REG - e-Therapeutics plc - Final results for the year ended 31 January 2023
04/05/2023 07:00
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RNS Number : 3470Y e-Therapeutics plc 04 May 2023
e-therapeutics plc
("e-therapeutics" or the "Company")
Final results for the year ended 31 January 2023
Successful year executing the Company's strategy resulting in the creation of
a rapidly growing in-house pipeline of promising preclinical
candidates
London, UK, 4 May 2023- e-therapeutics plc (AIM: ETX; OTCQX; ETXPF), a
company integrating computational power and biological data to discover
life-transforming RNAi medicines, announces its audited results for the year
ended 31 January 2023.
Operational highlights
· RNAi strategy delivering a rapidly growing in-house pipeline of
early first-in-class candidates, against target genes discovered using our
HepNet(TM) computational platform. Comprehensive in vivo proof-of-concept data
packages being generated.
· Active across a variety of areas of high unmet medical need,
including cardiovascular disease, non-alcoholic steatohepatitis ("NASH") and
haematology. Investing in the cardiometabolic space as a key focus area.
· Expansion of world's most comprehensive knowledge base of
hepatocyte-centric biology to capture and model complex biological processes
in the liver and tissues influenced by the liver, completing proprietary
curation of 100s of data sources.
· Increased integration of HepNet(TM) functionality and continued
validation of our tools, in particular our hepatocyte-specific knowledge graph
and proprietary target identification approaches.
· Mapping of human genetic validation of potential targets
completed for more informed target triage.
· Integration of large language models ("LLMs"), such as OpenAI's
GPT model, to radically enhance computational capabilities and transform
HepNet(TM) into a dynamic knowledge resource.
· Expansion of artificial intelligence ("AI") approaches that learn
from experimental data deployed into siRNA (short interfering RNA) drug
design.
· Sustained intellectual property ("IP") activity with patent
applications filed on eight further inventions arising from the Company's
proprietary GalNAc-siRNA technology, GalOmic(TM).
· New collaboration with iTeos Therapeutics in immuno-oncology
announced on 5 April 2022. Several milestone payments received since, in
addition to upfront consideration, following the successful identification of
potential targets and small molecule compounds.
· Successful completion of Galapagos NV collaboration in idiopathic
pulmonary fibrosis ("IPF"), with all near-term milestones achieved
demonstrating our ability to effectively identify potential therapeutic
strategies and targets.
Post Period Highlights
· Filing of four new patent applications to protect innovation
around novel gene targets and associated disease relevant biology as well as
proprietary siRNA stabilisation chemistries.
· Additional milestone achieved in collaboration with iTeos
Therapeutics, resulting in an additional payment to the Company.
Financial Highlights
· Successful fundraise of £13.5 million announced in September
2022
· Cash and short-term investment bank deposits at 31 January 2023
of £31.7 million (2022: £26.4 million)
· Revenues of £0.5 million (2022: £0.5 million)
· R&D spend of £7.2 million (2022: £6.1 million)
· Operating loss of £10.2 million (2022: £9.6 million)
· Loss for the year of £8.3 million (2022: £8.1 million)
· £1.5 million R&D tax credit receivable (2022: £1.5 million)
Ali Mortazavi, Chief Executive Officer of e-therapeutics, commented: "2022/23
was a pivotal year for e-therapeutics as we made significant progress towards
realising our goal of Computing the Future of Medicine. Through our innovative
computational approach and RNAi-based therapeutic modality, we were able to
rapidly identify and pursue promising targets in multiple disease areas. We
are now well-positioned to advance our pipeline of first-in-class preclinical
RNAi candidates, making significant progress in just one year.
By placing LLMs at the core of our computation and harnessing GPT-4's
capabilities, we can now create specialised LLM "agents" which will transform
HepNet(TM) into a dynamic knowledge resource. GPT-4 and LLM integration will
provide a unifying framework from which to drive every aspect of our pipeline
and position e-therapeutics as a global leader in hepatocyte biology and
related diseases.
Our long-term vision is to fully automate the preclinical drug discovery
process, using GPT-4 and LLMs to access real-time information and interface
with external applications, ultimately accelerating the development of
life-saving treatments. Through our computational approach, we have been able
to generate a multitude of potential target hypotheses and progress an
in-house pipeline. Given our established position in computational drug
discovery, we are ideally positioned to capitalise on this opportunity and
look forward to the future with great confidence".
