TIDMRENX
RNS Number : 7882P
Renalytix PLC
21 October 2021
Renalytix plc
("Renalytix" or the "Company")
Renalytix Reports Full Year Fiscal 2021 Results
LONDON and SALT LAKE CITY, October 21, 2021 - Renalytix plc
(NASDAQ: RNLX), (LSE : RENX) an artificial intelligence-enabled in
vitro diagnostics company, focused on optimizing clinical
management of kidney disease to drive improved patient outcomes and
advance value-based care , announces its results for the twelve
months ended 30 June 2021.
Highlights:
Regulatory & Reimbursement
-- Government-wide contract granted by the U.S. General Services
Administration for KidneyIntelX(TM) testing services at $950 per
reportable result; applies to more than 140 U.S. government
departments, agencies, and affiliates including U.S. Veterans
Administration (VA), Department of Defense military branches (Army,
Navy, Air Force, and Marines), and Indian Health Services
-- Accepted provider in 27 Medicaid state programs (including
post-period approvals) with additional applications pending
-- Ongoing process with Medicare Contractor organizations for Medicare local coverage
-- Positive coverage determinations from 20 regional and local
private health insurance payors to date including the first Blue
Cross Blue Shield coverage contract and coverage with HealthFirst,
one of New York State's largest not-for-profit health insurance
companies with over 1.5 million members
-- Ongoing process with FDA towards anticipated De Novo
marketing authorization under Breakthrough Device designation
-- Full CLIA certification of Salt Lake City laboratory facility
Commercial / Partnerships
-- KidneyIntelX launched within the Mount Sinai Health System,
validating the electronic health record (EHR) integrated care
pathway; subsequent (post-period) volume scale-up announced
-- Collaboration with AstraZeneca to develop and launch
precision medicine strategies for cardiovascular, renal and
metabolic diseases to potentially expand Renalytix's portfolio
Partnership with Atrium Health, Wake Forest Baptist Health and
Wake Forest School of Medicine to implement advanced clinical care
models to improve kidney health and reduce kidney disease
progression and kidney failure; expected go-live testing starting
in November
-- Partnership with the University of Utah to implement
KidneyIntelX and advanced clinical management care pathway to
reduce the risk of kidney failure
-- Collaboration with DaVita to enable first-of-its-kind program
combining early risk assessment and comprehensive care management
to improve early to late-stage patient outcomes and provide
meaningful cost reductions for health care providers
-- Exclusive option to license novel biomarkers with Joslin
Diabetes Center, which could provide additional clinical utility
for understanding early disease progression, risk of kidney
failure, therapeutic response, and the mechanistic pathways of
kidney disease beyond the markers that are currently captured by
KidneyIntelX.
Operations & Finance
-- Senior leadership and management hires in preparation for expanded commercialization
-- Achieved dual listing on Nasdaq Global Market and associated
$85.1 million gross equity financing
-- Completed spin-out of Verici Dx; shares in Verici were
distributed to Renalytix shareholders, and Verici subsequently
listed on the AIM market of the London Stock Exchange
-- Cash and equivalents of $65.1 million at 30 June 2021
Clinical / Validation
-- Peer-reviewed publication in Diabetologia demonstrating
KidneyIntelX more accurately predicted progressive kidney function
decline and kidney failure in a multi-center, diverse cohort of
1,146 type 2 diabetes patients with early-stage (stages 1-3) kidney
disease versus the current standard of care
-- Data presented at World Congress of Nephrology (WCN) showing
that the KidneyIntelX algorithm published in Diabetologia and
currently deployed commercially accurately predicted progression of
diabetic kidney disease (DKD) in a multinational cohort from the
CANagliflozin CardioVAScular Assessment Study (CANVAS) with
early-stage DKD (stages 1-3)
-- Data presented at the American Diabetes Association (ADA)
Annual Scientific meeting from the CANVAS trial demonstrating
KidneyIntelX can be effective at monitoring therapeutic response
and improvements in kidney health over time in adults with type 2
diabetes
-- Peer-reviewed submission accepted by American Journal of
Nephrology summarizing the aforementioned findings presented at the
WCN and ADA from the analyses in the CANVAS clinical trial
cohort.
Post Period End
-- Scale-up of Mount Sinai Health System KidneyIntelX population
health care-navigated risk assessment program with a target run
rate of 300 patient tests per week
-- Launch program for KidneyIntelX initiated for Veterans Health
Administration with target of 43 sales personnel plus supporting
medical science liaison and technical infrastructure
-- Achieved first Blue Cross Blue Shield private insurance coverage contract in October 2021
-- Welcomed new board members Ann Berman and Daniel Levangie
both with extensive backgrounds in healthcare company growth and
finance
-- Peer-reviewed publication in Journal of Medical Economics
supporting payer coverage for early-stage risk assessment and care
management in the primary care office; projecting significant
savings from KidneyIntelX testing at primary care level.
Investors are advised to read the results for the 12 months
ended 30 June 2021, which have been filed with the U.S. Securities
and Exchange Commission under Form 20-F concurrently with this
results announcement.
Analyst Conference Call
The Company will hold an analyst conference call at 8:30 a.m.
(EDT) / 1:30 p.m. (BST) on Thursday 21 October 2021. James
McCullough, CEO and O. James Sterling, CFO will discuss t he
financial results and key topics including business strategy,
partnerships and regulatory and reimbursement processes.
Conference Call Details:
US/Canada Participant Toll-Free Dial-In Number: (833)
614-1551
US/Canada Participant International Dial-In Number: (914)
987-7290
United Kingdom International Dial-In Number: 0800 0288 438
United Kingdom Local Dial-In Number: 0203 1070 289
Conference ID:6364722
Webcast Registration link: https://edge.media-server.com/mmc/p/r4ezp7bk
For further information, please contact:
Renalytix plc www.renalytix.com
James McCullough, CEO Via Walbrook PR
Stifel (Nominated Adviser, Joint Broker Tel: 020 7710 7600
)
Alex Price / Nicholas Moore
Investec Bank plc (Joint Broker) Tel: 020 7597 4000
Gary Clarence / Daniel Adams
Walbrook PR Limited Tel: 020 7933 8780 or renalytix@walbrookpr.com
Paul McManus / Lianne Applegarth Mob: 07980 541 893 / 07584 391
303
CapComm Partners Tel: 415-389-6400 or investors@renalytix.com
Peter DeNardo
About KidneyIntelX
KidneyIntelX, is a first-of-kind solution that enables
early-stage DKD progression risk assessment by combining diverse
data inputs, including validated blood-based biomarkers, inherited
genetics, and personalized patient data from electronic health
record, or EHR, systems, and employs a proprietary algorithm to
generate a unique patient risk score. This patient risk score
enables prediction of progressive kidney function decline in CKD,
allowing physicians and healthcare systems to optimize the
allocation of treatments and clinical resources to patients at
highest risk.
About Renalytix
Renalytix (NASDAQ: RNLX) (LSE: RENX) is the global founder and
leader in the new field of bioprognosis(TM) for kidney health. The
company has engineered a new solution that successfully enables
early-stage chronic kidney disease progression risk assessment. The
Company's lead product, KidneyIntelX, has been granted Breakthrough
Designation by the U.S. Food and Drug Administration and is
designed to help make significant improvements in kidney disease
prognosis, transplant management, clinical care, patient
stratification for drug clinical trials, and drug target discovery
(visit www.kidneyintelx.com ). For more information, visit
www.renalytix.com .
