REG - Arecor Therapeutics - Interim Results for six months ended 30 June 2024
26/09/2024 07:00
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RNS Number : 7086F Arecor Therapeutics PLC 26 September 2024
Arecor Therapeutics plc
("Arecor", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
- AT278 insulin candidate demonstrates superiority to current best
insulins in a Phase I clinical trial in Type 2 diabetics with high BMI
- Expansion of diabetes and obesity pipeline, with oral GLP-1 receptor
agonist development initiated and partnership inked with Medtronic on
implantable insulin pumps
- AT220 generating growing royalties under a worldwide licensing
agreement
- Growing technology partnerships portfolio offering significant
future upside potential from licensing
- Dr. Helen Parris appointed Senior Vice President, Commercial and
General Manager, Tetris Pharma
- Successful placing, subscription and retail offer raises £6.4
million, including support from two international life science healthcare
investors, providing sound financial platform for further investment in Group
R&D and in Tetris Pharma to drive Ogluo® product sales
Cambridge, UK, 26 September 2024: Arecor Therapeutics plc (AIM: AREC), the
biopharmaceutical group advancing today's therapies to enable healthier lives,
today announces its interim results for the six months ended 30 June 2024.
Sarah Howell, Chief Executive Officer of Arecor, said: "During the period we
have significantly advanced and expanded our diabetes and obesity portfolio,
reporting very positive Phase I clinical results for AT278 demonstrating its
clear superiority and potential to improve outcomes and lower the burden for
people living with diabetes, and expanding our technology platform in the
development of the oral delivery of peptides, initially GLP-1, a potential
high value, high growth proposition. With multiple opportunities for value
creation, we continue to build momentum across the business. With a
strengthened financial position following our fundraise we are confident in
our ability to deliver against our strategy and excited about what can be
achieved through 2024 and beyond."
Operational highlights (including post period events)
• Significant progress in development of AT278 insulin candidate,
demonstrating superiority to current best insulins in a Phase I clinical trial
in Type 2 diabetics with high BMI
• Expansion of diabetes and obesity pipeline, with oral GLP-1
receptor agonist development initiated
• Entered a strategic research collaboration with Medtronic to
develop a novel formulation of insulin for implantable intraperitoneal insulin
pump delivery, fully funded by Medtronic
• Arestat™-enabled product, AT220, generating growing royalties
under a worldwide licensing agreement
• Growing technology partnerships portfolio offering significant
future upside potential from licensing, including expansion of ongoing
collaboration with pharmaceuticals division of one of the world's largest
chemicals marketing and pharmaceuticals companies, in addition to Medtronic
partnership
• Pipeline of future technology partnerships and licensing
opportunities
• Dr. Helen Parris joins Group as Senior Vice President, Commercial
and General Manager of Tetris Pharma Ltd
Financial highlights
• Revenue of £2.0 million (first half 2023 unaudited: £1.67
million)
• Total income of £2.03 million (first half 2023 unaudited: £2.33
million)
• Investment in R&D of £2.09 million (first half 2023
unaudited: £2.86 million)
• Loss after tax for the period of £4.64 million (first half 2023
unaudited: £4.53 million)
• Cash, cash equivalents and short-term investments of £2.53
million at 30 June 2024 (at 30 June 2023 unaudited: £6.61 million)
• Post period fundraise of £6.4 million (before expenses),
including support from two international life science healthcare investors, to
be employed towards delivering significant value inflection points including
investment in R&D to drive high-value partnerships and working capital
inventory investment for Ogluo®, and balance sheet strength
Outlook (H2 2024 and beyond)
• Continued strategic discussions around AT278 including evaluation
of a co-development opportunity
• Non-clinical pharmacokinetic proof of concept study in oral GLP-1
receptor agonist collaboration anticipated in 1H 2025 following initial
positive results from the current formulation development phase
• Pipeline of future technology partnerships and potential near term
licensing opportunities
• Focus on accelerating growth of Tetris Pharma initially in the UK
and Germany though timing of sales potentially impacted by recent supply chain
issues
• The Board continues to target achieving consensus analyst revenue
market expectations for 2024 though this remains subject to inherent
uncertainty, such as the quantum of royalties on sales of AT220, the magnitude
and timing of licensing transactions which are under active negotiation and
the pace of the growth of Ogluo® product sales through the remainder of the
year
Analyst conference call today
Dr Sarah Howell, Chief Executive Officer, will host a meeting and webcast for
analysts and investors at 9.30am UK time today. Join the webcast here
(https://www.lsegissuerservices.com/spark/ARECORTHERAPEUTICS/events/02a733d4-e997-42d8-a7c6-f7a421904dc9)
. A copy of the interim results presentation will be released later this
morning on the Company website at www.arecor.com (http://www.arecor.com) .
