REG-4basebio Plc: Half-year Report
30/09/2022 07:15
4basebio PLC
("4basebio", the "Company" or the “Group”)
Half-year Report
for the six months ended 30 June 2022
4basebio PLC (AIM: 4BB), the specialist life sciences group focused on
exploiting intellectual property in the field of cell and gene therapies and
DNA vaccines, announces its unaudited half-year results for the six months
ended 30 June 2022.
Operational Highlights (including post period end)
* Clean rooms for DNA manufacturing commissioned
* Commercial sale of proprietary DNA
* Strengthening IP with three further patent filings
* Development of application specific suite of proprietary DNA constructs
* Evaluation and collaboration agreements signed
Financial Highlights
* Cash balances of £5.6 million at period end
* Cash runway into 2023 before utilisation of available debt facility
* Loss for the period of £2.4 million (H1 2021 loss: £1.7 million)
* Net cash outflow from operating activities of £2.5 million (H1 2021: £1.7
million)
Commenting on the interim results, Dr Heikki Lanckriet, CEO and CSO, said
“We continue to make excellent progress and are pleased to report our first
DNA sales in the period. While revenues will remain modest for 2022, we have
now made multiple sales and we are confident in the overall commercial
prospects of both our synthetic DNA and non-viral vector technology.
“We have also now taken possession of our manufacturing suites and are
working hard to implement systems and processes which will enable the
manufacture of GMP DNA as early as possible in 2023. Alongside this, we
continue to develop our intellectual property, with three further patents
filings in July 2022.
“We are very excited to be demonstrating the flexibility of our DNA
technology having developed a suite of proprietary application specific
synthetic DNA constructs optimised for the AAV, mRNA, gene editing and DNA
vaccine markets.
“We continue to invest in our technology platforms, with overall cash
expenditure during the period as expected. Looking forward to 2023, further
funding will be required. We remain open to a possible capital increase
where this is at a meaningful premium to the Company’s prevailing share
price; however, at this time, we expect to draw down on our available debt
facilities during H1 2023.”
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
For further enquiries, please contact:
4basebio PLC +44 (0)12 2396 7943
Heikki Lanckriet, CEO and CSO
Cairn Financial Advisers LLP (Nominated Adviser ) +44 (0)20 7213 0880
Jo Turner / Sandy Jamieson
finnCap Ltd (Broker)
Geoff Nash/Richard Chambers/Charlotte Sutcliffe +44 (0)20 7220 0500
Notes to Editors
4basebio (AIM: 4BB) is a specialist life sciences group focused on therapeutic
DNA for cell and gene therapies and DNA vaccines and providing solutions for
effective and safe delivery of these DNA based products to patients. It is the
intention of the Company to become a market leader in the manufacture and
supply of high purity, synthetic DNA for research, therapeutic and
pharmacological use and develop non-viral vectors for the efficient delivery
of payloads. The immediate objectives of 4basebio are to continue the
validation of its DNA products and Hermes™ technology and commence revenue
generation during 2022. 4basebio also continues to advance its collaborations
to facilitate the functional validation of its DNA based products and cell and
gene delivery solutions.
Chairman’s Statement
Introduction
The Board is pleased to report that 4basebio continued to make good progress
in the first half of the year in validating and commercialising 4basebio DNA
and targeted nanoparticle delivery technologies. Both technologies have
broad application in gene and cell therapy as well as vaccines; and as
reported previously, we see particular near-term opportunities in AAVs
(adeno-associated viral vectors) for gene therapy and in-vitro transcription
(IVT) for the production of mRNA vaccines.
During the period, as noted above, 4basebio also recorded its first DNA
revenues and completed the development of its manufacturing facility
comprising seven DNA production suites.
As expected, and as indicated in our 2021 Annual Report, 4basebio continued
with its investment in its technologies with the result that the Group
incurred a net loss for the first half of 2022.
Operational Review
4basebio continues to operate from three locations near Cambridge, UK and
Madrid, Spain and has established strong R&D groups in both countries. These
groups remained focussed on enhancing and scaling processes around its
synthetic DNA manufacture, its targeted nanoparticle technology, as well as
product and process innovation, strengthening the 4basebio’s intellectual
property.
