REG - Genedrive PLC - Half-year Report
28/03/2024 07:00
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RNS Number : 6010I Genedrive PLC 28 March 2024
genedrive plc
("genedrive" or the "Company")
Interim results to 31 December 2023
genedrive plc (LSE: GDR), the point of care pharmacogenetic testing company,
announces unaudited interim results for the six months to 31 December 2023.
OPERATING HIGHLIGHTS (including post period)
· Food and Drug Administration ("FDA") progress for the Genedrive®
MT-RNR1 pharmacogenetic test (Antibiotic Induced Hearing Loss). The Company
is in advanced stages of negotiating a collaboration with a USA-based Medical
Group to support a highly cost-effective pathway for the necessary clinical
trials
· Distributor agreement in place to support the FDA study and support
future sales in the United States
· NIHR i4i & OLS Real World Evidence Programme funding application
to address NICE EVA evidence generation requirements for the Genedrive®
MT-RNR1 kit, in partnership with lead partners at Manchester University NHS
Foundation Trust and 14 hospitals throughout the UK
· Strategic decision to sell Genedrive® MT-RNR1 kit direct in the UK
and Ireland in 2024 following addition of increased internal sales capability
· Royal Sussex County Hospital, Brighton adopts the Genedrive® MT-RNR1
ID Kit for routine use and ongoing discussions with other hospitals in the UK
and Ireland with further near-term adoption anticipated
· Initial international sales of the Genedrive® MT-RNR1 ID Kit
received from France, Austria, Greece, Saudi Arabia, Turkey and the
Netherlands
· UK Conformity Assessed ("UKCA") marking achieved for new Genedrive®
CYP2C19 pharmacogenetic test (stroke treatment selection)
· £1.2m (of which the Company is expected to receive c£0.2m directly)
multi-partner grant awarded and in progress for the validation of Genedrive®
CYP2C19 ID Kit in time critical NHS settings
· The draft NICE guidance recommends CYP2C19 genotyping for clopidogrel
treatment and Genedrive® CYP2C19 ID test modelled to be a clinically and most
dominant cost-effective option. The second consultation on the draft
guidance is scheduled to commence on 3 April 2024 and the final NICE
recommendations are expected to be published in July 2024
FINANCIAL HIGHLIGHTS
· Revenue and other income of £0.24m (H1 2022/3: £0.02m)
· R&D spend of £1.9m (H1 2022/3: £2.0m)
· Operating loss of £2.4m (H1 2022/3: £2.7m)
· Cash of £1.2m as at 31 December 2023 (30 June 2023: £2.6m)
· Cash of £1.2m as at 20 March 2024 following recent receipt of
R&D tax credit of £0.8m
James Cheek, CEO of genedrive plc, commented: "Following my arrival in
September I have seen the organisation really move forward with our commercial
enterprises and it has been encouraging to see how we have been able to
generate Genedrive® MT-RNR1 kit sales both inside and outside the UK in such
a short space of time. As well as our commercial focus, I have also been keen
to ensure we have the right strategy for our business overall, leading to
tighter controls over costs. I said in November, that for MT-RNR1, we would
have a new UK site on board soon, sales coming in from overseas and a
distributor in place to help us move forward with our desire to sell into the
much larger USA market (subject to FDA approval). This has all been achieved
and my focus going forward is on continuing with our MT-RNR1 sales, especially
outside of the UK, as well as building our marketing and sales for CYP2C19 in
the UK. Finally, we will seek to raise further equity funding in the coming
weeks in order to provide a longer-term financing solution for the Company's
exciting growth plans. On behalf of myself and the Board, I would like to
thank our shareholders for their support and I look forward to what I hope
will be a prosperous year."
