REG - Destiny Pharma PLC - Audited results for year ended 31 December 2021
12/04/2022 07:00
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RNS Number : 0342I Destiny Pharma PLC 12 April 2022
Destiny Pharma plc
("Destiny Pharma" or "the Company")
Audited results for the year ended 31 December 2021
Good progress preparing NTCD-M3 Phase 3 programme targeting C. difficile
infection recurrence
Discussions continue to progress with potential licensing partners for NTCD-M3
Primary endpoint met in XF-73 nasal Phase 2b clinical study
Secondary endpoint data showed XF-73 nasal exhibited a significant and
sustained nasal reduction of S.aureus
Positive feedback from European Medicines Agency on XF-73 nasal Phase 3
programme design
£6.5M post period equity fundraise completed - Company funded through to
mid-2023
Brighton, United Kingdom - 12 April 2022 - Destiny Pharma plc (AIM: DEST), a
clinical stage innovative biotechnology company focused on the development of
novel medicines that can prevent life-threatening infections, announces its
audited financial results for the year ended 31 December 2021.
Financial and corporate highlights
· Loss before tax of £6.3 million (2020: £6.5 million)
· R&D expenditure of £3.7 million (2020: £4.5 million)
· Other operating expenses (excluding share based payment charge)
of £2.3 million (2020: £1.9 million)
· Year-end cash and cash equivalents of £4.6 million (2020:
£9.7 million)
· Post period equity fund raise of £6.5 million
· Cash runway extended to mid-2023
Operational highlights
NTCD-M3 for prevention of C. difficile infection recurrence
· Good progress made during the year with the transfer and
commencement of manufacturing scale up processes and advancement of
discussions with US and European regulators on finalising the detail of the
Phase 3 clinical trial design. Regulatory discussions are expected to conclude
in the first half of 2022, manufacturing scale up by year-end and the Phase 3
trial is targeted to commence thereafter.
· Discussions are progressing with potential licencing partners,
with several parties active in the data room. This is in line with the
Company's strategy of seeking partners to co-fund Phase 3 trials and lead
commercialisation of the asset.
· US Department of Veterans Affairs research study confirms the
potential of NTCD-M3 as a novel treatment to prevent the recurrence of C.
difficile infections (CDI) that can be used alongside all standard-of-care
antibiotic treatments.
· US and European market research underpins clinical support and
market potential of NTCD-M3.
· Establishment of a NTCD-M3 clinical advisory board consisting
of Professor Dale Gerding MD, US, who discovered NTCD-M3, Professor Mark
Wilcox MD, UK key opinion leader in CDI and other medical and drug
development experts with recent experience of running and designing
international Phase 3 clinical studies in CDI.
XF-73 nasal gel for prevention of post-surgical infections
· Positive top-line results in Phase 2b clinical study reported
in 2021. Primary efficacy endpoint met successfully with high statistical
significance and no treatment related safety events.
· Very good secondary endpoint data announced in August 2021
showed that XF-73 has the potential to keep patients at a significantly
low S. aureus nasal burden during the period of highest infection risk which
runs from 1 hour prior to incision, during surgery itself, to the start of
wound healing and out to 6 days post-surgery.
· Independent European report underpins the clinical need and
market opportunity of XF-73 nasal gel which is seen as a very promising
alternative to the current standard of care, Mupirocin, by both clinicians and
payers.
· Successful XF-73 nasal gel Phase 2b study data was presented at
2021 ECCMID (European Congress of Clinical Microbiology & Infectious
Diseases) Congress by infection prevention expert, Professor Julie Mangino
MD.
Earlier pipeline and research projects
· Two new collaborations signed: NIAID in US supporting XF-73
dermal infection programme and US Department of Veterans Affairs to research
NTCD-M3 for prevention of recurrence of CDI.
· Pre-clinical work on SporCov COVID-19 programme in
collaboration with joint partner SporGen Limited (which is largely funded by
an £0.8 million Innovate UK grant) completing in H1 2022. Plans for next
stage of development are being progressed.
· XF platform research projects are progressing well after
Covid-19 delays and are largely funded by grants and non-dilutive funding.
Post period highlights
· Positive feedback received from the European Medicines Agency
(EMA) on plans for XF-73 nasal gel Phase 3 programme design. Phase 3 can use a
similar primary endpoint to the successful Phase 2b clinical study, providing
a route through Phase 3 trials to the European approval of XF-73 nasal gel as
a ground breaking hospital infection prevention product. Feedback from FDA is
expected in Q2 2022.
· Successful completion of the first of two pre-clinical safety
studies of XF-73 Dermal formulation. Work continues with US Government's NIAID
to complete preclinical safety package that will support future clinical
development of XF-73 Dermal in serious wound infections.
· China Medical System Holdings Limited (CMS), the Company's
China regional partner and investor, started an additional dermal programme
with XF-73 targeting the prevention and treatment of superficial skin
infections caused by bacteria.
· Successful equity fund raise of £6.5 million (gross) to enable
continued progress of NTCD-M3 and XF73 nasal toward Phase 3 clinical studies,
finalisation of regulatory plans and strengthening of balance sheet.
