REG - Arecor Therapeutics - Unaudited Preliminary Results for 2022
20/04/2023 07:15
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RNS Number : 8872W Arecor Therapeutics PLC 20 April 2023
Arecor Therapeutics plc
("Arecor", the "Company" or the "Group")
UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
Significant clinical progress with positive Phase I clinical results for both
lead products, AT278 and AT247, in diabetes franchise
Expansion of Partnership Portfolio
Extensive IP portfolio underpinning proprietary Arestat™ platform
Cambridge, UK, 20 April 2023: Arecor Therapeutics plc (AIM: AREC), a globally
focused biopharmaceutical company advancing today's therapies to enable
healthier lives, today announces its unaudited preliminary results for the
year ended 31 December 2022. The Annual Report and Accounts for the year ended
31 December 2022, will be posted to shareholders in due course together with
the notice of the 2023 Annual General Meeting.
Sarah Howell, Chief Executive Officer of Arecor, said: "2022 was a year of
delivery and execution of our strategy. As clinical development of the two
lead insulin candidates in our Diabetes franchise rapidly advances, 2023
should provide further evidence of their potential to enable a new frontier in
diabetes management. We continue to build a strong pipeline of potential
collaborations and future revenue opportunities to grow our portfolio of
partnerships. In 2023 we anticipate the first product incorporating the
Arestat(TM) technology, AT220, to be marketed by our partner under a royalty
generating license agreement in a multi-billion market. The commercial
roll-out of Ogluo®, Tetris Pharma's key diabetes product, will accelerate
across key European territories meeting a key patient need for people living
with diabetes at risk of severe hypoglycaemia."
Operational Highlights (including post-period events):
· AT247 - Positive results from US Phase I clinical trial of ultra-rapid
acting insulin, AT247
- Delivered by continuous subcutaneous infusion over 3 days via an insulin
pump
- Reinforces AT247 potential to enable a fully closed loop artificial pancreas
system
· AT278 - Initiation of second Phase I trial of ultra-rapid acting,
ultra-concentrated AT278 in people with Type 2 diabetes, with first patient
dosed in Q1 2023
· Specialty Hospital - Ready-to-use (RTU) injectable medicine AT307
transferred to Hikma
- Arestat™ enabled product to deliver safe, fast and effective treatment
options for patients
- Transferred to Hikma for further development, triggering license milestone
for Arecor
· Partnership portfolio further strengthened
- Two new collaborations with a top five global pharmaceutical company and
pharmaceutical division of one of world's largest chemicals marketing and
pharmaceuticals companies
· Acceleration of commercially driven strategy with acquisition of Tetris
Pharma Ltd
- £6 million Placing to add key commercial diabetes product, Ogluo®, and
build out Arecor's Specialty Hospital Products franchise with scalable sales,
marketing and distribution platform
· Appointment of Dr. Manjit Rahelu as Chief Business Officer
Financial Highlights:
· Total Income of £3.5 million (2021: £1.8 million)
· Investment in R&D of £8.6 million (2021: £5.4 million)
· Loss after tax for the year of £9.3 million (2021: £6.2 million)
· Cash and short-term investments of £12.8 million at 31 December 2022
(2021: £18.3 million)
· Successful placing of £6.0 million (before expenses)
· Acquisition of Tetris Pharma Ltd
Analyst meeting and webcast today
Dr Sarah Howell, Chief Executive Officer, and Susan Lowther, Chief Financial
Officer, will host a meeting and webcast for analysts and investors at 11.00
am UK time today. Join the webcast here
(https://www.lsegissuerservices.com/spark/ARECORTHERAPEUTICS/events/2ebd509b-0646-46c2-bce0-e5ce9d444590)
. A copy of the final results presentation will be released later this morning
on the Company website at www.arecor.com. Please contact Consilium Strategic
Communications for details on 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)
Susan Lowther, Chief Financial Officer Tel: +44 (0) 1223 426060
Email: info@arecor.com (mailto:info@arecor.com)
Mo Noonan, Communications Tel: +44 (0) 7876 444977
Email: mo.noonan@arecor.com (mailto:mo.noonan@arecor.com)
Panmure Gordon (UK) Limited (NOMAD and Broker) Tel: +44 (0) 20 7886 2500
Freddy Crossley, Emma Earl (Corporate Finance)
Rupert Dearden (Corporate Broking)
Consilium Strategic Communications
Chris Gardner, David Daley, Lindsey Neville Tel: +44 (0) 20 3709 5700
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 formulation 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 enhanced formulations of their 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)
This announcement contains inside information for the purposes of the retained
UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").
·
Chair's statement
Growing Arecor's reputation and reach
"As Arecor's reputation for innovative drug development continues to build, we
have demonstrated our strengths both in partnership with leading
pharmaceutical companies and through progress with our own insulin portfolio.
We will continue to build on that work in the coming year to cement our status
and expand our reach within the industry."
Celebrating its first full year as a quoted company, Arecor continued to make
strong progress in 2022. Against a background of major global challenges
impacting the financial markets, we focused on our strategy; delivering
clinical data for one of our lead diabetes programmes, bolstering our
portfolio of blue-chip partners and successfully completing a £6 million
Placing to acquire Tetris Pharma, a complementary commercial acquisition in
the specialty hospital products field.
2022 was a year characterised by macroeconomic turmoil and geopolitical events
that impacted financial markets and affected all segments of industry
including the pharmaceutical sector. Whilst this has had only a limited impact
on the day-to-day business through rising costs for companies such as Arecor,
the resultant ripples has impacted the way that the industry connects and
works together.
