REG - Hemogenyx Pharma Plc - Final Results for the Year Ended 31 December 2022
28/04/2023 07:00
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RNS Number : 7869X Hemogenyx Pharmaceuticals PLC 28 April 2023
28 April 2023
Hemogenyx Pharmaceuticals plc
("Hemogenyx Pharmaceuticals" or the "Company")
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU AS IT FORMS PART OF LAW IN THE UNITED KINGDOM BY VIRTUE
OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
Final Results for the Year Ended 31 December 2022
Hemogenyx Pharmaceuticals plc (LSE: HEMO), the biopharmaceutical group
developing new therapies and treatments for deadly blood diseases, announces
its results for the year ended 31 December 2022.
Key Highlights
§ Nearing completion of the IND application to the FDA to enter phase I
clinical trials for HEMO-CAR-T for the treatment of R/R AML.
§ CBR platform extended into treatment of multiple viral infections beyond
COVID-19 using single CBR-based therapeutic.
§ Initiated IND-enabling activities for CDX bi-specific antibody for
treatment of R/R AML.
§ Successfully set up and qualified GMP manufacturing and analytical testing
of cell therapies and implemented Quality System in a new purpose-built
R&D/manufacturing facility.
The full annual report and accounts for 2022 are published on the Company's
web site at https://hemogenyx.com (https://hemogenyx.com) and will be
available from Companies House and the National Storage Mechanism.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this news release contain forward-looking information.
These statements address future events and conditions and, as such, involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by the
statements. Such factors include without limitation the completion of planned
expenditures, the ability to complete exploration programs on schedule and the
success of exploration programs. Readers are cautioned not to place undue
reliance on the forward-looking information, which speak only as of the date
of this news release.
Enquiries:
Hemogenyx Pharmaceuticals plc https://hemogenyx.com (https://hemogenyx.com/)
Dr Vladislav Sandler, Chief Executive Officer & Co-Founder headquarters@hemogenyx.com (mailto:headquarters@hemogenyx.com)
Peter Redmond, Director peter.redmond@hemogenyx.com (mailto:peter.redmond@hemogenyx.com)
SP Angel Corporate Finance LLP Tel: +44 (0)20 3470 0470
Matthew Johnson, Vadim Alexandre, Adam Cowl
Peterhouse Capital Limited Tel: +44 (0)20 7469 0930
Lucy Williams, Duncan Vasey, Charles Goodfellow
About Hemogenyx Pharmaceuticals plc
Hemogenyx Pharmaceuticals is a publicly traded company (LSE: HEMO)
headquartered in London, with its US operating subsidiaries, Hemogenyx
Pharmaceuticals LLC and Immugenyx LLC, located in New York City at its
state-of-the-art research facility.
The Company is a pre-clinical stage biopharmaceutical group developing new
medicines and treatments to treat blood and autoimmune disease and to bring
the curative power of bone marrow transplantation to a greater number of
patients suffering from otherwise incurable life-threatening diseases.
Hemogenyx Pharmaceuticals is developing several distinct and complementary
product candidates, as well as platform technologies that it uses as engines
for novel product development.
Chairman's Statement
I am pleased to announce the Company's results for the year ended 31 December
2022. During the year we focussed heavily on bringing our major development
project, the key HEMO-CAR-T product candidate, towards its Investigational New
Drug ("IND") application to enable us to move into clinical trials. At the
same time, we also advanced the development of our other main pipeline assets,
our CD3-FLT3 CDX antibody and the Chimeric Bait Receptor ("CBR") platform.
After the year end, in January, we successfully raised £4,056,250 in new
equity capital at 2.5p per share which will give us the funds to take the
Company through the IND process and into the beginning of clinical trials for
HEMO-CAR-T and enable us to further advance the CBR project.
HEMO-CAR-T
Our work during the period under review has primarily focussed on bringing our
lead product, HEMO-CAR-T, through the preparatory process to clinical trials,
a process which has been more complex and hence longer and more intensive than
we had anticipated but which has now reached an advanced stage. We have
continued to move other projects forward, in particular our CBR technology,
but our main object has been to take HEMO-CAR-T, and with it the Company, to
the next critical level of being a clinical-stage company. We have been
particularly concerned to cover all aspects in preparing the IND documentation
so as to minimise any possible delays and questions that may arise from its
review by the US Food and Drug Administration ("FDA"). The IND submission
process is very detailed, as it should be to ensure the safety of this key
potential treatment for patients suffering from advanced stage relapsed or
refractory ("R/R") acute myeloid leukaemia ("AML"). We received constructive
early feedback and guidance from a "pre-IND submission" to the FDA which have
helped to shape the final submission, along with advice from our Medical
Director and a committee of "Key Opinion Leaders" who are experts in the
treatment of leukaemias, as well as the design and conduct of clinical trials.
We expect to submit the IND application in the very near future.
During the last quarter of 2022 and the early months of the current year we
successfully carried out the final processes and underwent the internal and
third-party tests necessary to complete the detailed IND submission pack.
These included Process Development runs of the end-to-end process for the
manufacture of HEMO-CAR-T cells and exhaustively documented engineering, or
Process Qualification, runs under real-world conditions.
These cell manufacturing dry runs were followed by analytical release tests
that were conducted both by the Company and a third party to ensure that the
manufactured HEMO-CAR-T cells comply with a set of required quality
attributes. Among these are the viability, potency and sterility of the
resulting cells.
CDX
CDX, our CD3-FLT3 bispecific antibody, will provide an alternative means of
treating AML and of conditioning patients for bone marrow transplants when
fully developed. While concentrating our efforts on HEMO-CAR-T as the asset
most ready to take the Company to the important clinical trial stage of its
maturity, we have taken further steps to develop this important asset during
the year. In January 2022, we entered into a service agreement to develop a
"master cell line" that will be used to produce CDX antibodies for future
clinical trials and patient treatments. We are utilising Selexis'
SUREtechnology Platform™, a suite of cell line development tools and
technologies that reduces the time, effort and cost in developing
high-performance mammalian cell lines. The platform facilitates the rapid,
stable, and importantly cost-effective production of recombinant proteins and
vaccines, providing seamless integration of the development continuum from
discovery to commercialisation. This is an important step in moving CDX
towards clinical trials.
The Company's existing intellectual property protection for CDX was further
strengthened by the China National Intellectual Property Administration
granting a patent to it, which joins patents previously granted in the US for
CDX and monoclonal antibodies used for the development of both CDX and
HEMO-CAR-T.
Exploration of ways to finance and further the pre-clinical and clinical
testing of CDX continued with early-stage conversations with potential
development partners.
CBR
Work has also continued in an encouraging manner on the development of our CBR
platform. As shareholders are aware, the essence of the CBR-based approach is
programming immune cells using a novel type of modifiable synthetic receptor
to destroy viral pathogens and potentially to programme immune cells to
destroy certain malignant cancer cells. The Company has also developed an
associated derivative technology, the Bait Macrophage Engager ("BME"), whose
constructs act like antibodies, directing immune cells to neutralise them. We
believe this novel approach holds great promise and the invention is the
subject of a seminal provisional patent application that was filed in March
2022.
This project was initiated prior to the COVID-19 pandemic as a new way to
combat emerging viral diseases and potentially as-yet unknown infections
(referred to as "Disease X"). The platform has been successfully tested in the
laboratory against variants of the SARS-CoV-2 virus that causes COVID-19 as
they have emerged. Detailed subsequent work suggests that its use could be
expanded to certain cancers, and has provided evidence that the CBR platform
is applicable in principle to almost any known form of virus.
The Company has successfully demonstrated in vitro that immune cells
programmed with a CBR-based construct against SARS-CoV-2 selectively consume a
live synthetic virus. Importantly, the function of the CBR construct was not
affected by known mutations of the spike protein that endows the virus with
the ability to infect cells. The Company has now begun in vivo tests with a
partner in a biosafety level 3 ("BSL3") facility to demonstrate that CBR could
be used against infectious replicating SARS-CoV-2 virus. Work also continues
in relation to CBR's applicability to certain cancers.
In recent months, further progress has been made. As announced in January
2023, our scientists have identified a target protein that can be incorporated
into a single multipurpose CBR-based therapeutic capable of treating multiple
viruses that belong to different viral families, instead of having to make a
separate CBR construct for every virus. Among them are Dengue, Ebola, Marburg,
Zika and Chikungunya. These viruses are among the most dangerous to humans,
causing serious and often fatal diseases, and for which few effective
treatment options exist.
The Company's technology utilises synthetic biology and artificial
intelligence approaches to advance medicine to protect society from future
pandemics that may challenge the global economy, health, and national defence.
When fully developed, we would be able to create front-line treatments that
may prevent the development of the next pandemic. Moreover, these new
therapeutic tools can be used to protect against bio-terrorism, potentially
rendering a universe of viral bio-weapons ineffective.
We continue to believe that this platform has the capacity to be extremely
valuable.
New Custom R&D Facility
In July 2022, we officially opened our new custom-designed laboratory in the
Mink Building in the Manhattanville area of New York City, a state-of-the-art
research facility of some 10,000 square feet that includes two clean rooms for
cell therapy manufacturing. We can now manufacture cells in-house,
accelerating and simplifying the commercialisation of our cell therapy product
candidates. The facility is near to world-class educational institutions that
play a leading role in the rich local life sciences ecosystem, including
Columbia University and City College.
New Appointments
We made two important appointments during the year: Dr Koen van Besien was
appointed as our Medical Director, and we also welcomed a Director of Quality,
Stuart Tinch.
Dr van Besien, who is Chief of the Division of Hematology and head of the
Wesley Center for Immunotherapy at University Hospitals Seidman Cancer Center,
has been associated with the Company since its founding as a member of our
Scientific Advisory Board. Now that we are moving closer to clinical trials,
he has stepped up to a position in which he is engaged in refining the
protocol for those trials and their implementation.
Stuart Tinch brings over seven years of Good Manufacturing Practice ("GMP")
expertise to Hemogenyx Pharmaceuticals. He will be instrumental in creating a
culture and system of quality to ensure that the Company's therapies are held
to the standards of current GMP regulations.
Financial Results
Overall, the Group made a loss of £3,986,982 (2021: £5,108,310 loss) during
the period under review. The increased operating loss of £3,997,548 (31
December 2021: £2,702,754) marks the increasing volume of work and need to
engage external service providers as our assets are taken towards the crucial
clinical trial stage of their development.
It only remains for me to thank our CEO Dr Vladislav Sandler and his
scientific team for their excellent and highly productive work under a tight
budget, as well as my fellow directors, and to look forward with confidence to
the achievement of important milestones during the present financial year.
Prof Sir Marc Feldmann AC, FRS
MB BS, PhD, FRCP, FRCPath, FAA, F Med Sci
Chairman
27 April 2023
Directors' Report for the year ended 31 December 2022
The Directors present their report with the audited financial statements of
the Group for the year ended 31 December 2022.
The Company's Ordinary Shares were admitted to listing on the London Stock
Exchange under the name Silver Falcon plc, on the Official List pursuant to
Chapters 14 of the Listing Rules, which sets out the requirements for Standard
Listings, on 9 November 2015.