genedrive plc +44 (0)161 989 0245
James Cheek: CEO / Russ Shaw: CFO
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0)20 7418 8900
James Steel / Patrick Birkholm
Walbrook PR Ltd (Media & Investor Relations) +44 (0)20 7933 8780 or genedrive@walbrookpr.com
(mailto:genedrive@walbrookpr.com)
Anna Dunphy +44 (0)7876 741 001
About genedrive
genedrive plc is a pharmacogenetic testing company developing and
commercialising a low cost, rapid, versatile, simple to use and robust point
of need pharmacogenetic platform for the diagnosis of genetic variations. This
helps clinicians to quickly access key genetic information that will help them
make the right choices over the right medicine or dosage to use for an
effective treatment. Based in the UK, the Company is at the forefront of work
on Point of Care pharmacogenetics. Pharmacogenetics looks at how your genetics
impacts a medicines ability to work for you. Therefore, by using
pharmacogenetics, medicines can be made safer and more effective. The Company
has launched its flagship product, the Genedrive® MT-RNR1 ID Kit, which is a
single-use disposable cartridge that circumvents the requirement for cold
chain logistics by providing temperature stable reagent test kits for use on
their proprietary test platform. This test allows clinicians to make a
decision on antibiotic use within 26 minutes; ensuring vital care is delivered
with no negative impact on the patient pathway.
The Company has a clear commercial strategy focused on accelerating growth
through maximising in-market sales, geographic and portfolio expansion and
strategic M&A, and operates out of its facilities in Manchester.
CHIEF EXECUTIVE OFFICER'S AND CHAIRMAN'S REPORT
The Company continues to make significant steps in revolutionising the
delivery of personalised medicine, enhancing health outcomes and generating
health economic benefits. There has been a renewed focus on our commercial
team leading to changes in personnel and structure. This has allowed us to go
direct in the UK and Ireland, enhance our digital marketing offering and
increase our distributor network worldwide.
Antibiotic Induced Hearing Loss (AIHL) - Genedrive® MT-RNR1-ID Kit
Our MT-RNR1 ID kit is the world's first point-of-care genetic test to reduce
the risk of antibiotic induced hearing loss ("AIHL"). Following detection of
the MT-RNR1 variant an alternative antibiotic treatment can be prescribed. Our
test has the potential to save thousands of children from lifelong hearing
loss, whilst providing a net positive financial outcome case to global
healthcare systems.
In March 2023, the Genedrive® MT-RNR1-ID Kit received a recommendation for
use in the UK by the National Institute for Health and Care Excellence
("NICE") under its Early Value Assessment Programme ("EVA"). The EVA was
introduced to allow rapid assessment of digital products, devices and
diagnostics for clinical effectiveness and value for money, so that the NHS
and patients can benefit from these promising technologies sooner. The
recommendation is conditional on further evidence being generated and the
Company is a partner with clinical colleagues at Manchester University NHS
Foundation Trust ("MFT") who have recently applied for funding to address the
NICE EVA evidence generation recommendations, which are required for
progressing the NICE conditional recommendation into a full recommendation at
the earliest opportunity. The NIHR i4i & OLS Real World Evidence Programme
is intended to address each eligible EVA, is being led by Office for Life
Sciences ("OLS") as part of the UK Government's Life Sciences Vision and is
backed by £10m of government funding and is expected to commence in October
2024.
Royal Sussex County Hospital, Brighton has adopted the Genedrive® MT-RNR1 ID
Kit for routine use. This was a significant milestone, as it's the first
adopter outside of Greater Manchester and plans are being put into place to
roll out the test in the wider Kent, Surrey and Sussex region.
We continue to pursue all avenues to ensure we achieve specialist
commissioning before the current timescale of April 2025. In line with
specialist commissioning being devolved to the Integrated Care Boards
("ICBs"), our initial discussions have been with the Manchester ICB to obtain
funding from April 2024 for the live sites across the Greater Manchester
region.
In December 2023, following product registration and language translations,
the first international sales of the Genedrive® MT-RNR1 ID Kit were achieved
in France, Austria, Greece, Saudi Arabia, Turkey and the Netherlands and we
have recently signed new distributors in Italy and the UAE.
The Company is at advanced stages in agreeing a partnership with a key
strategic USA-based Medical Group with broad coverage of neonatal intensive
care units nationally to progress our aim of introduction of our MT-RNR1 point
of care pharmacogenetic test to the USA (subject to regulatory approval). If
the partnership is secured it would provide the Company with a highly
cost-effective pathway for the required regulatory studies for potentially
attaining approval in the USA which would be a key element of the use of
proceeds for the Company's proposed equity financing.