Neil Clark, Chief Executive Officer of Destiny Pharma, commented:
"With full control of two high quality, late-stage clinical assets targeted at
infection prevention, both of which are backed by strong Phase 2 clinical data
and clear commercial positioning, Destiny Pharma is very well positioned for
the future. We have made excellent progress in developing our pipeline in
2021 and the Board and employees are excited about delivering on our strategy
to build a world leading infection prevention company."
Webcast
Destiny Pharma will host a webcast presentation followed by a live Q&A
session at 10:30 am BST today, accessible via the Investor Meet Company
platform.
The webcast of the presentation will be available on the Company's investor
relations website at www.destinypharma.com (https://www.destinypharma.com/) .
The presentation is open to analysts and all existing and potential new
shareholders.
Investors can sign up to Investor Meet Company for free, and add to
meet Destiny Pharma plc via:
https://www.investormeetcompany.com/destiny-pharma-plc/register-investor
(https://www.investormeetcompany.com/destiny-pharma-plc/register-investor) .
Investors who already follow Destiny Pharma plc on the Investor Meet Company
platform will automatically be invited.
This announcement has been released by Shaun Claydon, Chief Financial Officer
(CFO), on behalf of the Company.
For further information, please contact:
Destiny Pharma plc
Neil Clark, CEO
Shaun Claydon, CFO
+44 (0)1273 704 440
pressoffice@destinypharma.com (mailto:pressoffice@destinypharma.com)
Optimum Strategic Communications
Mary Clark / Manel Mateus / Vici Rabbetts
+44 (0) 208 078 4357
DestinyPharma@optimumcomms.com (mailto:DestinyPharma@optimumcomms.com)
finnCap Ltd (Nominated Advisor and Broker)
Geoff Nash / Kate Bannatyne / George Dollemore, Corporate Finance
Alice Lane / Nigel Birks / Harriet Ward, ECM
+44 (0) 207 220 0500
MC Services AG
Anne Hennecke / Andreas Burckhardt
+49-211-529252-12
About Destiny Pharma
Destiny Pharma is a clinical stage, innovative biotechnology company focused
on the development of novel medicines that can prevent life-threatening
infections. Its pipeline has novel microbiome-based biotherapeutics and XF
drug clinical assets including NTCD-M3, a Phase 3 ready treatment for the
prevention of C. difficile infection (CDI) recurrence which is the leading
cause of hospital acquired infection in the US and XF-73 nasal gel, which has
recently completed a positive Phase 2b clinical trial targeting the prevention
of post-surgical staphylococcal hospital infections including MRSA. It is also
co-developing SPOR-COV, a novel, biotherapeutic product for the prevention of
COVID-19 and other viral respiratory infections and has earlier grant funded
XF research projects.
For further information, please visit www.destinypharma.com
(http://www.destinypharma.com)
Forward looking statements
Certain information contained in this announcement, including any information
as to the Group's strategy, plans or future financial or operating
performance, constitutes "forward-looking statements". These forward looking
statements may be identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "anticipates", "projects",
"expects", "intends", "aims", "plans", "predicts", "may", "will", "seeks"
"could" "targets" "assumes" "positioned" or "should" or, in each case, their
negative or other variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not historical facts.
They appear in a number of places throughout this announcement and include
statements regarding the intentions, beliefs or current expectations of the
Directors concerning, among other things, the Group's results of operations,
financial condition, prospects, growth, strategies and the industries in which
the Group operates. The directors of the Company believe that the expectations
reflected in these statements are reasonable but may be affected by a number
of variables which could cause actual results or trends to differ materially.
Each forward-looking statement speaks only as of the date of the particular
statement. By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future or are beyond the Group's control. Forward
looking statements are not guarantees of future performance. Even if the
Group's actual results of operations, financial condition and the development
of the industries in which the Group operates are consistent with the
forward-looking statements contained in this document, those results or
developments may not be indicative of results or developments in subsequent
periods.
Chief Executive Officer's Statement
Operational and strategic review
Our pipeline has a much reduced risk profile compared to many other
biotechnology companies as our two lead assets have both completed Phase 2 and
have been shown to be effective and safe. They also act through two completely
different mechanisms, reducing the risk in the pipeline through clear
diversification.
The Company's lead drug candidate, NTCD-M3 for the prevention of CDI, is
focused on infection prevention and is very well positioned as a targeted,
naturally occurring bacterial therapy for this serious gut infection. The
NTCD-M3 programme also brings the Company into the exciting area of the human
microbiome and biotherapeutics, which is a fast-developing area of medical
science and investigation for new therapies.
We believe that XF-73 nasal, our other late-stage programme and the lead
drug candidate from our XF platform, has a target product profile that is
very attractive to hospital infection experts. There are many millions of
hospital operations in the US alone where a new drug is needed to help prevent
post-surgical infections.
NTCD-M3 Clostridioides difficile programme
NTCD-M3 was developed by gastrointestinal infection (GI) physician Professor
Dale Gerding, who is a world-leading specialist in C. difficile, with more
than 400 peer-reviewed journal publications, book chapters and review
articles in the area. NTCD-M3 has successfully completed Phase 1 and Phase 2b
trials. The Phase 1 study demonstrated a strong safety/toxicology profile and
the 95% prevention of CDI recurrence. Phase 2b NTCD-M3 data was published in
the prestigious Journal of the American Medical Association (Gerding DN et al
JAMA 2015;313:1719).
NTCD-M3 has also been awarded Fast Track status by the FDA. Destiny Pharma
acquired global rights to the NTCD-M3 programme in November 2020.
