REG - Cizzle Biotechnology - Results for the year ended 31 December 2021
30/05/2022 07:15
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RNS Number : 1630N Cizzle Biotechnology Holdings PLC 30 May 2022
Cizzle Biotechnology Holdings Plc
("Cizzle Biotechnology", "Cizzle" or the "Company")
Results for the year ended 31 December 2021
Cizzle Biotechnology, the UK-based diagnostics developer, is pleased to
announce its audited results for the year ended 31 December 2021.
Chair's Statement
I am pleased to report on the Group's activities and results for 2021 during
which we announced the acquisition of Cizzle Biotechnology Limited ("CBL") on
14 May 2021 and admission to trading on the London Stock Exchange by way of a
Standard Listing, raising proceeds of £2,200,000 before expenses from the
issue of new shares. We changed the company name from Bould Opportunities plc
to Cizzle Biotechnology Holdings plc to better reflect the Group's ambitions
to become a leading biotechnology business focussed on early-stage cancer
detection through the commercialisation of its proprietary CIZ1B biomarker
technology developed by Professor Dawn Coverley and her team at the University
of York for the early detection of lung cancer.
The Group has made significant progress during 2021 and so far in 2022. In
addition to implementing our strategy to develop a regulatory approved
commercial, diagnostic laboratory immunoassay for early-stage lung cancer,
we have broadened our interests in the detection of a range of other
early-stage cancers, expanded our potential customer base to include the
pharmaceutical industry through diagnostic tests that can help in the
development of personalised medicines, so called "companion diagnostics" and
secured royalty bearing rights to the sale of such drugs in the longer term.
To achieve this we have entered into a number of strategic supply agreements,
extended our research and development programme with the University of York,
secured an important companion diagnostic development project for autoimmune
diseases worth up to £1m with St George Street Capital ("SGSC") and invested
in royalty arrangements for their therapeutic asset (AZD1656) for the
potential treatment of inflammatory diseases, including those linked with
COVID 19.
The Group has also begun the process of selecting appropriate industrial
development and distribution partners that will facilitate access to major
markets globally and we are pleased to announce a royalty bearing strategic
partnership in China to help address the country's challenge of reducing
nearly 715,000 deaths caused by lung cancer in 2020.
(Source:
https://www.statista.com/statistics/1053667/china-cancer-death-number-by-type/
(https://www.statista.com/statistics/1053667/china-cancer-death-number-by-type/)
).
Research and Development
The Group is developing a blood test for the early detection of lung cancer.
Its proof of concept prototype test is based on the ability to detect a stable
plasma biomarker, a variant of CIZ1 known as CIZ1B. CIZ1 is a naturally
occurring cell nuclear protein involved in DNA replication, and the targeted
CIZ1B variant is highly correlated with early stage lung cancer. Currently the
laboratory test developed by Professor Dawn Coverley at The University of
York, has been used to validate the use of CIZ1B to detect lung cancer, and a
proof of concept prototype test developed, which is compatible with potential
use within a hospital laboratory setting.
In June 2021 we entered into a Collaboration Agreement with FairJourney
Biologics to develop proprietary antibodies. Along with other key suppliers
the Group expects to create a range of monoclonal antibodies and reagents that
are the foundation for developing immunoassays, and in the future point of
care tests not only for early-stage lung cancer but potentially also for other
cancers with unmet clinical need.
In September 2021 we announced a new research agreement with The University of
York for developing our blood test for the early detection of lung cancer, and
potentially other forms of cancer. A further new agreement was announced in
April 2022 that extended this work until June 2022.
A research and development agreement was finalised in October 2021 with
"SGSC", the UK based biomedical charity to develop a companion diagnostic test
for autoimmune disease. Its aim is to develop tests that will operate
alongside SGSC's programme for the development of therapeutic assets licensed
to SGSC from one of the world's largest pharmaceutical companies, Astra
Zeneca. This seeks to address unmet clinical needs in a variety of autoimmune
diseases which will significantly broaden the Company's product pipeline for
which SGSC will pay the Group £200,000 upfront on commencement of the project
and then further milestone payments totalling £1m.
China
One of the target markets identified for the Group is in China where we are
aware there are serious challenges in being able to detect cancer early, and
there is a great need for screening and diagnosing cancers among the Chinese
population. Targeted testing can improve timely access to cancer care and save
lives. The Group entered into a Memorandum of Understanding ("MOU") with the
International Co-innovation Centre for Advanced Medical Technology ("iCCAMT")
and Shenzhen Intelliphecy Life Technologies Co. Ltd ("Intelliphecy") to
develop and market the Group's proprietary early lung cancer diagnostic tests
based on the CIZ1B biomarker in China.
In February 2022 a full commercial agreement was executed to develop and
market early lung cancer diagnostic tests in China. This agreement will
generate future revenues for the Group via a 10% royalty on the sales of all
products and services using its proprietary CIZ1B technology and from payment
for monoclonal antibodies and reagents.
iCCAMT, founded with German Medical Valley, Robert Bosch GmbH and Sinopharm
Group, aims to accelerate global med-tech innovation in the Chinese market, by
bringing together world leading expertise. Intelliphecy is aiming to innovate
technologies in the hope to win the war against cancer.
USA
On 6 May 2022 the Group announced that it had signed a heads of terms to
partner with CorePath Laboratories (CorePath), a full service cancer reference
laboratory, to develop and offer its proprietary early-stage lung cancer test
throughout the USA. The proposal is that the Group would receive a 15% royalty
and royalty sharing arrangements overall offering of products and services
using CIZ1B via CorePath in the USA.
Lung cancer is the leading cause of cancer death in the USA, making up almost
25% of all cancer deaths. The American Cancer Society's estimates for lung
cancer in the USA for 2022 are:
- About 236,740 new cases of lung cancer annually and about 130 - 180 deaths
from lung cancer each year (Source:
https://www.cancer.org/cancer/lung-cancer/about/key-statistics.html
(https://www.cancer.org/cancer/lung-cancer/about/key-statistics.html) ); and
- Currently, there are no simple specific blood tests to detect lung cancer
early when targeted interventions can improve timely access to cancer care and
save lives. Yet it is estimated that about 8 million Americans qualify as high
risk of lung cancer and are recommended to receive annual screening with
low-dose CT scans and if half of these high risk individuals were screened,
over 12,000 lung cancer deaths could be prevented (Source: Cheung LC, Katki
HA, Charurvedi AK, Jemal A, Berg CD. Preventing Lung Cancer Mortality by
Computed Tomography Screening: The Effect of Risk-Based Versus U.S.
