REG - e-Therapeutics plc - Final results for the year ended 31 January 2022
04/05/2022 07:00
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RNS Number : 1952K e-Therapeutics plc 04 May 2022
e-therapeutics plc
("e-therapeutics" or the "Company")
Final results for the year ended 31 January 2022
Change of Registered Office
Significantly strengthened cash position enables expansion of computational
drug discovery platform capabilities and acceleration of the development of an
in-house RNAi therapeutics pipeline
London, UK, 4 May 2022 - e-therapeutics plc (AIM: ETX; OTCQX; ETXPF), a
specialist in computational drug discovery with a focus on developing RNA
interference ("RNAi") therapeutics, announces its audited final results for
the year ended 31 January 2022.
Operational Highlights
· Strengthened financial position, raising £22.5m before expenses in June 2021
· Three pre-defined milestones achieved in the collaboration with Galapagos NV ("Galapagos") in idiopathic pulmonary fibrosis ("IPF")
· Gene silencing RNA interference ("RNAi") platform development and benchmarking studies successfully completed. Equivalent performance to leading competitor platforms and excellent safety profile seen in lead designs in mice and non-human primates ("NHP")
· Eleven patent applications filed to protect proprietary and novel GalNAc-siRNA silencing construct designs
· Rapid progress in the development of a liver focussed computational platform, including the generation of a hepatocyte-specific knowledge graph
· Developed machine learning ("ML") driven siRNA sequence design and expanded computational therapeutic target identification capabilities
· Significant increase in speed and automation of in silico network biology model construction and analysis. This has resulted in the ability to generate and computationally analyse complex human disease processes in a matter of hours as opposed to months
· Commenced trading on the OTCQX Best Market ("OTCQX") in the United States, under the ticker symbol "ETXPF" in September 2021, to broaden visibility and attract further commercial and investor attention
Post Period Highlights
· Immuno-oncology research collaboration with iTeos Therapeutics
("iTeos") announced on 5 April 2022. The partnership blends e-therapeutics'
computational platform expertise and iTeos' proprietary assays. e-therapeutics
will receive upfront and near-term cash payments material to the revenue of
the Company. The Company is also eligible to receive undisclosed milestone
payments through pre-clinical and clinical development, in addition to
regulatory milestones per programme
· Key milestone achieved with Galapagos, resulting in a cash
payment to e-therapeutics following the successful characterisation by the
Company of the mechanism of action of hit compounds ("hits") identified
earlier in the collaboration. The Company has now achieved all pre-agreed
near-term milestones and the future of the identified hits and targets will be
determined by Galapagos according to its strategic priorities
· Commenced the pre-clinical prosecution of two hepatocyte targets
derived from the Company's computational platform. Further targets are being
evaluated in feasibility studies
· Effective 3 May 2022, the Company's registered office address
changed from 7 Blenheim Office Park Long Hanborough, OX29 8LN, Oxfordshire to
4 Kingdom Street, W2 6BD, London
Financial Highlights
During the period, the Company strengthened its financial position
following the successful equity fund raise which was completed in June
2021.
· Revenues of £0.5 million (2021: £0.3 million)
· R&D spend of £6.1 million (2021: £2.7 million)
· Operating loss of £9.6 million (2021 loss: £4.5 million)
· Loss after tax of £8.1 million (2021 loss: £3.7 million)
· £22.5 million before expenses, from placing,
subscription and retail offer completed in June 2021
· Cash and short term investment bank deposits at 31 January
2022 of £26.6 million (31 January 2021: £13.0 million)
· R&D tax credit receivable at 31 January 2022 of
£1.5 million (31 January 2021: £0.8 million)
· Headcount (excluding Non-Executive Directors) at 31 January 2022
was 35 (31 January 2021: 25)
Ali Mortazavi, Chief Executive Officer of e-therapeutics, commented: "I am extremely pleased with
the progress the Company has made in 2021 in all aspects of the business. We
are excited to partner with iTeos to help identify highly differentiated
immuno-oncology medicines for patients. This collaboration provides further
validation of the value of our network-driven, disease agnostic computational
platform. At the same time, we have again shown the value of our computational
platform with the successful completion of our collaboration with Galapagos
where we met every success milestone. Importantly, the same computational
tools that are used in these collaborations have been successfully migrated to
our hepatocyte-focused computational platform and applied to proprietary
hepatocyte datasets.
"In October 2021, the Company achieved a major milestone, announcing positive
headline results from in vivo studies confirming that our proprietary
GaINAc-siRNA platform is competitive relative to peer platforms. This is a
material step in the Company's ultimate goal of developing an in-house RNAi
pipeline with future scope for early-stage
partnering. Eleven patent applications have been
filed to protect these innovations.
