REG - C4X Discovery - Interim results
27/03/2024 07:00
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RNS Number : 4206I C4X Discovery Holdings PLC 27 March 2024
C4X Discovery Holdings plc
("C4XD", "C4X Discovery" or the "Company")
Half-year results for the six months ended 31 January 2024
Excellent portfolio progress supported by a robust balance sheet
$11 million preclinical milestone payment by AstraZeneca
C4XD seeks voluntary delisting from the London Stock Exchange AIM
27 March 2024 - C4X Discovery Holdings plc (AIM: C4XD), a pioneering Drug
Discovery company, today announces its half-year results for the six months
ended 31 January 2024.
Operational Highlights (including post-period events)
· Announced today: C4XD seeks voluntary delisting from the London
Stock Exchange AIM (see separate release)
· Receipt of $11 million preclinical milestone payment from
AstraZeneca under the exclusive worldwide licence agreement worth up to $400
million, for C4XD's NRF2 Activator programme.
· α4β7 integrin inhibitor programme for inflammatory bowel
disease ("IBD") delivered compounds showing improved activity at a lower dose
compared to example competitor compounds in a pharmacodynamic model after oral
dosing. The project is moving towards the selection of a pre-clinical
candidate.
· C4XD internal portfolio expanded in inflammatory diseases with
new programmes identified progressing towards Lead Optimisation.
· Indivior acquired C4XD's oral Orexin-1 receptor antagonist,
C4X_3256 (INDV-2000), for substance use disorder under an asset purchase
agreement for £15.95 million.
· In April 2021, C4XD signed a world-wide exclusive agreement with
Sanofi, for an oral pre-clinical IL-17A inhibitor programme worth up to €414
million with first milestone payment of €3 million received in July 2022.
· MALT-1 inhibitor programme progressing towards candidate
shortlist as partnering process ongoing.
Financial Highlights
· Revenue was £24.6 million (January 2023: £1.7m) reflecting
receipt of £15.9 million from sale of Orexin-1 receptor antagonist programme
and $11 million milestone payment from AstraZeneca.
· Total profit after tax of £17.8 million or 7.06 pence per share
(January 2023: loss of £3.9m or 1.55 pence per share).
· R&D expenses remained at £5.2 million (January 2023:
£5.2m), reflecting focused investment in key drug discovery programmes
focused on immune-inflammatory diseases.
· Net assets of £24.6 million (January 2023: £13.6m).
· Net cash as at 31 January 2024: £13.1 million (31 January 2023:
£9.6m), before post-period receipt of $11 million milestone payment from
AstraZeneca in February 2024.
Dr Clive Dix, Executive Chairman of C4X Discovery, said: "C4XD has
demonstrated time and again our expertise to discover and develop high value,
novel small molecule drugs. We have announced three major deal partnerships
with world leading pharmaceutical companies, one of which has since acquired
the programme outright demonstrating our scientific and deal-making
capabilities. The Company is in a strong financial position with the potential
for further milestone payments over the next 18 months. As we progress our
lead programme through the discovery phase towards the clinic and with a clear
focus on immuno-inflammatory diseases, the Board feel it necessary to address
the perceived under-valuation of our business in the public market and the
subsequent inability to access the future funding the Board believes is
required to allow C4XD to flourish.
"The healthcare sector in the financial markets has proved challenging in
recent years and has been further hindered by wider macro and economic events
happening worldwide, which have collectively had a negative impact on the
valuations of smaller companies in general. At the same time, funding for
private companies has continued to remain resilient. The Board has concluded
that the current public market valuation does not reflect the underlying
potential of our business or our achievements to date and believe that this is
unlikely to change in the short-to-medium term. Consequently, the Board
believes that C4XD's growth prospects, and the ability to execute its strategy
to develop precision therapeutics in immuno-inflammatory diseases, will be
best accomplished as a private company, where we can potentially access a
larger quantum of future funding required to accelerate our strategy and drive
towards discovery and development inflection points to maximise revenue from
our portfolio. We therefore believe that a cancellation of the Company's
admission on AIM is in the best interest for shareholders and for the future
of our business as a whole, and we are excited for the road ahead."