On 4 October 2017 the Company's shareholders voted in favour of acquiring the
biotechnology company Hemogenyx Pharmaceuticals Limited, with shares being
readmitted to trading on 5 October 2017 under the name Hemogenyx
Pharmaceuticals plc.
Principal Activity
The Group's principal activity is the discovery, development and
commercialisation of a suite of products to address current problems
associated with the treatment of blood disorders such as cancers and
autoimmune diseases, with bone marrow, or hematopoietic stem cell,
transplants, and with viral infections. The company's leading technologies aim
to change the way in which bone marrow/hematopoietic stem cell ("BM"/"HSC")
transplants are performed and improve their efficacy. Hemogenyx
Pharmaceuticals' distinct and complementary products include immunotherapy
product candidates for the treatment of AML and other blood malignancies and
patient conditioning (the CDX bi-specific antibody and CAR-T therapy), and a
cell therapy product for BM/HSC transplantation (the Hu-PHEC). Each of these
products holds the potential to revolutionise the way BM/HSC transplants are
being performed or diseases of the blood are treated, offering solutions that
mitigate the dangers and limitations associated with the current standard of
care. Additionally, the Group has two platform technologies: its Advanced
peripheral blood Hematopoietic Chimeras, a form of humanised mouse used to
model diseases including autoimmune conditions and to test multi-specific
antibody treatments; and Chimeric Bait Receptors or CBR, a novel way to create
constructs potentially capable of programming immune cells to attract and
destroy a wide range of viruses and malignant (cancer-causing) cells.
The Group has three companies that are located outside of the UK. The
principal laboratory of the Group is located in Brooklyn, New York, USA. The
Group also had a subsidiary in Liège, Belgium that was dissolved on 30 March
2022.
Results and Dividends
The Consolidated Statement of Comprehensive Income set out on page 44 shows a
loss for the year amounting to £3,986,982 (2021: £5,108,310). The Directors
do not propose a dividend in respect of the year ended 31 December 2022 (31
December 2021: nil).
Directors and Directors' Interests
The Directors who held office during the year and up to the date of this
report were as follows:
Date Appointed Date Resigned
Professor Sir Marc Feldmann 9 April 2018 -
Dr Vladislav Sandler 4 October 2017 -
Alexis Sandler 4 October 2017 -
Peter Redmond 29 July 2015 -
The Directors of the Company who held office at 31 December 2022 had the
following beneficial interests in the Ordinary shares of the Company at 31
December 2022 according to the register of directors' interests:
Director At 31 December 2022 At 31 December 2021
Professor Sir Marc Feldmann - -
Peter Redmond* 5,596,270 5,596,270
Dr Vladislav Sandler 41,544,677 41,544,677
Alexis Sandler 75,090,685 75,090,685
* Peter Redmond holds the majority of these shares through Catalyst Corporate
Consultants Ltd of which he is the sole shareholder.
At the date of this report, there have been no further changes to the
Directors' beneficial interest in the Ordinary shares of the Company as
disclosed in the table above.
According to the Register of Directors' Interests, no rights to subscribe for
shares in or debentures of Group companies were granted to any of the
Directors or their immediate families, or exercised by them, during the
financial year, save for the annual grant of 10,000 ownership units in
Immugenyx LLC due to Dr Vladislav Sandler under the terms of his appointment
as CEO and Chief Scientific Officer of that company. Grants of options are as
indicated below (see Note 20 for detail on option plans):
Options
Date of grant Number of options at start of year Options granted or acquired during year Options lapsed during year Number of options at end of year
Professor Sir Marc Feldmann
9 Apr 2018 18,002,568 - - 18,002,568
18,002,568 - - 18,002,568
Dr Vladislav Sandler
20 August 2020 5,000,000 - - 5,000,000
5,000,000 - - 5,000,000
Peter Redmond
13 July 2020 2,200,000 - - 2,200,000
2,200,000 - - 2,200,000
Qualifying Third Party Indemnity Provision
At the date of this report, the Company has a third-party indemnity policy in
place for all Directors.
Substantial Shareholders
As at 31 December 2022, the total number of issued Ordinary Shares with voting
rights in the Company was 979,749,321 (now: 1,141,999,321). The Company has
been notified of the following interests of 3 per cent or more in its issued
share capital as at the date of approval of this report:
Party Name Number of Ordinary Shares % of Share Capital
Alexis Sandler 75,090,685 6.58
Vladislav Sandler 41,544,677 3.64
Share Capital
Details of the issued share capital, together with details of the movement in
issued share capital during the year, are shown in Note 18 to the financial
statements.
Financial Instruments
Details of the use of the Company's financial risk management objectives and
policies as well as exposure to financial risk are contained in the Accounting
policies and Note 25 of the financial statements.
Future Developments and Events Subsequent to the Year End
On 26 January 2023 the Company announced that it issued and allotted
162,250,000 new ordinary shares at 2.5 pence per share.
The net proceeds from the Placing will be used to facilitate progression of
the Company's HEMO-CAR-T product candidate into clinical trials and to enable
the Company to continue development of product candidates for the treatment of
viral infections based on its CBR platform.
Further details of the Group's future developments and events subsequent to
the year end are set out in the Chairman's Statement and Directors' Strategic
Report on pages 3 and 8 respectively.
Corporate Governance
The Corporate Governance report is disclosed on page 24 of the full accounts.
Going Concern
The Company's business activities, together with facts likely to affect its
future operations and financial and liquidity positions are set out in the
Chairman's Statement and Directors' Strategic Report on pages 3 and 8
respectively. In addition, Note 25 to the financial statements discloses the
Company's capital risk management policy and Note 2 details further
considerations made by the Directors in respect of going concern.
The Directors, having made due and careful enquiry, are of the opinion that
the Company has or will have access to sufficient funding in order to execute
its operations over the next 12 months. The Directors therefore have made an
informed judgment, at the time of approving the financial statements, that
there is a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. As a result, the
Directors have adopted the going concern basis of accounting in the
preparation of the annual financial statements.
Political Donations
The Group made no political donations during the year (2021: £nil).
Charitable Donations
There were no charitable donations made by the Group in thecurrent or prior
year.
Greenhouse gas emissions
The Company used less than 40,000kWh of energy in the United Kingdom during
2022 and therefore does not report on energy consumption and emissions under
the Companies (Directors' Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.
Auditors
The auditors, PKF Littlejohn LLP, have expressed their willingness to continue
in office and a resolution to reappoint them will be proposed at the Annual
General Meeting.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the Group
and Company financial statements in accordance with UK-adopted international
accounting standards.
Under Company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that year.
In preparing these financial statements, the Directors are required to:
· Select suitable accounting policies and then apply them
consistently;
· Make judgments and accounting estimates that are reasonable and
prudent;
· State whether applicable UK-adopted international accounting
standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and parent company's transactions and
disclose with reasonable accuracy at any time
the financial position of the Group and parent company and enable them to
ensure that the financial statements and the Directors' remuneration report
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and parent company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities. They
are also responsible to make a statement that they consider that the annual
report and accounts, taken as a whole, is fair, balanced, and understandable
and provides the information necessary for the shareholders to assess the
Group and parent company's position and performance, business model and
strategy.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other
jurisdictions.
Directors' Responsibility Statement Pursuant to Disclosure and Transparency
Rules
Each of the Directors, whose names and functions are listed on page 1,
confirms that, to the best of their knowledge and belief:
· the group and company financial statements have been prepared in
accordance with UK-adopted international accounting standards, and give a true
and fair view of the assets, liabilities, financial position and loss of the
Group; and
· the Annual Report and financial statements, including the
Business review, includes a fair review of the development and performance of
the business and the position of the Group and parent company, together with a
description of the principal risks and uncertainties that they face.
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant audit information of
which the Company's auditors are unaware, and each Director has taken all the
steps that he ought to have taken as a Director in order to make himself aware
of any relevant audit information and to establish that the Company's auditors
are aware of that information.
Approved by the Board on 27 April 2023
Dr Vladislav Sandler
CEO
Consolidated Statement of Comprehensive Income
Group - Continuing Operations Note Year Ended 31 December 2022 Year Ended 31 December 2021
£ £
Revenue - -
Administrative Expenses 6 (3,433,476) (2,576,414)
Depreciation Expense 12, 13 (564,072) (126,340)
Operating Loss (3,997,548) (2,702,754)
Other Income 7 - 171,875
Finance Income 10,599 17,958
Finance Costs (33) (2,595,389)
Loss before Taxation (3,986,982) (5,108,310)
Income tax 10 - -
Loss for the year (3,986,982) (5,108,310)
Loss attributable to:
- Owners of Hemogenyx Pharmaceuticals plc (3,979,314) (5,099,228)
- Non-controlling interests (7,668) (9,082)
(3,986,982) (5,108,310)
Items that may be reclassified subsequently to profit or loss:
Translation of foreign operations (954,642) (18,025)
Other comprehensive income for the year (954,642) (18,025)
Total comprehensive loss for the year (4,941,624) (5,126,335)
Attributable to:
Owners of Hemogenyx Pharmaceuticals plc (4,933,956) (5,117,253)
Non-controlling interests (7,668) (9,082)
Total comprehensive loss for the year (4,941,624) (5,126,335)
Basic and diluted earnings loss per share attributable to the equity owners of 11 (0.007)
the Company
(0.005)
The Notes to the Financial Statements form an integral part of these Financial
Statements.
Consolidated Statement of Financial Position
Group Note
31 December 2022 31 December 2021
Assets £ £
Non-current assets
Property, plant and equipment 12 1,023,252 787,887
Right of use asset 13 2,892,261 9,242
Security deposit 26 140,821 142,599
Intangible asset 14 441,493 441,493
Total non-current assets 4,497,827 1,381,221
Current assets
Trade and other receivables 17 62,024 298,220
Cash and cash equivalents 2,532,758 6,840,969
Total current assets 2,594,782 7,139,189
Total assets 7,092,609 8,520,410
Equity and Liabilities
Equity attributable to shareholders
Paid-in Capital
Called up share capital 18 9,797,493 9,797,493
Share premium 19 16,808,647 16,808,647
Other reserves 20 921,801 904,226
Reverse asset acquisition reserve 4 (6,157,894) (6,157,894)
Foreign currency translation reserve (980,563) (25,921)
Retained Earnings (17,114,056) (13,134,742)
Equity attributable to owners of the Company 3,275,428 8,191,809
Non-controlling interests (31,908) (24,240)
Total equity 3,243,520 8,167,569
Liabilities
Non-current liabilities
Lease liabilities 13 3,100,678 -
Total non-current liabilities 3,100,678 -
Current liabilities
Trade and other payables 22 426,254 342,689
Borrowings 23 - -
Lease liabilities 13 322,157 10,152
Total current liabilities 748,411 352,841
Total liabilities 3,849,089 352,841
Total equity and liabilities 7,092,609 8,520,410
This report was approved by the Board and authorised for issue on 27 April
2023 and signed on its behalf by Dr Vladislav Sandler, CEO
The Notes to the Financial Statements form an integral part of these Financial
Statements.