"We believe that e-therapeutics offers a differentiated strategy, with the
ability to silence any gene in the liver with extremely rapid pre-clinical
timelines, coupled with powerful computational capabilities, including in
better understanding human hepatocyte biology. Importantly, the execution of
our strategy is well underway and two hepatocyte targets are currently in
pre-clinical research, with further feasibility work being conducted across
multiple other computationally generated targets."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
Enquiries:
e-therapeutics plc
Ali Mortazavi, Tel: +44 (0)1993 883 125
CEO
www.etherapeutics.co.uk
James Chandler, VP IR & Strategic Communications
SP Angel Corporate Finance LLP
Tel: +44(0)20 3470 0470
Nominated Adviser and Broker
Matthew Johnson/Caroline Rowe (Corporate Finance)
Vadim Alexandre/Rob Rees (Corporate Broking)
About e-therapeutics plc
e-therapeutics plc is a UK-based company integrating computational power and
biology to accelerate the discovery of life-transforming medicines. The
Company has developed and validated a powerful, disease and modality agnostic
computational approach to drug discovery, leveraging its
industry-leading expertise in network biology to fully capture and interrogate human disease complexity.
The Company's multi-disciplinary team builds computational models of biological functions to transform
the search for new medicines, interventions, mechanisms and genetic support.
Its biology-led in silico laboratory enables rapid hypothesis generation and
phenotypic screening of millions of compounds leading to 100-1000x higher hit
rates in the wet lab and successful mode of action elucidation. Novel
targets can also be identified, prioritised and assessed. Harnessing internal target gene discoveries, e-
therapeutics is currently building an in-house pipeline of RNAi based
medicines, using its proprietary GalNAc-siRNA technology.
e-therapeutics has deployed and validated its disease-agnostic computational drug discovery platform
both in house and with partners, including Novo Nordisk, Galapagos NV, iTeos
and a US-based, top 5 pharmaceutical company.
Chairman's Statement
The financial year to 31 January 2022 has been one of significant progress
both scientifically and in terms of growing shareholder value, which sets us
on a solid basis for future success.
As we announced during the year, e-therapeutics is a specialist in
computational drug discovery, now with a focus on developing RNA interference
(RNAi) therapeutics.
The core of our approach relies on the computational modelling and
interrogation of biological mechanisms, moving away from the traditional
"blind" screens that have been historically used by pharmaceutical/biotech
companies to discover new drugs.
Our computational platform enables us to make sense of complex datasets. By
placing genes in the context of the biological networks to which they belong
we can identify key disease-related biological processes and pathways that can
result in the identification of superior targets and the creation of unique,
novel drug candidates.
Our focus
Our focus during the financial year ending 31 January 2022 has been on the
development of our liver targeting RNAi platform. Our upcoming drug candidates
are designed to silence disease-associated genes to treat key unmet medical
needs.
RNAi medicines are next-generation therapeutics, and their design is markedly
accelerated relative to traditional drug modalities as it is based on the
human genetic code. Other advantages of RNAi therapeutics include:
· high specificity against their target gene, thus minimising
potential off-target effects;
· long duration of action, supporting infrequent administration and
reduced patient burden; and
· good safety profile.
An additional level of specificity can be achieved by coupling siRNA molecules
to delivery systems for specific targeting of cell types. Our siRNA constructs
are conjugated to N-Acetylgalactosamine (GalNAc) moieties which mediate highly
specific delivery to hepatocytes in the liver.
I am pleased to report that we have made rapid progress in this field during
the past year such that we were able to announce, in October 2021, top-line
positive results from in vivo studies in non-human primates, confirming that
the GaINAc-siRNA platform has been successfully benchmarked against leading
competitor RNAi platforms.
These excellent results show that our proprietary delivery system and siRNA
chemistries are competitive relative to peer platforms, which is a material
step in the Company's ultimate goal of developing an in-house RNAi pipeline
with future scope for early-stage partnering.
In addition, the Company is building the most complete hepatocyte knowledge
graph integrating numerous data sources and its newly created, AI-enhanced,
hepatocyte protein-protein interactome. This cell type-specific knowledge
graph provides a key differentiator in the search for novel RNAi targets.
We firmly believe that our continuing success in this impactful therapeutic
modality, together with our computational edge, places us in a strong
competitive position.
In parallel, we have made further progress in our collaboration with Galapagos
to identify new therapeutic approaches to modulate a specific mechanism
involved in idiopathic pulmonary fibrosis (IPF) and potentially in other
fibrotic indications with high unmet need. Hit compounds were successfully
identified and experimentally validated, further verifying the applicability
of our platform across different areas of biology and under stringent success
criteria set by leading partners.
Our financial position
These advances during this highly successful year have been made possible
through the June 2021 £22.5m gross fundraise and I would like to acknowledge
and thank new and existing shareholders for their continuing support.
The Board and management have advanced in implementing and maintaining robust
financial controls. The Company has strengthened its financial position,
enabling the next stage of growth, value creation and sufficient working
capital for at least 12 months.
In the coming financial year, we will continue to drive forward with our
strategic plans. We therefore anticipate a significant increase in the rate of
spend whilst maintaining a prudent budget, which incorporates discretionary
spend, that could be scaled back if considered appropriate.