Alongside its R&D activities, the Group has scaled up its manufacturing and
quality assurance teams significantly during the period. This coincides with
4basebio taking full control of its manufacturing facility near Cambridge and
progressing with its operational validation. The next objective is to
implement GMP processes and procedures during the second half of 2022 with a
view to manufacturing first GMP batches in 2023.
In order to support both its research and manufacturing activities, the Group
continues to recruit, principally in the UK, with overall headcount increasing
from 33 at 31 December 2021 to 51 at 30 June 2022. It is anticipated this
will grow further during the second half of the year.
The commercial development of the Group also continued apace, with first
synthetic DNA revenues recorded in H1 2022. 4basebio is now working to
develop a pipeline of commercial opportunities. Currently, these are
typically early-stage projects where customers are evaluating 4basebio
technology with their customer specific application needs. The Group expects
its pipeline to grow with further DNA and nanoparticle revenues in H2 2022.
Visibility on the impact on revenue and overall financial performance is
however limited.
During the half year, 4basebio also announced further collaborations:
* research collaboration with Teesside University and the University of
Alabama for the treatment of Neurofibromatosis Type 1;
* joint development agreement with Heqet Therapeutics for the development of a
non-viral vector therapy for cardiac regeneration; and
* strategic research collaboration with eTheRNA immunotherapies relating to
the evaluation of linear DNA for mRNA production.
(The Group also has further evaluation projects ongoing which are subject to
non-disclosure agreements.)
In summary, during the first half of 2022 4basebio has built critical mass in
its R&D and manufacturing teams as well as progressing its commercial
objectives. The Directors consider the Group to be extremely well placed to
continue the commercial exploitation of its DNA and nanoparticle technology.
Business outlook
Overall revenues are expected to be consistent with previous periods,
reflecting some revenues from DNA and Hermes™ services, offsetting a decline
in legacy revenues with certain historic one-time orders now not expected to
repeat.
The Group expects to continue investing in its technologies and staff team
during the remainder of 2022. The ongoing expenditure will continue to be
much greater than revenues, with the Group reporting a loss for the full
year. This is as previously indicated.
Financial Review
The results for the period ended 30 June 2022 and the consolidated balance
sheet at that date reflect the consolidated performance and position of
4basebio PLC and all its subsidiary companies.
Revenue
Revenue in the first six months of 2022 (“H1 2022”) was £0.15 million (H1
2021: £0.18 million). This reflects a fall in legacy revenue from kit sales
and licence income offset by modest sales from DNA.
Cost of sales
Cost of sales in H1 2022 was £37k (H1 2021: £38k). Cost of sales reflects
a combination of amortisation on previously capitalised intangible assets
linked to kit sales and inputs for DNA production.
Selling and administration expenses
Selling, general and administrative expenses were a combined £1.4 million in
H1 2022 (H1 2021: £1.2 million) reflecting the underlying growth in the scale
of the business.
Operations expense
Operations expense is a new expenditure line for the Group, capturing
expenditure relating to manufacturing and quality assurance. Operations
expense includes primarily payroll and consumables spend.
Research and development
Overall research and development expenditure for H1 2022 was £1.6 million (H1
2021: £0.86 million), of which £0.55 million was capitalised in the period
(H1 2021: £0.23 million). Overall expenditure increased due to the ongoing
expansion of the UK team and investment in R&D programs. Capitalised
expenditure relates to platform research undertaken in Spain.
Tax
Tax represents R&D tax credits expected to be recovered in relation to
expenditure during the first half of the year.
Balance sheet
Non-current assets increased to £5.5 million at 30 June 2022 from £4.1
million at 31 December 2021; this related to additions of tangible fixed
assets in the UK and capitalised R&D expenditure in Spain as shown in notes 6
and 7 to the half year results. Current assets fell to £6.9 million at 30
June 2022 from £10.6 million at 31 December 2021, due primarily to cash
outflows during the first half of 2022. As a result, closing cash balances
at 30 June 2022 stood at £5.6 million (31 December 2021: £9.6 million).
