TIDMETX
RNS Number : 4573Y
e-Therapeutics plc
13 May 2021
e-therapeutics plc
("e-therapeutics" or "the Company" or "the Group")
Final Results for the Year Ended 31 January 2021
Oxford, UK, 13 May 2021 - e-therapeutics plc (AIM: ETX), the
drug discovery company, announces its final audited results for the
year ended 31 January 2021.
Operational Highlights
Management and Board restructure
-- On 11 February 2020, Ali Mortazavi was appointed Executive
Chairman in a management restructure that saw Ray Barlow stepping
down as Chief Executive Officer and Steve Medlicott stepping down
as Chief Financial Officer
-- From 12 October 2020, Ali Mortazavi was appointed as Chief Executive Officer
-- Post year end, Trevor Jones, who has been an independent
Non-Executive Director since 2015, was appointed Non-Executive
Chairman and post period, Karl Keegan was appointed Chief Financial
Officer in March 2021
Expansion into RNA interference (RNAi)
-- In May 2020, the Company announced expansion into RNAi as a
therapeutic modality having designed a novel GalNAc small
interfering RNA (siRNA) that will leverage expertise in network
biology and, post period, filed a patent application and commenced
experiments to characterise the platform. The Company expects to
offer this proprietary platform to potential partners in
2021-22
Collaboration with Galapagos NV ("Galapagos")
-- In June 2020, the Company announced a collaboration with
Galapagos to identify new therapeutic approaches to modulate a
specific mechanism involved in idiopathic pulmonary fibrosis
("IPF"). Significant progression has been made on this
collaboration during the year and post period, this collaboration
has achieved two success-based milestones. The Company remains in
business development discussions for both network-driven and
functional
genomics technologies with multiple potential partners
Scientific Advisory Board ("SAB") launched
-- During the year, a SAB was created. Headed by Dr Paul Burke,
with members Dr Bill Harte and Professor John Mattick, who all have
considerable industry experience and will provide strategic advice
and insight on transforming the drug discovery process
COVID-19 project
-- In response to the COVID-19 pandemic, the Company initiated a
project to identify approved and known drugs, both alone and as
synergistic combinations, that could rapidly be repositioned for
the treatment of COVID-19
-- Compounds identified through the Company's network-driven
discovery platform have been tested by Wuxi App Tec in cell-based
assays and show potent anti-inflammatory and antiviral activity.
This activity is expected to be generically applicable, raising the
prospect of utility against both existing and new emergent strains
of coronavirus
Financial highlights
During the year the Company strengthened its financial position
raising t otal gross funds of GBP13.2m .
-- Completed equity fundraises of GBP1.6m and GBP11.6m in
February and July 2020 respectively to scale the Group's business
model with focus on further developing the Group's informatics
platform capabilities, building and populating an internal pipeline
of high conviction early assets and expanding the team to support
the scale-up
-- Revenues of GBP0.3m (FY20: GBP0.5m)
-- Cash at 31 January 2021 of GBP13.0m (FY20: GBP3.8m)
-- Cash increase in the year of GBP9.2m (FY20: GBP(2.1)m)
-- R&D spend GBP2.7m (FY20: GBP2.1m)
-- Operating loss of GBP4.5m (FY20: loss of GBP2.9m)
-- R&D tax credit of GBP0.8m (FY20: GBP0.6m)
Ali Mortazavi, Chief Executive Officer of e-therapeutics,
commented: " Our ambition is to transform the drug discovery
process. The successful fundraises during the year enable the next
stage of growth and value creation for the Company. We have begun
to build momentum as we move forward with our strategy delivering
scientific progress as well as current and prospective
partnerships. "
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
-Ends-
Enquiries:
e-therapeutics plc Tel: +44 (0)1993 883
125
Ali Mortazavi, CEO www.etherapeutics.co.uk
Karl Keegan, CFO
SP Angel Corporate Finance LLP Tel: +44(0)20 3470
0470
Nominated Adviser and Broker
Matthew Johnson/Caroline Rowe (Corporate
Finance)
Vadim Alexandre/Rob Rees (Corporate
Broking)
About e-therapeutics plc
e-therapeutics plc is an Oxford, UK-based company with a
powerful computer-based approach to drug discovery, founded on its
industry-leading expertise in network biology to fully capture
disease complexity. The Company combines network science, machine
learning, artificial intelligence, statistics and big data with
expertise in drug discovery and development to transform the search
for new medicines and intervention strategies.
e-therapeutics has developed an in silico laboratory that
enables the rapid screening of millions of compounds and the
identification of small subsets that are enriched for highly active
hits. Its proprietary platform also has novel applications in
functional genomics, being able to analyse complex genetic
datasets, provide a deep understanding of pathological mechanisms
and distil actionable insights for the discovery of novel drugs,
biomarkers and diagnostics.
e-therapeutics has deployed and validated its disease-agnostic
drug discovery platform both in house and with partners, including
Novo Nordisk, Galapagos NV and a US-based, top 5 pharmaceutical
company.
Chairman's statement
During the financial year ended 31 January 2021, we have seen
good momentum in growing shareholder value, leveraging the funds
raised to deliver scientific progress and building upon current and
prospective partnerships and collaborations. The Company has ended
the period in a secure financial position which will enable it to
make significant progress in the year ahead and beyond.
In my first statement as Chairman, I am pleased to report that
the Company is now well positioned for future success. Over the
last 12 months e-therapeutics has made significant progress across
the business and raised significant funding to support its strategy
for value creation. The proceeds have facilitated a number of
initiatives, with a particular focus on expanding the Company's
computational platform capabilities, internal asset pipeline
prospects and success in securing partnerships and collaborations.