Preventative Services Task Force Eligibility Criteria, 2005-2015. Anals of
Internal Medicine. 2018; 168(3):229-32. Doi: 10.7326/M17-2067).
Royalty Investment in AZD1656
In September 2021 the Group entered into a royalty sharing agreement with SGSC
to grant the Group potential royalty payments from the commercialisation of
SGSC's therapeutic asset AZD1656 of up to £5m, plus potentially further
payments from the use of a companion diagnostic. During the year the Group
paid a total of £0.2m for this investment.
This supports the strategy of building a portfolio of early cancer detection
tests, companion diagnostics and royalty bearing stakes in significant drug
assets. SGSC has reported positive results from its ARCADIA clinical trial for
diabetes patients with COVID19 and have indicated this may be through the
regulation of the patients' immune system (via controlling Regulatory T Cells
or "Tregs"). Tregs act to suppress immune response and combat damaging cells
potentially reducing serious cardiovascular disease, and also lung diseases
that are linked with the development of lung cancer.
In February 2022 the Group announced a further royalty deal in Inflammatory
Pulmonary and Cardiovascular diseases with Conduit Pharmaceuticals Ltd
("Conduit") and SGSC to acquire an additional 5% economic interest in the
commercialisation of the AZD 1656 asset or such other assets being developed
by Conduit or SGSC to treat inflammatory pulmonary and cardiovascular disease.
Under the agreement the Group will receive 5% of all sums received by SGSC
pursuant to any AstraZeneca ("AZ") commercialisation or sub-licence
commercialisation of the AZD 1656 asset in inflammatory pulmonary and
cardiovascular diseases, after the deduction of certain sums. The
consideration due to SGSC is £1.88m with the initial consideration of £1m
being settled through the issue of 25,000,000 new ordinary shares at a price
of 4.0p per share, which was a premium of 56.9% to the Company's closing
mid-market price of 2.55p on 11 February 2022. The remaining consideration of
£0.88m will be payable in new ordinary shares at 4.0p per share, on the
earlier of receiving shareholder approval to issue the shares or the first
anniversary of completion.
Financial overview
Due to reverse acquisition accounting principles, which are explained in more
detail in Note 3 to the financial statements, these consolidated financial
statements represent a continuation of the consolidated statements of Cizzle
Biotechnology Holdings PLC ("the Company") and its subsidiaries (together
referred to as "the Group") and include:
- The assets and liabilities of CBL at their pre-acquisition carrying value
amounts and the results for all periods reported: and
- The assets and liabilities of the Company as at 14 May 2021 and its results
from the date of reverse acquisition on 14 May 2021 to 31 December 2021.
As the new Group was not in existence in 2020 the comparative results under
reverse acquisition rules are those of the existing company, CBL, that
effectively completed the acquisition. The financial results for the period to
31 December 2021 are summarized below:
- Corporate expenses, before share option charge and exceptional items:
£552,000 (2020 CBL: £14,000);
- Share option charge: £299,000 (2020 CBL: £Nil)
- Exceptional corporate expenses relating to the acquisition: £3,117,000 (2020
CBL: £Nil) which include transaction costs of £303,000 and a non-cash
share-based expense of £2,804,000 (explained in Notes 3 and 5);
- Total comprehensive loss: £ 3,921,000 (2020 CBL Loss £ 14,000); and
- Loss per share 2.4 p (2020 CBL Loss 2.8) p.
Allan Syms
Executive Chair
Enquiries:
Cizzle Biotechnology Holdings plc Via IFC Advisory
Allan Syms (Executive Chairman)
Allenby Capital Limited +44(0) 20 33285656
John Depasquale
Alex Brearley
Novum Securities Limited +44(0) 20 7399 9400
Colin Rowbury
Jon Bellis
IFC Advisory Limited +44(0) 20 3934 6630
Tim Metcalfe cizzle@investor-focus.co.uk
Florence Chandler
Notes to Editors:
About Cizzle Biotechnology
Cizzle Biotechnology is developing a blood test for the early detection of
lung cancer. Cizzle Biotechnology is a spin- out from the University of
York, founded in 2006 around the work of Professor Coverley and colleagues.
Its proof-of-concept prototype test is based on the ability to detect a stable
plasma biomarker, a variant of CIZ1 known as CIZ1B. CIZ1 is a naturally
occurring cell nuclear protein involved in DNA replication, and the targeted
CIZ1B variant is highly correlated with early-stage lung cancer.
For more information, please see https://cizzlebiotechnology.com
(https://cizzlebiotechnology.com)
You can also follow the Company through its twitter account @CizzlePlc and on
LinkedIn.
Consolidated Statement of Comprehensive Income
for the period year ended 31 December 2021
Notes
Group CBL
Year ended 31 December Year ended 31 December
2021 2020
£'000 £'000
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses
- on-going administrative costs 6 (552) (14)
- share option charge 6 (299) -
- transaction costs 6 (303) -
- reverse acquisition expenses 6 (2,804) -
Total administrative expenses (3,958) (14)
Operating (loss) and (loss) before income tax (3,958) (14)
Income tax 9 37 -
Loss and total comprehensive income for the year (3,921) (14)
attributable to the equity shareholders of the parent
Earnings per ordinary share (pence) attributable to the equity shareholders:
Continued operations basic and diluted 10 (2.4p) (2.8p)
Earnings per ordinary share (pence) attributable to
the equity shareholders of the parent 10 (2.4p) (2.8p)
The Company has elected to take the exemption provided under section 408,
Companies Act 2006 from presenting the Company statement of comprehensive
income.