Organisation
The new focus on RNAi therapeutics has been accompanied by some organisational
changes. Ali Mortazavi's outstanding leadership as CEO has resulted in the
establishment of two key discovery/development teams, with an Informatics
focused division led by our CTO, Dr Jonny Wray, and a Biology focused division
led by our CSO, Dr Alan Whitmore. These R&D divisions are supported by the
rest of our experienced Executive Committee and its respective specialist
teams in Finance, Business Development, Human Resources and Intellectual
Property.
We have been fortunate to attract a number of key scientists to join our
Company and are actively seeking to make additional appointments to further
strengthen our teams as we prepare to populate our in-house pipeline with
high-confidence candidates. Key open positions include an additional
Non-Executive Director and a Chief Financial Officer.
As has been the case for all organisations during the past two years, and in
line with Government requirements, the SARS-CoV-2 pandemic resulted in the
need to establish new working arrangements. Fortunately, the nature of
e-therapeutics, activities (in particular the central role of AI and
computational biology) has meant that we have been less affected by the
pandemic than has been the case for those companies whose activities depend on
wet chemistry/biology laboratories.
As with any successful organisation, involving staff, at all levels, in
discussions and decisions about their future and that of the organisation is
paramount. Our Human Resources group led by Chief People Officer Stephanie
Maley has been especially active in running a series of consultations and we
have now agreed a hybrid working policy. We have opened a central London
office conveniently located near transport networks, including international
airports.
We continue to engage with shareholders and potential new investors, and I
invite you to contact us should you wish to discuss any matters relating to
our business.
Finally, in addition to congratulating all staff for their success during the
year, I would like to express my thanks to Ali Mortazavi for his exceptional
dedication and leadership and to thank my colleague Michael Bretherton, who,
in addition to his NED role, has recently taken interim oversight of financial
matters pending the appointment of a new CFO following the previously
announced departure of Karl Keegan for family reasons.
It is my pleasure to be Chairman of the Company. We are excited about the
potential for e-therapeutics going forward and in a strong position both
scientifically and financially to achieve our objectives.
Professor Trevor Jones CBE FMedSci
Independent Non-Executive Chairman
4 May 2022
Chief Executive's Statement
2021 was a transformative year for e-therapeutics against the backdrop of
multiple unprecedented global macro challenges. Despite the enormous success
of the global vaccination programme to tackle COVID-19, many operational and
logistical challenges remained in 2021. By October 2021, the hope for a return
to normality was seriously hindered by the emergence of the Omicron variant
and we, like many other companies, were forced to delay the return to an
office environment. In addition, and at the same time as the emergence of
Omicron, the global biotechnology sector saw a dramatic and unprecedented
decline.
In spite of these challenges, and thanks to the nimble nature of the Company,
it was a landmark year for e-therapeutics which saw significant and material
progress across all aspects of the business. It is a testament to the team and
our collective ambition to reinvent the drug discovery industry and compute
the future of medicine that we were able to achieve so much against such an
unforgiving backdrop. Key achievements in 2021 include:
Capital Raise
In June 2021, we strengthened our balance sheet with an equity capital raise
of £22.5m before expenses. Importantly, we received significant blue chip
institutional support for our strategy which will enable us to realise our
ambitions to become a world leading company in the field of computational
approaches to drug discovery.
RNAi liver platform
A key component of our strategy was to establish a proprietary therapeutic
technology platform which is potent, specific, safe, reproducible and gives us
the ability to design potential drug candidates as quickly as possible. This
would put us in a position of being able to rapidly prosecute novel target
genes identified using our computational engine. We focused on liver targeting
given the organ's crucial role across a variety of homeostatic biological
function, including in complex cardiometabolic diseases. GalNAc-siRNA
conjugates are a commercial stage, next-generation therapeutic modality that
enables highly specific hepatocyte targeting and potent gene silencing.
In October 2021, we announced significant progress in establishing our
proprietary liver-centric RNAi platform. Our in vivo experiments yielded two
different GalNAc-siRNA construct designs that showed at least equivalent
performance in terms of potency, target gene silencing and duration of action
(up to three months) against the best competitor data in the same targets in
NHP. These data enabled us to file eleven new patent applications to protect
these novel construct designs.
Yet again, despite an extremely unfavourable global logistics background, we
successfully completed these critical platform validation experiments on time
and on budget. This key validating dataset on our GalNAc-siRNA platform
technology firmly places the Company in an area with an extremely high barrier
to entry and a very small global peer group, which is in need of better
therapeutic targets to unlock further value in areas of high unmet need.
Target identification and computational platform specialisation
Target identification is currently the biggest limitation in GalNAc-siRNA and
there is a high degree of overlap in competitive pipelines. An important
differentiator for the Company relative to RNAi peers is the ability to
leverage its computational platform to identify better, novel therapeutic
targets. Our computational platform is also an enabler in the discovery of
mechanistic insights, assessment of genetic support and in silico evaluation
of target hypotheses ahead of wet lab experiments.
To complement our GalNAc-siRNA capabilities and feed our in-house pipeline,
the Company has created a hepatocyte-focused specialisation within its core
computational platform. e-therapeutics is also executing on an ambitious data
strategy to create the most comprehensive and integrated hepatocyte-centric
data resource in the World, tailored to our computational biology approach to
drug discovery. We are compiling experimental data at genome-wide scale using
bespoke human hepatocyte assays and combining it with our existing
state-of-the-art network analytics and artificial intelligence/machine
learning ("AI/ML") approaches to create a seamless connection between the
computer and the laboratory.