This announcement contains inside information for the purpose of the UK Market
Abuse Regulations.
- Ends -
Contacts
C4X Discovery Holdings
Mo Noonan, Communications +44 (0)787 6444977
Panmure Gordon (UK) Limited (NOMAD and Broker)
Freddy Crossley, Emma Earl (Corporate Finance) +44 (0)20 7886 2500
Rupert Dearden (Corporate Broking)
C4X Discovery Media - ICR Consilium
Mary-Jane Elliott, Chris Gardner, Angela Gray +44 (0)203 709 5700
Notes to Editors:
About C4X Discovery
C4X Discovery (C4XD) is a pioneering Drug Discovery company, combining
scientific expertise with cutting-edge technologies to efficiently deliver
world‑leading medicines. We have a highly valuable and differentiated
approach to Drug Discovery through our enhanced molecular design and patient
stratification capabilities, generating small molecule drug candidates across
multiple disease indications focused on immuno-inflammation. We are advancing
our internal portfolio which ranges from early-stage target opportunities to
late-stage Drug Discovery programmes and we have two commercially partnered
programmes with Sanofi and AstraZeneca, and one clinical stage candidate which
has been acquired by Indivior.
For more information visit us at www.c4xdiscovery.com or follow us on twitter
@C4XDiscovery.
Corporate Overview
The latter half of 2023 saw excellent progress across our portfolio with each
of our programmes successfully advancing during the period, supporting our
strategic decision to focus on immuno-inflammatory diseases. The outright
£15.95 million acquisition by Indivior of our Orexin-1 receptor antagonist
programme for the treatment of substance abuse disorder, laid a solid
financial base to advance our newly focused portfolio towards, and
potentially, into the clinic. Our balance sheet was further bolstered post
period in February 2024 by the $11 million milestone payment from AstraZeneca
triggered by preclinical progress of our NRF2 Activator programme, positioning
us with a robust cash position.
With immuno-inflammation drug discovery expertise at our core, we are building
a valuable and commercially relevant, small-molecule drug portfolio. Our
molecules have Best-in-Class and First-in-Class potential to treat patients
across a range of immuno-inflammatory diseases. Our aim to develop alternative
oral treatments not only has the potential to broaden patient access to much
needed treatments, but also enable easier treatment regimens and potentially
reduce the healthcare burden.
Our lead internal programme, focused on oral small molecule inhibitors of
α4β7, has the potential to deliver a low dose Best-In-Class α4β7 inhibitor
therapy for the treatment of inflammatory bowel disease ("IBD") where an
effective oral therapy remains highly sought-after. This programme is
progressing through late-stage discovery studies and towards selection of a
pre-clinical candidate. In addition, insights garnered from our PatientSeek
platform to identify stratification signals in IBD patients could both inform
and potentially de-risk the clinical development path for the α4β7
programme.
We continue to advance our portfolio of early-stage discovery
immuno-inflammatory projects towards Lead Optimisation. These projects target
clear unmet medical need, combined with significant commercial potential.
Through our Conformetrix technology, we are able to produce valuable chemical
equity through the interpretation of conformational insight into the behaviour
of molecules. These insights enable a more accurate molecule design that is
best suited to our therapeutics targets. We use PatientSeek to inform our
target selection choices, based on identification of patient stratification
opportunities. We anticipate moving two of these projects into Lead
Optimisation by the end of 2024, when we will be able to provide greater
detail.
We have out-licensed two programmes to leading pharmaceutical companies,
AstraZeneca and Sanofi. We were thrilled to receive the first milestone
payment under our exclusive worldwide licensing agreement worth up to $400
million with AstraZeneca, signed only a little over a year earlier, for C4XD's
NRF2 Activator programme. The worldwide exclusive license with Sanofi worth up
to €414 million for C4XD's oral IL-17A inhibitor programme previously paid
its first milestone payment of €3 million in July 2022.