The notes are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2021
Notes Group CBL
2021 2020
£'000 £'000
Non-current assets
Intangible asset 11 200 -
Tangible assets 11 - -
200 -
Current assets
Trade and other receivables 12 80 3
Cash and cash equivalents 13 875 7
955 10
Total assets 1,155 10
Equity
Capital and reserves attributable to equity holders of the company
Ordinary shares 14 3,493 3
Share premium 32,566 1,585
Reverse acquisition reserve (40,021) -
Share capital reduction reserve 10,081 -
Share option reserve 335 -
Retained losses (5,517) (1,596)
Total equity 937 (8)
Liabilities
Current liabilities
Trade and other payables 15 218 8
Borrowings - 10
Total liabilities 218 18
Total equity and liabilities 1,155 10
The notes are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the board
on 30 May 2022 and were signed on its behalf by:
Nigel Lee
Director
Company Statement of Financial Position
As at 31 December 2021
Notes 2021 2020
£'000 £'000
Non-current assets
Intangible asset 11 200
Investments 11 21,803 -
22,003 -
Current assets
Trade and other receivables 12 241 6
Cash and cash equivalents 13 848 84
1,089 90
Total assets 23,092 90
Equity
Capital and reserves attributable to equity holders of the company
Ordinary shares 14 3,493 3,470
Share premium 32,566 8,852
Share capital reduction reserve 10,081 10,081
Share option reserve 335 -
Accumulated losses (23,516) (22,371)
Total equity 22,959 32
Liabilities
Current liabilities
Trade and other payables 15 133 58
Total liabilities 133 58
Total equity and liabilities 23,092 90
The notes are an integral part of these financial statements. The loss for the
year of the Company was £1,145,000 (2020: loss of £306,000).
The financial statements were approved and authorised for issue by the board
on 30 May 2022 and were signed on its behalf by:
Nigel Lee
Director
Consolidated Statement of Cash Flows for the year ended 31 December 2021
Notes Group CBL
2021 2020
£'000 £'000
Cash flows from operating activities
(3,958) (14)
Operating (loss) before tax
Adjustment for: 3,6 2,804 -
Reverse acquisition expense
Share option charge 299 -
Transaction costs settled through share issue 32 -
Share based payment to former director 11 -
Operating cash flow before working capital movements (812) (14)
Decrease in trade and other receivables 12 7 -
Decrease in trade and other payables 15 (204) (2)
Net cash used in operating activities (1,009) (16)
Cash flows from investing activities
Cash acquired on acquisition of subsidiary 46 -
Purchase of investment in intangible assets 11 (200) -
Net cash used in investing activities (154) -
Cash flows from financing activities
Proceeds from the issue of ordinary shares (net of issue costs) 14 2,041 -
Borrowings received - 10
Borrowings repaid (10) -
Net cash generated from financing activities 2,031 10
Net increase / (decrease) in cash and cash equivalents 868 (6)
Cash and cash equivalents at the start of the year 13 7 13
Cash and cash equivalents at the end of the year 13 875 7
The notes are an integral part of these financial statements.
Company Statement of Cash Flows for the year ended 31 December 2021
Notes 2021 2020
£'000 £'000
Cash flows from operating activities
(1,145) (306)
Loss before tax
Share option charge 299 -
Transaction costs settled through share issue 32
Operating cash flow before working capital movements (814) (306)
Change in trade and other receivables 12 (19) 25
Change in trade and other payables 15 75 (13)
Net cash used in operating activities (758) (294)
Cash flows from investing activities
Purchase of investment in intangible assets (200) -
Investment in subsidiary company 11 (103) -
Change in intra group funding (216) -
Net cash used in investing activities (519) -
Cash flows from financing activities
Proceeds from the issue of ordinary shares (net of issue costs) 14 2,041 -
Net cash generated from financing activities 2,041 -
Net increase / (decrease) in cash and cash equivalents 764 (294)
Cash and cash equivalents at the start of the year 13 84 378
Cash and cash equivalents at the end of the year 13 848 84
The notes are an integral part of these financial statements.
Group statement of Changes in Equity
for the year ended 31 December 2021
Group Ordinary Share Share Reverse Retained Total
Share Premium Capital Option Acquisition Losses
Capital Redemption Reserve Reserve
Reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 3 1,585 - - (1,596) (8)
-
Issue of shares - 11 - - - 11
-
Transfer to reverse acquisition reserve (3) (1,596) - 1,599 - -
-
Recognition of plc equity at acquisition date 3,470 8,852 - (22,621) - (218)
10,081
Issue of shares for acquisition of subsidiary 21 21,679 - (21,803) - (103)
-
Reverse acquisition expense - - - 2,804 - 2,804
-
Issue of shares for cash 2 2,198 - - - 2,200
-
Issue of shares in settlement of fees - 32 - - - 32
-
Issue of warrants - (36) 36 - - -
-
Cost of share issue - (159) - - - - (159)
Share option charge - - - 299 - - 299
3,493 32,566 335 (40,021) (1,596) 4,858
10,081
Comprehensive Loss for the year - - - - (3,921) (3,921)
-
At 31 December 2021 3,493 32,566 335 (40,021) (5,517) 937
10,081
For the year ended 31 December 2020
CBL
Ordinary
Share Share Retained
Capital Premium Losses Total
£'000 £'000 £'000 £'000
At 1 January 2020 3 1,585 (1,582) 6
Comprehensive loss for the year - - (14) (14)
At 31 December 2020 3 1,585 (1,596) (8)
Company statement of Changes in Equity
for the year ended 31 December 2021
Ordinary Share Share premium Share capital reduction reserve Share option reserve Retained Losses Total
Capital £'000 £'000 £'000 £'000
£'000 £'000
At 1 January 2020 3,470 8,852 - (22,065) 338
10,081
Comprehensive Loss for the year - - - (306) (306)
-
At 31 December 2020 3,470 8,852 - (22,371) 32
10,081
Issue of shares for acquisition of subsidiary 21 21,679 - - 21,700
-
Issue of shares for cash 2 2,198 - - 2,200
-
Issue of shares in settlement of fees - 32 - - 32
-
Cost of share issue - (159) - - - (159)
Issue of warrants - (36) 36 - -
-
Share option charge - - - 299 - 299
3,493 32,566 335 (22,371) 24,104
10,081
Comprehensive Loss for the year - - - (1,145) (1,145)
-
At 31 December 2021 3,493 32,566 335 (23,516) 22,959
10,081
The notes are an integral part of these financial statements.
