TIDMDDDD
RNS Number : 8339N
4d Pharma PLC
26 May 2020
This announcement is deemed by the Company to contain inside
information under the Market Abuse Regulation (EU) No.
596/2014.
22 MAY 2020
4D PHARMA PLC
("4D", the "Company" or, together with its subsidiaries, the
"Group")
Final Results for the year ended 31 December 2019
4D pharma plc (AIM: DDDD), a pharmaceutical company leading the
development of Live Biotherapeutics, is pleased to announce the
final results for the Group for the year ended 31 December
2019.
Financial highlights for the year:
-- Net assets of GBP22.3 million (2018: GBP45.8 million)
-- Cash and cash equivalents (including cash on deposit) of
GBP3.8 million (2018: GBP26.2 million)
-- Total comprehensive loss after tax of GBP23.7 million (2018: GBP24.3 million)
-- Adjusted loss per share of 40.81 pence (2018: 36.17 pence)
-- Basic and diluted loss per share of 36.75 pence (2018: 36.17 pence)
Operational highlights for the year:
-- First-in-class data in oncology - positive safety and
preliminary clinical observations of lead immuno-oncology candidate
MRx0518 in combination with Keytruda(R)
-- Entered a research collaboration and option agreement with
MSD (Merck Sharp & Dohme Corp., a subsidiary of Merck &
Co., Inc., Kenilworth, NJ, USA) to use the MicroRx(R) discovery
platform to develop Live Biotherapeutics in the vaccines space ,
including an upfront payment and potential milestone payments
totalling >$1 billion
-- MSD collaboration included commitment to equity investment in
4D by MSD, triggered after period end
-- Launched a Phase I/II trial of MRx-4DP0004 in partly
controlled asthma - the first clinical trial of a single strain
Live Biotherapeutic in this indication
-- Expanded our Board of Directors, adding clinical and
commercial expertise from both Europe and US
Since the period end:
-- In early January 2020 we launched our third trial of MRx0518,
in pancreatic cancer in combination with radiotherapy
-- In February 2020 4D completed a placing and subscription
raising gross proceeds of GBP22 million
-- In April 2020 we announced interim results from an ongoing
Phase II trial of Blautix(R) in IBS-C or IBS-D
-- In April 2020 we received expedited approval from the MHRA for a Phase II clinical trial of immunomodulatory Live Biotherapeutic MRx-4DP0004 to treat COVID-19 patients
Axel Glasmacher, Chairman of 4D pharma, commented "I am pleased
to be able to announce the Group's final results for the year ended
31 December 2019. 2019 was a successful year for the Group in which
we made great progress in the clinic across multiple programmes,
and entered collaborations with new partners. I would like to thank
everyone in the Group for their valuable contributions as we look
ahead to a pivotal year for 4D as we reach key readouts from
multiple clinical studies."
Duncan Peyton, Chief Executive Officer, commented "Over the past
year we made impressive progress in all aspects of our business,
towards the delivery of a new class of drug, Live Biotherapeutics.
We now look forward to the year having set up multiple
near-to-mid-term catalysts as we generate robust clinical data with
multiple shots on goal. "
The Annual Report, together with a notice of the Company's
Annual General Meeting ("AGM"), will be posted to shareholders and
made available on the Company's website, www.4dpharmaplc.com, on 4
June 2020. The Annual General Meeting will be held on Tuesday 30
June 2020 at 10 a.m. at 9 Bond Court, Leeds, LS1 2JZ. In light of
the current guidance from the UK Government which prevents public
gatherings of more than two people, shareholders, advisers and
other guests will not be allowed to attend the AGM and anyone
seeking to attend the meeting in person will be refused entry. We
therefore encourage shareholders to submit any questions they would
like to pose to the Board to ir@4dpharmaplc.com so as to be
received no later than 26 June 2020. All emails should be marked
"AGM Question" in the subject line, and will require a shareholder
number. If the UK Government's guidance changes before the AGM and
allows gatherings of more than two people, we will notify you via
the Company's website at www.4dpharmaplc.com
For further information please contact:
4D
Duncan Peyton, Chief Executive Officer + 44 (0)113 895 0130
Investor Relations ir@4dpharmaplc.com
N+1 Singer - Nominated Adviser and Joint Broker +44 (0) 20 7496
3000
Aubrey Powell / Justin McKeegan / Alex Bond (Corporate
Finance)
Tom Salvesen (Corporate Broking)
Bryan Garnier & Co. Limited - Joint Broker +44 (0)20 7332
2500
Dominic Wilson / Phil Walker
Image Box PR
Neil Hunter / Michelle Boxall
Tel +44 (0)20 8943 4685
neil@ibcomms.agency / michelle@ibcomms.agency
www.4dpharmaplc.com
Chairman's Statement
Axel Glasmacher, Non-Executive Chairman since 17 April 2020, and
David Norwood, Non-Executive Chairman to 17 April 2020
2019 was a successful year for the Group in which we made great
progress in the clinic across multiple programmes, and entered
collaborations with new partners. The coming year will be pivotal
for 4D as we reach key readouts from multiple clinical studies.