Forward Looking Statements
Statements contained in this press release regarding matters
that are not historical facts are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, as amended. Examples of these forward-looking statements
include statements concerning: the commercial prospects of
KidneyIntelX, including whether KidneyIntelX will be successfully
adopted by physicians and distributed and marketed, the rate of
testing with KidneyIntelX in health care systems, expectations and
timing of announcement of real-world testing evidence, the
potential for KidneyIntelX to be approved for additional
indications, our expectations regarding reimbursement decisions and
the ability of KidneyIntelX to curtail costs of chronic and
end-stage kidney disease, optimize care delivery and improve
patient outcomes. Words such as "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "seeks," and similar
expressions are intended to identify forward-looking statements. We
may not actually achieve the plans and objectives disclosed in the
forward-looking statements, and you should not place undue reliance
on our forward-looking statements. Any forward-looking statements
are based on management's current views and assumptions and involve
risks and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or
implied in such statements. These risks and uncertainties include,
among others: that KidneyIntelX is
based on novel artificial intelligence technologies that are
rapidly evolving and potential acceptance, utility and clinical
practice remains uncertain; we have only recently commercially
launched KidneyIntelX; and risks relating to the impact on our
business of the COVID-19 pandemic or similar public health crises.
These and other risks are described more fully in our filings with
the Securities and Exchange Commission (SEC), including the "Risk
Factors" section of our annual report on Form 20-F filed with the
SEC on October 21, 2021, and other filings we make with the SEC
from time to time. All information in this press release is as of
the date of the release, and we undertake no obligation to publicly
update any forward-looking statement, whether as a result of new
information, future events, or otherwise, except as required by
law.
INTERIM CHAIRMAN & CEO'S JOINT REVIEW
We are delighted to present preliminary results for the twelve
months ended 30 June 2021 for Renalytix plc.
About Renalytix
At Renalytix, we are helping lead the charge to introduce
simple, more accurate prognosis and effective care management for
the estimated 850 million people worldwide with chronic kidney
disease. In the United States alone, chronic kidney disease affects
close to an estimated 40 million people and is responsible for one
of the largest cost drivers in the national medical system. Early
identification, prognosis and treatment beginning with primary care
physicians is essential if we are to stem the growing social cost
and suffering associated with kidney disease.
With our lead product, KidneyIntelX, our goal is to continue
shifting the conversation from kidney disease to kidney health
through a more accurate understanding of patient risk early on.
With KidneyIntelX deployment this year, Renalytix is the global
leader in the new field of bioprognosis, a biology-driven approach
to risk assessment that relies on integrating information from a
simple blood draw and a patient's health record to produce an
accurate picture of kidney health. A doctor can use KidneyIntelX
results to act on patients at high risk of kidney disease
progression or failure at an early stage where active management
and therapeutics have the best opportunity to impact outcomes and
cost before it is too late.
We have crossed key data, reimbursement and regulatory hurdles
during a relatively short time-period since we opened our doors in
2018 through a public listing on AIM, a market of the London Stock
Exchange. We subsequently expanded our capital base by raising an
additional $85 million through a listing on the Nasdaq Global
Market in July 2020. The commercial roll-out of our kidney health
solution, KidneyIntelX, is underscored by:
-- A 10-year government-wide contract by the U.S. General
Services Administration at $950 per test
-- Hiring of sales, medical science liaison, and customer service support for national coverage
-- The Centers for Medicare & Medicaid Services awarding a national price of $950 per test
-- 27 state Medicaid program authorization contracts
-- Partnerships announced with the Mount Sinai Health System,
University of Utah, Atrium Health, Wake Forest Baptist Health, and
Capital District Physicians' Health Plan (CDPHP)
-- New York State Department of Health approval
-- A distinct Common Procedural Terminology (CPT) Code for
reimbursement granted by the American Medical Association
-- Over 17 private payor coverage determinations
-- Multi-center, peer reviewed clinical studies that found
KidneyIntelX is 72% more effective than the current standard of
care in identifying early-stage patients at high risk for kidney
disease progression and failure
KidneyIntelX
Our novel platform, KidneyIntelX, uses a machine-learning
enabled algorithm to process predictive blood biomarkers with key
features from a patient's health record to generate an early and
accurate kidney health risk score. The score identifies those
patients at the most risk for kidney disease progression and/or
failure and further guides ongoing clinical decisions.
KidneyIntelX is initially indicated for use with adults who have
diagnosed kidney disease and diabetes - diabetic kidney disease or
DKD. Future KidneyIntelX products in development intend to expand
the indicated uses to include broader chronic kidney disease,
health equity strategies and kidney health monitoring through
treatment. Diabetes is the leading cause of chronic kidney disease,
representing nearly 40% of its cases, and DKD patients are the
highest contributors to emergency room dialysis starts.
Unfortunately, many DKD patients are unaware that their kidney
disease has been progressing, often uncontrolled, for many years
and now find themselves making difficult decisions about late-stage
treatments. We believe this predicament is largely avoidable and
have built the KidneyIntelX care model to ultimately equip the
estimated 210,000 primary care physicians in the United States with
a comprehensive suite of information and guidelines driven
follow-on action.
KidneyIntelX was designed as an expandable platform which is
able to add indicated uses and a monitoring capability, all within
an FDA regulated framework. Expansion may include extending into
additional populations of CKD patients beyond those with diabetes,
including patients of African ancestry with the APOL1 high-risk
genotype. We also intend to develop solutions for use in other
large chronic disease patient populations, like cardiovascular
disease.
Operational Progress
In the year ended 30 June 2021 ("FY21") and the immediate
post-period, the Company expanded its announced partnership base to
include the University of Utah Health System, Atrium Health and
Wake Forest Baptist Health. In September 2021, Mount Sinai Health
System and Renalytix announced a scale-up of the KidneyIntelX care
program to a targeted run-rate of 300 tests per week. Renalytix
testing is fully covered at $950 per test under the Mount Sinai
real-world evidence program and we expect an estimated 6,000 tests
to be completed by the end of fiscal 2022. We expect that Atrium
Health, Wake Forest Baptist Health and University of Utah will be
running live testing as early as December 2021.
Expert experience is reflected in the design of the KidneyIntelX
test report and the newly launched product website -
www.kidneyintelx.com. We believe our education and support program
will be an important resource to help inform and improve care for
early-stage diabetic kidney disease ("DKD") patients and support
future hospital system deployments of KidneyIntelX in the United
States and abroad.
The Company also continues to execute on a number of key
operational items including (1) growing our world-class employee
base and leadership team to manage U.S. national commercial
expansion, (2) developing expanded products which will add to the
KidneyIntelX clinical use cases and addressable market, (3) adding
laboratory services capacity with our facility in Salt Lake City,
Utah, and (4) generating additional utility and validation data to
build-out our peer-reviewed performance data dossier.
Reimbursement and Regulatory
We have achieved full insurance coverage for U.S. government
physicians ordering of KidneyIntelX through our granted General
Services Administration (GSA) and are moving assertively to
activate our VA Health System sales strategy. We estimate there is
full coverage available at $950 per test to an estimated 400,000
DKD patients in the VA Health System alone.
Under our agreement with the Mount Sinai Health System, we
receive payment for KidneyIntelX testing at $950 per reportable
result through the first approximately 6,000 patients tested under
a real-world evidence development program. In October, this program
was expanded system-wide and Mount Sinai is working to achieve a
weekly testing run rate of 300 patients.
The recent government proposal to repeal the Medicare Coverage
of Innovative Technologies (MCIT) rule was disappointing. However,
the earlier delay of MCIT implementation from May to December 2021
had already decreased the rule's potential value to Renalytix given
the existing planning for a local Medicare coverage determination
which was underway before MCIT was announced in January 2021.
Ultimately, we do not see a material impact on our business plan if
MCIT is ultimately repealed and believe Medicare payment for
KidneyIntelX at $950 per reportable result can be achieved by the
summer of 2022. We estimate that over four million DKD patients are
covered under Medicare and, in certain metro markets such as our
New York City launch market, Medicare represents a majority of
insured DKD patients.
As we have previously reported, KidneyIntelX has achieved both a
distinct Common Procedural Terminology ("CPT") reimbursement code
0105U and inclusion in the final 2020 Clinical Laboratory Fee
Schedule ("CLFS") by CMS which set a national price for
KidneyIntelX at $950 per reportable test result.
