared following the
recognition and measurement principles of the International
Financial Reporting Standards, International Accounting Standards
and Interpretations (collectively IFRS) issued by the International
Accounting Standards Board (IASB), and as adopted by the UK and in
accordance with International Accounting Standard 34 Interim
Financial Reporting ('IAS 34'). The interim consolidated financial
information does not include all the information and disclosures
required in the annual financial information and should be read in
conjunction with the audited financial statements for the year
ended 31 December 2020.
The condensed interim financial information contained in this
interim statement does not constitute statutory financial
statements as defined by section 434(3) of the Companies Act 2006.
The condensed interim financial information has not been audited.
The comparative financial information for the year ended 31
December 2020 in this interim financial information does not
constitute statutory accounts for that year. The statutory accounts
for 31 December 2020 have been delivered to the UK Registrar of
Companies. The auditor's report on those accounts was unqualified
and did not contain a statement under section 498(2) or 498(3) of
the Companies Act 2006. The auditor's report did draw attention to
a material uncertainty related to going concern and the
requirement, as of the date of the report, for additional funding
to be raised by the Company within the succeeding 12 months.
Midatech Pharma's annual reports may be downloaded from the
Company's website at
http://www.midatechpharma.com/investors/financial-reports.html or a
copy may be obtained from 1 Caspian Point, Caspian Way, Cardiff
CF10 4DQ.
Going Concern
Midatech has experienced net losses and significant cash
outflows from cash used in operating activities over the past years
as it has developed its portfolio. As at 30 June 2021 the Group had
total equity of GBP3.75m (GBP6.72m at 31 December 2020), it
incurred a net loss after tax for the six months to 30 June 2021 of
GBP3.15m (1H 20: GBP17.42m) and used cash in operating activities
of GBP3.11m (1H20: GBP7.09m) for the same period. As at 30 June
2021, the Company had cash and cash equivalents of GBP4.20m.
The future viability of the Company is dependent on its ability
to generate cash from operating activities, to raise additional
capital to finance its operations or to successfully obtain
regulatory approval to allow marketing of the Company's development
products. The Company's failure to raise capital as and when needed
could have a negative impact on its financial condition and ability
to pursue its business strategies.
The Directors have prepared cash flow forecasts and considered
the cash flow requirement for the Company for the next three years
including the period 12 months from the date of approval of this
interim financial information. These forecasts show that the
Company has sufficient cash resources for the next 12 months from
the date of approval of these consolidated interim financial
statements. The Directors therefore consider it appropriate to
continue to adopt the going concern basis in preparing the
financial information.
2. Finance income and expense
Six months Six months
ended 30 ended 30
June 2021 June 2020
unaudited unaudited
GBP'000 GBP'000
-------------------------------------------- ---------- ----------
Finance income
Interest received on bank deposits - 1
Gain on equity settled derivative financial
liability - 507
-------------------------------------------- ---------- ----------
Total finance income - 508
-------------------------------------------- ---------- ----------
The gain on the equity settled derivative financial liability in
2020 arose as a result of the reduction in the Midatech share
price.
Six months Six months
ended 30 ended 30
June 2021 June 2020
unaudited unaudited
GBP'000 GBP'000
-------------------------------------------- ---------- ----------
Finance expense
Interest expense on lease liabilities 13 16
Other loans 9 6
Loss on equity settled derivative financial
liability 134 -
-------------------------------------------- ---------- ----------
Total finance expense 156 22
-------------------------------------------- ---------- ----------
3. Taxation
Income tax is recognised or provided at amounts expected to be
recovered or to be paid using the tax rates and tax laws that have
been enacted or substantively enacted at the Group Statement of
Financial Position date. Research and development tax credits are
recognised on an accruals basis and are included as an income tax
credit under current assets. The research and development tax
credit recognised is based on management's estimate of the expected
tax claim for the period and is recorded within taxation under the
Small and Medium-sized Enterprise Scheme.