Please contact ICR Consilium for details on arecor@consilium-comms.com
(mailto:arecor@consilium-comms.com) / +44 203709 5700.
For more information, please contact:
Arecor Therapeutics plc www.arecor.com (http://www.arecor.com/)
Dr Sarah Howell, Chief Executive Officer Tel: +44 (0) 1223 426060
Email: info@arecor.com (mailto:sarah.howell@arecor.com)
Panmure Liberum Limited (NOMAD and Joint Broker) Tel: +44 (0) 20 7886 2500
Freddy Crossley, Emma Earl (Corporate Finance)
Rupert Dearden (Corporate Broking)
WG Partners LLP (Joint Broker) Tel: +44 (0)20 3705 9321
Nigel Barnes, Satheesh Nadarajah,
David Wilson, Claes Spang
ICR Consilium Tel: +44 (0) 20 3709 5700
Chris Gardner, David Daley, Lindsey Neville Email: arecor@consilium-comms.com (mailto:arecor@consilium-comms.com)
Notes to Editors
About Arecor
Arecor Therapeutics plc is a globally focused biopharmaceutical company
transforming patient care by bringing innovative medicines to market through
the enhancement of existing therapeutic products. By applying our innovative
proprietary technology platform, Arestat™, we are developing an internal
portfolio of proprietary products in diabetes and other indications, as well
as working with leading pharmaceutical and biotechnology companies to deliver
therapeutic products. The Arestat™ platform is supported by an extensive
patent portfolio.
For further details please see our website, www.arecor.com
(http://www.arecor.com)
Corporate overview
We continued to build strong momentum across the business during the first
half of 2024, supporting the growth of Arecor's diverse portfolio of both
proprietary in-house products and partnered programmes.
We further delivered on our diabetes strategy, generating additional clinical
data that strengthen the potential of our ultra-concentrated, ultra-rapid
acting insulin candidate, AT278, and established a development path forward
that provides the best opportunity to maximise value for shareholders. Within
our broader product portfolio, our oral glucagon-like peptide-1 (GLP-1)
receptor agonist programme presents opportunities within high value global
markets and offers the potential to further expand our technology platform to
the oral delivery of peptides, which is a key target for global pharmaceutical
companies.
Strong progress across Arecor's partnered portfolio highlights the value of
our Arestat™ technology in driving revenue growth in 2024 and beyond. These
partnerships are revenue-generating from inception and offer significant
upside potential from licensing, as illustrated by AT220, the first launched
product incorporating Arestat™ technology, which is providing Arecor with a
growing revenue stream from sales royalties, under a worldwide license. Sanofi
continues to progress the registrational enabling study for SAR447537,
formerly INBRX-101 (AT292), which incorporates an Arestat™ novel formulation
under license from Arecor.
Tetris Pharma, the Group's specialty pharmaceutical business, continues to
focus on its key diabetes product, Ogluo® (glucagon prefilled autoinjector
pen) and, with increased inventory enabled by the Group's fundraise in July
2024, the team is focused on accelerating commercial growth, initially in the
UK and Germany. There has been a recent, third-party supply chain issue with
respect to Ogluo® packaging, which is anticipated to lead to a near-term
delay in our enhanced ability to increase Ogluo® stock in the market. This is
being actively managed and is expected to be short term in nature.
The Group has been actively engaged in a search for a new Chief Financial
Officer (CFO) and had identified and progressed a preferred candidate. Due
to circumstances beyond Arecor's control that candidate is no longer
available. The process remains underway and the Group intends to
appoint an interim CFO as soon as possible.
Arecor has multiple opportunities for revenue growth and value creation for
shareholders and the £6.4 million gross raised in July 2024, including
support from two international life science healthcare investors, provides a
sound financial platform allowing Arecor to deliver significant valuation
inflexion points. The Group will continue to invest in Arecor research and
development, focused on areas in which our Arestat™ technology can deliver
transformational opportunities, including the development of enhanced
injectables through our portfolio of technology partnerships with leading
pharmaceutical and biotech companies, and innovation in the field of oral
delivery of peptides. We also continue to explore options, including strategic
co-development and non-dilutive funding, to progress a three-day insulin pump
study for AT278, which we believe is a major value accretion point, increasing
both the potential and value of future dealmaking.
