REG-4basebio Plc: Half-year Report
21/09/2023 07:15
4basebio PLC
("4basebio", the "Company" or the “Group”)
Half-year Report
for the six months ended 30 June 2023
4basebio PLC (AIM: 4BB), Cambridge, UK, 21 September 2023 – 4basebio PLC, an
innovation driven biotechnology company enabling and accelerating development
of advanced therapy medicinal products (ATMPs) through its high performant
synthetic DNA products and non-viral, thermostable nucleic acid delivery
platform, announces its unaudited half-year results for the six months ended
30 June 2023.
Operational Highlights (including post period end)
* DNA and Hermes™ revenues exceeded £200k for the half year
* Supply Agreement signed for provision of DNA for clinical studies announced
on 24 May 2023
* Announcement of Bill & Melinda Gates Foundation grant on 1 August 2023
* Three patent additional filings during the period
* Demonstrated in vivo efficacy of Hermes™ delivery system
Financial Highlights
* Cash balances of £3.6 million at period end
* Loss for the period of £3.6 million (H1 2022 loss: £2.4 million)
* Net cash outflow from operating activities of £3.0 million (H1 2022: £2.5
million)
Commenting on the interim results, Dr Heikki Lanckriet, CEO and CSO, said
“We are pleased to report continued commercial progress since recording
first DNA and Hermes™ revenues in 2022. We have seen a good influx of early
stage projects as we are gearing up our commercial effort and this has
manifested in H1 2023 revenue growth, with overall revenues in line with full
year 2022, driven primarily by DNA sales.
“During the period, our commercial focus has been on early stage engagement
with potential clients seeking DNA for their clinical programs, with this
approach leading to the onboarding of multiple clients. Typical customer
projects commence with lower value research grade product supply. As new
client programs progress over time, we expect the demand to move to full GMP,
with individually higher value product supply opportunities occurring. One
such example of this is our supply agreement with Neomatrix S.r.l. which was
recently announced and where 4basebio will supply DNA into a cancer neoantigen
vaccine program.
“Alongside this commercial traction, our progress towards overall GMP
certification is important and continues, with 4basebio now in position to
manufacture GMP compliant critical starting material for mRNA and AAV markets.
“We are also delighted to have received a grant from the Bill & Melinda
Gates Foundation to progress a project focussed on thermal stability of our
Hermes™ nanoparticle and our innovative synthetic DNA payloads.
“Alongside the ongoing commercial development, 4basebio remains a technology
company, which is evidenced by the progress in developing its portfolio of
patent families. As a Group, we continue to innovate and find novel
solutions to challenges experienced by clients, with additional DNA products
being developed as a result. The flexibility in our platform which enables
this innovation also offers clear competitor differentiation.
“We continue to invest in our technology platforms and overall cash
expenditure during the period was in line with management expectations. For
the remainder of 2023, we expect to continue this investment in technology,
commercial activities and production capabilities.
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
Cavendish Capital Markets Limited (Broker)
Geoff Nash/Richard Chambers/Charlotte Sutcliffe +44 (0)20 7220 0500
Lionsgate Communications (Media Enquiries) +44 (0)77 91892509
Jonathan Charles
Notes to Editors
4basebio (AIM: 4BB) is an innovation driven life biotechnology company
focussed on accelerating the development of advanced therapy medicinal
products (ATMPs) through its high performant synthetic DNA products and
non-viral, cell targeting nucleic acid delivery platform. The Company’s
objective is to become a market leader in the manufacture and supply of high
quality synthetic DNA products for research, therapeutic and pharmacological
use as well as development of target specific non-viral vectors for the
efficient delivery of payloads in patients. The Company is offering GMP
compliant DNA starting materials suitable for use in AAV viral vector
production as well as mRNA vaccine and therapeutics production.