Notes to the financial statements for the year ended 31 December 2021
1 General information
Cizzle Biotechnology Holdings PLC ("the Company" of "the Group") (formerly
Bould Opportunities PLC) is a public limited company with its shares traded on
the Standard Listing of the London Stock Exchange. On 14 May 2021 the Company
acquired through a share for share exchange the entire share capital of Cizzle
Biotechnology Limited. The Company is a holding company of a group of
companies ("the Group") whose principal activity is the early detection of
lung cancer via the development of an immunoassay test for the CIZ1B
biomarker.
The directors consider there to be no ultimate controlling shareholder of the
Company.
The address of the registered office is 6(th) Floor, 60 Gracechurch Street,
London, EC3V 0HR and the registered number of the Company is 06133765.
2 Accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The financial statements of Cizzle Biotechnology Holdings PLC ("the Company")
including subsidiary undertakings (together referred to as "the Group") have
been prepared in accordance with UK-adopted international accounting
standards, and the Companies Act 2006 on a historical cost basis.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Company's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 4.
The results for the year ended 31 December 2021 are the Group results
following the acquisition of Cizzle Biotechnology Limited ("CBL") on 14 May
2021. The results for the comparative period to 31 December 2020 are the
results of CBL prior to the creation of the new Group.
(a) New standards and interpretations
The IASB and IFRS Interpretations Committee have issued the following
standards and interpretations with an effective date of implementation of 1
January 2021.
i) New standards and amendments - applicable 1 January 2021
The following standard and interpretations apply for the first time to
financial reporting periods commencing on or after 1 January 2021:
Effective for accounting periods beginning on or after Impact
Interest rate benchmark reform - Amendments to IFRS 17 "Insurance Contracts" 1 January 2021 None
Interest rate benchmark reform - Amendments to IFRS 16 "Leases" 1 January 2021 None
Interest rate benchmark reform - Amendments to IFRS 9 "Financial Instruments" 1 January 2021 None
Interest rate benchmark reform - Amendments to IAS 39 "Financial Instruments: 1 January 2021 None
Recognition and Measurement"
Interest rate benchmark reform - Amendments to IFRS 7 "Financial Instruments: 1 January 2021 None
Disclosures"
ii) Forthcoming requirements
As at 31 December 2021, the following standards and interpretations had been
issued but were not mandatory for annual reporting periods ending on 31
December 2021 and not early adopted.
Effective for accounting periods beginning on or after Impact
COVID-19 related Rent Concessions - Amendments to IFRS 16 1 March 2021 None
Income Taxes - Deferred tax amendments to IAS 12 1 May 2021 None
Property, Plant and Equipment: Proceeds before intended use - Amendments to 1 January 2022 None
IAS 16
Reference to the Conceptual Framework - Amendments to IFRS 3 1 January 2022 None
Onerous Contracts: Cost of Fulfilling a Contract - Amendments to IAS 37 1 January 2022 None
Annual Improvements to IFRS Standards 2018-2020 1 January 2022 None
Classification of Liabilities as Current or Non-current - Amendments to IAS 1 1 January 2022 None
2.2 Going concern
The Directors have adopted the going concern basis in preparing the financial
statements for the year to 31 December 2021. In reaching this conclusion, the
Directors have considered current trading and the current and projected
funding position for the period of just over 12 months from the date of
approval of the financial statements through to 30 June 2023. The Company, as
anticipated in the Company's Prospectus announced on 23 April 2021, will need
to generate finance through equity or debt in order to meet its committed
liabilities as they fall due for the foreseeable future and progress its
planned product research and development activities. The auditors have made
reference to a material uncertainty in respect of going concern in their audit
report. The assessment of the COVID-19 situation continues to be monitored by
the directors. It's impact to date on the Group's operations has been minimal.
Current funding
The Company's cash balance as at 31 December 2021 was £875,000 and there were
no borrowing facilities at that date. On 14 May 2021 the Company raised
£2,200,000, before share issue costs, through the placing of new ordinary
shares in conjunction with the admission of its shares to trading on the
London Stock Exchange by way of a Standard Listing.
Conclusion
After taking account of the Company's current funding position, its cash flow
projections and the risks and uncertainties associated with these, the
directors have a reasonable expectation that the Company has access to
adequate resources to continue in operational existence for the foreseeable
future. For these reasons they continue to prepare the financial statements on
a going concern basis. These financial statements do not include any
adjustments that would result from the going concern basis of preparation
being inappropriate.
2.3 Segmental reporting
IFRS 8 requires that segmental information be disclosed on the basis of
information reported to the chief operating decision maker. The Company
considers that the role of chief operating decision maker is performed by the
Company's Board of Directors. The Group's only business activity and single
segment is the development of tests for the early detection of lung cancer.
2.4 Foreign currency translation
The functional currency of the Company is Sterling which is also the
presentational currency of the financial statements. Foreign currency assets
and liabilities are converted into Sterling at the rates of exchange ruling at
the end of the financial year. Foreign currency transactions are translated
into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end exchange
rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of comprehensive income.
2.5 Non-Current assets
Investments in intangible assets and subsidiaries are stated at cost less
accumulated impairment. Plant and equipment are stated at costs less
accumulated depreciation and any accumulated impairment losses. Depreciation
is charged to write off costs less estimated residual values on a
straight-line basis over their estimated useful lives. Estimated useful lives
are reviewed each year and amended if necessary.
2.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short-term highly liquid investments, with original maturities
of three months or less.
2.7 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
2.8 Current and deferred income tax
Current income tax is calculated on the basis of the tax laws enacted or
substantively enacted at the statement of financial position date in the
countries where the Company's subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation and establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. However, deferred
income tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit nor
loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantively enacted by the statement of financial position
date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled. Deferred income
tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can
be utilised.
2.9 Share based payments
The Company operates an equity-settled, share-based compensation plan. The
fair value of the employee services received in exchange for the grant of the
options is recognised as an expense and credited to the share option reserve
within equity. The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options granted, excluding
the impact of any non-market vesting conditions (for example, profitability
and sales growth targets). Options that lapse before vesting are credited back
to income. The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and, if applicable, share
premium when the options are exercised.
2.10 Financial instruments
i) Financial assets
The Company classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value through profit or loss; and
· those to be measured at amortised cost.
The classification depends on the business model for managing the financial
assets and the contracted terms of the cash flows. Financial assets are
classified as at amortised cost only if both of the following criteria are
met:
· the asset is held within a business model whose objective is to collect
contracted cash flows; and
· the contractual terms give rise to cash flows that are solely payments of
principal and interest.