Six months Six months
ended 30 ended 30
June 2021 June 2020
unaudited unaudited
GBP'000 GBP'000
------------------ ---------- ----------
Income tax credit 236 439
------------------ ---------- ----------
4. Loss per share
Basic loss per share amounts are calculated by dividing the net
loss for the period from continuing operations, attributable to
ordinary equity holders of the parent company, by the weighted
average number of ordinary shares outstanding during the period. As
the Group made a loss for the period the diluted loss per share is
equal to the basic loss per share.
Six months Six months
ended 30 ended 30
June 2021 June 2020
unaudited unaudited
GBP'000 GBP'000
------------------------------------------- ---------- ----------
Numerator
Loss used in basic EPS and diluted EPS: (3,154) (17,420)
Denominator
Weighted average number of ordinary shares
used in basic and diluted EPS: 63,296,377 27,283,688
------------------------------------------- ---------- ----------
Basic and diluted loss per share: (5)p (64)p
------------------------------------------- ---------- ----------
The Group has made a loss in the current and previous years
presented, and therefore the options and warrants are
anti-dilutive. As a result, diluted earnings per share is presented
on the same basis for all periods shown.
5. Property, plant and equipment (unaudited)
Right of
Fixtures Leasehold Computer Laboratory use
and fittings improvements equipment equipment asset Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------- ------------- ---------- ---------- -------- ---------
Cost
At 1 January 2021 53 4 236 1,662 188 2,143
Additions 45 - 4 140 720 909
Effect of modification
to lease terms - - - - (24) (24)
Disposal - - - (121) - (121)
At 30 June 2021 98 4 240 1,681 884 2,907
------------------------- ------------- ------------- ---------- ---------- -------- ---------
Accumulated depreciation
At 1 January 2021 49 2 199 1,239 112 1,601
Charge for the period 2 1 12 102 62 179
Disposal - - - (121) - (121)
------------------------- ------------- ------------- ---------- ---------- -------- ---------
At 30 June 2021 51 3 211 1,220 174 1,659
------------------------- ------------- ------------- ---------- ---------- -------- ---------
Net book value
At 30 June 2021 47 1 29 461 710 1,248
At 1 January 2021 4 2 37 423 76 542
Right of
Fixtures Leasehold Computer Laboratory use
and fittings improvements equipment equipment asset Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------- ------------- ---------- ---------- -------- ---------
Cost
At 1 January 2020 248 2,038 403 3,738 1,124 7,551
Additions - 58 16 135 - 209
Effect of modification
to lease terms - - - - (678) (678)
Disposals (202) (2,184) (185) (2,323) (316) (5,210)
Exchange differences 7 92 2 112 58 271
------------------------- ------------- ------------- ---------- ---------- -------- ---------
At 31 December 2020 53 4 236 1,662 188 2,143
------------------------- ------------- ------------- ---------- ---------- -------- ---------
Accumulated depreciation
At 1 January 2020 235 1,794 332 2,740 296 5,397
Charge for the period 9 310 50 720 118 1,207
Disposals (202) (2,183) (185) (2,300) (316) (5,186)
Exchange differences 7 81 2 79 14 183
------------------------- ------------- ------------- ---------- ---------- -------- ---------
At 31 December 2020 49 2 199 1,239 112 1,601
------------------------- ------------- ------------- ---------- ---------- -------- ---------
Net book value
At 31 December 2020 4 2 37 423 76 542
At 1 January 2020 13 244 71 998 828 2,154
In April 2021 the Group signed an agreement to lease new
premises in Cardiff to house its corporate offices and
laboratories. The agreement to lease allowed the Group to carry out
the Cat A works and fit out prior to completion of the lease and
its occupation in August 2021. The principal terms of the lease are
as follows:
-- Five-year term with no break clause;
-- Nine months' rent free from commencement of lease;
The lease has been recognised as a right of use asset during the
period.
6. Borrowings
As at 30 As at 31
June 2021 December
unaudited 2020
GBP'000 GBP'000
------------------------------ ---------- ---------
Current
Lease liabilities (note 5) 130 93
Government and research loans - 107
------------------------------ ---------- ---------
Total 130 200
------------------------------ ---------- ---------
Non-current
Lease liabilities (note 5) 682 60
Government and research loans - -
------------------------------ ---------- ---------
Total 682 60
------------------------------ ---------- ---------
Book values approximate to fair value at 30 June 2021 and 31
December 2020.