Underpinning the significant progress made during the period, the Company has
a robust cash position and manageable fixed cost base. Cash, cash equivalents,
short-term investments and deposits were £13.1 million at 31 January 2024 (31
January 2023: £9.6 million) before post-period receipt of the $11 million
milestone payment in February 2024. R&D investment remained at £5.2
million in the six months ending 31 January 2024 (January 2023: £5.2
million), reflecting focused investment in key drug discovery programmes.
Administrative expenses were £1.8 million for the six months ended January
2024 (January 2023: £1.6 million).
Outlook
C4XD has demonstrated time and again our expertise to discover and develop
high value, novel small molecule drugs. We have announced three major deal
partnerships with world leading pharmaceutical companies, one of which has
since acquired the programme outright demonstrating our scientific and
deal-making capabilities. The Company is in a strong financial position with
the potential for further milestone payments over the next 18 months. As we
progress our lead programme through the discovery phase towards the clinic and
with a clear strategic focus on immuno-inflammatory diseases, the Board feel
it necessary to address the perceived under-valuation of our business in the
public market and the subsequent inability to access the future funding the
Board believes is required to allow C4XD to flourish.
The healthcare sector in the financial markets has proved challenging in
recent years and has been further hindered by wider macro and economic events
happening worldwide, which have collectively had a negative impact on the
valuations of smaller companies in general. At the same time, funding for
private companies has continued to remain resilient. The Board has concluded
that the current public market valuation does not reflect the underlying
potential of our business or our achievements to date and believe that this is
unlikely to change in the short-to-medium term. Consequently, the Board
believes that C4XD's growth prospects, and the ability to execute its strategy
to develop precision therapeutics in immuno-inflammatory diseases, will be
best accomplished as a private company, where we can potentially access a
larger quantum of future funding required to accelerate our strategy and drive
towards discovery and development inflection points to maximise revenue from
our portfolio. We therefore believe that a cancellation of the Company's
admission on AIM is in the best interest for shareholders and for the future
of our business as a whole, and we are excited for the road ahead.
Interim consolidated statement of comprehensive income
For the six months ended 31 January 2024
Six months Six months Year
to to to
31 January 2024 31 January 2023 31 July
2023
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Notes
Revenue 3 24,646 1,676 1,710
Cost of sales - (22) (38)
Gross profit 24,646 1,654 1,672
Research and development expenses (5,195) (5,194) (10,894)
Administrative expenses (1,803) (1,638) (4,192)
Operating profit /(loss) 17,648 (5,178) (13,414)
Finance income 158 15 22
Finance costs (8) (12) (24)
Profit /(loss) before taxation 17,798 (5,175) (13,416)
Taxation 4 - 1,296 2,305
Profit /(loss) for the period and total comprehensive loss for the period 17,798 (3,879) (11,111)
Profit /(loss) per share:
Basic profit /(loss) for the period 5 7.06p (1.55)p (4.42)p
Diluted profit /(loss) for the period 5 7.06p (1.55)p (4.42)p
Interim consolidated statement of changes in equity
For the six months ended 31 January 2024
Issued equity Share Warrant Share based payment Merger Capital contribution Revenue
capital premium reserve reserve reserve reserve reserve Total
£000 £000 £000 £000 £000 £000 £000 £000
At 01 August 2022 4,316 53,355 968 1,543 920 195 (49,493) 11,804
Loss for the six months to - - - - - - (3,879) (3,879)
31 January 2023
Issue of share capital 228 5,467 - - - - - 5,695