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, CEO Tel: +44 (0)20 4551 8888
Laura Roca-Alonso, COO/CBO www.etherapeutics.co.uk (http://www.etherapeutics.co.uk)
SP Angel Corporate Finance LLP Tel: +44(0)20 3470 0470
Nominated Adviser and Broker
Matthew Johnson/Harry Davies-Ball (Corporate Finance)
Vadim Alexandre/Rob Rees (Corporate Broking)
About e-therapeutics plc
e-therapeutics plc ("ETX") integrates computational power and biology
information to discover life-transforming RNAi medicines. The Company's
technology uses computation to capture and model human biology, identify
novel targets, and develop RNAi medicines against those targets that can be
rapidly progressed to the clinic.
ETX's proprietary HepNet(TM) platform enables the generation and analysis of
biological network models, providing a novel and mechanistic approach to drug
discovery. This approach explicitly considers the true complexity of biology
to make more reliable predictions from large complex data sets and ETX's
proprietary hepatocyte knowledgebase - the world's most comprehensive and
integrated hepatocyte-centric data resource. The Company generates,
prioritises and tests millions of hypotheses in silico to identify better
therapeutic targets with higher confidence.
GalOmic(TM), ETX's proprietary RNAi platform, enables the targeted delivery to
hepatocytes in the liver and the specific silencing of novel
disease-associated genes, identified by HepNet(TM). The focus on hepatocytes
offers the opportunity to tackle a wide variety of diseases. The liver is a
highly metabolically active organ which performs a key role in many biological
processes and vital functions crucial for human health. ETX's GalOmic(TM)
constructs have demonstrated compelling in vivo performance in terms of
depth of gene silencing and duration of action.
The Company is progressing a pipeline of first-in-class preclinical RNAi
candidates across several high unmet medical needs in cardiometabolic
indications and targeting promising hepatocyte-expressed targets with effects
in other disease areas. ETX has also partnered with biopharma companies such
as Novo Nordisk, Galapagos NV and iTeos Therapeutics using its computational
network biology approach across a diverse range of drug discovery projects.
The Company is based in London, UK and listed on the Alternative Investment
Market of the London Stock Exchange ("AIM"), with ticker symbol ETX.
E-therapeutics is also traded on the OTCQX Best Market (OTCQX) in the United
States, under ticker symbol ETXPF.
Chair's Statement
I am pleased to report a year of significant progress across all elements of
the business culminating in the rapid establishment of an in-house pipeline of
RNAi candidates and the continued advancement of our highly differentiated
computational tools and approach.
Our RNAi focus
The focus on RNAi as a modality of choice enables the Company to realise some
key advantages associated with this ground-breaking technology which include:
· High specificity against their target gene, thus minimising
potential off-target effects
· No druggability issues, being able to silence virtually any gene
in the genome
· Long duration of action, supporting infrequent administration and
reduced patient burden
· Reversible effects (no changes to DNA)
· Good safety profile
The recent strategic focus on RNAi, together with the use of sophisticated
computational approaches to identify novel therapies, has resulted in a
frenetic period of innovation which is outlined throughout this report.
Our hepatocyte expertise
Whilst our methodology is applicable to a wide range of diseases, our focus is
specific to diseases associated with the liver. Hepatocytes are highly
metabolically active cells, and their targeting enables the Company to develop
therapeutic strategies in a broad variety of therapeutic areas including
cardiovascular, metabolic, renal, and rare diseases.
Developing and protecting a pipeline
During the year the Company has further leveraged its HepNet(TM) computational
biology platform to identify novel gene targets resulting in the initiation of
our own in-house therapeutic pipeline. This represents a move away from
earlier stage partnering towards prosecuting our own ideas where we believe
there is greater potential for later-stage higher value commercial
opportunities.
The in-house pipeline contains a number of novel targets undergoing advanced
experimental evaluation and prosecution. Behind this sits a large portfolio
of additional target ideas being discovered and assessed in silico as well as
experimentally.
Importantly, we continue to protect our innovation through patent applications
for Intellectual Property Rights around novel gene targets and associated
disease relevant biology discoveries as well as proprietary siRNA
stabilisation chemistries. During the reported year, and continuing into the
new financial year, we have filed a series of patent applications to protect
17 inventions.
Board and governance
As an AIM-quoted company we have chosen to apply the 2018 Quoted Companies
Alliance Corporate Governance Code (the "QCA Code"). The Board remains
committed to high standards of corporate governance that ensure the Company
operates in a transparent and ethical way that delivers value for employees,
shareholders and stakeholders. This includes activities undertaken during
the period across the areas of risk management control, financial planning,
organisational structure and resource allocation.