Company Statement of Financial Position
Company Note
31 December 2022 31 December 2021
£ £
Assets
Non-current assets
Loan to subsidiaries 15 14,451,733 13,214,507
Investment in subsidiary 16 8,000,000 8,000,000
Total non-current assets 22,451,733 21,214,507
Current assets
Trade and other receivables 17 20,405 15,478
Cash and cash equivalents 88,909 111,245
Total current assets 109,314 126,723
Total assets 22,561,047 21,341,230
Equity and Liabilities
Equity attributable to shareholders
Foreign currency translation reserve
Paid-in Capital
Called up share capital 18 9,797,493 9,797,493
Share premium 19 16,808,647 16,808,647
Other reserves 20 920,697 903,122
Retained Earnings (5,100,447) (6,302,461)
Total Equity 22,246,390 21,206,801
Liabilities
Current liabilities
Trade and other payables 22 134,657 134,429
Total current liabilities 134,657 134,429
Total liabilities 134,657 134,429
Total equity and liabilities 22,561,047 21,341,230
Hemogenyx Pharmaceuticals plc has used the exemption granted under s408 of the
Companies Act 2006 that allows for the non-disclosure of the Income Statement
of the parent company. The after-tax gain/(loss) attributable to Hemogenyx
Pharmaceuticals plc for the year ended 31 December 2022 was £1,202,014 (2021:
(£3,166,171)).
This report was approved by the Board and authorised for issue on 27 April
2023 and signed on its behalf by Dr Vladislav Sandler, CEO
The Notes to the Financial Statements form an integral part of these Financial
Statements.
Consolidated Statement of Changes in Equity
Group
Called up Share Capital Share Premium Foreign currency translation reserve Retained earnings Total Equity
Other reserves Reverse acquisition reserve Non-
Controlling interests
£ £ £ £ £ £ £ £
As at 1 January 2021 4,336,363 9,990,965
764,815 (6,157,894) (7,896) (8,035,514) (15,158) 875,681
Loss in year - - (5,099,228) (5,108,310)
- - - (9,082)
Other Comprehensive Income - - - (18,025)
- - (18,025) -
Total comprehensive income for the year - - (5,099,228) (5,126,335)
- - (18,025) (9,082)
Conversion of debt to equity - 10,400,000
5,373,710 5,026,290 - - - -
Shares issued to arrangers of debt facility 77,420 522,580 - 600,000
- - - -
Shares issued to consultant 10,000 56,337 - - - - - 66,337
Charge recognised upon conversion of debt - 1,212,475 - 1,212,475
- - - -
Issue of options - - 153,355 - - - - 153,355
Adjustment to Embedded derivative on convertible note - - (13,944) - - - - (13,944)
As at 31 December 2021 9,797,493 16,808,647 (6,157,894) (25,921) 8,167,569
904,226 (13,134,742) (24,240)
Loss in year - - (3,979,314) (3,986,982)
- - - (7,668)
Other Comprehensive Income - - -
- - (954,642) - (954,642)
Total comprehensive income for the year - - (3,979,314) (4,941,625)
- - (954,642) (7,668)
Extension of options - - 17,575 - - - - 17,575
As at 31 December 2022 9,797,493 16,808,647 (17,114,056) 3,243,520
921,801 (6,157,894) (980,563) (31,908)
The notes to the financial statements form an integral part of these financial
statements.
Company Statement of Changes in Equity
Company
Called up Share Capital Share Premium Foreign currency translation reserve Other reserves Retained earnings Total Equity
£ £ £ £ £ £
As at 31 December 2020 4,336,363 9,990,965 (3,136,290) 11,940,805
- 749,767
Loss in year - - (3,166,171) (3,166,171)
- -
Other Comprehensive Income - - - -
- -
Total comprehensive income for the year - - (3,166,171) (3,166,171)
- -
Conversion of debt to equity 5,373,710 5,026,290 - 10,400,000
Shares issued to arrangers of debt facility 77,420 522,580 - 600,000
-
Shares issued to consultant 10,000 56,337 - - - 66,337
Charge recognised upon conversion of debt - 1,212,475 - 1,212,475
- -
Issue of options - - - 153,355 - 153,355
As at 31 December 2021 9,797,493 16,808,647 (6,302,461) 21,206,801
- 903,122
Income in year - - 1,202,014 1,202,014
- -
Other Comprehensive Income - - - -
- -
Total comprehensive income for the year - - 1,202,014 1,202,014
- -
Extension of stock options - - - 17,575 - 17,575
As at 31 December 2022 9,797,493 16,808,647 (5,100,447) 22,426,390
- 920,697
The notes to the financial statements form an integral part of these financial
statements.
Consolidated Statement of Cash Flows
Group Note Year Ended Year Ended
31 December 2022 31 December 2021
£ £
Cash flows generated from operating activities
Loss before income tax (3,986,982) (5,108,310)
Depreciation 12 195,246 126,340
Other non-cash items 81 77
Interest income (10,599) (17,958)
Interest expense 33 923,361
Beneficial conversion charge related to convertible debt 23 - 1,212,475
Share based payments 20 17,575 153,355
Changes in right of use asset and lease liability, net 627,515 -
Foreign exchange gain 12,937 (18,025)
(Decrease)/Increase in trade and other payables (27,120) 298,070
Increase in trade and other receivables (2,109) (196,683)
Decrease in prepaid and deposits 271,819 -
Net cash outflow used in operating activities (2,910,604) (2,627,298)
Cash flows generated from financing activities
Proceeds from issuance of debt and equity securities - 12,000,000
Repayment of loans and borrowings 23 - (3,183,281)
Payment of lease liabilities (110,144) (39,079)
Net cash flow (used in)/generated from financing activities (110,144) 8,777,640
Cash flows generated from investing activities
Interest income 10,599 17,958
Payment of security deposit for lease (1,908) (138,913)
Payment for intangible assets - (181,743)
Purchase of property & equipment (428,945) (636,255)
Net cash flow generated from/(used in) investing activities (420,254) (938,953)
Net (decrease)/increase in cash and cash equivalents (3,432,002) 5,211,389
Effect of exchange rates on cash (876,209) (182,719)
Cash and cash equivalents at the beginning of the year 6,840,969 1,812,299
Cash and cash equivalents at the end of the year 2,532,758 6,840,969
The notes to the financial statements form an integral part of these financial
statements.
Company Statement of Cash Flows
Company Note Year Ended 31 December 2022 Year Ended 31 December 2021
£ £
Cash flows generated from operating activities
Gain/(loss) before income tax 1,202,014 (3,166,171)
Foreign exchange gain (1,539,778) (184,759)
Interest expense - 883,692
Beneficial conversion charge related to convertible debt - 1,212,475
Share based payments 20 17,575 153,356
(Increase)/decrease in trade and other receivables (4,927) 45,970
Increase in trade and other payables 228 -
Adjustments to net loss for cash items - (5,822)
Net cash outflow used in operating activities (324,888) (1,061,259)
Cash flows generated from financing activities
Proceeds from issuance of debt and equity securities - 12,000,000
Repayment of loans and borrowings - (1,600,000)
Net cash flow generated from financing activities - 10,400,000
Cash flows generated from/(used in) investing activities
Loan from/(to) related parties 301,421 (10,263,778)
Net cash flow generated from/(used in) investing activities 301,421 (10,263,778)
Net decrease in cash and cash equivalents (23,467) (925,037)
Effect of exchange rates on cash 1,131 68
Cash and cash equivalents at the beginning of the year 111,245 1,036,214
Cash and cash equivalents at the end of the year 88,909 111,245
The Notes to the Financial Statements form an integral part of these Financial
Statements.
Notes to the Financial Statements
1. General information
The Group's business is preclinical-stage biotechnology focused on the
discovery, development and commercialisation of innovative treatments relating
to bone marrow/hematopoietic (blood-forming) stem cell (BM/HSC) transplants
for blood diseases, including leukaemia, lymphoma and bone marrow failure,
autoimmune disease, and viral infections. The products under development are
designed to address a range of problems that occur with current standard of
care treatments.
The Company's registered office is located at 6(th) floor, 60 Gracechurch
Street, London, EC3V 0HR, and the Company's shares are listed on the main
market of the London Stock Exchange.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with UK-adopted
international accounting standards and with requirements of the Companies Act
2006. The financial statements have been prepared under the historical cost
convention.
Basis of consolidation
The consolidated financial statements comprise the financial statements of
Hemogenyx Pharmaceuticals plc and its subsidiaries as at 31 December 2022. The
financial statements of the subsidiaries are prepared for the same reporting
period as the parent company, using consistent accounting policies.
All intra-group balances, transactions, income and expenses and profits and
losses resulting from intra-group transactions that are recognised in assets,
are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control ceases. Hemogenyx Pharmaceuticals plc owns the
majority of the shareholdings and has operational control over all its
subsidiaries. Please refer to Note 4 for information on the consolidation of
Hemogenyx Pharmaceuticals LLC.
Hemogenyx Pharmaceuticals plc has used the exemption granted under s408 of the
Companies Act 2006 that allows for the non-disclosure of the Income Statement
of the parent company. The after-tax loss attributable to Hemogenyx
Pharmaceuticals plc for the year ended 31 December 2022 was £1,202,024 (2021:
£3,166,171).
On 30 March 2022, the Company formally dissolved its Belgian subsidiary
Hemogenyx-Cell SPRL.
Research and development expenditure
(i) Research and development
Expenditure on research activities, undertaken with the prospect of gaining
new scientific or technical knowledge and understanding, is expensed in profit
or loss as incurred. Development activities involve a plan or design for the
production of new or substantially improved products and processes.
Development expenditures are capitalised only if development costs can be
measured reliably, the product or process is technically and commercially
feasible, future economic benefits are probable, and the Company intends to,
and has sufficient resources to, complete development and to use or sell the
asset. No development costs have been capitalised to date.
(ii) Clinical trial expenses
Clinical trial-related expenses are a component of the Company's research and
development costs. These expenses include fees paid to contract research
organisations, clinical sites, and other organisations who conduct development
activities on the Company's behalf. The amount of clinical trial expenses
recognised in the period related to clinical agreements is based on estimates
of the work performed using an accrual basis of accounting. These estimates
incorporate factors such as patient enrolment, services provided, contractual
terms, and prior experience with similar contracts.
(iii) Government grants
Government grants relate to financial grants from governments, public
authorities, and similar local, national or international bodies. These are
recognised when there is a reasonable assurance that the Company will comply
with the conditions attaching to them, and that the grant will be received.
Government grants relating to research and development are off-set against the
relevant costs.
Intangibles
Research and development
Research expenditure is written off as incurred. Development costs are
capitalised only if the expenditure can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are
probable, the Group intends to and has sufficient resources to complete
development and to use or sell the asset, and it is able to measure reliably
the expenditure attributable to the intangible asset during its development.