Expenses of placing - (287) - - - - - (287)
Exercise of options 1 5 - - - - - 6
Share-based payments - - - 214 - - - 214
At 31 January 2023 4,545 58,540 968 1,757 920 195 (53,372) 13,553
Loss for the six months to - - - - - - (7,732) (7,732)
31 July 2023
Share-based payments - - - 211 - - - 211
At 31 July 2023 4,545 58,540 968 1,968 920 195 (60,604) 6,532
Profit for the six months to - - - - - - 17,798 17,798
31 January 2024
Exercise of options 2 4 - - - - - 6
Share-based payments - - - 268 - - - 268
At 31 January 2024 4,547 58,544 968 2,236 920 195 (42,806) 24,604
Interim consolidated statement of financial position
As at 31 January 2024
31 January 2024 31 January 2023 31 July 2023
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Notes
Assets
Non-current assets
Property, plant and equipment 35 43 39
Intangible assets 51 59 54
Goodwill 1,191 1,192 1,192
Right-of-use assets 240 563 402
1,517 1,857 1,687
Current assets
Trade and other receivables 9,275 567 572
Income tax asset 2,305 3,661 2,305
Cash and cash equivalents 13,126 9,642 4,220
24,706 13,870 7,097
Total assets 26,223 15,727 8,784
Liabilities
Current liabilities
Trade and other payables (1,361) (1,587) (1,828)
Lease liabilities (253) (329) (337)
(1,614) (1,916) (2,165)
Non-current liabilities
Trade and other payables - - -
Lease liabilities (5) (258) (87)
(5) (258) (87)
Total liabilities (1,614) (2,174) (2,252)
Net assets 24,604 13,553 6,532
Capital and reserves
Issued equity capital 6 4,547 4,545 4,545
Share premium 6 58,544 58,540 58,540
Share-based payment reserve 2,236 1,757 1,968
Warrant reserve 968 968 968
Merger reserve 920 920 920
Capital contribution reserve 195 195 195
Revenue reserve (42,806) (53,372) (60,604)
Total equity 24,604 13,553 6,532
Approved by the Board and authorised for issue on 27 March 2024
Brad Hoy
Chief Financial Officer
26 March 2024
Interim consolidated cash flow statement
For the six months ended 31 January 2024
Six months Six months Year
to to to
31 January 31 January 31 July
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit /(loss) after tax and interest 17,798 (3,879) (11,111)
Adjustments for:
Depreciation of property, plant and equipment 14 12 26
Depreciation of right-of-use assets 163 143 305
Amortisation of intangible assets 4 3 7
Net foreign exchange differences (89)
Share-based payments 268 214 425
Finance income (158) (15) (22)
Finance costs 8 12 24
Taxation - (1,296) (2,305)
Changes in working capital:
Decrease/(increase) in trade and other receivables (8,703) 2,502 2,497
(Decrease)/increase in trade and other payables (467) (462) (211)
Cash outflow from operating activities 8,927 (2,766) (10,454)
Research and development tax credit received - 2,063 4,427
Net cash outflow from operating activities 8,927 (703) (6,027)
Cash flows from investing activities:
Purchases of property, plant and equipment (10) (8) (18)
Finance income 158 15 22
Net cash outflow from investing activities 148 7 4
Cash flows from financing activities:
Payment of lease liabilities (175) (155) (329)
Proceeds from the issue of ordinary share capital 6 5,701 5,701
Expenses of placing - (287) (287)
Net cash inflow from financing activities (169) 5,259 5,085
Increase/(decrease) in cash and cash equivalents 8,906 4,563 (938)
Net foreign exchange differences 79
Cash and cash equivalents at the start of the period 4,220 5,079 5,079
Cash, cash equivalents and deposits at the end of the period 13,126 9,642 4,220
Notes to the interim financial report
For the six months ended 31 January 2024
1. Corporate information
The principal activity of the C4X Discovery Holdings plc is research and
development, a review of which is included in the Chairman's and CEO's
Statement.
C4XD is incorporated and domiciled in the United Kingdom and its registered
number is 09134041. The address of the registered office is Manchester One, 53
Portland Street, Manchester, M1 3LD.
The interim financial information was approved for issue on 25 March 2024.