Chairman’s Statement
Introduction
The Board is pleased to report 4basebio is making good progress in its
commercial development and also continues to expand its technology and product
offering. With significant focus on customer engagement, revenue momentum is
now building, with DNA and Hermes™ sales for the half year exceeding like
for like sales for the full year 2022. Alongside this, the capabilities of
the Group continue to expand with additional resource across commercial,
operations and R&D activities and with overall headcount increasing to 78 at
the end of June 2023.
As expected and as indicated in our 2022 Annual Report, the Group incurred a
net loss for the first half of 2023. 4basebio continues to implement its
strategy requiring ongoing investment in technology and product
commercialisation, including GMP, which it expects will generate significant
revenues and profitability over time.
Operational Review
4basebio operates from four locations near Cambridge, UK and Madrid, Spain,
having recently taken a long lease over a second property adjacent to its
clean room facility in the UK. This additional property will house
laboratories and offices supporting the manufacturing and quality teams in the
business. The Group’s head office at Norman Way will accommodate R&D and
general support functions.
Over the first half of the year, the Group has focussed on three key areas:
* Commercialisation of its product offering, in particular DNA
* Continued progression of GMP implementation
* Ongoing technology platform development and generation of Intellectual
Property
Across all three areas, the Group continues to make good progress. In the year
to date, DNA and Hermes™ revenues exceeded like for like revenues for 2022.
Whilst it remains difficult to provide guidance over how revenues may develop
during the early stages of commercial development, we expect revenue growth to
accelerate over time. From our early commercial activity, however, it is
evident that there is clear customer demand to adopt 4basebio synthetic DNA
into development programs, with multiple customer evaluation projects now
completed and progressing towards more valuable HQ and GMP products.
Implementation of GMP quality standards remains an ongoing task with the Group
now able to manufacture GMP compliant critical starting materials for feeding
into the mRNA and AAV markets, two key areas for revenue growth for
4basebio. Our next objective is to secure GMP certification along with the
ability to produce GMP certified drug substance DNA products. In light of this
objective, the quality, manufacturing and regulatory teams will continue to
grow over the course of 2023 and 2024 to support the Group’s GMP
objectives. The board remains positive that the Group will secure the
desired GMP certification in 2024.
Finally, the investment in, and development of, the Group’s technology
platforms continues, with three further patent filings during the period. The
board considers 4basebio’s synthetic DNA platform as being unique in its
flexibility, thereby offering optimised and bespoke solutions for a range of
cell and gene therapy and vaccine applications.
Swift commercial progress is a key objective for the Group. Alongside this,
the board continues to believe that investing in the Group’s technology
platforms to further optimise and expand its product offering is central to
creating and realising shareholder value.
In summary, the board is pleased with the continued progress which has been
made during the first half of 2023. The Group is validating its commercial
proposition by way of customer revenues while at the same time it continues to
strengthen its market position with ongoing patent filings around its
technologies. The board considers the Group to be extremely well placed to
continue the commercial exploitation of its DNA and nanoparticle technology.
Business outlook
Over the second half of the financial year, the Group expects to continue to
secure new clients and recognise revenues from the sale of DNA and
Hermes™. As previously indicated, the Group will also continue investing
in its technologies and staff teams, so that ongoing expenditure will continue
to significantly exceed revenues, with the Group reporting a loss for the full
year, which will be funded by drawing on the loan facility with 2Invest AG.
Financial Review
The results for the period ended 30 June 2023 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 2023 (“H1 2023”) was £0.24 million (H1
2022: £0.15 million). The increase in revenues relates entirely to the sale
of DNA and Hermes™.
Cost of sales
Cost of sales in H1 2023 was £77k (H1 2022: £37k). Cost of sales reflects
a combination of amortisation on previously capitalised intangible assets
linked to kit sales and direct inputs for DNA production.
Selling and administration expenses
Selling, general and administrative expenses were a combined £1.9 million in
H1 2023 (H1 2022: £1.4 million) This includes non-cash items relating to
amortisation and depreciation of £190k and share options charges of £87k.