Performance
Over the last year we have continued to lead the development of
Live Biotherapeutics, significantly expanding our clinical
development activities and rapidly generating early signs of
clinical efficacy. Meanwhile we continued to identify promising new
candidates from our MicroRx(R) platform in exciting new areas like
neurodegenerative disease.
This year has ushered in a critical period for us as a fully
fledged clinical-stage biotech, including some historic firsts for
the broader microbiome space. We reported safety and positive early
clinical observations in oncology - the first ever for a Live
Biotherapeutic - and since the period end we announced an interim
analysis from our Phase II study of Blautix(R) in IBS,
demonstrating a safety profile comparable to placebo and
encouraging us to continue with the analysis of the full
cohort.
In 2019 we launched a Phase I/II trial in asthma, another first
for an LBP in this indication. In addition, we commenced a clinical
biomarker study of immuno-oncology LBP MRx0518 with our partners at
Imperial College London. This study will generate valuable data to
deepen our understanding of MRx0518's activity and help guide
clinical development plans. After the period end, in early January
2020, we launched a third study of MRx0518 and our second at the
world-leading MD Anderson Cancer Center, in combination with
radiotherapy in patients with pancreatic cancer.
While we are immensely pleased with the rapid progress we are
making in the clinic, we continue to leverage the MicroRx(R)
platform to generate value, through our internal development
pipeline but also by facilitating partnerships. Our research
collaboration with MSD in the vaccines space serves as an example
of the power and potential of the platform, and provides a valuable
endorsement from an industry-leading partner.
Our Culture
Our success is built on a foundation of collaboration between
our cross-functional teams. Where we are today is a testament to
the hard work and commitment of our staff across all our sites in
Europe and those involved in our wider collaborations. I would like
to thank them all for their valuable contribution to the progress
we have made in 2019.
Board and Governance
We were delighted to welcome Dr. Sandy Macrae as an independent
Non-Executive Director in August 2019. Dr. Macrae brings extensive
biopharma leadership experience, most recently as CEO of US-based
genomic medicine pioneer Sangamo Therapeutics. Reflecting the
transition to a new phase in the Company's growth, after the period
end I was appointed to the role of Chairman, taking over from David
Norwood, who has done an excellent job leading the Company since
its inception. On behalf of the Board I would like to thank David
for his leadership in making 4D what it is today, and look forward
to continuing to work with him in his role as Non-Executive
Director.
I would also like to thank Thomas Engelen for his contribution
over the years, after he stepped down from 4D's Board of Directors
in May 2020.
The Board is committed to maintaining high standards of
governance, both at Board level and operationally throughout the
business.
Outlook
Building on the success of 2019, during which we took great
strides on multiple fronts in the clinic, the coming year will be
pivotal for 4D as we reach readouts from key clinical studies in
oncology, IBS and asthma. In the last year we entered pioneering
research collaborations, and will seek to continue the rapid
progress already made to date. I look forward to taking the next
steps to bring this revolutionary new class of medicines to
patients.
In 2020 the global COVID-19 pandemic hit the UK affecting almost
all aspects of the economy, the pharmaceutical industry and 4D
pharma included. In response we have been proactive, putting the
safety of staff and patients first. We have made good use of
technology to minimise disruption to our operations while
protecting our staff. However, as has been seen across the
biopharma industry, there have been unavoidable impacts on certain
activities, resulting in some potential delays to expected clinical
readouts. We continue to monitor the situation closely and will
provide updates as and when the expected resolution of the
situation becomes clearer.
In light of this unprecedented situation the Board has carefully
re-evaluated the Company's strategic priorities and
near-to-mid-term objectives. We have taken measures to streamline
the business, including changes to management structure and
reducing staffing requirements, primarily relating to
manufacturing, research and administrative services. The Board has
also prioritised allocation of capital and resources to key
programmes such as oncology, set to deliver key clinical value
drivers for our shareholders in the coming year, including
launching a Phase II clinical trial of an orally administered
immunomodulatory LBP in COVID-19 in the second quarter of 2020.
David Norwood
Non-Executive Chairperson (up to 15 April 2020)
Axel Glasmacher
Non-Executive Chairperson (since 15 April 2020)
22 May 2020
Chief Executive Officer's Report
Duncan Peyton, Chief Executive Officer
In 2019 we made significant progress in our mission to deliver
Live Biotherapeutics, a disruptive new class of drug. 4D has firmly
established itself as a clinical-stage drug development biotech,
focussing significant resources on the clinical development of our
lead LBP drug candidates.