In light of the recent uncertainty arising from the COVID-19
pandemic, we have been quick to adapt to the changing circumstances
and there has been minimal impact on our business. Indeed, for our
Company, the situation has opened up new opportunities. The speed
at which the Company has reacted to changing circumstances and the
support it has offered its employees is a credit to the leadership
of CEO, Ali Mortazavi and the Executive Team.
e-therapeutics' ambition is to transform the drug discovery
process. We are leveraging our computational platform and network
biology expertise to accelerate the identification and development
of effective therapies, in particular through the synergy between
our computational approaches and our recently added proprietary
RNAi technology platform.
Our goal is to establish e-therapeutics as the leading platform
in computational biology:
1. To win commercial deals and achieve industrial validation of our informatics Platform
2. Establish a validated RNAi platform
3. Develop high-conviction internal assets
4. Develop the Company to a sufficient scale through platform development and recruitment
5. Provide guidance, development and feedback to people to enable them to fulfil their role
The period has seen significant delivery against this strategy
with the following notable achievements:
-- The Company announced a collaboration with Galapagos to
identify new therapeutic approaches to modulate a specific
mechanism involved in Idiopathic Pulmonary Fibrosis (IPF) and
potentially other fibrotic indications. In addition, the Company
has existing partnerships with Novo Nordisk and this partnership on
Type- 2 diabetes has been extended with the potential to progress
to a larger discovery project. The Company expansion into RNA
interference (RNAi) and the establishment of a proprietary siRNA
platform with siRNA as the drug modality of choice for our internal
pipeline was a key achievement during 2020.
-- Significant progress has been made on our GaINAc siRNA
platform and we have recently filed a patent application relating
to specific hepatocyte targeting for liver gene silencing which
will provide a competitive advantage in developing our RNAi
therapeutic pipeline.
-- In addition to its partnerships/collaborations, the Company
intends to extract and retain further value from its platform by
building an in-house pipeline of assets to provide out-licensing
opportunities, through a data-driven and flexible partnering
strategy at the right value inflection points. The Company has
developed a proprietary disease-agnostic platform to produce
valuable disease biology insights and potential drug targets and
candidates.
-- In December 2020, the Company announced it had deployed its
network biology platform to identify clinical stage compounds that
either singly or in combination could be repurposed rapidly to
treat COVID-19 and it has generated very encouraging results.
-- Innovations continue to be made to our core platform
technologies including increased automation and in the area of
target identification. Significant headway has been made in
recruiting further skilled people to the team.
-- In order to support and develop our people, the appointment
of our Chief People Officer has resulted in new initiatives,
regular interactive learning and cross-team collaboration sessions
as well as the implementation of a new HR framework.
Strengthened financial position
During the period under review, the Board and management have
continued to implement robust financial control. A particular
achievement during the period was the Board's commitment to
strengthen the financial position of the Company by securing new
investors and raising funds to enable the Company's next stage of
growth and value creation.
I am delighted that in the most recent fund raise we welcomed
new institutional shareholders and retail shareholders, through a
specific Retail Offer via PrimaryBid. As a result, the overall size
and shape of our shareholder base has significantly changed. I
should like to thank all our new and existing shareholders for
their continued support.
The funds raised in the period gives the Company sufficient
working capital for at least 12 months and with an element of
discretionary spend.
Board and Executive Team
In February 2020, we announced a restructuring of the Board and
Executive Team resulting in the appointment of Ali Mortazavi as
Executive Chairman. In addition, Michael Bretherton was appointed
Non-Executive Director. Subsequently in October 2020, Ali Mortazavi
was also appointed Chief Executive of the Company in addition to
his role as Chairman. Post period in March 2021, a further
reorganisation of the Board resulted in my appointment to the role
of Independent Non-Executive Chairman with Ali Mortazavi continuing
in his role as Chief Executive Officer.
The Company continued to build its Executive competencies with
the appointments of Laura Roca-Alonso as Chief Business officer,
Stephanie Maley as Chief People Officer and, post period, the
appointment of Karl Keegan as Chief Financial Officer.
I should like to thank our dedicated staff for their very
significant contribution to the Company and for their continued
diligence, agility and commitment throughout this difficult time.
In my opinion, the Board restructuring has denoted a turning point
in the leadership and direction of e-therapeutics and we are now in
a strong position under the leadership of Ali Mortazavi to execute
on our strategy. I warmly welcome all the new appointments to our
company. I am delighted to have been appointed as Chairman and I
now look forward to completing the search for an additional Non-
Executive Director to strengthen the Board further and to support
the Company's future success.
Professor Trevor Jones CBE
Independent Non-Executive Chairman
12 May 2021
Chief Executive Officer's statement
Prior to investing and becoming the CEO, I conducted detailed
due diligence into the full range of computational approaches in
drug discovery. I was struck by the Company's "biology first"
approach and the interest its network biology capabilities were
receiving from large biopharmaceutical companies.
I am pleased to report my first set of full year results for
e-therapeutics as CEO. We have begun to build momentum as we move
forward with our strategy, accelerated by our substantial new
investment completed last year. Despite some of the most
challenging conditions that we have all seen in our lifetimes, this
year has been a pivotal and successful year for e-therapeutics. The
COVID-19 pandemic has affected every individual in very different
and sometimes tragic ways but, out of necessity, it has also opened
up opportunities for businesses such as ours.
e-therapeutics' expertise in network biology and drug
development, coupled with our nascent RNAi platform, gives us a
synergistic competitive advantage through effective drug discovery
target identification and a rapid and validated development path.
This expertise underpins many of the operational highlights for the
Company this year. Our collaboration agreement with Galapagos in
IPF, with potential in other fibrotic conditions and our type-2
diabetes agreement with Novo Nordisk are validation of our
platform, highlighting the ability of our network approach and
expertise to go beyond pure in silico predictions and identify
potentially clinically viable interventions with supporting
laboratory data.