Against this backdrop we are very encouraged by how much progress Arecor has
made. Our new partnerships with leading pharmaceutical companies only
strengthen our reputation as an innovator that pharma and biopharma can work
with and clearly demonstrates the strength and relevance of our platform and
intellectual property. The progress of our partnered pipeline products and the
achievement of licence milestones further exemplifies this success.
Within our own portfolio of insulin-based products notably, AT278 and AT247,
we have continued to build out excellent clinical data sets, which is key to
demonstrating where they best fit within the clinical landscape and with
potential commercial partners. We successfully completed a further Phase I
clinical trial in diabetes for AT247, an insulin candidate, which clearly
showed that it possesses characteristics that facilitate a fully closed loop
artificial pancreas, with optimal automated delivery of insulin. This will
enable far more effective disease management, making living with the disease
easier and less burdensome for people with Type I diabetes.
Furthermore, we closed the year with initiation of a second Phase I clinical
trial for AT278, an ultra-rapid acting, ultra-concentrated (500 U/mL) insulin
candidate, in Type 2 diabetic patients. This head-to-head study is important
to demonstrate AT278's potential as a single injection treatment for patients
who need higher doses of insulin. Its highly concentrated formulation also
has the potential to advance the miniaturisation of delivery devices. With
~537 million people living with diabetes worldwide and ~64 million requiring
insulin daily, finding solutions to improve the lives of people living with
diabetes is more critical than ever.
Diabetes and metabolic disorders are principally treated by endocrinologists,
a group of clinical specialists that Arecor already interacts closely with in
the development of its diabetes franchise. In August, we successfully raised
£6 million to acquire Tetris Pharma, providing Arecor with a marketing, sales
and distribution capability focused on injectable specialty products across
the UK and Europe. The lead product Ogluo®, a treatment for severe
hypoglycaemia is prescribed to diabetics by endocrinologists and so is
complementary to our therapeutic focus. This acquisition provides Arecor
with greater optionality in the future both for our specialty products
franchise and potential partner products.
Looking forward, 2023 will build on the solid platform we have produced in
2022 and will be a year of accelerated delivery across the key areas of our
business. One critical aspect of this will be the way we work with both
commercial and technology partners. Building successful partnerships is of
great importance to Arecor. It requires two-way commitment and engagement, and
I would like to thank our partners for their contribution in making our
current and future potential partnerships succeed. The success of our partners
with products incorporating our technology is our success.
I would also like to thank our shareholders for their continued belief in our
vision, strategy and team. Their support has enabled us to grow Arecor into
a successful UK biopharmaceutical company on the international stage and it is
pleasing to shine a light on examples of British science and expertise that
maintain the UK's strong reputation within the industry.
Finally, the Company would not be where it is today without the hard work and
commitment of our employees. 2023 shows no sign of slowing for Arecor. Our
focus is ensuring both scientific and commercial delivery across our business
pillars; a focus that will drive value for our shareholders.
Andrew Richards
Non-Executive Chair
Chief Executive Officer's review
Significant momentum across internal and partnered portfolio
"Arecor's ambition is to build a significant self-sustaining biopharmaceutical
company and in 2022 we made excellent progress across all aspects of our
business, advancing our lead diabetes clinical development programmes,
delivering on our partnerships portfolio and accelerating our commercially
driven strategy."
Our vision is to transform patient care through the enhancement of existing
therapeutic products. By applying our innovative proprietary formulation
technology platform, Arestat(TM) we are developing novel formulations of
medicines with enhanced properties that genuinely transform patient care,
improving outcomes and bringing safer, more effective and affordable
treatments for the benefit of patients and healthcare systems.
Combining our extensive know-how and expertise alongside the power of
Arestat(TM), allows us to deliver differentiated, patent-protected products,
bringing benefits to patients and achieving a commercial advantage in valuable
and often competitive fields of medicine. The progress in 2022 across our
internal portfolio of proprietary products and within our partnered
programmes, reflects the strength and broad applicability of our formulation
technology and expertise.
Within our Diabetes franchise, we made excellent progress in the continued
clinical development of our two lead insulin candidates, AT247 and AT278. The
latest data from our clinical trials continue to reinforce our belief in the
value of these products and that they offer the potential to simplify and
improve blood glucose control for people living with diabetes and could enable
the development of next generation miniaturised insulin delivery systems and a
fully closed loop/artificial pancreas system - the Holy Grail of diabetes
management.
The steady growth in demand for ready-to-use (RTU) and ready-to-administer
(RTA) hospital care medicines that are administered by healthcare
professionals, underlines the significant opportunity for Arecor within our
Specialty Hospital Products franchise. The transfer of our novel RTU
therapeutic to Hikma, which triggered the payment of a license milestone to
Arecor, was a significant advancement for the programme and for our Company -
important validation from a major pharmaceutical company of the potential of
our Arestat(TM) technology to deliver difficult to achieve, but important RTU
medicines, which are becoming increasingly desirable for fast, safe and
effective treatment of patients at the point of care.
The acquisition of Tetris Pharma, and lead product Ogluo®, brought an
opportunity to accelerate our commercially driven strategy. Now a subsidiary
of Arecor, this business provides us with a revenue-generating sales,
marketing and distribution platform which complements our Specialty Hospital
Products franchise and adds the optionality of taking selected products to
market in the UK and Europe, in addition to our already proven partnering
strategy. Its targeting of endocrinologists with Ogluo® provides a valuable
link for Arecor to the clinical community most closely engaged with diabetes
patients.