We were pleased to announce positive safety data and the world's
first ever positive clinical observations of a Live Biotherapeutic
in oncology, from a study of our LBP MRx0518 in combination with
the immune checkpoint inhibitor (ICI) Keytruda(R) in heavily
pre-treated patients with secondary resistant tumours refractory to
ICIs.
Continuing to lead the development of LBPs for diseases beyond
the gut, we also launched a Phase I/II clinical trial of
MRx-4DP0004 in partly controlled asthma.
Meanwhile, we continue to utilise the MicroRx(R) platform to
discover promising new LBP candidates for major diseases with
significant unmet need. This year we presented data on two novel
LBPs which have demonstrated potential as treatments for
neurodegenerative diseases like Parkinson's.
A landmark achievement in 2019 was the announcement of a
research collaboration and option agreement with MSD in the field
of vaccines. This partnership represents a significant endorsement
of 4D's approach and the MicroRx(R) platform from an industry
leader.
From a corporate strategy perspective, since the period end we
made further progress in our goal of expanding our US presence,
bringing in new US-based investors as part of a fundraise in
February 2020, including a $5 million investment from our partner
MSD.
Research
Our research is the core of what we do, and our philosophy is
what sets us apart. Since inception we have pursued a
function-focussed approach investigating the interactions between
commensal bacteria and the human host. Our long-standing position,
that understanding mechanism will be key to the success of this new
area of medicine, is a view increasingly espoused within the
microbiome field as well as the broader biopharma industry. This
'function first' approach has generated a pipeline pioneering the
use of Live Biotherapeutics in diseases beyond the gut. In 2019 we
presented ground-breaking research on the mechanisms and
pre-clinical efficacy of our investigational LBPs for the treatment
of cancer and neurodegenerative disease in respected peer-reviewed
journals and at leading international conferences.
Recognising the value of such an approach, and building on our
existing clinical collaboration in oncology, in October 4D pharma
and MSD were pleased to announce a research collaboration and
option agreement in the vaccines space in up to three undisclosed
indications. Under the terms of the deal 4D pharma is eligible for
potential milestone payments totalling over $1 billion. It has been
great to see this project come together, driven by close
collaboration between our respective research teams and effectively
leveraging our complementary expertise.
As the Live Biotherapeutics field rapidly matures, we see the
next critical stage being the generation of robust clinical data,
to deliver on the immense potential of microbiome research to date.
This year we have made significant advances in this respect across
our development pipeline.
Oncology
Oncology is a core focus area for 4D and a field in which we
believe LBPs will make a significant impact first. 2019 saw a
number of clinical developments regarding our lead oncology
candidate MRx0518.
In November we were pleased to be able to report the first
clinical observations from our ongoing Phase I/II trial in
combination with blockbuster immunotherapy Keytruda(R) , in heavily
pre-treated patients with acquired resistance to checkpoint
inhibitors. Of the first six patients enrolled, three achieved a
clinical benefit including two partial responses. Additional
details of these patients achieving clinical benefit were presented
in March 2020 at Chardan's 2nd Annual Microbiome Medicines Summit.
While preliminary, these observations are hugely encouraging in
this particularly difficult to treat population, and represent a
significant milestone for the microbiome-oncology space. Since the
period end we have successfully completed Part A of the study,
confirming the safety of the combination therapy and generating
highly encouraging preliminary signals of activity. Part B of the
study will assess clinical benefit and safety, enrolling up to an
additional 30 patients per tumour type cohort (up to a total of
120). Encouraged by these early results, enrolment for Part B will
be expanded to additional trial sites.
To inform our clinical strategy, in 2019 4D launched two
clinical biomarker studies of MRx0518, furthering our understanding
of this promising immunotherapy and its potential application. One,
a study of MRx0518 as a monotherapy in patients undergoing surgical
resection of solid tumours, is being conducted at Imperial College
London, while the second is in pancreatic cancer under our
strategic collaboration with the University of Texas MD Anderson
Cancer Center.
Meanwhile we have ramped up our business development activities
with the goal of expanding the development of MRx0518 into new
settings, and are actively exploring additional collaborations.
Beyond our lead immuno-oncology candidate MRx0518, the
MicroRx(R) platform has continued to identify new LBP candidates
exhibiting novel mechanisms of action with the potential to treat
different types of cancers. This year we presented mechanistic and
pre-clinical efficacy data from the first of these - MRx1299.
Gastrointestinal Disease
This year we made significant progress with our Phase II study
of Blautix(R) in IBS. In April 2020 4D announced results of a
pre-planned interim analysis performed on around 270 patients. The
interim analysis demonstrated that Blautix(R) has a safety profile
comparable to placebo, and that the study was not futile with
regards to the primary endpoint.
Based on these encouraging interim safety and non-futility data
we are actively exploring potential partnering or out-licensing
opportunities as we seek to streamline our development pipeline and
focus on our key areas of oncology, asthma and neurodegenerative
disease.