The USA is a particularly attractive market for this unique test, given its
high birth rates, use of diagnostic testing and reimbursement structure and
therefore has the potential to save many children from life-long deafness. In
2021, 3.7m babies were born in the USA, with approximately 10.5% born
prematurely. It was estimated that malpractice litigation settlements in cases
related to deafness caused by the use of aminoglycosides average over US$1.1m
per case, further adding to the positive health economic case of providing
accurate and timely testing to reduce unwanted side effects of gentamicin
usage and reduce potential litigation costs.
A distributor agreement is in place with International Biomedical, Ltd. to
support the FDA study and future sales in the United States. International
Biomedical has over 45 years' experience in the design, manufacture and
distribution of neonatal and perinatal products and solutions, covering the
entire USA.
Genedrive® CYP2C19 ID Kit
Genedrive® CYP2C19 ID Kit achieved UKCA marking registration in September
2023. It is a point of care pharmacogenomic test that can differentiate
between patients that could respond to clopidogrel treatment and those that
will not, allowing more effective drug treatment to be prescribed on a
personalised basis. The test can be performed at the bedside or in a ward and
can deliver a clinically actionable result in just over one hour.
Suboptimal response to clopidogrel following stroke is common, as reported by
the NHS it is affecting up to 30% of patients in the general population, which
increases to approximately 50%-60% in certain ethnic groups. In the UK, the
National Institute for Health and Care Excellence ("NICE") recommended in May
2023 draft guidance that people who have had an ischaemic stroke or transient
ischaemic attack ("TIA") should have a CYP2C19 genetic test prior to
treatment. According to the World Stroke Organization, globally there are over
77 million people currently living who have experienced ischaemic stroke. It's
estimated by the Stoke Association that there are 100,000 strokes in the UK
each year.
The Genedrive® CYP2C19 test uses a single, non-invasive cheek swab sample,
and rapidly identifies six important genetic variants of the CYP2C19 gene,
which are instrumental in the loss of metabolism function and poor activation
of clopidogrel in a patient. The Genedrive® system automatically interprets
the information for the clinician, allowing prompt administration of an
optimised treatment plan. Like all genedrive products, the tests are presented
in a room-temperature stable, freeze-dried format, allowing testing to be
performed by healthcare workers, away from laboratory locations. In its
performance evaluations, the test achieved 100% accuracy in detecting the
variants that underpin loss of metabolism function.
The Development and Validation of Technology for Time Critical Genomic Testing
("DEVOTE") grant is providing acute care patient access and supporting
infrastructure for the Company to assess the real-world clinical performance
of time-critical clinical tests in an NHS setting. The programme, led by the
University of Manchester ("UoM"), builds on the model of the previous
successful UoM/genedrive partnership with the PALOH programme, which supported
the development and evaluation of the Genedrive® MT-RNR1 ID Kit. The
Company is expected to receive circa £0.2m directly with the £1m balance
funding the costs of a clinical trial that would otherwise have been incurred
in full.
Our participation in the DEVOTE programme is well underway and is generating
additional performance data in an acute care setting. This expanded dataset is
required to drive our CE-IVD submission, which will allow for subsequent
commercialisation in the EU. Submission is achievable in the second half of
2024 once genedrive's engagement with DEVOTE has completed. With an
approximate seven-month regulatory review process, we anticipate CE-IVD
certification in early 2025. Whilst already UKCA marked, our
commercialisation efforts in the UK will commence following successful
completion of the DEVOTE clinical performance study at end of May 2024.
In the UK, the Company will be selling the product through its direct sales
team, and momentum for adoption is expected to be influenced by positive final
NICE recommendations for CYP2C19 testing. The draft NICE guidance recommends
CYP2C19 genotyping for clopidogrel treatment and Genedrive® CYP2C19 ID test
modelled to be a clinically and most dominant cost-effective option. The
second consultation on the draft guidance is scheduled to commence on 3 April
2024 and the final NICE recommendations are expected to be published in July
2024.