The significant progress made on our GaINAc siRNA platform will
enable us to benchmark it against those of competitor RNAi
companies. In parallel, we have also established a dedicated group
to leverage our computational network biology discovery platform
specifically at target genes in hepatocytes, which are amenable to
GaINAc delivery. We believe that the combination of these elements
will enable us to offer an attractive business development
proposition to potential collaborators.
e-therapeutics' computational platform is capable of discovering
novel drug targets and active small molecules and of uncovering new
biological mechanisms and genetic insights. In our COVID-19 project
launched this year, we have deployed that capability to investigate
known compounds in a novel context and have uncovered new
mechanisms that mitigate infection-induced hyperinflammation as
well as discovering a potent anti-viral strategy.
The most significant challenge for the Company was having
sufficient capital to allow us to realise opportunities and I am
very pleased that we were able to secure the financing to execute
on our strategy and business model.
Strategy
e-therapeutics' ambition is to transform the drug discovery
process, leveraging its computational network biology platform
(drug discovery) to find novel targets to address mechanisms
underpinning complex disease. The business model incorporates out-
licensing of targets and compounds in addition to the development
of an in-house pipeline of RNAi therapeutics.
Drug discovery - computational network driven biology
platform
The Company was, and is, one of the few purely "biology first"
computational companies that I have come across, in contrast to
competitors who are primarily focused on computational approaches
to small molecule chemistry. This approach starts with a biological
question such as "which processes in COVID-19 disease might it make
most sense to address?" One answer could be "hyperinflammation".
From a knowledge of just some of the proteins involved we are able
to use our proprietary platform and data resources to construct
bespoke network models that capture the full complexity of this
process and predict missing information. These models are analysed
using our cutting- edge network analytics which leverage network
science, network statistics and ML/AI approaches to derive new drug
targets, biological mechanisms and active small molecules, as well
as providing genetic support for target choices.
Establishing world leading hepatocyte expertise, generating
novel hepatocyte expressed targets and a focus on expanding our
collaborations
The platform is disease agnostic and the Company has completed
multiple in-house and partnered projects in diverse disease areas
such as fibrosis, type-2 diabetes, CNS and oncology indications, to
name but a few. I believe that e-therapeutics is addressing the
most critical unmet need in drug discovery/development - the
modelling and interpretation of complex human biology. Biological
functions are controlled by networks of genes and proteins and we
construct in silico models of these
functions to interpret human biology/disease states. We believe
that the Company has the most complete datasets, predictive AI/ ML
algorithms and the most experienced computational biologists,
informaticians and data scientists in the field of network biology
and these assets provide an important barrier to entry for
competitors.
Informatics and drug development
Historically, the Company has operated a hybrid
partnership/collaboration model and the use of small molecules as a
drug modality for its internal pipeline. However, the time, costs
and time to value inflection in small molecule drug development
makes this difficult for a small company to prosecute.
By way of example, even after our in-house computational methods
have generated a biological hypothesis, target, active chemical
matter and an indication to pursue, it typically takes 3-4 years
and c.US$3-5m to create a lead compound to take into IND enabling
studies. In addition, a further 2 years would most likely be needed
to generate human phase 1 data where potential partnership
discussions
could begin. Clearly, these timelines and costs in addition to
the additional centralised overheads are hugely capital intensive
and at most, we would only be able to prosecute one high conviction
candidate.
As such, small molecule drug development now forms part of the
Company's partnership/ collaboration strategy and we will endeavour
to structure transactions where we have some upside economics/
opt-ins with biopharmaceutical collaborators who use
e-therapeutics' network driven computational biology platform but
who wish to develop small molecules in the clinic independently and
at their own cost.
RNAi platform the new drug modality of choice for our internal
pipeline
One of the key achievements of the year has been to establish
RNAi as the drug modality of choice for our internal pipeline.
Importantly, this is not a choice that many companies can easily
make and we have deep in-house expertise in this field which we
believe gives us a competitive advantage. It is fair to say that
without this expertise, it would have taken a significantly longer
time to file IP and develop the multiple RNA chemistries which we
have developed this year.
Liver presents large commercial opportunities for RNA
therapies
Focused delivery of siRNAs to the liver has striking advantages
over small molecules in terms of timelines, costs and value
inflection points: in contrast to the 3-4 years and c. US$3-5m to
create a lead small molecule compound an siRNA attached to a GaINAc
delivery system can be synthesised in 4-5 months and for a cost of
c. US$200-300K. In addition, as one of the most sought-after drug
modalities, there have been multiple collaboration transactions
pre-IND filing as opposed to at a later stage (Phase 1-2) with
small molecules.
We have recently filed a patent application related to the
chemistry of novel GaINAc conjugated siRNAs. In addition, a number
of siRNA constructs have been designed with potentially beneficial
safety and potency profiles and additional patent applications are
expected to be filed shortly. We believe that the new patent
applications, combined with our extensive know-how, will provide a
significant competitive advantage in further developing our RNAi
therapeutic pipeline. The new constructs will include features to
minimise potential microRNA off-target effects, thermally
destabilising regions of the siRNA for reduced toxicity and
important position-specific stabilisation chemistries to improve
potency. Multiple in vitro and in vivo experiments are underway to
test these constructs with contract research organisations in
Germany and China. We expect to offer our proprietary platform to
potential business development partners in 2021-2022 and anticipate
that these constructs will demonstrate at least equivalence to
competitors' platforms.
Liver focused informatics team
The advantages of RNAi as a drug modality extend beyond the
delivery platform. In Q3 2020, we established a liver-focused
scientific group which is actively engaged in curating, generating
and mining hepatocyte specific data and knowledge resources
specifically designed to complement our computational platform.