People and culture
The Board is committed to building a diversified inclusive workplace and
creating a thriving culture of integrity and trust where people can freely
innovate. During the period we have sought ways to further develop
initiatives that promote employee wellbeing and engagement. We continue to
seek and attract high calibre talent with plans to add further expert resource
to the existing team in the year ahead.
Our move from Oxford to London has been completed successfully and places us
in a position to access a larger pool of talent attracted by the opportunity
to work in a popular vibrant international city without losing our close
proximity to the centres of excellence in Oxford and Cambridge.
Financial position
Through the activities of the Audit Committee, the Board and the Executive
Management Team the Company continues to implement and maintain robust
financial controls and reporting.
Via a £13.5m fundraise announced in September 2022 we strengthened our
financial position which provides us with the capital to support the execution
of our immediate strategy. The fundraising also provided an important
endorsement of our differentiated approach and expertise in integrating
computational power and biological data to accelerate the discovery of novel
RNAi medicines. I would like to acknowledge and thank our shareholders for
their continued support.
I am delighted to represent this dynamic and progressive company as its Chair.
We are in a strong position financially, making good progress scientifically
and committed to creating value for all our stakeholders.
Prof Trevor M Jones CBE FMedSci
Independent Non-Executive Chair
4 May 2023
Chief Executive's Statement
2022/23 was a pivotal year for e-therapeutics as we made significant progress
towards realising our goal of Computing the Future of Medicine(TM). Through
our innovative computational approach and RNAi-based therapeutic modality, we
were able to rapidly identify and pursue promising targets in multiple disease
areas. We are now well-positioned to advance our pipeline of first-in-class
preclinical RNAi candidates across multiple therapeutic areas, making
significant progress in just one year.
Pivot from small molecules to RNAi: GalOmic(TM)
The opportunity to pivot into RNAi as a modality of choice to prosecute our
novel target ideas presented several key advantages. In particular, focussing
on GalNAc-conjugated siRNA, using our proprietary GalOmic(TM) platform, allows
us to leverage the existing safety and performance precedent of a
commercial-stage technology and take more biological risks by pursuing novel
targets. In addition, RNAi enables rapid and comparatively inexpensive
candidate generation once a target is selected. This allows us to have
multiple 'shots on goal' for the same cost as a single small molecule
programme with a much higher probability of success. Critically, domain
knowledge of the RNAi therapeutics space is extremely niche, and I believe
that the previous experience in the field of our senior leadership team will
prove to be a crucial component of our success.
We have now shown across multiple targets that we can design and synthesise
lead GalNAc-conjugated siRNAs in approximately 6 months and at a cost of c.
$500K (including healthy in vivo pharmacology). This capability has enabled us
to generate and progress drug candidates at a greatly accelerated pace and
scale compared to more traditional modalities, and we believe that RNAi-based
therapeutics have the potential to transform the treatment landscape across
multiple disease areas.
Significant progress in RNAi IP, drug design and speed of execution
During the year, we have also made significant progress in our intellectual
property ("IP") portfolio, with the filing of multiple patent applications to
protect both our RNAi platform (GalOmic(TM)) inventions and novel targets. We
have gained significant new know-how whilst optimising our drug design process
and reducing the associated timelines. These include the protection of siRNA
chemical modification "stamps" thereby reducing the number of permutations and
combinations in our screening cascades as well as predictive methodologies to
reduce the number of sequences that need to be tested for in vivo studies.
This is part of our goal to apply computation across all aspects of our
business, eventually allowing us to confidently predict the attributes of our
siRNA molecules without the need for cell-based or in vivo screening. This
will allow us to progress our siRNA molecules from in silico drug design
straight to in vivo experiments, increasing our speed of execution. In
addition, following the success of the mRNA-based COVID-19 vaccines, we have
noted a significant change in policy from regulators to use compelling
computational data to help reduce preclinical timelines and start first in
human ("FIH") clinical trials as quickly as possible. We believe, given that
computation and data is used at every step of our drug discovery efforts, ETX
is extremely well-positioned to take advantage of the changing regulatory
landscape going forward.
HepNet(TM): Our computational solution to human biology modelling and novel
target ID
We continue to make significant strides in our expansion of HepNet(TM), the
most comprehensive hepatocyte data and analytics resource in the world.
HepNet(TM) enables generation and analysis of biological network models,
providing a novel and mechanistic approach to drug discovery that explicitly
considers the true complexity of biology. Our computational network models
represent, as closely as possible, the biological systems ETX is seeking to
impact. The approach allows us to identify, prioritise and test millions of
hypotheses in silico to make more reliable predictions with higher confidence
and generate gene target hypotheses based on large complex data sets.