As has been experienced broadly across the diagnostics industry,
KidneyIntelX has had a prolonged review since our De Novo
submission in August of 2020 due to FDA staffing challenges and
continued prioritization of a significant number of COVID-19
related Emergency Use Authorization submissions. Across a number of
applications, the FDA is not currently meeting ITS 150-day De Novo
review goal in MDUFA IV due to "considerable increases in COVID-19
activities" and this is not unique to Renalytix. We are committed
to working collaboratively and expeditiously with the FDA and
continue to provide additional information, clarification and
supplemental analyses related to our novel KidneyIntelX design as
requested. While we will continue to decline to forecast projecting
a definitive timeline for De Novo marketing authorization, we are
confident that KidneyIntelX will receive FDA De Novo marketing
authorization given interactive dialogue and data requirements to
date and that Fiscal 2022 commercial objectives are on track.
Strategic Collaborations
An innovative partnership with AstraZeneca (LSE/STO/NYSE: AZN)
was secured in the period to develop and launch precision medicine
strategies for cardiovascular, renal and metabolic diseases. The
first stage in the collaboration is examining the uptake of, and
patient adherence to, treatments for diabetes as well as common
complications of CKD, including hyperkalemia and anemia. This will
provide key insights into the impact of the KidneyIntelX platform
to optimize utilization of therapeutics in CKD under current
standard of care protocols. Importantly, this collaboration extends
the potential impact of KidneyIntelX to populations beyond the
first indicated use, DKD, that is approved with New York State and
under breakthrough review with the FDA.
In January 2021, we entered into a partnership with DaVita
(NYSE: DVA) for a program aimed at slowing disease progression and
improving health outcomes in CKD patients by enabling earlier
intervention for patients with early-stage kidney disease through
actionable risk assessments and end-to-end care management. After
risk stratification using KidneyIntelX, program patients identified
as intermediate- and high-risk are expected to receive care
management support through DaVita's integrated kidney care
program.
In February 2021, we entered into a partnership with the
University of Utah to implement KidneyIntelX in combination with a
range of advanced clinical management solutions to optimize patient
care and drive towards improved outcomes system-wide at University
of Utah Health, which serves millions of patients in six states.
Core to this partnership is the implementation of care navigation
and pharmacy programs, behavioral and health economic assessments,
together with data-driven analytics. KidneyIntelX will be deployed
directly into the EHR system at University of Utah Health, enabling
access to more than 1,700 clinicians for seamless test ordering and
patient risk score reporting as part of the standard clinical
workflow.
In May 2021, we entered into a partnership with Atrium Health,
Wake Forest Baptist Health and Wake Forest School of Medicine to
implement an advanced clinical care model to improve kidney health
and reduce kidney disease progression and kidney failure. Through
these partnerships, KidneyIntelX access will be enabled to primary
care physicians, endocrinologists, nephrologists and care teams in
37 hospitals and more than 1,350 care locations across the
Carolinas and Georgia.
Financing
Renalytix has continued to benefit from the participation of a
growing investor base. In July 2019, we raised gross proceeds of
$17.3 million in a following-on financing on the AIM market, and in
July 2020, we raised an additional $85.1 million in gross proceeds
through an offering and concurrent dual-listing on the Nasdaq
Global Market in the U.S. The Directors believe our company is now
well positioned to build on our competitive advantages.
In November 2020, the Company completed a spin-out of Verici Dx
(previously known as FractalDx). Shares in Verici were distributed
to Renalytix shareholders in July, 2020, and Verici subsequently
listed on the AIM market of the London Stock Exchange in November,
2020. Renalytix retains a minority equity interest in Verici.
Patient Studies
During fiscal year 2021 and in the post-period, several
publications and presentations supporting KidneyIntelX were
disseminated, including:
-- Peer-reviewed publication in Diabetologia demonstrating
KidneyIntelX more accurately predicted progressive kidney function
decline and kidney failure in a multi-center, diverse cohort of
1,146 type 2 diabetes patients with early-stage (stages 1, 2, and
3) kidney disease versus the current standard of care
-- Data presented at World Congress of Nephrology (WCN) showing
that the KidneyIntelX algorithm published in Diabetologia and
currently deployed commercially accurately predicted progression of
diabetic kidney disease (DKD) in a multinational cohort from the
CANagliflozin CardioVAScular Assessment Study (CANVAS) with
early-stage DKD (stages 1-3)
-- Data presented at the American Diabetes Association (ADA)
Annual Scientific meeting from the CANVAS trial demonstrating
KidneyIntelX can be effective at monitoring therapeutic response
and improvements in kidney health over time in adults with type 2
diabetes
-- Peer-reviewed submission accepted by American Journal of
Nephrology summarizing the aforementioned findings presented at the
WCN and ADA from the analyses in the CANVAS clinical trial
cohort
-- Peer-reviewed publication in Journal of Medical Economics
supports payer coverage for early-stage risk assessment and care
management in the primary care office; projects significant savings
from KidneyIntelX testing at primary care level
Intellectual Property
In the period, the U.S. Patent and Trademark Office allowed
claims extending the use of one of KidneyIntelX's primary blood
biomarkers, sTNFR1, to all patients with diabetes to determine an
increased risk of developing progressive kidney disease or kidney
failure. We have also completed rights to additional patent
applications for use with KidneyIntelX. We continue to build out
our intellectual property portfolio and are actively evaluating
in-licensing opportunities that will enhance our competitive
product positioning.
Real World Evidence Program
Through our growing number of health system partnerships,
pharmaceutical collaborations and payor models, we are creating a
comprehensive real-world evidence (RWE) and data generation program
including the previously announced programs at Mount Sinai, Wake
Forest / Atrium Health and Utah Health. The primary objective is to
demonstrate the clinical and economic impact of KidneyIntelX
informed care management in large populations and we expect to
expand the scale of this program with extensive publication and
dissemination of the results.
Additionally, through these Institutional Review Board
(IRB)-approved and patient consented studies we will be amassing or
have access to a large biorepository of urine, blood and DNA
samples (already planned to exceed 10,000 patients) linked to
comprehensive longitudinal patient data which will help accelerate
the development of diagnostic products and data solutions for
kidney disease and related complications and co-morbidities.
Importantly, we are actively pursuing opportunities to leverage
the KidneyIntelX platform and this unique RWE program focused on
chronic condition management at primary care to other indications,
most notably cardiovascular disease, heart failure and liver
disease.
A further significant value creation aspect of our RWE program
is the enablement and deployment of our comprehensive digital
health and data strategy. This program provides an invaluable
access to users and insights that inform the features we are
building into our digital technology and data platforms.
Additional Business
In May 2020, the Company and the Icahn School of Medicine at
Mount Sinai entered into an operating agreement to form a joint
venture, Kantaro Biosciences LLC ("Kantaro"), for the purpose of
developing and commercializing laboratory tests for the detection
of antibodies against SARS- CoV-2 originally developed by Mount
Sinai. Owing to a shift in focus from COVID-19 antibody testing to
promoting vaccination in the United States and European Union,
Kantaro saw a decrease in demand for COVID-19 antibody testing,
lower forecasted sales volume and consequently, a lower time
commitment from Renalytix employees.
Expansion of Product Portfolio
We believe there are significant opportunities to expand our
technology platform through incremental version releases of
KidneyIntelX as well as through extending KidneyIntelX application
into additional populations of CKD patients beyond those with
diabetes, including patients of African ancestry with the APOL1
high-risk genotype. We also intend to develop solutions for use in
other large chronic disease patient populations, like
cardiovascular disease. KidneyIntelX has been designed within a
regulated, manufacturing-quality environment to allow us to take
advantage of the dynamic nature of machine learning to improve
product performance through a sequence of controlled version
releases. We believe that our product development approach, which
is based on a quality systems framework following FDA's Quality
System Regulations and the ISO guidelines applicable to medical
devices, will enable our KidneyIntelX platform to rapidly generate
exponential data growth and new clinical use cases, with a clearer
path to achieving the regulated and reimbursed introduction and
subsequent product improvements of an artificial
intelligence-powered in vitro diagnostic.