In April 2023, we were delighted to welcome Dr. Manjit Rahelu as Chief
Business Officer. Manjit brings extensive experience nurturing the growth of
companies and driving deals to commercial success, which will be invaluable to
Arecor as we deliver on our key strategic goals, leveraging the potential of
our Arestat(TM) platform technology, advancing our pipeline of proprietary
products and further expanding our partnered portfolio.
Operational review
Diabetes: Clinical progress with faster acting and more concentrated faster
acting insulins, AT247 and AT278. During the year we made further significant
progress advancing our proprietary diabetes focused portfolio through clinical
development. Our Arestat(TM) enabled novel formulations of insulin are
designed to accelerate insulin absorption post injection, enabling more
precise and effective management of blood glucose levels for people living
with diabetes, particularly around difficult to manage mealtimes.
In 2022, under an IND we undertook a US Phase I clinical trial of our
ultra-rapid acting insulin candidate, AT247, delivered by continuous
subcutaneous infusion and designed to further demonstrate the superiority of
AT247 compared to current best-in-class insulins available to patients
today. Results from that trial clearly demonstrate faster insulin absorption
than the currently available, gold standard, rapid acting insulins,
NovoRapid® and Fiasp®, and reinforce the potential of AT247 to enable a
fully closed loop artificial pancreas system, a potentially life changing
treatment option for people living with diabetes. The successful completion of
this first trial to investigate the potential of AT247 when delivered by
subcutaneous infusion via an insulin pump over a period of 3 days, was an
important milestone for Arecor. With a superior PK profile and promising PD
results, the data support the potential that AT247 can enable even more
effective disease management for people with Type I diabetes using fully
automated delivery of insulin via a pump in closed loop mode.
Both clinical trial and real-world evidence show that closed loop systems are
more effective in keeping blood glucose in a healthy range than standard care,
which entails regular measurement of blood glucose level by the patient.
This fact, in addition to patient testimony describing the reduced mental load
in the management of their diabetes afforded by such systems, has led to a
recommendation by NICE that there should be wider access to closed loop
technology for people with Type 1 Diabetes.
The availability of AT247 with its ultra-rapid acting PK/PD profile will be a
key component in the move from the currently available systems to those that
are fully automatic and require limited input from patients, allowing them to
'fully switch off' from worrying about dipping into hypoglycaemia.
We have also initiated a second Phase I clinical trial of AT278, our
ultra-rapid acting, ultra-concentrated insulin candidate, in Type 2 diabetic
patients, illustrating the rapid progress we are making in our clinical
development programmes. This candidate has a very promising profile, already
demonstrated in our previous study, which delivered results at the high end of
expectations. In 2022 we took these results to key scientific conferences,
showcasing our research to the diabetes research community. At both the
International Advanced Technologies and Treatments for Diabetes (ATTD) meeting
and the Annual Meeting of the European Association for the Study of Diabetes
(EASD), the data were well received. A key opinion leader webinar, entitled
"The Need for Concentrated and Rapid Acting Insulin Treatments in Diabetes
Care", which we hosted following the ATTD meeting, brought together four
world-class experts in the field of diabetes care to discuss the AT278
clinical data and highlighted the clear clinical and patient need.
When speaking about the unmet need for concentrated, rapid acting insulin in
the Arecor KOL webinar, Wendy Lane, MD, highlighted the potential benefits to
patients with the use of AT278 when delivered by either pen or pump. Patient
comfort and convenience are likely to be improved with the smaller injection
volume needed and the ultimate development of smaller, longer wear-time
devices that concentrated insulin will allow. Importantly, these benefits
would come with no compromise to the known clinical benefits of better blood
glucose control and outcomes for patients when using fast acting insulin
around mealtimes. Currently there are no highly concentrated rapid acting
insulins available for these patients.
AT278 has the potential to disrupt the market for insulin treatment as the
first concentrated, yet very rapid acting insulin, and thereby become the gold
standard insulin for the growing population of people with diabetes with high
daily insulin needs. It has the potential to be a critical enabler in the
development of next generation miniaturised insulin delivery systems that are
beginning to dominate segments of the market. We look forward to generating
further data to support this candidate's profile, with results from our second
phase I clinical trial anticipated in Q4 2023. We believe that further
investment in the diabetes programme will take the products to a significantly
higher value inflexion prior to partnering.
Advancing specialty hospital proprietary portfolio
Our Specialty Hospital Products franchise is developing medicines that are
administered within the hospital setting by health care professionals,
particularly during the treatment of serious infections, cancer and emergency
care. Leveraging our Arestat(TM) technology, we are developing RTU and RTA
medicines within this franchise, which provide significant benefits through
point of care use including safety benefits through reduced risk of
inappropriate dosing and efficiency benefits through avoiding the need for
pharmacy reconstitution.
Under a co-development agreement announced in January 2020 with Hikma, and
subsequently expanded in October 2020, we have been responsible for optimising
novel formulations of two products using our Arestat(TM) technology platform.
In 2022 we successfully completed the application of this technology platform
for both products, and in January 2023, Hikma made the very positive decision
to take on full responsibility for the further development and
commercialisation activities for one of those products, AT307, a RTU
injectable hospital medicine. Hikma will now further develop this product
and seek approval under the U.S. Food and Drug Administration's 505(b)(2)
regulatory pathway. Hikma will generate all data required for regulatory
submission and approval in its territories, including the United States. Under
the terms of our royalty-based agreement with Hikma, this transfer also
triggered a milestone payment to Arecor, following the upfront payment to
Arecor in October 2020 when the co-development and license agreement was
signed.