Respiratory disease
2019 saw another world first for Live Biotherapeutics delivered
by 4D, in the area of respiratory disease. We commenced a Phase
I/II randomised, placebo-controlled trial of MRx-4DP0004 in partly
controlled asthma in July, evaluating the safety and tolerability
of MRx-4DP0004 in combination with existing maintenance therapy,
with a range of secondary endpoints to evaluate efficacy.
Unfortunately, the global COVID-19 pandemic has had a significant
impact on recruitment for the study as we have a duty to prioritise
the safety of our patients in this high risk group and the
wellbeing of the medical staff involved. We are monitoring the
situation closely and will be in a position to provide further
updates as the expected impact on the trial becomes clearer.
COVID-19
However, with great challenges come great opportunity and social
obligation. The primary burden on healthcare systems caused by
SARS-CoV-2 infection is the hyperinflammatory response which leads
to the need for mechanical ventilation and admission to intensive
care. There is a clear and urgent need for an immunomodulatory
therapeutic to prevent or reduce hyperinflammation associated with
severe disease.
As the scientific community's understanding of the immunology of
COVID-19 has developed it became clear that the unique
immunomodulatory activity of MRx-4DP0004 may be able to address
this critical gap in the management of COVID-19 - to prevent or
reduce hyperinflammation in hospitalised patients. 4D is conducting
a Phase II placebo-controlled trial to demonstrate clinical benefit
in addition to standard of care. The trial has received expedited
acceptance from the UK's MHRA, and preparations are advancing
quickly to begin dosing patients.
Intellectual Property
Intellectual property is a key component of our strategy. We
continue to invest in our industry-leading patent estate, now
numbering over 60 patent families.
Our functional, granular approach to LBPs has allowed us to
secure robust multi-layered protection for all our development
candidates in major markets including the US, Europe and Japan.
This year we secured over a hundred new patents across multiple
territories, and have many more applications pending.
Our IP estate is a testament to our highly productive R&D
platform, MicroRx(R) . In addition, however, we have also filed a
number of patent applications deriving from the product development
work at our cGMP-certified facility, and from our machine learning
microbiome analysis research. Our IP strategy allows us to capture
the competitive advantages from our unique end-to-end
capabilities.
2019 saw the first major challenges to IP in the microbiome
therapeutics space. We are confident in the strength of our patent
portfolio and its ability to protect our single strain Live
Biotherapeutic candidates. Where challenged, we will robustly
defend it.
Financial Summary
Our cash consumption for the year ended 31 December 2019
remained in line with management expectations, driven by the
increased clinical trial activity and progress of our pre-clinical
candidates.
In the year to December 2019, our cash and cash equivalents and
short-term deposits reduced from GBP26.2 million to GBP3.8 million
with a loss before tax of GBP29.4 million (compared with GBP28.4
million in the year to December 2018). This is inclusive of GBP0.2
million of Revenue relating to the recognition of a limited part of
the upfront cash payment, in accordance with IFRS15 and the terms
of our collaboration with MSD in the vaccine space. Our claim for
research and development tax credit was GBP5.4 million (compared
with GBP4.7 million in the year to December 2018).
The Group continues to manage its cash deposits prudently and
invest available longer-term funds across a number of financial
institutions which have investment grade credit ratings. The Board
has continued to operate a robust set of financial controls
including rolling short-term and long-term forecasts to assist in
the control and prioritisation of resources.
After the period end, in February 2020, the Group completed a
fundraise through the placing and a subscription for new ordinary
shares with and by certain existing and new investors, to raise
aggregate gross proceeds of GBP22 million. As a result of this
fundraise , prioritisation of the Group's programmes and cost
reduction measures put in place, the Directors estimate that cash
held by the Group, together with known receivables, will
be sufficient to support the current level of activities until Q4 2020.
The Directors are continually exploring sources of finance
available to the Group and have a reasonable expectation that they
will be able to secure sufficient cash inflows for the Group to
continue its activities for not less than twelve months from the
date of approval of the accounts. They have therefore been prepared
on a going concern basis.
Because the additional finance is not committed at the date of
approval of the financial statements, these circumstances represent
a material uncertainty as to the Group's ability to continue as a
going concern.
Should the Group be unable to obtain further finance such that
the going concern basis of preparation was no longer appropriate,
adjustments may be required which would include the reduction in
the carrying value of the Group's to their recoverable amounts and
would also incorporate provisions for any future liabilities that
would arise.
Outlook
Over the past year we made impressive progress in all aspects of
our business. We reported the first signs of clinical activity for
a Live Biotherapeutic in the field of oncology, and took a new
candidate into the clinic in asthma. We have set up multiple
near-to-mid-term clinical catalysts as we generate robust clinical
data with multiple shots on goal. In parallel, the Company has
continued to elucidate the mechanisms of our lead LBPs, and
identified promising new candidates in priority areas like
neurodegenerative disease.