Antiplatelet therapies such as Clopidogrel are recommended by NICE to prevent
occlusive vascular events for people who have had an ischaemic stroke, who
have peripheral arterial disease or multivesicular disease, or for people who
have had a myocardial infarction only if aspirin is contraindicated or not
tolerated. Other antiplatelet drugs can be used where clopidogrel is
contraindicated or not tolerated. Other antiplatelet therapies have a higher
risk of bleeding, although equivalent efficiency if preceded by CYP2C19
genotype guided therapy, and so in ischaemic stroke, current draft guidance
from NICE states that CYP2C19 genotyping should be conducted in advance of
Clopidogrel administration within 24 hours for ischaemic stroke. It is
likely that this pathway will be adopted for other indications requiring
clopidogrel, for example, in cardiovascular indications.
FINANCIAL RESULTS
Revenue and other income in the period was £0.24m (H1 2022/3: £0.02m).
Research and development costs continued at similar levels, being £1.9m (H1
2022/3: £2.0m) as the Company focused on near-commercialisation product
development. Administration costs continue to be controlled at £721k (H1
2022/3: £713k). The trading loss for the period was £2.4m (H1 2022/3:
£2.7m). Finance costs in the period of £30k (H1 2022/3: £11k).
After financing costs, the loss before taxation was £2.4m (H1 2022/3: £2.7m
loss before taxations). The loss after taxation decreases to £2.0m (H1
2022/3: £2.2m loss after taxation) after estimating the six-month taxation
credit as £0.35m (H1 2022/3: £0.5m). The basic loss per share was 2.0p (H1
2022/3: 2.4p basic loss per share).
Cash Resources
The operating loss for the period was £2.4m (H1 2022/3: £2.7m) and working
capital reduced by £0.2m (H1 2022/3: £0.1m). Net cash out-flow from
operations was £2.4m (H1 2022.3: £2.4m) and as the R&D tax credit was
not received in the period the net cash flow from operating activities was
also £2.4m.
Cash flows from financing activities consisted of lease liability repayments
of £112k (H1 2022/3: £81k) and there was £1.2m of proceeds from the
Investor Placing Agreement (H1 2022/3: £nil).
Closing cash was £1.2m (31 December 2022: £2.21m). The cash balance on 21
March 2024 was £1.2m with £0.8m received from the R&D tax credit post
period end; the current burn rate without any material revenues and assuming
current levels of expenditure is circa £0.4m per month.
Balance Sheet
Balance sheet net assets at 31 December 2023 were £1.5m (30 June 2023: £2m;
31 December 2022: £3.5m) and the consolidated loss of the period was £2m (H1
2022/3: £2.2m). As at 31 December 2023 the amount outstanding from the
investor placing agreement was £1m (30 June 2023: £1.3m) and £0.1m on 21
March 2024.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which could have a
material impact on the Company's performance over the remaining six months of
the financial year and could cause actual results to differ materially from
expected and historical results. The Directors do not consider that these
principal risks and uncertainties have changed materially since publication of
the annual report for the year ended 30 June 2023; a more detailed explanation
of the risks for the Company can be found on page 20 of the annual report.
Going Concern
At the current burn rate, the Company has a cash runway through May 2024. We
are confident that we will continue to gain commercial traction and securing
significant revenues, but due to the time required to achieve this, as we have
already stated, we will require additional funding. As described in the
accounting policies, we continue to adopt a going concern basis for the
preparation of the accounts, but the above condition represents a material
uncertainty that may cast significant doubt on the Group and Company's ability
to continue as a going concern. As set out above, the Company is actively
pursuing further equity funding to provide the necessary resources to execute
the Company's growth strategy.
OUTLOOK
The Board is pleased with the tangible progress the Group is generating, with
a clear focus on pharmacogenetic testing and the commercialisation of our two
innovative products. This fuels the Board's optimism for future success, as we
strive to generate value for our shareholders while positively impacting
individuals' lives.
The news that funding is to be made available from the government's Office for
Life Sciences via NIHR for the real world evidence generation required by NICE
for our Genedrive® MT-RNR1 ID Kit is very welcome, affording the potential
for it to move from a conditional recommendation to a full recommendation with
NICE which would accelerate the adoption of the test in the NHS. Genedrive
is a technical partner in an application from a consortia of 14 hospitals
throughout the UK regions, led by our clinical partners at MFT.