The transfer of AT307 was a significant milestone for Arecor and a clear
demonstration of the value that our expertise and technology can bring to
leading pharmaceutical companies developing innovative products to improve
patient care. It is also an important further step in bringing this important
medicine to patients, through Hikma's commitment to the product's further
development and future commercialisation.
Following a product portfolio review, Hikma also made the decision to
deprioritise AT282, the second RTU medicine within our co-development and
licensing agreement. All rights to this product have been returned to Arecor
and with the strong data package generated and Arecor owned patents, we are
now assessing options for gaining a new commercial partner for this
potentially important product.
Expansion of revenue generating partnership deals
The year brought further validation of the scientific strength of our
Arestat™ technology platform and the value of our offering to leading
healthcare companies, with the addition of two new technology partnerships to
our roster of collaborations. Working with our partners we are applying our
Arestat(TM) platform technology to develop enhanced formulations of our
partners' proprietary products, with superior target product profiles.
In June 2022, we entered into an exclusive formulation study collaboration
with a top 5 global pharmaceutical company to develop improved, stable, high
concentration liquid formulations of its proprietary products.
In November 2022, we entered an exclusive formulation collaboration with the
pharmaceutical division of one of the world's largest chemicals marketing and
pharmaceutical companies, to develop a differentiated, stable, liquid drug
product for intravenous RTU administration. The new product formulation
supports safe medication practices and operational efficiency by eliminating
the need for reconstitution.
In February 2023, we entered into an additional formulation study agreement
with an existing top five global pharmaceutical partner, building on a
collaboration formed in 2022, to develop improved, stable, high concentration,
liquid formulations of its proprietary product
These partners who gain access to our technology, fund the development work
and have the option to acquire the rights to the new proprietary formulation
and associated Intellectual Property (IP) under a technology licensing model
to further develop and commercialise the product.
Partnerships provide near-term revenues as they typically involve upfront and
milestone payments and, if successful, they provide significant future
recurring revenue upside potential from a royalty stream or equivalent. These
also provide continued learnings on where our technology can be applied.
Among our three licensed programmes, we continue to expect the first partnered
product incorporating the Arestat™ technology, AT220, to be on the market
within 2023. This is our most advanced partnered programme and is a novel and
differentiated formulation of a product licensed to a global pharmaceutical
company, targeting a multi-billion market opportunity. Arecor will receive
development milestones and royalties on sales from continued development and
commercialisation.
These partnerships with leading biotech and biopharma companies validate the
need and demonstrate the opportunity for the Arestat™ platform and are
testament to our world-leading expertise and innovation in formulation
science.
Building a robust intellectual property portfolio
Throughout the year we have continued to invest in building a strong patent
portfolio to protect our Arestat™ technology platform and proprietary
pipeline products. The Group's IP portfolio currently comprises 36 patent
families, including >75 granted patents in Europe, the US and in other key
territories. The strength of our patents are a key valuable asset in licensing
negotiations.
In 2022 we further strengthened the portfolio with six significant patents
granted and a further three post-period, protecting our proprietary Arestat™
technology and novel formulations of existing therapeutic medicines with
enhanced features. The European Patent Office granted a patent (EP3496734B)
protecting novel compositions of insulin glargine with improved
thermostability and two patents (EP3592383B1 and EP3592385B1) protecting our
novel formulations of high-concentration adalimumab; the United States Patent
and Trademark Office granted a patent (US11278624) protecting novel
formulations of AT247 and AT278, as did the Japan Patent Office (JP7145849).
The same patent was also granted in South Korea.
In February 2023, the Indian Patent Office granted a patent (IN412485)
protecting novel formulations of the Group's proprietary insulin products,
AT247 and AT278, until 2038. In addition, the United States Patent and
Trademark Office has granted two patents (US11534402 and US11534403)
protecting the Group's novel formulations of high-concentration adalimumab
until 2038.
These are important additions to our comprehensive IP strategy and provide
further proof of the potential of our Arestat(TM) technology in the
development of enhanced products.
Acquisition of Tetris Pharma and initiation of European roll-out of Ogluo®
2022 provided an opportunity to further build on our ambition to become a
significant self-sustaining biopharmaceutical company through the successful
£6 million Placing to acquire Tetris Pharma. Tetris Pharma is a strong,
strategic fit for the Group, giving Arecor a commercial stage speciality
pharmaceutical business with a marketing and distribution platform across
the UK and European markets with a core focus on niche injectable and
hospital-based prescription products. That platform has the potential to add
future optionality to our Specialty Hospital Products franchise by providing
the capability to take select products to market in
the UK and Europe, where appropriate. While there is no change to the
Group's overall strategy, we believe Arecor is stronger as a result of this
complementary acquisition. We have gained a key commercial diabetes product
for our portfolio, with Ogluo®, a ready-to-use glucagon auto-injector pen to
treat severe hypoglycaemia, a key patient need. The acquisition also
complements Arecor's existing Specialty Hospital Products franchise, offering
the potential to accelerate significant revenue growth for the Company.
Following an earlier UK launch, the Tetris Pharma team has continued the
European commercial roll out of Ogluo®, which is now also available to
patients in Germany and Austria. Syneos Health, along with selected potential
partners, is supporting Ogluo's® continued roll-out across Europe, with
additional launches planned across key territories to further support
anticipated revenue growth.