Operational review (including post period events)
Proprietary product portfolio
During the period we made significant clinical progress within our diabetes
portfolio, announcing in May 2024 that the Group's ultra-concentrated,
ultra-rapid acting, insulin candidate, AT278, had met all primary and
secondary endpoints, and had also demonstrated superiority to NovoRapid® and
Humulin® R U-500, in a Phase I clinical trial in Type 2 diabetics with a high
body mass index (BMI).
Together with its superior profile in the earlier Phase I clinical study in
Type 1 diabetic patients, AT278 has demonstrated its ability to maintain a
fast and superior onset of action and glucose lowering profile irrespective of
diabetes type and BMI. Not only does it have the potential to significantly
improve post-prandial glucose control whilst lowering the burden for anybody
with diabetes who has a high daily insulin need, AT278 is set to be a powerful
catalyst in the development of next generation, truly miniaturised,
longer-wear insulin pumps, a key focus for patients, physicians and the
industry.
Earlier this month, the results from the latest study were presented at the
60th Annual Meeting of the European Association for the Study of Diabetes
(EASD) in Madrid. The abstract, which was selected as a late-breaking
presentation, was well received at the international congress, with
recognition of AT278's unique characteristics in the competitive field of
insulin analogues and the opportunity it presents to improve the future
management of diabetes.
As previously communicated, we believe the optimal value inflexion point for
AT278 and potential value for shareholders is likely to be best achieved
through conducting an insulin pump study, to provide sufficient data for
potential licensing partners. Arecor continues to explore funding options,
including but not limited to co-development partnerships, to conduct the
clinical pump study.
The Group's proprietary product portfolio provides significant opportunities
to further expand its proprietary pipeline of different therapeutic
injectables for partnering and is a continued focus of research and
development.
In March 2024, Arecor established a research collaboration with TRx
Biosciences, a drug development company applying novel lipid technology to the
oral delivery of challenging molecules, for the formulation development of an
oral GLP-1 receptor agonist product. The collaboration is progressing at pace,
with initial positive results from the current formulation development phase,
and we anticipate commencing non-clinical pharmacokinetic (PK) studies in 1H
2025.
With current treatment options mostly limited to injectable therapies, many
patients in need are unable to benefit from these highly effective treatments,
providing a significant market opportunity within the GLP-1 market, which is
forecast to exceed $100 billion by 2030. The collaboration with TRx
Biosciences provides scope for expansion to develop further oral peptide
products and combination approaches which may be key in the treatment of
obesity-related health conditions, as well as for other peptide products
targeting multiple therapeutic areas. If technically successful, Arecor
anticipates its oral GLP-1 receptor agonist product to be highly commercially
attractive to partners but, potentially of more significance, this would allow
expansion more broadly into oral delivery of peptides.
Partnership products
A robust portfolio of revenue-generating partnered programmes underscores the
strength of Arecor's Arestat™ technology and its value to our partners in
the development of enhanced formulations of their proprietary products which
would otherwise be unachievable.
Commercialisation by Arecor's partner of the first product incorporating
Arestat™ technology, AT220, commenced in November 2023 and the reach of that
product continues to grow within multiple major global markets. This is
providing Arecor with a revenue stream from royalties on AT220 sales under a
worldwide license, which is growing in line with the Group's expectations.
In May 2024, Sanofi announced the completion of its acquisition of Inhibrx's
assets and liabilities associated with SAR447537, formerly INBRX-101 (AT292),
an Arestat™ formulated optimised recombinant human AAT-Fc fusion protein,
for treatment of patients with emphysema due to alpha-1 antitrypsin
deficiency, which is under license to Sanofi. A registration-enabling clinical
trial of SAR447537 commenced in 2023. Sanofi's acquisition of Inhibrx further
endorses our Arestat™ platform and highlights the value of this novel
therapy for patients and its future commercial potential.
In May 2024 Arecor added to its portfolio of technology partnerships with
leading pharmaceutical and medtech companies by establishing a research
collaboration with Medtronic, the global leader in healthcare technology.
Through the partnership, Medtronic is funding Arecor's development of an
Arestat™ enabled novel, high concentration, thermostable insulin, for use by
Medtronic's Diabetes business in intraperitoneal therapy via an implantable
insulin pump system. This new insulin has the potential to bring significant
advancements in the current insulin treatment options for an extremely
vulnerable patient group who have limited options for controlling their
diabetes with traditional therapy.
An ongoing collaboration, which Arecor established in 2023, with the
pharmaceutical division of one of the world's largest chemicals marketing and
pharmaceuticals companies to develop a differentiated, RTU liquid formulation
of the company's product, AT351, was expanded in January 2024.