The Group's view is that capitalised assets have a finite useful life and to
that extent they should be amortised over their respective unexpired periods
with provision made for impairment when required. Assets capitalised are not
amortised until the associated product is available for use or sale.
Amortisation is calculated using the straight-line method to allocate the
costs of development over the estimated useful economic lives. Estimated
useful economic life is assessed by reference to the remaining patent life and
may be adjusted after taking into consideration product and market
characteristics such as fundamental building blocks and product life cycle
specific to the category of expenditure.
Intellectual property (IP)
IP assets (comprising patents, know-how, copyright and licences) acquired by
the Group as a result of a business combination are initially recognised at
fair value or as a purchase at cost and are capitalised.
Internally generated IP costs are written off as incurred except where IAS 38
criteria, as described in research and development above, would require such
costs to be capitalised.
The Group's view is that capitalised IP assets have a finite useful life and
to that extent they should be amortised over their respective unexpired
periods with provision made for impairment when required. Capitalised IP
assets are not amortised until the Group is generating an economic return from
the underlying asset and as such no amortisation has been incurred to date as
the products to which they relate are not ready to be sold on the open market.
When the trials are completed and the products attain the necessary
accreditation and clearance from the regulators, the Group will assess the
estimated useful economic like and the IP will be amortised using the
straight-line method over their estimated useful economic lives.
Fixed assets
All property and equipment are stated at historical cost less accumulated
depreciation or impairment value. Cost includes the original purchase price
and expenditure that is directly attributable to the acquisition of the items
to bring the asset to its working condition. Depreciation is provided at rates
calculated to write off the cost less estimated residual value of each asset
over its expected useful economic life. Right of Use assets are depreciated
over their expected useful economic life on the same basis as owned assets, or
where shorter, the lease term. Assets are reviewed for impairment when events
or changes in circumstances indicate that the carrying amount may not be
recoverable.
The following rates are used:
Computer equipment 33% Straight-line
Leasehold improvements 12.5% Straight-line
Property & equipment 20% - 50% Straight-line
Impairment of non-financial assets
The Group is required to review, at least annually, whether there are
indications (events or changes in circumstances) that non-financial assets
have suffered impairment and that the carrying amount may exceed the
recoverable amount. If there are indications of impairment then an impairment
review is undertaken. An impairment charge is recognised within operating
costs for the amount by which the carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of the asset's fair value less
costs to sell and the value-in-use. In the event that an intangible asset will
no longer be used, for example, when a patent is abandoned, the balance of
unamortised expenditure is written off.
Impairment reviews require the estimation of the recoverable amount based on
value-in-use calculations. Non-financial assets relate typically to
investments in related parties and in-process development and patents, and
require broader assumptions than for developed technology. Key assumptions
taken into consideration relate to technological, market and financial risks
and include the chance of product launch taking into account the stage of
development of the asset, the scale of milestone and royalty payments, overall
market opportunities, market size and competitor activity, revenue
projections, estimated useful lives of assets (such as patents), contractual
relationships and discount rates to determine present values of cash flows.
Investments
Equity investments in subsidiaries are held at cost, less any provision for
impairment. As there is no quoted price in an active market, fair value cannot
be reliably measured.
Going concern
The preparation of financial statements requires an assessment on the validity
of the going concern assumption.
The Company did not raise any outside funding during the year ended 31
December 2022. The Company had cash and cash equivalents totalling £2,532,758
as at 31 December 2022. On 26 January 2023 the Company raised gross placing
proceeds of £4,056,250, which will be used to facilitate progression of the
Company's HEMO-CAR-T product candidate into clinical trials and to enable the
Company to continue development of product candidates for the treatment of
viral infections based on its CBR platform.
The Directors, having made due and careful enquiry, are of the opinion that
the Group and Company have or will have access to sufficient funding in order
to execute its operations over the next 12 months. The Directors therefore
have made an informed judgment, at the time of approving the financial
statements, that there is a reasonable expectation that the Group and Company
has adequate resources to continue in operational existence for the
foreseeable future. As a result, the Directors have adopted the going concern
basis of accounting in the preparation of the annual financial statements.
Notwithstanding the Group's cash balance, should the Group elect to raise
additional capital within the next year, it cannot be certain that such
additional funding will be available on acceptable terms, or at all. To the
extent that the Company raises additional funds by issuing equity securities,
the Company's stockholders may experience dilution. Any debt financing, if
available, may involve restrictive covenants. If the Company is unable to
raise additional capital when required or on acceptable terms, it may have to
(i) significantly delay, scale back or discontinue the development and/or
commercialisation of one or more product candidates; (ii) seek collaborators
for product candidates at an earlier stage than otherwise would be desirable
and on terms that are less favourable than might otherwise be available; or
(iii) relinquish or otherwise dispose of rights to technologies, product
candidates or products that it would otherwise seek to develop or
commercialise on unfavourable terms.
Trade and other receivables and payables
Trade and other receivables are amounts due from customers for services
performed in the ordinary course of business. If collection is expected in one
year or less (or in the normal operating cycle of the business if longer),
they are classified as current assets. If not, they are presented as
non-current assets.
Trade and other receivables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective interest method,
less provision for impairment.
Other liabilities measured at amortised cost are obligations to pay for goods
or services that have been acquired in the ordinary course of business from
suppliers. The liabilities are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business
if longer). If not, they are presented as non-current liabilities.
The liabilities are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method.
Foreign currencies
Functional and presentation currency
The Company's presentation currency is the British Pound Sterling ("£"). The
functional currency for the Company, being the currency of the primary
economic environment in which the Company operates, is the British Pound
Sterling. The individual financial statements of each of the Company's wholly
owned subsidiaries are prepared in the currency of the primary economic
environment in which it operates (its functional currency).
The financial statements of Hemogenyx Pharmaceuticals LLC, Immugenyx LLC and
Hemogenyx-Cell SPRL have been translated in to Pound Sterling in accordance
with IAS 21 The Effects of Changes in Foreign Exchange Rates. This standard
requires that assets and liabilities be translated using the exchange rate at
period end, and income, expenses and cash flow items are translated using the
rate that approximates the exchange rates at the dates of the transactions
(i.e. the average rate for the period). The foreign exchange differences on
translation of Hemogenyx Pharmaceuticals LLC, Immugenyx LLC and Hemogenyx-Cell
SPRL are recognised in other comprehensive income (loss).
Foreign currency transactions
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing on the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at period-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in profit and
loss.
Share capital
Ordinary Shares are classified as equity. Equity instruments issued by the
Hemogenyx Pharmaceuticals Group are recorded at the proceeds received, net of
direct issue costs.
Cash
Cash consists of cash bank deposit balances.
Deferred Financing Costs
Deferred financing costs represent direct expenditures made by the Company for
the financing transaction completed in January 2021. These costs were offset
against the proceeds received in 2021 from the financing transactions.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payment for all
grants of equity instruments.
The Group issues equity-settled share-based payments to the directors, senior
management and employees ("Employee Share Options"), to corporate finance
advisers for assistance in raising private equity, and to its Scientific
Advisory Board members ("Non-employee Share Options"). In 2021, the Group
adopted the "Hemogenyx Pharmaceuticals plc 2021 Equity Incentive Plan with
Non-Employee Sub-Plan" (the "EIP") for the grant of options, restricted
shares, and restricted share units to employees, directors and consultants of
the Company and its subsidiaries over ordinary shares in the capital of the
Company, which was approved by the Company's shareholders at the 2022 AGM.
Equity-settled share-based payments are measured at fair value at the date of
grant for Employee Share Options and the date of service for Non-employee
Share Options. The fair value determined at the grant date or service date, as
applicable, of the equity-settled share-based payments is expensed, with a
corresponding credit to equity, on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. At
each subsequent reporting date, the Group calculates the estimated cumulative
charge for each award having regard to any change in the number of options
that are expected to vest and the expired portion of the vesting period. The
change in this cumulative charge since the last reporting date is expensed
with a corresponding credit being made to equity. Once an option vests, no
further adjustment is made to the aggregate amount expensed.
The fair value is calculated using the Black Scholes method for both Employee
and Non-employee Share Options as management views the Black Scholes method as
providing the most reliable measure of valuation. The expected life used in
the model has been adjusted, based on management's best estimate, for the
effects of non-transferability exercise restrictions and behavioural
considerations. The market price used in the model is the issue price of
Company shares at the last placement of shares immediately preceding the
calculation date. The fair values calculated are inherently subjective and
uncertain due to the assumptions made and the limitation of the calculations
used.
Taxation
Current tax
Current taxation is based on the results for the year as adjusted for items
that are non-assessable or disallowed. It is calculated using rates that have
been enacted, or substantially enacted, by the balance sheet date. Current
income tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the relevant taxation authorities.
Deferred tax
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
financial statements, with the following exceptions:
§ where the temporary difference arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither accounting
nor taxable profit or loss;
§ in respect of taxable temporary differences associated with investment in
subsidiaries, associates and joint ventures, where the timing of the reversal
of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future; and
§ deferred income tax assets are recognised only to the extent that it is
probable that taxable profit will be available against which the deductible
temporary differences, carried forward tax credits or tax losses can be
utilised.
Deferred income tax assets and liabilities are measured on an undiscounted
basis at the tax rates that are expected to apply when the related asset is
realised or liability is settled, based on tax rates and laws enacted or
substantively enacted at the statement of financial position date.
The carrying amount of deferred income tax assets is reviewed at each
statement of financial position date. Deferred income tax assets and
liabilities are offset, only if a legally enforcement right exists to set off
current tax assets against current tax liabilities, the deferred income taxes
related to the same taxation authority and that authority permits the Company
to make a single net payment.
Income tax is charged or credited directly to equity if it relates to items
that are credited or charged to equity. Otherwise income tax is recognised in
the statement of comprehensive income.
Financial Assets and Liabilities
Financial assets and liabilities are recognised in the Company's statement of
financial position when the Company becomes a party to the contractual
provisions of the instrument. The Company currently does not use derivative
financial instruments to manage or hedge financial exposures or liabilities.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after
the end of the reporting period. These are classified as non-current assets.
The Company's loans and receivables comprise Trade and Other Receivables and
Cash and Cash Equivalents in the Statement of Financial Position.
Impairment of Financial Assets
The Company and Group assess at each reporting date whether a financial asset
is impaired and will recognise the impairment loss immediately through the
consolidated statement of comprehensive loss.
Interest Bearing Loans and Borrowings
Borrowings are initially recognised at the fair value of consideration
received less directly attributable transaction costs. After initial
recognition, borrowings are subsequently measured at amortised cost using the
effective interest rate method. Where borrowings are provided by shareholders
at an interest rate discounted to market rates, the difference on initial fair
value is taken to equity as a capital contribution.
Where the Group has entered into a hybrid instrument whereby there is a debt
instrument and an embedded derivative financial liability, the fair value of
the debt instrument less the fair value of the derivative financial liability
is equal to loan recognised on initial measurement.