This focus on one cell type is an important driver for novel
targets and mechanisms and we believe will improve the performance
of our network models and algorithms.
Efforts in this area include proprietary data resources in
hepatocyte biology such as our hepatocyte- specific interactome,
which is an important and recently completed map of hepatocyte
network biology, a complete genome-wide siRNA signature database
for human hepatocytes and a comprehensive hepatocyte-centric
knowledge resource leveraging natural language processing (NLP),
our in-house proprietary data, knowledge graphs and AI-driven
inference approaches.
By deploying our cutting-edge informatics platform alongside our
novel RNAi technology platform, we believe that we can harness the
many therapeutic opportunities in the liver which have yet to be
identified.
The hepatocyte team comprises highly skilled scientists and
physicians whose objective is to identify novel
hepatocyte-expressed targets for complex indications such as
cardiovascular and metabolic diseases. This team will conduct
validation of those targets in appropriate phenotypic assay systems
and animal models and assess genetic support for the therapeutic
targets using our functional genomics capability. We are in a
unique position of using our "Hepatocyte Atlas" and computational
modelling of biology to feed a drug platform which can have
multiple shots on goal due to the costs and timelines outlined.
Partnerships and collaborations
In Q2 2020, we announced a collaboration agreement with
Galapagos to identify new therapeutic approaches to modulate a
specific mechanism involved in IPF and potentially in other
fibrotic indications with high unmet need. The project has
successful achieved two pre-defined milestones to date. In this
period we also extended our collaboration with Novo Nordisk in type
2 diabetes until March 2021, after which there is a 6-month option
period to progress the collaboration to a larger discovery
project.
COVID-19 project
Our project to find compounds for the treatment of COVID-19
using our platform generated very encouraging results. In Q2 2020,
small molecule compounds predicted by our platform were tested in
validated SARS-CoV-2 in vitro assays at WuXi AppTech. These
compounds showed potent anti-inflammatory and anti-viral activity
and confirmed our in silico predictions. We identified a clear
mechanism, target and clinical stage compounds. This activity also
extended to other alpha and beta coronaviruses and we expect this
to be generically applicable, raising the prospect of utility
against both existing coronaviruses that cause serious disease such
as SARS and MERS and against new emergent strains of coronavirus.
This data set is a strong validation of our platform and the
network biology approach to drug discovery.
The success of the two fundraises in the year have enabled us to
make significant hires in all aspects of our business and headcount
since I joined in February 2020 has risen from 16 to 25. I would
like to thank the dedicated team, the Board and our shareholders
for their hard work and support during the year.
I believe that we have a unique blend of individual skillsets in
the Company and look forward with great confidence to the coming
year and beyond.
Outlook
The last twelve months have been very encouraging as we have
continued to develop our strategy and consistently demonstrated our
scientific capabilities and further validation of our platforms.
Importantly, with further investment to continue to develop our
capabilities we now enter the next year ready to deliver on our
exciting plans and with multiple opportunities.
The Company will look to maximise the value of its computational
network driven biology platform through creating deal structures
and positioning e-therapeutics as a global leader in network
biology. Our ambition is to secure multiple research collaborations
each year.
The Company will also look to commence RNAi platform
partnerships/deals - an area currently commanding significant and
attractive deals - and we anticipate business development
opportunities in the second half of 2021.
Our priorities for the coming year are to:
-- Expand computational platform collaborations
-- Establish world-leading hepatocyte expertise
-- Identify novel hepatocyte-expressed targets
-- Commence RNAi in vivo studies and platform partnerships
The Company aims to maximise the value of its internal platform
capabilities through two core channels - entering into platform
collaborations with strategic partners and through the generation
of in-house datasets to support development candidates. In addition
to its partnerships, the Company intends to extract and retain
further value from its platform by building an in-house pipeline of
assets to provide out-licensing opportunities, through a
data-driven and flexible partnering strategy at the right value
inflection points.
Ali Mortazavi
Chief Executive Officer
12 May 2021
Financial review
Our people and processes have responded well to a financial year
that has brought a lot of change to e-therapeutics - with a new
management team and gross fundraises totalling GBP13.2m in the year
enabling us to focus on streamlining and scaling our business model
and pushing forward with our strategic aims.
Revenue
In June 2020, we signed a collaboration agreement with Galapagos
to identify new therapeutic approaches to modulate a specific
mechanism involved in IPF and potentially in other fibrotic
indications. Revenue during the year, of GBP0.3m, relates to the
partial recognition of upfront payments and achieved milestones
during the year, in accordance with IFRS 15. Additional revenue is
expected to be recognised in the coming financial year as this
collaboration further advances. The business development functions
of the Group have been strengthened during the year, including the
hire of a Chief Business Officer in April 2020, and it is expected
that further collaborations will be signed in the coming financial
year. Revenue in the prior year, of GBP0.5m, related to deals with
Novo Nordisk in the area of type-2 diabetes, which successfully
completed in the prior year.
Fundraises
The fundraises during the year (gross GBP1.6m in February 2020
and gross GBP11.6m in July 2020) have enabled the Group to refocus
its strategy on enhancing and validating our platform technologies
and developing our internal asset pipeline. It was also announced
during the year that e-therapeutics would be expanding into RNA as
a therapeutic modality, with computational drug discovery outcomes
to be harnessed both internally and in partnership with
collaborators.
R&D expenditure
An increase in R&D expenditure began to materialise after
the half-year fundraise and the full year expenditure totalled
GBP2.7m (2020: GBP2.1m). R&D spend is expected to increase
significantly in the coming year, with the advancements of internal
discovery programmes, both small molecule and RNAi, along with the
release of a competitive and functional RNAi platform.