The Group anticipates further expansion of its technology partnerships
portfolio, alongside the conversion of new licenses from existing
partnerships, to continue driving revenue growth in 2024 and beyond.
Tetris Pharma
Tetris Pharma, the Group's specialty pharmaceutical business, continues to
focus on its key diabetes product, Ogluo® (glucagon prefilled autoinjector
pen). Dr. Helen Parris, who was appointed Senior Vice President, Commercial
and General Manager of Tetris Pharma in January 2024, is focused on ensuring
sufficient stock of Ogluo® to meet demand and implementing targeted awareness
campaigns to drive further demand and revenue growth.
While first half of 2024 sales were significantly tempered by the availability
of Ogluo® stock, the Group's fundraise in July 2024 has enabled increased
investment in this business to continue commercial expansion. Through the
remainder of 2024 and in 2025, Tetris Pharma is focused on implementing
targeted awareness campaigns in two key territories, the UK and Germany, where
the RTU glucagon market is estimated to be worth approximately £18 million
and £9.5 million respectively.
In recent weeks, Tetris Pharma has been informed of an issue related to the
sealed foil pouches that protect the product from light and moisture, in the
latest consignments of Ogluo® intended for Tetris Pharma. This is not related
to the quality of the autoinjector pen itself, however, it is likely that
there will be a short-term impact on supply in Germany and, potentially, in
the UK. The issue was identified at the packaging stage and does not impact
any product released to the market. Tetris is working closely with its
manufacturing partner to resolve the issue and to prevent any recurrence.
While there is expected to be some impact on Ogluo® product sales, any impact
on cash will be minimised by adjusting the timing of future inventory
investment accordingly, and cash will be proactively managed.
Intellectual property portfolio
Arecor's broad and robust global patent portfolio has >90 granted patents
across key territories protecting both the Arestat™ technology platform as
well as the enhanced versions of therapeutic medicines that we develop
leveraging Arestat™. That portfolio was bolstered in January 2024 by a
patent from the European Patent Office protecting novel formulations of the
Group's proprietary insulin products, AT278 and AT247, alongside patents of
similar scope that were granted in Australia, India and Mexico.
Finance
The consolidated financial results for the period ended 30 June 2024 reflect
the performance of Arecor Therapeutics plc and its trading subsidiaries;
Arecor Limited and Tetris Pharma Ltd.
Total income for the six months to 30 June 2024 of £2.03 million (Restated H1
2023: £2.33 million).
Other operating income for the period was £39,000 (Restated H1 2023:
£656,000). This decrease was due to the completion of a UK Government
research grant in the prior year and therefore not repeating in the current
period.
Investment in R&D of £2.09 million (H1 2023: £2.86 million) reflecting a
reduced R&D spend on clinical development in our proprietary diabetes
portfolio. Future R&D expenditure will increasingly focus on areas in
which the Group's Arestat™ technology can deliver transformational
opportunities, including within diabetes and the field of oral delivery of
peptides.
Sales, General and Administrative costs were £4.78 million (H1 2023: £4.38
million).
The total loss after tax for the six-month period was £4.64 million (H1 2023:
£4.53 million).
The Group ended H1 2024 with cash, cash equivalents and short-term investments
of £2.53 million (H1 2023: £6.61 million).
Post the period end, the Company raised £6.4 million (before expenses) from
new and existing shareholders. These funds will be made available to the
subsidiaries within the group to enable continuation of R&D activities and
growth of sales.
The Company continues to examine cost mitigation and manage cash as
efficiently as possible. A targeted reduction in headcount will deliver
annualised savings.
Summary and outlook
The Company remains confident in its strategy and opportunities for
significant valuation creation. Following the positive AT278 clinical readout,
we are continuing positive co-development discussions with potential partners
to maintain progress in our diabetes portfolio. With a strengthened cash
position, and multiple opportunities for valuation creation across the Group,
including the potentially transformational impact from enhanced delivery of
oral peptides, we look forward to building momentum through the rest of the
year and beyond.
Reflecting the Company's near-term pipeline of technology partnership
licensing opportunities and anticipated growth in both AT220 royalties and
sales of Ogluo®, we anticipate revenue growth over the full year. The Board
continues to target achieving consensus analyst revenue market expectations
for 2024 though this remains subject to inherent uncertainty, such as the
quantum of royalties on sales of AT220, the magnitude and timing of licensing
transactions which are under active negotiation, and the pace of the growth of
Ogluo® product sales through the remainder of the year.