IFRS 15, Revenue from Contracts with Customers
The Company follows IFRS 15, which establishes principles for reporting useful
information to users of financial statements about the nature, amount, timing,
and uncertainty of revenue and cash flows arising from an entity's contracts
with customers. The standard establishes a five-step principle-based approach
for revenue recognition and is based on the concept of recognising an amount
that reflects the consideration for performance obligations only when they are
satisfied, and the control of goods or services is transferred.
Historically, the majority of the Group's revenue has been derived from fees
related to collaboration agreements.
Management reviewed contracts where the Group received consideration in order
to determine whether or not they should be accounted for in accordance with
IFRS 15. To date, Hemogenyx Pharmaceuticals has entered into few transactions
that meet the scope of IFRS 15. Instead, most income has been generated
through collaboration agreements and grants with counterparties that do not
meet the definition of a customer, and therefore the contracts fall outside
the scope of IFRS 15 and have been accounted for in accordance with IAS 20.
Income is recognised at either a point-in-time or over time, depending on the
nature of the services and existence of acceptance clauses.
IFRS 16, Leases
IFRS 16 requires lessees to recognise a lease liability reflecting future
lease payments and a 'right-of-use asset' for virtually all lease contracts.
IFRS 16 includes an optional exemption for certain short-term leases and
leases of low-value assets; however, this exemption can only be applied by
lessees. For lessors, the accounting remains substantially unchanged. IFRS 16
provides updated guidance on the definition of a lease (as well as the
guidance on the combination and separation of contracts); under IFRS 16, 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.
The right-of-use asset and lease liability are both based on the present value
of lease payments due over the term of the lease, with the asset being
depreciated in accordance with IAS 16 Property, Plant and Equipment and the
liability increased for the accretion of interest and reduced by lease
payments.
Segmental reporting
The Group's operations are located in New York, USA with the head office
located in the United Kingdom. The main assets of the Group, cash and cash
equivalents, are held primarily in the United Kingdom and the United States,
while the fixed assets and right of use assets are held in the United States.
The Board ensures that adequate amounts are transferred internally to allow
all companies to carry out their operations on a timely basis.
The Group currently has one reportable segment - a biotechnology company
focused on the discovery, development and commercialisation of innovative
treatments relating to blood and immune system disorders and viral infections.
New Accounting Standards and Interpretations issued and applied in the Financial Statements
(a) New and amended standards mandatory for the first time for the financial
periods beginning on or after 1 January 2022
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. The amendments and revisions were applicable for the year
ended 31 December 2022 but did not result in any material changes to the
financial statements of the Group or Company.
b) New standards, amendments and interpretations in issue but not yet
effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have
not been early adopted are as follows:
Standard Impact on initial application Effective date
IFRS 16 (Amendments) Property, plant, and equipment *1 January 2024
IAS 1 (Amendments) Classification of Liabilities as Current or Non-Current. 1 January 2023
IAS 8 (Amendments) Accounting estimates 1 January 2023
IAS 17 (Amendments) Insurance 1 January 2023
(* )Subject to endorsement
The Group is evaluating the impact of the new and amended standards
above which are not expected to have a material impact on future Group
financial statements.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements in conformity with International
Financial Reporting Standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Company's accounting policies.
Estimates and judgements are continually evaluated, and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
The principal areas in which judgement is applied are as follows:
Valuation of stock options
Management uses the Black Scholes model to value the share options. The model
requires use of assumptions regarding volatility, risk free interest rate and
a calculation of the value of the option at the time of the grant. Please see
Note 20 for details.
Intangible assets impairment
When there is an indicator of a significant and permanent reduction in the
value of intangible assets, an impairment review is carried out. The
impairment analysis is principally based on estimated discounted future cash
flows. The determination of the assumptions is subjective and requires the
exercise of considerable judgement about the outcome of research and
development activity, probability of technical and regulatory success, amount
and timing of projected future cash flow or changes in market conditions. Any
changes in key assumptions could materially affect whether an impairment
exists. See Note 14 for further details.
4. Reverse acquisition and LSE listing
On 4 October 2017, the Company acquired the entire issued share capital of
Hemogenyx Pharmaceuticals LLC, a private company incorporated in the United
States, by way of a share for share exchange. In substance, the shareholders
of Hemogenyx Pharmaceuticals LLC acquired a controlling interest in the
Company and the transaction has therefore been accounted for as a reverse
acquisition. Following the completion of the transaction the Company changed
its name to Hemogenyx Pharmaceuticals plc.
The reverse acquisition reserve that arose from the reverse takeover is
$6,157,894 at December 31, 2022 and 2021 and is made up of the following:
Components
£
Pre-acquisition losses of Hemogenyx Pharmaceuticals plc1 (799,763)
Hemogenyx Pharmaceuticals LLC issued capital at acquisition2 1,010,849
Investment in Hemogenyx Pharmaceuticals LLC3 (8,000,000)
Reverse acquisition expense4 1,631,020
As at December 31, 2022 and 2021 (6,157,894)
The movements on the Reverse acquisition reserve are as follows:
1. These consolidated financial statements present the legal capital
structure of the Company. However, under reverse acquisition accounting rules,
the Company was not acquired until 4 October 2017 and therefore the entry
above is required to eliminate the initial retained losses of the Company.
2. Hemogenyx Pharmaceuticals LLC had issued share capital of equivalent to
£1,010,849 as at 4 October 2017. As these financial statements present the
capital structure of the parent entity, the issue of equity by Hemogenyx
Pharmaceuticals LLC has been recorded in this reserve.
3. The Company issued 228,571,428 shares at £0.035 each, totalling
£8,000,000 for the entire issued capital of Hemogenyx Pharmaceuticals LLC.
The above entry is required to eliminate the balance sheet impact of this
transaction.
4. The entry above represents the difference between the value of the
equity issued by the Company, and the deemed consideration given by Hemogenyx
Pharmaceuticals LLC to acquire the Company.
5. Segment Information
The Group has one reportable segment, the discovery, development and
commercialisation of innovative treatments relating to blood and immune system
disorders and viral infections, and administrative functions in the United
Kingdom, and therefore the segmental information is the same as that presented
in the primary statements.
The following tables present expenditure and certain asset information
regarding the Group's geographical segments for the year ended 31 December
2022 and 2021:
Year Ended 31 December Year Ended 31 December 2021
2022
£ £
Segment assets
United Kingdom
- Non-current - -
- Current 109,314 126,723
United States
- Non-current 4,497,827 1,381,221
- Current 2,464,581 6,992,630
Belgium (Discontinued operation)
- Non-current - -
- Current 20,887 19,836
Total
- Non-current 4,497,827 1,381,221
- Current 2,594,782 7,139,189
Capital expenditure
United Kingdom - -
United States 430,611 636,255
Belgium (Discontinued operation) - -
430,611 636,255
Capital expenditure consists of the purchase of property, plant and equipment.
The Group also had a subsidiary in Liège, Belgium that was dissolved on 30
March 2022.
The loss arising from this discontinued operation was: £5,706.
6. Expenses by nature
Group Group
Year Ended 31 December 2022 Year Ended 31 December 2021
£ £
Laboratory expenses 402,940 37,583
Consumable equipment and supplies 2,196,822 283,647
Contractors & consultants 290,688 468,505
Travel 44,057 10,603
Staff Costs 1,424,301 1,023,783
Insurance 77,652 56,363
Other 167,621 285,844
Legal and professional fees 362,334 537,954
Foreign exchange loss / (gain) (1,532,939) (127,868)
Total Administrative Expenses 3,433,476 2,576,414
7. Other income
Other income during the period ended 31 December 2022 consists of £0 (2021:
£171,875, comprising £71,932 arising from the forgiveness of a US
governmental loan programme (the Payroll Protection Program) and £99,943
received from a third party under a research collaboration programme relating
to humanised mice).
8. Employees
Group Group Company Company
Year Ended 31 December 2022 Year Ended 31 December 2021 Year Ended 31 December 2022 Year Ended 31 December 2021
£ £ £ £
Wages and salaries 1,288,215 810,851 115,000 115,000
Social security 90,220 41,377 1,542 1,408
Share based payments 17,575 153,356 17,575 137,390
Pension contributions 28,291 18,199 - -
1,424,301 1,023,783 134,117 253,798
Average number of people (including Executive Directors) employed:
Group Group Company Company
Year Ended 31 December 2022 Year Ended 31 December 2021 Year Ended 31 December 2022 Year Ended 31 December 2021
Research & development 9 7 - -
Administration 5 3 2 2
14 10 2 2
9. Auditor's remuneration
Group Group
Year Ended 31 December 2022 Year Ended 31 December 2021
£ £
Fees payable to the Company auditor:
Audit of the financial statements of the Group and Company 50,000 46,700
50,000 46,700
10. Income tax
Group Group
Year Ended 31 December 2022 Year Ended 31 December 2021
£ £
Current Tax: - -
Tax on loss on ordinary activities - -
Loss on ordinary activities before tax (3,986,982) (5,108,310)
Analysis of charge in the year:
Loss on ordinary activities multiplied by weighted average tax rate for the (1,090,838) (1,145,371)
group of 27.36% (2020: 22.40%)
Disallowed items 330,370 405,711
US R&D credit and timing differences (323,215) (136,371)
Tax losses carried forward 1,083,683 1,200,007
Current tax credit - -
Weighted average tax rate is calculated by reference to the tax rates
effective in each of the jurisdictions. The tax rates effective at 31 December
2022 are 19% and 28% in the UK and the USA respectively.
The Group has accumulated tax losses arising in the UK of approximately
£3,225,000 (Dec 2021: £4,450,000) that should be available, under current
legislation, to be carried forward against future profits. No deferred tax
asset has been recognised against these losses.
The Group has tax losses carried forward in the US of approximately
$11,377,000 (Dec 2021: $6,700,000) available under current rules until 2037.
Of the total Federal net operating losses, the amounts incurred after 2017 of
approximately $9,000,000 will carry forward indefinitely. No deferred tax
asset has been recognised against these losses. Sections 382 and 383 of the US
Internal Revenue Code, and similar state regulations, contain provisions that
may limit the tax loss carried forward available to be used to offset income
in any given year upon the occurrence of certain events, including changes in
the ownership interests of significant stockholders. In the event of a
cumulative change in ownership in excess of 50% over a three-year period, the
amount of the NOL carry forwards that the Company may utilise in any one year
may be limited.
11. Earnings per share
The calculation of the basic and fully diluted earnings per share is
calculated by dividing the loss for the year from continuing operations
attributable to equity owners of the Group of £3,979,314 (2021: £5,099,228)
by the weighted average number of ordinary shares in issue during the year of
979,749,321 (2021: 773,952,166).
Dilutive loss per Ordinary Share equals basic loss per Ordinary Share as, due
to the losses incurred in 2022 and 2021, there is no dilutive effect from the
subsisting share options. See Note 20 for details of stock options and
warrants outstanding.