Administrative expenditure
Administrative expenditure for the year totalled GBP2.1m (2020:
GBP1.2m), with the management restructure in February 2020
resulting in one-off redundancy costs of GBP0.4m. In the coming
year we will continue to invest in our people, both in terms of
recruitment and ongoing motivation and development. We will also
continue to improve our underlying system infrastructure and
processes to ensure that they grow with the business, enabling our
employees to work efficiently and ensuring the safety of our
information assets. Although we are not expecting the same level of
one-off expenditure, we are expecting the underlying cost base to
increase as the business continues to grow.
Operating loss
The operating loss for the year, of GBP4.5m (2020: GBP2.9m), is
GBP1.6m greater than the operating loss in the prior year, due to
the one-off administrative expenses during the current year
referred to above and as plans for expanding the business are put
into motion.
R&D tax credits
We are anticipating an R&D tax credit of GBP0.8m (2020:
GBP0.6m) to be received in relation to the current year, bringing
the loss for the year to GBP3.7m (2020: GBP2.3m). The R&D tax
credit claim has not yet been submitted to HM Revenue and Customs,
yet historically the amounts received have been materially in line
with the receivable booked at the year end.
Cash flow
The year-end cash position is GBP13.0m (2020:GBP3.8m), with the
most significant inflow during the year being the gross fundraises
of GBP13.2m, with associated costs of GBP0.6m. After adjusting for
the net fundraises, the R&D tax credit received during the
year, of GBP0.6m (2020:GBP1.1m), the non-cash charges of share
options under IFRS 2, of GBP0.4m, and depreciation, amortisation
and impairment of GBP0.1m, the underlying cash burn of GBP4.0m
(2020: GBP3.2m) is broadly in line with the operating loss.
Financial outlook
In the coming financial year, we will drive forward with the
strategic plans formulated during the large mid-year fundraise,
validating our platform technologies, developing our RNAi platform
and progressing our high-conviction in-house RNAi and small
molecule assets.
Our budget, which has been prepared taking risk factors such as
COVID-19 and Brexit into consideration, shows that we have
sufficient funds to continue in operational existence for at least
12 months from the signing of these financial statements. We
anticipate a significant increase in our rate of spend, but our
budget remains prudent and incorporates discretionary spend which
would only be incurred if data supported that it remained the best
strategic direction for the Group.
Ali Mortazavi
Chief Executive Officer
12 May 2021
Consolidated Income Statement
For the year ended 31 January 2021
2021 2020
(audited) (audited)
Notes GBP000 GBP000
-------------------------------------- ------ ----------- -----------
Revenue 317 456
Cost of sales - -
-------------------------------------- ------ ----------- -----------
Gross profit 317 456
Research and Development expenditure (2,705) (2,104)
Administrative expenses (2,097) (1,240)
Operating loss (4,485) (2,888)
Investment income 17 15
Loss before tax (4,468) (2,873)
Taxation 5 784 526
-------------------------------------- ------ ----------- -----------
Loss for the year attributable to
equity holders of the Company (3,684) (2,347)
-------------------------------------- ------ ----------- -----------
Loss per share - basic and diluted 6 (0.99)p (0.87)p
-------------------------------------- ------ ----------- -----------
Consolidated Statement of Comprehensive Income
For the year ended 31 January 2021
2021 2020
(audited) (audited)
GBP000 GBP000
-------------------------------------------- ----------- -----------
Loss for the financial year (3,684) (2,347)
Other comprehensive income - -
-------------------------------------------- ----------- -----------
Total comprehensive loss for the financial
year (3,684) (2,347)
-------------------------------------------- ----------- -----------
Consolidated Statement of Changes in Equity
For the year ended 31 January 2021
Share Share Retained
capital premium earnings Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2019 (audited) 269 65,165 (58,632) 6,802
Total comprehensive income for year
Loss for the nancial year - - (2,347) (2,347)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (2,347) (2,347)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 11 - 11
Equity-settled share-based payment transactions - - 36 36
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners - 11 36 47
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2020 (audited) 269 65,176 (60,943) 4,502
Total comprehensive income for year
Loss for the nancial year - - (3,684) (3,684)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (3,684) (3,684)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares 152 12,492 - 12,644
Equity-settled share-based payment transactions - - 422 422
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners 152 12,492 422 13,066
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2021 (unaudited) 421 77,668 (64,205) 13,884
------------------------------------------------------- -------- -------- --------- --------
Company Statement of Changes in Equity
For the year ended 31 January 2021
Share Share Retained
capital premium earnings Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2019 (audited) 269 65,165 (56,060) 9,374
Total comprehensive income for year
Loss for the nancial year - - (5,171) (5,171)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (5,171) (5,171)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 11 - 11
Equity-settled share-based payment transactions - - 36 36
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners - 11 36 47
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2020 (audited) 269 65,176 (61,195) 4,250
Total comprehensive income for year
Loss for the nancial year - - (3,682) (3,682)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (3,682) (3,682)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares 152 12,492 - 12,644
Equity-settled share-based payment transactions - - 422 422
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners 152 12,492 422 13,066
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2021 (unaudited) 421 77,668 (64,455) 13,634
------------------------------------------------------- -------- -------- --------- --------
Balance Sheets
As at 31 January 2021
Group Company
------------------------ ------------------------
2021 2020 2021 2020
(audited) (audited) (audited) (audited)
Notes GBP000 GBP000 GBP000 GBP000
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Non-current assets
Intangible assets 7 82 110 82 110
Property, plant and equipment 8 80 93 80 93
162 203 162 203
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Current assets
Tax receivable 5 769 557 769 557
Trade and other receivables 57 36 57 36
Prepayments 296 149 296 149
Cash and cash equivalents 13,027 3,841 12,776 3,840
-------------------------------- ------ ----------- ----------- --- ----------- -----------
14,149 4,583 13,898 4,582
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Total assets 14,311 4,786 14,060 4,785
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Current liabilities