While the progression of our drug candidates through the clinic
to approval is a key value driver, we believe the MicroRx(R)
platform itself also has immense potential to create value, in
diverse therapeutic areas, exemplified by our collaboration with
MSD in the vaccines space. In order to capture the potential of the
platform and maximise value creation, we are actively pursuing
additional research collaborations, pairing our expertise in LBP
discovery and development and access to our library of well
characterised bacterial isolates with the disease-specific
expertise of partners.
Like many others in the wider pharmaceutical industry, 4D pharma
has not been immune to the disruption caused by the COVID-19
pandemic. We are taking the situation very seriously and heeding
the advice of the UK government and other authorities, utilising
technology effectively to mitigate this unprecedented disruption
where possible. To protect the safety of patients, our staff and
the staff of our collaborators, we have limited non-essential
activity at clinical sites which has had an impact on patient
recruitment for some studies. The time course of the pandemic, and
thus its impact on our operations, is hard to predict. 4D is
monitoring the situation closely and prepared to adapt our strategy
and operations in response to unfolding events.
Duncan Peyton
Chief Executive Officer
22 May 2020
Development Pipeline
Programme Indication Development Stage Status
Blautix IBS-C, IBS-D Phase II Ongoing; positive
interim analysis
complete
------------------- ------------------ -----------------------
MRx-4DP0004 COVID-19 Phase II Ongoing
------------------- ------------------ -----------------------
MRx0518 Solid tumours Phase I/II Ongoing; Part A
safety stage complete
------------------- ------------------ -----------------------
MRx-4DP0004 Asthma Phase I/II Ongoing
------------------- ------------------ -----------------------
Thetanix Crohn's disease Phase I Successful Phase
I complete
------------------- ------------------ -----------------------
MRx0573 Solid tumours Preclinical Demonstrated in
vivo efficacy
------------------- ------------------ -----------------------
MRx1299 Solid tumours Preclinical Demonstrated in
vivo efficacy
------------------- ------------------ -----------------------
MRx0005 Neurodegeneration Preclinical Demonstrated in
vivo efficacy
------------------- ------------------ -----------------------
MRx0029 Neurodegeneration Preclinical Demonstrated in
vivo efficacy
------------------- ------------------ -----------------------
Various Autoimmune disease Preclinical Demonstrated in
vivo efficacy
------------------- ------------------ -----------------------
Vaccines research Vaccines Discovery Research collaboration
collaboration and option to license
agreement with MSD
------------------- ------------------ -----------------------
Group Statement of Total Comprehensive Income
For the year ended 31 December 2019
31 December 31 December
2019 2018
Notes GBP000 GBP000
------------------------------------------------------- ----- ------------ -----------
Revenue 211 -
Research and development costs (26,512) (24,908)
Administrative expenses (4,359) (4,212)
Foreign currency (losses) / gains (1,006) 749
Other income 34 -
------------------------------------------------------- ----- ------------ -----------
Operating loss before non-recurring income (31,632) (28,371)
Non-recurring income 3 2,659 -
------------------------------------------------------- ----- ------------ -----------
Operating loss after non-recurring income (28,973) (28,371)
Finance income 61 282
Finance expense (514) (348)
------------------------------------------------------- ----- ------------ -----------
Loss before taxation (29,426) (28,437)
Taxation 5,360 4,747
------------------------------------------------------- ----- ------------ -----------
Loss for the year (24,066) (23,690)
Other comprehensive income
Exchange differences on translating foreign operations 379 (601)
------------------------------------------------------- ----- ------------ -----------
Loss for the year and total comprehensive income
for the year (23,687) (24,291)
------------------------------------------------------- ----- ------------ -----------
Loss per share
Basic and diluted for the year 4 (36.75)p (36.17)p
------------------------------------------------------- ----- ------------ -----------
The basic and diluted loss per share are the same as the effect
of share options is anti-dilutive.