Financial assets, including trade and other receivables and cash and bank
balances, are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the transaction is
measured at the present value of the future receipts discounted at a market
rate of interest.
Such assets are subsequently carried at amortised cost using the effective
interest method.
At the end of each reporting period financial assets measured at amortised
cost are assessed for objective evidence of impairment. If an asset is
impaired the impairment loss is the difference between the carrying amount and
the present value of the estimated cash flows discounted at the asset's
original effective interest rate. The impairment loss is recognised in the
consolidated income statement.
The Company applies the simplified approach in calculating the expected credit
losses (ECLs) as permitted by IFRS 9. Changes in credit risk is not tracked
but instead a loss allowance is recognised at each reporting date based on the
financial asset's lifetime ECL.
If there is a decrease in the impairment loss arising from an event occurring
after the impairment was recognised the impairment is reversed. The reversal
is such that the current carrying amount does not exceed what the carrying
amount would have been had the impairment not previously been recognised. The
impairment reversal is recognised in the consolidated income statement.
Financial assets are derecognised when (a) the contractual rights to the cash
flows from the asset expire or are settled, or (b) substantially all the risks
and rewards of the ownership of the asset are transferred to another party or
(c) despite having retained some significant risks and rewards of ownership,
control of the asset has been transferred to another party who has the
practical ability to unilaterally sell the asset to an unrelated third party
without imposing additional restrictions
ii) Financial liabilities
Basic financial liabilities, being trade and other payables, are initially
recognised at transaction price, unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present
value of the future receipts discounted at a market rate of interest.
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities. Trade payables
are recognised initially at transaction price and subsequently measured at
amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished,
that is when the contractual obligation is discharged, cancelled or expires.
The Company does not hold or issue derivative financial instruments.
iii) Offsetting
Financial assets and liabilities are offset and the net amounts presented in
the financial statements when there is an enforceable right to set off the
recognised amounts and there is an intention to settle on a net basis or to
realise the asset and settle to liability simultaneously.
2.11 Pensions
For defined contribution schemes the amount charged to the statement of
comprehensive income is the contribution payable in the year. Differences
between the contributions payable in the year and contributions actually paid
are shown either as accruals or prepayments.
2.12 Exceptional items
The Company has separately identified certain net expenses that are
exceptional by either their size or the fact that they do not normally occur
in the Company's normal course of business. Such items are recorded separately
in the Statement of Comprehensive Income and are explained further in Note 6.
3 Reverse acquisition
On 14 May 2021 the Company acquired through a share for share exchange the
entire share capital of CBL whose principal activity is the early detection of
lung cancer through the development of tests to detect CIZ1B variant protein.
Although the transaction resulted in CBL becoming a wholly owned subsidiary of
the Company, the transaction constitutes a reverse acquisition as the previous
shareholders of CBL own a substantial majority of the shares of the Company.
In substance the shareholders of CBL acquired a controlling interest in the
Company and the transaction has therefore been accounted for as a reverse
acquisition. As the Company's activities prior to the acquisition were purely
the maintenance of the AIM listing, acquiring CBL and raising equity finance
to provide the required funding for the operations of the acquisition means it
did not meet the definition of a business combination in accordance with IFRS
3.
Accordingly, this reverse acquisition does not constitute a business
combination and was accounted for in accordance with IFRS 2 "Share-based
Payments" and associated IFRIC guidance. Although the reverse acquisition is
not a business combination, the Company has become a legal parent and is
required to apply IFRS 10 and prepare consolidated financial statements. The
directors have prepared these financial statements using the reverse
acquisition methodology, but rather than recognise goodwill, the difference
between the equity value given up by the CBL shareholders is charged to the
statement of comprehensive income as a share-based payment on reverse
acquisition, and represents in substance the cost of acquiring a quoted
company.
In accordance with the reverse acquisition principles, these consolidated
financial statements represent a continuation of the consolidated statements
of Cizzle Biotechnology Holdings Plc and its subsidiaries and include:
- The assets and liabilities of CBL at their pre-acquisition carrying value
amounts and the results for all periods reported; and
- The assets and liabilities of the Company as at 14 May 2021 and its results
from the date of reverse acquisition (14 May 2021 to 31 December 2021).
On 14 May 2021 the Company issued 206,310,903 ordinary shares to acquire the
313,932 ordinary shares of CBL Limited. At 14 May 2021 the valuation of the
investment in CBL was £21,700,000.
Because the legal subsidiary, CBL, was treated on consolidation as the
accounting acquirer and the legal parent company, Cizzle Biotechnology
Holdings Plc, was treated as an accounting subsidiary, the fair value of the
shares deemed to be issued by CBL was calculated at £2,587,000 based on an
assessment of the purchase consideration for a 100% holding of Cizzle
Biotechnology Holdings plc.
The fair value of the net liabilities of Cizzle Biotechnology Holdings Plc at
acquisition was as follows:
£'000
Cash and cash equivalents 46
Other assets 47
Liabilities (310)
Net (Liabilities) (217)
The difference between the deemed cost of £2,587,000 and the fair value of
the net liabilities noted above of £(217,000) resulted in £2,804,000 being
expensed as "reverse acquisition expenses" in accordance with IFRS2, Share-
based Payments, reflecting the economic cost to CBL shareholders of acquiring
a quoted entity.
The reverse acquisition reserve which arose from the reverse takeover is made
up as follows:
£'000
Pre-acquisition equity(1) (22,621)
CBL share capital at acquisition(2) 1,599
Investment in CBL(3) (21,803)
Reverse acquisition expense(4) 2,804
(40,021)
1. Pre-acquisition equity of Cizzle Biotechnology Holdings PLC at 14 May 2021.
2. CBL had issued share capital and share premium of £1,599,000. As these
financial statements represent the capital structure of the legal parent
entity, the equity of CBL is eliminated.
3. The value of the shares issued by the Company in exchange for the entire share
capital of CBL plus stamp duty expenses.
4. The reverse acquisition expense represents the difference between the value of
the equity issued by the Company, and the deemed consideration given by CBL to
the Group.
Recognition of pre-acquisition equity of Cizzle Biotechnology Holdings PLC at
14 May 2021.
CBL had issued share capital and share premium of £1,599,000. As these
financial statements represent the capital structure of the legal parent
entity, the equity of CBL is eliminated.