12. Property and equipment
Group Property, plant & equipment Computer equipment Leasehold Total
Improve-ments
£ £ £ £
Cost
31 December 2020 425,108 10,957 - 436,065
Additions - 8,508 627,747 636,255
Foreign exchange movement 5,063 263 16,408 21,734
31 December 2021 430,171 19,728 644,155 1,094,054
Additions 417,897 11,161 1,553 430,611
Foreign exchange movement 26,011 2,065 76,463 104,539
Disposals (1,666) - - (1,666)
31 December 2022 872,413 32,954 722,171 1,627,538
Accumulated depreciation and impairment losses
31 December 2020 209,783 3,424 - 213,207
Depreciation 84,645 5,322 - 89,967
Foreign exchange movement 2,881 112 - 2,993
31 December 2021 297,309 8,858 - 306,167
Depreciation 116,493 8,129 75,226 199,848
Foreign exchange movement 54,693 677 42,900 98,270
31 December 2022 468,495 17,664 118,127 604,285
Carrying amounts
31 December 2020 215,325 7,533 - 222,858
31 December 2021 132,862 10,870 644,155 787,887
31 December 2022 403,918 15,290 604,044 1,023,252
13. Leases
The Group follows IFRS 16 with respect to its leases, whereby the Group
recognises right-of-use assets and lease liabilities for all leases on its
balance sheet. Each of the two US subsidiaries has an agreement for the lease
of laboratory facilities to which IFRS 16 has been applied.
The key impacts on the Statement of Comprehensive Income and the Statement of
Financial Position are as follows:
Group & Company
Right of use asset Lease liability Income statement
£ £ £
Carrying value at 31 December 2020 45,885 (48,754) (40,531)
Depreciation (36,373) - (36,373)
Interest - (1,560) (1,560)
Lease payments - 39,167 -
Foreign exchange movements (270) 995 -
Carrying value at 31 December 2021 9,242 (10,152) (37,932)
Additions 3,249,244 (3,249,244) -
Depreciation (366,302) - (366,302)
Interest - (274,802) (274,802)
Lease payments - 106,321 -
Foreign exchange 77 5,042 (4,965)
Movements
Carrying value at 31 December 2022 2,892,261 (3,422,835) (539,748)
14. Intangible assets
On 15 January 2015, the Company entered into an Exclusive License Agreement
with Cornell University to grant to the Company patent rights to patent
PCT/US14/65469 entitled Post-Natal Hematopoietic Endothelial Cells and Their
Isolation and Use and rights to any product or method deriving therefrom. The
Company paid Cornell University USD $347,500 for such licence rights.
In October 2021, the Company entered into a licence with Eli Lilly &
Company to use a patented product derived from jointly-developed intellectual
property in the CDX antibody for a term ending on the latest of (a) the
twelfth (12th) anniversary of the date of First Commercial Sale of a
particular Licensed Product in a particular country; (b) the first day on
which there is not at least one Licensed Patent having a Valid Claim Covering
the manufacture, use, or sale of such Licensed Product in such country; or (c)
the expiration of the last-to-expire Data Exclusivity Period for such Licensed
Product in such country. The Company paid £181,743 GBP or $250,000 USD as an
up-front payment and will make milestone payments of up to $1 million through
to Phase II clinical trials. Lilly is also eligible to receive substantial
additional milestone payments based on the achievement of prespecified
milestones, as well as tiered single-digit royalties on sales and a percentage
of any cash payments received in respect of any sublicence of the licensed
intellectual property. Through December 31, 2022, the Company has not incurred
any development or sales-based payment obligations to the licensor.
Cost Intellectual Property
£
31 December 2020 254,955
Additions 181,743
Exchange movements 4,795
31 December 2021 441,493
Additions -
Exchange movements -
31 December 2022 441,493
The carrying value of intangible assets is reviewed for indications of
impairment whenever events or changes in circumstances indicate that the
carrying value may exceed the recoverable amount. The products to which they
relate are not ready to be sold on the open market. When the trials are
completed and the products attain the necessary accreditation and clearance
from the regulators, the Group will assess the estimated useful economic life
and the IP will be amortised using the straight-line method over their
estimated useful economic lives. The directors are of the view that no
impairment is required as the test results to date have been very positive and
these products are now being moved on towards the clinical trial phase.
Accordingly, the directors continue to believe that the products will
eventually attain the necessary accreditation and clearance from the
regulators and so no impairment has been considered necessary.
Amortisation will be charged to operating costs in the Statement of
Comprehensive Income when the Group achieves product sales.
15. Loan to subsidiary
Company Company
Year Ended 31 December 2022 Year Ended 31 December 2021
£ £
Hemogenyx Pharmaceuticals LLC 14,451,112 13,213,951
Immugenyx LLC 621 556
14,451,733 13,214,507
Hemogenyx Pharmaceuticals plc has made cumulative loans to Hemogenyx
Pharmaceuticals LLC of US$17,883,274 (£14,4551,112) as at 31 December 2022
(Dec 2021: US$17,883,274 (£13,213,951)) and Immugenyx LLC of US$752 (£621)
as at 31 December 2022 (Dec 2021: US$752 (£556)). The loans are interest free
and will be repaid when Hemogenyx LLC's operational cash flow allows.
Management has undertaken an impairment assessment of the loan as at 31
December 2022 and has determined that that there was no impairment required
due to continued progress of the product candidates. The interest rate and
impairment assessment are reviewed on an annual basis.
16. Investment in subsidiary
Name Address of the registered office Nature of business Proportion of ordinary shares held directly by parent (%) Proportion of ordinary shares held ultimately by parent (%)
Hemogenyx UK Limited 6(th) Floor, 60 Gracechurch Street, London, EC3V 0HR Holding Company 100 -
Hemogenyx Pharmaceuticals LLC 9 East Lookerman Street, Suite 3A, Dover, Kent, Delaware, USA, 19901 Biomedical sciences - 100
Immugenyx LLC c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware, Biomedical sciences - 92.2
USA, 19808
Hemogenyx-Cell SPRL (dissolved in 2022) Avenue du Parc Industriel 89, 4041 Milmort, Belgique Biomedical sciences - 100
The remaining shares in Immugenyx LLC are held by Dr Vladislav Sandler and by
a prior employee, Carina Sirochinsky, as part of their compensation under
their respective roles as CEO and Director of Operations. Ms Sirochinsky's
role as Director of Operations ended on the termination of her employment on 1
July 2021. Dr Sandler and Ms Sirochinsky receive(d) 10,000 and 1,000 shares
respectively for each year of employment from January 2019. At 31 December
2022, Hemogenyx Pharmaceuticals LLC, Dr Sandler, and Ms Sirochinsky each own
500,000, 40,000, and 2,500 shares in Immugenyx LLC, respectively.
17. Trade and other receivables
Group Group Company Company
Year Ended 31 December 2022 Year Ended 31 December 2021 Year Ended 31 December 2022 Year Ended 31 December 2021
£ £ £ £
VAT receivable 9,664 6,127 9,664 6,127
Trade and other receivables 146 1,386 - -
Prepayments 52,214 290,707 10,741 9,351
Total trade and other receivables 62,024 298,220 20,405 15,478
There are no material differences between the fair value of trade and other
receivables and their carrying value at the year-end. No receivables were past
due or impaired at the year end.
18. Called up share capital
Group & Company Number of shares £
As at 31 December 2020 433,636,255 4,336,363
Conversion of debt to issue of shares - placement 25 Feb 2021 13,131,313 131,313
Conversion of debt to issue of shares - placement 26 Mar 2021 14,285,714 142,857
Conversion of debt to issue of shares - placement 16 Apr 2021 24,547,803 245,478
Conversion of debt to issue of shares - placement 26 Apr 2021 29,850,746 298,508
Conversion of debt to issue of shares - placement 5 May 2021 22,222,222 222,222
Conversion of debt to issue of shares - placement 18 May 2021 433,333,333 4,333,333
Shares issued as arrangement fees for debt issuance 8,741,935 87,419
As at 31 December 2021 979,749,321 9,797,493
No shares issued during 2022 - -
As at 31 December 2022 979,749,321 9,797,493
During 2021, the Company issued 546,113,066 ordinary shares upon conversion of
debt - See Note 23. During 2022, the Company did not issue any ordinary
shares.
19. Share premium
Group &
Company
£
As at 31 December 2020 9,990,965
Issue of shares - placement 5,548,969
Issues of shares - consultant 66,337
Charge recognised upon conversion of debt 1,212,475
As at 31 December 2021 16,808,647
As at 31 December 2022 16,808,647
20. Other reserves
Year Ended 31 December 2022 Year Ended 31 December 2021
Group:
£ £
As at start of year 904,226 764,815
Charge for the year - employees 17,575 153,355
Convertible Note embedded derivative - (13,944)
As at end of year 921,801 904,226
Year Ended 31 December 2022 Year Ended 31 December 2021
Company:
£ £
As at start of year 903,122 749,767
Charge for the year - employees 17,575 153,355
As at end of year 920,697 903,122
The expense recognised for employee and non-employee services during the year
is shown in the following table:
Year Ended 31 December 2022 Year Ended 31 December 2021
Group and Company:
£ £
Expense arising from equity-settled share-based payment transactions 17,575 153,355
Total expense arising from share-based payment transactions 17,575 153,355
Employee Plan
Under the Employee Plan ("EMP") share options are granted to directors and
employees at the complete discretion of the Company. The fair value of the
options is determined by the Company at the date of the grant. Options granted
vest in tranches on each of the following events/dates:
(i) Admission to the LSE ("Admission");
(ii) On the date falling six (6) months after Admission;
(iii) On the date falling twelve (12) months after
Admission; and
(iv) On the date falling twenty-four (24) months after
Admission
On the provision that the option holder remains an employee of the Group.
Options granted to most other option holders from 4 January 2018 onwards vest
in equal tranches of 12.5% every three months from the date of grant, until
fully vested.
The fair value of the options is determined using the Black Scholes method as
stated in Note 2. The contractual life of each option granted is between two
and five years. There are no cash settlement alternatives.
Options are settled when the Company receives a notice of exercise and cash
proceeds from the option holder equal to the aggregate exercise price of the
options being exercised.
Non-Employee Plan
Under the Non-Employee Plan ("NEMP") share options are granted to
non-employees at the complete discretion of the Company. The exercise price of
the options is determined by the Company at the date of the grant. The options
vest at the date of the grant.
The fair value of the options is determined using the Black Scholes method as
stated in Note 2 and not the value of services provided as this is deemed the
most appropriate method of valuation. In all cases non-employee option holders
received cash remuneration in consideration for services rendered in
accordance with agreed letters of engagement. The contractual life of each
option granted ranges from two to five years. There are no cash settlement
alternatives. Volatility was determined by calculating the volatility for
three similar listed companies and applying the average of the four
volatilities calculated.
Options are settled when the Company receives a notice of exercise and cash
proceeds from the option holder equal to the aggregate exercise price of the
options being exercised.
2021 Equity Incentive Plan with Non-Employee Sub-Plan
Under the 2021 Equity Incentive Plan with Non-Employee Sub-Plan" (the "EIP")
share options, restricted shares, and restricted share units may be granted to
employees, directors and consultants of the Company and its subsidiaries at
the discretion of the Company in an aggregate amount up to 30,000,000 shares.