Our equity funding plans are being advanced and the intention will be to raise
sufficient funding to complete the clinical trials and regulatory approval
process in the USA for the AIHL test whilst also providing sufficient funding
to cover the Company's operating costs for an appropriate period of time. The
Board intends to provide a mechanism for retail shareholders to participate in
any equity financing and a further announcement will be made in due course.
Securing further funding is key to the execution of our strategy as is
finalising our partnership in the USA for MT-RNR1 studies required for future
de novo submission route for FDA approval. As a direct result of our
collaboration with clinical colleagues under the DEVOTE programme for CYP2C19,
we should also achieve IVDR approval for CYP2C19 by the end of 2024/early 2025
allowing us to sell the product into Europe and further afield. With both
these products, with strong unmet need, clear market potential and defined
NICE recommendations, genedrive has significant potential but we will also
pursue new developments, partnerships and opportunities for Pharmacogenetic
testing. We believe we are in the right place at the right time, with the
right products, with little competition in the field of point of care
pharmacogenetic testing.
James Cheek
Chief Executive Officer
Dr Ian Gilham
Chairman
28 March 2024
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2023
Six months ended Six months ended Year ended
31 December 2023 31 December 2022 30 June 2023
Unaudited Unaudited Audited
Note £000 £000 £000
Revenue and other income (4) 238 21 55
Research and development costs (1,876) (1,988) (3,924)
Administrative costs (721) (713) (1,355)
Operating loss (4) (2,359) (2,680) (5,224)
Finance costs (5) (30) (11) (757)
Loss on ordinary activities before taxation (2,389) (2,691) (5,981)
Taxation 350 500 831
Loss for the financial period (2,039) (2,191) (5,150)
Total comprehensive expense for the period (2,039) (2,191) (5,150)
Loss per share (pence)
-Basic (2.0)p (2.4)p (5.5)p
-Diluted (2.0)p (2.4)p (5.5)p
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2023
Share Capital Other Reserves Accumulated Total
(unaudited) (unaudited) Losses (unaudited)
£000 £000 (unaudited) £000
£000
At 30 June 2022 1,388 51,294 (47,071) 5,611
Equity -settled share-based payments - 34 - 34
Transactions settled directly in equity - 34 - 34
Total comprehensive loss for the period - - (2,191) (2,191)
At 31 December 2022 1,388 51,328 (49,262) 3,454
Share issue - 2 - 2
Investment funding arrangement, net of costs 97 1,385 - 1,482
Equity -settled share-based payments - 62 - 62
Transactions settled directly in equity 97 1,449 - 1,546
Total comprehensive loss for the period - - (2,959) (2,959)
At 30 June 2023 1,485 52,777 (52,221) 2,041
Investment funding arrangement, net of costs 351 1,113 - 1,464
Equity -settled share-based payments - 40 - 40
Transactions settled directly in equity 351 1,153 - 1,504
Total comprehensive loss for the period - - (2,039) (2,039)
At 31 December 2023 1,836 53,930 (54,260) 1,506
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 31 December 2023
31 December 31 December 30 June
2023 2022 2023
(unaudited) (unaudited) (audited)
£000 £000 £000
Note
Non-current assets
Intangible assets - - -
Plant and equipment 279 503 392
279 503 392
Current assets
Inventories 539 665 525
Trade and other receivables 214 126 158
Current tax 1,181 1,456 831
asset
(6)
Cash and cash equivalents 1,226 2,083 2,601
3,160 4,330 4,115
Liabilities
Current liabilities
Trade and other payables (788) (1,066) (935)
Lease liabilities (129) (221) (222)
Derivative financial instruments (1,016) - (1,290)
(1,933) (1,287) (2,447)
Non-current liabilities
Lease liabilities - (92) (19)
Total liabilities (1,933) (92) (2,466)
Net assets 1,506 3,454 2,041
Capital and reserves
Called-up equity share 1,836 1,388 1,485
capital
(8)
Other 53,930 51,328 52,777
reserves
(9)
Accumulated losses (54,260) (49,262) (52,221)
Total shareholder equity 1,506 3,454 2,041
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2023
31 December 2023 31 December 2022 30 June
(unaudited) (unaudited) 2023
(audited)
£'000 £'000 £'000
Cash flows from operating activities
Operating loss for the period (2,359) (2,680) (5,224)
Depreciation and amortisation on non-leased assets 28 32 61
Depreciation on right-of-use assets 90 81 193
Share - based payment 40 34 96
Operating loss before changes in working capital and provisions (2,201) (2,533) (4,874)