Trade and other payables 327 215 326 466
Lease liability 23 46 23 46
Contract liability 77 - 77 -
-------------------------------- ------ ----------- ----------- --- ----------- -----------
427 261 426 512
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Non-current liabilities
Lease liability - 23 - 23
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Total liabilities 427 284 426 535
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Net assets 13,884 4,502 13,634 4,250
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Equity
Share capital 9 421 269 421 269
Share premium 77,668 65,176 77,668 65,176
Retained earnings (64,205) (60,943) (64,455) (61,195)
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Total equity attributable to
equity holders of the Company 13,884 4,502 13,634 4,250
-------------------------------- ------ ----------- ----------- --- ----------- -----------
Consolidated Statement of Cash Flow
For the year ended 31 January 2021
Group
------------------------
2021 2020
(audited) (audited)
Notes GBP000 GBP000
-------------------------------------------- ------ ----------- -----------
Loss for the year (3,684) (2,347)
Adjustments for:
Depreciation, amortisation and impairment 7,8 112 97
Investment income (17) (15)
Equity-settled share-based payment
expense 422 36
Taxation 5 (802) (547)
-------------------------------------------- ------ ----------- -----------
Operating cash flows before movements
in working capital (3,969) (2,776)
Decrease in trade and other receivables (168) 161
Decrease in trade and other payables 189 (500)
Tax received 590 1,088
-------------------------------------------- ------ ----------- -----------
Net cash used in operating activities (3,358) (2,027)
-------------------------------------------- ------ ----------- -----------
Interest received 17 15
Acquisition of property, plant and
equipment 8 (53) (5)
Acquisition of other intangible assets 7 (18) (11)
Net cash (used in)/from investing
activities (54) (1)
-------------------------------------------- ------ ----------- -----------
Net proceeds from issue of share capital 12,644 11
Payments under lease liability (46) (46)
-------------------------------------------- ------ ----------- -----------
Net cash (used in)/from nancing activities 12,598 (35)
-------------------------------------------- ------ ----------- -----------
Net increase/(decrease) in cash and
cash equivalents 9,186 (2,063)
Cash and cash equivalents at 1 February 3,841 5,904
-------------------------------------------- ------ ----------- -----------
Cash and cash equivalents at 31 January 13,027 3,841
-------------------------------------------- ------ ----------- -----------
Notes
1. Status of Audit
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. The financial information for the year ended 31 January 2021
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 12 May 2021 and
which, if adopted by the members at the Annual General Meeting,
will be delivered to the Registrar of Companies for England and
Wales.
The financial information for the year ended 31 January 2020 has
been extracted from the Group's audited financial statements which
were approved by the Board of Directors on 25 March 2020 and which
have been delivered to the Registrar of Companies for England and
Wales. The report of the auditor on these financial statements was
unqualified, did not contain a statement under Section 498(2) or
Section 498(3) of the Companies Act 2006.
The report of the auditor on the 31 January 2020 financial
statements was unqualified, did not contain a statement under
Section 498(2) or Section 498(3) of the Companies Act 2006, and did
not include a matter to which the auditors drew attention by way of
emphasis without qualifying their report.
The information in this preliminary statement has been extracted
from the audited financial statements for the year ended 31 January
2021 and as such, does not contain all the information required to
be disclosed in the financial statements prepared in accordance
with International Accounting Standards in Conformity with the
provisions of the Companies Act 2006.
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange.
2. Basis of preparation
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International accounting standards in
conformity with the requirements of the Companies Act 2006 this
announcement does not in itself contain sufficient information to
comply with IFRS. This preliminary announcement has been prepared
using the accounting policies that are expected to be published in
the Group's accounts for the year ended 31 January 2021, which are
consistent with the accounting policies published in the Group's
accounts for the year ended 31 January 2020 and that are available
on the Company's website at www.etherapeutics.co.uk, with the
exception of those new standards, interpretations and amendments
which became effective during the year and were adopted by the
Group, albeit with no impact on the Group's loss for the year or
equity on initial recognition.
This announcement contains forward-looking statements that are
based on current expectations or beliefs, as well as assumptions
about future events. These forward-looking statements can be
identified by the fact that they do not relate only to historical
or current facts. Forward-looking statements often use words such
as anticipate, target, expect, estimate, intend, plan, goal,
believe, will, may, should, would, could, is confident, or other
words of similar meaning. Undue reliance should not be placed on
any such statements because they speak only as at the date of this
document and, by their very nature, they are subject to known and
unknown risks and uncertainties and can be affected by other
factors that could cause actual results, plans and objectives, to
differ materially from those expressed or implied in the
forward-looking statements. There are a number of factors which
could cause actual results to differ materially from those
expressed or implied in forward-looking statements. The Company
undertakes no obligation to revise or update any forward-looking
statement contained within this announcement, regardless of whether
those statements are affected as a result of new information,
future events or otherwise, save as required by law and
regulations.
Going concern
Although the Group has recognised revenue from commercial deals
during the current and prior year, it is still largely reliant on
its cash balance to fund ongoing operations.
At 31 January 2021 we reported cash and liquid resources of
GBP13,027,000 and an underlying cash burn during the year,
excluding R&D tax credits received and the net proceeds from
fundraises, of GBP4,030,000.
We prepared detailed strategic plans as part of the fundraise
process in July 2020, which raised total gross proceeds, along with
the smaller fundraise in February 2020, of GBP13,203,000. We have
also prepared a detailed budget for 16 months, which supports the
view that the Group has sufficient cash to meet its operational
requirements for at least 12 months from the signing of these
financial statements. The budget includes a significant increase in
R&D expenditure, in line with progressing our strategic aims.