Outlook
2022 was a year of delivery and execution of our strategy. As clinical
development of the two lead insulin candidates in our Diabetes franchise
rapidly advances, 2023 should provide further evidence of their potential to
enable a new frontier in diabetes management. We continue to build a strong
pipeline of potential collaborations and future revenue opportunities to grow
our portfolio of partnerships. In 2023 we anticipate the first product
incorporating the Arestat(TM) technology, AT220, to be marketed by our partner
under a royalty generating license agreement in a multi-billion market. The
commercial roll-out of Ogluo®, Tetris Pharma's key diabetes product, will
accelerate across key European territories meeting a key patient need for
people living with diabetes at risk of severe hypoglycaemia.
Arecor enters 2023 in its strongest position yet to transform patient care
with enhanced, differentiated, life-changing treatments. I would like to thank
our Board, partners, stakeholders and shareholders for their belief in Arecor.
And above all, my colleagues for their exceptional efforts and scientific
achievements.
Sarah Howell
Chief Executive Officer
Financial Review
The acquisition of Tetris Pharma Ltd and the associated placing of £6 million
in the year, accelerates our commercial strategy and complements our
proprietary diabetes portfolio and partnered products
"We are grateful to our shareholders for their support of the acquisition of
Tetris Pharma, the associated raise and our vision of building a commercially
focused business with the potential to derive significant revenue from
existing and future partnering opportunities."
On 4 August 2022, the Group acquired the entire issued share capital of Tetris
Pharma Ltd. On 4 August 2022, the Group raised £6 million (before expenses),
through the issue of an aggregate of 2,000,000 placing shares to existing
institutional and other shareholders at a price of 300 pence per ordinary
share. Certain of the Company's directors participated in the placing and
subscribed an aggregate of £113,271 for 37,755 shares.
At the end of the financial year, the Group had cash resources of £12.8
million (2021: £18.3 million) and remained debt free. Cash and operating
expenditure continue to be carefully managed.
Cashflow forecasts and going concern
The directors regularly review rolling 12 monthly cash flow forecasts. These
forecasts indicate that the Group expects to remain cash positive to continue
to deliver on its business strategy. This includes a period of at least 12
months from the date of approval of the financial statements. The review of
forecasts for this period includes levers and controls which could be applied
if it was necessary to do so.
Taking such factors into account, the Group's unaudited financial statements
have been prepared on a going concern basis.
Key financial performance indicators
A summary of the financial KPIs is set out below:
2022 2021
£'000s £'000s
Total Income 3,537 1,798
Formulation development projects 1,352 1,158
Product sales 1,051 -
Other operating income 1,132 640
Loss after tax (9,260) (6,169)
Cash and short-term investments 12,806 18,316
Net Assets 17,455 18,549
Total Income increased to £3.5 million in the year (2021: £1.8 million),
including revenue of £2.4 million (2021: £1.2 million) and other operating
income of £1.1 million (2021: £0.6 million).
Revenue recognised in the year increased to £2.4m million (2021: £1.2
million). On a like-for-like basis, revenue from formulation development
projects increased to £1.4 million (2021: £1.2 million) including two new
agreements signed in the year. Net Product sales of £1.0 million (2021: Nil)
from Tetris Pharma Ltd were generated in the five-month period from August to
December 2022.
Other operating income of £1.1 million (2021: £0.6 million) was derived from
a full project year of the Innovate UK grant awarded in March 2021.
The loss after tax of £9.3 million (2021: £6.2 million) included R&D
expenditure which increased to £8.6 million (2021: £5.4 million). This was
focused investment in our proprietary products including the US Phase I
clinical trial of AT247, with headline results announced in October, and the
EU Phase I clinical trial of AT278 which was initiated in December 2022.
Sales, General and Administrative expenses increased to £5.6 million (2021:
£2.9 million) and included expenditure by Tetris Pharma Ltd from August
onwards. Including non-recurring costs of £0.2 million in respect of the
acquisition and placing. The prior year non-recurring expenditure of £0.5
million was placing and AIM admission costs.
Net assets of £17.2 million (2021: £18.5 million) included cash and
short-term investments of £12.8 million (2021: £18.3 million). Trade and
other receivables increased to £2.2 million (2021: £1.4 million) and
included trade receivables and grant project debtors. Current liabilities
increased to £4.0 million (2021: £2.3 million) and included final amounts
due for the US Phase I clinical trial of AT247.
Susan Lowther
Chief Financial Officer
Consolidated income statement
for the year ended 31 December 2022
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Revenue 2,403 1,158
Other operating income 1,132 640
Research and Development (8,613) (5,386)
Sales, General & Administrative (5,552) (2,851)
Operating loss (10,630) (6,439)
Finance income 109 1
Finance expense (21) (507)
Loss before tax (10,542) (6,945)
Taxation 1,282 776
Loss for the financial year (9,260) (6,169)
Basic and diluted loss per share (£) (0.32) (0.27)
In the year ended 31 December 2022, Sales, General & Administrative costs
included £0.2 million of non-recurring expenses incurred in the acquisition
of Tetris Pharma Ltd. The prior year included £0.5 million of non-recurring
IPO and placing costs.
All results presented above are derived from continuing operations and are
attributable to owners of the company.