Sarah Howell
Chief Executive Officer
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Consolidated Statement of Comprehensive Income
Notes Period ended 30 June 2024 Period ended 30 June 2023 (Re-stated) Year ended 31 December 2023
Unaudited Unaudited Audited
£000 £000 £000
Revenue 4 1,995 1,669 4,573
Other operating income 39 656 1,142
Total Income 2,034 2,325 5,715
Research and Development (2,087) (2,858) (5,977)
Sales, General and Administrative 5 (4,781) (4,375) (8,913)
Operating loss (4,834) (4,908) (9,175)
Other income - - 5
Finance income 55 164 284
Finance expense 7 (12) (10) (15)
Loss before tax (4,791) (4,754) (8,901)
Taxation 8 151 226 347
Loss for the period (4,640) (4,528) (8,554)
Basic and diluted loss per share (£) 9 (0.15) (0.15) (0.28)
There were no other items of comprehensive income during the periods under
review.
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Consolidated Statement of Financial Position
Notes 30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited Audited
£000 £000 £000
Assets
Non-current assets
Intangible Assets 1,743 1,815 1,812
Goodwill 1,484 1,484 1,484
Property, Plant and Equipment 694 720 834
Other receivables 69 48 77
3,990 4,067 4,207
Current assets
Trade and other receivables 10 2,753 4,671 3,189
Inventory 446 1,564 771
Current tax receivable 632 1,598 458
Cash and cash equivalents 11 2,529 6,610 5,093
Short term investments 11 16 1,619 1,659
6,376 16,062 11,170
Current liabilities
Trade and other payables 12 (4,551) (6,254) (4,903)
Lease liabilities (111) (116) (118)
Provisions (1) - (129)
(4,663) (6,370) (5,150)
Non-current liabilities
Lease liabilities (169) (51) (220)
Provisions (19) (28)
Deferred tax (437) (496) (452)
(625) (547) (700)
Net Assets 5,078 13,212 9,527
Equity 13
Share capital 306 306 306
Share premium account 28,976 28,976 28,976
Share-based payment reserve 1,638 1,143 1,518
Other reserves 11,455 11,455 11,455
Merger relief reserve 2,014 2014 2,014
Foreign exchange reserve 51 14 (20)
Retained earnings (39,362) (30,696) (34,722)
Shareholder's funds 5,078 13,212 9,527
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Consolidated Statement of Changes in Equity
Share-based payment reserve Merger relief reserve Other reserves Foreign exchange reserve Retained
losses
Share capital Share premium Total
equity
£000 £000 £000 £000 £000 £000 £000 £000
For the period ended 30 June 2024
Balance at 1 January 2023 306 28,976 893 2,014 11,455 (8) (26,181) 17,455
Loss for the period - - - - - - (4,528) (4,528)
Total comprehensive loss for the period - - - - - - (4,528) (4,528)
Transactions with owners:
Share-based compensation - - 263 - - - - 263
Reserve transfer - - (13) - - - 13 -
Foreign exchange movements - - - - - 22 - 22
Total transactions with owners - - 250 - - 22 13 285
Balance at 30 June 2023 (Unaudited) 306 28,976 1,143 2,014 11,455 14 (30,696) 13,212
For the period ended 31 December 2023
Balance at 1 July 2023 306 28,976 1,143 2,014 11,455 14 (30,696) 13,212
Loss for the period (4,026) (4,026)
Total comprehensive loss for the period - - - - - - (4,026) (4,026)
Transactions with owners
Share-based compensation - - 375 - - - - 375
Foreign exchange movements - - - - - (34) - (34)
Total transactions with owners - - 375 - - (34) - 341
Balance at 31 December 2023 (audited) 306 28,976 1,518 2,014 11,455 (20) (34,722) 9,527
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Consolidated Statement of Changes in Equity (continued)
Share-based payment reserve Merger relief reserve Other reserves Foreign exchange reserve Retained
losses
Share capital Share premium Total
equity
£000 £000 £000 £000 £000 £000 £000 £000
For the period ended 30 June 2024
Balance at 1 January 2024 306 28,976 1,518 2,014 11,455 (20) (34,722) 9,527
Loss for the period - - - - - - (4,640) (4,640)
Total comprehensive loss for the period - - - - - - (4,640) (4,640)
Transactions with owners:
Share-based compensation - - 120 - - - - 120
Reserve Transfer - - - - - - - -
Foreign Exchange movements - - - - - 71 - 71
Total transactions with owners - - 120 - - 71 - 191
Balance at 30 June 2024 (unaudited) 306 28,976 1,638 2,014 11,455 51 (39,362) 5,078
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Consolidated Statement of Cash Flows
Period ended 30 June 2024 Period ended 30 June 2023 (Re-stated) Year ended 31 December 2023
Unaudited Unaudited Audited
£000 £000 £000
Cash flow from operating activities
Loss before tax (4,791) (4,754) (8,901)
Finance income (55) (164) (284)
Finance costs 12 10 15