NTCD-M3 mechanism of action harnesses the human microbiome
NTCD-M3 is a naturally occurring non-toxigenic strain of C. difficile
bacteria, which lacks the genes that can express C. difficile toxins. It is an
oral formulation of NTCD-M3 spores and patients who have taken NTCD-M3 were
found to be protected from C. difficile infections. NTCD-M3 acts as a safe
"ground cover" preventing toxic strains of C. difficile proliferating in the
colon after antibiotic treatment. NTCD-M3 temporarily colonises the human gut
without causing any symptoms and the gut microbiome returns to normal a few
weeks after treatment.
The Phase 2 data from a completed study with NTCD-M3 was very promising. The
study was a randomised, double-blind, placebo‑controlled trial, among
173 patients aged >18 years, who were diagnosed as having CDI (either a
first episode or first recurrence). The results were a strong, statistically
significant data set showing rapid onset of colonisation which
provided protection during the early post‑treatment period, making it an
ideal complement to a vaccine and other antibiotic treatments. The rate of
recurrence (RR) of CDI after treatment with the best dose of NTCD-M3 was only
5%, (placebo 30%) p<0.01. The Company believes this is compelling efficacy
compared with clinical trial data from other approaches.
The Company has held discussions with the FDA as part of Type C meetings and
this clarified the work required to prepare for Phase 3 clinical trials
including certain manufacturing scale-up activities that are important for
such a late-stage clinical project and also the detailed Phase 3 design. The
FDA meeting confirmed that a single Phase 3 800 patient study is required as a
randomised, double-blind, placebo-controlled trial.
The treatment regimen will be an oral capsule of an NTCD-M3 dose of 10(7)
spores (or placebo) once daily for seven days starting after the
last antibiotic course.
Sampling will take place to confirm NTCD-M3 colonisation, assess changes in
the faecal microbiome during treatment with NTCD-M3 and the recurrence rate of
CDI. The plan is to complete the manufacturing tech transfer and set-up in
2022 and, subject to funding, start Phase 3 recruitment as soon as possible in
2023 and finish in 2025.
The Company has undertaken market research to assess the US market size for
prevention of recurrence indication. The only approved drug is Merck's
Zinplava that is expensive and reimbursed at c.US$3,700, which inhibits its
uptake. It is expected that NTCD-M3 could be priced at US$1,500, delivering
estimated peak US sales of c.US$200 million. The market for Europe and the
rest of the world is estimated by Destiny Pharma to be a similar size, so
global sales per annum of c.US$500 million could be achieved. There is also
the potential for additional indications (prevention /multiple recurrence)
that could double the global peak sales to c.US$1 billion per annum. The
extra costs of care in the US per CDI patient range from US$10,000 to 20,000
and the total annual CDI-attributable cost in the US alone was estimated in
2016 at US$6.3 billion. Total annual CDI hospital management required nearly
2.4 million days of inpatient stay. This is a significant burden on
the US healthcare system.
XF platform
The XF platform presents the opportunity to deliver "prevention rather than
cure" at sensible pricing whilst delivering safe, effective anti-infective
treatments that also address the issue of AMR.
The Board believes that increasing governmental pressure and financial
incentives that are being implemented by leading institutions such as the WHO,
UN, FDA and G7/G20 will further increase the options available for profitable
commercialisation and the generation of shareholder value. The UK and US
governments have been taking the lead here by introducing new regulations
with clear financial incentives that may be available for novel
anti-infectives such as those being developed by Destiny Pharma.
The key potential benefits of the XF platform are significant:
· Ultra-rapid bacteria kill: Studies have shown the XF drugs killing
bacteria in vitro in less than 15 minutes; faster acting than standard
antibiotics currently in use;
· Ability to kill bacteria in any growth phase: This is an important
feature as bacteria are not always actively growing. XF drugs can kill
bacteria even when dormant;
· Ability to kill bacteria within bacterial biofilms: Biofilms are an
increasing problem that are poorly treated by current drugs as they act as a
protective barrier for bacteria. They are associated with indwelling
medical devices;
· Active against all Gram-positive bacteria tested to date and selected
Gram-negative bacteria: This includes clinically important and
infection-causing strains, such as: Staphylococcus aureus,
Listeria monocytogenes, Propionibacterium acnes, Group G Streptococcus,
Mycobacterium tuberculosis, Streptococcus pneumonia, Bacillus anthracis,
Yersinia pestis, Acinetobacter baumannii, Pseudomonas aeruginosa, and
Clostridium difficile; and
· No bacterial (MRSA) resistance is seen to emerge: No bacterial
(MRSA) resistance was seen to emerge in a landmark in vitro study of
bacterial resistance that compared XF-73 to standard antibiotics currently in
use.
Clinical data underpinning the XF‑73 nasal programme is strong
The announcement of positive Phase 2b results in 2021 confirmed the potential
of XF-73 nasal gel. XF-73 (exeporfinium chloride) was awarded Qualified
Infectious Disease Product ("QIDP") status by the FDA in 2015. Within the QIDP
award, the FDA also confirmed a new US disease indication for XF-73 nasal;
namely the "prevention of post‑surgical staphylococcal infections",
including MRSA. This represents a new US market for which no
existing product is approved.