Continued Expansion of People
Our executive team has an average of 25 years' experience in
professional disciplines including bioinformatics, digital health,
data security, market access, commercial operations, medical
affairs, insurance reimbursement, FDA regulation and International
Organization for Standardization, or ISO, quality management
systems, population health, clinical medicine, finance and health
economics. We believe the integration of such diverse experience is
essential to understanding the complex dynamics of deploying a new
technology into the highly regulated world of patient clinical
care, and we have assembled our team specifically with this
multi-disciplinary approach in mind.
We have continued to invest in key hires on the board and in
management to support the commercialization pathway. During FY21,
we filled positions including a VP of global quality and regulatory
appointment, VP of sales, VP and director of commercial
partnerships, VP of marketing, among others. Post period end, we
appointed Ann Berman and Daniel Levangie to the board of directors,
both bringing extensive commercial operating and leadership
experience to the Company. Jed Fulk was appointed as vice president
of sales, government accounts to develop and lead a team to support
the KidneyIntelX rollout to the VA Health System.
Outlook
We believe KidneyIntelX is a powerful, actionable prognostic
tool that can inform clinical pathways to slow the progression of
kidney disease and potentially prevent the occurrence of
progressive kidney function decline such as kidney failure and the
need for long-term dialysis or kidney transplant. We are building a
body of evidence through clinical validation studies and patient
data generation to demonstrate that accurate and early
identification of high-risk patients, coupled with
guidelines-driven clinical recommendation designed to maximize
patient treatment and compliance, can have a measurable positive
impact on patient quality of life and significantly lower
healthcare costs. By involving a broad range of expert clinical
opinions, testing a growing number of patient samples, consulting
closely with clinical society and patient advocacy organizations,
partnering with healthcare systems and payors and developing a
detailed understanding of the clinical practice environment, we
believe KidneyIntelX will help ease suffering and improve outcomes
for patients living with DKD.
Financial Review
The preliminary results presented cover the fiscal year ended
June 30, 2021 (FY21). Full audited financial results will be
included within the company's FY21 Annual Report. The
presentational currency for Renalytix plc and its subsidiaries
(together, the "Group") is the United States Dollar.
Income Statement
Revenue
The Group recognized revenue of $1.5m in the financial year
ended 30 June 2021 ("FY21") related to services performed as well
as the successful launch of commercial testing in the second half
of the financial year.
Cost of Sales
The cost of sales associated with the services performed and
commercial testing revenue was $0.8m for FY21.
Administrative Costs
During FY21, administrative expenses totaled $33.3m (financial
year ended 30 June 2020 ("FY20"): $11.1m). The major items of
expenditure were general and administrative costs of $22.9m (FY20:
$9.9m) which included $13.8m in employee-related costs (FY20:
$4.6m), $9.1m in subcontractors, legal, accounting, and other
professional fees (FY20: $3.0m), and $8.3m in insurance, marketing,
materials, rent, and other administrative costs (FY20: 2.3m).
Depreciation and amortization expense totaled $2.1m for the period
(FY20: $1.2m).
Finance Income (Expense)
Finance expense totaled $3.2m during FY21 (FY20: $0.5m income)
related to unrealized foreign exchanges losses and an impairment of
the investment in Kantaro offset by mark to market adjustments
related to Verici securities, interest income and other income
related to PPP loan forgiveness.
Balance Sheet
Inventory
Inventory consists of consumable materials used by the labs to
carry out KidneyIntelX tests. During FY21, inventory levels
increased slightly due to purchases as the company prepares for
increased KidneyIntelX testing volumes. Inventory on hand at 30
June 2021 totaled $0.4m (FY20: $0.3).
Fixed Assets
Property, plant, and equipment consists of laboratory equipment
being used to support testing and product development activities.
At 30 June 2021, the company held $1.0m in net property, plant, and
equipment (FY20: $0.6m).
Intangible Assets
The Group held $15.8m net book value of intangible assets held
at 30 June 2021 (FY20: $17.1m) includes payments made primarily to
Mount Sinai for license and patent costs for the intellectual
property underlying KidneyIntelX, as well as amounts capitalised as
development costs. Intangible assets also include the value of the
biomarker business purchased (in exchange for ordinary shares in
the Company) from EKF. Intangible assets decreased period over
period due to amortization.
Deferred Tax
A deferred tax asset totaling $7.1m (FY20: $2.3m) has been
calculated based on the accumulated tax losses in the U.S.
Investment in Verici
In the first half of FY21 the Group converted the note
receivable into equity in Verici Dx. At the end of FY21 the group
held 9,831,681 shares in Verici Dx. The fair value of the
investment in Verici Dx was $9.3 million at June 30, 2021.
Cash
The Group had cash on hand of $65.2m (FY20: $13.3m). Cash and
equivalents are held in several deposit accounts in the US
($64.0m), UK ($1.1m) and IRE ($0.1m). Our expenditure plans remain
sufficiently adaptable to align with available resources.
Borrowings
The Group has no long-term debt outstanding as of 30 June
2021.
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 30 JUNE 2021
Note Period to 30 Period to 30
June 2021 June 2020
$'000 $'000
Continuing operations
Revenue 1,491 -
------------- -------------
Cost of Sales (804) -
------------- -------------
Gross Profit 687
Administrative expenses (33,298) (11,078)
Operating loss (32,611) (11,078)
Share of Net loss in Associate (199)
Finance income - net (2,977) 468
------------- -------------
Loss before tax (35,787) (10,610)
Taxation 5 4,778 1,360
------------- -------------
Loss for the period (31,009) (9,250)
============= =============
Earnings per Ordinary share from
continuing operations
Basic and diluted 6 $ (0.43) $ (0.16)
============= =============
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2021
Period to Period to
30 June 30 June
2021 2020
$'000 $'000
Loss for the period - continuing operations (31,009) (9,250)
Other comprehensive income:
Items that may be subsequently reclassified to
profit or loss
Currency translation differences 9,705 (1,265)
---------- ----------
Other comprehensive loss for the period (21,304) (10,515)
---------- ----------
Total comprehensive loss for the period (21,304) (10,515)
---------- ----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Group Group Company Company
As at 30 June As at 30 June As at 30 June As at 30 June
2021 2020 2021 2020
Notes $'000 $'000 $'000 $'000
Assets
Non-current assets
Property, plant and
equipment 1,081 580 - -
Right of use asset 297 365 - -
Intangible assets 15,812 17,118 15,314 16,841
Investment in
subsidiaries 7 - 1,937 4,588 2,264
Note receivable 75 83 - 2,106
Deferred tax assets 5 7,097 2,319 - -
------------------ ------------------ ------------------ ------------------
Total non-current
assets 24,362 22,402 19,903 21,211
------------------ ------------------ ------------------ ------------------
Current Assets
Inventory 353 326 - -
Security deposits 86 71 - -
Assets held for - 1,705 - -
sale
Investment in
Verici Dx 9,295 - 9,295
Trade and other
receivables 594 18 84,573 21,956
Prepaid and other
current assets 520 2,501 271 2,408
Financial assets - 982 - -
Cash and cash
equivalents 65,159 13,293 15,063 2,441
------------------ ------------------ ------------------ ------------------
Total current
assets 76,006 18,896 109,202 26,805
------------------ ------------------ ------------------ ------------------
Total assets 100,368 41,298 129,105 48,016
================== ================== ================== ==================
Equity attributable
to owners of the
parent
Share capital 233 192 233 192
Share premium 76,457 - 76,346 -