Share-based compensation 120 263 638
Depreciation 157 198 390
Amortisation 69 103 106
Foreign exchange movements 73 132 135
RDEC receivable (39) (47) (116)
(4,454) (4,259) (8,017)
Changes in working capital
(Increase)/ decrease in inventory 325 (433) 360
(Increase)/ decrease in trade and other receivables 444 (2,456) (1,003)
Increase/(decrease) in trade and other payables (352) 2,728 1,377
Decrease/(increase) in provisions (126) - 157
Tax received - - 1,285
291 (161) 2,176
Net cash used in operating activities (4,163) (4,420) (5,841)
Cash flow from investing activities
Purchase of property, plant & equipment (15) (73) (151)
Sale of property, plant & equipment - - 5
Transfer of short term investments 1,643 6,422 6,382
Interest received 55 164 284
Net cash used in investing activities 1,683 6,513 6,520
Cash flow from financing activities
Repayment of loans by Directors 10 - 38
Capital payments on lease liabilities (63) (114) (203)
Interest paid on lease liabilities (12) (10) (15)
Net cash (used in) / generated by financing activities (65) (124) (180)
Net (decrease) / increase in cash and cash equivalents (2,545) 1,969 499
Exchange (losses) / gains on cash and cash equivalents (19) (124) (171)
Cash and cash equivalents at beginning of period or financial year 5,093 4,765 4,765
Cash and cash equivalents at end of period or financial year 2,529 6,610 5,093
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Notes to the financial information
COMPANY INFORMATION
Arecor Therapeutics plc ("Arecor" or the "Company") is a public limited
company registered in England and Wales at Chesterford Research Park, Little
Chesterford, Saffron Walden, CB10 1XL with registered number 13331147.
The principal activity of the Company is to act as a holding company. The
Group has two wholly owned trading subsidiaries; Arecor Limited and Tetris
Pharma Ltd.
Tetris Pharma Ltd and its wholly owned subsidiary Tetris Pharma B.V were
acquired on 4th August 2022.
1. CHANGE IN ACCOUNTING POLICY AS RESTATEMENT OF PRIOR YEAR INTERIM
COMPARATIVE
The accounting policy relating to the treatment of Research and Development
Expenditure Credits (RDEC) has changed to align with recommended practice. The
change in accounting policy has been adopted during the year ended 31 December
2023, with the prior mid-year comparatives also restated.
Previously, both RDEC and the Small and Medium Entity (SME) R&D tax relief
scheme were reported in the Income Statement as Taxation. RDEC claims are now
reported gross of any tax due as other income. The corresponding corporation
tax payable on this income is also reflected within the taxation line. This
change has no impact on the statement of financial position, therefore an
additional statement of financial position showing the impact of this change,
as prescribed in IAS 1 paragraph 40A, is not required.
By enacting this change, a balance of £0.47 million is reported as Other
income for the period ended 30 June 2023. The restated prior year other income
balance has increased by £0.47 million with a corresponding reduction in the
taxation line. As the financial statements for the year ended 31 December 2023
were prepared on the revised basis, no restatement of this comparative is
required.
2. BASIS OF PREPARATION
The financial statements for the period ended 30 June 2024 incorporate the
results of Arecor Therapeutics plc and its trading subsidiaries. The
consolidated interim financial statements for the period to 30 June 2024 are
unaudited and were approved by the board of directors on 25 September 2024.
The consolidated interim financial statements have been prepared in accordance
with the AIM rules for Companies and should be read in conjunction with the
Group's Annual Report for the Year ended 31 December 2023. The financial
information has been prepared on the basis of IFRS that the Directors expect
to be applicable at 31 December 2024.
The financial information contained in these interim financial statements does
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006. These interim financial statements do not include all of the
information and disclosures required in the annual financial statements. The
financial information for the six months ended 30 June 2024 and 30 June 2023
is unaudited.
Financial statements for year ended 31 December 2023 have been filed with the
Registrar of Companies for Arecor Therapeutics plc (Company registration
number 13331147). The audit report for this period, previously filed, was
unmodified.