QIDP status identifies XF‑73 nasal as a drug that is intended to treat
serious or life‑threatening infections, including those caused by
antibiotic resistant pathogens. The FDA also awarded XF-73 nasal Fast Track
status in 2019, recognising it as a priority drug for US development.
Destiny Pharma has now completed seven successful clinical trials in over 300
subjects with XF-73 nasal, which included measures of its efficacy in reducing
nasal colonisation by Staphylococcus aureus.
The Phase 2b study completed in 2021 was a multi‑centre, randomised,
placebo‑controlled study of multiple applications of a single concentration
of XF-73 nasal gel to assess the antimicrobial effect of XF-73 nasal on
commensal Staphylococcus aureus nasal carriage in patients scheduled for
surgical procedures.
Destiny Pharma's experience in carrying out this clinical study has confirmed
the increasing compliance in US hospitals with best practice, whereby patients
are screened, and carriers of Staphylococcus aureus are decolonised prior to
surgery. This is very supportive of the potential sales in the initial market
for XF-73 nasal gel in the large US hospital surgery market.
Efficacy conclusion - very strong Phase 2b data supporting XF-73 nasal target
product profile ("TPP")
· XF-73 reduced the mean nasal burden of S. aureus in patients
undergoing open chest open heart surgery by 2.5 log (99.5% reduction) in the
24 hours immediately before surgery in the micro-ITT population. The effect
was maintained during surgery - considered the period when the risk for
infections is the highest.
· XF-73 showed 2.1 log (99.2%) greater reduction than placebo in the
same patient population and this difference in reduction of nasal burden of
S. aureus was statistically significant (p<0.0001) in both the micro-ITT
and per protocol populations.
· A significantly higher reduction of burden of nasal S. aureus in
XF-73 arm compared to placebo arm in the 24 hours before surgery was also
observed when the data was analysed by AUC. This higher reduction was also
seen when analysing the percentage of patients reaching a specific log value
over time.
The Company is in the process of finalising Phase 3 study designs for XF-73
nasal and is seeking scientific advice from the key regulators in the US and
Europe. It is expected that these regulatory discussions will be completed
mid-2022. Destiny Pharma will then be able to establish the size and costs of
the Phase 3 studies and with that information a targeted partnering campaign
will begin with the aim of finding one or more partners in H1 2023 or sooner
if possible.
The medical need to combat surgical infections is significant
Patient carriage of Staphylococcus aureus strains, including MRSA,
is recognised as a growing problem and the testing of patients entering
hospital for surgery is widespread in many countries, including the
US. Landmark outcome studies (Bode et al 2010) have demonstrated that
reduction of all strains of Staphylococcus aureus can significantly reduce the
post‑surgical infection rate by 60% and reduce mortality.
In response to these and other findings, the US Surgical Infection Society
("SIS"), the Society for Hospital Epidemiologists of America ("SHEA"), the
Infectious Disease Society of America ("IDSA") and the American Society of
Hospital Pharmacists ("ASHP") published guidelines recommending that in
the US all Staphylococcus aureus (including MRSA) carriers should be
decolonised in all cardiovascular and most orthopaedic surgeries.
AHRQ/IDSA/SHEA recommended an even more aggressive treatment strategy,
universal decolonisation (UD) of all Intensive Care Unit (ICU) patients
without screening, awarding a Grade I (highest) level of evidence rating. US
hospital groups, including the Hospital Corporation of America, are now
implementing UD for all patients entering the ICU.
In Europe, similar guidelines exist recommending decolonisation of
Staphylococcus aureus positive patients prior to certain surgeries.
The antibiotic mupirocin is often used off-label in the US for these
applications, although it has two key disadvantages in that it is slow acting,
requiring five days of dosing, and staphylococcal resistance to mupirocin can
develop rapidly and become widespread. Consequently, many guidelines are
accompanied with a resistance warning related to mupirocin use. In 2020
another new review concluded that global mupirocin-resistant Staphylococcus
aureus prevalence had increased to 7.6% and that mupirocin-resistant MRSAs
have increased by 13.8% and consequently the monitoring of mupirocin use
remains critical.
Destiny Pharma believes this is clear support for the need for an alternative
treatment for nasal decolonisation as presented by the XF-73 programme. (Ref.
Mupirocin Resistance in Staphylococcus aureus: A Systematic Review and
Meta‑Analysis - Dadashi et al 2020).
The commercial opportunity for XF-73 nasal is over a billion dollars
There is a significant market for a new drug that can assist in the
"prevention of post-surgical staphylococcal infections", particularly in the
US. There are approximately 41 million surgeries per year in the US alone,
all of which expose patients to the risk of post-surgical infections.
The market analysis undertaken by Destiny Pharma and its specialist
consultants supports the view that XF-73 nasal could achieve annual peak
sales in the US alone of over US$1 billion and peak sales in Europe and
the rest of the world could be US$500 million for the initial indication
of "prevention of post-surgical staphylococcal infections".
The most recent independent market reviews carried out in 2019 and 2022
updated the Company's understanding of current US and EU clinical practice,
the competitor environment for the proposed XF-73 nasal gel formulation,
pricing sensitivities and the payers' assessment of the target product profile
("TPP") of XF-73 nasal.
The study conclusions were very encouraging and reported that the sample of
US/EU treaters (surgeons, infectious disease specialists and ICU specialists)
and payers (hospital medical directors, pharmacy services directors,
microbiologists and clinical directors) who were consulted confirmed that
XF-73's target product profile is superior when compared to existing
treatments.