Share-based payment
reserve 4,940 2,833 4,940 2,833
Foreign currency
reserves 7,790 (1,915) 7,776 (1,970)
Retained
earnings/(deficit) 3,772 34,852 38,917 46,710
------------------ ------------------ ------------------ ------------------
Total equity 93,192 35,962 128,211 47,765
------------------ ------------------ ------------------ ------------------
Liabilities
Current liabilities
Trade and other
payables 6,474 2,899 894 251
Current lease
liabilities 86 92 - -
Borrowings 53 121 - -
Current due to
affiliated company 350 271 - -
------------------ ------------------ ------------------ ------------------
Total current
liabilities 6,963 3,383 894 251
------------------ ------------------ ------------------ ------------------
Non-current
liabilities
SBA PPP Funding - - 134 - -
long-term
Non-current lease
liabilities 213 275 - -
Non-current due to
affiliated company 1,544
------------------ ------------------ ------------------ ------------------
Total non-current
liabilities 213 1,953 - -
------------------ ------------------ ------------------ ------------------
Total liabilities 7,176 5,336 894 251
------------------ ------------------ ------------------ ------------------
Total equity and
liabilities 100,368 41,298 129,105 48,016
================== ================== ================== ==================
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2021
Group Group Company Company
Period to 30 June Period to 30 June Period to 30 June Period to 30 June
2021 2020 2021 2020
Note $'000 $'000 $'000 $'000
Cash flow from
operating activities
Loss before income
tax (35,787) (10,610) (7,316) (1,794)
Adjustments for
- Depreciation 126 140 - 25
- Amortisation and
impairment charges 1,958 1,108 1,806 1,094
- Share-based
payments 2,180 1,696 75 172
- Share of net loss
of associate 1,617 63
- Gain on Sale of
assets (449) - (449) (270)
- Forgiveness of PPP (255) -
Loan
- Unrealized loss
(Gain) on equity
method investment (6,483) - (6,483)
- Unrealized foreign
exchange loss
(Gain) 8,349 - 3,074
Changes in working
capital - - 517
- Trade and other
receivables
- Prepaid assets and
other current
assets (576) (18) (57,673) (12,756)
- Assets classified
as available for
sale 1,981 (2,440) 2,137 (2,378)
- Inventory (1,714)
- Security Deposits (27) (326) -
- Trade and other
payables (15) (22) -
Cash used in
operations 3,575 2,064 643 (188)
------------------ ------------------ ------------------- -------------------
Interest paid (23,806) (10,059) (63,669) (16,095)
Net cash used in
operating
activities 3 - 3 -
------------------ ------------------ ------------------- -------------------
(23,803) (10,059) (63,666) (16,095)
------------------ ------------------ ------------------- -------------------
Cash flow from
investing activities
Investment in
subsidiary
Purchase of
property, plant and
equipment (PPE) 472 - (2,324) -
Purchase of capital
lease (637) (359) - -
Purchase of
intangibles (93) (61) - -
Proceeds (purchase)
of financial assets (1,118) (1,411) (840) (1,027)
Net cash generated - 982 -
by/(used in)
investing activities
------------------ ------------------ ------------------- -------------------
(1,377) (849) (3,164) (1,027)
------------------ ------------------ ------------------- -------------------
Cash flow from
financing activities
Note receivable
Issue of shares (net
of issue costs) 8 (83) (161)
Proceeds from loans 76,877 16,678 79,023 16,678
Proceeds from the
issuance of
ordinary shares
under employee
share purchase plan (202) 255 67 -
Proceeds from
exercise of stock
options 111 111
Repayment of loans 252 252
Net cash generated - - -
from financing
activities
------------------ ------------------ ------------------- -------------------
Net
increase/(decrease)
in cash and cash
equivalents 77,046 16,850 79,453 16,517
------------------ ------------------ ------------------- -------------------
Cash and cash
equivalents at
beginning of period 51,866 5,942 12,622 (605)
Cash and cash
equivalents at end
of period 22 13,293 7,297 2,441 3,045
65,159 13,293 15,063 2,441
================== ================== =================== ===================
COMPANY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2021
Share Capital Share Share-based Foreign Retained Total
Premium payment Currency earnings equity
reserve Reserve
$'000 $'000 $'000 $'000 $'000 $'000
At 30 June and
1 July 2019 175 34,032 1,137 (599) (6,578) 28,167
Comprehensive
income
Loss for the period - - - - (9,250) (9,250)
Other comprehensive
income
Currency translation
differences - - - (1,265) - (1,265)
Total comprehensive
income 175 34,032 1,137 (1,864) (15,828) 17,652
Transactions with
owners
Issue of shares 17 17,193 - - - 17,210
Less issue costs - (596) - - - (596)
Share-based payments - - 1,696 - - 1,696
Stock reduction - (50,629) - (51) 50,680 -
Total transactions
with owners of
the parent, recognised
directly in equity 17 (34,032) 1,696 (51) 50,680 18,310
-------------- --------- ------------ ---------- ---------- ---------
At 30 June and
1 July 2020 192 - 2,833 (1,915) 34,852 35,963
-------------- --------- ------------ ---------- ---------- ---------
Comprehensive
income
Loss for the period - - - - (31,009) (31,009)
Other comprehensive
income
Currency translation
differences - - - 9,705 4 9,709
Total comprehensive
income 192 - 2,833 7,790 3,848 14,663
-------------- --------- ------------ ---------- ---------- ---------
Transactions with
owners
Issuance of Ordinary
Shares in US IPO 40 85,141 - - - 85,181
Less issue costs - (9,047) - - - (9,047)
Share-based payments - - 2,107 - - 2,107
Shares issued
under the ESPP - 111 - - - 111
Exercise of Stock
Options 1 252 - - - 252
Verici Ordinary
Share Repurchase - - - (75)- (75)
Total transactions
with owners of
the parent, recognised
directly in equity 41 76,457 2,107 - (75)- 78,530
-------------- --------- ------------ ---------- ---------- ---------
At 30 June 2021 233 76,457 4,940 7,790 3,773 93,192
============== ========= ============ ========== ========== =========
COMPANY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2021
Share Capital Share Premium Share-based Foreign Retained Total equity
payment Currency earnings
reserve Reserve
$'000 $'000 $'000 $'000 $'000 $'000
At 30 June and
1 July 2019 175 34,032 1,137 (610) (2,176) 32,558
Comprehensive
income
Loss for the
period - - - - (1,794) (1,794)
Other
comprehensive
income
Currency
translation
differences - - - (1,309) - (1,309)
Total
comprehensive
income 175 34,032 1,137 (1,919) (3,970) 29,455
Transactions
with owners
Issue of shares 17 17,193 - - - 17,210
Less issue
costs - (596) - - - (596)
Share-based
payments - - 1,696 - - 1,696
Asset Sale - - - - -
Stock reduction - (50,629) - (51) 50,680 -
Total
transactions
with owners of
the parent,
recognised
directly in
equity 17 (34,032) 1,696 (51) 50,680 18,310
At 30 June and
1 July 2020 192 - 2,833 (1,970) 46,710 47,765
Comprehensive
income
Loss for the
period - - - - (7,316) (7,316)
Gain on Verici (402) (402)
Other
comprehensive
income
Currency
translation
differences - - - 9,746 9,746
Total
comprehensive
income 192 - 2,833 7,776 38,992 49,793
-------------- -------------- --------------- ---------------- ---------------- -------------
Transactions
with owners
Issuance of
Ordinary
Shares in US
IPO 40 85,141 - - - 85,181
Less issue
costs - (9,047) - - - (9,047)
Share-based
payments - - 2,107 - - 2,107
Shares issued - - - - - -
under the ESPP
Exercise of
Stock Options 1 252 - - - 252
Verici Ordinary
Share
Repurchase - - - (75)- (75)
Total
transactions
with owners of
the parent,
recognised
directly in
equity 41 76,346 2,107 - (75)- 78,419
-------------- -------------- --------------- ---------------- ---------------- -------------
At 30 June 2021 233 76,346 4,940 7,776 38,917 128,212
============== ============== =============== ================ ================ =============
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
1. General information and basis of presentation
Renalytix Plc (the "Company") is a company incorporated in the
United Kingdom. The Company is a public limited company, which is
listed on the AIM market of the London Stock Exchange. The address
of the registered office is Finsgate, 5-7 Cranwood Street, London,
United Kingdom, EC1V 9EE. The Company was incorporated on 15 March
2018 and its registered number is 11257655.