Our assays are guided by our in silico work and our
in vitro experimental
data feed back into making increasingly better models of
human biology. In addition, the Company is building the
most complete hepatocyte knowledge
graph, integrating its experimental data and its newly created AI/ML enhanced,
hepatocyte protein-protein interactome. The knowledge graph already includes
data derived from natural language processing of hundreds of thousands of
publications and data sources, patient-derived information, patent mining and
human expertise.
This knowledge
graph is structured to allow it to perform ML-driven mechanistic inference
to impute missing links and uncover hidden knowledge around biological
mechanisms, the greatest roadblock to efficient drug discovery and
development. This integrated resource will provide the Company with an
unprecedented foundation from which to derive disease intervention hypotheses,
support network model construction, carry out target identification and
discover genetic links. It will also provide data and insights to feed into its AI-driven siRNA
design workflows, which are another addition to our tool kit. The bases for
this data strategy are already in place and providing insights as we continue
to grow and enhance our capabilities. Furthermore, the knowledge graph and
tailored computational tools we have developed in hepatocytes can be
replicated in additional cell types of interest.
Importantly, the Company has expanded its network-aware
target identification, MoA (mode of action) elucidation and target
deconvolution capabilities. This has been possible via the augmentation of
network-based analysis with a suite of proprietary AI/ML approaches. These
target-centric approaches continue to complement foundational phenotypic
modelling capabilities.
Taken together, the enhanced applications of the e-therapeutics'
computational platform that have been developed to date will be a key enabler
both internally and for partners. In addition, e-therapeutics continues to
streamline its computational platform via increased automation and cloud
computing.
Partnerships and Collaborations
Partnering and collaborating around our computational biology platform has
been a key component of our strategy during the period. We believe that not
only can we derive revenue streams from these collaborations, but partnerships
also allow us to learn and enhance our platform under pharmaceutical settings.
We are extremely pleased to collaborate with iTeos, a clinical-stage
biopharmaceutical company pioneering the discovery and development of a new
generation of highly differentiated immuno-oncology therapeutics for patients.
The collaboration is focused on the discovery of novel therapeutic approaches
and targets in immuno-oncology and e-therapeutics will remain free to explore
additional collaborations in the space.
In addition, we have achieved all near-term milestones in our collaboration
with Galapagos as we have successfully identified potential therapeutic
strategies and targets in a specific area of biology associated with IPF and
potentially other fibrotic indications. In keeping with previous
e-therapeutics projects, the hit rate in identification of active compounds
was several orders of magnitude higher than industry standard, further
validating e-therapeutics' robust computational biology methods. The future of
the identified hits and targets will be determined by Galapagos according to
its strategic priorities and we remain in active dialogue with other potential
partners.
Outlook
Despite the challenging macro-operating environment experienced during the period, we have demonstrated great adaptability and focus which has resulted in significant scientific, technological and commercial progress. Our prospects remain favourable, and we are confident that our equity story is extremely attractive, differentiated and compelling.
We have successfully leveraged and monetised our computational platform and developed a proprietary gene silencing RNAi platform, enabling us to prosecute our discoveries and build long-term value. In addition, we have successfully started the population of our in-house pipeline of RNAi therapeutics with the initiation of experimental work on two gene targets.
I remain extremely confident in the potential of e-therapeutics and believe that your Company is well placed to become a world leading company able to compute the future of medicine.
Ali Mortazavi
Chief Executive Officer
4 May 2022
Financial Review
This has been a year of significant progress which has included strengthening
the management team and raising net proceeds of £21.7m through an equity
issue in order to fund an expansion of the Company's RNAi and computational
platform capabilities and build and populate an internal pipeline of
high-conviction early assets.
Revenue
Revenue of £0.5m for the year (2021: £0.3m) relates mainly to the partial
recognition of upfront payments and the achievement of milestones under the
collaboration agreement with Galapagos to identify new therapeutic approaches
to modulate a specific mechanism involved in IPF and potentially in other
fibrotic indications.
Multiple in vitro and in vivo studies to test newly designed siRNA constructs
were undertaken during the year with headline results announced that show at
least equivalent performance and safety to industry-leading RNAi platforms.
This is a material step in the Company's ultimate goal of developing an
in-house RNAi pipeline with future scope for early-stage partnering and
revenue generation.
Fundraise
An equity fundraise of £21.7m (gross £22.5m less related costs and
commissions of £0.8m) was completed in June 2021 to expand the Company's
platform capabilities and asset pipeline including investing in RNAi
therapeutic programmes, further developing the computational platform,
generating hepatocyte proprietary data and building and populating an internal
pipeline of high- conviction early assets, as well as recruiting additional
scientists and staff to support the scale-up. Overall headcount (excluding
Non-Executive Directors) increased from 25 at 31 January 2021 to 35 at 31
January 2022.