All intra-Group transactions, balances, income and expenses have been
eliminated in full on consolidation.
The financial information is presented in Sterling, which is the functional
currency of the Group and has been rounded to the nearest £000.
3. PRINCIPAL ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with the
accounting policies set out in the audited financial statements for the period
ended 31 December 2023 and IFRS. There have been no changes to the accounting
policies or the application of the accounting standards during the period of
review.
a) Going Concern
The Directors have reviewed current cash and short- term investments together
with forecast receivables to support forecast operating expenditure and
planned investment in R&D. Sensitivities included the impact of reduced
receivables and mitigating actions. The review indicated that in potential
downside scenarios, cash flow forecasts extended to a period beyond 12 months
from the date of approval of the consolidated interim results.
In reaching their decision to prepare these unaudited interim financial
statements on a going concern basis, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing these
unaudited interim financial statements.
4. REVENUE AND OPERATING SEGMENTS
Period ended 30 June 2024 Period ended 30 June 2023 Year ended 31 December 2023
£000 £000 £000
UK 1,267 1,190 2,893
The Netherlands 191 - -
Germany 95 79 332
Switzerland 203 77 488
Italy 54 - 274
Rest of Europe - 45 -
USA 185 248 556
India - 30 30
Total revenue 1,995 1,669 4,573
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision makers. Information
reported includes revenue by project, expenditure by type and department,
cashflows and EBITDA for the Group.
The Board of Directors has been identified as the chief operating decision
makers, who are responsible for allocating resources, assessing the
performance of the operating segment and making strategic decisions.
Accordingly, the Directors consider there to be a single operating segment.
Period ended 30 June 2024 Period ended 30 June 2023 Year ended 31 December 2023
£000 £000 £000
Formulation development projects 383 342 923
Milestones from licence agreements - 108 683
Royalties 203 - 26
Total revenue recognised from contracts with customers 586 450 1,632
Sale of pharmaceuticals 1,409 1,219 2,941
Total revenue 1,995 1,669 4,573
Revenue from formulation development projects has been recognised as the
performance obligations set out in agreements are satisfied over time.
Revenue from Milestones defined in license agreements has been recognised when
a milestone is achieved.
Sales of pharmaceuticals are product sales which have been recognised as the
rights and obligations pertaining to those items are transferred to the buyer.
5. SALES, GENERAL AND ADMINISTRATIVE COSTS
Operating expenditure which is not considered as Research and Development is
treated as Sales, General and Administrative costs. This includes Finance, HR,
Administrative and sales and marketing and Business Development teams,
building facilities, sale of pharmaceutical products and costs relating to the
Board of Directors.
6. SHARE BASED COMPENSATION
The Company operates an All-Employee Share Option Plan (AESOP) and grants
share options to eligible employees. The options vest over time.
The Company's Long Term Incentive Plan (LTIP) is principally used to grant
options to Executive directors and senior management. The LTIP options vest
after three years subject to meeting performance criteria as defined in the
option agreement. These can be a combination of both operational objectives
and share price performance compared to a benchmark. These performance
conditions are approved by the Board on each occasion prior to the grant of
the options. Ordinary shares acquired on exercise of the LTIP options are
subject to a holding period of a minimum of one year from the date of vesting.
The movement in share options in the period was as follows:
Number of Options
Balance at 1 January 2023 1,627,803
AESOP options granted 86,250
LTIP options granted 190,000
AESOP options exercised (7,471)
Options lapsed (235,167)
Balance at 30 June 2023 1,661,415
AESOP options granted -
LTIP options granted -
AESOP options exercised (1,332)
Options lapsed (1,750)
Balance at 31 December 2023 1,658,333
AESOP options granted 382,250
LTIP options granted 540,000
AESOP options exercised -
Options lapsed (695,333)
Balance at 30 June 2024 1,885,250
Shared Based Payment charges to the Statement of Comprehensive Income £000
Period to June 2024 118
Period to June 2023 263
Year to December 2023 638
7. FINANCE EXPENSES
In the period ended 30 June 2024, the finance expenses of £12,000 were
interest costs on finance leases (period ended 30 June 2023: £10,000).
8. TAXATION
Period ended 30 June 2024 Period ended 30 June 2023 Year ended 31 December 2023
£000 £000 £000
R&D Tax credit receivable 151 226 458
Total taxation 151 226 458
On 1 April 2023 the UK Government's rates of tax relief for loss making SME
R&D tax credits decreased from 14.5% to 10%. On the same date, the tax
relief for the RDEC scheme increased from 13% to 20%. The Group utilises both
schemes and has calculated the balance receivable based on the applicable
rates for expenditure incurred before and after the date of transition.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to
ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period.