Consolidated statement of financial position
At 31 December 2022
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Non-Current assets
Intangible assets 1,918 30
Goodwill 1,484 -
Property, plant and equipment 838 328
Other receivables 48 48
Total non-current assets 4,288 406
Current assets
Trade and other receivables 2,215 1,423
Current tax receivable 1,325 776
Cash and cash equivalents 4,765 18,316
Short term investments 8,041 -
Inventory 1,131 -
Total current assets 17,477 20,515
Current liabilities
Trade and other payables (3,526) (2,141)
Lease liabilities (202) (126)
Total current liabilities (3,728) (2,267)
Non-current liabilities
Lease liabilities (86) (105)
Deferred tax (496) -
Total non-current liabilities (582) (105)
Net Assets 17,455 18,549
Equity attributable to equity holders of the company
Share capital 306 278
Share premium account 28,976 23,348
Share-based payments reserve 893 519
Other reserves 11,455 11,455
Merger relief reserve 2,014 -
Foreign exchange reserve (8) -
Retained losses (26,181) (17,051)
Total equity attributable to equity holders of the company 17,455 18,549
Consolidated statement of changes in equity
for the year ended 31 December 2022
Share capital Share premium Other reserves Merger relief reserve Share-based payments reserve Foreign exchange reserve Retained losses Total equity
£000 £000 £000 £000 £000 £000 £000 £000
At 1 January 2021 27 11,594 - - 1,045 - (11,892) 774
Comprehensive income for the year
Loss for the year - - - - - - (6,169) (6,169)
Transactions with owners
Shares issued by Arecor Limited 1 - - - - - - 1
Reserve transfer - - - - (1,010) - 1,010 -
Share bonus issue 139 (139) - - - - - -
Incorporation of Arecor Therapeutics Limited - (11,455) 11,455 - - - - -
Shares issued by Arecor Therapeutics plc 110 24,785 - - - - 24,895
-
Share issue expense - (1,437) - - - - - (1,437)
Share based compensation - - - - 484 - - 484
Issue of shares on exercise of share options 1 - - - - - - 1
Total transactions with owners 251 11,754 11,455 - (526) - 1,010 23,944
Equity as at 31 December 2021 (Audited) 278 23,348 11,455 519 - (17,051) 18,549
Loss for the year - - - - - - (9,260) (9,260)
Transactions with owners
Issue of shares on acquisition of Tetris Pharma Ltd 7 - - 2,014 - - - 2,021
Issue of shares for working capital purposes 20 5,980 - - - - - 6,000
Share issue expense (352) - - - - - (352)
Issue of shares on exercise of share options 1 - - - - - - 1
Reserve transfer - - - - (130) - 130 -
Share based compensation - - - - 503 - - 503
Foreign exchange movements - - - - - (8) - (8)
Total transactions with owners 28 5,628 - 2,014 374 (8) 130 8,165
Equity as at 31 December 2022 (Unaudited) 306 28,976 11,455 2,014 893 (8) (26,181) 17,455
Consolidated statement of cash flows
for the year ended 31 December 2022
31 December 2022 31 December 2021
Unaudited Audited
£000 £000
Cash flow from operating activities
Loss for the financial year before tax (10,542) (6,945)
Finance income (109) (1)
Finance costs 21 507
Share-based payment expense 503 484
Depreciation 248 163
Amortisation 93 8
Foreign exchange movements (69) (5)
(9,855) (5,789)
Changes in working capital
Decrease / (increase) in Inventories 587 -
Decrease / (increase) in trade and other receivables (48) (1,257)
Increase / (decrease) in trade and other payables (2,198) 838
Tax received 734 758
Net cash from operating activities (10,780) (5,450)
Cash flow from investing activities
Acquisition of subsidiary net of cash acquired 284 -
Purchase of property, plant and equipment (299) (69)
Purchase of intangible assets (46) -
Short term investments (8,041)
Interest received 109 1
Net cash used in investing activities (7,993) (68)
Cash flow from financing activities
Issue of ordinary shares 6,000 20,002
Share issue costs (352) (1,437)
New loans received - 2,500
Capital payments on lease liabilities (165) (112)
Repayment of working capital facility (295) -
Interest paid on lease liabilities (21) (22)
Other interest paid (7) -
Net cash generated from financing activities 5,160 20,931
Net (decrease) / increase in cash and cash equivalents (13,613) 15,413
Exchange losses on cash and cash equivalents 62 5
Cash and cash equivalents at beginning of financial year 18,316 2,898
Cash and cash equivalents at end of financial year 4,765 18,316
Notes to the consolidated financial statements
1. General 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 4 August 2022.
Basis of preparation
Whilst the financial information included in this preliminary announcement has
been prepared in accordance with international accounting standards, this
announcement does not itself contain sufficient information to comply with all
IFRS disclosure requirements. The Company's 2022 Annual Report and Accounts
will be prepared in compliance with UK-adopted International Accounting
Standards (IFRS).
The unaudited preliminary announcement does not constitute a dissemination of
the annual financial report and does not therefore need to meet the
dissemination requirements for annual financial reports. A separate
dissemination announcement in accordance with Disclosure and Transparency
Rules (DTR) 6.3 will be made when the annual report and audited financial
statements are available on the Company's website.
Statutory Information
The financial information included in this preliminary announcement does not
constitute statutory accounts. The statutory accounts for the year ended 31
December 2021 have been delivered to the Registrar of Companies and received
an unqualified auditors' report, did not draw attention to any matters by way
of emphasis and did not contain statements under s498 (2) or (3) of the
Companies Act 2006.