This included off-label use of the antibiotic mupirocin in US, with the
conclusion in both the US and EU being that XF-73 nasal has the potential to
replace mupirocin as the preferred treatment. There was also strong support
for a pricing strategy that could be at the higher end of previous
assumptions.
SPOR-COV COVID-19 programme
The SPOR-COV prophylactic approach targets the innate immune system with the
potential to develop COVID-19 protection within a few days of treatment. The
product consists of a proprietary formulation of Bacillus bacteria that will
be administered nasally as a spray. SPOR-COV has already been shown by
SporeGen to provide complete (100%) protection in pre-clinical models of
influenza.
SPOR-COV is different to vaccines in that it utilises the innate immune
system with the aim of developing COVID-19 protection within a few days after
dosing. As an "easy to use" first line of defence, it has the potential to
reduce COVID-19 infection rates and transmission significantly. The final
SPOR-COV product is planned to be straightforward to produce at both high
volumes and at low cost.
Additional attributes are that it can be stockpiled almost indefinitely
without the need for cold chain refrigeration as it is a very stable product.
It could be made available globally as a cost-effective measure in the fight
against COVID-19 as well as new COVID strains and other respiratory viral
infections.
In 2020, Destiny Pharma announced that Innovate UK ("IUK") awarded a grant of
£800,000 to fund the majority of the £1 million cost of the initial SPOR-COV
programme.
The pre-clinical efficacy work is being performed in collaboration
with Professor Aras Kadioglu, at the University of Liverpool, who is
Professor of Bacterial Pathogenesis in the Department of Clinical Infection,
Microbiology & Immunology, where he heads the Bacterial Pathogenesis and
Immunity group and is a leading expert in respiratory infection models and
host immunity to infection.
The manufacturing and formulation development work will be carried out by
HURO, an experienced manufacturer of bacterial product formulations based in
Vietnam and part of PAN Group.
The plan is to complete the required pre-clinical safety and efficacy studies
and also develop the manufacturing process by mid-2022, and be ready
to commence the first human clinical studies thereafter. Further
announcements will be made in H2 2022.
Dermal programmes
The Company is also running a XF-73 Dermal infection preclinical programme in
collaboration with the expert National Institute of Allergy and Infectious
Disease (NIAID) group in the US. A novel XF-73 Dermal formulation is being
developed as a new treatment for serious wound infections such as those
associated with diabetic foot ulcer infections (DFUs). This target market is
estimated to be a US$500 million global sales opportunity based on the
incidence of such infections, the costs of the associated medical care and a
realistic product pricing of XF-73 in this new market. Driven by the growing
number of diabetics and associated complications such as infected DFUs, this
represents a significant market opportunity for XF-73.
China Medical System Holdings Limited (CMS), the Company's China regional
partner and investor, has established its own differentiated dermal programme
in 2021 with XF-73 targeting the prevention and treatment of superficial skin
infections caused by bacteria.
As with all anti-infectives, AMR is also a concern within these dermal
infection markets and the XF platform's "no/low resistance" profile is an
additional benefit alongside the targeted product claims for efficacy and
safety.
Outlook for Destiny Pharma
The strengthened balance sheet provides Destiny Pharma with working capital
through to mid-2023, enabling us to complete the preparation of NTCD-M3 for
our single Phase 3 study and be in a strong position to close a partnering
deal. Following the positive Phase 2b clinical trial results for XF-73 nasal,
Phase 3 design discussions are being held with regulators and when complete
the Phase 3 study plans will then be added to our existing comprehensive data
package and we will be in a good position to secure partners for XF-73 nasal.
Our cash resources are also being used to develop new dermal infection
clinical candidates from the pre-clinical XF pipeline, contribute to our
COVID-19 SPOR-COV project and to capitalise on commercial opportunities
including additional grant funding, partnering, and licensing. Whilst the
short-term focus is on our two valuable lead assets, Destiny Pharma will
continue to establish research programmes through existing and new
collaborations and, where possible, seek additional non-dilutive funding
support as we have done successfully in the period under review.
Destiny Pharma has a great opportunity as a focused UK biotechnology company
with full control of two high-quality, late-stage clinical assets targeted at
infection prevention. Both are backed up by strong Phase 2 clinical data and
have clear commercial positioning. The Board and employees are excited about
the next stage in the Company's development and delivering on our strategy to
build a world-leading infection prevention company.
Neil Clark
Chief Executive Officer
12 April 2022
Chief Financial Officer's Statement
Financial review
During 2021 we successfully completed our XF-73 nasal gel Phase 2b clinical
study, announcing excellent data in Q2 2021. The focus for this programme is
now on clarifying the European and US regulatory requirements for Phase 3
studies. Our other main activity during the period was the commencement of the
important manufacturing scale-up process for our NTCD-M3 programme, following
the acquisition of this valuable asset at the end of 2020. Activity and
associated investment in this programme will increase in 2022 as we ready the
programme for commencement of a Phase 3 clinical study. Further progress was
also made in our earlier programmes, in conjunction with our research
partners, and we secured further collaborations for our dermal programme
during the period. We increased headcount during the year to support our
growth plans and also increased investment in our business development
activities, including the appointment of a Chief Business Officer to lead our
partnering strategy.