Group Statement of Financial Position
At 31 December 2019
Registered no. 08840579
At At
31 December 31 December
2019 2018
GBP000 GBP000
------------------------------------------- ------------ -----------
Assets
Non-current assets
Property, plant and equipment
* Owned assets 4,196 4,865
* Right-of-use assets 964 -
Intangible assets 13,988 14,445
Taxation receivables 188 137
-------------------------------------------- ------------ -----------
19,336 19,447
------------------------------------------- ------------ -----------
Current assets
Inventories 198 290
Trade and other receivables 1,118 1,248
Taxation receivables 6,122 5,393
Short-term investments and cash on deposit - 10,174
Cash and cash equivalents 3,836 16,053
-------------------------------------------- ------------ -----------
11,274 33,158
------------------------------------------- ------------ -----------
Total assets 30,610 52,605
-------------------------------------------- ------------ -----------
Liabilities
Current liabilities
Trade and other payables 6,192 3,525
Lease liabilities 68 11
Contingent consideration - 1,641
-------------------------------------------- ------------ -----------
6,260 5,177
------------------------------------------- ------------ -----------
Non-current liabilities
Lease liabilities 1,043 15
Contingent consideration - 684
Deferred tax 964 966
2,007 1,665
------------------------------------------- ------------ -----------
Total liabilities 8,267 6,842
-------------------------------------------- ------------ -----------
Net assets 22,343 45,763
-------------------------------------------- ------------ -----------
Capital and reserves
Share capital 164 164
Share premium account 108,296 108,296
Merger reserve 958 958
Translation reserve 446 67
Other reserve (864) (864)
Share-based payments reserve 367 708
Retained earnings (87,024) (63,566)
-------------------------------------------- ------------ -----------
Total equity 22,343 45,763
-------------------------------------------- ------------ -----------
Group Statement of Changes in Equity
For the year ended 31 December 2019
Share-based
Share Share Merger Translation Other payment Retained Total
capital premium reserve reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- ----------- ------- ----------- -------- --------
At 1 January 2018 164 108,296 958 668 (864) 440 (39,876) 69,786
---------------------------------- ------- ------- ------- ----------- ------- ----------- -------- --------
Total transactions with owners
recognised in equity for the
year - - - - - - - -
Loss and total comprehensive
income
for the year - - - (601) - - (23,690) (24,291)
Issue of share-based compensation - - - - - 268 - 268
---------------------------------- ------- ------- ------- ----------- ------- ----------- -------- --------
At 31 December 2018 164 108,296 958 67 (864) 708 (63,566) 45,763
---------------------------------- ------- ------- ------- ----------- ------- ----------- -------- --------
Total transactions with owners
recognised in equity for the
year - - - - - - - -
Loss and total comprehensive
income
for the year - - - 379 - - (24,066) (23,687)
Lapsed options - - - - - (608) 608 -
Issue of share-based compensation - - - - - 267 - 267
---------------------------------- ------- ------- ------- ----------- ------- ----------- -------- --------
At 31 December 2019 164 108,296 958 446 (864) 367 (87,024) 22,343
---------------------------------- ------- ------- ------- ----------- ------- ----------- -------- --------
Group Cash Flow Statement
For the year ended 31 December 2019
Year to Year to
31 December 31 December
2019 2018
GBP000 GBP000
--------------------------------------------------- ------------ -----------
Loss after taxation (24,066) (23,690)
Adjustments for:
Depreciation of property, plant and equipment 1,065 905
Amortisation of intangible assets 216 296
(Profit )/ loss on disposal of property, plant
and equipment (17) 1
Loss on disposal of intangible assets 29 -
Lease liabilities included in the Income Statement 159 -
Finance income (61) (282)
Finance expense 514 348
Release of contingent consideration (2,659) -
Share-based compensation 267 268
---------------------------------------------------- ------------ -----------
Cash flows from operations before movements in
working capital (24,553) ( 2 2 ,154)
Changes in working capital:
Decrease /( increase) in inventories 92 (37)
Decrease in trade and other receivables 130 1,894
Increase in taxation receivables (780) (1,166)
Increase /( decrease ) in trade and other payables 3,555 (1,474)
---------------------------------------------------- ------------ -----------
( 21,556 (22 ,937
Cash outflow from operating activities ) )
---------------------------------------------------- ------------ -----------
Cash flows from investing activities
Purchases of property, plant and equipment (538) (537)
Purchase of software and other intangibles (57) (4)
Acquisition of subsidiaries net of cash acquired - (660)
Cash received on disposal of assets 43 -
Interest received 94 378
Monies drawn from deposit 10,174 27,959
---------------------------------------------------- ------------ -----------
Net cash inflow from investing activities 9,716 27,136
---------------------------------------------------- ------------ -----------
Cash flows from financing activities
Lease liability payments (197) (10)
Interest paid (180) (1)
---------------------------------------------------- ------------ -----------
Net cash outflow from financing activities (377) (11)
---------------------------------------------------- ------------ -----------
(Decrease)/increase in cash and cash equivalents (12,217) 4,188
Cash and cash equivalents at the start of the
year 16,053 11,865
---------------------------------------------------- ------------ -----------
Cash and cash equivalents at the end of the year 3,836 16,053
---------------------------------------------------- ------------ -----------
On 1 January 2019 IFRS 16 'Leases' came into effect, replacing
IAS 17. Amongst other effects the new reporting requirement removed
the distinction between operating leases and finance leases , which
changed the general presentation. The Group has limited exposure to
the effects of the changes so has elected to implement the
simplified cumulative catch - up approach with the effects being
recognised entirely in the current year. Further details of the
effect of the adoption of IFRS 16 are included in the notes to the
full accounts.
Notes to the Financial Information
For the year ended 31 December 2019
1. Basis of preparation
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 December 2019
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 22 May 2020 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 December 2018
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 20 May 2019 and
which have been delivered to the Registrar of Companies for England
and Wales.