HepNet(TM) was built on the Company's previously established proprietary
network biology knowledge, tools and algorithms to model and interrogate human
biology. This powerful modular platform was originally cell type agnostic.
Extensive work has recently been undertaken to extend its capability and to
leverage the focus on a single modality, RNAi, to create the most
comprehensive and integrated proprietary hepatocyte-centric data resource.
We have invested in the licensing and generation of a range of proprietary
liver omics data resources to support disease related process and target
discovery, particularly in the realm of cardiometabolic disorders. The
Company's proprietary hepatocyte-focused Knowledge Graph has been further
enhanced with additional data derived from both experimental Natural Language
Processing ("NLP") approaches and through AI-driven predictive approaches to
knowledge inference. This allows the discovery of hidden relationships in data
whilst providing the capability to impute missing information. Furthermore,
the application of robust standards of validation for all our tools and
approaches remains an important focus, and this rigour will continue to be a
critical part of our development going forward.
In terms of scalability, the HepNet(TM) platform and data resources are now
entirely cloud-based, ushering in a new era of effectively unlimited
computational power and data storage. Using cutting-edge technologies we have
been able to speed up our analytical pipelines by orders of magnitude,
reducing compute times from weeks or months to a few hours. This has enabled
the development of proprietary large-scale statistical approaches to analysis
that were previously unfeasible.
HepNet(TM) has been instrumental in enabling us to develop a deep
understanding of hepatocyte biology and giving us the ability to identify
novel targets for potential drug candidates. We have continued to build on the
platform, generating proprietary data inputs, exploring additional datasets of
interest and keeping our data foundation updated. Through this, we have been
able to generate a multitude of potential target hypotheses, enabling us to
rapidly prosecute many high conviction, computationally-derived gene targets
in relevant disease areas as possible.
Target nomination and pipeline
We believe that we now have a robust process to assess and prosecute any
hepatocyte gene target from idea to FIH studies. In addition, we are
continually refining and improving our methodologies, algorithms, datasets and
implementing one of the fastest cascades in preclinical drug development. This
has resulted in the Company having a number of high conviction therapeutic
target-indication pairs which can be prosecuted at speed, dependent on our
capital position.
Our preclinical pipeline has progressed at a rapid rate and we have initiated
preclinical activities for additional targets while continuing to pursue
previous projects. We expect to nominate our first candidate for IND/CTA
enabling studies before the end of 2023, while we continue to advance projects
through construct design and in vitro studies into in vivo testing.
Cardiometabolic indications continue to be a key focus, but we remain open to
pursuing promising hepatocyte-expressed targets identified by our
computational methods that have effects in other disease areas, as exemplified
by our active haematology programmes.
Through this pipeline, we aim to translate our discoveries into real-world,
highly specific, and effective medicines in record time. We have also
continued to nominate new targets, with a key pipeline priority being targets
within cardiometabolic indications, such as cardiovascular disease ("CVD") and
non-alcoholic steatohepatitis ("NASH"). We have active programmes in these
areas, and we plan to continue to add projects across metabolic syndrome
indications.
Non-dilutive funding opportunities via collaborations/partnerships remains a
key component of the Company's strategy. Future collaborations will be in
line with our current liver and RNAi focus, with an expectation for
later-stage partnerships that maximise value retention and reflect the
development of ETX's early in-house RNAi pipeline. A balance will be found
between preclinical assets to partner and assets that the Company will
progress to early clinical trials to reach a more significant value inflection
point.
Large Language Models and GPT-4
I believe that the most significant development at e-therapeutics over the
past year occurred during Q4 2022, when we began investigating the integration
of large language models ("LLMs") and GPT-4 as a core component and enabling
technology within all of our computational efforts. The drug discovery
landscape is on the brink of a transformative revolution, driven by LLMs such
as GPT-4. As I have already stated, e-therapeutics has made remarkable
progress in multiple discovery programs, transitioning from small molecule
discovery to hepatocyte-targeted GalNAc-siRNA drugs and our HepNet(TM)
proprietary platform for insights and predictions.
Nevertheless, a weakness in our computation has been the immaturity of NLP
algorithms to couple large corpora of text alongside our machine learning
("ML") and statistical approaches. However, LLMs, such as GPT-4, now offer a
unique opportunity to revolutionise e-therapeutics' text capabilities and
materially enhance HepNet(TM)'s capabilities.