Obligations under finance leases are secured by a fixed charge
over the fixed assets to which they relate.
Government loans in Spain
In February 2021 the remaining Spanish government loan was
repaid in full.
7. Derivative financial liability - current
As at 30 As at 31
June 2019 December
unaudited 2020
GBP'000 GBP'000
--------------------------------------------- ---------- ---------
At 1 January 1,559 664
Warrants issued - 997
Transfer to share premium on exercise of
warrants (70) (499)
Gain recognised in finance income within
the consolidated statement of comprehensive
income 134 397
--------------------------------------------- ---------- ---------
1,623 1,559
--------------------------------------------- ---------- ---------
Equity settled derivative financial liability is a liability
that is not to be settled for cash.
On 16 February 2021 306,815 pre-existing warrants were exercised
at $0.41. The gross proceeds received by the company was $126,561.
The fair value of the warrants on the date of exercise was
GBP70,339.
In May 2020 the Group issued 9,545,456 warrants in the ordinary
share capital of the company as part of a Registered Direct
Offering. The number of ordinary shares to be issued when exercised
is fixed, however the exercise price is denominated in US Dollars
being different to the functional currency of the parent company.
Therefore, the warrants are classified as equity settled derivative
financial liabilities recognised at fair value through the profit
and loss account ('FVTPL'). The financial liability is valued using
the Monte Carlo model. Financial liabilities at FVTPL are stated at
fair value, with any gains or losses arising on re-measurement
recognised in profit or loss. The net gain or loss recognised in
profit or loss incorporates any interest paid on the financial
liability and is included in the 'finance income' or 'finance
expense' lines item in the income statement.
At 30 June 2021 6,738,641 warrants were outstanding (31 December
2020: 7,045,455)
In October 2019 the Group issued 3,150,000 warrants in the
ordinary share capital of the company as part of a Registered
Direct Offering. The number of ordinary shares to be issued when
exercised is fixed, however the exercise price is denominated in US
Dollars. The warrants are classified as equity settled derivative
financial liabilities recognised and accounted for in the same way
as those issued in May 2020. The financial liability is valued
using the Monte Carlo model.
At 30 June 2021 3,150,000 warrants were outstanding (31 December
2020: 3,150,000)
The Group also assumed fully vested warrants and share options
on the acquisition of DARA Biosciences, Inc. (which took place in
2015). The number of ordinary shares to be issued when exercised is
fixed, however the exercise prices are denominated in US Dollars.
The warrants are classified equity settled derivative financial
liabilities and accounted for in the same way as those issued in
May 2020. The financial liability is valued using the Black-Scholes
option pricing model.
During 2021 no options or warrants lapsed and the share price
had fallen to GBP0.2975. As the liability had already been reduced
to zero there was no movement on re-measurement.
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets and liabilities;
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly; and
Level 3: techniques which use inputs that have a significant
effect on the recorded fair value that are not based on observable
market data.
The fair value of the Group's derivative financial liability is
measured at fair value on a recurring basis. The following table
gives information about how the fair value of this financial
liability is determined.
Fair value Fair value Valuation
as as at technique(s) Significant Relationship of
Financial at 30 June 31 December Fair value and key unobservable unobservable inputs
liabilities 2019 2020 hierarchy input(s) input(s) to fair value
------------------ ------------ ------------ ---------- --------------- ------------------ -------------------
Equity settled GBP1,198,000 GBP1,187,000 Level Monte Carlo Volatility rate The higher the
financial 3 simulation of 105% determined volatility the
derivative model using historical higher the fair
liability volatility of value.
- May 2020 comparable
Warrants companies.
Expected life The shorter the
between expected life
a range of 0.1 and the lower the
4.39 years fair value.
determined
using the
remaining
life of the share
options.
Risk-free rate The higher the
between risk-free rate
a range of 0.31% the higher the
determined using fair value.
the expected life
assumptions.
Equity settled GBP425,000 GBP372,000 Level Monte Carlo Volatility rate The higher the
financial 3 simulation of 108.5% volatility the
derivative model determined higher the fair
liability using historical value.
- October volatility of
2019 Warrants comparable
companies.