The principal activity of the Company and its subsidiaries
(together "the Group") is as a developer of artificial
intelligence-enabled diagnostics for kidney disease.
The financial statements are presented in United States Dollars
("USD") because that is the currency of the primary economic
environment in which the Group operates.
2. Basis of presentation
The Group's and Company's financial statements for the year
ended 30 June 2021 have been prepared in accordance with
International Financial Reporting Standards (IFRS) in conformity
with the requirements of the Companies Act 2006The standards that
have been adopted by the Group are those that are effective for
financial years beginning on or after 1 January 2019.
The consolidated financial statements have been prepared under
the historical cost convention except for certain financial assets
measured at fair value. They cover the year to 30 June 2021. The
comparatives cover the period from 30 June 2019 to 30 June
2020.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies.
New standards, amendments, and interpretations issued but not
effective for the period ended 30 June 2020, and not early
adopted
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning on or
after 1 January 2021, and have not been applied in preparing these
financial statements. None of these is expected to have a
significant effect on the financial statements of the Group or
Parent Company.
3. Significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below.
Going concern
The Group and Company meet their day-to-day working capital
requirements through the use of cash reserves.
The Directors have considered the applicability of the going
concern basis in the preparation of these financial statements.
This included the review of internal budgets and financial results
which show, taking into account reasonably probable changes in
financial performance, that the Group and Company should be able to
operate within the level of its current funding arrangements.
We have not yet seen any material disruption to our business as
a result of the COVID-19 pandemic and current trading suggests that
our base case forecasts are still applicable.
The Directors believe that the Group and the Company have
adequate resources to continue in operation for the foreseeable
future. For this reason, they have adopted the going concern basis
in the preparation of the financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiary undertakings. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration agreement. Acquisition related costs are expensed as
incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date.
On 23 October 2018 as part of a pre-admission re-organisation,
the Company acquired the entire share capital of Renalytix AI,
Inc., then a subsidiary of EKF. Given common ownership of the
Company and the subsidiary from incorporation up to the date of
legal ownership, the transaction has been treated as a group
reorganisation with no fair value adjustments to assets or
liabilities. The subsidiary has been consolidated within the
results of the Group from the date of incorporation.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Associates are entities over which the Group has significant
influence but not control over the financial and operating
policies. Investments in associates are accounted for using the
equity method of accounting and are initially recognised at cost.
The Group's share of its associates' post-acquisition profits or
losses is recognised in profit or loss, and its share of
post-acquisition movements in reserves is recognised in other
comprehensive income. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment.
Foreign currency translation
(a) Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in
United States Dollars, which is the Group's presentational
currency. The functional currency of the Parent Company is GB
Pounds.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions where items are re-measured. Foreign exchange gains
and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in
the income statement within 'administrative expenses'.
(c) Group companies
The results and financial position of all the Group entities
that have a functional currency different from the presentational
currency are translated into the presentational currency as
follows:
-- assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
-- income and expenses for each income statement are translated
at average exchange rates; and
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations are taken
to other comprehensive income. When a foreign operation is
partially disposed of or sold, exchange differences that were
recorded in equity are recognised in the income statement as part
of the gain or loss on sale.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Executive Directors who make
strategic decisions. At present the Directors consider the business
to operate in a single segment.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and any provision for impairment.
Historical cost includes expenditure that is directly attributable
to the acquisition of the asset and bringing the asset to its
working condition for its intended use.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only where it is
probable that future economic benefits associated with the asset
will flow to the Group and the cost of the asset can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are
incurred.
Depreciation on assets is calculated using the straight-line
method to allocate their cost to their residual values over their
estimated useful lives, as follows:
Fixtures and fittings 20%
The assets' residual values and useful economic lives are
reviewed regularly, and adjusted if appropriate, at the end of each
reporting period.
An asset's carrying value is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on the disposal of assets are determined by
comparing the proceeds with the carrying amount and are recognised
in administration expenses in the income statement.
Intangible assets
(a) Trademarks, trade names and licences
Separately acquired trademarks and licences are shown at
historical cost. Trademarks and licences acquired in a business
combination are recognised at fair value at the acquisition date.
Trademarks and licences have a finite useful life and are carried
at cost less accumulated amortisation. Amortisation is calculated
using the straight-line method to allocate the cost of trademarks
and licences over the contractual licence period of 10 to 15 years
and is charged to administrative expenses in the income
statement.
(b) Development costs and trade secrets
Development costs have a finite useful life and are carried at
cost less accumulated amortisation.
Expenditure incurred on the development of new or substantially
improved products or processes is capitalised, provided that the
related project satisfies the criteria for capitalisation,
including the project's technical feasibility and likely commercial
benefit. All other research and development costs are expensed to
profit or loss as incurred.
Development costs are amortised over the estimated useful life
of the products with which they are associated. Amortisation
commences when a new product is in commercial production. The
amortisation is charged to administrative expenses in the income
statement. The estimated remaining useful lives of development
costs are reviewed at least on an annual basis.
The carrying value of capitalised development costs is reviewed
for potential impairment at least annually and if a product becomes
unviable and an impairment is identified the deferred development
costs are immediately charged to the income statement. Amortisation
has not yet commenced.
Trade secrets, including technical know-how, operating
procedures, methods and processes, are recognised at fair value at
the acquisition date. Trade secrets have a finite useful life and
are carried at cost less accumulated amortisation. Amortisation has
not yet commenced.
Impairment of non-financial assets
Assets that have an indefinite life or where amortisation has
not yet commenced are tested annually for impairment. Assets that
are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for
the amount by which the carrying amount exceeds its recoverable
amount.
The recoverable amount is the higher of an asset's fair value
less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not
been adjusted.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows. Impairment losses recognised for cash-generating units, to
which goodwill has been allocated, are credited initially to the
carrying amount of goodwill. Any remaining impairment loss is
charged pro rata to the other assets in the cash-generating
unit.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in the prior period. A
reversal of an impairment loss is recognised in the income
statement immediately. If goodwill is impaired however, no reversal
of the impairment is recognised in the financial statements.
Financial assets
Classification
The Company classifies its financial assets in the following
categories: loans and receivables at amortised cost and financial
assets at fair value through profit or loss. The classification
depends on the purpose for which the financial assets were acquired
and management determines the classification of its financial
assets at initial recognition.
(a) Loans and receivables
Financial assets are classified as at amortised cost only if
both of the following criteria are met: the asset is held within a
business model whose objective is to collect contractual cash
flows, and the contractual terms give rise to cash flows that are
solely payments of principal and interest. Loans and receivables
are non-derivative financial assets with fixed or determinable
payments that are not quoted on an active market. They are included
in current assets, except for maturities greater than 12 months
after the balance sheet date. These are classified as non-current
assets. The Company's loans and receivables comprise 'trade and
other receivables' and cash and cash equivalents in the balance
sheet.
(b) Financial assets at fair value through profit or loss
The Group classifies the following financial assets at fair
value through profit or loss ("FVPL"):
-- debt investments that do not qualify for measurement at
either amortised cost or fair value through Other Comprehensive
Income;
-- equity investments that are held for trading, and
-- equity investments for which the entity has not elected to
recognise fair value gains and losses through Other Comprehensive
Income.