The report of the auditor on the 31 December 2019 31 December
2018 financial statements was unqualified, did not contain a
statement under Section 498(2) or Section 498(3) of the Companies
Act 2006 but did include a matter to which the auditors drew
attention by way of emphasis without qualifying their report
relating to the basis of preparation which is reproduced below:
Material uncertainty related to going concern
We draw attention to the accounting policy on going concern on
page 46 of the financial statements, which indicates that the cash
flow forecast prepared by the directors estimate that the Group has
sufficient funds to support the current level of activities to the
final quarter of 2020 and therefore needs to raise additional
funds. As stated in the accounting policy on going concern, these
events or conditions, along with the other matters as set forth on
page 46 indicate that a material uncertainty exists that may cast
significant doubt on the Group's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
The information included in this preliminary announcement has
been prepared on a going concern basis under the historical cost
convention, and in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and the
International Financial Reporting Interpretations Committee (IFRIC)
interpretations issued by the International Accounting Standards
Board ("IASB") that are effective or issued and early adopted as at
the date of this financial information and in accordance with the
provisions of the Companies Act 2006.
The information in this preliminary statement has been extracted
from the audited financial statements for the year ended 31
December 2019 and as such, does not contain all the information
required to be disclosed in the financial statements prepared in
accordance with the International Financial Reporting Standards
('IFRS').
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. The Company is
incorporated in England and Wales. The registered office is 9 Bond
Court, Leeds LS1 2JZ.
2. Going concern
The Group subject to a number of risks similar to those of other
development stage pharmaceutical companies. These risks include,
amongst others, generation of revenues in due course from the
development portfolio and risks associated with research,
development and obtaining regulatory approvals of its products.
Ultimately, the attainment of profitable operations is dependent on
future uncertain events which include obtaining adequate financing
to fulfil the Group's commercial and development activities and
generating a level of revenue to support the Group's cost
structure.
The Directors have prepared detailed financial forecasts and
cash flows looking beyond twelve months from the date of the
approval of these financial statements. In developing these
forecasts, the Directors have made assumptions based upon their
view of the current and future economic conditions that are
expected to prevail over the forecast period. Shortly after the
year end the Group issued and placed new ordinary shares to raise
combined gross proceeds of GBP22 million from the issue of new
share capital. Together with restructuring measures undertaken in
light of COVID-19 the Directors estimate that the cash held by the
Group together with known receivables will be sufficient to support
the current level of activities to the end of quarter four of 2020.
The Directors are continuing to explore sources of finance
available to the Group and have a reasonable expectation that they
will be able to secure sufficient cash inflows into the Group to
continue its activities for not less than twelve months from the
date of approval of these accounts. They have therefore prepared
the financial statements on a going concern basis.
Because the additional finance is not committed at the date of
approval of these financial statements, these circumstances
represent a material uncertainty as to the Group's ability to
continue as a going concern. Should the Group be unable to obtain
further finance such that the going concern basis of preparation
were no longer appropriate, adjustments would be required including
to reduce the balance sheet values of assets to their recoverable
amounts, and to provide for future liabilities that may arise.
3. Non-recurring income
Year to Year to
31 December 31 December
2019 2018
GBP000 GBP000
-------------------------------------------------- ------------ ------------
Fair value adjustment on contingent consideration 2,659 -
-------------------------------------------------- ------------ ------------
The Group have provided for the contingent consideration on the
achievement of three time - based milestones for the validation of
the MicroDx platform by 4D Pharma Cork Ltd.
The contingent liability was calculated upon the acquisition of
4D Pharma Cork Limited and was based on the discounted probability
of the liability at that time. The probability of future milestones
is re-assessed as the timepoints for the milestones are reached,
these milestones are:
1) Technical validation of a diagnostic platform for IBS
dysbiosis
The milestone was achieved by 23 August 2017 and triggered the
issue of 635,692 shares for an aggregate market value of EUR2.6
million (at GBP3.7575 per 4D pharma plc share, being the average
mid-market price of a 4D share for the five business days
immediately preceding the date of allotment). The shares were
subsequently admitted on 31 August 2017.
2) Clinical validation of the optimal IBS dysbiosis diagnostic
platform based on more than 1,000 patients in a multicentre
trial
It is anticipated that the clinical validation stage will be
completed in 2020. Whilst there are no adverse indicators relating
to the clinical validation of the platform at 31 December 2019, the
time - based criteria for the completion of the milestone, which
required completion of this phase by 23 August 2019, was not
achieved and the fair value of the contingent consideration has
been adjusted by GBP1.877 million to bring the balance at 31
December 2019 to GBPNil.
3) Regulatory approval of a diagnostic platform for IBS
dysbiosis
The third milestone is also time based and linked to regulatory
approval being achieved by 23 August 2020. Based on the patient
recruitment at milestone two it is anticipated that regulatory
approval would be achieved in 2021 meaning that the probability of
achieving milestone three by the required date is considered to be
minimal ; as a result the fair value has been reduced to GBPNil,
releasing GBP0.782 million of the contingent consideration.