Otherwise, expenditure increased with additional headcount across business
development, legal and support services.
Operations expense
Operations expense was £0.6 million (H1 2022: £0.4 million) This reflects
the scaling of the manufacturing and quality assurance team between the two
periods.
Research and development
Overall research and development expenditure for H1 2023 was £1.8 million (H1
2022: £1.5 million), of which £0.3 million was capitalised in the period (H1
2022: £0.5 million). Overall expenditure increased due to the ongoing
expansion of the UK team. 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 £6.5 million at 30 June 2023 from £5.8
million at 31 December 2022; 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 £5.1 million at 30
June 2023 from £5.9 million at 31 December 2022, due primarily to cash
outflows during the first half of 2023. As a result, closing cash balances
at 30 June 2023 stood at £3.6 million (31 December 2022: £4.4 million).
Current liabilities were stable at £1.5 million at 30 June 2023 (31 December
2022: £1.5 million) with a modest decline in short term financial liabilities
offset by an increase in trade payables. Long term financial liabilities
reflect the drawdown on the 2Invest AG loan facility. As a result, overall
long term liabilities stood at £6.7 million as at 30 June 2023 (31 December
2022: £3.1 million). Other long term liabilities represent deferred grant
income in Spain.
Share Capital at both 30 June 2023 and 31 December 2022 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 £3.0 million for the period ended 30
June 2023 (period ended 30 June 2022: outflows of £2.5 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
statement.
Cash outflows from investing activities declined with the investment in
tangible fixed assets of £0.4 million for the period ended 30 June 2023
(period ended 30 June 2022: £1.0 million) relating to both operations and R&D
equipment. In addition, intangible assets including capitalised development
expenditure in 4basebio S.L.U. represented a cash outflow of £0.3 million
from £0.4 million in period ended 30 June 2022.
Cashflows from financing for the period ended 30 June 2023 reflect in
particular the drawdowns from 2Invest AG under the loan facility of £3.5
million, partially offset by repayments of Spanish softloans.
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
20 September 2023
Consolidated statement of profit or loss and other comprehensive income
for the six months ended 30 June 2023
in £‘000 Note Six months ended 30 June 2023 (unaudited) Six months ended 30 June 2022 (unaudited) Year ended 31 December 2022 (audited)
Revenues 238 152 268
Cost of goods sold (77) (37) (29)
Gross profit 161 115 239
Sales and marketing expenses (248) (97) (245)
Administration expenses (1,603) (1,306) (2,711)
Operations expense (596) (367) (928)
Research and non-capitalised development expenses (1,596) (1,024) (2,081)
Other operating expenses (18) (37) (181)
Other operating income 136 2 67
Loss from operations (3,764) (2,714) (5,840)
Finance expense (98) (16) (89)
Loss before tax (3,862) (2,730) (5,929)
Income tax credit / expense 4 307 300 779
Loss for the period (3,555) (2,430) (5,150)
Loss per share
* Basic and diluted (in £/share) 5 (0.29) (0.20) (0.42)
Items that may be reclassified to the income statement in subsequent periods
Exchange rate adjustments (243) 173 447
Total comprehensive income (3,798) (2,257) (4,703)
All of the loss for each period is from continuing operations.