Expected life The shorter the
between expected life
a range of 0.1 and the lower the
4.00 years fair value.
determined
using the
remaining
life of the share
options.
Risk-free rate The higher the
between risk-free rate
a range of 0.26% the higher the
determined using fair value.
the expected life
assumptions.
Equity settled - - Level Black-Scholes Volatility rate The higher the
financial 3 option pricing of 108.5%% volatility the
derivative model determined higher the fair
liability using historical value.
- DARA Bioscience volatility of
warrants comparable
and options companies.
Expected life The shorter the
between expected life
a range of 0.1 and the lower the
1.3 years fair value.
determined
using the
remaining
life of the share
options
Risk-free rate The higher the
between risk-free rate
a range of 0.26% the higher the
determined using fair value.
the expected life
assumptions.
------------------ ------------ ------------ ---------- --------------- ------------------ -------------------
Changing the unobservable risk free rate input to the valuation
model by 10% higher while all other variables were held constant,
would not impact the carrying amount of shares (2020: nil).
There were no transfers between Level 1 and 2 in the period.
The financial liability measured at fair value on Level 3 fair
value measurement represents consideration relating to warrants
issued in May 2020 and October 2019 as part of Registered Direct
offerings and also a business combination.
8. Share capital
Authorised, allotted As at 30 As at 30 As at 31 As at 31
and fully June 2021 June 2021 December December
paid - classified unaudited unaudited 2020 2020
as equity Number GBP Number GBP
--------------------- ---------- ---------- ------------ ---------
Ordinary shares of
GBP0.001 each 63,380,667 63,381 63,073,852 63,074
Deferred shares of
GBP1 each 1,000,001 1,000,001 1,000,001 1,000,001
--------------------- ---------- ---------- ------------ ---------
Total 1,063,382 1,063,075
--------------------- ---------- ---------- ------------ ---------
Ordinary and deferred shares were recorded as equity.
Ordinary Deferred Share
Shares Shares Price Total consideration
2021 Number Number GBP GBP'000
----------------- ----------------------- ---------- --------- ------ -------------------
At 1 January 2021 63,073,852 1,000,001 96,426
16 February 2021 Exercise of warrants 306,815 - 0.298 91
------------------ ---------------------- ---------- --------- ------ -------------------
At 30 June 2021 (unaudited) 63,380,667 1,000,001 96,517
------------------------------------------ ---------- --------- ------ -------------------
2020
------------------ ---------------------- ---------- --------- ------ -------------------
At 1 January
2020 23,494,981 1,000,001 85,638
UK Placing and
US Registered Direct
18 May 2020 Offering 15,757,576 1,000,001 0.27 4,255
27 July 2020 UK Placing 21,296,295 - 0.27 5,750
19 August 2020 Exercise of warrants 2,500,000 - 0.3132 783
30 September
2020 Issue to SIPP trustee 25,000 - 0.001 -
------------------ ---------------------- ---------- --------- ------ -------------------
At 31 December 2020 63,073,852 1,000,001 96,426
------------------------------------------ ---------- --------- ------ -------------------
9. Related party transaction
Transactions with BioConnection BV
The Directors consider BioConnection BV to be a related party by
virtue of the fact that there is a common Director with the
Company.
Amounts owed to related
Purchase of goods parties
----------------- ---------------------- -------------------------
Six months Six months
ended 30 ended 30 As at 30 As at 30
June 2021 June 2020 June 2021 June 2020
EUR'000 EUR'000 EUR'000 EUR'000
----------------- ---------- ---------- ------------ -----------
BioConnection BV - 296 - -
----------------- ---------- ---------- ------------ -----------
10. Contingent liabilities
The Group had no contingent labilities as at 30 June 2021 (30
June 2020: Nil).
11. Events after the reporting date
On 29 June 2021, the Company announced that it had raised
GBP10.0 million (before expenses) in a UK placing of 35,087,720 new
ordinary shares of 0.1p each at an issue price of GBP0.285 per
share. The UK placing closed and the new ordinary shares were
admitted to trading on AIM on 7 July 2021.
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IR VDLBFFKLLBBE
(END) Dow Jones Newswires
September 17, 2021 04:31 ET (08:31 GMT)
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