(c) Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive
income comprise equity securities that are not held for trading and
which the Group has irrevocably elected at initial recognition to
recognise in this category. The Group considers this category to be
more relevant for assets of this type.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash
at bank and in hand and short- term deposits with an original
maturity of three months or less.
For the purposes of the cash flow statements, cash and cash
equivalents consist of cash and short-term deposits as defined
above.
Share capital and premium
Ordinary Shares are classified as equity. Proceeds in excess of
the nominal value of shares issued are allocated to the share
premium account and are also classified as equity. Incremental
costs directly attributable to the issue of new Ordinary Shares or
options are deducted from the share premium account.
Other reserves - equity
The share-based payment reserve is used to recognise the fair
value of equity settled share-based payment transactions.
Foreign currency reserve is used to record the exchange
differences on translation of entities in the Group which have a
functional currency different to the presentation currency.
Retained earnings includes all current and prior period results
as disclosed in the income statement.
Trade and other payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at fair value and subsequently measured at amortised cost
using the effective interest method.
Current and deferred income tax
Income tax comprises current and deferred tax. Tax is recognised
in the income statement, except to the extent that it relates to
items recognised in other comprehensive income where the associated
tax is also recognised in other comprehensive income.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the Company and its subsidiary operate and
generate taxable income. Management evaluates positions taken in
tax returns with respect to situations in which applicable tax
regulation is subject to interpretation and establishes provisions
where appropriate on the basis of amounts expected to be paid to
the tax authorities.
Deferred tax is recognised, using the liability method, on all
temporary differences at the balance sheet date between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred tax liabilities are
recognised in respect of all temporary differences except where the
deferred tax liability arises from the initial recognition of
goodwill in business combinations.
Deferred tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax assets and tax losses, to
the extent that they are regarded as recoverable. They are regarded
as recoverable where, on the basis of available evidence, there
will be sufficient taxable profits against which the future
reversal of the underlying temporary differences can be
deducted.
The carrying value of the amount of deferred tax assets is
reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be
available to allow all, or part, of the tax asset to be
utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on the tax rates (and
tax laws) that have been substantively enacted at the balance sheet
date.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Leases
Leases are recognised as a right-of-use asset and a
corresponding lease liability at the date on which the leased asset
is available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less any lease incentives receivable
-- variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date
-- amounts expected to be payable by the group under residual value guarantees
-- the exercise price of a purchase option if the group is
reasonably certain to exercise that option, and
-- payments of penalties for terminating the lease, if the lease
term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit within the lease. If that rate cannot be readily
determined, the Group's incremental borrowing rate is used, being
the rate that the Group would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security, and conditions.
Where the Group is exposed to potential future increases in
variable lease payments based on an index or rate, amounts are not
included in the lease liability until they take effect. When
adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the
right-of-use asset.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to the income statement over the lease
period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date less any lease incentives received
-- any initial direct costs
-- restoration costs
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on straight line
basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful life.
Revenue Recognition
The Company recognizes revenue when a customer obtains control
of promised goods or services. The Company records the amount of
revenue that reflects the consideration that it expects to receive
in exchange for those goods or services. The Company applies the
following five-step model in order to determine this amount: (i)
identification of the promised goods or services in the contract;
(ii) determination of whether the promised goods or services are
performance obligations, including whether they are distinct in the
context of the contract; (iii) measurement of the transaction
price, including the constraint on variable consideration;
(iv) allocation of the transaction price to the performance
obligations; and (v) recognition of revenue when (or as) the
Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when
it is probable that it will collect the consideration to which it
is entitled in exchange for the goods or services that it transfers
to the customer. The Company reviews the contract to determine
which performance obligations it must deliver and which of these
performance obligations are distinct. Certain contracts have
options for the customer to acquire additional services. The
Company evaluates these options to determine if a material right
exists. If, after that evaluation, it determines a material right
does exist, it assigns value to the material right based upon the
renewal option approach. The Company recognizes as revenue the
amount of the transaction price that is allocated to each
performance obligation when that performance obligation is
satisfied or as it is satisfied. The Company uses present right to
payment and customer acceptance as indicators to determine the
transfer of control to the customer occurs at a point in time.
Sales tax and other similar taxes are excluded from revenues.
Cost of revenue
Cost of revenue consists of costs directly attributable to the
services rendered, including labor costs directly related to
revenue generating activities.
Employee benefits
(a) Pension obligations
The Group makes contributions to defined contribution pension
plans. A defined contribution plan is a pension plan under which
the Group pays fixed contributions into a separate entity with the
pension cost charged to the income statement as incurred. The Group
has no further obligations once the contributions have been
paid.
(b) Share-based compensation
The Group operates an equity-settled, share-based compensation
plan, under which the Group receives services from employees and
others as consideration for equity instruments of the Group.
Equity-settled share-based payments are measured at fair value at
the date of grant and are expensed over the vesting period based on
the number of instruments that are expected to vest. For plans
where vesting conditions are based on share price targets, the fair
value at the date of grant reflects these conditions. Where
applicable the Group recognises the impact of revisions to original
estimates in the income statement, with a corresponding adjustment
to equity for equity-settled schemes. Fair values are measured
using appropriate valuation models, taking into account the terms
and conditions of the awards.
When the share-based payment awards are exercised, the Company
issues new shares. The proceeds received net of any directly
attributable transaction costs are credited to share capital
(nominal value) and share premium.
National insurance on share options
To the extent that the share price at the balance sheet date is
greater than the exercise price on options granted to UK citizens
under unapproved share-based payment compensation schemes,
provision for any National Insurance Contributions has been based
on the prevailing rate of National Insurance. The provision is
accrued over the performance period attaching to the award.
Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
Exceptional items
These are items of an unusual or non-recurring nature incurred
by the Group and include transactional costs and one-off items
relating to business combinations, such as acquisition
expenses.
4. Segmental reporting
The Group operates as a single segment. The Group is in its
initial commercial launch phase and therefore has not yet commenced
revenue generation as of the end of FY20.
5. Income Tax
Period ended 30 June 2021 Period ended 30 June 2020
Group $'000 $'000
-------------------------- --------------------------
Deferred tax 7,097 2,319
-------------------------- --------------------------
Total deferred
tax 7,097 2,319
-------------------------- --------------------------
Income tax credit 7,097 2,319
-------------------------- --------------------------
The Finance Act 2015 which was substantively enacted in 2015
included legislation to reduce the main rate of UK corporation tax
to 19% from 1 April 2017 and the Finance Act 2016 which was
substantively enacted in 2016 included legislation to reduce the
main rate of UK corporation tax to 17% from 1 April 2020. On 18
November 2019, the government pledged to put the planned
corporation tax reduction from 19% to 17% on hold. This was
substantively enacted on March 17 2020.
6. Earnings Per Share
Basic earnings per share is calculated by dividing the loss
attributable to equity holders of the parent by
the weighted average number of ordinary shares in issue during
the period.
Year ended 30 June 2021 Year ended 30 June 2020
$'000 $'000
Loss attributable to owners of the parent (31,009) (9,250)
71,484,934 59,416,134
Weighted average number of ordinary shares in issue
------------------------ ------------------------
Basic and diluted loss per share $ (0.43) $ (0.16)
======================== ========================
The Company was incorporated on 15 March 2018 with 50,000
ordinary shares of GBP1.00 each, and as a result of subdivisions
(100:1 on 4 May 2018 and then 4:1 on 24 October 2018), the
resulting founding shares became 20,000,000 at GBP0.0025 each.
The Company has one category of dilutive potential ordinary
share, being share options. The potential shares were not dilutive
in the period as the Group made a loss per share.
7. Investments in Subsidiaries
At 30 June At 30 June
2021 2020
Company $'000 $'000
Shares in Renalytix AI,
Inc. 4,588 2,264
Shares in Renalytix AI, - -
Ltd.