Consolidated statement of financial position
30 June 2023
in £’000 Note 30 June 2023(unaudited) 31 December 2022 (audited)
Assets
Intangible assets 6 2,366 2,124
Property, plant and equipment 7 4,088 3,633
Other non-current assets 34 35
Non-current assets 6,488 5,792
Inventories 199 133
Trade receivables 60 54
Other current assets 1,251 1,359
Cash and cash equivalents 8 3,558 4,351
Current assets 5,068 5,897
Total assets 11,556 11,689
Liabilities
Financial liabilities (321) (415)
Trade payables (528) (490)
Other current liabilities (635) (613)
Current liabilities (1,484) (1,518)
Financial liabilities (6,551) (2,935)
Other liabilities (110) (116)
Non-current liabilities (6,661) (3,051)
Total liabilities (8,145) (4,569)
Net assets 3,411 7,120
Share capital 11,132 11,130
Share premium 706 706
Merger reserve 688 688
Capital reserve 13,394 13,307
Foreign exchange reserve (229) 14
Profit and loss reserve (22,280) (18,725)
Total Equity 9 3,411 7,120
Consolidated statement of changes in equity
for the six months ended 30 June 2023
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 - - - - - (5,150) (5,150)
Foreign Exchange difference arising on translation of 4basebio S.L.U. - - - - 447 - 447
Share based payments - - - 128 - - 128
Balance at 31 December 2022 (audited) 11,130 706 688 13,307 14 (18,725) 7,120
in £‘000] Share capital Share premium Merger reserve Capital reserve Foreign exchange Profit and loss reserve Total equity
Balance at 1 January 2023 (audited) 11,130 706 688 13,307 14 (18,725) 7,120
Loss for the year - - - - - (3,555) (3,555)
Foreign Exchange difference arising on translation of 4basebio S.L.U. - - (243) - (243)
Share option charge - - - 87 - - 87
Shares issued in period 2 - - - - - 2
Balance at 30 June 2023 (unaudited) 11,132 706 688 13,394 (229) (22,280) 3,411
Consolidated statement of cash flows
for the six months ended 30 June 2023
in £’000 30 June 2023(unaudited) 30 June 2022(unaudited) 31 December 2022 (audited)
Net loss for the period (3,555) (2,430) (5,150)
Adjustments to reconcile net loss for the period to net cashflows
Income taxes (307) (300) (779)
Interest charge 98 16 89
Depreciation of property, plant and equipment 315 226 404
Amortisation and impairment of intangible assets 16 13 27
Other non-cash items 87 57 136
Tax receipt 561 - 401
Working capital changes:
(Increase)/decrease in trade receivables and other current assets (104) (216) 140
Increase/(decrease) in trade payables and other current liabilities (28) 157 (2)
(Increase)/decrease in inventories (70) 10 30
Net Cash flows from operating activities (2,987) (2,467) (4,704)
Investments in property, plant and equipment and intangible assets (406) (969) (1,155)
Investments in capitalised development and intangible assets (330) (404) (786)
Cash flows from investing activities (736) (1,373) (1,941)
Net receipt/(payment) of loans 3,187 (272) 1,412
Interest paid (26) (17) (93)
Capital lease payments (49) (38) (75)
Proceeds of shares issue 2 - -
Cash flows from financing activities 3,114 (327) 1,244
Net change in cash and cash equivalents (609) (4,167) (5,401)
Exchange differences (184) 178 166
Cash and cash equivalents at the beginning of the period 4,351 9,586 9,586
Cash and cash equivalents at the end of the period 3,558 5,597 4,351
Notes to the financial statements
For the six months ended 30 June 20231. General information
4basebio PLC (the “Company” or “4basebio”) is registered in England
and Wales with company number 13519889.
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 (together, “the Group”). 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 &
gene therapies and vaccines.
The Company’s shares are traded on London Stock Exchange’s AIM market.
The international securities number (ISIN) number for its AIM traded shares is
GB00BLD8ZL39; its ticker symbol is 4bb.l.
The interim report was approved by the board of directors on 20 September
2023.
1. 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 2022.
The accounting policies applied in this half year report are consistent with
those in the financial statements for the year ended 31 December 2022, 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
4 of the Company's 2022 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.
1. 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 2023 31 December 2022 Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Euro 0.8583 0.8869 0.8764 0.8424 0.8524
1. Income taxes
The Group anticipates claiming R&D tax credits in both the UK and Spain in
relation to the year ended 31 December 2023. The quantum of such claims for
the first half of 2023 is estimated at £0.3 million (period ending 30 June
2022: £0.3 million).