This expenditure is largely uncommitted and discretionary and would
be reduced or postponed if required to manage the Group's cash
resources.
The financial performance and position of the Group are
discussed in more detail in the Financial Review above.
The preliminary announcement has been prepared on the going
concern basis since, given the points discussed above, the
Directors have a reasonable expectation that the parent Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future.
3. Accounting judgements and sources of estimation uncertainty
The preparation of financial statements requires management to
make judgements, estimates and assumptions that may affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. The estimates and
underlying assumptions are reviewed on an ongoing basis.
The following are the key judgements that management have made
in the process of applying the Group's accounting policies and that
have the most significant effect on the amounts recognised in these
financial statements:
-- Management considers the continued adoption of the going
concern basis appropriate, as discussed further in Note 2 of this
preliminary announcement.
-- There are various revenue streams from collaborative
partnerships and management review these revenue streams against
the IFRS 15 criteria to establish whether revenue should be
recognised over time or at a point in time. Revenue recognised over
time results in a difference between up-front cash receipts and
revenue recognised, the balance of which is recorded on the Balance
Sheet. At the year end, contract liabilities were GBP77,000 (2020:
GBPnil). Revenue of GBP317,000 (2020: GBP456,000) is made up of
GBP163,000 (2020: GBPnil) recognised at a point in time and
GBP154,000 (2020: GBP456,000) over time. Variable consideration
consists of future potential pre-clinical and clinical development
and commercial milestone payments and it is deemed by the directors
to be fully constrained at this time given the uncertainty around
drug development.
-- The Directors have not recognised a deferred tax asset based
on an assessment of the probability that future taxable income will
be available against which the deductible temporary differences and
tax loss carry-forwards can be utilised. The potential deferred tax
asset is disclosed in note 5.
The following are the key assumptions concerning estimation
uncertainty that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year:
-- Revenue recognised from collaborative partnerships, and
corresponding contract liabilities, reflect management's best
estimate of each contract's stage of completion. Management
estimates project progress at each reporting date, with
consideration to project plans outlined in customer contracts, and
remeasures revenue accordingly. There were commercial contracts in
progress at the year end and management has recognised revenue in
accordance with IFRS 15 using the 5-step process. As a result, at
the year end contract liabilities of GBP77,000 (2020: GBPnil) were
recognised on the Balance Sheet.
-- The current tax receivable, of GBP769,000 (2020: GBP557,000),
represents an R&D tax credit based on an advance claim with
HMRC. The final receivable is subject to judgement and the correct
application of complex R&D tax rules. The minimum receipt
approved by HMRC could be GBPnil. Historically, final claims have
been successful and materially in line with the receivable
recognised in the financial statements. The Group expects the
current year to be successful too.
4. Staff numbers
The average number of persons employed by the Group and the
Company (including Executive Directors and excluding Non-Executive
Directors) during the year, analysed by category, was as
follows:
Number of employees
Group and Company
2021 2020
(audited) (audited)
---------------------------------- ----------- -----------
R&D Staff 12 12
Finance and administration staff 5 2
Executive Directors 1 2
---------------------------------- ----------- -----------
18 16
---------------------------------- ----------- -----------
5. Taxation
Recognised in the Income Statement: 2021 2020
(audited) (audited)
GBP000 GBP000
---------------------------------------------- ---- ----------- -----------
Current tax income
R&D tax credit receivable for the current
year (751) (536)
Adjustments for prior year in respect of R&D
tax credit (33) 10
---------------------------------------------------- ----------- -----------
Current tax credit (784) (526)
---------------------------------------------------- ----------- -----------
Deferred tax - -
---------------------------------------------- ---- ----------- -----------
Total on loss on ordinary activities (784) (526)
---------------------------------------------------- ----------- -----------
The standard rate of corporation tax applied to reported profit
is 19% (2020: 19%). The credit for the year can be reconciled to
the consolidated Income Statement as follows:
2021 2020
(audited) (audited)
GBP000 GBP000
---------------------------------------------- ---- ----------- -----------
Loss before tax (4,468) (2,873)
Tax at UK corporation tax rate of 19% (2020:
19%) (849) (546)
Expenses not deductible for tax purposes - 4
Enhanced relief for R&D (323) (231)
Unrelieved tax losses 396 230
Other 25 7
Adjustments in respect of prior period (33) 10
---------------------------------------------------- ----------- -----------
Total tax credit for the year (784) (526)
---------------------------------------------------- ----------- -----------
The total tax credit recognised with the Consolidated Income
Statement is GBP802,000 (2020: GBP547,000), which is made up the
small or medium sized enterprise ("SME") R&D tax relief of
GBP784,000 (2020: GBP526,000) and Research and Development
Expenditure Credit ("RDEC") of GBP18,000 (2020: GBP21,000). The SME
tax credit is shown within taxation, as reconciled above. The RDEC
is included within administrative expenses in the Consolidated
Income Statement on the basis that the RDEC is treated as taxable
income, being an 'above the line' relief.
The tax receivable on the Balance Sheet, of GBP769,000 (2020:
GBP557,000), is made up of SME tax relief of GBP751,000 (2020:
GBP536,000) and RDEC of GBP18,000 (2020: GBP21,000). Historically,
R&D credits relating to both the SME scheme and the RDEC scheme
have been received from HMRC as a single payment.