Current liabilities increased to £1.6 million at 30 June 2022 from £1.5
million at 31 December 2021 due primarily to an increase in trade payables
associated with fixed asset additions. Long term financial liabilities
reduced due to reclassification of soft loans from long term to short term
liabilities. As a result, overall long term liabilities stood at £1.3
million as at 30 June 2022 (31 December 2021: £1.5 million). Other long term
liabilities represent deferred grant income in Spain.
Share Capital at both 30 June 2022 and 31 December 2021 reflects the capital
contributions arising from the 2020 spin out process as explained in note 3.2
to the financial statements included in the Annual Report for 2021.
Cash flow
Net cash outflows from operations were £2.5 million for the period ended 30
June 2022 (period ended 30 June 2021: outflows of £1.7 million). This
reflects an increase in operating cashflows directly arising from the growth
in operations between the periods as presented in the profit and loss account.
Cash outflows from investing activities increased significantly with the
investment in tangible fixed assets £1m for the period ended 30 June 2022
(period ended 30 June 2021: £0.1 million) relating to both the manufacturing
facility and expansion of R&D laboratories. In addition, capitalised
development expenditure in 4basebio S.L.U. increased to £0.4 million from
£0.2 million in period ended 30 June 2021.
Cashflows from financing for the period ended 30 June 2022 were relatively
flat against the previous period, with the change dictated by the level of
Spanish soft loan repayments.
Exchange differences for the period represent changes in the British pound
value of cash balances held in foreign currency, almost entirely euro
denominated.
Tim McCarthy
Chairman
29 September 2022
Consolidated statement of profit or loss and other comprehensive income
for the six months ended 30 June 2022
[in £‘000] Note Six months ended 30 June 2022 (unaudited) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021 (audited)
Revenues 152 179 338
Cost of goods sold (37) (38) (69)
Gross profit 115 141 269
Sales and marketing expenses (97) (81) (132)
Administration expenses (1,306) (1,155) (1,725)
Operations expense (367) - -
Research and non-capitalised development expenses (1,024) (633) (1,622)
Other operating expenses (37) (103) (400)
Other operating income 2 15 83
Loss from operations (2,714) (1,816) (3,527)
Finance expense (16) (31) (113)
Loss before tax (2,730) (1,847) (3,640)
Income tax credit / expense 4 300 197 405
Loss for the period (2,430) (1,650) (3,235)
Items that may be reclassified to the income statement in subsequent periods
Exchange rate adjustments 173 (393) (608)
Total comprehensive income (2,257) (2,043) (3,843)
Loss per share
* Basic and diluted (in £/share) 5 (0.20) (0.13) (0.26)
All of the loss for each period is from continuing operations.
Consolidated statement of financial position
30 June 2022
[in £’000] Note 30 June 2022 (unaudited) 31 December 2021 (audited)
Assets
Intangible assets 6 1,695 1,271
Property, plant and equipment 7 3,488 2,759
Other non-current assets 331 30
Non-current assets 5,514 4,060
Inventories 148 156
Trade receivables 85 46
Other current assets 1,041 854
Cash and cash equivalents 8 5,597 9,586
Current assets 6,871 10,642
Total assets 12,385 14,702
Liabilities
Financial liabilities (362) (432)
Trade payables (664) (353)
Other current liabilities (589) (738)
Current liabilities (1,615) (1,523)
Financial liabilities (1,108) (1,326)
Other liabilities (173) (158)
Non-current liabilities (1,281) (1,484)
Total liabilities (2,896) (3,007)
Net assets 9,489 11,695
Share capital 11,130 11,130
Share premium 706 706
Merger reserve 688 688
Capital reserve 13,230 13,179
Foreign exchange reserve (260) (433)
Profit and loss reserve (16,005) (13,575)
Total Equity 9 9,489 11,695
Consolidated statement of changes in equity
for the six months ended 30 June 2022
[in £‘000] Share capital Share premium Merger reserve Capital reserve Foreign exchange Profit and loss reserve Total equity
Balance at 1 January 2021 (audited) 11,130 706 688 13,099 175 (10,340) 15,458
Loss for the year - - - - - (3,235) (3,235)
Foreign Exchange difference arising on translation of 4basebio S.L.U. - - - - (608) - (608)
Share based payments - - - 80 - - 80
Balance at 31 December 2021 (audited) 11,130 706 688 13,179 (433) (13,575) 11,695
[in £‘000] Share capital Share premium Merger reserve Capital reserve Foreign exchange Profit and loss reserve Total equity