R&D expenditure
R&D expenditures increased considerably to £6.1m compared to £2.7m for
the prior year. Significant progress has been made in developing the Company's
RNAi therapeutics platform and 11 patent applications have now been filed,
including around stabilising chemical modifications enabling specific
hepatocyte (liver cell) targeting. The Company has also continued to advance
its computational platform, with an increased focus on network-aware novel
target identification, mode of action elucidation and target deconvolution.
Administrative expenditure
Administrative expenditure for the year totalled £3.9m (2021: £2.1m)
inclusive of a share-based payment employee option charge of £0.5m (2021:
£0.4m). The increased cost reflects continued improvements to our underlying
system infrastructure and processes to ensure that they grow with the
business, enabling our increased employee base to work efficiently and
ensuring the safety of our information assets. This included the opening of a
modern London head office in late October 2021, although subsequent
Omicron-related COVID-19 restrictions meant that the office did not become
fully operational until after the recent lifting of all such restrictions in
England on 24 February 2022.
Operating loss
The operating loss for the year of £9.6m is £5.1m higher than that in the
prior year. This is mainly attributable to increased R&D expenditure,
together with higher administration costs as the business continues to grow.
R&D tax credits and loss for the year
The consolidated income statement includes an R&D tax credit of £1.5m
(2021: £0.8m) to be received in relation to the current year, bringing down
the loss for the year to £8.1m (2021: £3.7m). The R&D tax credit claim
has not yet been submitted to HM Revenue and Customs, but historically the
amounts received have been materially in line with our calculated tax
receivable estimate included at the year end.
Cash flow
Year end cash and short term investment bank deposits amounted to £26.6m,
which is £13.6m higher than at the previous year end. The increase reflects
an equity fundraise inflow of £21.7m, together with R&D tax credits
received of £0.8m, partially offset by an underlying net outflow cash burn of
£8.8m relating mainly to operating losses exclusive of non-cash charges in
relation to share-based payment employee option costs of £0.5m and
depreciation, amortisation and impairment costs of £0.2m. Capital
expenditures in the year include £0.8m in respect of a right to use property
comprising a new London office lease which was fully funded by a corresponding
finance lease liability.
Financial outlook
In the coming financial year, we will drive forward with the strategic plans
formulated during the large mid-year fundraise in June 2021 which include:
· generation of experimental hepatocyte-specific proprietary data
for the Company's in silico discovery engine;
· advancement of two to three RNAi therapeutic programmes through
preclinical development;
· progress a first-in-human clinical study for one RNAi asset to
provide additional validation;
· further development of the Company's computational platform; and
· exploration of RNAi in other cell types.
Our budget, which has been prepared to reflect the above strategic plans,
shows that we have sufficient funds to continue in operational existence for
at least 12 months from the signing of these financial statements. We
anticipate a significant increase in our rate of spend, but our budget remains
prudent and incorporates discretionary spend which could be scaled back if
considered appropriate.
Michael Bretherton
Chief Financial Officer
4 May 2022
Consolidated Income Statement
For the year ended 31 January 2022
2022 2021
Notes (audited) (audited)
£'000 £'000
Revenue 477 317
Cost of sales - -
Gross profit 477 317
Research and development expenditure (6,109) (2,705)
Administrative expenses (3,938) (2,097)
Operating loss (9,570) (4,485)
Interest income 61 17
Interest expense (10) -
Loss before tax (9,519) (4,468)
Taxation 5 1,449 784
Loss for the year attributable to equity holders of the Company (8,070) (3,684)
Loss per share: basic and diluted 6 (1.65)p (0.99)p
Consolidated Statement of Comprehensive Income
For the year ended 31 January 2022
2022 2021
(audited) (audited)
£'000 £'000
Loss for the financial year (8,070) (3,684)
Other comprehensive income - -
Total comprehensive loss for the year attributable to equity holders of the (8,070) (3,684)
Company
Consolidated Statement of Changes in Equity
For the year ended 31 January 2022
Share capital Share premium Retained earnings deficit
£'000 £'000 £'000 Total
£'000
As at 1 February 2020 (audited) 269 65,176 (60,943) 4,502
Total comprehensive income for year
Loss for the financial year - - (3,684) (3,684)
Total comprehensive loss for year - - (3,684) (3,684)
Transactions with owners, recorded directly in equity
Issue of ordinary shares 152 12,492 - 12,644
Equity-settled share-based payment transactions - - 422 422
Total contributions by and distribution to owners 152 12,492 422 13,066
As at 31 January 2021 (audited) 421 77,668 (64,205) 13,884
Total comprehensive income for year
Loss for the financial year - - (8,070) (8,070)
Total comprehensive loss for year - - (8,070) (8,070)
Transactions with owners, recorded directly in equity
Issue of ordinary shares 94 21,575 - 21,669
Equity-settled share-based payment transactions - - 490 490
Total contributions by and distribution to owners 94 21,575 490 22,159
As at 31 January 2022 (Audited) 515 99,243 (71,785) 27,973
Consolidated Statement of Financial Position
As at 31 January 2022
(Restated) (Restated)
Notes 2022 2021 2020
(audited) (audited) (audited)
£'000 £'000 £'000
Non-current assets
Intangible assets 7 102 83 110
Property, plant and equipment 8 805 79 93
Investments - - -
907 162 203
Current assets
Tax receivable 5 1,474 769 557
Trade and other receivables 231 57 36
Prepayments 501 296 149
Cash and cash equivalents 9 11,598 7,005 2,833
Short term investments 9 15,051 6,022 1,008
28,855 14,149 4,583
Total assets 29,762 14,311 4,786
Current liabilities
Trade and other payables 1,103 327 215
Deferred revenue liability - 77 -
Lease liability 391 23 46
1,494 427 261
Non-current liabilities
Lease liability 295 - 23
Total liabilities 1,789 427 284
Net assets 27,973 13,884 4,502
Equity
Share capital 10 515 421 269
Share premium 99,243 77,668 65,176
Retained earnings deficit (71,785) (64,205) (60,943)
Total equity attributable to equity holders of the Company 27,973 13,884 4,502
Restatements reflect a simple reclassification of bank deposits on 95 days'
notice as short-term investments - see note 9.