The value of the shares issued by the Company in exchange for the entire share
capital of CBL plus stamp duty expenses. The above entry is required to
eliminate the balance sheet impact of this transaction.
The reverse acquisition expense represents the difference between the value of
the equity issued by the Company, and the deemed consideration given by CBL to
the Group.
4 Financial risk
The Group's principal risk factors are as follows:
4.1 Capital risk management
The Company monitors capital which comprises all components of equity (i.e.
share capital, share premium, capital reduction reserve, share option reserve,
and retained earnings/losses). Note 22 describes how capital is managed in
respect of the debt to equity ratio.
4.2 Financial risk factors
The Group's operations exposed it to a variety of financial risks that had
included the effects of credit risk, liquidity risk and interest rate risk.
The Company had in place a risk management programme that attempted to limit
the adverse effects on the financial performance of the Company by monitoring
levels of debt finance and the related finance costs. The Company did not use
derivative financial instruments to manage interest rate costs and as such, no
hedge accounting was applied.
Given the size of the Company, the directors did not delegate the
responsibility of monitoring financial risk management to a sub-committee of
the Board. The policies set by the board of directors were implemented by
the Company's finance department.
a) Credit risk
The Company's credit risk was primarily attributable to its trade receivables
balance. The amounts presented in the statement of financial position are net
of allowances for impairment.
b) Liquidity risk
Liquidity risk was the risk that an entity will encounter difficulty in
meeting obligations associated with financial liabilities. The Company's
financial liabilities included its trade and other payables shown in Note 15.
c) Interest rate cash flow risk
The Company had interest-bearing assets. Interest bearing assets comprised
only cash balances, which earned interest at floating rates.
5 Critical accounting estimates and judgements
In the preparation of the financial statements the directors must make
estimates and assumptions that affect the asset and liability items and
revenue and expense amounts recorded in the financial statements. These
estimates are based on historical experience and various other assumptions
that the Board believes are reasonable under the circumstances. The results of
this form the basis for making judgements about the carrying value of assets
and liabilities that are not readily available from other sources.
a) Accounting judgement
There were no judgments made.
b) Accounting estimate
Share based payments
See Note 14 which explains the methods used to estimate the fair value of
share options granted.
6 Operating expenses
Group CBL
2021 2020
£'000 £'000
Research and development 161 -
Professional advisers 89 -
Staff costs 88 -
Intellectual property renewal fees 57 14
Regulatory fees 53 -
Share based payment 37 -
Audit fees (Note 7) 27 -
Other expenditure 40 -
On-going administrative costs 552 14
Share option charge 299 -
Reverse acquisition expense 2,804 -
Transaction costs - IPO and reverse acquisition 303
Total administrative expenses 3,958 14
7 Auditor's remuneration
Group CBL
2021 2020
£'000 £'000
Fees payable to the Company's auditor for the audit of the Group, Company and 27 -
subsidiary financial statements
Non-audit services - reporting accountant for IPO 38 -
65 -
8 Directors' emoluments
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Wages and salaries 125 - 105 80
Social Security Costs 10 - 11 6
Pension Contributions 3 - 2 -
Share based payments 299 - 299 -
437 - 417 86
The Group does not have any employees other than the directors. The average
number of directors during the year was 4 (CBL 2020: 2).
9 Income tax credit
The tax credit for the year was as follows:
Group CBL
2021 2020
£'000 £'000
Research and development tax credits (37) -
(37) -
The tax on the Group's loss before tax differs from the theoretical amount
that would arise using the tax rate applicable to the losses of the group
(2020: CBL) as follows:
Group CBL
2021 2020
£'000 £'000
Loss before tax on continuing operations (3,958) -
Tax calculated at the domestic rate applicable of 19% (2020: 19%) (752) -
Expenses not deductible for tax purposes 590 -
Tax losses for which no deferred tax credit was recognised 162 -
Research and development tax credit (37) -
Total income tax credit (37) -
10 Earnings per share
Basic loss per share
Group CBL
2021 2020
Loss for the year (£3,921,000) (£14,000)
Weighted average number of ordinary shares 160,516,450 493,844
Basic loss per share (2.4p) (2.8p)
The basic loss per share is derived by dividing the loss for the period
attributable to ordinary shareholders by the weighted average number of shares
in issue. The weighted average number of shares is adjusted for the impact of
the reverse acquisition as follows:
- Prior to the reverse acquisition, the number of shares is based on CBL,
adjusted using the share exchange ratio arising on the reverse acquisition;
and
- From the date of the reverse acquisition, the number of share is based on the
Company.
Diluted earnings per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding after adjusting these amounts for the effects of dilutive
potential ordinary shares. As the results for the years ended 31 December 2021
and 31 December 2020 are a loss, any exercise of share options would have an
anti-dilutive effect on earnings per share. Consequently, earnings per share
and diluted earnings per share are the same and the calculation has not been
included.
As at 31 December 2021, there were share options outstanding over 23,432,041
shares (CBL 2020: 14,928,864 shares), which could potentially have a dilutive
impact in the future.
11 Non- Current assets
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Investment in subsidiary undertakings - - 21,803 -
Intangible assets 200 - 200 -
Tangible assets - - - -
Total investments 200 - 22,003 -
a. Investments in subsidiary undertakings - Company
2021 2020
£'000 £'000
Opening balance - -
Acquisition during the year 21,803 -
Closing balance 21,803 -
The investment in subsidiary undertakings is in the following companies:
Name Country of incorporation Proportion of ownership interest Principal activities/status
Cizzle Biotechnology Limited England and Wales 100% interest in ordinary share capital Early detection of lung cancer
Cizzle Biotech Limited (formerly Enfis Limited) England and Wales 100% interest in ordinary share capital Dormant
The registered address for ongoing subsidiaries is 6(th) floor, 60 Gracechurch
Street, London, EC3V 0HR.
Cizzle Biotechnology Limited - as mentioned in Note 3, this investment
represents the value of the shares issued by the Company in exchange for the
entire share capital of CBL (£21,700,000 plus stamp duty expenses of
£103,000).
b. Intangible assets - Group and Company
Intangible assets represents the fair value an investment in a royalty sharing
arrangement with St George Street Capital ("SGSC"), a UK-based medical
charity. This agreement grants the Company potential future royalty payments
from the commercialisation of St George Street's therapeutic asset AZD1656 of
up to £5m, plus potentially further payments from the use of a companion
diagnostic.