Following the year end, in March 2022, we announced a fundraise of up to £7
million via a £6 million Placing and £1 million Open Offer. The fundraise
was successfully approved by shareholders on 28 March, the final gross
proceeds amounting to £6.5 million. Proceeds will be utilised to advance our
key programmes and strengthen the Company's balance sheet as we progress
ongoing partner discussions. This is a significant achievement against the
backdrop of very difficult market conditions, inflationary and interest rate
headwinds and the geo-political events centred on Ukraine. We are very pleased
to have received support from both existing and new investors at a critical
time for the Company as we advance our two lead assets towards the
commencement of Phase 3 clinical studies and seek licencing partners.
Revenue
Destiny Pharma is a clinical stage research and development company and is yet
to commercialise and generate sales from its current programmes. The Company
received grant income of £0.1 million (2020: £0.01 million) during the
period.
Operating expenses
Operating expenses, which exclude the share-based payment charge of £0.4
million (2020: £0.1 million) during the period, amounted to £6.0 million
(2020: £6.4 million). Included within this total are R&D costs totalling
£3.7 million (2020: £4.5 million) which were £0.8 million lower than the
previous year. This was largely due to reduced activity in our XF-73 nasal
gel programme following completion of Phase 2b patient recruitment in 2020 and
successful data read out in Q2 2021.
Other operating costs increased by 21% to £2.3 million (2020: £1.9 million)
as a result of an increase in employee costs following recruitment of
additional staff during the first half of the year. General overheads,
included within this total, remained flat at £1.1 million, reflecting our
continued focus on minimising non-R&D spend.
Loss on ordinary activities before tax
Loss before tax for the year was £6.3 million (2020: £6.5 million).
Taxation
The Company received a repayment of £1.1 million in respect of the R&D
tax credit claimed during the year ended 31 December 2020. The R&D tax
credit receivable in the balance sheet of £0.9 million is an estimate
of the cash repayment the Company expects to qualify for in respect of
activities during the year ended 31 December 2021. However, as at the date
of this report, these amounts have not yet been agreed with HMRC.
Loss per share
Basic and diluted loss per share for the year was 8.9 pence (2020: 12.0
pence).
Cash flow
Net cash outflow from operating activities in 2021 was £5.1 million (2020:
£5.5 million) against an operating loss of £6.3 million (2020: £6.5
million), with the major reconciling items being the non-cash charge for
share-based payments of £0.4 million, the R&D credit received of £1.1
million and other net movements in working capital of £(0.3) million.
Balance sheet
Total assets decreased to £8.3 million (2020: £13.7 million) largely due to
the utilisation of cash in the operating activities highlighted above.
Intangible assets solely comprise the initial acquisition cost of NTCD-M3,
acquired in November 2020. Trade, other receivables, and prepayments decreased
to £1.3 million (2020: £1.7 million) which was primarily due to lower
upfront payments to the Company's clinical research organisation and lower
R&D tax credit compared to prior year.
Year-end cash and cash equivalents totalled £4.6 million (2020: £9.7
million). This does not include the proceeds of the fundraise which concluded
post year end.
Total liabilities decreased to £0.8 million (2020: £1.3 million) primarily
due to timing of payment to trade creditors.
Outlook
During the next financial year, the Company will continue to invest in
progressing its lead assets towards the commencement of Phase 3 clinical
studies and developing its early-stage pipeline. The Company also remains
focused on maintaining a disciplined cost base, seeking to minimise spend on
non-core R&D activities. The successful fundraise in March 2022 provides
the Company with a strong balance sheet as it seeks partners to co-fund
required Phase 3 studies and lead commercialisation of its lead
assets.
Shaun Claydon
Chief Financial Officer
12 April 2022
Statement of comprehensive income
For the year ended 31 December 2021
Notes Year ended Year ended
31 December 31 December
2021 2020
£ £
Continuing operations
Other operating income 4 135,028 12,450
Administrative expenses (6,016,128) (6,425,471)
Share-based payment expense (405,851) (139,491)
Loss from operations (6,286,951) (6,552,512)
Finance income 5 15,520 71,611
Loss before tax (6,271,431) (6,480,901)
Taxation 6 931,951 1,069,824
Loss and total comprehensive loss for the year from continuing operations (5,339,480) (5,411,077)
Loss per share - pence
Basic 7 (8.9)p (12.0)p
Diluted 7 (8.9)p (12.0)p
Statement of financial position
As at 31 December 2021
Notes As at As at
31 December 31 December
2021 2020
£ £
Assets
Non-current assets
Property, plant and equipment 35,882 18,141
Intangible assets 8 2,261,435 2,261,435
Non-current assets 2,297,317 2,279,576
Current assets
Trade and other receivables 9 991,913 1,172,403
Cash and cash equivalents 10 4,645,562 9,744,217
Prepayments 347,950 508,363
Current assets 5,985,425 11,424,983
Total assets 8,282,742 13,704,559
Equity and liabilities
Equity
Share capital 11 598,719 598,169
Share premium 27,091,466 27,085,506
Accumulated losses (20,180,879) (15,247,250)
Shareholders' equity 7,509,306 12,436,425
Current liabilities
Trade and other payables 12 773,436 1,268,134
Current liabilities 773,436 1,268,134
Total equity and liabilities 8,282,742 13,704,559
Statement of changes in equity
For the year ended 31 December 2021
Share Share Accumulated Total
capital premium losses £
£ £ £
1 December 2020 438,652 17,296,337 (9,975,664) 7,759,325
Comprehensive loss for the year
Total comprehensive loss - - (5,411,077) (5,411,077)
Total comprehensive loss for the year - - (5,411,077) (5,411,077)
Contributions by and distributions to owners