Investments in Group undertakings are recorded at cost which is
the fair value of the consideration paid, less any impairment.
The Company had the following subsidiaries as of 14 October
2021.
Name of Proportion held Class of shareholding Nature of business
Company
------------------------- ---------------- ---------------------- ---------------------------------------------
Renalytix AI Inc. (1) 100% Ordinary Developer of artificial intelligence-enabled
clinical diagnostic solutions for kidney
disease
------------------------- ---------------- ---------------------- ---------------------------------------------
Renalytix AI Limited (2) 100% Ordinary Developer of artificial intelligence-enabled
clinical diagnostic solutions for kidney
disease
------------------------- ---------------- ---------------------- ---------------------------------------------
(1) Renalytix AI Inc. is incorporated in the United States of
America and has their principal place of business at 1460 Broadway,
New York, New York 10036. Renalytix AI Inc. is included in the
consolidation. The proportions of voting shares held by the parent
company do not differ from the proportion of Ordinary Shares
held.
(2) Renalytix AI Limited is incorporated in the Republic of
Ireland and has their principal place of business at 29 Lower
Patrick Street, Kilkenny, Ireland. Renalytix AI Ltd. is included in
the consolidation. The proportions of voting shares held by the
parent company do not differ from the proportion of Ordinary Shares
held.
8. Related Party Transactions
In May 2018, the Company secured its cornerstone license
agreement with ISMMS for research and clinical study work and
intended commercialization by the Company. As part of the
collaboration, ISMMS became a shareholder in the Company and has
subsequently made equity investments both in the Company's IPO in
November 2018 and the subsequent sale of ordinary shares in July
2019. Additionally, in December 2018, the Company executed its
option with ISMMS for the FractalDx license, which grants rights to
technology and patents relating to a series of potential
diagnostics and prognostics in the field of kidney transplant and
rejection.
In connection with the formation of Kantaro, the Company entered
into a five-year Advisory Services Agreement ("Advisory Agreement")
pursuant to which the Company has agreed to provide certain
advisory services to Kantaro.
Pursuant to the Kantaro Operating Agreement, Kantaro issued 750
Class A Units to Mount Sinai in exchange for Mount Sinai granting
licenses to Kantaro under certain intellectual property rights of
Mount Sinai and 250 Class A Units to the Company as the sole
consideration for the services to be rendered by the Company under
the Advisory Agreement. A portion of the Company's units are
subject to forfeiture if, prior to December 31, 2020, Kantaro
terminates the Advisory Agreement as a result of an uncured
material breach of the Advisory Agreement or in the event the
Company is acquired by a hospital or health system that serves all
or any portion of the service areas served by Mount Sinai. The
Company determined the fair value of the services at June 30, 2021
to be provided under the Advisory Agreement was $0.4 million and
the fair value of the Class A units received from Kantaro was $1.9
million. A loss of $0.1 million was recognized within equity in
losses of affiliate in the accompanying consolidated statements of
operations and comprehensive loss. As of June 30, 2020, the total
liability associated with the services was $.9 million of which
$0.3 million is included within accrued expenses and other current
liabilities and $1.6 million is within other liabilities.
In addition to the equity granted at formation, the Company and
Mount Sinai each committed to making a loan to Kantaro. Mount Sinai
committed to lend an initial amount of $0.3 million and an
additional $0.5 million thereafter. The Company committed to lend
an initial amount of $83,333 and an additional $0.2 million
thereafter. Each loan bears interest at a per annum rate equal to
0.25%, compounded monthly, until repaid, and is repayable from the
first amounts that would otherwise constitute cash available for
distribution to the members of Kantaro (provided that each loan
repayment will be made, 75% to Mount Sinai and 25% to the Company).
In the year ended 30 June 2021, the Company loaned Kantaro the full
$250,000 however later recorded a reserve of $175,000 based on
uncertainty regarding collectability and had a remaining $75,000
note receivable at June 30, 2021. In addition, the Company
recognized losses of $199,000 on their investment in Kantaro during
the year ended 30 June 30 2021.
In June 2020, we and Mount Sinai entered into a registration
rights agreement pursuant to which we have granted Mount Sinai the
following registration rights:
-- Demand Registration on Form F-3 - Mount Sinai is entitled to demand registrations on Form
F-3, if we are then eligible to register shares on Form F-3, including up to two underwritten
offerings in any 12-month period.
-- Demand Registration on Form F-1 or Form S-1 - At any time following one year after the completion
of the global offering, if we are not eligible to register shares on Form F-3 or S-3, Mount
Sinai is entitled to a maximum of one demand registration on Form F-1 or Form S-1 during any
12-month period, subject to specified exceptions.
-- Piggyback Registration - Mount Sinai is entitled to certain piggyback registration rights,
subject to certain marketing and other limitations in the context of an underwritten offering.
-- Expenses - We will pay all registration expenses incident to the performance of our obligations
under the registration rights agreement.
Mount Sinai's registration rights will terminate at such time as
Rule 144, or another similar exception under the Securities Act, is
available for the unlimited public sale of all of Mount Sinai's
registrable securities without any volume or manner of sale
limitations, subject to specified exceptions.
9. Reconciliation of IFRS to U.S. GAAP
Since Renalytix initial listing on Nasdaq, the Company has
followed accounting principles generally accepted in the United
States of America ("U.S. GAAP"), both for internal as well as
external purposes.
Renalytix Form 20-F, which is based on U.S. GAAP, contains
differences from its Annual Report which is based on IFRS. The Form
20-F and Annual Report will be available on the Company's website
(www.renalytixai.com). In order to help readers to understand the
difference between the Group's two sets of financial statements,
Renalytix has provided, on a voluntary basis, a reconciliation from
IFRS to U.S. GAAP as follows:
Reconciliation of
Net Loss
($ thousands) 30-Jun-21 30-Jun-20
----------------------------------- ---------- ----------
Net loss in accordance with
IFRS (31,009) (9,250)
(a) Development expenditures and
amortization 1,842 (77)
(b) Deferred tax
assets (4,778) (1,360)
(c) Stock compensation expense (483) 537
(d) Verici Transaction (434) -
(e) Other Adjustments (473) 306
Total adjustments (4,326) (592)
Net loss in accordance with
U.S. GAAP (35,336) (9,844)
------------------------------------- ---------- ----------
(a) Development expenditures
Under IFRS, costs relating to development projects are
recognised as intangible assets when costs can be measured reliably
and the technical feasibility of the product, volumes and pricing
support the view that the development expenditure will generate
future economic benefits. Under U.S. GAAP, development costs are
expensed as incurred. As a result, costs incurred related to
development projects that have been capitalised under IFRS are
expensed as incurred under U.S. GAAP. Amortization expenses, net
result on disposal and impairment charges of previously capitalised
development costs recorded under IFRS have been reversed under U.S.
GAAP.
(b) Deferred tax assets
The Group's policy for accounting for deferred income taxes
under IFRS is described in section "Significant accounting
policies". This policy is similar to U.S. GAAP which states that a
deferred tax asset or liability is recognised for the estimated
future tax effects attributable to temporary differences and tax
loss carry forwards. Valuation allowances are recorded to reduce
deferred tax assets when it is more likely than not that a tax
benefit will not be realised based on available evidence.
(c) Stock compensation expense
Under IFRS, the Company utilises the graded vesting method to
expense stock options whereas the Company has elected to recognise
stock compensation expense on a straight-line basis under US
GAAP.
(d) Verici Transaction
Attributable to the differences in accounting treatment of the
Verici Dx transaction specifically the
distribution in specie and subsequent deconsolidation of the
Verici entity under IFRS vs. US GAAP.
(e) Other adjustments
The remaining difference of $0.1 million represents other
immaterial audit adjustments and small accounting differences.
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END
FR MBBATMTBTMLB
(END) Dow Jones Newswires
October 21, 2021 02:00 ET (06:00 GMT)
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