4. Loss per share
(a) Basic and diluted
Year to Year to
31 December 31 December
2019 2018
GBP000 GBP000
------------------------------------------------------ ------------ -----------
Loss for the year attributable to equity shareholders (24,066) (23,690)
------------------------------------------------------ ------------ -----------
Weighted average number of shares
Ordinary shares in issue 65,493,842 65,493,842
------------------------------------------------------ ------------ -----------
Basic loss per share (pence) (36.75) (36.17)
------------------------------------------------------ ------------ -----------
The basic and diluted loss per share are the same as the effect
of share options is anti-dilutive.
(b) Adjusted
Adjusted loss per share is calculated after adjusting for the
effect of non-recurring income in relation to the
reassessment of the contingent consideration .
Reconciliation of adjusted loss after tax:
Year to Year to
31 December 31 December
2019 2018
GBP000 GBP000
-------------------------------------- ------------ -----------
Reported loss after tax (24,066) (23,690)
Non-recurring income (2,659) -
-------------------------------------- ------------ -----------
Adjusted loss after tax (26,725) (23,690)
-------------------------------------- ------------ -----------
Adjusted basic loss per share (pence) (40.81) (36.17)
-------------------------------------- ------------ -----------
5. Subsequent events
Fundraising events
In February 2020 the Group raised GBP 22 million (GBP20.8
million net of transaction costs) through the issue of 27,179,920
new ordinary shares and a placing of 16,820,080 new ordinary shares
with certain new and existing investors at a share price of 50
pence per share. A warrant was also issued on the basis of one
share for every two placing or subscription shares based on an
admission cost of 100 pence per ordinary share and is exercisable
for five years from the date of admission.
As part of the Fundraising, the Group has exercised its right to
cause MSD (the tradename of Merck & Co., Inc, Kenilworth, NJ ,
USA) to purchase US$5 million (approx. GBP3.83 million) of new
ordinary shares at the Issue Price pursuant to the terms of a
Subscription Agreement (the agreement to do so having been
announced in parallel with the Company's research collaboration and
option to license agreement with MSD on 8 October 2019).
Directors' participation in Fundraising
At the time of the Fundraising certain of the Directors agreed
to subscribe for Subscription Shares at the Issue Price. The number
of Subscription Shares subscribed for by each of these Directors
pursuant to the Fundraising, and their resulting shareholdings on
Admission, are set out below:
Number of
subscription Percentage of
shares subscribed Consideration for Number of enlarged share
Number of existing for in the subscription ordinary shares capital on
Director ordinary shares Fundraising shares held on admission admission
---------------- ------------------- ------------------ ------------------- ------------------ ------------------
David Norwood 7,123,725 1,333,336 GBP666,668 8,457,061 7.70%
Duncan Peyton 6,455,075 1,333,332 GBP666,666 7,788,407 7.10%
Alex Stevenson 6,413,136 1,333,332 GBP666,666 7,746,468 7.10%
---------------- ------------------- ------------------ ------------------- ------------------ ------------------
19,991,936 4,000,000 GBP2,000,000 23,991,936
---------------- ------------------- ------------------ ------------------- ------------------ ------------------
COVID-19
In 2020 the global COVID-19 pandemic hit the UK affecting almost
all aspects of the economy, the pharmaceutical industry and the
Group included. In response to this unexpected and unprecedented
event, the Group has taken the situation very seriously and heeded
the advice of the UK government and other authorities, utilising
technology effectively to mitigate this unprecedented disruption
where possible. To protect the safety of patients, our staff and
the staff of our collaborators we have limited non-essential
activity at clinical sites which has had an impact on patient
recruitment for some studies resulting in some potential delays to
expected clinical readouts.
The likely duration of the disruption caused by COVID-19 is not
yet known and it is too early to accurately predict the impact on
the Group's operations and clinical timelines. However, in light of
this unprecedented situation the Board has carefully re-evaluated
the Company's strategic priorities and near-to-mid-term objectives.
We have taken measures to streamline the business, including
changes to management structure and reducing staffing requirements,
primarily relating to manufacturing, research and administrative
services. The Board has also prioritised allocation of capital and
resources to key programmes set to deliver key clinical value
drivers for our shareholders, including oncology and launching a
Phase II clinical trial in COVID-19.
The Group remains committed to reviewing the rapidly evolving
global situation and adapting its strategy and operations
accordingly.
6. Report and accounts
A copy of the Annual Report and Accounts will be sent to all
shareholders with notice of the Annual General Meeting, and will be
made available on the Company's website, www.4dpharmaplc.com, by 4
June 2020.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BCGDUDUDDGGU
(END) Dow Jones Newswires
May 26, 2020 02:01 ET (06:01 GMT)
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