The Group has accumulated losses available to carry forward
against future trading profits of GBP28,835,000 (2020:
GBP26,855,000). No deferred tax has been recognised in respect of
tax losses since it is uncertain at the Balance Sheet date as to
whether future profits will be available against which the unused
tax losses can be utilised. At the Budget 2020, the UK Government
announced that the corporation tax main rate for the years starting
1 April 2020 and 2021 would remain at 19%. At the Budget 2021, the
UK Government announced that the corporation tax main rate for the
year starting 1 April 2022 will remain at 19% and that legislation
will be introduced to set the main rate at 25% for the year
starting 1 April 2023. The estimated value of the deferred tax
asset not recognised, measured at the main rate of 19% (2020: 17%),
is GBP5,499,000 (2020: GBP4,589,000).
The increase in the current year tax credit is due to an
increased R&D credit, as a result of higher qualifying
expenditure during the year, enabled by the fundraise during the
year. The current year R&D credit has not yet been approved by
HMRC and, therefore, there is a risk that this claim may not be
successful.
6. Loss per share
The analysis of loss per share is as follows:
2021 2020
(audited) (audited)
---------------------------------------------- ----------- -----------
Earnings for the purposes of basic earnings
per share and diluted earnings per share,
being loss attributable to owners of the
Company (GBP000) (3,684) (2,347)
---------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
for the purposes of basic earnings per share
and diluted earnings per share (number) 373,215,456 268,855,366
---------------------------------------------- ----------- -----------
Loss per share - basic and diluted (p) (0.99) (0.87)
---------------------------------------------- ----------- -----------
Diluted EPS is calculated in the same way as basic EPS but also
with reference to reflect the dilutive effect of share options in
existence at the year end over 22,622,836 (2020: 19,220,500)
ordinary shares. The diluted loss per share is identical to the
basic loss per share, as potential dilutive shares are not treated
as dilutive since they would reduce the loss per share.
7. Goodwill and intangible assets
Group Company
------------------------------- -------------------------------
Patents Patents
and and
Goodwill trademarks Total Goodwill trademarks Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- --------- ----------- ------- --------- ----------- -------
Cost
As at 31 January 2019
(audited) 2,101 1,320 3,421 2,824 1,320 4,144
Additions - 11 11 - 11 11
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2020
(audited) 2,101 1,331 3,432 2,824 1,331 4,155
Additions - 18 18 - 18 18
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2021
(unaudited) 2,101 1,349 3,450 2,824 1,349 4,173
----------------------------- --------- ----------- ------- --------- ----------- -------
Amortisation and impairment
As at 31 January 2019
(audited) 2,101 1,201 3,302 - 1,201 1,201
Impairment losses - 3 3 2,824 3 2,827
Amortisation charge
for the year - 17 17 - 17 17
As at 31 January 2020
(audited) 2,101 1,221 3,322 2,824 1,221 4,045
Impairment losses - 30 30 - 30 30
Amortisation charge
for the year - 16 16 - 16 16
As at 31 January 2021
(unaudited) 2,101 1,267 3,368 2,824 1,268 4,092
----------------------------- --------- ----------- ------- --------- ----------- -------
Net book value
As at 31 January 2019
(audited) - 119 119 2,824 119 2,943
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2020
(audited) - 110 110 - 110 110
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2021
(unaudited) - 82 82 - 82 82
----------------------------- --------- ----------- ------- --------- ----------- -------
Amortisation
Amortisation has been charged on patents for which the
registration process is complete, over the term granted.
The goodwill in the Company Balance sheet arose following the
hive up of the trade and assets of InRotis Technologies Limited in
2007 and was fully impaired during the prior year, reflecting the
significant advancements in technology, such as the launch of GAINs
in the prior year, to the extent that management deem that the
business model is now founded upon a different technological
capability than it was at the date of the hive up in 2007 and to
which the goodwill is allocated.
8. Property, plant and equipment - Group and Company
Right-to-use Plant Fixtures
and
Property equipment and fittings Total
Group and Company GBP000 GBP000 GBP000 GBP000
----------------------------------- ------------- ---------- ------------- -------
Cost
As at 31 January 2019 (audited) - 198 107 305
On transition to IFRS 16 123 - - 1 23
Additions - 5 - 5
Disposals - (41) (4) (45)
As at 31 January 2020 (audited) 123 162 103 388
Additions - 53 - 53
Disposals - (1) - (1)
----------------------------------- ------------- ---------- ------------- -------
As at 31 January 2021 (unaudited) 123 214 103 440
Depreciation
As at 31 January 2019 (audited) - 161 102 263
Depreciation charge for the year 46 29 2 77
Eliminated on disposals - (41) (4) (45)
As at 31 January 2020 (audited) 46 149 100 295
Depreciation charge for the year 46 18 1 66
Eliminated on disposals - (1) - (1)
----------------------------------- ------------- ---------- ------------- -------
As at 31 January 2021 (unaudited) 92 167 101 360
Net book value
As at 1 February 2019 (audited) - 37 5 42
----------------------------------- ------------- ---------- ------------- -------
As at 31 January 2020 (audited) 77 13 3 93
----------------------------------- ------------- ---------- ------------- -------
As at 31 January 2021 (unaudited) 31 47 2 80
----------------------------------- ------------- ---------- ------------- -------
9. Capital and reserves
No. of ordinary
shares
2021 2020
(audited) (audited)
Share capital '000 '000
------------------------------------- ---- ---- ---- ----------- -----------
In issue at 1 February 269,125 268,690
Issued for cash 151,649 435
In issue at 31 January - fully paid 420,774 269,125
------------------------------------------------------- ----------- -----------
2021 2020
GBP000 GBP000
------------------------------------------ ------- -------
Allotted, called up and fully paid
420,773,546 (2020: 269,125,498) ordinary
shares of GBP0.001 each 421 269
--------------------------------------------- ------- -------
421 269
------------------------------------------ ------- -------
The Company has one class of ordinary shares, which carry no
right to fixed income.
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(END) Dow Jones Newswires
May 13, 2021 02:00 ET (06:00 GMT)
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