2021 2020
£'000 £'000
Opening balance - -
Acquisition during the year 200 -
Closing balance 200 -
c. Tangible assets - Group
Laboratory equipment
£'000
Total
£'000
Cost
At 1 January 2021 - -
Acquired during the year 18 18
Write-off during the year (18) (18)
At 31 December 2021 - -
Depreciation
At 1 January 2020 - -
Acquired during the year 18 18
Write-off during the year (18) (18)
At 31 December 2021 - -
Net book value
At 31 December 2021 - -
At 31 December 2020 - -
On 14 May 2021 the Group acquired laboratory equipment with a cost of £18,000
and a net book value of £Nil. This equipment was written off at 31 December
2021.
12 Trade and other receivables
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Trade receivables - - - 4
Less: provision for impairment - - - -
Trade receivables (net) - - - 4
Amounts due from subsidiaries - - 216 -
Social security and other taxes 14 - 7 2
Corporation tax recoverable 37 - - -
Prepayments and other receivables 29 3 18 -
80 3 241 6
Trade and other receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
classified as 'trade and other receivables' in the statement of financial
position and are included in current assets, except for maturities greater
than 12 months after the statement of financial position date. These are
classified as non-current assets. The value of trade receivables shown above,
in addition to the value of cash balances on deposit with counterparties (see
Note 17), represents the Company's maximum exposure to credit risk. No
collateral is held as security.
Amounts due from subsidiary undertakings at 31 December 2021 represented net
amounts provided to the Company's wholly owned subsidiary, Cizzle
Biotechnology Limited.
The fair value of trade and other receivables approximate to the net book
values stated above.
As of 31 December 2021, trade receivables of £Nil (2020: £Nil) were past
their due date of receipt.
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Up to two months past due - - - -
Over two months past due - - - 4
As of 31 December 2021, trade receivables of £Nil (2020: £Nil) were
impaired. The individually impaired receivables relate to balances where it
has been assessed that the receivable is not expected to be recovered.
13 Cash and cash equivalents
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Cash on hand and balances with banks 875 7 848 84
875 7 848 84
14 Share capital
Numbers in 000s
New Deferred 'A' shares Deferred 'A' shares
Ordinary
Nominal value per share Shares 0.01p 0.99p
0.01p
At 31 December 2020 - - -
Recognition of PLC equity 225,158 12,383,626
24,817
Issued 228,631 - -
At 31 December 2021 253,448 225,158 12,383,626
The following table reconciles the total nominal value of the shares in issue:
New Ordinary shares Deferred Deferred 'A' shares
£0.01p
'A' shares
Nominal value per share 0.01p 0.01p 0.99p Total
£000 £'000 £000 £000
At 31 December 2020 - - - -
On reverse takeover of Cizzle Biotechnology Limited
- Recognition of PLC equity 3 2,229
- Consideration shares 21 - 3,470
- Placing of shares for cash 2 1,238 - 21
- Settlement of fees - - - 2
- -
-
At 31 December 2021 26 1,238 2,229 3,493
During the year ended 31 December 2021, the following shares were issued:
No of shares Issue price
issued per share
14 May 2021 000s Pence
Reverse takeover - Cizzle Biotechnology Ltd (non-cash) 206,311 10.0p
Placing (cash) 22,000 10.0p
Settlement of fees (non-cash) 320 10.0p
Total issued 228,631
On 14 May 2021 the Company issued investor warrants to subscribe for
11,000,000 Ordinary Shares at a fixed price of 15p per share valid for three
years until 13 May 2024.
On 14 May 2021 the Company issued broker and adviser warrants to subscribe for
1,350,000 Ordinary Shares at a fixed price of 10p per share valid for three
years until 13 May 2024. 250,000 of these broker warrants are automatically
exercisable upon the Company's share price equalling 20p per share. The fair
value of these warrants at 31 December 2021 is £5,000 and has been accounted
for as a cost to the Company and a reduction of the share premium account (
see statement of changes in equity on pages 37 to 38).
Employee share scheme
The Company has an Executive Share Option Scheme.
The exercise terms of all granted options as at 31 December 2021 are
summarised below:
Date of grant Number of options Exercise price (pence per share)
Exercise
dates from
2015 300 5.02 2017
2016 800 1.85 2017
2017 500 1.00 2018
2021 3,689,096 1.53 2021
2021 19,741,345 10.00 2021 (based on performance)
The number and weighted average exercise price of the options that were
exercisable at 31 December 2021 were 23,432,041 and 8.67p respectively.
Movements in the number of share options outstanding and their related
weighted average exercise prices are as follows:
Average
exercise price Options
(pence per share) number
At 31 December 2020 -
Acquired on reverse takeover 1.53 3,690,696
Issued during year 10.00 19,741,345
At 31 December 2021 8.67 23,432,041
Share options outstanding at the end of the year have the following expiry
dates and exercise prices:
Exercise price Options
Expiry date (pence per share) 2021
2025 5.02 300
2026 1.85 800
2027 1.00 500
2027 1.53 3,689,096
2031 10.00 19,741,345
23,432,041
The Company determines the fair value of its share option contracts on the
grant date, adjusts this to reflect its expectation of the options that will
ultimately vest, and then expenses the calculated balance on a straight-line
basis through its statement of comprehensive income over the expected vesting
period with a corresponding credit to its share option reserve. Subsequent
changes to the expectation of number of options that will ultimately vest are
dealt with prospectively such that the cumulative amount charged to the
statement of comprehensive income is consistent with latest expectations.
Subsequent changes in market conditions do not impact the amount charged to
the statement of comprehensive income.
The Company determines the fair value of its share option contracts using a
model based on the Black-Scholes-Merton methodology. In determining the fair
value of its share option contracts, the Company made the following
assumptions (ranges are provided where values differ across tranches).
Expected volatility was determined by reference to historical experience.