Balance at 1 January 2022 (audited) 11,130 706 688 13,179 (433) (13,575) 11,695
Loss for the year - - - - - (2,430) (2,430)
Foreign Exchange difference arising on translation of 4basebio S.L.U. - - 173 - 173
Share option charge - - - 51 - - 51
Balance at 30 June 2022 (unaudited) 11,130 706 688` 13,230 (260) (16,005) 9,489
Consolidated statement of cash flows
for the six months ended 30 June 2022
[in £’000] 30 June 2022 (unaudited) 30 June 2021 (unaudited) 31 December 2021 (audited)
Net loss for the period (2,430) (1,650) (3,235)
Adjustments to reconcile net loss for the period to net cashflows
Income taxes (300) (197) (405)
Interest charge 16 31 113
Depreciation of property, plant and equipment 226 106 242
Amortisation and impairment of intangible assets 13 41 78
Other non-cash items 57 52 12
Working capital changes:
Trade receivables and other current assets (216) (99) (126)
Trade payables and other current liabilities 157 24 615
Inventories 10 26 (34)
Net Cash flows from operating activities (2,467) (1,666) (2,740)
Investments in property, plant and equipment and intangible assets (969) (141) (884)
Investments in capitalised development (404) (231) (628)
Cash flows from investing activities (1,373) (372) (1,512)
Cash in(out)flow due to changes in financing (272) (337) (331)
Interest paid (17) (31) (76)
Capital lease payments (38) (64) (60)
Cash flows from financing activities (327) (432) (467)
Net change in cash and cash equivalents (4,167) (2,470) (4,719)
Exchange differences 178 (467) (696)
Cash and cash equivalents at the beginning of the period 9,586 15,001 15,001
Cash and cash equivalents at the end of the period 5,597 12,064 9,586
Notes to the financial statements
For the six months ended 30 June 2022
1.General information
4basebio PLC is registered in England and Wales as a public limited company
since 20 July 2021. Prior to that date it was registered as a United Kingdom
Societas under the name 4basebio UK Societas. The conversion to a public
limited company occurred following shareholder approval of the conversion at
its Annual General Meeting held on 30 June 2021. With the conversion, the
name of the Company changed to 4basebio PLC.
The Company is domiciled in England and the registered office of the Company
is 25 Norman Way, Over, Cambridge, CB24 5QE. 4basebio PLC is the parent of a
group of companies. The group structure remains the same as that shown in
the Company’s financial statements for the year ended 31 December 2021.
The Group focusses on life sciences and in particular the development of
synthetic DNA and nanoparticles suitable for inclusion in, or delivery of,
therapeutic payloads for cell or gene therapies and gene vaccines.
The interim report was approved by the board of directors on 29 September
2022.
The Company’s shares are traded on London Stock Exchange’s AIM market,
having been admitted on 17 February 2021. The international securities
number (ISIN) number for its AIM traded shares is GB00BLD8ZL39; its ticker
symbol is 4bb.l.
2.Significant accounting policies
Basis of preparation
This half year report, which is not audited, has been prepared in accordance
with the measurement and recognition criteria of UK adopted International
Accounting Standards. It does not include all the information required for
full annual financial statements and should be read in conjunction with the
financial statements of the Company and its subsidiaries (the “Group”) for
the year ended 31 December 2021.
The accounting policies applied in this half year report are consistent with
those in the financial statements for the year ended 31 December 2021, as
described in those financial statements.
Significant judgments
In the application of the Group’s accounting policies, management is
required to make judgments, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The significant judgments made in relation to the financial
statements are further set out below.
Going concern
The directors have, at the time of approving the half year report, a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the financial statements.
Internally?generated intangible assets – research and development
expenditure
Development expenditure is capitalised when the conditions referred to in Note
3.2 of the Company's 2021 annual report are met. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
3.Foreign currencies
The functional currency of the Group is British Pounds.