Consolidated Statement of Cash Flow
For the year ended 31 January 2022
(Restated)
Notes 2022 2021
(audited) (audited)
£'000 £'000
Loss for the year (8,070) (3,684)
Adjustments for:
Depreciation, amortisation and impairment 7,8 218 111
Equity-settled share-based payment expense 490 422
Interest income (61) (17)
Interest expense 10 -
Taxation 5 (1,484) (802)
Operating cash flows before movements in working capital (8,897) (3,970)
Increase in trade and other receivables (379) (167)
Increase in trade and other payables 699 189
Tax received 779 590
Net cash used in operating activities (7,798) (3,358)
Interest received 61 17
Interest expense (10) -
Acquisition of other intangible assets 7 (55) (18)
Acquisition of property, plant and equipment 8 (908) (53)
Movement in short term investments 9 (9,029) (5,014)
Net cash used in investing activities (9,941) (5,068)
Proceeds from issue of share capital 21,669 12,644
Proceeds from lease liability 793 -
Repayment of lease liability (130) (46)
Net cash from financing activities 22,332 12,598
Net increase in cash and cash equivalents 4,593 4,172
Cash and cash equivalents at 1 February 7,005 2,833
Cash and cash equivalents at 31 January 11,598 7,005
Restatements reflect a simple reclassification of bank deposits on 95 days'
notice as short-term investments - see note 9.
The acquisition of property, plant and equipment in the year to 31 January
2022 includes a non-cash amount of £0.79 million capitalised in respect of a
right to use property for which a corresponding non-cash amount has been
recognised in proceeds from lease liability.
Notes
1. Status of Audit
The financial information set out herein does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The financial
information for the year ended 31 January 2022 has been extracted from the
Group's audited financial statements which were approved by the Board of
Directors on 4 May 2022 and which, if adopted by the members at the Annual
General Meeting, will be delivered to the Registrar of Companies for England
and Wales.
The financial information for the year ended 31 January 2021 has been
extracted from the Group's audited financial statements which were approved by
the Board of Directors on 12 May 2021 and which have been delivered to the
Registrar of Companies for England and Wales.
The report of the auditor on these financial statements was unqualified, did
not contain a statement under Section 498(2) or Section 498(3) of the
Companies Act 2006. The report of the auditor on the 31 January 2021 financial
statements was unqualified, did not contain a statement under Section 498(2)
or Section 498(3) of the Companies Act 2006, and did not include a matter to
which the auditors drew attention by way of emphasis without qualifying their
report.
The information in this preliminary statement has been extracted from the
audited financial statements for the year ended 31 January 2022 and as such,
does not contain all the information required to be disclosed in the financial
statements prepared in accordance with International Accounting Standards in
Conformity with the provisions of the Companies Act 2006.
The Company is a public limited company incorporated and domiciled in England
& Wales and whose shares are quoted on AIM, a market operated by The
London Stock Exchange.
2. Basis of preparation
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
international accounting standards in conformity with the requirements of the
Companies Act 2006, this announcement does not in itself contain sufficient
information to comply with IFRS. This preliminary announcement has been
prepared using the accounting policies that are expected to be published in
the Group's accounts for the year ended 31 January 2022, which are consistent
with the accounting policies published in the Group's accounts for the year
ended 31 January 2021 and that are available on the Company's website at
www.etherapeutics.co.uk, with the exception of those new standards,
interpretations and amendments which became effective during the year and were
adopted by the Group, albeit with no impact on the Group's loss for the year
or equity on initial recognition.
This announcement contains forward-looking statements that are based on
current expectations or beliefs, as well as assumptions about future events.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements
often use words such as anticipate, target, expect, estimate, intend, plan,
goal, believe, will, may, should, would, could, is confident, or other words
of similar meaning. Undue reliance should not be placed on any such statements
because they speak only as at the date of this document and, by their very
nature, they are subject to known and unknown risks and uncertainties and can
be affected by other factors that could cause actual results, plans and
objectives, to differ materially from those expressed or implied in the
forward-looking statements. There are a number of factors which could cause
actual results to differ materially from those expressed or implied in
forward-looking statements. The Company undertakes no obligation to revise or
update any forward-looking statement contained within this announcement,
regardless of whether those statements are affected as a result of new
information, future events or otherwise, save as required by law and
regulations.