Increase/ (decrease) in inventories (14) 83 223
(Increase)/ decrease in trade and other receivables (56) (19) (51)
Decrease/ (increase) in trade and other payables (147) 62 (59)
Net cash outflow from operations (2,418) (2,407) (4,761)
Tax received - - 956
Net cash outflow from operating activities (2,418) (2,407) (3,805)
Cash flows from investing activities
Finance income 18 5 29
Finance costs (10) (16) -
Proceeds from disposal of discontinued operations - 14 15
Acquisition of plant and equipment and intangible assets (5) (21) (52)
Net cash inflow/ (outflow) from investing activities 3 (18) (8)
Cash flows from financing activities
Proceeds from the investment placing agreement 1,200 - 2,300
Transaction costs relating to investment placing agreement (48) (283)
Repayment of lease liabilities (112) (81) (193)
Net inflow/ (outflow) from financing activities 1,040 (81) 1,824
Net decrease in cash equivalents (1,375) (2,506) (1,989)
Effects of exchange rate changes on cash and cash equivalents - - 1
Cash and cash equivalents at beginning of period 2,601 4,589 4,589
Cash and cash equivalents at end of period 1,226 2,083 2,601
Analysis of net funds
Cash at bank and in hand 1,226 2,083 2,601
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS
1. General information
genedrive plc ('the Company') and its subsidiaries (together 'the Group') is a
pharmacogenetic testing company developing and commercialising a low cost,
rapid, versatile, simple to use and robust point of need pharmacogenetic
platform for the diagnosis of genetic variations. The Company is a limited
liability company incorporated and domiciled in the UK. The address of its
registered office is 48 Grafton Street, Manchester, M13 9XX. The Company has
its listing on AIM.
The financial information for the period ended 31 December 2023 and similarly
the period ended 31 December 2022 has been neither audited nor reviewed by the
auditor. The financial information for the year ended 30 June 2023 has been
based on information in the audited financial statements for that period. The
interim financial statements for the period ended 31 December 2023 do not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for the year ended 30 June 2023 has
been delivered to the Registrar of Companies, the accounts had an unqualified
audit opinion and did not contain a statement under section 498(2) or (3) of
the Companies Act 2006 but did include a reference to a material uncertainty
that might cast significant doubt over the Group's ability to continue as a
going concern, to which the auditor drew attention by way of emphasis.
These interim financial statements were approved by the Board of Directors on
28 March 2024.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods represented in these consolidated
financial statements.
2. Significant accounting policies
Basis of accounting
The consolidated interim financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group"). They are presented
in pounds sterling and all values are rounded to the nearest one thousand
pounds (£k) except where otherwise indicated.
Subsidiaries are entities controlled by the Group. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases. Transactions
between Group companies are eliminated on consolidation.
The accounting policies used in the preparation of the financial information
for the six months ended 31 December 2023 are in accordance with the
recognition and measurement criteria of UK adopted international accounting
standards and are consistent with those which will be adopted in the annual
financial statements for the year ending 30 June 2024. Whilst the financial
information included has been prepared in accordance with the recognition and
measurement criteria of international accounting standards, the financial
information does not contain sufficient information to comply with
international accounting standards. The Group has not applied IAS 34, Interim
Financial Reporting, which is not mandatory for UK AIM listed Groups, in the
preparation of this interim financial report.
Going concern
The Directors have concluded that it is necessary to draw attention to the
revenue and cost forecasts in the business plans during the period to June
2025. The Group and Company does not currently have sufficient cash resources
to continue as a going concern during the forecast period due to the time
expected to be needed to gain commercial traction in its revenues.