The fair value of awards made under this plan is determined in the same way
as for the EMP and NEMP described above.
A schedule of options granted since inception for all plans is below:
Number options
Employees, including directors* 47,227,020
Members of the Scientific Advisory Board 12,481,912
Total 59,708,931
* Details of options held by individual directors are disclosed in the
Directors' Report.
In October 2022, the expiration date of options to acquire 4,806,577 ordinary
shares (which were scheduled to expire in October 2022) was extended by two
years by the Board of Directors of the Company. The Company recognised this
transaction as a modification of a share based instrument for financial
reporting purposes. The change in the fair value of the stock option before
and after the modification amounted to approximately $5,400, which was
recorded as part of expense related to share-based payment transactions. The
fair value was determined using the Black Scholes model using the assumptions
noted below.
Group & Company: 2022 2022 2021 2021
Number Weighted Average Exercise Price pence Number Weighted Average Exercise Price pence
Outstanding at the beginning of the year 45,081,506 4.4 42,465,787 4.6
Granted during the year - - 3,090,441 2.1
Lapsed during the year (14,588,497) 3.5 (474,722) 9.0
Extended during the year 4,806,577 3.5 - -
45,081,506 4.4
Outstanding at end of year 35,299,586 4.6
43,278,749 3.5
Exercisable at end of year 35,299,586 4.6
The weighted average remaining contractual life for the share options
outstanding as at 31 December 2021 is 2.93 years (2021: 2.08 years). The
weighted average fair value of options granted during the year was nil (2021:
0.7 pence).
The following table lists the inputs to the models used for the two plans for
the years ended 31 December 2021 and 31 December 2022:
July October 2022 modification
2021 (EMP)
(EMP)
Expected volatility % 65 68-424
Risk-free interest rate % 0.17 0.64-1.87
Expected life of options (years) 3 2
WAEP - pence 2.1 3.5
Expected dividend yield - -
Model used Black Scholes Black Scholes
21. Capital and reserves
The nature and purpose of equity and reserves are as follows:
Share capital comprises the nominal value of the ordinary issued share capital
of the Company.
Share premium represents consideration less nominal value of issued shares and
costs directly attributable to the issue of new shares.
Other reserves represents the value of options in connection with share-based
payments, warrants connected with share placements issued by the Company, and
the value of the deemed embedded derivative connected with the Convertible
Note liability.
Reverse asset acquisition reserve is the reserve created in accordance with
the acquisition of Hemogenyx Pharmaceuticals LLC on 5 October 2017.
Foreign currency translation reserve is used to recognise the exchange
differences arising on translation of the assets and liabilities of foreign
branches and subsidiaries with functional currencies other than Pounds
Sterling, as well as the revaluation of intercompany loans.
Retained earnings represent the cumulative retained losses of the Company at
the reporting date.
22. Trade and other payables
Group Group Company Company
Year Ended 31 December 2022 Year Ended 31 December 2021 Year Ended 31 December 2022 Year Ended 31 December 2021
£ £ £ £
Trade and other payables 374,342 295,829 82,745 87,569
Accruals and deferred income 51,912 46,860 51,912 46,860
Total 426,254 342,689 134,657 134,429
Current liabilities 426,254 342,689 134,657 134,429
23. Borrowings
Borrowings may be comprised of borrowings and convertible notes. The Group
follows IFRS 9, and as a result, where instruments contain liability
classified embedded derivatives, an election is taken to fair value the entire
financial instrument through profit or loss rather than split out the embedded
derivative. At 31 December 2022 and 2021, there were no borrowings
outstanding. The notes payable consisted of the following:
Group & Company Year Ended 31 December 2022 Year Ended 31 December 2021
£ £
Borrowings
Balance at 1 January - 753,717
Drawdowns - -
Paydowns - (791,641)
Interest expense - 14,354
Value of embedded derivative transferred to Other Reserves - 6,972
Foreign exchange movement - 16,598
Balance at 31 December - -
Convertible Notes
Balance at 1 January - 753,065
Drawdowns - -
Paydowns - (791,641)
Interest expense - 14,300
Value of embedded derivative transferred to Other Reserves - 6,972
Foreign exchange movement - 17,304
Balance at 31 December - -
Balance at 1 January - 72,596
Payroll Protection Loan borrowing - -
Payroll Protection Loan forgiveness - (71,932)
Foreign exchange movement - (664)
Balance at 31 December - -
Total Borrowings at 31 December - -
A summary of the prior debt facilities is as follows:
Mint Transactions
In November 2020, Mint Capital Limited ("Mint") and the Company entered into a
Financing Facility agreement ("Financing Facility") whereby Mint conditionally
agreed to subscribe for up to £60 million in aggregate principal amount of
Convertible Loan Notes pursuant to an agreement entered into with the Company
(the "Subscription Agreement"). The shareholders of the Company approved the
facility in January 2021 and a prospectus was published on 29 January 2021.
The key terms of the Convertible Loan Notes included:
· A principal amount of up to £60,000,000, split into
denominations of £50,000 per Convertible Loan Note. The Convertible Loan
Notes were to be subscribed for at par.
· The Convertible Loan Notes were to be issued in up to nine
tranches. A tranche of £12,000,000 in principal amount was issued on 3
February 2021. The subsequent eight tranches were to be issuable at the sole
discretion of, and in the amounts determined by, the Company at respective
intervals of 90 days after the Initial Issue Date. The aggregate maximum
principal amount of the Convertible Loan Notes was limited to £60,000,000.
· No interest was payable on the Convertible Loan Notes.
· The Convertible Loan Notes were unsecured.
· Each tranche of Convertible Loan Notes issued was to be
redeemable at par on the date falling 36 months after the relevant Issue Date
(the "Maturity Date").
· Each of the Convertible Loan Notes was convertible into ordinary
shares of £0.01 (1 pence) each in the capital of the Company ("Ordinary
Shares") at any time during the period commencing on the fifth business day
following the relevant Issue Date and ending at 5.00 p.m. London time on the
business day immediately prior to the relevant Maturity Date (the "Conversion
Period").
· The price used for the conversion (the "Conversion Price") was
equal to a 10 per cent discount to the lesser of (i) 125 per cent. of the
closing-bid price as reported by Bloomberg for one Ordinary Share one trading
day before the relevant Issue Date (subject to adjustment to reflect any
sub-division or consolidation of the Ordinary Shares) and (ii) the lowest
closing bid-price as reported by Bloomberg for an Ordinary Share from the
three consecutive trading days ending on the day prior to the date of service
of the relevant conversion notice (or if such conversion notice was served
after 4.35pm on any such date, then the three consecutive trading days ending
on the day such conversion notice was served. In no event was the Conversion
Price to be less than the nominal value of an Ordinary Share.
· A holder was not permitted to submit a conversion notice in
respect of the Convertible Loan Notes if the total Ordinary Shares held by the
holder following the execution of such conversion notice would exceed 29.9% of
the Company's total Ordinary Shares.
· If the Company were to commit an "event of default" then the
notes could be redeemed at 114-120% of the principal amount of the convertible
loan at the option of the holder.
· The Company had the ability to redeem the convertible loan under
certain circumstances at 114% of the principal amount of the convertible loan.
· Subject to limited exceptions, the Convertible Loan Notes were
not transferable.
· Prior to conversion, the Convertible Loan Notes did not entitle
the holder to any voting rights in the Company.
Arrangement fee
The Company agreed to pay a fee of 5% of the aggregate principal value of the
Convertible Loan Notes issued to the arranger for the Facility (the
"Arranger"). The company issued 7,741,935 shares in February 2021 as an
arrangement fee to the arranger of the Financing Facility.
Draw Down
The Company received £12,000,000 from the first drawn down of the Financing
Facility agreement in February 2021. The price of the conversion of the
convertible loan notes issued under the Financing Facility agreement into
common shares of the Company, as defined by the Financing Facility agreement,
was the lesser of (i) 8.4375p and (ii) 90% of the lowest closing bid price
as reported on Bloomberg from the three closing bid prices immediately
preceding a conversion.
The Company received a conversion notice from Mint in respect of £650,000 in
principal amount of Convertible Loan Notes and issued 13,131,313 shares to
Mint in March 2021. Further conversion notices were received from Mint in
respect of £900,000 and £950,000 in principal amount of Convertible Loan
Notes. The Company issued a further 14,285,714 shares to Mint in March 2021,
and 24,547,803 shares in April 2021; both of these allotments of shares were
admitted to trading on the London Stock Exchange's main market in April 2021.
Further conversion notices were received from Mint in respect of £900,000 and
£500,000 in principal amount of Convertible Loan Notes. The Company issued a
further 29,850,746 shares to Mint in April 2021, and 22,222,222 shares in May
2021; both of these allotments of shares were admitted to trading on the
London Stock Exchange's main market in May 2021.
The Company located a new investor to purchase the remaining position of Mint
and received a conversion notice from the new investor in respect of
£6,500,000 in principal amount of Convertible Loan Notes and issued
433,333,333 shares to such investor in May 2021. The Company repaid the
remaining £1,600,000 under the facility and the facility was terminated.
During the year ended 31 December, 2021, the Company recognized £3,883 of
financing related costs related to the stated interest rate on the convertible
debt through the date of conversion or repayment. During the year ended 31
December, 2021, the Company recognized £1,409,582 of financing related costs
related to the costs incurred, including fair value of the shares issued to
arrangers to obtain the credit facility from Mint. During the year ended 31
December, 2021, the Company recognized £1,208,592 of financing related costs
representing the fair value of shares issued in excess of the outstanding
principle and accrued interest at the date of the conversion.
Convertible Loan Facilities
During 2018 Orgenesis entered in to two debt facility agreements with the
Group, one each with Hemogenyx Pharmaceuticals LLC and Immugenyx LLC:
1) On 7 November 2018 the Group entered into a loan agreement with
Orgenesis Inc., an organisation with which the Group has an existing
collaboration agreement. The loan amount was for not less than US$1,000,000
with the proceeds of the loan to be used solely for the development of the
cell therapy technology in accordance with the plan of the collaboration
agreement. Drawdowns totalling US$1,000,000 had been made with Hemogenyx
Pharmaceuticals LLC receiving the funds. The loan carried an interest rate of
2% and had a term of three years. Orgenesis had the option to convert both
principal and accrued interest into equity in Hemogenyx-Cell at any time prior
to maturity. Hemogenyx-Cell SPRL ("Hemo-Cell") is a wholly owned Belgian
entity and was incorporated in April 2019 at which point this loan facility
was treated as a borrowing in accordance with the provisions of IAS39. The
loan was repaid in full in November 2021.
2) On 7 November 2018 the Group entered into a loan agreement, through its
wholly owned subsidiary Immugenyx LLC, with Orgenesis Inc., an organisation
with which the Group has an existing collaboration agreement. The loan amount
was for not less than US$1,000,000 with the proceeds of the loan to be used
solely for the development of the cell therapy technology in accordance with
the plan of the collaboration agreement. Drawdowns totalling US$1,000,000 had
been made. The loan carried an interest rate of 2% and had a term of three
years. Orgenesis had the option to convert both principal and accrued interest
into equity in Immugenyx LLC at any time prior to maturity. This loan has been
treated in accordance with the provisions of IAS39. The loan was repaid in
full in November 2021.