The principal currency rate of the Group other than the British Pounds is the
euro which has developed as follows in relation to the equivalent of one pound
(GBP/£):
[in GBP] Closing exchange rate Average exchange rate
30 June 2022 31 December 2021 Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Euro 0.8582 0.8403 0.8424 0.8678 0.8594
4.Income taxes
The Group anticipates claiming R&D tax credits in both the UK and Spain in
relation to the year ended 31 December 2022 and 2021. The quantum of such
claims for the first half of 2022 is estimated at £0.3 million (period ending
30 June 2021: £0.2 million).
5.Loss per share
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Numerator [in £‘000]
Loss for the period (2,430) (1,650) (3,235)
Denominator [number of shares]
Weighted average number of registered shares in circulation (ordinary shares) for calculating the undiluted earnings per share 12,317,473 12,317,473 12,317,473
Diluted and Undiluted earnings per share (£/share) (0.20) (0.13) (0.26)
6.Intangible assets
[in £‘000] Development costs Licences Total
Cost or acquisition value
01 January 2021 1,987 128 2,115
Additions 545 83 628
Exchange differences (142) (11) (153)
31 December 2021 2,390 200 2,590
01 January 2022 2,390 200 2,590
Additions 331 72 403
Exchange differences 56 6 62
30 June 2022 2,777 278 3,055
Cumulative amortisation and impairment
01 January 2021 1,304 26 1,330
Amortisation 69 9 78
Exchange differences (87) (2) (89)
31 December 2021 1,286 33 1,319
01 January 2022 1,286 33 1,319
Amortisation 7 6 13
Exchange differences 27 1 28
30 June 2022 1,320 40 1,360
Net book value
31 December 2021 1,104 167 1,271
30 June 2022 1,457 238 1,695
7.Property, plant and equipment
[in £‘000] Operating equipment Land and buildings Right of use assets Assets under construction Total
Cost or acquisition value
01 January 2021 598 997 166 1,761
Additions 308 - 478 751 1,537
Transfers - - - - -
Exchange differences (24) - (9) - (33)
31 December 2021 882 997 635 751 3,265
01 January 2022 882 997 635 751 3,265
Additions 909 43 - - 952
Transfers 751 - - (751) -
Exchange differences 7 1 3 - 11
30 June 2022 2,549 1,041 638 - 4,228
Cumulative amortisation and impairment
01 January 2021 249 5 29 - 283
Depreciation 124 46 72 - 242
Exchange differences (16) - (3) - (19)
31 December 2021 357 51 98 - 506
01 January 2022 357 51 98 - 506
Depreciation 115 67 43 - 225
Exchange differences 5 1 3 - 9
30 June 2022 477 119 144 - 740
Net book value
31 December 2021 525 946 537 751 2,759
30 June 2022 2,072 922 494 - 3,488
8.Cash and cash equivalents
[in £‘000] 30 June 2022 31 December 2021
Bank balances and cash in hand 5,597 9,586
Cash and cash equivalents 5,597 9,586
9.Equity
The share capital of 4basebio PLC as of 30 June 2022 and 31 December 2021
amounts to a total of €12,317,473 divided into 12,317,473 shares of €1.
These are all registered ordinary shares. There are no shares with special
rights or other restrictions on voting rights.
Share-based payments
During H1 2022, 53,000 share options to subscribe for shares in the Company
were granted to employees with an average weighted exercise price of £5.59
per share. The share options awarded vest one quarter on the anniversary of
grant, over four years. Consistent with previous awards as explained in note
25 to the 2021 financial statements, the awards were valued using a Black
Scholes valuation model.
An overall share-based payments charge of £51,000 has been expensed in the
period with a corresponding amount recognised in equity based on fair values
of between £0.22 and £2.36 per option, as at the dates of grant.
10.Approval of the half year report
The half year report was approved by the board of directors and authorised for
publication on 29 September 2022.
Forward-looking statements
This announcement may contain certain statements about the future outlook for
the 4basebio. Although the directors believe their expectations are based on
reasonable assumptions, any statements about future outlook may be influenced
by factors that could cause actual outcomes and results to be materially
different.
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