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™ 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 portfolioPartnership 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 CallThe
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 the 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) 614-1551US/Canada Participant
International Dial-In Number: (914) 987-7290United Kingdom
International Dial-In Number: 0800 0288 438United Kingdom Local
Dial-In Number: 0203 1070 289Conference 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 RenalytixRenalytix
(NASDAQ: RNLX) (LSE: RENX) is the global founder and leader in the
new field of bioprognosis™ 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
StatementsStatements 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 RenalytixAt 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
KidneyIntelXOur 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 ProgressIn 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 RegulatoryWe
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 CollaborationsAn
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.
FinancingRenalytix 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 StudiesDuring 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 PropertyIn 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
ProgramThrough 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 BusinessIn 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
PortfolioWe 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
PeopleOur 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.
OutlookWe 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 RevenueThe
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 SalesThe cost of sales associated with
the services performed and commercial testing revenue was $0.8m for
FY21.
Administrative CostsDuring 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 SheetInventoryInventory
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 AssetsProperty, 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 AssetsThe 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 TaxA deferred tax asset totaling $7.1m
(FY20: $2.3m) has been calculated based on the accumulated tax
losses in the U.S.
Investment in VericiIn 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.
CashThe 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.
BorrowingsThe Group has no long-term debt
outstanding as of 30 June 2021.
CONSOLIDATED INCOME STATEMENTFOR THE
YEAR ENDED 30 JUNE 2021
|
Note |
|
Period to 30 June2021 |
|
|
Period to 30 June2020 |
|
|
|
|
|
|
|
$’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
continuingoperations |
|
|
|
|
|
Basic and diluted |
6 |
|
$ |
(0.43 |
) |
|
$ |
(0.16 |
) |
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE
2021
|
Period to 30 June 2021 |
|
|
Period to 30 June 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
POSITIONAS AT 30 JUNE 2021
|
|
|
Group |
Group |
|
Company |
|
Company |
|
As at 30June 2021 |
As at 30June 2020 |
As at 30June 2021 |
|
As at 30June 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 sale |
|
|
- |
1,705 |
|
|
- |
|
- |
|
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 -
long-term |
|
|
- |
134 |
|
|
- |
|
- |
|
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 FLOWSFOR
THE YEAR ENDED 30 JUNE 2021
|
|
|
Group |
|
Group |
|
Company |
|
Company |
|
|
|
Period to 30June 2021 |
|
Period to 30June 2020 |
|
Period to 30June 2021 |
|
Period to 30June 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 Loan |
|
|
(255 |
) |
|
- |
|
|
|
|
|
- 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
by/(used in) investing activities |
|
|
- |
|
|
982 |
|
|
|
|
- |
|
|
|
|
(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 YEAR ENDED 30 JUNE
2021
|
Share Capital |
Share Premium |
Share-based payment reserve |
Foreign Currency Reserve |
|
Retained earnings |
Totalequity |
|
$’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
EQUITYFOR THE YEAR ENDED 30 JUNE 2021
|
Share Capital |
Share Premium |
Share-based payment reserve |
Foreign Currency Reserve |
|
Retained earnings |
Totalequity |
|
$’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 2006. The
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 concernThe 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 consolidationThe
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
currencyItems 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 balancesForeign
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 companiesThe 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 reportingOperating
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
equipmentProperty, 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 licencesSeparately 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
secretsDevelopment 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
assetsAssets 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 receivablesFinancial 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 lossThe 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 incomeFinancial 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 equivalentsCash
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
premiumOrdinary 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 payablesTrade
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
taxIncome 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.
LeasesLeases 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 RecognitionThe 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 revenueCost of revenue
consists of costs directly attributable to the services rendered,
including labor costs directly related to revenue generating
activities.
Employee benefits(a)
Pension obligationsThe 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 compensationThe 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
optionsTo 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 incomeInterest 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 itemsThese 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
bythe 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 £1.00 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 £0.0025
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 2021 |
|
At 30 June 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 ofCompany |
|
Proportion held |
|
Class of shareholding |
Nature of business |
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 expendituresUnder 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 assetsThe 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 expenseUnder
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 TransactionAttributable 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 adjustmentsThe remaining
difference of $0.1 million represents other immaterial audit
adjustments and small accounting differences.
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