2. Accounting policies
Basis of preparation
The accounting policies adopted in this interim financial report are
consistent with those followed in the preparation of the Group's annual report
and accounts for the year to 31 July 2023.
The interim financial information for the six months ended 31 January 2024 and
31 January 2023 is unaudited and does not constitute statutory accounts as
defined in the Companies Act 2006. This interim financial report includes
audited comparatives for the year to 31 July 2023. The 2023 annual report
and accounts received an unqualified audit opinion and have been filed with
the Registrar of Companies.
These interim financial statements have been prepared in accordance with IAS34
Interim Financial Reporting. They do not include all the information
required for a complete set of IFRS financial statements. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's financial
position and performance since the last annual consolidated financial
statements as at and for the year ended 31 July 2023.
Basis of consolidation
This interim financial report consolidates the financial statements of C4X
Discovery Holdings plc and the entities it controls (its subsidiaries).
3. Revenue
Six months to Six months to Year to
31 January 31 January 31 July
2024 2023 2023
£000 £000 £000
Revenue recognised at a point in time
- Right-to-use licence revenue 15,950 1,652 1,652
- Milestone revenue 8,683 - -
Revenue recognised over time 13 24 42
- Research services revenue - - 16
- Consultancy services
Total Revenue 24,646 1,676 1,710
Revenue in the current period has been generated from contracts with two
customers.
Revenue of £15.9 million from the agreement with Indivior for the outright
acquisition of Orexin-1 Receptor Antagonist Programme executed on 31 July 2023
was subject to certain performance obligations which were met on 4 August 2023
resulting in this revenue being recognised within the six months to 31 January
2024.
The revenue attributed to Milestone attainment was generated from one customer
and is recognised at a point in time.
Revenue In the prior periods was generated from contracts with a two customer.
In the prior period, the milestone revenue was determined to have one
performance obligation and was recognised at a point in time.
The revenue from the right-to-use licence agreement was recognised at a single
point in time when transfer of intellectual property was completed. The
revenue from provision of consulting and technical support services under the
same agreement was recognised over time when the services were provided.
The revenue attributed to the delivery of research services was recognised on
the same basis as in the previous period.
4. Taxation
Six months to Six months to Year to
31 January 31 January 31 July
2024 2023 2023
£000 £000 £000
UK corporation tax losses in the period - - -
Research and development income tax credit receivable - (1,296) (2,305)
Adjustment in respect of prior periods - - -
- (1,296) (2,305)
5.Loss per share
31 January 31 January 31 July
2024 2023 2023
£000 £000 £000
Profit /(loss) for the financial period attributable to equity shareholders 17,798 (3,879) (11,111)
Weighted average number of shares: No. No. No.
Ordinary shares in issue 252,169,076 250,048,502 251,102,072
Number of exercisable share options and warrants 32,967 305,197 855,664
Ordinary shares in issue for purposes of diluted EPS 252,202,043 250,353,700 251,957,736
Basic and diluted profit /(loss) per share (pence) 7.06p (1.55)p (4.42)p
The number of exercisable share options and warrants above are those deemed to
be potentially dilutive in nature as their exercise price is less than the
average share price for the period. As the group made a loss in the
comparative period the effects of these potential ordinary shares are not
dilutive.
6. Issued share capital and share premium
Deferred shares Ordinary shares Share capital Deferred shares Warrant reserve Share premium Total
Number Number £000 £000 £000 £000 £000
Ordinary and deferred shares as at 31 January 2023 2,025,000 252,119,597 2,520 2,025 968 58,540 64,053
Ordinary and deferred shares as at 31 July 2023 2,025,000 252,119,597 2,520 2,025 968 58,540 64,053
Issue of share capital on exercise of options - 107,500 2 - - 4 6
Ordinary and deferred shares as at 31 January 2024 2,025,000 252,227,097 2,522 2,025 968 58,544 64,059
7. Interim financial report
A copy of this interim condensed financial report is available on C4XD's
website at www.c4xdiscovery.com (http://www.c4xdiscovery.com) .
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