The statutory accounts for the year ended 31 December 2022 will be finalised
on the basis of the financial information presented by the directors in this
unaudited preliminary announcement and will be delivered to the Registrar of
Companies following the Company's General Meeting. The announcement of the
preliminary results was approved on behalf of the Board of directors on 19
April 2023.
Operating segments
The Directors have considered the reporting of operating segments in line with
IFRS 8 and believe that there is only one reporting unit within the Group. The
chief operating decision maker reviews the operating results at a group
consolidated level.
Business Combinations
Business combinations are accounted for using the acquisition method as at the
acquisition date. This is considered to be the date at which control is
transferred to the Group. The consideration transferred for the acquisition is
the fair value of any equity interests issued by the Group. Identifiable
assets and liabilities assumed in the business combination are measured at
their fair value at the date of acquisition. This includes the value of any
intangible assets generated that could not previously be recognised by the
entity pre-acquisition.
The Group measures goodwill at the date of acquisition as the fair value of
the consideration less the recognised net amount of the identifiable assets
and liabilities acquired. Costs related to the acquisition other than those
associated with the issue of equity in the Group are expensed as they are
incurred.
On 4 August 2022, the Group acquired the entire share capital of Tetris Pharma
Ltd. The company has been consolidated in its entirety with the income and
expenditure post-acquisition included in the consolidated income statement.
Investments in subsidiaries
Investments in subsidiaries owned by the company are included at cost less any
accumulated impairment charges.
Going Concern
The Directors have considered the Company's cashflow forecasts to the period
ending 12 months from the date of authorisation of the financial statements.
They have no grounds for concern regarding the Company's ability to meet its
obligations as they fall due and continue to operate within the existing cash
balance and working capital facilities, thus requiring no additional funding
to maintain liquidity.
Cash flow forecasts model sensitivities, controls and levers in the management
of working capital. The potential impact of the COVID-19 pandemic on the
Group's ability to execute its strategy has reduced however the business risk
from macroeconomic factors has increased. The potential impact on the Group
has been considered in the review of cashflow forecasts.
In reaching their decision to prepare financial statements on a going concern
basis, the Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for the
foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the
annual report and accounts
Revenue
Revenue is measured based on the consideration that the Group expects to be
entitled to in exchange for transferring promised goods and services. Revenue
is recognised to the extent that the Group obtains the right to consideration
in exchange for its performance. In accordance with IFRS 15 Revenue from
contracts with customers, the following five-steps are applied:
· identify contracts with customers;
· determine performance obligations arising under those contracts;
· set an expected transaction price;
· allocate that price to the performance obligations; and then
· recognise revenues as and when those obligations are satisfied.
2. Revenue and operating segments
The geographic analysis of the Group's revenue is as follows:
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
UK 1,136 71
Switzerland 240 -
Rest of Europe 108 76
USA 784 940
India 135 40
Rest of world - 31
2,403 1,158
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision makers. Information
reported includes revenue, expenditure by type and department, cashflows and
EBITDA for the Group.
The Board of Directors has been identified as the chief operating decision
makers and is 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.
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Formulation development projects 1,352 1,014
Sales of pharmaceuticals 1,051 -
Non-Government grants - 144
2,403 1,158
3. Other operating income
Other operating income in the year was grant income received in respect of a
£2.8m grant awarded by Innovate UK in March 2021.
4. Operating loss
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Operating loss is stated after charging:
Audit fees 148 60
Other audit services 10 8
Audit of grant claims - Other professional services 4 40
Depreciation of property, plant and equipment:
- Owned assets 122 68
- Right of use assets under leases 126 95
Amortisation of intangible assets 93 8
Research and Development costs not disclosed elsewhere in this note 5,958 3,570
Sales, General and Admin costs not disclosed elsewhere in this note 2,934 395
Non-recurring expenses 171 462
Foreign exchange gains (69) (5)
Directors and employee costs 4,668 3,536
Non-recurring expenses in the year were costs incurred in the acquisition of
Tetris Pharma Ltd. Prior year costs were expenses incurred in the admission to
AIM on 3(rd) June 2021.
5. Finance income
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Bank interest received 102 1
Other interest received 7 -
109 1
6. Finance expense
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Loan note conversion - 485
Lease interest 18 22
Other interest expenses 8 -
26 507
The prior year comparatives include a charge of £485,000 arising from the
conversion of loan notes into ordinary shares at Admission.
7. Taxation
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Research & development tax credit receivable (1,325) (776)
Total tax (1,325) (776)
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Loss before tax (10,542) (6,945)
Loss on ordinary activities multiplied by standard rate of corporation tax in (2,003) (1,320)
the UK of 19% (2021: 19%)
Tax effects of:
Expenses not deductible for tax purposes 248 180
Enhanced R&D relief (560) (523)
Unrecognised deferred tax 1,073 887
Additional relief on capital expenditure (20) -
Origination and reversal of timing differences (63) -
Total tax (credit) (1,325) (776)
At 31 December 2022, the Group has accumulated tax losses of £20,164,670
(2021: £11,361,635). No deferred tax asset was recognised in respect of these
accumulated tax losses due to uncertainty regarding the timing of
recoverability in future years. Under UK tax law currently enacted, the
accumulated tax losses are not limited by an expiry date.
As confirmed in the UK Government budget in March 2023, the level of UK
Corporation tax will increase from 19% to 25% on 6 April 2023
8. Basic and diluted loss per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
The diluted loss per share is considered to be the same as the basic loss per
share. Potential dilutive shares are not treated as dilutive where they would
result in a loss per share.