Going concern
Although the Group has recognised revenue from commercial deals during the
current and prior year, it is still largely reliant on its cash and short-term
investment bank deposits to fund ongoing operations.
At 31 January 2022, we reported cash and short-term investment bank deposits
of £26,649,000, versus an underlying cash burn during the year of
£8,791,000, excluding R&D tax credits received and net proceeds from the
equity fundraise.
We prepared detailed strategic plans as part of the fundraise process
completed in June 2021, which raised total gross proceeds of £22,500,000. We
have also prepared a detailed annual budget and follow-on projections, which
together cover a 24-month period, and provide support for the view that the
Group has sufficient cash to meet its operational requirements for at least 12
months from the signing of these financial statements. The budget includes a
significant increase in R&D expenditure, in line with progressing our
strategic aims. This expenditure is largely uncommitted and discretionary and
would be reduced or postponed if required to manage the Group's cash
resources.
The financial performance and position of the Group are discussed in more
detail in the Financial Review above.
The preliminary announcement has been prepared on the going concern basis
since, given the points discussed above, the Directors have a reasonable
expectation that the parent Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
3. Accounting judgements and sources of estimation uncertainty
The preparation of financial statements requires management to make
judgements, estimates and assumptions that may affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses. The estimates and underlying assumptions are reviewed on an
ongoing basis.
The following are the key judgements that management have made in the process
of applying the Group's accounting policies and that have the most significant
effect on the amounts recognised in these financial statements:
· There are various revenue streams from collaborative
partnerships. Management review these revenue streams against the IFRS 15
criteria to establish whether revenue should be recognised over time or at a
point in time. Revenue recognised over time results in a difference between
up-front cash receipts and revenue recognised, the balance of which is
recorded on the Balance Sheet. At the year end, deferred revenue liability was
£nil (2021: £77,000). Revenue of £477,000 (2021: £317,000) is made up of
£400,000 (2021: £163,000) recognised at a point in time and £77,000 (2021:
£154,000) over time.
· The Directors have not recognised a deferred tax asset based on
an assessment of the probability that future taxable income will be available
against which the deductible temporary differences and tax loss carry-forwards
can be utilised.
The following are the key assumptions concerning estimation uncertainty that
may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
· The current tax receivable, of £1,474,000 (2021: £769,000),
represents an R&D tax credit based on an advance claim with HMRC. The
final receivable is subject to judgement and the correct application of
complex R&D tax rules. The minimum receipt approved by HMRC could be
£nil. Historically, final claims have been successful and materially in line
with the receivable recognised in the financial statements. The Group expects
the current year to be successful too.
4. Staff numbers
The average number of persons employed by the Group (including Executive
Directors and excluding Non-Executive Directors) during the year, analysed by
category, was as follows:
Average number of employees
2022 2021
(audited) (audited)
R&D staff 21 12
Finance and administration staff 10 5
Executive Directors 1 1
32 18
5. Taxation
2022 2021
(audited) (audited)
£'000 £'000
Current tax:
SME R&D tax credit receivable for the current year (1,439) (751)
Adjustments for prior year in respect of SME R&D tax credit (10) (33)
Current tax credit (1,449) (784)
Deferred tax - -
Total tax credit on loss on ordinary activities (1,449) (784)
The standard rate of corporation tax applied to reported profit is 19% (2021:
19%). The credit for the year can be reconciled to the Consolidated Income
Statement as follows:
2022 2021
(audited) (audited)
£'000 £'000
Loss before tax (9,519) (4,468)
Tax at the UK corporation tax rate of 19% (2020: 19%) (1,809) (849)
Expenses not deductible for tax purposes (4) -
Enhanced relief for SMEs in relation to R&D (619) (323)
Unrelieved tax losses 920 396
Other 73 25
Adjustments in respect of prior year (10) (33)
Total tax credit for the year (1,449) (784)
The total tax credit recognised with the Consolidated Income Statement is
£1,484,000 (2021: £802,000), which is made up the small or medium- sized
enterprise ("SME") R&D tax relief of £1,449,000 (2021: £784,000) and
Research and Development Expenditure Credit ("RDEC") of £35,000 (2021:
£18,000). The SME tax credit is shown within taxation, as reconciled above.
The RDEC is included within administrative expenses in the Consolidated Income
Statement on the basis that the RDEC is treated as taxable income, being an
'above the line' relief.
The tax receivable on the Balance Sheet, of £1,474,000 (2021: £769,000), is
made up of current year SME tax relief of £1,439,000 (2021: £751,000) and
RDEC of £35,000 (2021: £18,000). Historically, R&D credits relating to
both the SME scheme and the RDEC scheme have been received from HMRC as a
single payment.