By placing LLMs at the core of our computation and harnessing GPT-4's
capabilities, we can create specialised LLM "agents" and transform HepNet(TM)
into a dynamic knowledge resource. Integration of GPT-4 and LLMs integration
will provide a unifying framework from which to drive every aspect of our
pipeline and position e-therapeutics as a global leader in hepatocyte biology
and related diseases. Our long-term vision is to fully automate the
preclinical drug discovery process, using GPT-4 and LLMs to access real-time
information and interface with external applications, ultimately accelerating
the development of life-saving treatments.
Immediate use cases for LLMs include our "Straight to In Vivo" project, target
identification, patent extraction and an in silico cell type delivery project.
We aim to create a robust pipeline and business model leveraging GPT-4 and
LLMs' full potential, ensuring our place at the forefront of the AI-driven
drug discovery revolution. By integrating GPT-4 and LLMs, e-therapeutics will
continue to break new ground in drug discovery, create novel therapeutic
strategies, and improve patient outcomes. Central to this vision is the
ongoing advancement of our RNAi chemistry platform (GalOmic(TM)) for
developing hepatocyte targeted GalNAc-siRNA drugs. These cutting-edge AI
technologies hold the key to unlocking new treatments for various diseases and
conditions, transforming the future of medicine.
In conclusion, integrating GPT-4 and LLMs into our drug discovery pipeline
will revolutionise hepatocyte biology, RNAi chemistry, and the development of
novel therapeutics. By harnessing these AI technologies, we can accelerate the
development of life-saving treatments, improve patient outcomes and realise
our vision of computing the future of medicine.
Collaborations
In April, we announced a new collaboration with iTeos Therapeutics. We are
using our unique computational methodology to enable the discovery of highly
differentiated novel immuno-oncology therapeutics. The work is progressing
well against pre-defined plans and milestones. As well as receiving near-term
cash payments material to the revenue of the Company, we are eligible to
receive undisclosed milestone payments through preclinical and clinical
development, in addition to regulatory milestones, per programme. Several
milestone payments have been received since we first announced this
collaboration and, after the period, we have achieved an additional success
milestone associated with a further cash payment to the Company.
The collaboration with Galapagos NV ("Galapagos") in idiopathic pulmonary
fibrosis ("IPF") has now successfully concluded and offers further evidence
and third-party validation of our ability to effectively identify potential
therapeutic strategies and targets computationally. We achieved all near-term
milestones resulting in several cash payments to the Company. The future of
the identified hits and targets will be determined by Galapagos according to
its strategic priorities. If progressed, we are eligible to receive further
milestones throughout development and commercial stages.
Capital Raise
2022/23 was an extremely difficult year for the biotechnology sector. However,
in September 2022 we successfully raised £13.5m through a share placing and
subscription with M&G Investments which we believe is a recognition of our
unique business model. This capital injection enables us to continue our
growth and development. I would like to take this opportunity to thank M&G
for their continued support.
Conclusion
In conclusion, I believe that 2022/23 will be seen as a transformative year
for e-therapeutics. Through our computational approach, we have been able to
generate a multitude of potential target hypotheses and progress an in-house
pipeline of preclinical RNAi candidates across multiple therapeutic areas. I
would like to reiterate that we believe that LLMs such as GPT-4 are a new
enabling technology that will completely transform our business. Given our
established position in computational drug discovery, we are ideally
positioned to capitalise on this opportunity and look forward to the future
with great confidence.
Ali Mortazavi
Chief Executive Officer
4 May 2023
CFO's Review
This has been another year of significant progress towards building and
populating an internal pipeline of high-conviction early RNAi assets. In
addition, the Company raised net proceeds of £13.4m through an equity issue
in order to fund its ongoing R&D activities, including expansion of the
Company's GalOmic(TM) and HepNet(TM) computational platform capabilities.
Revenue
Revenue of £0.5m for the year (2022: £0.5m) relates mainly to the
recognition of upfront payments and the achievement of milestones under the
immuno-oncology collaboration agreement with iTeos in addition to a remaining
milestone payment with Galapagos on successful conclusion of the collaboration
in idiopathic pulmonary fibrosis.
We are actively generating valuable data packages for several target genes and
indications and currently also have live targets progressing through in vivo
studies and disease models, together with three additional targets in earlier
stages. In addition, we continue target identification and triaging,
continuously generating additional targets ready for project initiation. This
is further validation of the Company's ultimate goal of developing a highly
differentiated in-house RNAi pipeline with future scope for early-stage
partnering and revenue generation.