31 December 31 December
2022 2021
Unaudited Audited
£ £
Loss per share from continuing operations (0.32) (0.27)
The loss and weighted average number of ordinary shares used in the
calculation of basic loss per share are as follows:
31 December 31 December
2022 2021
Unaudited Audited
£000 £000
Loss used in the calculation of total basic and diluted loss per share (9,260) (6,169)
31 December 31 December
2022 2021
Number of shares Number Number
Weighted average number of ordinary shares for the purposes of basic and 28,936,088 23,033,420
diluted loss per share
9. Intangible assets
GROUP Patents Licenses Software Total
£000 £000 £000 £000
Cost
At 1 January 2021 150 - - 150
Additions - - - -
At 31 December 2021 150 - - 150
Additions - 1,933 48 1,981
At 31 December 2022 150 1,933 48 2,131
Amortisation
At 1 January 2021 112 - - 112
Charge for the year 8 - - 8
At 31 December 2021 120 - - 120
Charge for the year 8 83 2 93
At 31 December 2022 128 83 2 213
Net book value
At 31 December 2021 30 - - 30
At 31 December 2022 22 1,850 46 1,918
Amortisation is recognised within administrative expenses.
10. Acquisition of Tetris Pharma Ltd
On 4 August 2022, the Group acquired 100% of the share capital of Tetris
Pharma Ltd and gained control of the company and its wholly owned subsidiary,
Tetris Pharma BV. The fair value of the assets acquired and the resulting
goodwill arising on acquisition is shown below. The fair value of the
consideration paid for the acquisition was £2,020,351.
Book value Fair value adjustment Fair value
£000 £000 £000
Ogluo license and distribution agreement, UK and Europe (Intangible asset) - 1,781 1,781
UK Distribution agreements - Other products (intangible asset) 152 152
Property, plant and equipment 232 - 232
Inventory 1,719 - 1,719
Trade and other receivables 738 - 738
Cash at bank 284 - 284
Trade and other payables (3,579) 505 (3,074)
Trade facility (295) - (295)
Historic liabilities - (505) (505)
Deferred tax on intangibles - (496) (496)
Total (901) 1,437 536
Goodwill 1,484
Total Consideration 2,020
The acquisition of Tetris Pharma Ltd was settled by the issue of 651,726
ordinary shares in Arecor Therapeutics plc. On the date of the transaction,
the market value was 310p per share. Further consideration may fall due if
specific sales and EBITDA targets are met in each of the three years following
the date of acquisition.
Historic liabilities were costs incurred prior to the acquisition which were
non-recurring therefore were considered separately to trade and other payables
in the fair value analysis.
Goodwill reflects expectations of future sales growth attributable to Tetris
Pharma Ltd.
From the date of acquisition to the financial year end, Tetris Pharma Ltd
contributed £1.0 million to Group revenue and incurred a loss for the period
of £1.2 million.
11. Share capital
31 December 31 December
2022 2022
Number Nominal value
£000
Ordinary shares - par value £0.01
Allotted, called up and fully paid
Ordinary shares of £0.01 30,618,183 306
At 31 December 2022 30,618,183 306
31 December 31 December
2021 2021
Number Nominal value
£000
Ordinary shares - par value £0.01
Allotted, called up and fully paid
Ordinary shares of £0.01 27,835,024 278
At 31 December 2021 27,835,024 278
The Company has a single class of Ordinary share that bear no rights to fixed
income
The following shares were issued in the periods presented:
Share Share
Number Capital Premium
£000 £000
At 1 January 2022 27,835,024 278 23,348
Issue of Ordinary shares of £0.01 2,000,000 20 5,980
Share issue expense - - (352)
Issue of ordinary shares of £0.01 as consideration for the acquisition of 651,726 7 -
Tetris Pharma Ltd
Issue of Ordinary shares of £0.01 on exercise of share options 131,433 1 -
At 31 December 2022 (Unaudited) 30,618,183 306 28,976
Share Share
Number Capital Premium
£000 £000
At 1 January 2021 - Arecor Limited 2,715,518 27 11,594
Issue of Ordinary shares of £0.01 62,493 1 -
Five to one bonus issue on all shares 13,890,055 139 (139)
Total Ordinary shares allotted, called up and fully paid in Arecor Limited at 16,668,066 167 11,455
24 May 2021
One to one share swap with Arecor Therapeutics ordinary shares at par 16,668,066 167 -
Conversion of loan notes 2,165,908 21 4,873
Issue of ordinary shares of £0.01 during listing 8,849,558 88 19,912
Costs associated with issue of ordinary shares of £0.01 (1,437)
Issue of Ordinary shares of £0.01 151,492 2 -
At 31 December 2021 (Audited) 27,835,024 278 23,348
Share Premium
Proceeds received in addition to the nominal value of the shares issued during
the period have been included in share premium less registration and other
regulatory fees and net of related tax benefits.
Share premium increases in the year arose from a placing of £6 million to
provide working capital and an issue of shares as consideration for the
acquisition of Tetris Pharma Ltd.
12. Financial commitments
In August 2022, the Group signed agreements with The Medical University of
Graz and Joanneum Research Forschungsgesellschaft GmbH, both based in Graz,
Austria to provide specialised clinical research services relating to a
European based clinical study of AT278, due to start in early 2023. Total
payments agreed to be paid to these parties for undertaking the study are
€1.6m.
13. Post balance sheet events
There were no adjusting or significant non-adjusting events post the balance
sheet date of 31 December 2022.
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