1. Loss per share
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Numerator in £‘000
Loss for the period (3,555) (2,430) (5,150)
Denominator number of shares
Weighted average number of registered shares in circulation (ordinary shares) for calculating the undiluted earnings per share 12,318,987 12,317,473 12,317,473
Diluted and Undiluted earnings per share (£/share) (0.29) (0.20) (0.42)
1. Intangible assets
in £‘000 Development costs Licences Total
Cost or acquisition value
01 January 2022 2,390 200 2,590
Additions 499 287 786
Exchange differences 151 17 168
31 December 2022 3,040 504 3,544
01 January 2023 3,040 504 3,544
Additions 263 67 330
Exchange differences (104) (14) (118)
30 June 2023 3,199 557 3,756
Cumulative amortisation and impairment
01 January 2022 1,286 33 1,319
Amortisation 9 18 27
Exchange differences 72 2 74
31 December 2022 1,367 53 1,420
01 January 2023 1,367 53 1,420
Amortisation 3 14 17
Exchange differences (45) (2) (47)
30 June 2023 1,325 65 1,390
Net book value
31 December 2022 1,673 451 2,124
30 June 2023 1,874 492 2,366
1. 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 2022 882 997 635 751 3,265
Additions 1,152 43 143 - 1,338
Transfers 751 - - (751) -
Disposals - - (143) - (143)
Exchange differences 18 - 8 - 26
31 December 2022 2,803 1,040 643 - 4,486
01 January 2023 2,803 1,040 643 - 4,486
Additions 405 1 372 - 778
Exchange differences (14) (2) (3) - (19)
30 June 2023 3,194 1,039 1,012 - 5,245
Cumulative amortisation and impairment
01 January 2022 357 51 98 - 506
Depreciation 298 89 87 - 474
Disposals - - (143) - (143)
Exchange differences 15 - 1 - 16
31 December 2022 670 140 43 - 853
01 January 2023 670 140 43 - 853
Depreciation 230 25 60 - 315
Exchange differences (8) (2) (1) - (11)
30 June 2023 892 163 102 - 1,157
Net book value
31 December 2022 2,133 900 600 - 3,633
30 June 2023 2,302 876 910 - 4,088
1. Cash and cash equivalents
in £‘000 30 June 2023 31 December 2022
Bank balances and cash in hand 3,558 4,351
Cash and cash equivalents 3,558 4,351
1. Equity
On 14 February 2023, 2,000 shares were issued pursuant to an exercise of
employee share options. As a result, the share capital of 4basebio PLC as of
30 June 2023 amounts to a total of €12,319,473 divided into 12,319,473
shares of €1 (31 December 2022: €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 2023, 60,000 share options to subscribe for shares in the Company
were granted to employees with an average weighted exercise price of £5.55
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
24 to the 2022 financial statements, the awards were valued using a Black
Scholes valuation model.
An overall share-based payments charge of £86,601 has been expensed in the
period with a corresponding amount recognised in equity based on fair values
of between £0.31 and £2.38 per option, as at the dates of grant.
1. Legal matters
As disclosed in note 26 of the 2022 financial statements, the Company was
notified in March 2021 of legal action against it in Germany in relation to
the spin out process of 4basebio SE (now 4basebio PLC) dating to 2020. Since
30 June 2023, the directors understand this process is now nearing a
conclusion, with any fees and costs associated with this matter expected to be
below £100k.
Separately, the Company previously commenced legal proceedings against a
Spanish entity in relation to patent entitlement and breach of confidentiality
and is pursuing appropriate legal recourse. On 19 September 2023, the
Company received a counterclaim for breach of confidentiality.
1. Approval of the half year report
The half year report was approved by the board of directors and authorised for
publication on 20 September 2023.
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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