The Group has accumulated losses available to carry forward against future
trading profits of £33,623,000 (2021: £28,835,000). No deferred tax has been
recognised in respect of tax losses since it is uncertain at the Balance Sheet
date as to whether future profits will be available against which the unused
tax losses can be utilised. The estimated value of the deferred tax asset not
recognised, measured at the main rate of 25% (2021: 19%), is £9,792,000
(2021: £5,499,000).
The increase in the current year tax credit is due to an increased R&D
credit, as a result of higher qualifying expenditure during the year, enabled
by the fundraise during the year. The current year R&D credit has not yet
been approved by HMRC and, therefore, there is a risk that this claim may not
be successful.
6. Loss per share
2022 2021
(audited) (audited)
Earnings for the purposes of basic earnings per share and diluted earnings per
share, being loss attributable to owners of the Company (£'000)
(8,070) (3,684)
Weighted average number of ordinary shares for the purposes of basic earnings 488,342,124 373,215,456
per share and diluted earnings per share (number)
Loss per share - basic and diluted (p) (1.65) (0.99)
The calculation of the basic and diluted earnings per share is based on the
following data:
Diluted EPS is calculated in the same way as basic EPS but also with reference
to reflect the dilutive effect of share options in existence at the year end
over 22,100,614 (2021: 22,622,836) ordinary shares. The diluted loss per share
is, however, identical to the basic loss per share, as potential dilutive
shares are not treated as dilutive where they would reduce the loss per share.
7. Intangible assets - Group
Patents and trademarks
Goodwill £'000 Total
£'000 £'000
Cost
As at 1 February 2020 2,101 1,332 3,433
Additions - 18 18
As at 31 January 2021 2,101 1,350 3,451
Additions - 55 55
As at 31 January 2022 2,101 1,405 3,506
Amortisation and impairment
As at 1 February 2020 2,101 1,221 3,322
Impairment losses - 30 30
Amortisation charge for the year - 16 16
As at 31 January 2021 2,101 1,267 3,368
Impairment losses - 25 25
Amortisation charge for the year - 11 11
As at 31 January 2022 2,101 1,303 3,404
Net book value
As at 1 February 2020 - 110 110
As at 31 January 2021 - 83 83
As at 31 January 2022 - 102 102
Research and development costs of £6,109,000 (2021: £2,705,000) have been
recognised in the Consolidated Income Statement.
Amortisation
Amortisation has been charged on patents for which the registration process is
complete, over the term granted. Amortisation is included within
administrative expenses.
The goodwill in the Company Balance sheet arose following the hive up of the
trade and assets of InRotis Technologies Limited in 2007. That goodwill was
fully impaired during 2020, reflecting the fact that the Group's business
model was then founded upon a very different, and significantly advanced,
technological capability versus that at the date of the hive-up in 2007.
8. Property, plant and equipment - Group
Right-to-use Property Plant and equipment Fixtures and
£'000 £'000 fittings
£'000 Total
£'000
Cost
As at 1 February 2020 123 162 103 388
Additions - 53 - 53
Disposals - (1) - (1)
As at 31 January 2021 123 214 103 440
Additions 802 64 42 908
Disposals (123) - - (123)
As at 31 January 2022 802 278 145 1,225
Depreciation
As at 1 February 2020 46 151 100 297
Depreciation charge for the year 46 18 1 65
Disposals - (1) - (1)
As at 31 January 2021 92 168 101 361
Depreciation charge for the year 148 31 3 182
Disposals (123) - - (123)
As at 31 January 2022 117 199 104 420
Net book value
As at 1 February 2020 77 13 3 93
As at 31 January 2021 31 46 2 79
As at 31 January 2022 685 79 41 805
9. Cash and cash equivalents and short-term investments - Group
2022 2021
£000 £000
Cash at bank and in hand 3,568 3,005
Bank deposits on 32 days' notice 8,030 4,000
Cash and cash equivalents 11,598 7,005
Short term investments (bank deposits on 95 day notice) 15,051 6,022
Total cash and cash equivalents and short term investments 26,649 13,027
The Group's primary objective is to minimise the risk of a loss of capital and
to eliminate any loss of liquidity which would have a detrimental effect on
the business. Short term surplus funds are deposited with reputably rated
banks for maturities of not more than 95 days.
Restatements: historically bank deposits on 95 days' notice were treated
as cash with a maturity of three months and were included within cash and
cash equivalents balances but it is now considered more appropriate
that these be classified as short-term investments and accordingly the
related prior year balances have also been restated to reflect this. The
resultant impact is to reduce prior year cash and cash equivalents balances at
31 January 2021 and 31 January 2020 by £6.022 million and £1.008 million
respectively and to increase short term investments by the same corresponding
amounts.
10. Share capital - Company and Group
No. of ordinary shares
2022 2021
(audited) (audited)
In issue at 1 February 420,773 269,125
Share issues 93,798 151,649
Total shares authorised and in issue at 31 January - fully paid 514,571 420,774
2022 2021
Nominal value £'000 £'000
Allotted, called up and fully paid
514,571,069 (2021: 420,773,546) ordinary shares of £0.001 each 515 421
515 421
The Company has one class of ordinary shares, which carry no right to fixed
income.
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