Therefore, the Company will need to raise further equity, or other funding, in
the near term in order to continue as a going concern. The forecasts
prepared by the Directors include a plan to raise additional funds from equity
investors or debt providers to allow the Company to continue as a going
concern.
The Company is confident that given the health benefits and economics that
RNR1 will be a commercial success. The NICE EVA (Early Value Assessment)
recommendation is testimony to it. Our CYP2C19 product is at validation and
verification stage and has a much larger potential market than RNR1 with a far
less complex route to market. The Company recognises the uncertainty regarding
the timing of the associated revenues, given we are first to market for RNR1
and the funding complexities within the NHS. NICE recommendations and
Specialist Commissioning will bring significant upside to our sales forecasts,
but they are outside of our control and are therefore uncertain. The
Directors have reasonable confidence in their ability to raise additional
funds given the progress described above and having made enquiries, have a
reasonable expectation that the Group has access to adequate resources to
continue in operational existence for the foreseeable future.
While the Board has a successful track record in raising funds, there remains
uncertainty as to the amount of funding that could be raised from shareholders
or debt providers. The combination of the above factors represents a material
uncertainty that may cast significant doubt on the Group and Company's ability
to continue as a going concern.
Accordingly, the Directors have concluded that it is appropriate to continue
to adopt the going concern basis of accounting in preparing these financial
statements. These financial statements do not include the adjustments that
would result if the Group and Company were unable to continue as a going
concern.
New accounting standards adopted in the period
There have been no new accounting standards adopted in the period that have
had a material impact on the financial statements.
Estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation were the same as those that applied to the consolidated
financial statements for the year ended 30 June 2023, with the exception of
changes in estimates that are required in:
- determining the provision for taxation; and
- determining the carrying value for inventory
Revenue recognition
a. Product sales
Sales of goods are recognised when all the performance obligations have been
completed and when the Group entity has no continuing managerial involvement
nor effective control over the goods. The transfer of control of goods can
pass at various points depending on the shipping terms of the contract with
the customer, they can be at collection from a premises or delivery to the
relevant port or customer designated premises. Where items are sold with a
right of return, accumulated experience is used to estimate and provide for
such returns at the time of sale.
b. Collaboration and licensing revenue
Contractually agreed upfront payments and similar non-refundable payments in
respect of collaboration or licence agreements which are not directly related
to ongoing research activity are recorded as deferred income and recognised as
revenue over the anticipated duration of the agreement. Where the anticipated
duration of the agreement is modified, the period over which revenue is
recognised is also modified.
Non-refundable milestone and other payments that are linked to the achievement
of significant and substantive technological or regulatory hurdles in the
research and development process are recognised as revenue upon the
achievement of the specified milestones.
Income which is related to ongoing research activity is recognised as the
research activity is undertaken, in accordance with the contract. Activity is
measured based on progress and milestones and not cost.
c. Other income - development grant funding
Income receivable in the form of Government grants to fund product development
is recognised as development grant funding over the periods in which the Group
recognises, as expenses, the related eligible costs which the grants are
intended to compensate and when there is reasonable assurance that the Group
will comply with the conditions attaching to them and that the income will be
received. Government grants whose primary condition is that the Group should
purchase or otherwise acquire non-current assets are recognised as deferred
revenue in the Consolidated Balance Sheet and transferred to the Consolidated
Statement of Comprehensive Income on a systematic and rational basis over the
useful lives of the related assets.
Research and development
Research expenditure is written off as it is incurred. Development expenditure
is written off as it is incurred up to the point of technical and commercial
validation. Thereafter, costs that are measurable and attributable to the
project are carried forward as intangible assets, subject to having met the
following criteria:
· demonstration that the product will generate profitable future
economic benefit and of an intention and ability to sell the product;
· assessment of technical feasibility;
· confirmation of the availability of technical, financial and
other resources to complete the development;
· management intends to complete the development so the product
will be available for use; and
· the expenditure attributable to the development can be reliably
measured.
Right-of-use assets (ROU)
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. Leases are recognised as an ROU asset and a
corresponding lease liability at the date at which the leased asset is
available for use by the Group. At the lease commencement date, a ROU asset is
measured at cost comprising the following: the amount of the initial
measurement of the lease liability; any lease payments made at or before the
commencement date less any lease incentives received; any initial direct
costs; and restoration costs to return the asset to its original condition.