Issue of share capital 159,517 10,209,105 - 10,368,622
Costs of share issue - (419,936) - (419,936)
Share-based payment expense - - 139,491 139,491
Total contributions by and distributions to owners 159,517 9,789,169 139,491 10,088,177
31 December 2020 598,169 27,085,506 (15,247,250) 12,436,425
Comprehensive loss for the year
Total comprehensive loss - - (5,339,480) (5,339,480)
Total comprehensive loss for the year - - (5,339,480) (5,339,480)
Contributions by and distributions to owners
Issue of share capital 550 5,960 - 6,510
Share-based payment expense - - 405,851 405,851
Total contributions by and distributions to owners 550 5,960 405,851 412,361
31 December 2021 598,719 27,091,466 (20,180,879) 7,509,306
Statement of cash flows
For the year ended 31 December 2021
Year ended Year ended
31 December 31
2021 December
£ 2020
£
Cash flows from operating activities
Loss before income tax (6,271,431) (6,480,901)
Depreciation of property, plant and equipment 12,518 16,881
Share-based payment expense 405,851 139,491
Finance income (15,520) (71,611)
(5,868,582) (6,396,140)
(Decrease)/increase in trade and other receivables and prepayments 198,336 (379,293)
(Decrease)/increase in trade and other payables (494,698) 469,995
Cash used in operations (6,164,944) (6,305,438)
Tax received 1,074,519 813,250
Net cash used in operating activities (5,090,425) (5,492,188)
Cash flows from investing activities
Purchase of property, plant and equipment (30,260) (2,099)
Purchase of intangible assets - (2,261,435)
Interest received 15,520 71,611
Net cash outflow from investing activities (14,740) (2,191,923)
Cash flows from financing activities
New shares issued net of issue costs 6,510 9,948,686
Net cash inflow from financing activities 6,510 9,948,686
Net (decrease)/increase in cash and cash equivalents (5,098,655) 2,264,575
Cash and cash equivalents at the beginning of the year 9,744,217 7,479,642
Cash and cash equivalents at the end of the year 4,645,562 9,744,217
Notes to the financial statements
1. Corporate information
Destiny Pharma plc (the "Company") was incorporated and domiciled in the UK
on 4 March 1996 with registration number 03167025. The Company's registered
office is located at Unit 36, Sussex Innovation Centre, Science Park Square,
Falmer, Brighton BN1 9SB.
The Company is engaged in the discovery, development and commercialisation of
novel medicines that prevent serious infections.
2. Basis of preparation
The financial statements have been prepared in accordance with UK-adopted
International Accounting Standards ("UK-IAS"). The financial statements have
been prepared under the historical cost convention.
The Company's financial statements have been presented in pounds sterling
("GBP"), being the functional and presentation currency of the company.
Going concern
The Company has not yet recorded any revenues and funds its operations through
periodic capital issues and research grants. Management prepares detailed
working capital forecasts which are reviewed by the Board on a regular basis.
Cash flow forecasts and projections take into account sensitivities on
receipts, and costs. In their assessment of going concern, the Directors have
considered the possible impact on the business of the COVID-19 pandemic.
Having made relevant and appropriate enquiries, including consideration of the
Company's current cash resources and the working capital forecasts, the
Directors have a reasonable expectation that the Company will have adequate
cash resources to continue to meet the requirements of the business for at
least the next twelve months. Accordingly, the Board continues to adopt the
going concern basis in preparing the financial statements.
Standards and interpretations issued
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 December 2021 reporting periods and have not been
early adopted by the Company. These standards are not expected to have a
material impact on the entity in the current or future reporting periods and
on foreseeable future transactions.
3. Segment reporting
The chief operating decision-maker is considered to be the Board of Directors
of the Company. The chief operating decision-maker allocates resources and
assesses performance of the business and other activities at the operating
segment level.
The chief operating decision-maker has determined that the Company has one
operating segment, the development and commercialisation of pharmaceutical
formulations. All activities take place in the United Kingdom.
4. Other operating income
31 December 31 December
2021 2020
£ £
Government grants received during the year 129,149 12,450
Government grants accrued at 31 December 5,879 -
135,028 12,450
Included in trade and other receivables (note 9) 5,879 -
5. Net finance income
31 December 31 December
2021 2020
£ £
Finance income
Deposit account interest 15,520 71,611
6. Income
tax
31 31
December December
2021 2020
£ £
Research and development tax credits based on costs in the financial year (927,256) (1,069,824)
Utilisation of previously unrecognised tax credit (4,695) -
(931,951) (1,069,824)
7. Loss per ordinary share
The calculation for loss per ordinary share (basic and diluted) for the
relevant period is based on the earnings after income tax attributable to
equity shareholders for the period. As the Company made losses during the
period, there are no dilutive potential ordinary shares in issue, and
therefore basic and diluted loss per share are identical. The calculation is
as follows:
31 December 31 December
2021 2020
£ £
Loss for the year attributable to shareholders (5,339,480) (5,411,077)
Weighted average number of shares ((1)) 59,851,442 45,219,999
Loss per share - pence
- Basic and diluted (8.9)p (12.0)p
(1) In March 2022 the Company raised gross proceeds of £6.5 million
through an equity fundraise, in which a total of 12,909,007 new shares were
issued and allotted. This transaction could have significantly changed the
weighted average loss per share if it had occurred before the end of the
reported period.