Given the Company's reported loss for the periods and financial year, share
options were not taken into account when determining the weighted average
number of ordinary shares in issue during the year as they would be
anti-dilutive, and therefore the basic and diluted loss per share are the
same.
Basic and diluted loss per share
Period ended Period ended Year ended
30 June 2024 30 June 31 December 2023
2023
Loss for the period (£000) (4,640) (4,528) (8,554)
Weighted average number of ordinary shares (number) 30,626,986 30,619,091 30,622,622
Loss per share from continuing operations (£ per share) (0.15) (0.15) (0.28)
10. TRADE AND OTHER RECEIVABLES
Current Assets
Period ended 30 June 2024 Period ended 30 June 2023 Year ended 31 December 2023
£000 £000 £000
Trade receivables 1,625 3,688 2,268
Other receivables 91 175 102
Amounts receivable from employees - - 129
Accrued income 136 - 87
Grant receivables - 423 280
Prepayments 902 385 323
Total Trade and other receivables 2,753 4,671 3,189
Non-Current Assets
Period ended 30 June 2024 Period ended 30 June 2023 Year ended 31 December 2023
£000 £000 £000
Other receivables 69 48 77
Total Trade and other receivables 69 48 77
Trade receivables for pharmaceutical products are gross of rebates payable to
wholesalers. Rebates are reported in Trade payables and accruals.
11. CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS
Period ended 30 June 2024 Period ended 30 June 2023 Year ended 31 December 2023
£000 £000 £000
Cash and cash equivalents 2,529 6,610 5,093
Short term investments 16 1,619 1,659
Total cash, cash equivalents and short term investments 2,545 8,229 6,752
Short term investments relate to balances held in either fixed term accounts
with a six-month maturity or notice accounts with a 95 day notice period.
All significant cash, cash equivalents and short-term investments are
deposited in the UK with large international banks.
12. TRADE AND OTHER PAYABLES
Current liabilities
Period ended 30 June 2024 Period ended 30 June 2023 Year ended 31 December 2023
£000 £000 £000
Trade payables 2,268 2,779 2,246
Other tax and social security 159 123 100
Other creditors 245 1,172 192
Contract liabilities 202 682 232
Accruals 1,677 1,498 2,133
Total Trade and other payables 4,551 6,254 4,903
The growth in Trade payables and Accruals include rebate amounts due to
wholesalers on the sales of pharmaceutical products by Tetris Pharma Ltd.
Other creditors of £1.2 million includes VAT payable and stock provisions
which were nil in the prior period ended 30 June 2022.
13. EQUITY
Share Capital
At 30 June 2024 At 30 June 2023 At 31 December 2023
Number Number Number
Allotted, called up and fully paid
Ordinary shares of £0.01 30,626,986 30,625,654 30,626,986
Total share capital 30,626,986 30,625,654 30,626,986
At 30 June 2024 At 30 June 2023 At 31 December 2023
£'000 £'000 £'000
Allotted, called up and fully paid
Ordinary shares of £0.01 306 306 306
Total share capital 306 306 306
14. EVENTS AFTER THE BALANCE SHEET DATE
In accordance with a Sale and Purchase Agreement dated 1(st) August 2022, the
acquisition of Tetris Pharma Ltd included contingent consideration of three
earn out payments, which may become payable on the first, second and third
anniversary following completion. The second earn out payment was subject to
Tetris Pharma Ltd achieving low-double-digit million-pound net sales and a low
single-digit million-pound EBITDA profit in the period 13-24 months following
completion. Earn out accounts were prepared by an independent accountant and
have been provided to the previous shareholders of Tetris Pharma Ltd. The
earn out accounts determined that the first earn out target was not achieved
and therefore contingent consideration of £1,500,000 for the second earn out
period was not payable.
On 8 August 2024, Arecor Therapeutics successfully completed a fundraising
round of £6.4 million (before expenses) from new and existing shareholders.
These funds will be made available to the subsidiaries within the group to
enable continuation of R&D activities and growth of sales.
15. COPIES OF THE INTERIM REPORT
Copies of the consolidated interim financial statements are available to the
public free of charge from the Company at Chesterford Research Park, Little
Chesterford, Saffron Walden, CB10 1 XL during normal business hours for 14
days from today.
Copies are also available on the Company's website at www.arecor.com.
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