The ROU asset is depreciated over the shorter of the asset's useful life and
the lease term on a straight-line basis. If ownership of the ROU asset
transfers to the Group at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated
useful life of the asset.
Foreign currencies
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in sterling which is the Group's presentation
currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying net investment hedges.
Non-monetary items carried at fair value and denominated in foreign currencies
are retranslated at the rates prevailing on the date when fair value is
determined.
3. Revenue
Revenue is measured at the fair value of the consideration received or
receivable and net of discounts and sales-related taxes.
4. Operating segments
Diagnostic Segment Administrative Total
Costs
Six months ended 31 December 2023 £'000 £'000 £'000
Revenue and other income 238 - 238
Operating loss (1,638) (721) (2,359)
Net Finance costs (30)
Loss on ordinary activities before taxation (2,389)
Taxation 350
Loss for the financial
Loss for the financial period (2,039)
Diagnostic Segment Administrative Total
Costs
Six months ended 31 December 2022 £'000 £'000 £'000
Revenue and other income 21 - 21
Operating loss (1,967) (713) (2,680)
Net Finance costs (11)
Loss on ordinary activities before taxation (2,691)
Taxation 500
Loss for the financial
Loss for the financial period (2,191)
Diagnostic Segment Administrative Total
Costs
Twelve months ended 30 June 2023 £'000 £'000 £'000
Revenue and other income 55 - 55
Operating loss (3,869) (1,355) (5,224)
Net Finance costs (757)
Loss on ordinary activities before taxation (5,981)
Taxation 831
Loss for the financial
Loss for the financial period (5,150)
5. Net Finance costs
31 December December 31 December December 30 June
2023 2022 2023
£000 £000 £000
Net interest income on bank deposits 18 5 30
Transaction costs relating to investment placing agreement (40) - (81)
Movement in fair value of derivative financial instrument - - (675)
Finance lease interest costs (8) (16) (31)
(30) (11) (757)
6. Current tax asset
The current tax asset relates to tax owing under the R&D tax credit scheme
of £1.2m (H1 2022/3: £1.5m). A payment of £0.8m was received in March
2024. The remaining £0.4m is an estimate of the tax credit for the interim
period to December 2023 and this will be received following submission of the
tax returns for the 12 months to June 2024, with receipt expected to be in the
first quarter of 2025.
7. Earnings per share
The basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders for the year by the weighted average
number of ordinary shares in issue during the period. The weighted average
number of shares in issue during the period was 103,900,492 (H1 2022/3:
92,542,446). Potentially dilutive options, after proceeds from conversion,
add no shares to basic weighted average number of shares in issue (H1 2022/3:
40,342).
8. Share capital
Allotted, issued and fully paid: No
£'000
Balance at 30 June 2022 and 31 December 2022 92,542,446 1,388
Share issue - equity-settled share-based payments 7,500 -
Share issue 6,500,000 97
Balance at 30 June 2023 99,049,946 1,485
Share issue 23,390,000 351
Balance at 31 December 2023 122,439,946 1,836
During the financial period the Company issued 23,390,000 shares in genedrive
plc as part of the Investor Placing Agreement entered into on 31 March 2023.
9. Other Reserves
Share Premium Account Shares to be issued Employee Share Incentive Plan Reserve Share Options Reserve Reverse Acquisitions Reserve Total
£000 £000 £000 £000 £000 £000
At 30 June 2022 52,426 - (196) 1,560 (2,496) 51,294
Equity settled share-based payments - - - 34 - 34
At 31 December 2022 52,426 - (196) 1,594 (2,496) 51,328
Investment funding arrangement 910 477 - - - 1,387
Share issue - - - - - -
Equity settled share-based payments - - - 62 - 62
At 30 June 2023 53,336 477 (196) 1,656 (2,496) 52,777
Investment funding arrangement 916 197 - - - 1,113
Share issue - - - - - -
Equity settled share-based payments - - - 40 - 40
At 31 December 2023 54,252 674 (196) 1,696 (2,496) 53,390
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