Fundraise
An equity fundraise of £13.4m (gross £13.5m less related costs and
commissions of £0.1m) was announced in September by way of a direct
subscription by funds managed by M&G Investment Management Limited. The
net proceeds are being used to expand the Company's platform capabilities and
RNAi asset pipeline.
R&D expenditure
R&D expenditure totalled £7.2m this year (2022: £6.1m). Significant
progress has been made in further developing the Company's RNAi therapeutics
platform and we have now filed patent applications to protect 17 inventions,
including around stabilising chemical modifications enabling specific
hepatocyte (liver cell) targeting. The Company has also continued to advance
its HepNet(TM) computational platform and to leverage the focus on a single
modality, RNAi, to create the most comprehensive and integrated proprietary
hepatocyte-centric data resource. This platform enables generation and
analysis of biological network models, providing a novel and mechanistic
approach to drug discovery that explicitly considers the true complexity of
biology.
Administrative expenditure
Administrative expenditure for the year totalled £3.5m (2022: £3.9m)
inclusive of a share-based payment employee option charge of £0.2m (2022:
£0.5m). The decreased administration cost is mainly due to a reduction of the
share-based payment charge which results from a significant number of options
lapsing in relation to employee leavers during the year.
Operating loss
The operating loss for the year of £10.2m is £0.6m higher than that in the
prior year. This is mainly attributable to increased R&D expenditure
reflecting further progress and development of our business strategy of
computing the future of medicine.
Interest and investment income
Interest and investment income for the year amounted to £0.5m (2022: £0.1m).
The increase includes interest income higher by £0.2m on higher cash deposit
balances and improved deposit rates, coupled with receipt of a £0.2m dividend
from a non-operating subsidiary which was dissolved in the year and following
which the Company no longer has any subsidiaries.
R&D tax credits and loss for the year
The income statement includes an R&D tax credit of £1.5m (2022: £1.5m)
in relation to the current year, bringing down the loss for the year to £8.3m
(2022: £8.1m). 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 £31.7m,
which is £5.1m higher than at the previous year end. The increase reflects an
equity fundraise inflow of £13.4m, together with R&D tax credits received
of £1.5m, partially offset by an underlying net outflow cash burn of £9.6m.
That cash burn relates mainly to operating losses exclusive of non-cash
charges in respect of share-based payment employee option costs of £0.2m, and
depreciation, amortisation and impairment costs of £0.5m. In addition, £0.2m
was spent on the acquisition of capital equipment and capitalised patents and
IP during the year.
Financial outlook
In the coming financial year, we will drive forward with our strategic plans
for nomination and execution of pre-clinical targets using our GalOmic(TM)
platform. Non-dilutive funding opportunities via collaborations/partnerships
remains a key component of the Company's strategy and a balance will be found
between preclinical assets to partner and assets that the Company will
progress to early clinical trials.
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 considerable increase in our rate of spend and our budget remains
prudent and incorporates discretionary spend which could be scaled back if
considered appropriate.
Michael Bretherton
Chief Financial Officer
4 May 2023
Income Statement
For the year ended 31 January 2023
2023 2022
Notes £'000 £'000
Revenue 475 477
Cost of sales - -
Gross profit 475 477
Research and development expenditure (7,224) (6,109)
Administrative expenses (3,490) (3,935)
Operating loss (10,239) (9,567)
Interest income 490 61
Interest expense (23) (10)
Loss before tax (9,772) (9,516)
Taxation 5 1,498 1,449
Loss for the year attributable to equity holders of the Company (8,274) (8,067)
Loss per share: basic and diluted 6 (1.54)p (1.65)p
Statement of Comprehensive Income
For the year ended 31 January 2023
2023 2022
£'000 £'000
Loss for the financial year (8,274) (8,067)
Other comprehensive income - -
Total comprehensive loss for the year attributable to equity holders of the (8,274) (8,067)
Company
Statement of Changes in Equity
For the year ended 31 January 2023
Share capital Share premium Retained earnings
£'000 £'000 £'000 Total
£'000
As at 31 January 2021 421 77,668 (64,455) 13,634
Total comprehensive income for year
Loss for the financial year - - (8,067) (8,067)
Total comprehensive loss for year - - (8,067) (8,067)
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 515 99,243 (72,032) 27,726
Total comprehensive income for year
Loss for the financial year - - (8,274) (8,274)
Total comprehensive loss for year - - (8,274) (8,274)
Transactions with owners, recorded directly in equity
Issue of ordinary shares 67 13,370 - 13,437
Equity-settled share-based payment transactions - - 155 155