Paycheck Protection Program Loan
On 1 May 2020, the Company received loan proceeds in the amount of $98,947
under the Paycheck Protection Program ("PPP"). The PPP, established as part of
the Coronavirus Aid, Relief and Economic Security Act, as amended ("CARES
Act"), provides for loans to qualifying businesses for amounts up to 2.5 times
of the average monthly payroll expenses of such qualifying business. The loans
and accrued interest are forgivable after certain time periods further defined
in the CARES Act (the "Covered Period") as long as the borrower uses the loan
proceeds for eligible purposes, including payroll, benefits, rent and
utilities, and maintains its payroll levels. The amount of loan forgiveness
will be reduced if the borrower terminates employees or reduces salaries
during the Covered Period.
The loan was forgiven in April 2021 by being converted into a grant at the
election of the Company. The Company qualified for this conversion as at least
60% of the amount of the loan was applied to payroll expenditure and there was
no reduction in employee headcount, and it was therefore included in other
income.
24. Related party disclosures
There were no related party disclosures other than Directors' remuneration as
disclosed in the Remuneration Report section of the Directors' Report. There
are no key management personnel other than the Directors and the Company
Secretary.
25. Financial instruments
The Group's financial instruments consist of cash, amounts receivable,
accounts payable and accrued liabilities.
Fair value of financial assets and liabilities
Fair values have been determined for measurement and/or disclosure purposes
based on the following methods. When applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific
to that asset or liability.
The carrying amount for cash, accounts receivable, and accounts payable and
accrued liabilities on the statement of financial position approximate their
fair value because of the limited term of these instruments. The fair value of
deferred payment approximates its fair value. The investment is carried at
cost as it is not traded on an active market.
Fair value hierarchy
Financial instruments that are measured subsequent to initial recognition at
fair value are grouped in Levels 1 to 3 based on the degree to which the fair
value is observable:
· Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or liabilities; and
· Level 2 fair value measurements are those derived from inputs
other than quoted prices included within level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
· Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The Group did not have any financial instruments in Level 1, 2 and 3.
Financial risk management objectives and policies
The Company has exposure to the following risks from its use of financial
instruments:
· Credit risk
· Liquidity and funding risk
· Market risk
The following table sets out the amortised costs categories of financial
instruments held by the Company as at the year ended 31 December 2022 and year
ended 31 December 2021:
Group Group Company Company
Year Ended 31 December 2022 Year Ended 31 December 2021 Year Ended 31 December 2022 Year Ended 31 December 2021
£ £ £ £
Assets
Trade and other receivables, except prepayments 9,810 1,696 - 310
Cash and cash equivalents 2,532,758 6,840,969 88,909 111,245
2,542,568 6,842,665 88,909 111,555
Liabilities
Trade and other payables (374,343) (295,829) (82,746) (87,569)
Lease liabilities (3,422,835) (10,152) - -
(3,797,178) (305,981) (82,746) (87,569)
Group 1 January 2021 Cash flows 31 December 2021
Non-cash changes
Foreign exchange movements Interest charge
Adjustment to reserve PPP Loan Forgiveness
Short-term borrowings (1) 1,579,378 (1,583,281) 13,944 33,237 28,654 -
(71,932)
Long-term borrowings - - - - - -
-
Total 1,579,378 (1,583,281) 13,944 (71,932) 33,237 28,654 -
(1) At December 31, 2021 the principal and interest on borrowings was paid
in full.
a) Credit risk
The Group had receivables of £0 owing from customers (31 December 2021: £0).
All bank deposits are held with Financial Institutions with a minimum credit
rating of B.
b) Liquidity and funding risk
The Group regularly reviews its major funding positions to ensure that it has
adequate financial resources in meeting its financial obligations. The Group
takes liquidity risk into consideration when deciding its sources of funds.
The principle liquidity risk facing the business is the risk of going concern
which has been discussed in Note 2.
c) Market risk
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Group's income and
operating cash flows are substantially independent of changes in market
interest rates as the Group has no significant interest-bearing assets. The
borrowings issued at fixed rates expose the Group to fair value interest rate
risk. The Company's management monitors the interest rate fluctuations on a
continuous basis and acts accordingly.
The Company has floating rate financial assets in the form of deposit accounts
with major banking institutions; however, it is not currently subjected to any
other interest rate risk.
Based on cash balances as above as at the statement of financial position
date, a rise in interest rates of 1% would not have a material impact on the
profit and loss of the Company and such is not disclosed.
In relation to sensitivity analysis, there was no material difference to
disclosures made on financial assets and liabilities.
At the reporting date the interest rate profile of interest-bearing financial
instruments was:
Group Group Company Company
Year Ended 31 December 2022 Year Ended 31 December 2021 Year Ended 31 December 2022 Year Ended 31 December 2021
£ £ £ £
Financial Assets
Cash and cash equivalents 2,532,758 6,840,969 88,909 111,245
Foreign currency risk
The Group operates internationally and has monetary assets and liabilities in
currencies other than the functional currency of the operating company
involved.
The Group seeks to manage its exposure to this risk by ensuring that where
possible, the majority of expenditure and cash of individual subsidiaries
within the Group are denominated in the same currency as the functional
currency of that subsidiary.
The Group has not entered into any derivative instruments to manage foreign
exchange fluctuations.
The following table shows a currency of net monetary assets and liabilities by
functional currency of the underlying companies for the years ended 31
December 2022 and 31 December 2021:
31 December 2022
Functional Currency
Currency of net monetary assets/(liabilities) Pound Sterling US Dollars Euro Total
£
£ £ £
Pounds Sterling 75,358 - - 75,358
US Dollars 13,551 2,422,962 - 2,436,513
Euros - - 20,887 20,887
Total 88,909 2,422,962 20,887 2,532,758
31 December 2021
Functional Currency
Currency of net monetary assets/(liabilities) Pound Sterling US Dollars Euro Total
£
£ £ £
Pounds Sterling 99,050 - - 99,050
US Dollars 12,197 6,709,888 - 6,722,085
Euros - - 19,834 19,834
Total 111,245 6,709,888 19,834 6,840,969
Capital risk management
The Group defines capital as the total equity of the Company. The Group's
objectives when managing capital are to safeguard the Group's ability to
continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
Fair value of financial assets and liabilities
There are no material differences between the fair value of the Group's
financial assets and liabilities and their carrying values in the financial
statements.
26. Commitments
Licences
Milestone and royalty payments that may become due under licence agreements
are dependent on, among other factors, clinical trials, regulatory approvals
and ultimately the successful development of new drugs, the outcomes and
timings of which are uncertain.
For the licence from Cornell University to the patent of the Hu-PHEC
technology, the Group's minimum future payments contingent upon meeting
certain development, regulatory and commercialisation milestones total
£855,301 ($1,035,000) plus £413,189 ($500,000) on receipt of marketing
approval from each additional market excluding the United States of America
and the European Union. Upon commencement of commercial production, the Group
will pay a royalty between 2 to 5% on all net sales. Through 31 December 2022,
none of the requirements to make such payments have been met. In addition, the
Group pays an annual licence maintenance fee of up to £61,978 ($75,000) until
commercial sales are achieved.
For the licence to Eli Lilly and Company's ("Lilly") contributions to the
intellectual property in the CDX bispecific antibody, future payments will be
contingent upon meeting certain similar development, regulatory and
commercialisation milestones and so do not meet the definition of commitments
pending further developments. This licence is subject to an up-front payment
to Lilly of $250,000 and milestone payments of up to $1 million through to
Phase II clinical trials. Lilly is also eligible to receive substantial
additional milestone payments based on the achievement of prespecified
milestones, as well as tiered single-digit royalties on sales. In addition,
the Company will pay Lilly a percentage of any cash payments received in
respect of any sublicence of the licensed intellectual property.
Leases
In August 2021, Hemogenyx LLC entered into a lease for a 9,357 square foot
purpose-built laboratory for eight years beginning on 1 April 2022. The lease
contains escalating monthly payments ranging from approximately $64,300 to
$76,500 per month over the lease term. The Group paid a security deposit of
£156,114 ($188,005) during the year ended 31 December 2021 for such facility
lease.
Service agreements
In December 2021, Hemogenyx Pharmaceuticals LLC entered into a service
agreement to establish Research Cell Banks (RCBs) for production of the
Company's proprietary recombinant protein(s) encoded by cDNAs. From 31
December 2021 through 31 December 2022, Hemogenyx Pharmaceuticals LLC has paid
£199.956 (CHF 214,063) under this agreement. Under the terms of the
agreement, Hemogenyx Pharmaceuticals LLC may pay up to CHF 590,000 at its
discretion in aggregate, inclusive of the amounts already paid.
In December 2021, Hemogenyx Pharmaceuticals LLC entered into service
agreements with another party to produce components of the Company's CAR-T
product candidate. Under the terms of the agreement, Hemogenyx Pharmaceuticals
LLC must pay an aggregate of £1,970,911 ($2,109,957) in milestone payments
during the term of production. From 31 December 2021 through 31 December 2022,
Hemogenyx Pharmaceuticals LLC has paid £862,670 ($1,134,059) under these
agreements.
27. Ultimate controlling party
The Directors have determined that there is no controlling party as no
individual shareholder holds a controlling interest in the Company.
28. Subsequent events
In January 2023, the Company successfully completed its second and third
Process Qualification ("PQ") runs of the end-to-end process for the
manufacture of HEMO-CAR-T cells. At least three identical manufacturing runs
are required for the submission of an Investigational New Drug ("IND")
application to the US Food and Drug Administration ("FDA"). The IND is needed
to obtain authorisation from the FDA to commence Phase I clinical trials of
HEMO-CAR-T. The process was carried out in the Company's current Good
Manufacturing Practice ("cGMP") compliant clean rooms. This was followed by
analytical release tests conducted by the Company required to verify the
quality of the manufactured HEMO-CAR-T cells and by tests by a third party to
ensure they comply with a set of required quality attributes. These tests were
completed in March 2023. Following completion of all tests, data are being
compiled for inclusion in the IND submission pack.
On 23 January 2023 the Company successfully raised £4,056,250 (before
expenses) through the allotment and issue of 162,250,000 new ordinary shares
at 2.5 pence per share (the "Placing"). The Placing was conducted by
Peterhouse Capital Limited and SP Angel Corporate Finance LLP as joint placing
agents for the Company.
The Company has entered into a preliminary agreement with a service provider
that it is anticipated will project manage and supervise the running of Phase
I clinical trials for its HEMO-CAR-T cell therapy, subject to negotiation of a
Master Services Agreement.
29. Copies of the annual report
Copies of the annual report will be available on the Company's web site at
https://hemogenyx.com and from the Company's registered office, 6(th) floor,
60 Gracechurch Street, London, EC3V 0HR.
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. END FR EAFLXAFFDEAARecent news on Hemogenyx Pharmaceuticals
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