8. Intangible assets
Acquired
development
programmes
£
Cost
At 1 January 2020 -
Additions 2,261,435
At 31 December 2020 2,261,435
Additions -
At 31 December 2021 2,261,435
In 2020, the Company acquired NTCD-M3, a development stage programme for
preventing toxic strains of C. difficile proliferating in the colon after
antibiotic treatment. The asset has not been amortised as the programme has
not yet generated products available for commercial use.
The programme has been assessed for impairment. The Company considers the
future development costs, the probability of successfully progressing to
product approval and the likely commercial returns, among other factors.
The result of this assessment did not indicate any impairment in the year.
The key sensitivity for all development programmes is the probability of
successful completion of clinical trials in order to obtain regulatory
approval for sale. Should trials be unsuccessful, the programme will be fully
impaired.
9. Trade and other receivables
31 December 31 December
2021 2020
£ £
Other receivables 64,657 102,579
Research and development tax repayment 927,256 1,069,824
991,913 1,172,403
10. Cash and cash equivalents
31 December 31 December
2021 2020
£ £
Cash and bank balances 4,645,562 9,744,217
11. Share capital
31 December 31 December
2021 2020
Ordinary shares of £0.01 each Number Number
Authorised((1)) n/a n/a
Allotted and fully paid
At 1 January 59,816,921 43,865,195
Issued for cash during the year 55,000 15,951,726
At 31 December 59,871,921 59,816,921
(1) During the year ended 31 December 2017 the Company adopted new Articles of
Association, which do not require the Company to have authorised share
capital.
31 December 31 December
2021 2020
£ £
Authorised n/a n/a
Allotted and fully paid 598,719 598,169
31 December 31 December
2021 2020
£ £
Share premium account 27,091,466 27,085,506
55,000 ordinary shares were issued during the year at a premium of £5,960.
Each ordinary share ranks pari passu for voting rights, dividends and
distributions, and return of capital on winding up.
Grants of options
On 21 January 2021, 180,436 Employee LTIP 2020 options were granted to four
employees at an exercise price of £0.01 per ordinary share. The fair value
per option was £1.12.
On 17 December 2021, 425,000 Employee LTIP 2018 options were granted to eleven
employees at an exercise price of £1.156 per ordinary share, the fair value
per option was £0.69, and 610,085 performance targeted Employee LTIP 2020
options were granted to four employees at an exercise price of £0.01 per
ordinary share, the fair value per option was £0.19.
IFRS 2 valuation
The estimated fair value of share options granted during the period without
performance conditions has been calculated by applying a Black-Scholes option
pricing model. The fair value of options with performance conditions has been
estimated using Monte Carlo modelling. The weighted average exercise price of
options granted in the period was £0.411 (2020: £0.111).
Measurement assumptions were as follows:
2021 2021 2020 2020
Share price £1.065 £1.065 - £1.130 £0.665 £0.400 - £0.665
Exercise price £0.01 £0.01 - £1.156 £0.01 £0.01 - £0.65
Expected volatility 58% 58% - 82% 76% 49% - 76%
Expected option life 3 years 10 years 3 years 10 years
Risk‑free rate 0.84% 0.37% - 0.84% 0.38% 0.28% - 0.38%
Expected dividends £nil £nil £nil £nil
Model used Monte Carlo Black-Scholes Monte Carlo Black-Scholes
Prior to the year ended 31 December 2020, historical volatility was measured
using a composite basket of listed entities in similar operating environments,
given the limited trading history of the Company following its IPO in 2017;
with effect from the year ended 31 December 2020, historical volatility is
measured using the Company's share price only.
The number and weighted average exercise prices of share options were as
follows:
31 December 2021 31 December 2020
Number of Weighted Number of Weighted
options average options average
exercise price exercise price
Balance outstanding at beginning of the year 9,090,846 £0.067 7,090,226 £0.068
Granted during year 1,215,521 £0.411 2,150,620 £0.111
Exercised during year (55,000) £0.118 - -
Cancelled during year - - (150,000) £0.765
Lapsed during year (492,242) £0.010 - -
Options outstanding at end of the year 9,759,125 £0.112 9,090,846 £0.067
Options exercisable at the end of the year 6,675,226 £0.054 6,555,226 £0.056
The expense arising from share-based payment transactions recognised in the
year was as follows:
31 December 31 December
2021 2020
£ £
Share-based payment expense 405,851 139,491
12. Trade and other payables
31 December 31 December
2021 2020
£ £
Trade payables 218,156 725,593
Social security and other taxes 82,075 49,015
Accrued expenses 453,815 485,261
Pension contributions payable 19,390 8,265
773,436 1,268,134
13. Statutory accounts
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2021 or 2020 but is derived
from those accounts. Statutory accounts for 2020 have been delivered to the
registrar of companies, and those for 2021 will be delivered in due course.
The auditor has reported on those accounts; their reports (i) were
unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
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