Total contributions by and distribution to owners 67 13,370 155 13,592
As at 31 January 2023 582 112,613 (80,151) 33,044
Statement of Financial Position
As at 31 January 2023
2023 2022
Notes £'000 £'000
Non-current assets
Intangible assets 7 239 102
Property, plant and equipment 8 400 805
Investments - -
639 907
Current assets
Tax receivable 5 1,500 1,474
Trade and other receivables 259 236
Prepayments 553 501
Cash and cash equivalents 9 31,689 11,346
Short term investments 9 - 15,051
34,001 28,608
Total assets 34,640 29,515
Current liabilities
Trade and other payables 1,301 1,103
Lease liability 295 391
1,596 1,494
Non-current liabilities
Lease liability - 295
Total liabilities 1,596 1,789
Net assets 33,044 27,726
Equity
Share capital 10 582 515
Share premium 112,613 99,243
Retained earnings deficit (80,151) (72,032)
Total equity attributable to equity holders of the Company 33,044 27,726
Statement of Cash Flow
For the year ended 31 January 2023
2023 2022
Notes £'000 £'000
Loss for the year (8,274) (8,067)
Adjustments for:
Depreciation, amortisation and impairment 7,8 468 218
Loss on disposal of fixed assets 8 10 -
Equity-settled share-based payment expense 155 490
Interest income (490) (61)
Interest expense 23 10
Taxation 5 (1,522) (1,484)
Operating cash flows before movements in working capital (9,630) (8,894)
Increase in trade and other receivables (75) (384)
Increase in trade and other payables 198 700
R&D Tax received 1,496 779
Net cash used in operating activities (8,011) (7,799)
Interest received 490 61
Interest expense (23) (10)
Acquisition of intangible assets 7 (142) (55)
Acquisition of property, plant and equipment 8 (68) (908)
Increase in short term investments 9 15,051 (9,029)
Net cash (used in)/from investing activities 15,308 (9,941)
Proceeds from issue of share capital 13,437 21,669
Proceeds from lease liability - 793
Repayment of lease liability (391) (130)
Net cash generated/(used) financing activities 13,046 22,332
Net increase/(decrease) in cash and cash equivalents 20,343 4,592
Cash and cash equivalents at 1 February 11,346 6,754
Cash and cash equivalents at 31 January 31,689 11,346
Short term investments/bank deposits - 15,051
Cash and cash equivalents and short term investments as at 31 January 31,689 26,397
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 of 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 2023 has been extracted from the
Company's audited financial statements which were approved by the Board of
Directors on 4 May 2023 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 2022 has been
extracted from the Company's audited financial statements which were approved
by the Board of Directors on 4 May 2022 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 2022 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 2023 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 Company's accounts for the year ended 31 January 2023, which are
consistent with the accounting policies published in the Company's accounts
for the year ended 31 January 2022 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 Company, albeit with no impact on the Company'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 Company has recognised revenue from commercial deals during the
current and prior year, it is still largely reliant on its cash balance to
fund ongoing operations.
At 31 January 2023, we reported cash and cash equivalents and short term
investments of £31,689,000 versus an underlying cash burn during the year of
£9,642,000, excluding R&D tax credits received and net proceeds from the
equity fundraise.
We prepared detailed strategic plans as part of the fundraise process
announced in September 2022, which raised total gross proceeds of
£13,500,000. 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 Company has sufficient cash to meet its operational
requirements for at least 12 months from the signing of these financial
statements. The budget includes a considerable 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 Company's cash resources.
The financial performance and position of the Company are discussed in more
detail in the CFO's 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 Company has 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 Company'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. Revenue recognised from collaborative
partnerships and corresponding contract liabilities reflect management's best
estimate of each contract's stage of completion. Management estimates project
progress at each reporting date, with consideration to project plans outlined
in customer contracts, and remeasures revenue accordingly. At the year end,
deferred revenue liability was £nil (2022: £nil). Revenue of £475,000
(2022: £477,000) is made up of £475,000 (2022: £400,000) recognised at a
point in time and £nil (2022: £77,000) 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 potential deferred tax asset is disclosed in Note 5.
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 £1,500,000 (2022: £1,474,000),
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 Company
expects the current year to be successful too.