Grant date Share Exercise Expected Expected Risk free Fair Value
Price Price Option Expected Dividend Interest At date of
Pence Pence Life Volatility Yield Rate Grant
Years % % % Pence
2021 9.38p 1.53p 10 years 68% 0% 0.83% 1.60p
2021 4.40p 10.00p 10 years 32% 0% 0.83% 3.00p
15 Trade and other payables
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Trade payables 111 2 73 14
Social security and other taxes 43 - 6 5
Accruals and other payables 64 6 54 39
218 8 133 58
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Due or due in less than one month 75 2 37 14
Due between one and three months 4 - 4 8
Due in more than three months 32 - 32 (8)
111 2 73 14
16 Borrowings
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Loans repayable in less than one year - 10 - -
- 10 - -
17 Financial assets and liabilities
The tables below analyse the carrying value of financial assets and financial
liabilities in the Group's and Company's statements of financial position.
Further information on the classes that make up each category is provided in
the notes indicated. The carrying value of each category is considered a
reasonable approximation of its fair value. All amounts are due within one
year.
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Trade receivables (Note 12) - - - 4
Amounts due from subsidiaries (Note 12) - - 216 -
Prepayments and other receivables (Note 12) 29 3 18 -
Cash and cash equivalents (Note 13) 875 7 848 84
Financial assets at amortised cost 904 10 1,082 88
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Trade payables (Note 15) 111 2 73 22
Accruals and other payables (Note 15) 64 6 54 36
Borrowings (Note 16) - 10 - -
Financial liabilities at amortised cost 175 18 127 58
18 Deferred income tax
There is an un-provided deferred tax asset arising on taxable losses of
£0.47m (2020: £0.2m). In accordance with accounting standards, the deferred
tax asset has not been recognised in the financial statements due to
uncertainty over the availability of sufficient future profits against which
it could be recovered.
At 31 December 2021 there was no deferred tax liability (2020: £nil).
19 Commitments
The Group has no commitments as at 31 December 2021 (2020: £Nil).
20 Related party transactions
Transactions with directors
Directors' emoluments as noted in note 8. The Group's Statement of
Comprehensive Income includes an amount of £7,366 (2020: £20,000) paid to
Experience Capital Limited in respect of non-executive director services
provided by Martin Lampshire.
21 Controlling party
The directors consider there to be no ultimate controlling party.
22 Capital management
In managing its capital structure, the Company's objective is to safeguard the
Company's ability to continue as a going concern, managing cash flows so that
it can continue to provide returns for shareholders.
The Company makes adjustments to its capital structure in the light of changes
in economic conditions and the requirements of the Company's businesses. The
Board has sought to maintain low levels of borrowing to reflect the
development stage of the Company's businesses. Over time as the Company's
businesses mature and become profitable the Board is likely to make increased
use of borrowing facilities to fund working capital. In order to maintain or
adjust the capital structure, the Company may issue new shares or seek
additional borrowing facilities. The Company monitors capital on several bases
including the debt to equity ratio. This ratio is calculated as debt ÷
equity. Debt is calculated as total borrowings as shown in the consolidated
statement of financial position.
Equity comprises all components of equity as shown in the consolidated
statement of financial position. The debt-to-equity ratio at 31 December 2021
and 31 December 2020 was as follows:
Group CBL Company Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Total debt - 10 - -
Total equity 937 (8) 22,959 32
Debt-to-equity ratio 0.0% 125% 0.0% 0.0%
23 Reserves
The following reserves describe the nature and purpose of each reserve within
equity:
a. Capital reduction reserve
The capital reduction reserve set out in the Statement of Changes in Equity
arose in 2014 when the nominal value of each share was reduced from 10p to 1p.
b. Share premium
The amount subscribed for each share in excess of nominal value.
c. Reverse acquisition reserve
The reverse acquisition reserve is explained in Note 3.
d. Share option
The accumulated expense arising during their vesting period of share options
granted to directors and employees and warrants granted to third parties.
e. Accumulated losses
All other net losses and gains not recognised elsewhere.
24 Subsequent events
a) Royalty Investment in AZD 1656
On 14 February 2022 it was announced that the Company had entered into a
definitive agreement (the "Agreement") with Conduit Pharmaceuticals Limited
("Conduit") and St George Street Capital Limited ("SGSC") to acquire a 5%
economic interest in the commercialisation of the AZD 1656 asset or other such
assets being developed by Conduit or SGSC to treat inflammatory pulmonary and
cardiovascular disease (the "Economic Interest").
Highlights of the Agreement are as follows:
- Agreement with Conduit and SGSC to acquire a 5% economic interest for a total
consideration of £1.88 million, to be settled in new Cizzle ordinary shares
at a price of 4.0p per share, a 56.9% premium to the closing mid-market price
on 11 February 2022;
- The Agreement is in addition to the Company's existing interest in AZD 1656 as
announced on 20 September 2021:
- SGSC recently reported the successful completion of the AZD 1656 ARCADIA
clinical trial in Covid-19 and SGSC and Conduit are in discussions with
multiple pharmaceutical companies about licensing opportunities for AZD 1656
for Covid-19 and potentially for further indications; and
- The Agreement supports the Company's ambitions to expand its target customer
base into the pharmaceutical industry and is in line with its strategy of
building a portfolio of early cancer detection tests, companion diagnostics
and royalty bearing stakes in significant drug assets.
Consideration for the Agreement
Under the terms of the Agreement, Cizzle will pay consideration of £1.88
million to SGS for the Economic Interest. Of the consideration payable, £1.0
million (the "Initial Consideration") will be satisfied by the issue of
25,000,000 new ordinary shares in the Company (the "Consideration Shares"), at
a price of 4.0 pence per Consideration Share, being a premium of 56.9 per
cent. to the Company's closing mid-market price of 2.55 pence on 11 February
2022. The remaining consideration of £880,000 will be payable in new ordinary
shares in the Company issued at 4.0 pence per share, on the earlier of
receiving shareholder approval to issue the shares or the first anniversary of
completion.
The transaction is considered to be a non-adjusting subsequent event as the
decision to make this investment was not undertaken until just prior to the
announcement. In 2022 the Group intends to account for this investment within
intangible assets.
b) USA
On 6 May 2022 the Group announced that it had signed a heads of terms to
partner with CorePath Laboratories (CorePath), a full service cancer reference
laboratory, to develop and offer its proprietary early-stage lung cancer test
throughout the USA. The proposal is that the Group would receive a 15% royalty
and royalty sharing arrangements overall offering of products and services
using CIZ1B via CorePath in the USA.
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