4. Staff numbers
The average number of persons employed by the Company (including Executive
Directors and excluding Non-Executive Directors) during the year, analysed by
category, was as follows:
Number of employees
2023 2022
R&D staff 26 21
Finance and administration staff 11 10
Executive Directors 1 1
38 32
5. Taxation
2023 2022
£'000 £'000
Current tax:
SME R&D tax credit receivable for the current year (1,483) (1,439)
Adjustments for prior year in respect of SME R&D tax credit (15) (10)
Current tax credit (1,498) (1,449)
Deferred tax - -
Total tax credit on loss on ordinary activities (1,498) (1,449)
The standard rate of corporation tax applied to reported profit is 19% (2022:
19%). The credit for the year can be reconciled to the Income Statement as
follows:
2023 2022
£'000 £'000
Loss before tax (9,772) (9,519)
Tax at the UK corporation tax rate of 19% (2020: 19%) (1,857) (1,809)
Expenses not deductible for tax purposes (3) (4)
Enhanced relief for SMEs in relation to R&D (635) (619)
Unrelieved tax losses 1,034 920
Income not taxable (47) -
Other 25 73
Adjustments in respect of prior year (15) (10)
Total tax credit for the year (1,498) (1,449)
The total tax credit recognised within the Income Statement is £1,522,000
(2022: £1,484,000), which is made up the small or medium- sized enterprise
("SME") R&D tax relief of £1,498,000 (2022: £1,449,000) and Research and
Development Expenditure Credit ("RDEC") of £24,000 (2022: £35,000). The SME
tax credit is shown within taxation, as reconciled above. The RDEC is included
within administrative expenses in the 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 £1,500,000 (2022: £1,474,000),
is made up of current year SME tax relief of £1,483,000 (2022: £1,439,000)
and RDEC of £17,000 (2022: £35,000). Historically, R&D credits relating
to both the SME scheme and the RDEC scheme have been received from HMRC as a
single payment.
The Company has accumulated losses available to carry forward against future
trading profits of £38,162,000 (2022: £33,623,000). 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% (2022: 19%), is £10,237,000
(2022: £9,792,000).
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
2023 2022
Earnings for the purposes of basic earnings per share and diluted earnings per (8,274) (8,067)
share, being loss attributable to owners of the Company (£'000)
Weighted average number of ordinary shares for the purposes of basic earnings 537,346,310 488,342,124
per share and diluted earnings per share (number)
Loss per share - basic and diluted (p) (1.54) (1.65)
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 21,172,836 (2022: 22,100,614) 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
Patents and trademarks
Goodwill £'000 Total
£'000 £'000
Cost
As at 1 February 2021 2,824 1,350 4,174
Additions - 55 55
As at 31 January 2022 2,824 1,405 4,229
Additions - 142 142
Disposals (2,824) - (2,824)
As at 31 January 2023 - 1,547 1,547
Amortisation and impairment
As at 1 February 2021 2,824 1,267 4,091
Impairment losses - 25 25
Amortisation charge for the year - 11 11
As at 31 January 2022 2,824 1,303 4,127
Amortisation charge for the year - 5 5
Disposals (2,824) - (2,824)
As at 31 January 2023 - 1,308 1,308
Net book value
As at 31 January 2021 - 83 83
As at 31 January 2022 - 102 102
As at 31 January 2023 - 239 239
Research and development costs of £7,224,000 (2022: £6,109,000) have been
recognised in the 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 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 Company'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. This
goodwill was accounted for as disposed in the current year following an
application for dissolution and strike off of InRotis Technologies that was
made in the final quarter of 2022. InRotis Technologies was subsequently
removed from the UK Companies House register.
8. Property, plant and equipment
Right-of-use Property Plant and equipment Fixtures and
£'000 £'000 fittings Total
£'000 £'000
Cost
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
Additions - 68 - 68
Disposals - (23) - (23)
As at 31 January 2023 802 323 145 1,270
Depreciation
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
Depreciation charge for the year 401 55 7 463
Disposals - (13) - (13)
As at 31 January 2023 518 241 111 870
Net book value
As at 31 January 2021 31 46 2 79
As at 31 January 2022 685 79 41 805
As at 31 January 2023 284 82 34 400
9. Cash and cash equivalents and short term investments
2023 2022
£'000 £'000
Cash at bank and in hand 3,616 3,316
Bank deposits on 32 days notice 12,879 8,030
Bank deposits on 35 days notice 15,194 -
Cash and cash equivalents 31,689 11,346
Short term investments (bank deposits on 95 day notice) - 15,051
Total cash and cash equivalents and short term investments 31,689 26,397
The Company'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 35 days.
10. Capital and reserves
No. of ordinary shares
2023 2022
'000 '000
In issue at 1 February 514,571 420,773
Share issue 67,588 93,798
Total shares authorised and in issue at 31 January - fully paid 582,159 514,571
The Company has one class of ordinary shares with a nominal value of £0.001
each and carry no right to fixed income.
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